Vajda-Papír achieved profit improvement and turnover growth in 2023

Vajda-Papír achieved profit improvement and turnover growth in 2023

Vajda-Papír 2023, Hungary's leading hygiene paper manufacturer, achieved record profits both in absolute terms and as a percentage of sales, closing last year with outstanding results, sales growth and a significant improvement in earnings, as expected.

According to Attila Vajda, the group's founding CEO, the positive results are driven by lower energy prices, improved productivity, investments to reduce the company's energy needs, innovations and the resulting increased efficiency. Attila Vajda also expects sales growth and further improvement in profitability in 2024, but the group faces new challenges as pulp prices started to slowly increase from the second half of 2023, which continued in the first quarter of 2024. 2024 first quarter results were similar to the fourth quarter of 2023, continuing the positive trend. The company's CEO also reported that investments, which had previously slowed down, could pick up, with plans to strengthen the company's external market position and invest in additional capacity in 2024, further improving the group's medium- and long-term prospects.


In 2023, the Hungarian owned, 25-year-old company's domestic cumulative consolidated turnover exceeded HUF 88 billion, while the Norwegian subsidiary's cumulative consolidated turnover was HUF 17 billion, bringing the group's annual cumulative consolidated turnover to HUF 105 billion, up 7% year-on-year. This resulted in an 8.5% volume decline in the domestic market, while export sales volumes were 15% higher than a year earlier.  The group was able to increase the average gross selling price of its products by almost 10%, Attila Vajda reported.  EBITDA was thus HUF 10.6 billion, while profit before tax was HUF 6.3 billion for the group as a whole.


On the domestic household paper market, Attila Vajda said that the average annual growth of the market in 2023 was still 18% in value terms, but in volume terms it was already 9% lower. Retail sales, including demand for tissue paper products, have declined in Hungary. He reported that toilet paper continued to account for the largest share of consumption (56%), followed by handkerchieves (22.4%) and household paper towels (21.6%), and paper napkins were the last to go. For toilet paper, consumers preferred three-ply and larger packs of up to 16-24 rolls.


According to the head of the market-leading tissue paper producing company, the household paper segment of the paper market as a whole is relatively stable, as the products are common household items that are considered to be almost irreplaceable. He added that, as a consequence of the recent inflationary effects, consumers have become more price-sensitive and more conscious of promotions, and therefore consumer price sensitivity has also somewhat reduced environmental awareness.


Among the efficiency-enhancing and energy-reducing measures and investments behind the Group's positive results, the CEO mentioned the increasing share of green technology and renewable energy in the company's energy mix; the 100% recycling of waste from the production of base paper and finished products; and the reduction of water consumption. As a result, the impact of energy prices has been mitigated, and the consequences of rising pulp prices have been mitigated by increasing in-house production of base paper. Attila Vajda stressed that over the past 10 years, some HUF 40 billion has been invested to ensure that the production of tissue paper and the operation of the company are carried out with the most environmentally friendly, sustainable technologies. He mentioned as an example the significant fuel savings of around 400,000 litres per year, due to the elimination of deliveries, by providing their own raw material. Operational carbon emissions have been reduced and the production process has become more sustainable: 1 tonne of base paper is produced with up to 26% less electricity and 70% less water than the average paper mill using previous technology. And in their Environmental, Social Responsibility and Governance (ESG) report, the first industrial manufacturing company to publish a commitment to further reduce water consumption by 20% by 2030, increase the use of renewable energy by 50% and become carbon neutral by 2050. These steps have also contributed to the Group's extraordinary results and its ability to retain more than 700 employees.


Attila Vajda reported that Vajda-Papír Group has strengthened its position in the Scandinavian market in recent years. Its Norwegian factory, Vajda-Papír Scandinavia AS, the only Hungarian-owned daily consumer goods manufacturer and exporter in Norway, celebrated its 10th anniversary in June 2023. In order to further exploit the good opportunities in the Scandinavian market and to strengthen the company's regional presence and export activities, Vajda-Papír is considering further investments, developments and market expansion.


In 2023, Vajda-Papír took an active role in the relaunch and development of training in the paper industry, and spent HUF 1.4 billion on training employees, as efficiency requires well-trained workers. As a result, the company was awarded the "Highest Volume Training Programme of the Year Award in 2023", he said, noting that the joint recognition by the Ministry of Foreign Affairs and Trade (MoFA) and the National Investment Promotion Agency (HIPA) proves that the company is on the right track in increasing production, while paying special attention to environmental protection, education and the retention of employees and managers with significant experience and industry expertise. In doing so, it is also contributing to the region's job retention and development, and to increasing the added value of the paper industry.


Attila Vajda reported that in 2023 the company's raw material production was already running at full capacity for the whole year, with almost 20% of the production sold to export markets. He stressed that he is confident that both export and domestic markets will see a pick-up in demand, with rising real wages and GDP growth driving demand for hygiene products.  The improved outlook is also reflected by the affirmation of Vajda-Papír's 'B' issuer credit rating by Scope Ratings GMbH last November, which upgraded the outlook on the rating from negative to stable, Attila Vajda said. The managing director reminded that the HUF 16 billion mill expansion, completed by summer 2022, will create Europe's largest hygiene paper production capacity in Dunaföldvár, supported by the Hungarian government with HUF 5.5 billion. He noted that the investment was also financed by issuing green bonds worth HUF 9.9 billion, the first among industrial companies to do so.


Vajda-Papír, the market leader in the production of hygiene paper products, which is 25-years-old and 100% Hungarian family-owned company, produces 55-60% of domestic demand and exports 60% of its production. In addition to European countries, Ooops! brand products are exported from their domestic factories to Asia and even the Caribbean. At group level, Vajda-Papír employs more than 700 people.