Ergis Group after 3Q 2018: lower results, unfavourable business environment in 3Q 2018

The ERGIS Group, a leader in plastics processing in Central and Eastern Europe, has published preliminary results for the third quarter of 2018. They are, according to the Management Board, unsatisfactory. The results were affected not only by an increase in the costs of remuneration, but also by temporary factors, such as the delayed achievement of full capacity by a new line at the Berlin plant or the abnormal fluctuations in raw material prices.

PRELIMINARY FINANCIAL PERFORMANCE IN DETAILS

	Q3 2018	Q3 2017	Dynamics
Sales revenue	195,697	201,237	-2.75%
Profit on operating activities	5,444	9,341	-41.72%
EBITDA	11,612	15,061	-22.90%
Gross profit	4,518	8,252	-45.25%
Net profit	3,948	4,825	-18.18%
Interest debt	168,564	162,259	3.89%

The unfavourable situation has had the strongest effect on the rigid film and packaging laminates business, which still suffers from a delay in achieving the expected capacity by a new PET film line. Therefore, the Group has not seen the expected decrease in the costs of production of these products. At the same time, failures of older production lines took place. These events have cause a decrease in sales and margin in the third quarter.

The financial results in the industrial packaging business, which in the past used to compensate for any weaker results of the other businesses, were also lower than expected. The only business which generated better results than expected was the soft PVC films business, however the achieved surplus could not compensate for the problems in other key businesses.

'The temporary nature of the difficulties which have negatively affected III quarter results convinces me that even in such unfavourable market environment, the Group has a great chance of regaining an acceptable level of profitability within a short period of time', said Tadeusz Nowicki, President of the Ergis Group.

ADDITIONAL INFORMATION

The ERGIS Group, listed at the Warsaw Stock Exchange, holds a leading position in the plastics processing sector in Central and Eastern Europe. Four of its five manufacturing plants are situated in Poland, and one in Germany. The Group's profile includes manufacturing of food packaging (printed multilayer laminates, PVC- and PET-based barrier films and laminates) and industrial packaging (LLDPE stretch films and PET binding tapes). Moreover, ERGIS is a manufacturer of pharmaceutical packaging films, waterproofing membranes, and PVC compounds. In 2017 the Group's revenue exceeded PLN 750 million.

Additional information is also available at www.ergis.eu