Antalis is ready to play an active role in the ongoing consolidation in the paper distribution business despite suffering in the third quarter of the year from squeezed margins and lower sales volumes.
The company which severed links with the ArjoWiggins paper making arm of Sequana earlier in the year, is now among the largest paper merchanting operations in Europe. That deal should be completed by the end of 2018.
Across its four major markets in Europe – UK & Ireland, Germany, France and Austria – sales for the first nine months of 2918 were €884 million, 1.7% lower than at the same point in 2017.
The drop reflects lower volumes of paper sold (though France was the exception) and a drop in the UK large format sector. This is blamed on Brexit. The exchange rate between sterling and the euro also hit the business.
Rest of Europe sales dipped 2.0%, mainly the result of foreign exchange rates. At constant rates the €686 million of sales was just 0.1% below 2017. The US dollar, South African rand and Brazilian real carry the blame for sales in the Rest of the World falling 5.7% to €160million. Antalis has since pulled out of South Africa selling the businesses in South Africa and Botswana to the local management.
The company says its performance was in line with market conditions: “During the third quarter, which traditionally witnesses lower sales, volumes in the paper distribution market continued to decline markedly, notably due to selling price increases driven by spiralling paper pulp prices, which weigh on consumption,” it says.
Packaging turned in a strong performance which, while not enough to cancel the drop in paper volumes, at least mitigated the impact. However, Ebitda earnings were down 13% to €50 million, hit by fewer working days than in the comparable period as well as currency fluctuations. Operating income was €32.9 million, a 1.9% margin on sales, compared to €45.5 million and a 2.6% margin in the first nine months in 2017.
The merchant says that performance will improve for the final three months of the year thanks to the continuous growth in packaging, implementation of price increases, though there will be a decline in sales compared to last full year.
In all sales of €1,730.5 million compared to €1,769 million in 2017.