Scope Ratings GmbH has today affirmed the B issuer rating on Hungary’s Vajda-Papír and revised the Outlook to Stable from Negative - the hygiene paper products company announced. Vajda-Papír’s long-term senior unsecured debt rating was also upgraded to B+ from B.

The rating agency justified the improved outlook on the basis of improving market conditions, pointing out that the company's past actions have led to an improvement in profitability and credit metrics. They explained that energy and pulp prices started to normalise in 2023, which improved profitability, with an EBITDA margin of 10.8 percent in the first half of the year.

Positive measures included the launch of base paper production, which will lead to stable prices and a more diversified product portfolio through sales to third parties. The possibility of fixing energy prices for the upcoming two years and automation of production will also contribute to stabilising the adjusted EBITDA margin.

Scope Ratings noted that Vajda-Papír Group is one of the leading consumer goods companies in Hungary, with a market share of around 35% in the household paper market. Demand is expected to remain strong domestically, and the company has strong market positions in several European countries, maintaining strong geographic diversification; more than 50 percent of its revenue comes from exports, Scope said.

They noted the risk of volatile profitability, but also the unpredictability of raw material prices.

Vajda-Papír Ltd. closed the first half of the year with an outstanding result, with net sales of more than HUF 29 billion, compared to HUF 21.5 billion a year earlier. Attila Vajda, the company's founding managing director, said that the positive decision of the credit rating agency also reflects the efforts of the company in recent years. "We have made a step in the right direction with the organisation of raw material production and the introduction of energy saving measures. The price of pulp, the raw material of paper, has stabilised, so that at the end of the half year the cost of producing the finished product was lower than a year earlier" he said. Based on the first half of the year, it expects double-digit growth in volumes sold this year and a 15 percent increase in revenue, he added. Consolidated profit before tax for the first six months was 1.67 billion forints. EBITDA for the period rose to HUF 2.967 billion from HUF 21 million in the same period last year.

The Managing Director also recalled that in 2022, the Vajda-Papír Group doubled its turnover at group level in both its domestic and Norwegian mills. Last year, the group's unconsolidated turnover exceeded HUF 80 billion, while that of the Norwegian subsidiary was close to HUF 20 billion.

Vajda-Papír was established 24 years ago as a family business, employing around 650 people across the group. Since 2013 the company has also been present in Norway with a subsidiary employing more than 110 people. In 2020 and 2021, the company has completed bond issues totalling more than HUF 20 billion. In addition to sales in Hungary, the company's tissue paper products are shipped to more than 30 countries worldwide, with more than 50 percent of the group's total tissue paper production sold in export markets.