Kronospan increases sales but gas explosion hit profits last year

6 July 2017

UK panel products manufacturer Kronospan’s newly-published accounts show it increased sales for the year ended September 30, 2016 but profits were reduced by a range of factors, including a gas explosion last summer at the Chirk factory.

Annual accounts for both Kronospan Ltd and its parent company Kronospan Holdings were filed at the end of last month.

Kronospan Holdings – which is primarily engaged in the manufacture and sale of chipboard, MDF, OSB, sawn timber and related value-added products in the UK and Luxembourg – saw group sales increase 6% from £326.7m to £346.3m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell from £34m to £28.4m, while operating profit reduced to £7.1m from £16.1m in the previous year.

“The main reasons for the lower EBITDA were reduced production volumes in the UK as a result of the impact of investment projects and a gas explosion together with the adverse impact of the weakening of sterling on raw material costs,” said directors Ludwig Scheiblreiter and Mike McKenna.

The sales increase was due to higher sales volumes and the weakening of sterling. The group’s customer base covers the construction, furniture and DIY sectors in the UK, Benelux, France and Germany.

“The Group does not expect any adverse consequences as a result of Brexit, primarily due to the geographical spread of the customer base.”

The accounts for UK-focused Kronospan Ltd, which is engaged in the production and sale of chipboard, MDF and related value added products in the UK, show a sales increase from £219m to £225m for the year ended September 30, 2016.

EBITDA reduced from £28.7m to £17.5m for the same reasons as above.

Trading conditions were described as stable through the year and expenditure on fixed assets at £24.1m was an increase on the previous year (£14.1m), while operating profit was £7.3m (2015: £18.8m).

“Despite the current uncertain economic outlook the directors expect a beneficial impact from recent investments in production equipment and the weakening of sterling which will make it less attractive to import product into the UK,” the directors said.

The company is currently undertaking several projects, including modernisation of the melamine-facing and log yard operations at Chirk.