REFILE-Constantia Flexibles expects profit to rise after share sale

Thu Nov 14, 2013 8:17am EST

FRANKFURT Nov 14 (Reuters) - Austrian packaging group Constantia Flexibles said it expects its sales and earnings to rise substantially in the near future, as it tries to convince investors to buy shares in its stock market listing.

The company plans to increase its operating margin to 16-16.5 percent in the next two or three years, sources familiar with Constantia's targets said.

In the first nine months of 2013, sales rose 24 percent to 1.23 billion euros and earnings before interest, tax, depreciation and amortisation (EBITDA) increased 22 percent to 175 million euros, giving Constantia a margin of 14.2 percent.

"We see clear upside potential for our EBITDA margin," Chief Executive Thomas Unger told journalists on Thursday, declining to give a specific 2014 forecast. He added that urbanisation across the globe was leading to an increased consumption of packaged food.

The banks organising the initial public offering, which is due to take place on Nov. 27, expect Constantia to post an EBITDA of 265 million euros ($355 million) next year.

While listed peers such as Bemis, Amcor and Sealed Air trade at an average multiple of 8.6 times their expected operating earnings, Constantia's owners will grant a discount to investors buying its shares.

"The IPO price range corresponds with a multiple of 6.8-7.9 times Constantia's 2014 EBITDA," said Christoph Stanger, equity capital markets banker at Goldman Sachs, which is organising the listing alongside Deutsche Bank and JP Morgan.

Constantia plans to raise up to 821 million euros in the share offer in Frankfurt and Vienna, valuing the firm at up to 1.43 billion euros.

The company said it would price its new shares in a range of 19.50 euros to 25.50 euros each and would offer up to 32.2 million shares, or 57.5 percent of the company, for sale.

It will use the funds to pay down debt, finance acquisitions and for general corporate purposes, Unger said, adding it had 50 possible acquisition targets on his radar with annual sales of between 30 million and 100 million euros each.

"But usually, we do only one or two acquisitions each year," Unger said.

The company, which makes aluminium-foil, paper and plastic-film packaging and labels for the food, pharmaceutical and beverage industries, ranks No.2 in Europe behind Amcor by market share.

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