SONAE INDÚSTRIA UNAUDITED CONSOLIDATED RESULTS JANUARY DECEMBER 2004

Transcrição

1 SONAE INDÚSTRIA - SGPS, S.A. Headquarters: Lugar do Espido, Via Norte, Maia, Portugal Share capital: Registered at Commercial Registry Office, Maia under no VAT no Publicly Traded Company SONAE INDÚSTRIA UNAUDITED CONSOLIDATED RESULTS JANUARY DECEMBER 2004 During 2004, Sonae Indústria achieved: (millions euros) % chg 4Q03 4Q04 FY2003 FY2004 FY04 / FY03 Consolidated Turnover % EBITDA % Margin % 11.6% 13.7% 10.4% 14.4% 38% Net Results Consolidated Net Debt n.a. Consolidated Turnover of million euros; Increase in Consolidated EBITDA by 52% to 227 million euros; Consolidated Total Net Debt reduction of 397 million euros; Positive Consolidated Net Results of 29 million euros, an improvement of 108 million euros on CEO Statement 2004 was a milestone for Sonae Indústria! In 2004, we saw the long awaited turn around and we are back where we belong as an influential player in our sector. This was the result of a very clear strategy outlined in the middle of 2003, based on three pillars: (1) Development of an autonomous organization focused on industrial operations; (2) Improvement of operational performance; (3) Financial restructuring.

2 Our expectations were met in 2004 and these results confirm the validity of the strategy we adopted. Sonae Indústria is now in a much stronger position. Consistency, resilience and endurance were rewarded by a positive net result of 29 million euros and an EBITDA of 227 million euros, which was up 52% on Today, Sonae Indústria delivers meaningful profits, on the back of a 76% operational improvement in wood-based products and we now have a restructured balance sheet, thanks to cash-flow generation and a share capital increase, leading to a 397 million euros reduction in net debt. Market conditions in Central Europe and growth in Eastern Europe were fundamental in improving the economics of our sector. Sonae Indústria actively pursued these opportunities, with redoubled vigour, improving both commercial performance and operational efficiency. I would like to make special reference to Glunz, in Germany, that, as well as reverting eight years of negative results, and despite a weak national economy in terms of growth, achieved a 26% increase in global turnover, when compared to I would also like to mention South Africa for the sustainability of the growth achieved, and Canada, for the improvement in operational margins, in spite of adverse conditions, including wood price increases and currency devaluation against the American dollar. New challenges and opportunities for development await Sonae Indústria which, based on the excellent capabilities of the management team, is ready to grow and learn to build its future with rigour, tenacity and confidence. The strength of Sonae Indústria is restored and I believe is here to stay! Carlos Moreira da Silva, CEO Sonae Indústria 2

3 OVERVIEW Sonae Indústria performance in 4Q 04 was in line with expectations: volumes remained at high levels and prices were stable. As anticipated, our variable costs increased, due to the persistent high oil price, and this affected the economic performance of the company. In 4Q 04, sales volumes increased 1.5% over 3Q 04. When compared with 3Q 04, sales from Iberia (+12.2%) and France (+12.9%) contributed very positively while South Africa (-19.5%), UK (-16.7%) and Germany (-5%) saw their sales decrease. By product, MDF (+6.2%) and MFC (Melamine Faced Chipboard) (+8.0%) increased their sales over the previous quarter while sales of OSB (-13.7%) decreased. Over 4Q 03, all products, with the exception of OSB (-4.1%), increased their sales volume. Overall, the average price has remained stable in the quarter. From the third to the fourth quarter of 2004 there was a small decrease of 0.5% and, when compared 4Q 03, an increase of 6.8%. In terms of price evolution Particle Board based products and OSB have seen a consistent positive price evolution since the last quarter of As anticipated in our previous quarterly report, the oil prices negatively affected our variable costs, in particular resins. Overall the resin price increased around 6.6% over 3Q 04 and 11% on 4Q 03. In terms of wood, we noticed a further cost increase in Brazil in the quarter and a more stable situation in Canada. In October, we completed a share capital increase of 200 million euros and a Bond issue of 80 million euros with a 5-year bullet term, at a variable interest rate of 6 months Euribor plus a 0.875% spread, which further strengthened the balance sheet. If we exclude the effect of the share capital increase, Net Debt was reduced by 96.5 million Euros, in the quarter. In December, the 50% stake in Imocapital was sold to Sonae SGPS for a consideration of 69.3 million euros. This sale generated an extraordinary profit of 13.1 million euros. Overall, the company is in a much stronger position than last year, and it is moving in the right direction in terms of organisation, operations and financial resources. 3

