Arctic Paper forecasts approx. PLN 360 mln annual CAPEX for 2024

"The CAPEX this year is indeed substantial, this was due on the one hand to the fact that we had and still have a good balance sheet situation, which was due to the fact that the economic perturbations not only in Europe but also worldwide gave us the opportunity to get better prices by negotiating further investment projects. (...) I think we will end the annual CAPEX at around PLN 360 million," the CEO Michal Jarczynski said.

"As for the following years, it will be a lower amount of about PLN 220-230 million," the company's CFO Katarzyna Wojtkowiak added.

In addition, the CEO said that he plans to prepare a dividend proposal for 2024, which will be shown in February next year.

Jarczynski also pointed out that the situation in the paper market remains difficult.

"The expected recovery is delayed all the time. (...) Our sales, which have so far been highest in the German market, are having some turbulence due to the problems of this market," the CEO said.

"We see (...) that customers on the German market have reduced their orders by 25 percent or even 30 percent year on year," he added.

The CEO continued that from the company's perspective, it can be seen that customers in this market are experiencing financial problems, but this did not affect the financial results of the third quarter.

Furthermore, he pointed out that there is an oversupply in the paper market, implying a year-on-year decline in demand of around 25-30 percent.

"This is due to the fact that there has been a fairly strong conversion of, for example, marketing expenditure from printed materials (...) to advertising in the digital world," the CEO assessed.

Jarczynski also indicated that the company wants to take advantage of the situation on the raw material market, where cellulose is currently cheaper, to start a more aggressive sales policy, mainly on the German, French, British and Polish markets.

"The aim of this is to increase capacity utilisation to at least 75 percent and even 80 percent. If we are talking about 2025, this level should be between 80-85 percent," the CEO said.

The company's sales outside Europe are made in low volumes, accounting for about 1 percent, due to the high freight costs that occur globally.

"We try to export outside Europe only the highest-margin paper (...), as the margins achieved there, (...) are high enough to give us the ability to cover the increased manufacturing costs," CEO Jarczynski said.

"We are slowly increasing our sales in the US market - we don't have our own business there, but contracts with several local distributors. We are trying to target only the East Coast there because of the high logistics costs inside the US," he added.

Jarczynski stressed that the US market is a prospective market for the company, where 300 to 1,000 tonnes of high-margin products can be placed on a monthly basis over a 1-2 year horizon.

He added that a risk factor in this case could be the ideas of US President-elect Donald Trump in the context of introducing tariffs on products also from Europe.

"Certain discussions by the president-elect about introducing tariffs of up to 30-60 percent on products also from Europe, not only China, could make it difficult to export to the United States. (...) In our case, we should not expect any special perturbations related to this," the CEO said.

mcb/ ao/