Press release
Boulogne-Billancourt, 24 April 2017
 

Improved operating performances in Q1 2017 driven by Antalis' distribution business
 

  • Sales down 0.6% to €744 million at a constant reporting structure for Arjowiggins (up 0.9% at constant exchange rates), and down 3.4% on a reported basis to €770 million
  • EBITDA up 7.3% to €27 million at a constant reporting structure for Arjowiggins, and up 3.5% on a reported basis to €26 million; EBITDA margin grew by 0.3 points to 3.6%
  • Antalis: increase of 8.5% in EBITDA to €22 million driven by the increasing contribution of the Packaging and Visual Communications businesses and lower overheads
  • Arjowiggins: EBITDA down 3.8% on Q1 2016 to €8 million on a like-for-like basis due to lower volumes of printing papers and recurring difficulties in the Security division
  • At the Annual General Meeting to be held on 6 June 2017, Sequana's Board of Directors will recommend not paying any dividends in respect of 2016.
  • Distribution of approximately 18.36% of Antalis International shares to Sequana shareholders (subject to approval by shareholders and by the AMF)

Sequana's Board of Directors' meeting in Boulogne-Billancourt on 21 April 2017 examined the unaudited financial statements for Q1 2017 and decided to convene the Annual General Meeting for 6 June 2017.


Key operating indicators

 (€ millions) except for per share dataQ1 2017Q1 2016
pro forma (1)
% change (*)
Q1 2017/
Q1 2016
pro forma (1)
 
Q1 2016
reported
% change (*)
Q1 2017/
Q1 2016
reported
 Sales744748 -0.6%770 - 3.4%
 EBITDA (2)2725 7.3%26 3.5%
 EBITDA margin (as % of sales)*3.6%3.3% +0.3 points3.3% -0.3 points
 Recurring operating income1914 +39.4%15 +31.7%
 Operating margin (as % of sales)*2.6%1.8%+0.8 points1.9% +0.7 points

(1) 2016 pro forma data exclude the contribution of Arjowiggins Healthcare which was sold in June 2016.
(2) Recurring operating income before depreciation and amortisation and excluding movements in provisions, corresponding to EBITDA as used previously by the Group.
(*) Percentage and margin changes are based on figures rounded out to one decimal place.

Sales were €744 million for the quarter, down 0.6% on Q1 2016 (but up 0.9% at constant exchange rates) at a constant reporting structure for Arjowiggins (down 3.4% on a reported basis).

The decline in printing volumes which continued during the first quarter weighed on the Group's sales both on the production and distribution sides of the business, mainly in the Creative Papers division which was affected by inventory reduction measures taken in the market during the early months of the year. Antalis' Packaging and Visual Communication businesses continued to perform well, growing by 4% on Q1 2016 on a like-for- like and constant exchange rate basis. The companies acquired by Antalis in late 2016 in each of its businesses (Papers, Packaging and Visual Communication) added €7 million to sales for the quarter. The negative forex impact on sales – mainly affecting Antalis – amounted to €11 million and was chiefly attributable to the depreciation in sterling since Q1 2016.

EBITDA grew 7.3% on Q1 2016 to €27 million at a constant reporting structure for Arjowiggins (up 3.5% on a reported basis). Sequana benefited from an enhanced product mix and the positive impact of lower overheads resulting from the closure of Arjowiggins mills, as well as from the optimisation of Antalis' supply chain. However, declining volumes of printing papers and higher prices for cotton (used to produce banknote paper) had a negative impact on Group operating performances. EBITDA improved by 0.3 points and represented 3.6% of sales.

Recurring operating income jumped by 39.4% to €19 million, compared to €14 million in Q1 2016. It includes a €2 million gain arising on a change to a pension plan carried on Antalis' books.


Distribution

Sequana's Board of Directors has decided to recommend not paying any dividends in respect of 2016 at the Annual General Meeting to be held on 6 June 2017.

The Board has also decided to recommend the distribution of approximately 18.36% of Antalis International shares to Sequana shareholders (subject to approval by the AMF) at the Annual General Meeting to be held on 6 June 2017.


Outlook

Antalis should continue to benefit from growth in its Packaging and Visual Communication businesses but sales in the paper business may decline slightly. Thanks to the smooth integration of the acquisitions completed in late 2016 and continued optimisation of the cost base, it should be able to maintain its EBITDA margin. Antalis' IPO, scheduled for June 2017, will enable it to pursue its growth and consolidate its market leader positions. 

Arjowiggins should continue to reap the rewards of lower overheads in its Graphic and Creative Papers divisions, however it will be hit by higher input costs (for pulp and energy) over the coming months. Arjowiggins' earnings will continue to suffer from the operating performance of the Security division. The sale of Arjowiggins Security BV (the Dutch VHP banknote paper mill) should complete in late May 2017 and the process to divest the rest of the business has been initiated.

The preventive procedure (procédure de sauvegarde) initiated on 15 February 2017 is continuing and Sequana reiterates its aim of rapidly exiting this procedure.


Upcoming events

Annual General Meeting: 6 June
First-half 2017 results: 26 July
Q3 2017 sales: 25 October


About Sequana
Sequana
(Euronext Paris: SEQ) is a major player in the paper industry, boasting leading positions in each of its two businesses:
- Antalis: European leader in the distribution of paper and packaging products, with around 5,600 employees based in 43 countries.
- Arjowiggins: World leader in creative and technical papers, with around 2,800 employees.
Sequana reported sales of €3 billion in 2016 and employed some 8,500 people worldwide.


