Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The food and premium packaging division showed strong performance with an operating margin above 11%, supported by productivity increases, cost reductions, and product innovation.
- Volumes in the board and paper division were significantly ahead of last year, despite the low overall price level.
- A comprehensive profit and cash protection program has been launched, focusing on cost reduction measures, particularly in energy savings, procurement, personnel, and operating expenses.
- Targeted price increases are being implemented, with major impacts anticipated in the next year.
- The company is focusing on higher value-added products and positioning itself as a market leader in Europe and the US for GLP-1 analogs for weight reduction, which have excellent growth prospects.
Negative Points
- Persistent weakness in consumer demand in Europe is affecting overall sales performance.
- The board and paper division's results were negatively impacted by the costs of annual maintenance shutdowns, with an impact of roughly EUR25 million.
- Costs for paper, recycling wood, and personnel remain elevated, necessitating higher pricing to reflect these increased costs.
- The farm and healthcare packaging profits were held back by weak demand due to current stocking in the industry and extra costs from the startup of new machines.
- CapEx for the year is expected to be substantially below previous guidance, indicating potential constraints on future growth investments.
Q & A Highlights
Q: What are your initial reflections on the Q3 results?
A: In Q3, sales remained consistent with the previous quarter. Despite weak consumer demand in Europe, our food and premium packaging division performed strongly with an operating margin above 11%, supported by productivity increases, cost reductions, and product innovation. However, the board and paper division faced challenges due to annual maintenance shutdown costs, impacting results by approximately EUR25 million. (Peter Oswald, CEO)
Q: What steps have you taken to address the weak earnings situation in board and paper?
A: We have launched a comprehensive profit and cash protection program, focusing on cost reduction measures, particularly in energy savings, procurement, personnel, and operating expenses. These savings are expected to materialize significantly in 2025, with some impact already seen in the second half of 2024. Additionally, targeted price increases are being implemented. (Peter Oswald, CEO)
Q: What are your expectations on costs looking forward?
A: Costs for fiber and personnel are expected to remain elevated. Therefore, implementing higher pricing to reflect these costs is imperative, as many of our prices are still lower compared to a year ago when costs were lower. (Peter Oswald, CEO)
Q: What will be your approach for packaging activities moving forward?
A: Our packaging division benefits from flexibility, allowing us to adapt quickly to market changes. We focus on higher value-added products and positioning ourselves as market leaders in Europe and the US for GLP-1 analogs for weight reduction, which have excellent growth prospects. We are also ramping up newly invested machines and increasing operational efficiency. (Peter Oswald, CEO)
Q: Where do you expect CapEx to land this year?
A: CapEx for the first three months was around EUR190 million, and we expect it to be around EUR250 million for the whole year, substantially below our previous guidance. (Peter Oswald, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
