HADERA, Israel, November 16, 2011 /PRNewswire/ --
Hadera Paper Ltd. (AMEX:AIP) (the "Company") today reported
financial results for the third quarter (the "Third Quarter")and
first nine months ended September 30,
2011 (the "Reported Period"). The Company, its subsidiaries
and associated company - are referred to hereinafter as the
"Group".
The Consolidated Data set forth below excludes the results of
operation of the associated company Hogla-Kimberly Ltd.
("H-K").
Consolidated sales during the Reported Period amounted to
NIS 1,541.7 million, as compared with
NIS 784.6 million last year,
representing an increase of 96.5%, originating primarily from
growth in the sales of the packaging paper and recycling sector as
compared with the corresponding period last year, coupled with the
consolidation of the sales of Hadera Paper - Writing and Printing
Ltd ("Hadera Paper Printing"), starting January 1, 2011, in the total sum of NIS 554.0 million, net of inter-company sales
totaling NIS 526.3 million.
The consolidated sales in the Third Quarter of the year totaled
NIS 519.5 million, as compared with
NIS 295.4 million in the
corresponding quarter last year, representing growth of
approximately 75.9%, originating primarily as a result of the
consolidation of the sales of Hadera Paper Printing, in the amount
of NIS 184.7 million, coupled with
growth in the sales of the packaging paper and recycling sector in
relation to the corresponding quarter last year and as compared
with second quarter sales this year of NIS
504.6 million, representing growth of approximately
2.96%.
The operating profit totaled NIS 45.8
million during the Reported Period, 3.0% of sales, as
compared with NIS 32.7 million, 4.2%
of sales, in the corresponding period last year. Net of
non-recurring revenues and expenditures during the Reported Period
and the corresponding period last year, the operating profit
decreased from NIS 19.1 million to
NIS 16.4 million. The decrease in the
operating profit from current operations during the Reported
Period, as compared with the corresponding period last year,
originates primarily from the consolidation of the results of the
Hadera Paper Printing segment since January
1, 2011, following an operating loss of NIS 13.1 million in this segment. This decrease
was offset as a result of a rise in the gross profit of the various
segments, in view of the increase in sales.
Operating loss amounted to NIS 9.5
million in the Third Quarter of the year, as compared with
operating profit of NIS 20.2 million
in the corresponding quarter last year. The transition to a loss in
the Third Quarter originated primarily as a result of recording a
provision for impairment on account of a cash-generating unit,
coupled with the consolidation of the operating loss of Hadera
Paper Printing, in the amount of NIS 3.2
million, as a result of a sharp rise in raw material prices,
coupled with specific inefficiency in the manufacture of fine
paper.
The net loss attributed to the Company's shareholders amounted
to NIS 35.7 million in the Reported
Period, as compared with net profit attributed to the Company's
shareholders of NIS 65.4 million in
the corresponding period last year. The net profit, net of
non-recurring revenues and expenditures during the Reported Period,
amounted to NIS 6.3 million, as
compared with NIS 55.8 million in the
corresponding period last year, representing a decrease of
88.8%.
The lower net profit attributed to the company shareholders
during the Reported Period, was primarily affected by a
non-recurring provision of NIS 58.8
million, recorded by the company following the decisions of
the Court in Turkey concerning
appeals filed by KCTR Turkey (49.9%) ("KCTR") pertaining to a
demand for tax payment in Turkey,
coupled with the recording of a provision for impairment on account
of the Carmel cash-generating unit in the amount of NIS 7.0 million (net of taxes), that was offset
from non-recurring revenues from the sale of real estate on
Totzeret Ha'Aretz Street in Tel
Aviv, the valuation of a Put option, as well as the improved
operating profitability of the packaging paper and recycling
segment. Moreover, the net profit was adversely affected by the
rise in financial expenses during the Reported Period, in relation
to the corresponding period last year, following the operation of
Machine 8.
Basic loss per share amounted to NIS
-7.02 per share ($-1.89 per
share) in the Reported Period, as compared with basic earnings per
share of NIS 12.88 per share
($3.51 per share) in the
corresponding period last year.
