Appvion reported first quarter 2016 operating income of $9.6 million compared to $4.3 million during first quarter 2015. Current year quarterly earnings were higher due to continued improvements in operating performance and execution of cost-saving initiatives in both the thermal papers and carbonless papers businesses, as well as improved pricing in the thermal papers business. In addition, current quarter selling, general and administrative (SG&A) expenses were $1.6 million, or 5.7%, lower than the previous year quarter primarily due to lower people costs and distribution expenses. First quarter 2016 adjusted EBITDA rose 25% compared to the same period in 2015. First quarter 2016 earnings benefited from improved prices for the Company’s thermal products and a more than $7 million reduction in manufacturing and raw materials spending resulting from strong operational performance.
Lecta has announced the temporary shutdown of line 8 production at its Condat mill, in the French town of Le Lardin Saint Lazare, from the end of April. The decision will be reevaluated in the following months depending on market developments.
The decrease in coated paper demand over the last several years resulted in overcapacity in our industry. The worsening of this trend observed in the last months is the main reason for the temporary line 8 shutdown at the Condat mill.
The Condat brand product range and service levels during this period are guaranteed due to efficiency improvements and streamlining on Condat line 4 as well as through the contribution of the Group’s other coated paper mills.
Despite the temporary shutdown, meeting the overall demand of Lecta’s coated paper customers is assured, given the Group’s total production capacity of more than 850,000 tons per year.
At the same time, Lecta continues working on a strategic transformation plan that will allow Condat to move forward with greater chances of success, although this project needs further definition over the next few months.
This plan would entail the transformation of production line 8 from manufacturing two-side coated papers to manufacturing specialty papers for labels and flexible packaging, a market in which Lecta has extensive experience given its manufacturing operations in Spain and business operations worldwide.