BRITISH POLYTHENE INDUSTRIES
Earnings improve in H1 2015 / Polymer price peak seen to have passed / Confidence for full year
After a strong first half year 2015, in which operating profit increased by 6% to GBP 18m (EUR 24.6 m), but rose 13% on a constant currency basis, PE film manufacturer British Polythene Industries (BPI, Greenock, Scotland / UK; www.bpipoly.com) is optimistic about making further headway in the second half, especially as demand remains at “reasonable” levels and raw material prices have now eased. “Having clearly demonstrated that we can cope well with volatile pricing through the cycle, the board is confident that our business is well placed to meet our expectations for the year as a whole,” said chairman, Cameron McLatchie.
Total first-half sales volumes of 157,400 t were 2% ahead of 2014. BPI attributes the improvement to modest growth in continental Europe, thanks in part to increased capacity in silage stretch and despite continued downgauging in some products. Under the influence of lower selling prices at the start of the year and negative currency translations, sales valued at GBP 265.8m were some 5% below the 2014 period. McLatchie termed the first-half results “a notable achievement” in the “most difficult” period of raw material price movements the company’s senior managers have ever encountered. He said management believes polymer prices have now peaked.
On the whole, BPI’s European business in the first half of 2015 was rendered more difficult by material shortages that resulted from a dearth of imports due to duties on Middle East products and the decline in the euro’s value. The shortage was exacerbated by the period’s “unprecedented” wave of forces majeures and plant outages, the chairman noted. Despite polymer suppliers placing customers on allocation, however, BPI was able to keep all of its production lines running. “Passing through the price increases was “exceedingly challenging and our margins were squeezed,” McLatchie added.
BPI’s earnings in the UK and Ireland in the first half, at GBP 7.6m, were “marginally ahead” of the 2014 period, despite margin pressure in the retail-related sector. Profits from the company’s “very successful” continental European business rose by 6.5% to EUR 13.1m. Due to the euro’s weakness, however, the sterling-denominated result deteriorated by 5% to GBP 9.6m. North American earnings turned around in the first half after being “badly affected” by a delayed plant installation in 2014. With production now running smoothly, the business reported operating profit of GBP 0.8m, following a GBP 0.6m loss in the 2014 first half.
The British film specialist has continued its capital spending scheme in 2015, with GBP 9.1m invested in the first half year. McLatchie said the company “remains committed” to increased investment to improve efficiency while reducing scrap, labour and energy costs. In the UK, extrusion lines have been upgraded at Bromborough, and at a seven-layer extrusion line for silage stretch ordered for Leominster.
Total first-half sales volumes of 157,400 t were 2% ahead of 2014. BPI attributes the improvement to modest growth in continental Europe, thanks in part to increased capacity in silage stretch and despite continued downgauging in some products. Under the influence of lower selling prices at the start of the year and negative currency translations, sales valued at GBP 265.8m were some 5% below the 2014 period. McLatchie termed the first-half results “a notable achievement” in the “most difficult” period of raw material price movements the company’s senior managers have ever encountered. He said management believes polymer prices have now peaked.
On the whole, BPI’s European business in the first half of 2015 was rendered more difficult by material shortages that resulted from a dearth of imports due to duties on Middle East products and the decline in the euro’s value. The shortage was exacerbated by the period’s “unprecedented” wave of forces majeures and plant outages, the chairman noted. Despite polymer suppliers placing customers on allocation, however, BPI was able to keep all of its production lines running. “Passing through the price increases was “exceedingly challenging and our margins were squeezed,” McLatchie added.
BPI’s earnings in the UK and Ireland in the first half, at GBP 7.6m, were “marginally ahead” of the 2014 period, despite margin pressure in the retail-related sector. Profits from the company’s “very successful” continental European business rose by 6.5% to EUR 13.1m. Due to the euro’s weakness, however, the sterling-denominated result deteriorated by 5% to GBP 9.6m. North American earnings turned around in the first half after being “badly affected” by a delayed plant installation in 2014. With production now running smoothly, the business reported operating profit of GBP 0.8m, following a GBP 0.6m loss in the 2014 first half.
The British film specialist has continued its capital spending scheme in 2015, with GBP 9.1m invested in the first half year. McLatchie said the company “remains committed” to increased investment to improve efficiency while reducing scrap, labour and energy costs. In the UK, extrusion lines have been upgraded at Bromborough, and at a seven-layer extrusion line for silage stretch ordered for Leominster.
02.09.2015 Plasteurope.com [232088-0]
Published on 02.09.2015