Corticeira Amorim sees 28.9% drop in half-year profits

Corticeira Amorim closed the first half of the year with a drop in sales and profits. Sales up to June remain above the 500 million euro mark, but fell 7.1% compared to the first six months of last year, to 500.736 million euros, the company announced this Monday. In profits, the drop was greater, in the order of 28.9%, to 36.5 million.

“All Business Units recorded a reduction in sales, generally resulting from lower levels of activity, except Amorim Cork Composites, whose sales amounted to 60 million euros, a growth of 3.2% compared to the first half of 2023”, indicates the company in the statement presenting the results sent to CMVM – Securities Market Commission.

The world’s leading group in the cork sector, refers to “the adverse market context, particularly with regard to volume performance” as “penalizing Amorim Cork’s sales, which recorded a decrease of 7.1% compared to the same period last year”.

Regarding the drop in profits, the group refers to the inclusion of non-recurring costs (5.3 million euros), as well as the increase in financial charges as a result of the higher level of debt.

Or EBITDA (lincome before profits, taxes, depreciation and amortization) consolidated revenue amounted to €94.4 million, down from €103.8 million in the first half of 2023, reflecting the pressure from “higher consumption prices for cork raw materials” and the “effect of operational deleveraging”. However, the statement says “lower costs for non-cork raw materials, greater industrial efficiencies and improvements in mix of product made it possible to partially offset these effects, supporting the consolidated EBITDA margin at 18.9% (19.2% in the same half year).

Less debt and new business model

At the end of June, net interest-bearing debt amounted to 237.5 million euros. “Despite the increase in working capital requirements (30 million), the payment of dividends (26.6 million) and the increase in investment in fixed assets (22.2 million), it was possible to reduce net debt by 3.4 million euros compared to the end of December 2023 (240.8 million)”, the statement highlights.

Regarding the change in the organizational model, the company’s management, chaired by António Rios Amorim, states that “the demanding economic context and the intensification of competition have impacted the flooring market in Europe and, consequently, penalized Amorim Cork Flooring’s activity in recent years. In view of this situation and given the lack of signs of recovery in this industry, a restructuring process was initiated in May of this year that involved adjusting its production and support structure to the current size of sales, in order to reduce operational losses and increase efficiency through industrial optimization”.

The process includes commercial optimization measures and the consequent adjustment of the distribution model, which foresees the closure or optimization of its own distribution companies abroad, it is necessary. Corticeira Amorim believes that by offering applications for different sectors in the “non-cork” business, the sharing of means and resources, as well as the exploitation of installed production capacity and technologies, will bring greater efficiency and effectiveness to operations.