Basic loss per share amounted to NIS
-8.56 per share ($-2.31 per
share) in the Third Quarter of the year, as compared with earnings
of NIS 4.53 per share ($1.24 per share) in the corresponding quarter
last year.
The exchange rate of the NIS in relation to the US dollar was
devaluated by approximately 4.6% during the Reported Period, as
compared with a revaluation of approximately 2.9% during the
reported period last year (the average exchange rate of the NIS
vis-à-vis the dollar was revaluated during the Reported Period by a
rate of approximately 6.4% in relation to the corresponding period
last year). The changes in exchange rates as mentioned above,
affected the results of the various sectors, although the Group's
business portfolio, including the associated companies, is
practically at equilibrium in terms of foreign currency and
consequently, the exposure of the Group to sharp fluctuations in
currency exchange rates is low.
The inflation rate during the Reported Period amounted to 2.2%,
as compared with an inflation rate of 1.9% in the corresponding
period last year.
The Company estimates that the demand for recycled packaging
paper, as a replacement for virgin packaging paper, is continuing
in global paper markets. Following a slowdown in the global
packaging paper market, in terms of virgin products in the Third
Quarter, a decrease was recorded in the prices of recycled
products. The trend of decreasing recycled product prices in the
global packaging paper market - that began in the Third Quarter -
amounted to approximately 4% in relation to the second quarter. The
Company estimates that this trend will continue in the near future
as well.
The Group manages a wide and diverse portfolio of companies and
businesses focused on consumer goods and basic commodities. As part
of the trend of consumption in the Israeli economy during the
Reported Period, this trend led to an increase in demand at most
Group companies for a wide range of products, while continuing to
place a special emphasis on the implementation of efficiency and
cost-cutting measures across all sectors of operation, including an
employee retirement agreement, as part of a collective
agreement.
On May 15, 2011, the Company
signed an extension of the agreement for the purchase of natural
gas with the partners in the Yam Tethys Project. The overall
financial volume of the agreement is estimated at approximately
$63 million (according to the
calculation of the formula at the date of signing the agreement).
The new gas agreement will enter into effect on July 1, 2011, for a period of two years.
Following the new gas contract, an increase of 190% was recorded in
the average price of gas, starting with the first day of the
agreement. During the Reported Period water and electricity prices
rose by an average rate of 21% and 4.4%, respectively, as compared
with the corresponding period last year. In addition, a sharp rise
was recorded in the price of paper waste, by an average rate of
approximately 35%, in relation to last year. These price increases
were offset by a revaluation of the NIS vis-à-vis the US dollar,
during the Reported Period compared to last year, by a rate of
approximately 6.4%. This revaluation brought about savings in the
inputs and imported products denominated in this currency.
The financial expenses during the Reported Period amounted to
NIS 61.7 million, as compared with
NIS 28.4 million in the corresponding
period last year. The growth in financial expenses originated as a
result of the capitalization of some of the financing costs of
Machine 8 during the corresponding period last year, along with the
expansion of Bond Series 5 at the beginning of the Third Quarter
that served to increase the financial expenses by approximately
NIS 3.1 million. Moreover, an
increase of NIS 2.6 million was
recorded in financial expenses in relation to the corresponding
period last year, as a result of the higher inflation rate during
the Reported Period (Known Index) by approximately 2.7%, as
compared with a lower increase of 1.6% in the inflation rate during
the corresponding period last year, coupled with the consolidation
of the financial expenses of Hadera Paper Printing, starting
January 1, 2011, in the sum of
NIS 9.1 million, following the entry
of Hadera Paper Printing into the consolidated statements.
The Company's share in the losses of associated companies (H-K)
totaled NIS 29.1 million during the
Reported Period, as compared with a share in profits of
NIS 58.5 million in the corresponding
period last year. The transition to a loss in the Company's share
in the earnings of associated companies, as compared with the
corresponding period last year, originates primarily as a result of
the Company's share in a provision in the amount of NIS 58.8 million, created by H-K following the
rulings by the court in Turkey
regarding appeals filed by KCTR, concerning a demand for tax
payments in Turkey, coupled with
the Company's share in the earnings of Hadera Paper Printing
(consolidated in the company's financial statements since
January 1, 2011), that were included
during the corresponding period last year in the amount of
approximately NIS 10.4 million and
that were not included in this period (The Hadera Paper Printing
results were consolidated within the consolidated financial
statements of Hadera Paper in this period).
