Could these firms be making the headlines this year?
January 2008
By Justin Toland, Editor
After another turbulent 12 months in the pulp and paper industry, it's time once again to focus on five companies that PPI thinks will be making headlines in the coming year.
Last year's selection by (PPI Editor 1995-2000) Jim Kenny certainly proved to be prescient, including as it did Nine Dragons, Botnia, VCP, Cascades and Ilim Pulp Enterprise. The first three of these five in particular provided page after page of industry news in 2007.
Now, in no particular order, here are my five companies to watch in 2008: Rottneros, AbitibiBowater, Guangzhou Paper, Portucel Soporcel and Segezha.
Rottneros
New CEO Ole Terland, who joins Rottneros from SCA, faces a challenging introduction to the 'c-suite'.
The Swedish pulp producer posted an operating loss of SEK 82 million ($-13 million) for the first nine months of 2007, its results, as for many European pulp companies, being affected by increased raw material costs and a wood shortage. The weakness of the greenback has been another difficulty, with the impact of pulp price increases being negated by the low value of the benchmark US dollar.
Rottneros reduced headcount by 30 at its eponymous mill during 2007. Further job cuts and capacity closures could be in the cards in 2008 unless trading conditions improve. A merger or takeover cannot be ruled out either.
The future of the company could hang on the results of the main study into the planned transfer of the Utansjö mechanical pulp mill in Sweden (due early this year) to a new location in South Africa, where it would be the jointly owned by Rottneros and the local NCT Forestry.
2008 will also see Rottneros take further steps into the food-packaging arena, with the opening of a new factory producing SilviPak, a product designed for use with chilled or frozen ready meals. The new plant is being constructed next to the group's pulp mill in Miranda in northern Spain.
AbitibiBowater
2007 began with an announcement of "a merger of equals": the $1.6 billion tie-up between Abitibi-Consolidated and Bowater, creating a North American newsprint giant (43% market share). The year ended with the Board of AbitibiBowater announcing a two-phase action plan that looks set to cause major ructions well into 2008. Key elements of phase one of the plan include reducing paper production capacity by some 1 million tonnes/yr; targeting $375 million in savings from synergies, as well as $500 million from asset sales; and asking Canadian trades union to renegotiate existing labor agreements. Phase two will depend on the outcome of a four-month long top-to-toe strategic review of the business, set for completion in March.
The outcome of that review and the response of employees and politicians could well have a major impact on the future of the entire North American pulp and paper industry.
Guangzhou Paper
Guangzhou Paper was the first Chinese firm to produce newsprint, way back in 1936. More than 70 years later, the firm is set to start up a brand new 400,000-tonne/yr newsprint machine at a brand new site in Guangzhou's NanSha district, some 50 km from downtown. PM 9, supplied by Metso Paper, is only the start of Guangzhou Paper's big plans for NanSha. If planning permission is granted, it intends to add a 300,000-tonne/yr newsprint machine, PM 10, in 2009 or 2010. The company then plans to relocate PM 1 and PM 8 from its existing Guangzhi Road complex, giving a total capacity of close to 1 million tonnes/yr of newsprint at the new site within five years.
Portucel Soporcel
Portugal's leading pulp and paper player has been looking beyond the Iberian Peninsula during 2007. Reports of scouting missions to Uruguay and Angola in connection with potential new sites for low-cost, large-scale hardwood pulp mills have set industry tongues wagging. Will 2008 see an announcement that one of these schemes is set to move beyond the drawing board? Factor in the start of installation work on PM 4, the new 500,000-tonne/yr uncoated woodfree machine at the Setúbal mill in Portugal, and you can bet Portucel Soporcel won't be far from the front pages of the industry newsletters and magazines this year.
Segezha
The Russian firm made headlines in the oft-overlooked sack sector in 2006 with its $93 million purchase of Korsnäs Packaging - a reversal of the usual Western-Company-Buys-Russian-Outfit scenario. Now signs are that Segezha is moving towards an integrated sack kraft paper operation.
Besides the 2006 acquisition of Korsnäs's converting operations, Segezha Packaging recently entered into an agreement with Turkish cement sack manufacturer Isiklar Ambalaj to buy two of its plants with a capacity of 300 million paper sacks/yr.
And in September Segezha Packaging started up a new sack kraft converting plant in Zwaag, the Netherlands, increasing the company's annual production in that country to 100 million sacks/yr.
Now the firm is investing Rouble 750 million ($31 million) in a greenfield sack kraft converting plant in Saransk, 620 km southeast of Moscow. The facility, which will have a capacity of some 400 million paper sacks/yr when it starts up in May, will be located in Russia's heavily industrialized 'cement belt' in the republic of Mordovia.
Presently Segezha Packaging produces about 1.3 billion paper sacks/yr across Europe and Russia. It is a sister company of Segezha Pulp and Paper Mill, which can produce about 350,000 tonnes/yr of sack kraft paper at its Karelia production site. A Rouble 1 billion investment plan there will see the 110,000 tonne/yr PM 9's output switched from standard to semi-extensible unbleached sack kraft paper by March, and then a substantial capacity expansion in the second half of 2008.
Additional reporting by Jessica Zimbalatti, Associate Editor, PPI This Week.
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