ERGIS Group, the leader of plastics processing in Central and Eastern Europe, has published financial results for the third quarter of 2017. The results are not significantly different compared to the preliminary financial results published on October 19th. Over the three quarters, the Group recorded a revenue of PLN 574.7 million (increase of 8.3%), EBITDA level reaching PLN 48.9 million (increase of 0.1%), operating result amounting to PLN 31.3 million (increase of 3.7%) and net profit of PLN 20.4 million (decrease of 3.3%).
In the third quarter alone, compared to the third quarter of 2016, the Group generated revenue growth by 11.6% and drops of the levels of the following: operating profit by 3.3%, EBIDTA by 2.8% and the net profit by 34.4%. The profit in the third quarter of 2017 is burdened by the Group’s increased remuneration costs – by PLN 2.8 million (compared to Q2 of 2017) and by PLN 5.6 million after the first three quarters of 2017 (compared to the first three quarters of 2016). A situation on the raw materials market, particularly persisting since the beginning of the year high costs of PVC and softeners, also negatively affected the level of the margins. EBIDTA of the third quarter is also burdened by the costs of organizational restructuring of the Group, which amount to approx. PLN 500,000 and the net profit was reduced by nearly PLN 1 million as a result of a tax asset release related to improvement of financial performance of the German companies of the Group.
FINANCIAL RESULTS – DETAILS
Financial results of the ERGIS Group after three quarters of 2017 are presented in the table below:
|
PLN thousand |
Q3 2017 | Q3 2016 | Dynamics | Q1 – Q3
2017 |
Q1 – Q3 2016 | Dynamics |
| Sales revenue | 201,237 | 180,369 | +11.6% | 574,706 | 530,759 | +8.3% |
| Operating profit | 9,098 | 9,405 | -3.3% | 31,335 | 30,228 | +3.7% |
| Gross profit | 8,009 | 8,899 | -10.0% | 28,604 | 26,185 | +9.2% |
| EBITDA | 15,061 | 15,491 | -2.8% | 48,950 | 48,911 | +0.1% |
| Net profit | 4,655 | 7,095 | -34.4% | 20,422 | 21,116 | -3.3% |
| Interest bearing debt | 162,304 | 151,981 | +6.8% | 162,304 | 151,981 | +6.8% |
Analysis of the financial results for three quarters of 2017 gives a clear picture. We have recorded a record increase in sales. After three quarters, results achieved from the sales of stretch films from the new investment increased the EBITDA of this sector by over 5 million PLN. Since the introduction of the nanoERGIS® film to the market, the proportion of stretch film in the Group’s EBITDA has more than doubled to reach over 50% of this factor. These positive results, however, were neutralized by rising labour costs and a significant drop in profitability – especially in soft PVC films and flexible packaging induced by the situation on the market of raw materials. As we expect polymer prices to finally drop and the labour costs get stabilized, we are optimistic about the outlook for the coming year – said Tadeusz Nowicki, President of the Management Board of ERGIS S.A.