The following principal changes were recorded in the Company's
share in the earnings of associated companies, in relation to the
corresponding period last year:
- The Company's share in the net profit of H-K in Israel (49.9%) during the Reported Period
amounted to NIS 35.2 million, as
compared with NIS 56.0 million in the
corresponding period last year. The decrease in the sum of
NIS 20.8 million, originated
primarily from the decrease in operating profit that fell from
NIS 147.3 million to NIS 93.1 million
this year. The sharp decrease in the operating profit is primarily
attributed to the erosion of selling prices in certain segments of
operation as a result of escalating competition in the market, that
grew even worse towards the end of the second quarter as a result
of the parallel import of Huggies diapers, coupled with
non-recurring expenditures associated with compensation of
consumers on account of complaints related to leaks in a new brand
of diapers in the first quarter of the year, coupled with a rise in
the prices of principal raw materials. These were offset by
efficiency measures that were implemented across the company and
the lowering of purchasing expenditures in view of the decrease in
the average dollar exchange rate by approximately 6.4%. These
factors served to reduce the erosion in profit during the Reported
Period.
- The Company's share in the losses of KCTR Turkey (49.9%) during
the Reported Period amounted to NIS 65.9
million, as compared with NIS 5.5
million in the corresponding period last year, representing
an increase of approximately NIS 60.4
million. The greater loss, originated primarily as a result
of a NIS 58.8 million provision
recorded by the company following the decisions of the Court in
Turkey concerning appeals filed by
KCTR pertaining to a demand for tax payment in Turkey, coupled with an increase in the
operating loss, from NIS 10.5 million
in the corresponding period last year, to NIS 12.5 million during the Reported Period.
KCTR has informed the Company that it has appealed some of the
court decisions in Turkey, while
it intends to appeal other court decisions, based on the expert
opinion of its legal consultants. However, according to the
accounting policy of the company, the actual handing down of the
court ruling, even if this can be appealed with high chances of
success, creates a presumption whereby it is "more likely than not"
that certain sums will be paid on account of these tax
requirements. The company has consequently created a provision
during the Reported Period on account of its share in these
sums.
This report contains various forward-looking statements based
upon the Board of Directors' present expectations and estimates
regarding the operations and plans of the Group and its business
environment. The Company does not guarantee that the future results
of operations will coincide with the forward-looking statements and
these may in fact differ considerably from the present forecasts as
a result of factors that may change in the future, such as changes
in costs and market conditions, failure to achieve projected goals,
failure to achieve anticipated efficiencies and other factors which
lie outside the control of the Company as well as certain other
risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission. The Company undertakes no
obligation for publicly updating the said forward-looking
statements, regardless of whether these updates originate from new
information, future events or any other reason.
Hadera PAPER LTD.
SUMMARY OF RESULTS
(UNAUDITED)
except per share amounts
Nine months ended September
30,
NIS IN THOUSANDS(1)
2011 2010
Net sales 1,541,733 784,626
Net earnings (loss)
attributed to the
Company's shareholders (35,704) 65,354
Basic net earnings(loss)
per share attributed to
the Company's shareholders (7.02) 12.88
Fully diluted
earnings(loss)per share
attributed to the
Company's shareholders (7.02) 12.77
Three months ended September
30,
NIS IN THOUSANDS(1)
2011 2010
Net sales 519,491 295,435
Net earnings(loss)
attributed to the
Company's shareholders (43,560) 23,026
Basic net earnings
(loss)per share
attributed to the
Company's shareholders (8.56) 4.53
Fully diluted
earnings(loss)per share
attributed to the
Company's shareholders (8.56) 4.5
(1) The representative exchange rate at September 30, 2011 was N.I.S. 3.712=$1.00.
Contact:
Yael Nevo, Adv.
Corporate Secretary and Chief of Legal Department
Hadera Paper Ltd. Group
Yaeln@hadera-paper.co.il
SOURCE Hadera Paper Ltd