The unprecedented decline in demand in the market for wood-free printing and writing papers in Europe has also caused the results of Lecta, Barcelona, for the second quarter and the first half of the year to drop significantly.
The overall market for wood-free coated papers in Europe shrank by around 40 per cent year-on-year in the second quarter of 2023, similar to the first quarter, Lecta says, describing the market situation for the period. The ongoing decline in paper consumption due to digitalisation, reduction of oversized inventories, macroeconomic uncertainties and subdued economic development are cited as possible reasons for the development. Ebitda for the first half of the year is €12m (2022: €113m), operating profit slipped into the red to €-48m (€91m), similar to the net result of €-77m (€62m). Turnover fell to €674m (€998m).
Although sales prices fell from the first to the second quarter, average prices for the entire first half of 2023 were at the same level as last year. Sales trends had the strongest impact on results, and the company's shipments really collapsed: in the second quarter of this year, Lecta sold only 193,400 t of wood-free coated papers, speciality papers and merchandise, compared to 319,4000 t last year. The figures for the entire first half-year look similar, with sales shrinking to 385,000 (647,800) t. The cost of raw materials and other consumables fell significantly, but this could not compensate for the weak capacity utilisation and the resulting high fixed cost burden, despite some cost containment measures.
Demand was weak not only in the market for wood-free coated papers, but sales of materials for self-adhesive labels and of thermal papers also fell by about 30 per cent in the second quarter compared to the previous year at Lecta. This is unusual for otherwise fundamentally growing markets, the company noted in its comments.
Lecta has responded to brand development by announcing in June that it will shut down PM 4 for woodfree coated papers (200,000 tpy) at its Condat mill in France. The second machine (PM 4) at the mill, which will continue to operate, will produce for Lecta's growth markets. Release liners and one-side coated papers for packaging purposes are areas the company plans to shift further towards. It plans to reduce its presence in the wood-free coated paper market, the company says in its comments, but will continue to generate sales and earnings from these papers. Over the period 2028 to 2022, Lecta's share of wood-free coated papers in its product mix decreased from 54 per cent to 47 per cent, while over the same period the share of speciality papers increased from 34 per cent to 42 per cent.