Mayr-Melnhof first-half net profit down 20%

Short-time restocking of the supply chain at the beginning of the year was followed by increased volatility and caution in MM’s core European markets.

In the first half-year 2012, Mayr-Melnhof Group (MM) recorded a 20% year-on-year drop in net profit at €51.2m. Operating profit went down by 15% or €13.6m to €79.1m, with about €9m in non-recurring expenses related to the closure of its folding carton facility in Liverpool, the group said. At €975.0m consolidated sales decreased by 1.3% compared to the first half of 2011. "An improvement in MM Packaging's average sale prices was offset by a decline in MM Karton's sales volume,” Mayr-Melnhof explained.

MM Karton has sold 765.000 t of cartonboard in the first half 2012, 4.7% less than in the same period last year, resulting in a 5.3% decrease in revenues to €466.5m. Operating profit in the cartonboard divison dropped by 31.9% year-on-year to €29.5m on lower volumes, reduced average selling prices and increased costs. "While the beginning of the year was characterised by a noticeable recovery in the cartonboard business due to restocking of the supply chain, caution and short-term planning in line with the development of the economy in the European main market impacted the further course of demand until mid-year,” Mayr-Melnhof reported.

The European folding carton business was characterised by a general decline in consumption and destocking effects at customers in the first half of the year, according to Mayr-Melnhof. Cigarette and food packaging were reportedly stable in the first half with food packaging demonstrating positive dynamics in the period under review.

Despite a 6.4% drop in processed volume in the first half of 2012, MM Packaging has seen a 1.2% increase in revenues to €560.6m due to higher average prices. Operating profit stood at €49.6m and was thus maintained at the previous year’s level despite non-recurring expenses related to the closure of the Bootle folding carton plant near Liverpool, the group explained. The main reason behind a solid operating profit in the packaging division was a positive development in cigarette packaging, Mayr-Melnhof said.

As far as regards future business development, Mayr-Melnhof believes that the slowdown in economic activity in its main European sales market will hold up and that the cautious and short-term planning effects on customers’ side will affect demand for cartonboard and folding cartons. Nevertheless, the group plans to continue investing in order to "maintain and increase competitiveness and growth potential.” In September 2012, a new centre for packaging gravure is to become operational in Trier, Germany. In Bydgoszcz, Poland a new folding carton plant will kick off production in January 2013.