Hadera Paper Ltd. Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2009
Published In: Business, Israel 
Monday, August 10, 2009 3:36 AM
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HADERA, Israel, August 10 /PRNewswire-FirstCall/ -- Hadera Paper Ltd.
(AMEX:AIP) (the "Company" or "Hadera Paper") today reported financial results
for the second quarter and first six months ended June 30, 2009. The Company,
its subsidiaries and associated companies, is referred to hereinafter as the
"Group".

Since the Company's share in the earnings of associated companies
constitutes a material component in the Company's statement of income
(primarily on account of its share in the earnings of Mondi Hadera Paper Ltd.
("Mondi Hadera") and Hogla-Kimberly Ltd. ("H-K"), before the presentation of
the consolidated data below, the aggregate data which include the results of
all the companies in the Hadera Paper Group (including the associated
companies whose results appear in the financial statements under "earnings
from associated companies") is being presented, without considering the rate
of holding therein and net of mutual sales.

Aggregate sales during the reported period amounted to NIS 1,618.8
million, similar to the level of aggregate sales last year.

Aggregate sales in the second quarter this year amounted to NIS 788.8
million, as compared with NIS 771.0 million in the corresponding period last
year, and as compared with NIS 830.0 million in the first quarter of the year.

Aggregate operating profit totaled NIS 118.0 million during the reported
period, as compared with NIS 111.3 million in the corresponding period last
year.

Aggregate operating profit totaled NIS 54.1 million in the second quarter
of the year, as compared with NIS 51.5 million in the corresponding quarter
last year, and as compared with NIS 63.9 million in the first quarter of the
year.

The Consolidated Data set forth below excluding the results of operation
of the associated companies: Mondi Hadera, H-K. Consolidated Data include the
sales turnover of Carmel Containers Systems Ltd. ("Carmel") and Frenkel- C.D.
Ltd. ("Frenkel- C.D.") that were consolidated as of September 2008, as a
result of the fact that the holding rate in Carmel has increased from 36.2%
to 89.3%, and at Frenkel C.D., indirectly, from 37.93% to 52.72%.

Commencing January 1, 2009, the Company applies IFRS 8, "Operating
Segments", and has accordingly recognized the packaging products and board
segment, which includes the operations of Carmel and Frenkel C.D., as a
separate segment. The associated companies H-K and Mondi Hadera were also
recognized as independent segments. For further details, see page 4 below.

Consolidated sales in the reported period amounted to NIS 434.0 million,
as compared to NIS 275.8 million in the corresponding period last year,
representing an increase which was due mainly to the first-time consolidation
of the data of Carmel and Frenkel C.D. in the reported period, in the amount
of approximately NIS 240.1 million.

Consolidated sales in the second quarter, amounted to NIS 204.1 million,
as compared with NIS 133.3 million in the corresponding quarter last year.

Operating profit totaled NIS 13.9 million during the reported period, as
compared with NIS 30.1 million in the corresponding period last year. The
decrease in the operating profits originated from the erosion of selling
prices of packaging paper and recycling, the impact of a certain slowdown in
operations at some of the companies as a result of the global crisis and its
local repercussions, that was offset by the recording of non-recurring
revenues on account of a unilateral dividend.

Operating loss amounted to NIS 4.6 million in the second quarter of the
year, as compared with operating profit of NIS 12.6 million in the
corresponding quarter last year.

Net profit attributed to the Company's shareholders in amounted to NIS
34.7 million in the reported period, as compared with net profit of NIS 39.3
million in the corresponding period last year, and was affected by the
improvement in operating profitability at some of the groups companies in
Israel and in Turkey, by the recording of earnings as a result of the
distribution of a unilateral dividend on account of the application of a
preferred share by an associated company, and by a reduction in the Company's
share in the losses on account of the operations in Turkey (KCTR).

The net profit for the second quarter this year amounted to NIS 15.6
million, as compared with a net profit of NIS 18.0 million in the
corresponding quarter last year.

Basic earnings per share amounted to NIS 6.86 per share ($1.75 per share)
in the reported period, as compared with basic earnings per share of NIS 7.77
per share ($2.32 per share) in the corresponding period last year.

Basic earnings per share amounted to NIS 3.09 per share in the second
quarter ($0.79 per share), as compared with earnings of NIS 3.56 per share
($1.06 per share) in the corresponding quarter last year.

The inflation rate during the reported period amounted to 2.1%, as
compared with an inflation rate of 2.3% in the corresponding period last year.

The US dollar exchange rate was devaluated by 3.1% during the reporting
period, in relation to a revaluation of approximately 12.8% during the
corresponding period last year.

