Mayr-Melnhof sees slow going in cartonboard price hikes

In annual results published this week that also showed a slide in pre-tax profits, the Austrian group said that cartonboard buyers’ low inventories were making the price rises announced in the first quarter “slow-going in Europe”.

However, operating margins improved to 9.4% from 7.9% in 2008 as a result, the group said, of cutbacks to variable costs and an insurance payout for a fire at one of its German mills in early 2009.

The Vienna-based group said that economic uncertainty meant that demand for folding cartons would remain weak, making the battle for market share “intensify markedly”.

“Permanent price pressure on consumer goods markets affects the cartonboard processing companies, which in turn try to pass on the price pressure to the cartonboard suppliers,” the group said.

“Under these circumstances, the industry-wide cartonboard price increase announced for the first quarter of 2010 is slow-going in Europe, despite the fact that price inflation on the recovered paper markets showed a significant rise.”

The group said that the continuing high demand from Asia was also contributing to pricing pressure in Europe.

Sales for 2009 fell to EUR1.60bn from EUR1.73bn in 2008, while pre-tax profit slid 4.1% to EUR132m.

In its MM Karton cartonboard manufacturing division, sales fell 12.6%, although operating profit shot up by a third after an insurance pay-out on fire damage at the group’s Hirschwang mill in early 2009. The group produced 1,499,000 tonnes of cartonboard in the year, down 1.8%.

In the MM Packaging division, sales dropped 3.8%, while the tonnage of cartonboard converted slipped 3.4% to 630,000 tonnes.

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MAYR-MELNHOF FULL-YEAR 2009 RESULTS
(all figures in EURm)

Overall sales 1,601.5 (2008: 1,731.2)
Operating profit 149.9 (2008: 136.9)
Pre-tax profit 132.4 (2008: 138.0)
Net profit 97.4 (2008: 96.9)

Divisional figures

MM Karton
Sales 766.0 (2008: 876.7)
Operating profit 51.5 (2008: 39.1)

MM Packaging
Sales 952.0 (2008: 990.0)
Operating profit 98.4 (2008: 97.8)

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