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Frigoglass: H1 Net Jumps

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Frigoglass, a Greek drink refrigeration equipment make, said Tuesday its net profit increased 136.9% to EUR14.8 million in the first half of the year, benefiting from a 12.3% decrease in interest expenses and a 16.7% decrease in minorities. The effective tax rate for the period equated to 26.9%.

Consolidated Sales increased 30.0% to EUR236.0 million in the first half of the year, driven by the 36.6% increase at Cool Operations, where growth was driven by Asia / Oceania and Eastern Europe. The top-line trend improved at Glass Operations in Nigeria in the second quarter, reversing the decline in the first quarter, leading to a 2.7% increase in Euro terms for the first half.

Gross Profit increased by 43.0% in the first half of the year to EUR56.2 million, with the respective margin increasing 210 bps to 23.8%. This reflects the impact of positive operating leverage resulting from improving sales, led by Cool Operations, and effective cost management, as the Cost of Goods Sold margin contracted to 76.2% in the first half of this year.

“Whilst we remain positive on the near- and long-term prospects for Frigoglass, we are mindful of the volatile economic environment and fragile economic recovery across our geographies,” the company said in a statement.

Operating Profit (EBIT) increased 65.0% in the first half of the year, to EUR29.8 million, reflecting the benefit of positive operating leverage owing to strong sales momentum and effective cost management. The Total Operating Expenses margin declined by 140 bps to 11.6% in the first half, and this was achieved despite the 36.0% increase in R&D expenses, evidencing our commitment to reinvesting in organic growth platforms. Therefore, the EBIT margin improved by 270 bps to 12.6% in the first half of this year. Last year, EBIT included a EUR1.65 million exceptional benefit in the first half relating to the sale of assets in Norway and the reduction in the provision taken for the writedown of machinery in Poland and Norway.

Net cash flow from operations increased by EUR7.3 million in the first half, posting an inflow of EUR1.6 million, versus an outflow of EUR5.7 million in the prior year period, reflecting strong trading. Working capital requirements were high owing to the significant increase in sales during the period, but disciplined management saw the large rise in inventories partially offset by a reversal in trade creditors.

Investing activities increased by EUR10.2 million compared to the first half of last year due to higher capex and the absence of sales proceeds of EUR4.6 million received in the comparable period. This resulted in a net cash outflow of EUR10.7 million after operational and investing activities, compared to an outflow of EUR7.9 million in the first half of last year.

Net debt was reduced to EUR172.9 million, from EUR215.6 million at the end of Q1 2010 and from EUR199.2 million in the comparable prior year period. Net Debt / Equity also fell from 163.1% to 118.7% in the respective half year periods. 03 August 2010

Average working capital decreased by 2.6% to EUR161.6 million, versus the 30.0% increase in Consolidated Sales. Net working capital / Sales improved to 0.7 compared to 0.9 in the first half of last year.

Capex amounted to EUR12.4 million in the first half of the year, compared to EUR6.7 million in the first half of last year. Glass Operations in Nigeria accounted for EUR8.8 million of this, primarily relating to the planned refurbishment of one of the Glass furnaces. The remaining EUR3.6 million was directed towards Cool Operations, mainly for the development of new products and for machinery and equipment.
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