Mr. Avi Brener, Chief Executive Officer of the Company, said that "the
Group manages a wide and relatively diverse portfolio of companies and
businesses. This fact is instrumental in dealing with the local and global
crisis. The Group's financial stability, coupled with its efficiency in
international terms, in terms of its production lines, energy systems and
supply chains, in conjunction with its diverse portfolio consisting primarily
of basic consumer goods, are all enabling the Company to contend with a
difficult and challenging business environment, while preserving its
aggregate turnover and while incurring only a limited erosion of the net
profit. Alongside the said global financial crisis, the Israeli economy
experienced significant fluctuations in foreign currency exchange rates
vis-a-vis the NIS, during the reported period. The Company's business
portfolio, including its associated companies, is balanced in terms of
foreign currency and the level of the Company's exposure to sharp
fluctuations in currency rates is therefore low. The decreasing trend in the
prices of inputs such as fibers, chemicals and commodities as a result of the
global crisis, moderated somewhat during the reported period. This trend
allowed for a partial compensation for the slowdown in operations, in both
local and export markets. These savings were partially offset as a result of
the rising water prices during the reported period. The devaluation of the
NIS in relation to the dollar and to the euro, had a negative impact on the
Company in terms of the imported inputs, while on the other hand, serving to
improve the selling prices that previously eroded, in the Company's main
sectors of operation, whose prices are in line with import prices, in US
dollars. In facing the global and local economic crisis, the Group managed to
align its assets in advance in order to correctly contend, in a focused
manner, with the sharp change in the business environment. The Group was
quick to formulate, an aggressive program for efficiency and savings in
purchasing for all its companies. The plan for company growth and improving
profitability is based on business opportunities in the core sectors in
Israel and worldwide and on empowering company operations in terms of
development and innovation in the various business sectors, so as to generate
new products that will provide a distinct added value for both the businesses
and the consumer. The Group also operated in order to intensively manage, in
a controlled manner, the operating working capital, while carefully
monitoring trade receivables and risk management".

In the reported period, the implementation of the new recycled packaging
paper manufacturing network, is progressing as planned and the construction
of the machine's building is advancing in 2009 at the Hadera site, along with
installation of the equipment. The new production lines are scheduled to
begin operating at full capacity in early 2010, after a startup of several
months.

The financial expenses during the reported period amounted to NIS 10.0
million, as compared with NIS 11.1 million in the corresponding period last
year.

The Company's share in the earnings of associated companies totaled NIS
34.9 million during the reported period, as compared with NIS 25.8 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 Paper
(49.9%) decreased by NIS 1.9 million. The decrease in profits
originated primarily from the decrease in the operating profit of
Mondi, that fell from NIS 17.7 million last year to NIS 15.9 million
this year, primarily as a result of the erosion of prices due to
imports at dumping prices. The net profit also decreased as a result
of an increase in financial expenses during the reported period in
relation to last year, primarily on account of the impact of the
devaluation of the NIS against the US dollar.

- The Company's share in the net earnings of Hogla-Kimberly
Israel (49.9%) increased by NIS 6.4 million. Hogla's operating profit
grew from NIS 85.1 million to NIS 102.3 million this year. The improved
operating profit originated from a quantitative increase in sales,
improved selling prices in some of the sectors of operation, the
continuing trend of raising the proportion of certain premium products
out of the products basket, while innovating products and empowering
the Company's brands, a decrease in the prices of certain company
inputs in view of the erosion of global commodity prices, continuing
efficiency measures across the Company and growing savings in
procurement that also contributed significantly to the profit.

- The Company's share in the losses of KCTR Turkey (49.9%)
decreased by NIS 3.6 million. The significant decrease in the loss is
attributed primarily to the growth in the volumes of operation that led
to the continued reduction in the operating loss, from NIS 20.9 million
last year to approximately NIS 14.1 million this year. Moreover, due to
the increase in the shareholders' equity of KCTR through a financial
influx from Hogla-Kimberly last year and during the reported period, the
bank loans were repaid, while reducing the financial expenses, thereby
leading to an additional reduction in the net loss.



As aforementioned, according to IFRS 8, the Company has identified five
segments and fields of operation, as follows: (1) The paper and recycling
segment - generates revenue from the sale of paper products to paper
manufacturing companies as well as from the recycling of paper and cardboard.
(2) The office supplies marketing segment - generates revenue from the sale
of office supplies to customers. (3) The packaging and cardboard products
segment - generates revenue from the sale of packaging and cardboard products
to customers. (4) The Hogla-Kimberly segment - an associated company that
generates revenue from the manufacture and marketing of household paper
products, hygiene products, disposable diapers and complementary kitchen
products, in Israel and in Turkey. (5) The Mondi Hadera Paper segment - an
associated company that generates revenue from the manufacture and marketing
of fine paper.

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
(UNAUDITED)
except per share amounts

Six months ended June 30,

NIS IN THOUSANDS (1)

2009 2008

Net sales 434,034 275,786

Net earnings attributed
to the Company's
shareholders 34,716 39,302

Basic net earnings per
share attributed to the
Company's shareholders 6.86 7.77

Fully diluted earnings
per share attributed to
the Company's shareholders 6.86 7.76


Three months ended June 30,

NIS IN THOUSANDS (1)

2009 2008

Net sales 204,153 133,267

Net earnings attributed
to the Company's
shareholders 15,637 18,032

Basic net earnings per
share attributed to the
Company's shareholders 3.09 3.56

Fully diluted earnings
per share attributed to
the Company's shareholders 3.09 3.55

(1) The representative exchange rate at June 30, 2009 was N.I.S.
3.919=$1.00.


Contact:
Lea Katz, Adv.
Corporate Secretary and Chief of Legal Department
Hadera Paper Ltd. Group
Tel:+972-4-6349408
Leak@hadera-paper.co.il




SOURCE Hadera Paper Ltd


 
Monday, August 10, 2009 3:36 AM

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