Annual Report - SIG Combibloc

20 Group report
Operating profit (ebita/ebit)
in millions of eur
78
2001
97
2002
48
2003
EBITA
EBIT
In beverage packaging, four major providers remain active: Tetra Pak /Sidel, Krones, khs
and SIG. Of these four, SIG possesses a unique competitive position. While, in terms of
sales, we rank second to Tetra Pak /Sidel, SIG is the only Group capable of offering an infinite
range of systems for beverage cartons and pet bottles as complete solutions under the
same roof.
The materials business of SIG Combibloc is continuously growing. The capacities for
producing cartons and assembling filling machines have both reached their limits.
We have started to expand our production capacities for carton packages. In the machine
sector, the Group is benefiting from being able to exploit capacities across divisions:
SIG Combibloc ordered the first filling machines from SIG Simonazzi in Parma. This ability
of jointly developing and building filling machines is only one of the advantages of our
two-pillar strategy, which we shall exploit more strongly in the future.
The competitive position of SIG Beverages varies, depending on region. Whereas the
division holds a leading position in Central and South America, South Europe and Asia our
competitors are stronger in North and Central Europe; also in North America. SIG Combibloc,
by contrast, achieves almost two thirds of its sales in the European Union. This presents us
with a major opportunity to exploit these complementary regional strengths to extend our
global competitive position.
Business review 2003: SIG Combibloc again outstanding
While our materials and services business again developed robustly over the past business
year, the other activities suffered from the hesitant economic conditions.
Compared to the business year 2002, SIG again grew at Group level. Net sales increased
by 1% to eur 1,896 millions (2002: eur 1,877 millions). At eur 1,861 millions, order intake
was comparable to the level of the previous year (eur 1,873 millions). Expressed in local
currencies, net sales and order intake would have been 4% higher.
The operating profit (ebit) of the Group was significantly impacted by the streamlining
of the Group portfolio in the first half and the not yet satisfactory course of business at
SIG Beverages; it stands at eur 16 millions (2002: eur 62 millions). Extraordinary burdens
totaling eur 49 millions had a marked effect on this year’s ebit. They consist of value
adjustments and restructuring provisions for the activities outside the core business, in
addition to a write-off of the entire capitalized goodwill of SIG Elettric 80. Additionally,
the weak dollar had a negative effect of eur 12 millions on operating profit.
Divestments realized during the business year resulted in a loss of eur 11 millions.
An improved financial result compared to the previous year, plus significantly lower
income tax expenditure stemming from a one-time tax refund, led to a net profit of
eur -20 millions (2002: eur 10 millions).
Despite high levels of investment and the extraordinary adjustments, free cash flow in the
2003 business year was positive but, at eur 32 millions, lay substantially below the figure
for the previous year (2002: eur 89 millions). Hence, by the end of the completed business
year, we were in a position to reduce the net financial debt to further eur 232 millions.
Consequently, our balance sheet indicators have stabilized further. At bbb+, our credit
rating with financial institutions remains unchanged.