Lecta publishes its Q3 2019 results
In 3Q2019, the net sales of Coated Woodfree were €143 million vs €180 million in 3Q2018, a decrease of €37 million or -20%. The Ebitda at €4 million was lower than in 3Q2018 (€8 million). This decrease was mainly due to a reduction in sales volume and an increase in distribution costs, partly offset by an increase of net sales price and reductions in variable production costs and fixed expenses.
In 3Q2019, the net sales of Specialties were €114 million vs €122 million in 3Q2018, a decrease of €8 million or -7%. The Ebitda at €8 million was lower than in 3Q2018 (€17 million). This decrease was mainly due to reductions in sales volume and net sales price, an increase in variable production costs, partly offset by decreases in distribution costs and fixed expenses.
For the third quarter ended 30 September 2019, Lecta had revenue of €316.5 million versus €366.7 million in the third quarter ended 30 September 2018, a decrease of €50.1 million or -13.7%.
This decrease was attributable to lower sales of CWF, Specialties and Purchased Products, resulting from lower sales volumes of 52,900 metric tons (or -15.6%), 286,500 metric tons in 3Q2019 vs 339,400 metric tons in 3Q2018, but an increase in average net sales price (1,025€/t in 3Q2019 vs 1,001€/t in 3Q2018).
For the nine months ended 30 September 2019, Lecta had revenue of €1,051.1 million versus €1,113.8 million in the nine months ended 30 September 2018, a decrease of €62.6 million or -5.6%.
Lecta temporarily shut down Line 8 at its Condat mill in France starting at the end of April 2019. The decrease in CWF demand over the last several years resulted in overcapacity in the industry. The worsening of this trend observed in the last months is the main reason for this decision.The Condat brand product range and service levels during this period are guaranteed due to efficiency improvements and streamlining on Condat’s Line 4 as well as through the contribution of the Group's other CWF paper mills. Despite the temporary shutdown, meeting the overall demand of Lecta's CWF customers is assured, given the Group's total production capacity of more than 850,000 tons per year.
At the same time, Lecta continues working on a strategic transformation plan that will allow Condat to diversify its production. This plan would entail the transformation of Line 8 from manufacturing CWF to manufacturing specialty papers for labels and flexible packaging, a market in which Lecta has extensive experience given its manufacturing operations in Spain
In June 2019, a new Enterprise Resource Planning system was implemented in Lecta’s Riva del Garda Italy paper mill. Implementation was more challenging than expected, resulting in a loss of production and deliveries of CWF from the mill, as well as extra cost. The estimated and accounted for EBITDA impacts in 2Q and 3Q 2019 were negative EUR (1.8) M and EUR (5.9) M respectively. The mill is operating normally since the month of October.
In September 2019, the two Mexican subsidiaries, i.e. Lecta México S. de R.L. de C.V. and Torraspapel Servicios México S. de R.L. de C.V. were liquidated. They served as Commercial agent for the manufacturing companies of the Lecta group. As part of the shift of Lecta group business into Specialties and given the decrease in margin of the sales in Mexico, it was considered more cost efficient to have the Mexican clients dealt with directly by the Central Overseas structure in Barcelona.
Lecta Group is engaged in the production and sale of Coated Woodfree (CWF) and Specialty papers. Lecta Group has production sites in France, Italy and Spain and sells all around the world. It employed circa 3,166 FTE people in the quarter ended 30 September 2019.
The parent company of the Lecta Group is Lecta SA, a limited company incorporated and domiciled in the Grand Duchy of Luxembourg.
Lecta Group as at 30 June 2019
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