Packaging giant SIG has reported 8.6% growth in core revenue (at constant currency) in the first half of its financial year ended 30 June 2020, partly driven by stock-building among customers, retailers and consumers.
The company reported revenue growth across all divisions, with the Americas region seeing a 16.4% increase (at constant currency) followed by EMEA at 7.8% and APAC at 7.0%.
Adjusted EBITDA for the period increased by 5% to €215.7 million, while EBITDA margin declined to 25.1%, from 25.6% in the first half of 2019.
The decline in EBITDA margin has been attributed to the negative impact of the depreciation of key currencies, notably the Brazilian Real, against the Euro.
The company’s adjusted net income remained stable at €79.6 million in the first half of 2020.
Second Quarter Performance
In the second quarter, the company’s core revenue increased by 8.8% to €460.1 million.
Its EMEA division saw a 12.2% growth in revenue as customers and retailers in Europe started restocking after abnormally high demand in March.
Commenting on the company’s performance, Rolf Stangl, CEO of SIG Combibloc, said, “The results for the second quarter are stronger than expected, contributing to a first-half performance which demonstrates the benefits of our broad geographic presence.
“Strong growth in Europe more than compensated for a relatively weak performance in Asia Pacific, where on-the-go consumption has been hit by lockdowns in various countries.”
The company expects to meet its target for the adjusted EBITDA margin and generate significant free cash flow for the full year.
However, it has lowered its growth guidance to a range between 4%-6% from the previous guidance of 6%-8% (at constant currency).
Stangl explained, “While we continue to reap the benefit of new customer wins and filler placements globally, our first-half performance also reflects stock-building by customers, retailers and consumers.
"This is likely to reverse to some extent in the second half and we also expect a reduced year-end rally as customers opt to conserve cash. We are therefore lowering our constant currency core revenue growth forecast.”