4 CONSOLIDATED FINANCIAL REVIEW Turnover rose to million euros in 2004, a 9.6% increase over FY 03. Sales increased by 13.7% in 4Q 04 over 4Q 03. Gescartão contributed with 181,3 million euros in FY 04, which represents an increase of 1.6% over The panel business continued to perform well for the fifth consecutive quarter, due to strong demand for particleboard and OSB which had an increase in sales volume of 33.6% over euros millions YTD 03. Consolidated sales volumes increased by 12.8% for the year and 3.5% for the quarter. Prices have been recovering steadily since October 2003 and the consolidated average price for FY 04 shows an improvement of 3.2% over FY 03. Current market demand allowed Capacity utilization at a consolidated level to remain at 91%, in spite of the normal slowdown in the month of December. For the full year, the most significant improvement is in OSB, which operated at full capacity. Particleboard also increased capacity utilisation by 11 percentage points as did MDF by 3 percentage points.!#"%$ &(' )+*-,.(/ 0 12,.(/ 3 4,.(/ 576 8:9<; =2>@? 4

5 EBITDA, reached million euros in 2004, an increase of 51.7% over FY 03. This figure represents 14.4% of turnover, which compares with 10.4% in the same period of The panel business improved its EBITDA by 82.2 million euros, or 76.8% on a like for like basis, which resulted in an absolute increase of 4.7 percentage points on turnover. euros millions 70 66,9 60, , ,4 41,4 39, ,7 32, Earnings Before Tax (EBT) improved by million euros. This evolution reflects a positive variation of 90.8 million euros in operational profit, a reduction in net financial costs of 16.8 million euros and an increase in extraordinary results of 20.4 million euros. Net Results (after minority interests) improved by million euros to 29.2 million euros. Improving the balance sheet structure was a priority during 2004 and Consolidated Net Debt was reduced by 397 million euros during

6 OPERATING PERFORMANCE IBERIA FY 04 shows a significant improvement both in turnover and EBITDA when compared with FY 03. Demand was stronger in both Iberian and export markets, particularly from the Middle and Far East. Prices were stable during 4Q 04 and remained above the price levels of 4Q 03, although average prices for the FY 04 were at the same level as FY 03. Sales volumes of , , , ,0 15, , ,0 0 12,0 Turnover (KK ACB EBITDA % Particleboard based products were 3% above 4Q 03, whilst MDF showed growth of 1%. Year on year, particleboard production increased 15%, whilst MDF remained stable, since we were already operating close to full capacity. Use of recycled wood increased from 36% to 38.5%, showing continuous efforts to optimise the use of wood resources. In value terms, EBITDA for 4Q 04 remained at the same level as for 4Q 03, despite a decrease of 1.5 % in absolute EBITDA margins. FRANCE Isoroy closed 2004 with EBITDA of 10.8 million euros, an improvement of 9.7 million euros over FY 03. Turnover for 4Q 04 was 64.2 million euros, more than 17% above 4Q 03. Although prices recovered during 2004, the average price for FY 04 was at the same level as FY 03. In the 4Q 04 the average price was 6.6% above 4Q 03. A 17.6% increase in year on year , , ,0 20 2, Turnover (KK A ) EBITDA % production was achieved, by improving press efficiency and by reducing scheduled shutdowns. In Lure, the increase in production reached 34%. 6

7 Fixed costs are higher than last year s in absolute figures, due to taxes and personnel costs associated with the increase in production in finishing activities, which are labour intensive. GERMANY D , , ,0 12,0 60 8,0 40 6,0 20 4,0 2,0 0 Turnover (KK ) EBITDA % FY 04 sales in the main German market segments - trade and industry - were significantly stronger than in the FY 03. Global sales volumes of Glunz products increased by 21% year on year, well above GDP growth of 1.7% in Germany. The main drivers for the volume growth at Glunz were higher sales of OSB and more effective commercial performance for raw particleboard, MDF and tongue and groove boards. Average prices for particleboard, melamine faced chipboard and in particular OSB rose, while prices for MDF remained more or less stable. All raw press lines produced at full capacity and the additional output generated better contribution margins at Glunz. Cost increases for raw materials, in particular for wood and energy, were partly compensated by increased efficiency. The higher production output of 22% in additional raw board volume compared to 2003, was achieved at the same time that fixed costs were reduced by 4%. The Nettgau plant, on its own, produced more than 1 million m3 of PB and OSB. Overall profitability in FY 04 has improved in comparison to FY 03, due to better sales volumes and prices, higher production output and reduced fixed costs. Total EBITDA reached 49 million euros and has improved by 41 million euros against FY 03. 7

