Hadera Paper Ltd. Reports Financial Results for Fiscal Year Ended December 31, 2010
(AMEX:AIP) (the “Company”) today reported financial results for the year
the year (“Fourth Quarter”). The Company, its subsidiaries and associated
companies – are referred to hereinafter as the “Group”.
The Consolidated Data set forth below excludes the results of operation
of the associated companies: Hadera Paper- Printing and Writing Paper Ltd.
(“Hadera Paper Printing”) and Hogla-Kimberly Ltd. (“H-K”).
It should be noted, that following an acquisition transaction, as at
Hadera Paper Printing that was consolidated within the financial statements
of the Company.
Consolidated sales in 2010 amounted to
originating primarily from growth in the packaging paper and recycling sector
in relation to last year.
Consolidated sales in the Fourth Quarter of the year totaled
year, representing growth of approximately 41.6%, originating primarily as a
result of an increase in the sales of the packaging paper and recycling
sector in relation to the corresponding quarter last year and as compared
with Fourth Quarter sales of
of approximately 13.9%.
The operating profit totaled
operating profit in 2010 as compared with the corresponding year is primarily
attributed to the increase in gross profit as a result of the increase in
sales. In 2010 and in 2009 the operating profit included non-recurring
The operating profit in the Fourth Quarter of the year amounted to
corresponding quarter last year and as compared with operating profit of
profit this quarter is primarily attributed to the sharp rise in gross profit
of paper and recycling sector, as a result of the increase in sales and the
manufacturing efficiency of the sector as a result of the operation of
The net profit attributed to the Company’s shareholders in 2010 amounted
2009, representing an increase of 10.4%. The net profit, net of non-recurring
revenues and expenditures during the Reported Period, amounted to
non-recurring revenues and expenditures in 2009 that amounted to
The net profit attributed to the Company’s shareholders during the
Reported Period was affected by the improvement in the operating margin of
most Group companies in
brought about an improvement in the operating profit.
Basic earnings per share amounted to
share) in 2010, as compared with basic earnings per share of
The exchange rate of the NIS in relation to the dollar was revaluated
during 2010 by approximately 6.0%, as compared with a revaluation of
approximately 0.7% last year (the average exchange rate of the NIS vis-a-vis
the dollar was revaluated in 2010 by a rate of approximately 5.1% in relation
to last year). The changes in exchange rates, affected the results of the
various sectors, although the Group’s business portfolio, including the
investee companies, is practically at equilibrium in terms of foreign
currency and consequently, the exposure of the group to sharp fluctuations in
currency exchange rates is low.
The inflation rate in 2010 amounted to 2.7%, as compared with an
inflation rate of 3.9% in 2009.
In the global packaging paper market, the Company estimates that as a
result of the continuing rise in global pulp prices during the Reported
Period, the demand for recycled packaging paper has increased, as an
alternative to virgin packaging paper. The trend of rising prices of recycled
products in the global packaging paper market continued consistently
throughout the Reported Period, at an average rate of approximately 28%
(according to publications by PPI Germany), and grew more moderate only
toward the end of 2010 until its stabilization.
The Group manages a wide and diverse portfolio of companies and
businesses focused on consumer goods and basic commodities. As part of the
trend of consumption in the Israeli economy during the Reported Period, this
trend led to an increase in demand at most Group companies for a wide range
of products, while continuing to place an emphasis on the implementation of
efficiency and cost-cutting measures across all sectors of operation.
The aforementioned revaluation of the NIS in relation to the average
dollar and the euro, in relation to last year, by approximately 5.1% and
9.4%, respectively, led to savings in terms of inputs and imported products
denominated in dollars or euro, in the principal sectors of operation of the
Company, whose prices track import prices in the said currencies. As a result
of the said revaluation, the relative price of natural gas denominated in
dollars, decreased by approximately 6% in relation to last year and also
contributed to savings. Moreover, the price of electricity also decreased by
approximately 10% in 2010, in relation to last year. These savings were
partially offset by the rising prices of water during the year, by an average
rate of 42%, along with the sharp rise in the price of fibers by
approximately 43%, in relation to last year.
Net financial expenses amounted to
primarily as a result of the growth in financial expenses on account of
long-term liabilities, that increased by approximately
relation to last year, mostly due to the cost of financing Series 3 and 4,
whose discounting of financing costs for Machine 8 ended at the end of May,
coupled with the issuing of bond series 5 (new series) in May. Moreover, an
increase was recorded in financial expenses as a result of long-term loans
assumed by a subsidiary for financing an investment in a corrugator.
