Preliminary forecasts for the fourth quarter of 2018

In accordance with its corporate calendar the Management Board of Grupa Kęty S.A. is publishing its preliminary forecasts of results for the fourth quarter of 2018.

Market demand continues to be strong. In the Extruded Products Segment the average waiting time for orders in the European market has admittedly gone back to typical levels (3-4 weeks) but this is a natural level for the market and one both producers and clients of aluminium profiles find satisfactory. There is still optimism in the market regarding development of the situation next year, translating into the opinion that estimated growth in needs for aluminium profiles in Europe in 2019 will be at least 2%. A similar situation can be seen in the Aluminium Systems Segment. Demand continues to be strong and forecasts for next year indicate stable growth of several percent. The Flexible Packaging Segment is also achieving a few percent growth despite very high production utilisation. As in the case of the other two segments it is estimated that the packaging market will also grow over the next few years. The growth rate for the European packaging market is forecast to be around 2%.

In the fourth quarter estimated growth in sales for each of the Segments is as follows:

  • Extruded Products Segment – an increase of 12%
  • Aluminium Systems Segment – an increase of 15%
  • Flexible Packaging Segment – an increase of 7%

According to estimates by the Management Board, consolidated sales revenue will reach a level of 740 mill. PLN (an increase of 12%), and consolidated operating profit for the quarter, due to margins being maintained at a similar level to last year, will grow to around 58 mill. PLN (+13%). Consolidated  EBITDA (operating profit before depreciation) will grow from 82 mill. PLN last year to 89 mill. PLN (+9%). The balance from financial activities for the quarter (interest costs, exchange rate differences in the valuation of balance sheet items including foreign exchange loans) will be negative and stand at around 6 mill. PLN, (for the fourth quarter of 2017 the balance was -1.2 mill. PLN). In accordance with assumptions for the fourth quarter a deferred tax asset of 13 mill. PLN was created due to running business activities in the economic zone (primarily due to expansion of the Alupol Films company), which resulted in a one-time increase in the net result. Estimated consolidated net profit for the quarter will be around 56 mill. PLN, i.e. 40% higher than that achieved for the same quarter last year. According to estimates, the Group’s net debt at the end of the quarter will amount to around 800 mill. PLN, hence around 14 mill. PLN higher than that at the end of the third quarter of 2018. The increase in the Group’s debt is due to the investments made.

The forecast results for the fourth quarter show that the Group is achieving financial results over and above those planned for 2018. Since the projected difference does not exceed 10%, the Management Board of Grupa Kęty S.A. will not be publishing revisions to the forecast for 2018 published on 1st of February, 2018.

The above forecast is based on the following assumptions.

Q.3,2018 Q.3, 2019 (forecast) Change
average EUR/PLN rate in Q.3 4.23 4.30 +2%
average USD/PLN rate in Q.3 3.59 3.77 +5%
average 3M aluminium price in Q.3 2,119 USD/t 1,983 USD/t -6%