American Israeli Paper Mills Ltd.
Hadera, Israel, 12 May 2008 -- /PRNewswire/ -- American Israeli Paper Mills Ltd. (AMEX:AIP) (AIPM) today reported its financial results for the first quarter ended 31 March 2008.
Because the company's share in the earnings of associated companies constitutes a material component in the company's statement of income (primarily because of its share in the earnings of Mondi Hadera Paper Ltd. [Mondi Hadera and Hogla-Kimberly Ltd. (H-K)]), the consolidated data, which include the results of all the companies in the AIPM Group (including the associated companies), is being presented without considering the rate of holding therein and net of mutual sales.
As a result of the company's transition to reporting according to International Financial Reporting Standards (IFRS), the figures for the first quarter, and the comparison figures for the corresponding quarter last year and for the year ended 31 December 2007, are in accordance with IFRS.
Aggregate sales amounted to NIS 847.6 million during the first quarter, as compared with NIS 752.7 million in the corresponding period last year and NIS 826.1 million in the fourth quarter of 2007.
The aggregate operating profit amounted to NIS 59.8 million during the first quarter, as compared with NIS 28.3 million in the corresponding period last year and NIS 58.3 million in the fourth quarter of 2007. The significant improvement in the aggregate operating profit was primarily due to the improved performance in Israel, coupled with the continued trend of lowering the operating loss in Turkey.
The consolidated data set forth below excludes the results of operation of the associated companies: Mondi Hadera, H-K, and Carmel Containers Systems Ltd.
Consolidated sales during the first quarter amounted to NIS 142.5 million, as compared with NIS 136.6 million in the corresponding period last year and NIS 154.8 million in the fourth quarter of 2007.
Operating profit totaled NIS 17.5 million during the first quarter, as compared with NIS 16.5 million in the corresponding period last year, representing growth of 5.7%.
Net profit amounted to NIS 21.3 million during the first quarter, as compared with a loss of NIS (-3.9) million in the corresponding period last year.
The net profit in the first quarter was affected by the improvement in the Group's profitability in Israel, coupled with the NIS 18.4 million reduction of the company's share in the losses of Kimberly Clark Turkey (KCTR), a wholly-owned H-K subsidiary,from a share in the loss of NIS 22.8 million last year to NIS 4.4 million this year.
Basic earnings per share amounted to NIS 4.20 per share (USD 1.18 per share) in the first quarter, as compared with NIS -0.96 per share (USD -0.23 per share) in the corresponding period last year.
Avi Brener, chief executive officer of the company, said "the global trends in the paper sector -- primarily in Europe -- are affecting the group companies that are active in Israel. The reduced gaps between the supply and the demand for various types of paper, especially in Europe, in light of the relatively high growth rates in developing markets, especially Asia, are increasing the demand for paper and are leading to a continued increase in pulp prices in Europe as well as other input prices, such as chemicals, while also leading to higher prices for the different types of paper. These trends enable the Group companies to continue raising prices in most paper and paper products areas, thereby compensating for the high input prices, while improving profitability."
In the first quarter, KCTR continued to implement its strategic plan formulated together with its international partner, Kimberly Clark. The plan is intended to introduce Kimberly Clark's global brands to Turkey, on the basis of local manufacturing. If fully implemented, KCTR will grow to become a dominant and profitable company by 2015, with annual sales in the area of USD 300 million.
The financial expenses during the first quarter amounted to NIS 6.8 million, as compared with NIS 6.6 million in the corresponding period last year.
The company's share in the earnings (losses) of associated companies totaled NIS 14.6 million during the first quarter, as compared with a loss of NIS (10.5) million in the corresponding period last year.
The following principal changes were recorded in the company's share in the earnings of associated companies, in relation to the corresponding period last year:
-- The company's share in the net profit of Mondi Hadera (49.9%) increased by approximately NIS 4.3 million. Most of the change in profit originated from Mondi's improved profitability, primarily as a result of the higher selling prices that led to an improved gross margin. This improvement was the result of the recovery in the European paper industry. The net profit also increased as a result of the decrease in financial expenses, primarily on account of the effect of the revaluation of the NIS against the U.S. dollar. -- The company's share in the net profit of H-K (49.9%) increased by approximately NIS 2.1 million. The improved operating profit originated from a quantitative increase in sales, improved selling prices net of the effet of higher raw material prices and the continuing trend of raising the proportion of some of the premium products out of the products basket. -- The company's share in the losses of KCTR (formerly Ovisan) (49.9%) decreased by NIS 18.4 million. The significant decrease in the loss is attributed to the growth in the volumes of operation that led to a significant reduction in the operating loss, from NIS 27 million last year to approximately NIS 11 million this year. In the corresponding period last year, a nonrecurring loss of NIS 6 million was included on account of the termination of trade agreements with distributors due to the transition to distribution by Unilever, of which AIPM's share was approximately NIS 3 million. Moreover, the tax asset that was recorded in previous years in Turkey, in the sum of approximately NIS 12 million was reduced, of which our share is NIS 6.0 million. Moreover, due to the increase in the shareholders' equity of KCTR through a financial influx from Hogla, the bank loans in Turkey were repaid, while significantly reducing the financial expenses, thereby leading to an additional reduction in the net loss. -- The company's share in the net profit of Carmel (36.21%) increased by approximately NIS 0.6 million. The factors that influenced the growth in the company's share in the net profit of Carmel originated inter alia from the improved operating profitability as a result of the improved gross margin as a result of the raising of prices beyond the rise in raw material prices.
As part of the options plan that was approved by the company's board of dDirectors on 14 January 2008, for the allocation of 285,750 option warrants, a sum of 250,500 option warrants was allocated in the first quarter of 2008 to senior employees at the company and at the subsidiaries, to the company's CEO, and to senior employees at associated companies. The rest -- 35,250 of the said option warrants -- were allocated to a trustee as a pool for future granting to senior officers and employees at associated companies, subordinate to the board of directors approval.
In other company news, the board of directors decided that the Annual General Meeting of Shareholders will be held at the registered office of the company on 24 June 2008. If the meeting is postponed, it will be held on 01 July 2008.
AMERICAN ISRAELI PAPER MILLS LTD. SUMMARY OF RESULTS (UNAUDITED) except per share amounts
Three months ended 31 March 2008
* NIS in thousands 2008 2007
Net sales 142,519 136,638 Net earnings 21,270 (3,877) Basic Earnings (losses) per share 4.20 (0.96) Fully diluted earnings (losses) 4.20 (0.96) per share
The representative exchange rate 31 March 2008 was NIS 3.553 = USD 1.00
Source: American Israeli Paper Mills Ltd.
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