Pulp and paper business drags down GLV results
By Pulp & Paper Canada
By Pulp & Paper Canada
GLV Inc. reports that its Pulp and Paper Group’s performance continued to be severely affected during the seco…
GLV Inc. reports that its Pulp and Paper Group’s performance continued to be severely affected during the second quarter by the sharp slowdown in the global pulp and paper industry, although the group’s volume of new order bookings has started to stabilize. GLV Inc. is a Quebec-based supplier of equipment for the pulp and paper and water treatment industries.
Despite a slight decline in its revenues, the Water Treatment Group further improved its profitability in comparison with the previous year.
Second-quarter consolidated revenues, for the three-month period ended September 30, 2009, totalled $104 million, posting a 30.7% decrease (at constant exchange rates) primarily attributable to the Pulp and Paper Group. For the six-month period ended September 30, 2009, consolidated revenues decreased by 28.8% (at constant exchange rates) to $217.4 million.
During the second quarter, the Pulp and Paper Group’s revenues decreased by 48.7% (at constant exchange rates) to $40.6 million. In addition to the finalization of a large-scale contract that was in progress during the corresponding quarter of the previous year, this decline is attributable to the severe slowdown in the global pulp and paper industry since the winter of 2008-2009, which mostly affected sales of new equipment, but also sales of spare parts, which were below management’s expectations.
Considering the sharper decline in sales of new equipment, however, the aftermarket accounted for 62.2% of the group’s total second-quarter revenues, compared with 41.1% in the same quarter last year.
The Pulp and Paper Group recently announced it had been awarded several large-scale contracts, including two orders totalling $7.8 million for new pulp preparation equipment in the United States. Furthermore, order bookings in the aftermarket have improved in the last few weeks, especially in Europe. In light of the positive signs that continue to materialize in the global pulp and paper market, including a strengthening of pulp prices and an increase in the number of inquiries and calls for tenders by the group’s international customer base, GLV’s management still believes that order bookings will gradually pick up in the second half of fiscal 2010, which should enable the Pulp and Paper Group to improve its profitability as of fiscal 2011.