Key trends shaping the future of paper and packaging and five industry giants to watch
The paper and packaging industry is highly diverse in terms of products, ranging from graphic and packaging papers to absorbent hygiene products, graphic papers including printing and writing papers and newsprint for communication purposes. The Paper & Packaging industry provides packaging solutions for liquid, food, pharmaceutical, beauty, household, commercial and industrial products, and it also produces fluff and specialty pulps for absorbent hygiene products, tissue and paper products. The paper and packaging industry caters to a wide range of industries including food and beverage, agriculture, home and personal care, health, retail, e-commerce and transportation. Industry players meet customers’ shipping, storage and display requirements with sustainable solutions. godiva box of chocolates
01. Major trends shaping the future of the papermaking and related product industries
Low consumer spending, high costs are near-term issues: Current inflationary pressures have been affecting consumers, resulting in lower demand for goods, which in turn affects demand for packaging as consumer priorities shift to non-discretionary goods and service, prompting brand owners to work hard to reduce high inventory. Companies in the paper and packaging industry have had to reduce production levels to meet customer demand. Additionally, the paper and packaging industry is witnessing rising transportation, chemical and fuel costs as well as supply chain headwinds. Hence, industry players are increasingly focusing on pricing actions and cost reduction with the help of manufacturing automation to increase productivity and efficiency.godiva goldmark assorted chocolate gift box
Digitalisation hurts paper demand: The shift to digital media has been eating into the graphic paper market share for some time and this remains a constant threat to the industry. Paperless communication, increasing use of email, decrease in print advertising, increase in electronic billing, and decline in product catalogs are all weakening demand for graphic papers. Therefore, the industry is converting to packaging and specialty papers with the help of machines. Paper consumption in schools, offices and businesses has been hit by shutdowns caused by the pandemic. But demand picked up as schools and offices reopened. life like a box of chocolate
E-Commerce and Consumer Goods Supporting Packaging Demand: The paper and packaging industry has a large exposure to consumer-oriented end markets, including food and beverages and healthcare, ensuring steady revenue growth. For e-commerce, packaging becomes extremely important as it must maintain the integrity of the product and be durable enough to withstand the complexities involved in delivering the product. According to Statista’s forecast, from 2023 to 2027, the compound annual growth rate of global e-commerce revenue is expected to reach 11.2%, which is a major growth opportunity for the paper and packaging industry. Brazil is expected to lead the development of retail e-commerce with a CAGR of 14.08% during 2023-2027, followed by Argentina, Turkey and India with growth rates of 14.61%, 14.33% and 13.91%, respectively. gourmet chocolate box
Sustainability is key: Growing demand for sustainable packaging options and eco-friendly packaging solutions will support the paper market in the future. The paper industry has already begun to incorporate recycled content into production methods. By maximizing recycling, the paper and packaging industry will be able to implement environmentally and economically sustainable production methods. Investments in breakthrough technologies will drive the demand for premium paper products.
02. Five industry giants worthy of attention
Vertiv: Despite destocking across the industry, continued execution of Vertiv’s business strategy resulted in a record adjusted EBITDA margin of 6.9% in the first quarter of 2023. Vertiv’s record low net leverage of 0.3, coupled with strong free cash flow generation, provides the company with significant room for growth. The sale of Vertiv’s Canadian distribution will help its strategy to focus on investing in high-growth, high-margin businesses and geographies, with a focus on e-commerce and growing sustainable products helping growth. life is a like a box of chocolates
Shuzan Yunuo: Despite inflationary pressures, the company’s adjusted EBITDA reached a record level in 2022. Driven by higher prices, EBITDA in the paper and packaging business increased by 50% and surpassed the 3 billion reais mark for the first time in a year. In the first quarter of 2023, adjusted EBITDA increased by 20% year-on-year. Cash generation from operations increased by 21% compared to the first quarter of 2022.
Suzanno managed to reduce its net debt/adjusted EBITDA ratio to 1.9 times by the end of the first quarter of 2023 – the lowest level since Suzanno pulp and paper merged with Fibria in 2019. That’s impressive considering the company’s largest investment cycle to date. During the period January-March 2023, Shuzanol invested R$ 3.7 billion, of which R$ 1.9 billion has been allocated for the construction of a pulp mill. hot chocolate gift box
In addition, 57% of Shuzan’s US$2.8 billion Cerrado project has been completed and will be put into production in the first quarter of 2024 as planned. Once completed, it is expected to increase Shuzan Euno’s current pulp production capacity by approximately 20%. It will be the largest mill in the world with a single eucalyptus pulp production line.
Smurfi Kappa: Smurfi Kappa’s performance has been supported by its focus on bringing innovative and sustainable paper-based packaging to market, customer-focused investments made over the past few years and strategic acquisitions. The company continues to expand its geographic footprint and product portfolio through acquisitions. huge box of chocolates
Smurfi Kappa recently invested $12 million in its Tijuana facility in new machinery and process upgrades that will significantly improve print quality and efficiency. The company, which has invested more than $350 million over the past five years, has been increasing production capacity in Mexico. Mexico is the second largest economy in Latin America after Brazil. It was considered an ideal location to enter the US market.
Demand for sustainable and innovative packaging solutions remains strong. Smurfi Kappa has also been investing in the latest high-tech and energy-efficient machinery, which will boost production while reducing its environmental footprint and expanding its range of high-value, innovative and sustainable packaging solutions. life is.like a box of chocolates
Sappi: The viscose staple fiber and dissolving pulp markets are recovering, and demand from Sappi’s major customers remains healthy. The company is struggling to manage working capital by cutting production and adjusting its product and market mix to meet demand. The company is well on track with its Thrive25 strategic plan. This requires focusing on growing its business dissolving pulp capacity, expanding packaging and specialty papers across all geographies, while reducing exposure to the graphic paper market. how to make boxed chocolate cake better
Sappi is also focused on maintaining financial health and progress towards achieving a net debt target of approximately $1 billion, while working to drive operational excellence by improving its cost position and production efficiencies. The company’s stock price has fallen 29.4% in a year, but is expected to trend higher on the back of these favorable factors mentioned above.
Rayonier Advanced Materials: Despite some recent softness in some parts of the business, the company has managed to offset the impact by focusing on improving operational efficiency and reducing costs. Since 2021, sales have increased by 7%. The company is well on track with its working capital plan and has reduced its net debt leverage to 3.3 times. This can be achieved through EBITDA expansion. The company plans to increase this to 2.5 times in 3-5 years. is like a box of chocolates
Ongoing strategic investments by Rayonier Advanced Materials are expected to drive EBITDA growth. The de-bottlenecking program at the Jessup plant is expected to boost EBITDA starting in the second half of this year. The Tartas bioethanol plant, which is expected to be completed in the second half of 2024 and contribute to EBITDA, is also focused on investing in high-return projects and acquisitions to drive growth.
Post time: Jul-04-2023
