Net sales for the fourth quarter 2014 were $1.4 billion, an increase of 5.5% over the same period in 2013, which was driven by the Brown Printing acquisition. Fourth quarter 2014 Adjusted EBITDA was $183 million compared to $198 million for the same period in 2013, and Adjusted EBITDA margin was 12.8% compared to 14.7%. The Adjusted EBITDA margin variance primarily reflects the impacts of ongoing volume and pricing pressures, and the margin dilution impact of the Brown Printing acquisition, which has a historically lower margin profile. For full-year 2014, net sales were $4.9 billion versus net sales of $4.8 billion for the previous year. Full-year 2014 Adjusted EBITDA was $543 million compared to $577 million for fiscal 2013, and Adjusted EBITDA margin was 11.2% compared to 12.0% for the previous year. Free Cash Flow was $154 million compared to $292 million for the previous year. The variance in Free Cash Flow was primarily due to an estimated $90 million one-time benefit in 2013 from the restoration of normalized working capital levels following the Vertis acquisition. Also contributing to the variance was increased working capital, including a working capital increase from the Brown Printing acquisition and lower Adjusted EBITDA.
Sun Chemical will implement surcharges affecting its solvent liquid inks in Europe, effective 1 April 2020.
The current situation is causing considerable pressure on the supply chain of alcohols – in particular, ethanol. With supply already limited in the second half of 2019 due to a bad crop of raw materials increasing the demand for fuel ethanol, the coronavirus (COVID-19) has caused further increased demand for pharmaceutical and sanitized products, with governments considering allocation measures. While availability is reducing globally, prices are increasing quickly.
In order to secure its supplies for the coming months, Sun Chemical has accepted higher prices to comply with current market conditions. The risk always exists that governments may seize the products for health emergency reasons – a situation that is beyond Sun Chemical’s control.
As from 1 April 2020, a solvent surcharge will be applied to Sun Chemical’s ink and varnish prices. Surcharges will vary depending on product types. Sun Chemical will communicate specific increases directly with its customers.
As a leading ink supplier, Sun Chemical is working hard to mitigate rising costs by implementing internal improvement programs and by maintaining very close communication with its suppliers and industry associations to ensure it is fully aligned to the latest procurement situation. The surcharges will last until the situation normalises.
“The pressure on the alcohol supply chain is causing an abrupt rise in raw material costs and unfortunately requires us to increase customer prices,” said Nicolas Bétin, Director Product Strategy EMEA, Sun Chemical. “We will continue to work with our supply chain partners to manage and minimize the impact on our customers.”