October 2, 2022

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The individual carton manufacturer bears the burden of high prices: - Unmatched

The individual carton manufacturer bears the burden of high prices: – Unmatched

Inflation and higher raw material prices put significant pressure on our margins in the fourth quarter, says Thomas Körmendi.

Leading Elopak, one of the world’s largest beverage carton manufacturers. The company has been owned by Johan H. Andresen and family for several decades through the billionth conglomerate Ferd, but last year the cardboard giant was listed on the stock exchange with a current price of NOK 5.4 billion.

On Wednesday, Elopak will present fourth-quarter results. They showed revenue was increasing, but the result fell by more than half in the quarter due to sharp increases in the cost of the materials the group uses to produce its cartons.

Price increases will be passed on to customers.

“Unmatched”

According to Elopak, prices have gone up almost everywhere.

Prices for polymer (the material in the screw cap), aluminum and energy are high. In the quarterly report, the group wrote that input factor costs are squeezing margins and driving price increases for customers.

“The price hike in the industry is unprecedented,” writes Elopak.

Over the past year, the carton manufacturer earned €50 million before taxes. This is down from €60m before taxes the previous year. The turnover increased from 914 million euros to 940 million euros.

– We are pleased with this development in view of the unique raw material situation that has arisen after the 2021 pricing was entered into with customers. However, with the price increases that will be implemented for customers in January 2022, we are seeking to handle costs responsibly and will cover to some extent the increased raw material costs, CEO Cormendi says in a statement in the quarterly report.

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It’s hard to predict the price

Regarding the future outlook, Elopak wrote that fluctuations in commodity prices are expected to continue in the short term. According to the company, it is becoming increasingly difficult to predict future price levels.

Some of this will be reduced by increasing prices to customers, the business model and hedging raw material prices.

With normal levels of activity in the future and current price pressure, Elopak expects an increase in operating costs in line with levels before the Corona pandemic.

“The main priority then will be to closely monitor operating costs and ensure strong cost discipline,” Elopak wrote.

A member of the Andresen family owns about 58% of the Elopak. The company has fallen about 28 percent on the Oslo Stock Exchange since it was listed in June 2021.

Price pressure in Tomara

Elopak is not the only one feeling the price pressure in the world.

On Wednesday, the chief financial officer of mortgage lender Tomra said they had also noticed an increase in rates. They also send it to clients.

So far, it’s been successful in paying customers higher prices, but that’s clearly going to put an overall pressure on Tomra’s margins, Tomra CFO Espen Gundersen says in the company’s quarterly presentation, TDN Direkt writes.

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According to Gundersen, the bulk of the cost pressure stems from a lack of ingredients

In the fourth quarter, Tomra generated a profit before tax of NOK 502 million on sales of NOK 3.05 billion. This is an increase over the same period last year when profit before tax was NOK 443 million on a sales figure of NOK 2.74 billion.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.