Revenues amounted to NIS 350 million, compared with NIS 386 million in the corresponding quarter; Despite the increase in operating profit, net profit was cut by 33% and amounted to only NIS 1 million
Hadera Paper, controlled by the Pimi Fund (approximately 60%), publishes the results of the third quarter of 2020, which was affected by a decline in demand for paper products and a rise in raw material prices.
The company’s revenues in the third quarter amounted to NIS 350 million, compared with NIS 386 million in the corresponding quarter last year. The company’s value chain segments, paper rolls for cardboard and packaging products, showed an aggregate increase of approximately NIS 15 million in the quarter. The decrease in sales turnover was mainly due to a decline in the stationery and printing sector as a result of a sharp decline in demand, worldwide, as part of the consequences of the corona crisis.
Gross profit grew by about 20% in the quarter and amounted to about NIS 51 million (about 15% of revenues), compared with about NIS 43 million (about 11% of revenues) in the corresponding quarter last year. The improvement was achieved thanks to operational efficiency and an increase in output.
Operating profit (before non-recurring expenses and income) amounted to NIS 10 million in the third quarter, compared with a loss of NIS 1 million in the corresponding quarter last year.
EBITDA in the quarter grew by approximately 16% and amounted to approximately NIS 44 million (approximately 13% of revenues) compared with approximately NIS 38 million (approximately 10% of revenues) in the corresponding quarter last year. The company was able to increase profitability compared to the corresponding period last year, despite the decrease in sales turnover, thanks to the reduction in the cost of sales and general and administrative expenses.
The net profit for the quarter amounted to NIS 1 million, compared with NIS 3 million in the corresponding quarter last year. The decrease in net profit is due to one-time income that was recorded in the financing and tax items last year.
Equity as of September 30, 2020 amounted to NIS 1,016 million, compared with NIS 1,010 million as of December 31, 2019.
Gadi Kunia, CEO of the Hadera Paper Group, said: “We continue to show an improvement in operating results in the third quarter as well. The improvement was achieved despite the many challenges, closures and restrictions imposed due to the outbreak of the corona plague. The actions taken at the beginning of the crisis and throughout its length to address these challenges helped maintain production continuity around the clock.
In addition, since the beginning of the year we have successfully realized capital investments and managerial actions we have taken in recent years. Thanks to these actions we were able to improve production efficiency, increase factory output and accordingly the quantities sold. The improved efficiency and increase in output have helped the company improve its profitability, despite the low selling prices worldwide.
In recent weeks we have witnessed an increase in demand for cardboard packaging products worldwide, most likely as part of the recovery in industrial activity, online commerce and an increase in the movement of products and goods. “We believe that if this trend continues, and the market returns to its long-term growth rates, Hadera Paper will be in an excellent starting position to meet the growing demand.”
Lior Hellman, CFO of Hadera Paper Group: “Hadera Paper continues to maintain a solid balance sheet and a low level of leverage in all market conditions, which allows for continued development and investments, even in such a challenging year.”