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Sonae Industria reports weaker earnings

12.11.2018 − 

Sonae Industria and the joint venture Sonae Arauco both ended the third quarter with a significant decrease in earnings compared with the same stretch last year following mixed trends in the second quarter. Sonae Arauco also booked a sharp fall compared with the second quarter, while Sonae Industria delivered a slight improvement.

According to Sonae Industria’s quarterly report, which was published on 24 October, the fall in Sonae Arauco’s earnings was primarily connected to lengthy stoppages for maintenance at individual European mills, the ramp-up of its two Portuguese mills in Mangualde and Oliveira do Hospital in a more challenging market climate and a renewed decrease in insurance income. By contrast, Sonae Industria battled production problems at a line at its particleboard mill in Lac-Mégantic, Canada as well as higher logistics and energy costs, as it had in the second quarter.

Sonae Industria’s revenues were in line with last year at €57.0m in the third quarter. EBITDA tumbled 17.5% to €8.2m, while recurrent EBITDA slipped 14.9% to €8.6m. The margin based on recurrent EBITDA worsened to 15.0% as a result. Operating income plunged even more by 28.9% to €4.9m. The contribution to earnings from the joint venture, which is based on its stake, decreased 37.1% compared with last year to €2.8m. The joint venture transferred €14.1m to Sonae Industria in the second quarter, primarily because of much higher insurance compensation for its mills in Mangualde and Oliveira do Hospital after fires. The contribution to earnings thus plunged €11.3m between the second and third quarters, about €8m of which was due to insurance compensation and €3.3m to a weaker performance for seasonal and economic reasons. The lower contribution from Sonae Arauco was also the main reason why Sonae Industria saw its pre-tax profits fall to €4.8m and its net profits to €3.7m in the third quarter.

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