Business Report For The Year 2009

2009 once again brought about significant changes for the European paper industry. We have seen significant volatility in external conditions. Profitability suffered to a great extent due to the trends in the paper industry, the global financial crisis and the related recession. As a one-off effect, our results were further decreased by the fact that our activities were partially discontinued and partially outsourced into a separate limited liability company. Thus, according to its strategic goals, Dunapack Zrt. became a purely corrugated product manufacturer.

There were hectic fluctuations in the exchange rate of the Hungarian Forint. At the beginning of the year, it was around HUF 320 / EUR, while by the end of the year it had fallen to HUF 270 / EUR.

In 2009, the European containerboard market went through its deepest crisis of the past few decades. Due to the recession, demand fell and by the end of the year, the stocks of paper factories rose to their historical peak. Thus, prices bottomed out in August. From autumn, we succeeded to reach a price increase of EUR 80/ton, but this improvement could not turn the trend around and our containerboard division closed the year with serious losses.

At our converting activity, we saw a weak beginning in the first quarter 2009 after a very weak fourth quarter in 2008. Due to the decreasing industrial production, demand for packaging materials also fell.
In the 1st and 2nd quarters, we faced lack of orders, therefore, first we had to send our staff on holiday, later we were compelled to decrease staff. As a result of the improvement of the external conditions, orders started to grow gradually from the middle of the year and after an outstanding July, we closed a very strong September-December period. We have not achieved the volumes originally planned, but both the manufactured and sold quantity exceeded that of 2008. Our profit margin based on low paper prices improved significantly in this product group, thus our results exceeded the forecasts.