The PPI Top 100

By  Justin Toland, Editor, PPI magazine, RISI

BRUSSELS, Sept. 30, 2007 (Viewpoint) - This time last year I speculated whether International Paper's major restructuring program would see it lose top spot in the ranking of the industry's biggest pulp and paper companies. The answer, at least so far, is no. Despite divesting assets, IP managed to post net sales from its pulp, paper and converting operations of $21,095 million in 2006, some $4.8 billion more than nearest rival, Stora Enso. The Finnish giant did manage to close the gap in net sales by approximately $2.6 billion compared with 12 months ago, however. For Stora, as for many other European producers, 2006 was also a year of change, of closures, of restructuring.

The restructuring at International Paper led to the emergence of a new name in the Top 100 in Verso Paper. Headquartered in Memphis, Tennessee, Verso was founded by private equity firm, Apollo Management, following the latter's acquisition of the four US mills that made up IP's coated paper business. Verso posted net sales of $1,611.2 million in 2006, making it the 44th largest firm in the industry and the highest new entrant on the PPI Top 100. Another debutant in the chart is Sun Paper Group. Net sales of $648 million put the Shandong-based enterprise at #86 in our ranking.

This year's joint biggest climbers came from very different ends of the pulp and paper spectrum: Hong Kong-based Nine Dragons Paper Holdings (which rose from #85 to #63 in the Top 100) only began making board a decade ago. By contrast, Glatfelter, which jumped from #86 to #64, began producing paper at its mill in Spring Grove, Pennsylvania back in 1865. Another difference: while Nine Dragons' meteoric rise has been through a rapid mill-building program (one which is set to speed up in the next 12 months -- see Upfront, p. 5), Glatfelter's growth in 2006 was the result of its acquisition of Crompton's composite fibers mill in Lydney, Gloucestershire, UK, and of New Page's carbonless operations (Chillicothe, Ohio, USA).

Other significant climbers on this year's chart include Chile's Arauco (which moved from #62 to #51) and China's Lee & Man, climbing 13 spots to #81.

At the top end of the table, UPM is now one of the world's top five pulp and paper companies, while the newly-merged Smurfit Kappa Group takes its economies of scale from #16 to #8, edging ahead of tissue behemoth Kimberly-Clark in the process.

Divestments saw MeadWestvaco drop outside the top 20, sliding from #15 to #26.

Companies exiting the Top 100 included Georgia-Pacific (financials no longer available) and Menasha Corporation (stopped producing containerboard), as well as India's Ballarpur Industries Ltd (BILT) (ranked #103 for 2006). Other firms just outside the Top 100 included Reno De Medici, Tokai Pulp and Paper, Constantia Packaging (Duropack), Rottneros and the Cham Paper Group.

More millions

Some 58 companies churned out more than one million tonnes of paper and board in 2006, five more than one year ago, perhaps indicating that the million-tonne mark is no longer the magic figure it once was.

Of more interest to the modern paper executive than tonnage is profitability. The 100 biggest firms in the industry earned more than $23,000 million last year. This was an improvement on the $15,823 million achieved by the top 100 companies in 2005.

See Related Tables (pdf format):

• The Million Tonners' club
• Portrait of the Top 100 by Corporate Size
• Geographic Portrait of the Top 100
• Top 100 in Alphabetical Order
• PPI Top 100 of 2006
• Currency Conversion Rates to the Dollar

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