UPM Paper ENA will simplify its organisational structure. The new model consists of two strategic business units (SBUs) with revised customer focus, product ownership and asset allocation. The new SBUs are called News & Retail (N&R) and Magazines, Merchants & Office (MM&O). The following UPM Paper ENA Management Team appointments are valid as of 15 September: Anu Ahola has been appointed Senior Vice President, News & Retail. Ruud van den Berg has been appointed Senior Vice President, Magazines, Merchants & Office. Christian Thaler (Vice President, Business Control), Olli Heikkilä (Vice President, Business Processes and Solutions) and Daniel Schwab (Vice President, Human Resources) will continue in their current roles. All the management team members report to Winfried Schaur, Executive Vice President, UPM Paper ENA.
Jeff Schoen, President and Chief Executive Officer, stated, “Despite intense competitive pressures, year-over-year adjusted EBITDA increased 2%, the adjusted EBITDA margin increased from 19.4% to 20.3%, and Cost of sales, exclusive of depreciation, decreased 4.4% while Sales declined only 2.3%. In other words, improved cash margins and cost cutting helped offset the impact of the decline in sales.
On the whole, the fourth quarter of 2016 was characterized by a continuation of trends previously noted in the second and third quarters, principally competitive pressures that did not abate. As discussed in the third quarter earnings calls, Orchids has been active in several retailers’ private label bids as part of our plan to increase breadth and depth in Orchids customer base. As previously announced, Orchids recently won private label bids and branded business that, all things being equal, are expected to increase sales volumes of converted products by over 35% in the second half of 2017. These developments lead us to remain optimistic about our ability to achieve our goal to grow Orchids’ annual earnings per share (EPS) to within the approximate range of $2.50 to $3.50. We estimate that, based on current trends, our running rate EPS figure will enter this range by early 2018 and be toward the higher end of this range by the end of 2018.
I am also pleased that, as previously announced, our bankers agreed to relax our covenant restrictions for a temporary period and increase our debt availability to allow us to bridge the next few quarters to our greater level of operations, inclusive of the completion of the capacity expansion in Barnwell, South Carolina. Regarding this project, the two converting lines are ramping-up to meet the new demand, and the paper mill is still scheduled for completion around the end of the first quarter of 2017, with the major ramp-up of the paper mill occurring in second quarter of 2017. The total projected expenditure for the facility remains at $150 million of which approximately $119.2 million had been expended as of December 31, 2016.”
Fourth Quarter 2016, relative to Fourth Quarter 2015
Net sales decreased $4.2 million, or 10%, primarily due to heavy promotional activity by brand-competitors and other competitive pressures. Parent roll sales increased by $0.7 million while converted product sales decreased by $4.9 million. Of the $4.9 million decrease, $3.7 million was attributable to the decreased number of tons sold, and $1.2 million was due to a decline in the average price per ton that principally reflects the mix of customers buying the products.
Cost of sales, exclusive of depreciation, decreased $2.1 million, or 7%. The decrease in sales volumes, contributed to the relative decrease in Cost of sales, as did spreading fixed overhead over a lower volume and approximately $0.6 million in additional costs for our Mexicali operations, which reflected increased costs for fiber, electricity, and overhead that were only partially offset by favorable foreign exchange impacts upon peso-denominated costs.
Interest expense increased $0.3 million, or 112%, due principally to increased debt levels and financial leverage.
Other expenses increased $0.5 million principally due to the recognition of a $0.4 million foreign exchange loss on the valuation of VAT and income tax receivables. As the balances of these receivables have been diminished, this economic loss is not expected to be reoccurring to this extent.
more detail at: http://www.prnewswire.com/news-releases/orchids-paper-products-company-announces-2016-fourth-quarter-and-year-to-date-results-declares-dividend-of-035-per-share-300407659.html