The group achieved a gross revenue of €328.1 million, an increase of 35.1% on the same period last year (H1 2018: €242.8 million). Net revenue1 increased by 23.4% to €184.8 million (H1 2018: €149.7 million)
EBITDA (earnings before interest, tax, depreciation, amortisation and exceptional charges) was virtually unchanged at €20.0 million (H1 2018: €20.1 million). Profits would have been significantly higher had we not been obliged to absorb a substantial increase in the cost of paper.
Manufacturing output (A4 pages or equivalent) rose by 18.9% to 201.6 billion A4 pages (H1 2018: 169.6 billion).
In the six-month period to 30 June 2019 external net debt2 reduced by €9.6 million to €88.2 million (31 December 2018: €97.8 million) due to €17.7 million of cash inflow from operating activities3 (H1 2018: €12.8 million). This resulted in the group’s debt leverage ratio4 improving to 1.8x (31 December 2018: 2.1x).
Restructuring activities consisted principally of 255 redundancies at Walstead Central Europe, and 100 at Walstead Leykam. The group employs 3,551 staff (30 June 2018: 2,295).
Capital expenditure was €6.1 million (H1 2018: €6.0 million) which included the completion of the installation a 96pp web offset press at Walstead Iberia and the relocation of two web offset presses from Austria to the Czech Republic and Poland.
Walstead expects EBITDA of between €47.0 million and €52.0 million for the full year.
Mark Scanlon, chairman of Walstead, commented:
“During the first half of this year we continued to experience the adverse market conditions which originated in 2018 following a series of substantial price increases imposed by paper manufacturers. Trading in the second half of 2019 will remain challenging but our profits will be significantly higher than in H1 due to the pre-emptive cost-saving initiatives we implemented earlier this year, as well as seasonally higher volumes and revenues.
“One of the major events during the period was the rapid demise (following the rapid ascent) of Circle Media Group and the closure of most of its factories; hopefully, the latter will create a better balance between supply and demand in the various countries it operated in – we will see. Our business model and financial structure are very different to the opaque ones Circle operated. We do not overpay for acquisitions – we synergise, improve and restructure them; we manage our cash very tightly; we maintain serviceable levels of debt; our working capital is positive; and we have the cash headroom to effect restructuring should it become necessary.
“For some of our remaining competitors, insolvency is a real threat. Supply exceeds demand; contracts are hard fought-over and prices are often dropped to win the work. I am confident Walstead will continue to thrive in this maelstrom because of our low-cost base, economies of scale, and sound financial footing.”
1 Net revenue: gross revenue less recharges for paper.
2 External net debt: bank loans, factoring, HP, and leases, less cash balances.
3 Cash inflow from operating activities: EBITDA less exceptional charges and adjustments for working capital.
4 Debt leverage ratio: external net debt divided by forecast FY19 EBITDA.
Currency exchange rate: Euro €1 = GBP £0.885
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