The company lifted its profit margin in the second quarter of 2015 and continued to see progress in its American markets, but its European business was marked by ‘intensifying price competition’.
Competitiveness & profitability
Ulrik Kolding Hartvig, CEO, Hartmann, said the firm implemented a number of efficiency improvement measures in Europe as well as the factory closure proposal to strengthen its competitiveness and profitability.
It will now transfer its volume to other factories, which are currently being expanded.
“Overall, our business generated good results in Q2, despite intensifying price competition on the European markets,” he said.
“We continued to see progress on the American markets, while developments in Europe underline a need to enhance efficiency.”
Hartvig said it moderately increased its sales of egg packaging last year, but intensifying price competition had an adverse impact on the average selling price.
“Generally, revenue from the sale of moulded-fibre packaging remained stable, and the change in our total European revenue was attributable to lower contributions from our other European activities," he added.
“The efficiency improvement measures implemented had a modest effect in 2015. If the German factory is closed down in Q2 2016, the efficiency improvement measures will take full effect in 2017.”
Raw materialsfor production
Hartmann is dependent on the purchase prices of raw materials it uses for production and it is exposed to fluctuations in the purchase price of recycled paper and energy (electricity and gas).
“We regularly sign fixed-price agreements with energy suppliers, typically for six or 12 months, covering a substantial part of our energy consumption. However, it is not possible to sign fixed-price agreements with energy suppliers in all the countries in which we operate,” said Hartvig.
The reporting segments are: Europe comprising the production and sale of moulded-fibre packaging.The products are manufactured at factories in Europe (including Israel) and are primarily sold to egg producers, egg packing businesses, retail chains and buyers of industrial packaging.
The segment also comprises sale of machinery for production of moulded fibre packaging and a combined heat and power plant in Tønder, Denmark.
The Americas market comprises the production and sale of moulded-fibre packaging. The products are primarily manufactured at the North American and South American factories and sold to egg and fruit producers, egg and fruit packing businesses and retail chains.
Hartmann acquired Lactosan Sanovo Holding (‘Sanovo Greenpack’) in South America, last year, which is a producer of moulded-fibre packaging for eggs and fruit with about 600 employees and four production facilities in Brazil and Argentina.
It is expanding its business volume significantly through its presence in growth markets in South America, strengthening the group’s global position within production and sale of moulded-fibre egg packaging.