Norwegian packaging group Elopak enjoyed a 'strong' operational performance in the first quarter of 2022, reporting revenue growth of 9% compared to the same period last year.
The group's performance was negatively impacted by the ongoing conflict in Ukraine, as well as unprecedented high prices of raw materials.
Elopak Q1 Performance
Revenue during the quarter added up to €243.4 million, and growth was driven by value growth in EMEA and the Americas.
Adjusted EBITDA amounted to €27 million, down from €32 million in the first quarter of 2021, while adjusted EBITDA margin was 11.1%.
According to Elopak, increased raw material prices impacted its quarterly results by approximately €9 million, while total impairment related to assets in Russia and Ukraine was €22.2 million.
Commenting on the war in Ukraine, Elopak CEO Thomas Körmendi said, "We are deeply concerned by the suffering caused as a result of the ongoing conflict in Ukraine, and our overriding priority remains the personal safety and security of our employees in the country. While production remains suspended in Russia, we have resumed some domestic production in Ukraine in support of efforts to maintain supplies of essential goods in the country. We will continue to pay the salaries of our 336 employees in Ukraine and Russia until further notice."
The packaging firm completed the acquisition of the environmentally friendly fibre-based and hygienic packaging group Naturepak on 29 March.
The leverage ratio was 2.9x at the end of the first quarter 2022, following the acquisition and higher raw material costs, the company added.
Other deals include the signing of the Nippon License agreement, which ensures Nippon will use Elopak’s lineup of Pure-Pak packaging for liquid food and beverage products worldwide and introduce them to the Oceania region.
Elsewhere, the signing of the JV agreement in India with GLS in April will provide Elopak access to the high-growth Indian market.
Körmendi stated, "I am very pleased with our strong revenue growth delivered in the quarter. This was primarily driven by our ability to pass through cost increases, in addition to higher volumes in segments in both Europe and Americas. We were however faced with unprecedented high raw material prices and inflationary pressure in the quarter, impacting our margins.
"The inflationary environment will continue to have a negative impact in the second quarter until our recently announced price increases take effect from June. We expect to see recovering margins in the second half of 2022."
New Growth Opportunities
The packaging group says it 'remains committed to its growth strategy, as demonstrated by its pursuit of new opportunities in MENA and India.'
Körmendi explained, "Despite the rough waters in the first quarter, our growth journey continues. With the integration of Naturepak into Elopak financials and continued growth in the MENA region, we expect to strengthen our position and deliver improved margins for the Group in the second half of 2022."
"Our strategic priorities in the near future will be to capitalize on the opportunities coming from the Naturepak integration and a stronger footprint in India, and at the same manage the uncertainties around Russia and Ukraine and raw material prices," he added.