Constantia Flexibles Group GmbH, a leading manufacturer of flexible packaging products and labels, surpassed annual sales of two billion euros in 2016 – the first time in its history. The company also achieved record operating profit before exceptional items in 2016. Both sales and earnings were boosted by contributions from newly acquired companies in growth markets – a key element of Constantia Flexibles’ global strategy.

According to preliminary results, sales increased by 8.6% to roughly €2.1 billion in 2016. Newly-acquired Afripack (Food and Labels), Pemara (Labels) and Oai Hung (Pharma), contributed €152.3 million to sales. Adjusted for exchange rate effects and portfolio changes, organic sales growth was 1.5% year-on-year. This growth was achieved in all markets and was generated by volume increases, as well as improvements in the price and product mix.

Operative EBITDA at Group level was €301.8 million, an increase of 14.7% compared to the previous year, driven by the aforementioned growth, as well as targeted savings projects and productivity increases. As a result, the EBITDA margin rose to 14.6% compared to 13.9%.

The net result remained stable at €57.4 million. The recent acquisitions, mainly in the emerging markets, increased the number of employees (annual average) to 10,180 FTE at the end of the year.

“On behalf of the Board of Management, I would like to thank our dedicated employees for increasing sales and operating profit in 2016 – our seventh year in succession,” says Alexander Baumgartner, CEO of Constantia Flexibles. “We are especially pleased with the margin improvement and aim to further improve profitability by pushing ahead with our global growth strategy, focusing on selective end-markets in attractive regions with our customers.”

Sales of the Food Division increased by 6.8% to €1,204.3 million in 2016. The Food Division’s share of the Constantia Flexibles Group’s total sales was 56.7%. Growth in America in 2016 was especially encouraging for the Food Division. The business with film-based snack packaging achieved significant sales increases.

Sales in Europe declined slightly, primarily due to lower raw materials prices. Sales volumes of film-based packaging for confectionery and ready-made meals increased yet again. Furthermore, additional drivers of innovation, such as portion packs for coffee and tea, gained market share.

Sales in the emerging markets were challenging in 2016 due to the difficult political environment in Turkey and neighboring countries.

Last month, Constantia Flexibles announced the acquisition of Italy’s leading dairy lidding company Alucap near Trento, the area with the highest yogurt production in Italy. Alucap supplies aluminum diecut lids and plastic films to local dairies and international food manufacturers.

The Pharma Division’s sales increased by 5.6% to €312.6 million in 2016. The Division’s share of Constantia Flexibles’s total sales was 14.2%.

In addition to an increase in sales in the core European region, the share in the emerging markets was significantly improved through the acquisition of Oai Hung in 2016. Volume growth in the American market in the first half of the year was dampened somewhat, primarily in the core pharmaceuticals business, following a very strong growth period in the previous year.

The leading product category of cold-form foil showed growth in all areas, while new innovative products in the area of Home & Personal Care opened up new markets.

For the Labels Division, sales increased by 11.8% year-on-year to €604.7 million in 2016. The Labels Division’s share of Constantia Flexibles’s total sales was thus 29.1%.

Market growth in 2016 was characterized by increasing demand for higher-value labels (primarily self-adhesive labels), particularly in the global beer market. The 2013 acquisition of the Spear Group, a market leader in self-adhesive labels, allowed Constantia Flexibles to benefit from this market trend. An additional sales driver was increased global demand for wet-glue labels. Growth was also supported by the continuous expansion of existing business relationships and the addition of new customers in Asia.

The rapid integration of the recent pharmaceutical packaging acquisitions Oai Hung in Vietnam and Lamp San Prospero in Italy will continue. San Prospero is an excellent addition to the company’s satellite production concept, while Oai Hung adds exposure to the fast-growing Southeast Asian region. In the Food division, the positive turnaround of the acquired Afripack business in South Africa is set to continue.