Sequana
Analysts & Investors
Xavier Roy-Contancin
+33 (0)1 58 04 22 80
Communication
Sylvie Noqué
+33 (0)1 58 04 22 80
contact@sequana.com


Image Sept
Claire Doligez
Priscille Reneaume
+33 (0)1 53 70 74 25
cdoligez@image7.fr
preneaume@image7.fr



APPENDICES: Analysis by business

Breakdown of sales by business

 (€ millions)Q1 2017Q1 2016
pro forma (1)
% change (*)
Q1 2017/
Q1 2016
pro forma (1)
Q1 2016
reported
% change (*)
Q1 2017/
Q1 2016
reported
 Antalis 612 630 - 2.8% 630 - 2.8%
 Arjowiggins 175 172 +1.3% 194 - 10.0%
 Eliminations and other (43) (54) - (54) -
 Total744748- 0.6%770-3.4%

(1) 2016 pro forma data exclude the contribution of Arjowiggins Healthcare which was sold in June 2016.
(*) Percentage and margin changes are based on figures rounded out to one decimal place.


Antalis

Key operating indicators

 (€ millions)Q1 2017Q1 2016% change
Q1 2017/Q1 2016
 Sales 612 630 - 2.8%
 EBITDA 22 20 8.5%
 EBITDA margin
(as a % of s ales)
3.5%3.2%-0.3 points
 Recurring operating income 19 14 +34.8%
 Operating margin
(as a % of sales)
3.0%2.2%-0.8 points


Antalis reported sales of €612 million, down 2.8% versus Q1 2016 (down 1.1% at constant exchange rates). The acquisitions completed in late 2016 in each of its three businesses (Papers, Packaging and Visual Communication) added €7 million to Q1 2017 sales. The negative forex impact on sales amounted to €11 million and was chiefly attributable to the depreciation in sterling since Q1 2016.

The Paper business reported sales of €431 million, a decrease of 5.4% on Q1 2016, mainly attributable to a decline in printing volumes, but partially offset by a resilient performance in the office paper segment. 

Sales in the Packaging and Visual Communication businesses of €124 million (up 3.8%) and €57 million (up 5.7%), respectively, reflect the fine momentum in these two segments.

Broken out by geography, the Main European countries (i.e., UK & Ireland, Germany & Austria, France) reported sales of €309 million, a drop of 6.4%, due mainly to a depreciation in the value of sterling; the Rest of Europe reported sales of €245 million (down 0.9%). Sales in the Rest of the World (i.e., Latin America, Asia-Pacific and South Africa) climbed 12.9% to €57 million thanks to a favourable forex impact.

EBITDA grew by 8.5% to €22 million. Antalis benefited from an enhanced product mix and the positive impact of lower overheads driven by greater flexibility in the supply chain, which helped to absorb the negative impact of lower volumes of printing papers. The negative FX impact on Q1 EBITDA amounted to €1 million.

Recurring operating income came in at €19 million and included a €2 million gain arising on a change to a pension plan; operating margin was 0.8 points higher at 3.0% of sales.


Arjowiggins

Key operating indicators

 (€ millions)Q1 2017Q1 2016
pro forma(1)
% change
Q1 2017 /Q1 2016
pro forma
Q1 2016 reported% change
Q1 2017/
Q1 2016
reported
 Sales 175 172 +1.3% 194 - 10.0 %
 EBITDA 8 8 - 3.8% 9 - 13.6%
 EBITDA margin (as a % of sales) 4.4% 4.6% -0.2 points 4.5% -0.1 points
 Recurring operating income 3 3 +3.1% 4 - 17.5%
 Operating margin (as a % of sales)1.9%1.9%-2.1%-0.2 points

(1) 2016 pro forma data exclude the contribution of the Healthcare business which was sold in June 2016.


Arjowiggins reported sales of €175 million, up 1.3% on Q1 2016 on a like-for-like basis (and up 2.0% at constant exchange rates). The FX impact during the period was not material.

Arjowiggins' sales were negatively impacted by declining volumes of printing papers, mainly in the Creative Papers division, attributable to inventory reduction measures taken in the market during the early months of the year. This negative impact was wholly offset by a favourable product mix in the Security division. Sales in the other specialty businesses, particularly laminated and tissue papers, held up well.

EBITDA declined 3.8% on Q1 2016 to €8 million on a like-for-like basis. Arjowiggins continued to reap the rewards of lower overheads in its Graphic and Creative Papers divisions, but it was negatively impacted by higher prices for cotton which the Security division uses to produce banknote paper.

Excluding the Security division, EBITDA came in at €11 million, versus €10 million in Q1 2016 (on a like-for-like basis).

The sale of Arjowiggins Security BV (the Dutch-based banknote business) to Oberthur Fiduciaire, announced on 15 February 2017, should be finalised by the end of May, once an opinion has been issued by the relevant work councils.

Recurring operating income was €3 million and represented 1.9% of sales.



Regulated information
News releases under ongoing reporting obligations:
- News release on accounts, results
Full and original press release in PDF:
https://www.actusnews.com/documents_communiques/ACTUS-0-48216-resultats-1er-trimestre-2017_eng.pdf
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