The Company’s share in the earnings of associated companies totaled
The following principal changes were recorded in the Company’s share in
the earnings of associated companies, in relation to the corresponding period
- The Company's share in the net profit of Hadera Paper Printing (49.9%) in 2010 amounted to NIS 11.1 million as compared with NIS 14.1 million in 2009, a decrease of NIS 3.0 million. The decrease in the profit Originated primarily from the decrease in the operating profit of Hadera Paper Printing, that decreased from NIS 40.5 million last year, to NIS 31.1 million this year. The decrease in operating profit in 2010 originated primarily from the sharp rise in the prices of raw materials in relation to last year, despite measures to raise prices in the course of the year and the improved gross margin of part of the product range. The decrease in net income was also affected by the growth in tax expenditures in the amount of NIS 6.7 million in 2010, as compared with last year, primarily as a result of recording tax revenues of approximately NIS 6 million last year as a result of the change in the tax rate, that were offset as a result of the reduction in financial expenses in the amount of NIS 9.7 million. - The Company's share in the net profit of H-K in Israel (49.9%) in 2010 amount to NIS 75.0 million as compared with NIS 83.0 million in 2009. The decrease in the sum of NIS 8.0 million, originated primarily from the decrease in operating profit that fell from NIS 210.0 million to NIS 193.8 million this year. The decrease in the operating profit is Primarily attributed to the erosion of the selling prices in some sectors of operation, coupled with the rise in the prices of some principal inputs at the company, that were offset by far-reaching efficiency measures that were implemented across the company, continuing savings in purchasing and the strengthening of the company brands, led to a reduction in the erosion of earnings in 2010. - The Company's share in the losses of KCTR Turkey (49.9%) in 2010, amounted to NIS 2.7 million, as compared with NIS 7.6 million in 2009, representing a decrease of NIS 4.9 million. This reduction in loss, despite the slight decrease in the volumes of operation, is primarily attributed to the sale of the PEDO brand to a local chain, that generated non-recurring revenues of NIS 3.1 million in 2010, that brought about the continuing reduction in the net loss from NIS 15.1 million last year, to NIS 5.4 million in 2010. In addition, the loss was reduced as a result of recording of financial revenues from the valuation of operational balances.
The Company also announced that the Board of Directors has approved the
convening of an annual general shareholders meeting to discuss the financial
reports and management discussion for 2010, and to approve, the election of
directors (other than external directors), the nomination of the auditing
CPA’s for 2011 and the approval of a lease agreement between the Company and
Clal PV Projects Ltd. (a private company held and indirectly controlled by
Clal Industries and Investments Ltd., the Company’s controlling shareholder)
for the Company’s leasing roof area to Clal P.V. for construction of
installations for the production of electricity using photovoltaic
technology. At such time as the Company fixes the record date and meeting
date for the shareholders meeting, it will distribute a proxy statement
describing the proposals to be considered at the meeting.
This report contains various forward-looking statements based upon the
Board of Directors’ present expectations and estimates regarding the
operations and plans of the Group and its business environment. The Company
does not guarantee that the future results of operations will coincide with
the forward-looking statements and these may in fact differ considerably from
the present forecasts as a result of factors that may change in the future,
such as changes in costs and market conditions, failure to achieve projected
goals, failure to achieve anticipated efficiencies and other factors which
lie outside the control of the Company as well as certain other risks
detailed from time to time in the Company’s filings with the Securities and
Exchange Commission. The Company undertakes no obligation for publicly
updating the said forward-looking statements, regardless of whether these
updates originate from new information, future events or any other reason.
Hadera PAPER LTD. SUMMARY OF RESULTS (AUDITED) except per share amounts NIS IN THOUSANDS (1) 2010 2009 Net sales 1,121,008 891,995 Net earnings attributed to the Company's shareholders 100,728 91,230 Basic net earnings per share attributed to the Company's 19.84 18.03 shareholders Fully diluted earnings per share attributed to the 19.68 18.03 Company's shareholders
(1) The representative exchange rate at
Contact: Yael Nevo, Adv. Corporate Secretary and Chief of Legal Department Hadera Paper Ltd. Group Yaeln@hadera-paper.co.il Tel:+972-4-6349408
SOURCE Hadera Paper Ltd