Hadera Paper Ltd. Reports Financial Results for Fiscal Year Ended December 31, 2010
HADERA, Israel, March 7, 2011 /PRNewswire-FirstCall/ -- Hadera Paper Ltd. (AMEX:AIP) (the "Company") today reported financial results for the year ended December 31, 2010 ("the Reported Period") and for the fourth quarter of the year ("Fourth Quarter"). The Company, its subsidiaries and associated companies - are referred to hereinafter as the "Group".
The Consolidated Data set forth below excludes the results of operation of the associated companies: Hadera Paper- Printing and Writing Paper Ltd. ("Hadera Paper Printing") and Hogla-Kimberly Ltd. ("H-K").
It should be noted, that following an acquisition transaction, as at December 31, 2010, the Company holds approximately 75% of the shares of Hadera Paper Printing that was consolidated within the financial statements of the Company.
Consolidated sales in 2010 amounted to NIS 1,121.0 million, as compared with NIS 892.0 million last year, representing an increase of 25.7% originating primarily from growth in the packaging paper and recycling sector in relation to last year.
Consolidated sales in the Fourth Quarter of the year totaled NIS 336.4 million, as compared with NIS 237.6 million in the corresponding quarter last year, representing growth of approximately 41.6%, originating primarily as a result of an increase in the sales of the packaging paper and recycling sector in relation to the corresponding quarter last year and as compared with Fourth Quarter sales of NIS 295.4 million this year, representing growth of approximately 13.9%.
The operating profit totaled NIS 61.3 million in 2010, 5.5% of sales, as compared with NIS 15.6 million, 1.7% of sales, last year. The increase in operating profit in 2010 as compared with the corresponding year is primarily attributed to the increase in gross profit as a result of the increase in sales. In 2010 and in 2009 the operating profit included non-recurring revenues.
The operating profit in the Fourth Quarter of the year amounted to NIS 28.6 million in relation to operating profit of NIS 0.4 million in the corresponding quarter last year and as compared with operating profit of NIS 20.2 million in the third quarter of the year. The increase in operating profit this quarter is primarily attributed to the sharp rise in gross profit of paper and recycling sector, as a result of the increase in sales and the manufacturing efficiency of the sector as a result of the operation of Machine 8.
The net profit attributed to the Company's shareholders in 2010 amounted to NIS 100.7 million, as compared with net profit of NIS 91.2 million in 2009, representing an increase of 10.4%. The net profit, net of non-recurring revenues and expenditures during the Reported Period, amounted to approximately NIS 76.7 million, as compared with net profit, net of non-recurring revenues and expenditures in 2009 that amounted to NIS 59.2 million, representing an increase of 29.6%.
The net profit attributed to the Company's shareholders during the Reported Period was affected by the improvement in the operating margin of most Group companies in Israel as a result of the growth in operations that brought about an improvement in the operating profit.
Basic earnings per share amounted to NIS 19.84 per share ($5.59 per share) in 2010, as compared with basic earnings per share of NIS 18.03 per share ($4.78 per share) in 2009.
The exchange rate of the NIS in relation to the dollar was revaluated during 2010 by approximately 6.0%, as compared with a revaluation of approximately 0.7% last year (the average exchange rate of the NIS vis-a-vis the dollar was revaluated in 2010 by a rate of approximately 5.1% in relation to last year). The changes in exchange rates, affected the results of the various sectors, although the Group's business portfolio, including the investee companies, is practically at equilibrium in terms of foreign currency and consequently, the exposure of the group to sharp fluctuations in currency exchange rates is low.
The inflation rate in 2010 amounted to 2.7%, as compared with an inflation rate of 3.9% in 2009.
In the global packaging paper market, the Company estimates that as a result of the continuing rise in global pulp prices during the Reported Period, the demand for recycled packaging paper has increased, as an alternative to virgin packaging paper. The trend of rising prices of recycled products in the global packaging paper market continued consistently throughout the Reported Period, at an average rate of approximately 28% (according to publications by PPI Germany), and grew more moderate only toward the end of 2010 until its stabilization.
The Group manages a wide and diverse portfolio of companies and businesses focused on consumer goods and basic commodities. As part of the trend of consumption in the Israeli economy during the Reported Period, this trend led to an increase in demand at most Group companies for a wide range of products, while continuing to place an emphasis on the implementation of efficiency and cost-cutting measures across all sectors of operation.
The aforementioned revaluation of the NIS in relation to the average dollar and the euro, in relation to last year, by approximately 5.1% and 9.4%, respectively, led to savings in terms of inputs and imported products denominated in dollars or euro, in the principal sectors of operation of the Company, whose prices track import prices in the said currencies. As a result of the said revaluation, the relative price of natural gas denominated in dollars, decreased by approximately 6% in relation to last year and also contributed to savings. Moreover, the price of electricity also decreased by approximately 10% in 2010, in relation to last year. These savings were partially offset by the rising prices of water during the year, by an average rate of 42%, along with the sharp rise in the price of fibers by approximately 43%, in relation to last year.
