Interim report January – September 2023

CONTINUED STRONG PROFIT – INCREASED VOLUMES

July – September 2023

• Sales volume amounted to 4,819 tonnes (3,817 tonnes) an increase by 26%.
• Net sales amounted to SEK 262.9 million (SEK 232.0 million), an increase by 13%. The organic increase was 5%.
• Operating profit amounted to SEK 28.0 million (SEK 10.8 million), an increase by 159%.
• The operating margin increased to 10.7% (4.7%)
• Profit for the period amounted to SEK 20.8 million (SEK 7.6 million), an increase by 174%.
• Earnings per share before dilution amounted to SEK 1.03 (SEK 0.38) and after dilution to SEK 0.99 (SEK 0.36).
• All warrants of series 2020/2023 have been exercised for subscription of new shares whereas SEK 29.2 million has been added.

January – September 2023

• Sales volume amounted to 14,904 tonnes (14,533 tonnes) an increase by 3%.
• Net sales amounted to SEK 788.5 million (SEK 725.7 million), an increase by 9%. The organic decline was 2%.
• Operating profit amounted to SEK 75.6 million (SEK 35.7 million), an increase by 112%.
• The operating margin increased to 9.6% (4.9%).
• Profit for the period amounted to SEK 57.8 million (SEK 25.8 million), an increase by 124%.
• Earnings per share before dilution amounted to SEK 2.87 (SEK 1.29) and after dilution to SEK 2.76 (SEK 1.23).
• Net cash amounted to SEK 8.8 million (SEK -108.0 million) at the end of the period, corresponding to 0.1 times (-1.3 times) EBITDA.
• The cash flow from operating activities amounted to SEK 86.9 million (SEK 35.5 million).

The market

The quarter was characterized by a market development that differs from previous quarters during the year and the previous year. The volumes in our industry have welcomingly started to increase, and we estimate that we maintain our market share in Europe. We have probably passed the lowest point in terms of the decline in market volumes and landed at a more stable level of demand, similar to the one before the pandemic. Demand in the construction industry remains generally weak, while a distinguishable increase has been noted in several other sectors, particularly in industry and industrial projects where special products have performed strongly. This trend has been evident in both segment Czech Republic and segment Sweden.

The prices of raw materials, which affect both net sales and gross profit, have continued downward during the third quarter. Global demand for raw materials has been weak, therefore our industry is currently experiencing a good supply. However, we have started to see tendencies towards capacity reduction in the supply chain. Price trends and the availability of raw materials are still uncertain factors in our market.

Strong profit and increased volumes

Our volumes increased by 26 percent compared to the previous year, while net sales increased by 13 percent. Net sales were positively affected by effects from organic growth, currency and acquisitions, while lower raw material prices counteracted. We see increased competition, driven by the economy, in certain product areas such as PETG and MWPC. At the same time, we continue to strengthen our offer within special products, which is made clear by an increased share of sales of OPC. We have successfully started the sale of PMMA products to infrastructure projects in the Nordics, which is an important step towards further broadening our product and customer portfolio.

During the third quarter of 2023, the operating profit amounted to SEK 28.0 million, which represents a significant increase compared to the same period last year. We have defended our margins in a market with falling prices and the gross margin strengthened further this quarter to 23.4 percent. A favorable product mix and efficient material use are reflected in the improved profitability.

We are still satisfied with the cash flow, even if it is weaker than the corresponding quarter last year. During 2023, we have had a constant lower level of working capital and the cash flow is a result of the increased operating profit and our measures to optimize capital tied up, especially in inventory. The strong cash flow frees up resources and has enabled us to further reduce our net debt to a net cash of SEK 8.8 million.

Sustainability

We continue to prioritize our sustainability initiatives. Together with one of our key customers, we have started a joint project to use a circular bio-based raw material. The work on the comprehensive life cycle analysis for products produced in Sweden is in its final phase where third-party review remains, which is expected to be completed before the year end. Subsequently, similar analyses will be carried out in our remaining facilities. The goal that our customers should be able to easily predict the climate impact of our products is therefore reachable in the near future. At the same time, we are working on structuring our sustainability work to be able to communicate our efforts and results in a better and clearer way.

Outlook

Market demand has stabilized and is stronger now than last year, but future development is still difficult to assess. We note that demand in various application areas is changing, but thanks to our well-diversified customer and product portfolio, the fluctuations are partially evened out. Investments have been restrained this year as we plan for the modernization of our facility in Kadaň and the construction of a new warehouse in Borensberg. The investments aim to streamline production in Kadaň and optimize logistics flows in Borensberg. With our improved profitability and strong balance sheet, we have good conditions to continue developing the business in a positive direction going forward.

Christian Krichau

President and CEO

For further information, please contact:

Christian Krichau, CEO, +46 141 20 38 58

Monica Ljung, CFO, +46 141 20 38 02

Forward-looking information

Certain statements in this report are forward-looking and the actual outcome may be significantly different. In addition to the specific mentioned factors, other factors may have material impact on the actual outcome. Such factors include, but are not limited to, the general economic climate, exchange-rate fluctuations and changes in interest rates, political developments, the impact of competing products and the prices of such products, interruptions to the access to raw materials. 

This information is such information that Arla Plast AB is obliged to publish in accordance with the EU Market Abuse Regulation. The information was published by the above mentioned contact persons on August 9, 2023 at 8:00 am CET.

About Arla Plast

Arla Plast is a producer and supplier of extruded sheets made of technical plastics. The plastic sheets are made of polycarbonate (PC), acrylonitrile butadiene styrene (ABS), glycol-modified polyethylene terephthalate (PETG) and polymethyl methacrylate (PMMA) and have a large number of areas of application, such as safety products, machine guards, ice hockey rinks, greenhouses, pool covers, sound walls, suitcases, automotive components and various construction-related areas of application. The company is headquartered in Borensberg, Sweden, and has a total of three production facilities in Sweden and the Czech Republic. Arla Plast has a turnover of more than SEK 950 million, has approximately 250 employees and delivers to more than 700 customers in over 45 countries. In 2022, Arla Plast completed its first acquisition by acquiring Alphaplex GmbH in Germany.

More information about Arla Plast is available at www.arlaplastgroup.com.