Reno De Medici falls deeper in the red


High natural gas prices in Italy said to be the cost component with the greatest negative impact on the Group’s operating performance. Net sales 12% down due to lower sales volumes.

2012 was another loss-making year for Italian cartonboard manufacturer Reno de Medici. The company reported a net loss of €12.2m, an increase in net loss of €10m compared to the previous year. Operating result was negative at €1.5m, down €3.6m year-on-year. Net sales in the fiscal 2012 totalled €446.3m, down by 12% against 2011.

Reno de Medici attributed the drop in sales to lower volumes of board sold: due to the closure of its Magenta mill in Italy, RDM sold 834,000 t of board in 2012, a decrease of 44,000 t from 878,000 t in 2011. However, comparing the fourth quarter of 2012 with the same quarter of 2011, which both reflected capacity reduction at Magenta, net sales were up by more than 5% to €118.0m, while board deliveries rose by almost 11% to 214,000 t, RDM said. Average sales prices decreased in the fourth quarter, following the reduction in raw material costs.

In addition, high natural gas prices in Italy are said to have had a negative impact on the Group’s operating performance in 2012. According to RDM, the company would be more profitable, if its Italian plants could source gas at the same prices as its facilities in other European countries.

Commenting on business development in 2013, RDM said it expected a slight recovery in the first half of the year. However, the company took a cautious stand: "The trend recorded at the beginning of 2013 is substantially in line with the final months of 2012 and presents significant uncertainty, especially with regard to the first half of the year.”

As far as regards future development of major cost components, RDM expects an increase in costs for recycled fibres, based on the assumption that recovered paper demand from China will pick up. Furthermore, the company believes that speculative tensions could result in upward movement on natural gas prices in Italy in spite of ample supply. On the contrary, costs of other energy components like coal and electricity might display a downward trend due to the continuing economic recession.

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