Net financial expenses amounted to NIS 44.8 million in 2010, as compared with NIS 18.3 million in 2009. The growth in financial expenses originated primarily as a result of the growth in financial expenses on account of long-term liabilities, that increased by approximately NIS 30.6 million relation to last year, mostly due to the cost of financing Series 3 and 4, whose discounting of financing costs for Machine 8 ended at the end of May, coupled with the issuing of bond series 5 (new series) in May. Moreover, an increase was recorded in financial expenses as a result of long-term loans assumed by a subsidiary for financing an investment in a corrugator.
The Company's share in the earnings of associated companies totaled NIS 81.1 million in 2010, as compared with NIS 87.4 million last year.
The following principal changes were recorded in the Company's share in the earnings of associated companies, in relation to the corresponding period last year:
- The Company's share in the net profit of Hadera Paper Printing (49.9%)
in 2010 amounted to NIS 11.1 million as compared with NIS 14.1 million in
2009, a decrease of NIS 3.0 million. The decrease in the profit
Originated primarily from the decrease in the operating profit of Hadera
Paper Printing, that decreased from NIS 40.5 million last year, to NIS
31.1 million this year. The decrease in operating profit in 2010
originated primarily from the sharp rise in the prices of raw materials
in relation to last year, despite measures to raise prices in the course
of the year and the improved gross margin of part of the product range.
The decrease in net income was also affected by the growth in tax
expenditures in the amount of NIS 6.7 million in 2010, as compared with
last year, primarily as a result of recording tax revenues of
approximately NIS 6 million last year as a result of the change in the
tax rate, that were offset as a result of the reduction in financial
expenses in the amount of NIS 9.7 million.
- The Company's share in the net profit of H-K in Israel (49.9%) in 2010
amount to NIS 75.0 million as compared with NIS 83.0 million in 2009. The
decrease in the sum of NIS 8.0 million, originated primarily from the
decrease in operating profit that fell from NIS 210.0 million to NIS
193.8 million this year. The decrease in the operating profit is
Primarily attributed to the erosion of the selling prices in some sectors
of operation, coupled with the rise in the prices of some principal
inputs at the company, that were offset by far-reaching efficiency
measures that were implemented across the company, continuing savings in
purchasing and the strengthening of the company brands, led to a
reduction in the erosion of earnings in 2010.
- The Company's share in the losses of KCTR Turkey (49.9%) in 2010,
amounted to NIS 2.7 million, as compared with NIS 7.6 million in 2009,
representing a decrease of NIS 4.9 million. This reduction in loss,
despite the slight decrease in the volumes of operation, is primarily
attributed to the sale of the PEDO brand to a local chain, that generated
non-recurring revenues of NIS 3.1 million in 2010, that brought about the
continuing reduction in the net loss from NIS 15.1 million last year, to
NIS 5.4 million in 2010. In addition, the loss was reduced as a result of
recording of financial revenues from the valuation of operational
balances.
The Company also announced that the Board of Directors has approved the convening of an annual general shareholders meeting to discuss the financial reports and management discussion for 2010, and to approve, the election of directors (other than external directors), the nomination of the auditing CPA's for 2011 and the approval of a lease agreement between the Company and Clal PV Projects Ltd. (a private company held and indirectly controlled by Clal Industries and Investments Ltd., the Company's controlling shareholder) for the Company's leasing roof area to Clal P.V. for construction of installations for the production of electricity using photovoltaic technology. At such time as the Company fixes the record date and meeting date for the shareholders meeting, it will distribute a proxy statement describing the proposals to be considered at the meeting.
This report contains various forward-looking statements based upon the Board of Directors' present expectations and estimates regarding the operations and plans of the Group and its business environment. The Company does not guarantee that the future results of operations will coincide with the forward-looking statements and these may in fact differ considerably from the present forecasts as a result of factors that may change in the future, such as changes in costs and market conditions, failure to achieve projected goals, failure to achieve anticipated efficiencies and other factors which lie outside the control of the Company as well as certain other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation for publicly updating the said forward-looking statements, regardless of whether these updates originate from new information, future events or any other reason.
Hadera PAPER LTD.
SUMMARY OF RESULTS
(AUDITED)
except per share amounts
NIS IN THOUSANDS (1)
2010 2009
Net sales 1,121,008 891,995
Net earnings attributed to the Company's shareholders 100,728 91,230
Basic net earnings per share attributed to the Company's 19.84 18.03
shareholders
Fully diluted earnings per share attributed to the 19.68 18.03
Company's shareholders
(1) The representative exchange rate at December 31, 2011 was NIS 3.549=$1.00.
Contact:
Yael Nevo, Adv.
Corporate Secretary and Chief of Legal Department
Hadera Paper Ltd. Group
[email protected]
Tel:+972-4-6349408
SOURCE Hadera Paper Ltd
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