Reno de Medici slips into red

Short-term outlook remains volatile, says RDM. A clear sign of recovery in demand for cartonboard expected only in 2013.

Reno de Medici (RDM) has seen its net result slip into the red in the first-half of 2012. The Italian recycled cartonboard producer reported a net loss of €3.9m versus a net profit of €3.2m in the same period of the last year. Net revenues decreased by 15% to €237.5m. Operating profit for the first half of 2012 was €0.9m, down by €7.2m compared to the first half 2011.

RDM attributed the drop in net revenues to lower sales volumes: the company sold 423.000 t of board in the first half of 2012 against the sale volume of 485.000 t in the previous year. European demand for folding boxboard fell by 3.6% in the first six months of 2012 compared to the previous year. At the same time, Italian manufacturers continued to feel the pressure of high energy costs in 2012 caused by the lack of access to spot markets. A €5m increase in the cost of natural gas compared to 2011 and lower sales volumes reduced EBITDA in the first half 2012 to €14m, compared to €21.2 in the same period last year, RDM said.

Commenting on the situation in the market for folding boxboard in the period under review, RDM said it recognised positive signals in the end of destocking activity on the customer side. According to the company, destocking was pronounced during the second half of 2011 and augmented the effects of the overall economic crisis on supply-demand situation. Order intake in the folding boxboard market returned to normal in the first half of 2012.

Regarding future demand development for consumer goods and packaging, RDM expects the economic and financial context in the second half of 2012 to be rather difficult, even though the "slight positive signs noted in the first half" should be confirmed. "A clear sign of recovery in demand for cartonboard is expected only in 2013," RDM stated. The short-term outlook remains characterised by high volatility as there was a high risk of relapse into the recession due to the economic and financial situation in general, according to the company.

RDM postpones acquisition of Cascade's Virgin Assets

Despite a strong interest in acquiring Virgin Assets from Cascades SAS in order to diversify into production of virgin-fibre based cartonboard, RDM said it would not make use of the call option provided by the combination agreement between Cascades and RDM. The current market situation and lending difficulties has led the Board of Directors not to exercise the call option for the purchase of Cascade's assets in 2012, the company said.

Cascades is the major shareholder of Reno de Medici. During the second quarter of the year, Cascades has bought additional shares in RDM and is currently holding a 45% stake in the company, Reno de Medici reported.