With parcel carriers charging for dimensional weight (if higher than the actual weight of a box) and consumers pushing for less packaging waste, shippers are motivated to minimize package size. This steers businesses away from using the proper amount of protective packaging materials to prevent damage, reduce shipping costs, minimize returns/claims, and ultimately satisfy customers. So, what happens when packages sacrifice protection to downsize? Substandard and inadequate packaging materials are the main reason one in 10 packages arrive damaged, leading to 860 million reships annually. Damage rates create a lose-lose situation, eating into profits since shippers must replace damaged products and packing materials and pay for shipping a second time. click read more below for the rest of the story
The Mayr-Melnhof Group was able to increase sales as well as profit in the first three quarters of 2016 compared to the reference period in an increasingly challenging economic environment lacking direction. Due to the broad geographical sales spectrum and the focus on various consumer goods industries it was possible to maintain capacity utilization at a high level in both divisions despite restrained overall conditions.
As expected, the situation on the European cartonboard and folding carton markets started to get more challenging due to a lack of momentum. Nevertheless, MM Packaging was able to grow further, primarily through last year’s acquisition in France, and to maintain its high profit level with a favorable product mix. In contrast, the pressure on margins at MM Karton strengthened particularly due to a significant rise in recovered paper prices during the third quarter. Accordingly, we aim to continue the consequent price policy in Europe and to pass on the cost increase through higher cartonboard prices in a timely manner.
For the fourth quarter pressure on margins and volumes is expected still to persist mainly as a result of seasonality. However, based on the strong development in the first half-year, the positive prospects for 2016 as a whole remain intact.
The Group’s consolidated sales totaled EUR 1,713.8 million and were thus 5.9 % or EUR 96.0 million above the previous year’s value (1-3Q 2015: EUR 1,617.8 million). This rise is primarily due to the acquisition-related higher business volume at MM Packaging.
At EUR 160.2 million, operating profit was 3.6 % or EUR 5.6 million above the comparative value of the previous year (1-3Q 2015: EUR 154.6 million). A significant increase at MM Packaging was contrasted with a decrease at MM Karton. The Group’s operating margin reached 9.3 % (1-3Q 2015: 9.6 %).
Financial income totaled EUR 2.3 million (1-3Q 2015: EUR 1.4 million), while financial expenses amounted to EUR -4.7 million (1-3Q 2015: EUR -4.7 million).
Profit before tax went up by 6.2 % to EUR 155.9 million, after EUR 146.8 million in the first three quarters of the previous year. Income tax expense amounted to EUR 40.4 million (1-3Q 2015: EUR 38.6 million), resulting in an effective Group tax rate of 25.9 % (1-3Q 2015: 26.3 %).
Thus, profit for the period rose by 6.7 % to EUR 115.5 million (1-3Q 2015: EUR 108.2 million) and earnings per share from EUR 5.36 to EUR 5.76.
more at: http://www.mayr-melnhof.com/en/press/press-releases/press-details/608.html