8 UNITED KINGDOM 20 8,0 15 6,0 10 4,0 5 2,0 0 Turnover (KK GBP) EBITDA % In the UK, furniture retailers and DIY stores have performed particularly well in 2004 and are forecast to continue their growth in sales. Year on year comparison shows 5% growth in sales volumes in the sector in Purchase input prices for timber continue to fall with an annual reduction of 21%, although raw material availability will temper this downward trend. This has been combined with a recovery in the PRN (Packaged Recycled Notes) market. EBITDA recovered from a negative position in FY 03 to a post a 5.7% EBITDA margin in FY 04. CANADA Canadian operations posted significantly higher turnover as well as cash generation and profitability. Turnover grew by 13% and production output by 3% compared to FY 03. Melamine products, whose production output increased by 20% in 2004, 6 32, ,0 4 26,0 24,0 3 22,0 18,0 16,0 14,0 12,0 Turnover (KK CAD) EBITDA % have driven this performance. With this increase in melamine sales volume, market penetration, in the home market, has risen to the highest figures in the history of Tafisa Canada. Fibre supply has been a key issue in the sector and continues to cast a shadow on the future of many plants located in Canada. The main wildcard continues to be the fate of countervailing and antidumping duties on soft wood lumber exports from Canada into the 8

9 United States. Recent decisions by WTO and NAFTA panels have been favourable to Canada s position, however, litigation processes are lengthy and could easily stretch into late BRAZIL In 2004, the Brazilian wood based panel market grew by 16.2% and prices increased by 13.5%. Tafisa Brazil sales grew by 10.8%, year on year, whilst volume decreased by 2.3%. A special effort is being made to sell more added value product: sales of melamine faced 9 26,0 8 24,0 7 22,0 6 18,0 5 16,0 4 14,0 3 12,0 8,0 6,0 Turnover (KK Brl) EBITDA % products increased by 41% and prices increased by 22% during Variable costs per m 3 increased significantly, mainly due to the large increase in wood costs and despite a small decrease in costs of resin. EBITDA margins increased significantly during the second half of 2004, reaching 18.7% for FY 04. SOUTH AFRICA Demand was strong in 2004, as a result of favourable market conditions, and production ca ,0 36,0 34,0 32,0 pacity, throughout the industry was stretched, es ,0 26,0 pecially in the second half of the year. These favourable conditions resulted in an increase of 26% in 5 Turnover (KK ZAR) EBITDA % 24,0 22,0 9

10 sales volume year on year. This demand was evident across the entire building sector, which experienced a similar trend. It is anticipated that the market conditions for 2005 should continue to remain buoyant. Sales prices, which were negatively affected by import activity in the first three quarters of 2004, recovered in the last quarter, as this negative impact was offset by the contention of operating costs, as a result of favourable exchange rates on the raw material purchase side as well as the benefit from increases in sales volumes. From a manufacturing perspective, the most significant improvement was achieved at the Panbult plant, which is now operating at levels above the original design capacity. Total output increased by 13%, with the major increase being in the latter half of the year. This was mostly the result of a focused effort to reduce downtime. The net turnover increased by 26% and EBITDA by 41%, when compared to FY 03. LOOKING FORWARD The key to maintaining stable business conditions in 2005 is the stability of the demand. In 2004, we have seen a recovery in the prices of the different products, driven by an increase in demand in both national and export markets. We expect this stability to be a reality during 2005, as, in the short term, we do not expect any significant change in the availability of product or in the business environment. After the increases in the second half of 2004, prices of raw materials will not post significant changes, unless something unexpected happens. Maia, 28 February 2005 The Board of Directors Further information: Lugar do Espido - Via Norte - Apartado Maia Portugal Telefone(+351) Fax (+351) sonaeindustria@sonae.pt 10

11 CONSOLIDATED PROFIT & LOSS ACCOUNT (millions euros) % chg 4Q03 4Q04 FY2003 FY2004 FY04 / FY03 Consolidated Turnover % Stock Variation % Gross Margin % EBITDA % % 11.6% 13.7% 10.4% 14.4% 38% Operational Profit n.a. Net Financial Charges % Profit on Ordinary Activities % Extraordinary Profit/(Loss) % Profit/(Loss) before taxes % Taxes n.a. Profit/(Loss) for the period % CONSOLIDATED BALANCE SHEET % chg FY2003 FY2004 FY2004 / FY2003 Fixed Assets % Intangible Assets % Tangible Assets % Current Assets % Deferrals % Total Assets % Shareholders' Funds % Minority Interests % Equity + Minority Interests % Interest Bearing Debt % Short term % L-M term % Other Short term Debt % Other Liabilities % Accruals % Total Liabilities % Total Liabilities, Shareholders' Funds and Minority Interests 2.053, % 11