How do you future-proof How do you future-proof the European Paper - - PowerPoint PPT Presentation

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How do you future-proof How do you future-proof the European Paper - - PowerPoint PPT Presentation

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How do you future-proof How do you future-proof the European Paper Industry? Industry? Berry Wiersum CEO, Sappi Europe 1 | RISI March 2014 | B. Wiersum | 11 March 2014 From the perspective of a Graphics Paper Producer F th ti

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How do you future-proof How do you future-proof the European Paper Industry? Industry?

Berry Wiersum CEO, Sappi Europe

| RISI March 2014 | B. Wiersum | 11 March 2014 1

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F th ti f G hi P P d … From the perspective of a Graphics Paper Producer

  • COST, CUSTOMERS AND CASH
  • GROWTH AND CONVERSION
  • NEW REVENUE STREAMS

| RISI March 2014 | B. Wiersum | 11 March 2014 2

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Our view on P+W grades 13 years ago

Example WFC

0 tons ‘00

| RISI March 2014 | B. Wiersum | 11 March 2014 3

  • Source: EURO-GRAPH /PPPC/SFPE
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…. and today

Example WFC

0 tons ‘00

| RISI March 2014 | B. Wiersum | 11 March 2014 4

  • Source: EURO-GRAPH /PPPC/SFPE
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Current status

Paper industry facing strong economic challenges due to declining market conditions and rising costs: market conditions and rising costs:

| RISI March 2014 | B. Wiersum | 11 March 2014 5

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Mid term outlook today

Some stabilization in CWF during the last months in NA

  • > CWF NA: drop of 30% vs top year 2006
  • > CWF EU: drop of 26% vs top year 2007

| RISI March 2014 | B. Wiersum | 11 March 2014 6

Source: PPPC, Market Intelligence

CWF EU: drop of 26% vs top year 2007

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Mid term outlook today

| RISI March 2014 | B. Wiersum | 11 March 2014 7

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Appetite for apps Appetite for apps Digital Digital keeps growing growing

25 million issues delivered in the last year and 120,000 every day day

| RISI March 2014 | B. Wiersum | 11 March 2014 8

Source: Morgan Stanley

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However…Papermaking cash cost rising?

Comparison Q3, 2013 vs Q3, 2009

| RISI March 2014 | B. Wiersum | 11 March 2014 9

Note: Cash Cost: fiber, fuels, chemicals, labor, materials, electricity Source: Risi’s Cornerstone WF2s coated

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and ….margin squeeze continues

European Value Chain

| RISI March 2014 | B. Wiersum | 11 March 2014 10

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From Last Year - what the Paper Industry needs to do

Challenge the Status Quo:  Current Go-to-market routes are too expensive  D li ti (l i ti & l h i

European Value Chain

 Duplication (logistics & supply chain, unnecessary stock)  Waste (odd sizes, grain direction) ( , g )  Old-fashioned (Nobody does it like us…)  G tti id f h t d d ’t d  Getting paid for what you do or don’t do

| RISI March 2014 | B. Wiersum | 11 March 2014 11

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Cost, Customers and Cash: conclusions

  • Reducing volumes and prices -> increased bankruptcies
  • Publishers and Printers force industry into lowest cost to serve

Indent Stock Distance becomes discriminator

  • Industry closes highest cost mills and reduces cost to serve ->

further pressure on price p p

  • 2013 -> market decline faster than industry adjustment
  • 2014 -> industry catches up
  • Go to market route under threat
  • Go to market route under threat

| RISI March 2014 | B. Wiersum | 11 March 2014 12

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| RISI March 2014 | B. Wiersum | 11 March 2014 13

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American Express

| RISI March 2014 | B. Wiersum | 11 March 2014 14

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Shell

in 1833

| RISI March 2014 | B. Wiersum | 11 March 2014 15

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Nokia & RIM

| RISI March 2014 | B. Wiersum | 11 March 2014 16

Source: Board of Innovation

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Nokia & RIM

| RISI March 2014 | B. Wiersum | 11 March 2014 17

Source: Board of Innovation

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Nokia & RIM

| RISI March 2014 | B. Wiersum | 11 March 2014 18

Source: Board of Innovation

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Samsung

in 1938

| RISI March 2014 | B. Wiersum | 11 March 2014 19

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Definition „Speciality“ Papers

  • Paper or board that is manufactured, or subsequently

converted, for a specific use. These grades usually cannot be p g y used for anything other than their intended special purpose.

  • Paper that is often suitable for special purposes because it
  • Paper that is often suitable for special purposes, because it

possesses unique characteristics and properties, and is not considered to be one of the standards by the paper industry.

Speciality Papers ≠ Commodity Speciality Papers ≠ Commodity

| RISI March 2014 | B. Wiersum | 11 March 2014 20

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Market Development

Speciality Papers have in recent years trended with GDP Outlook 2013 – 2015 Speciality Papers have in recent years trended with GDP

  • With GDP ranging from 1.15% to 2,50% this would result in a growth of

3,5 and 7%

  • That equals a volume growth between 878 – 1.938 ktons

Source AWA

  • Asia-Pacific represents the strongest growth (+12%)
  • Europe and North America represent with 60% the biggest share of the global

demand

| RISI March 2014 | B. Wiersum | 11 March 2014 21

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Influencing Factors

  • Increasing wealth in emerging markets

g g g

  • Demographic development in mature markets

I i i l h h ld

  • Increase in single households
  • Increasing awareness of sustainability issues
  • Smaller packaging sizes (convenience food)
  • Technical requirements (e.g. stiffness)

q ( g )

| RISI March 2014 | B. Wiersum | 11 March 2014 22

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Speciality Papers

New applications for speciality papers for packaging will develop

Trends and Outlook

The packaging industry has now started intensive research efforts in order to develop improved and new functional properties for paper based substrates. – Functional barriers and nanotechnologies -> increased usage of paper for primary k i f f d d t (f h l h lf lif d f l ti fil ) packaging of food products (freshness, longer shelf life, reduce use of plastic films). – Development of chemicals and fibres -> allow new packaging design with paper (e.g. moulded packs, thermo formed packs,…) – Active and intelligent packaging -> incorporation of active substances like oxygen scavengers, antimicrobial systems, time temperature indicators, freshness indicators,.. Evolving market requirement: Packaging papers and boards will move from print carrier + and mechanical protection print carrier + and mechanical protection (multi-) functional materials fulfil food packaging requirements and enable replacement of mineral il b d k i t i l

| RISI March 2014 | B. Wiersum | 11 March 2014 23

  • il based packaging materials
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Definition „Speciality“ Papers

Out of more than 400 million tons paper production only 5- 7% can be called specialties.

| RISI March 2014 | B. Wiersum | 11 March 2014 24 Source AWA

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Trends in Packaging

| RISI March 2014 | B. Wiersum | 11 March 2014 25

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A trend in packaging which needs to be stopped …

| RISI March 2014 | B. Wiersum | 11 March 2014 26

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Growth and Conversion conclusion

Conversion doubles Sappi’s presence in Specialities

43000 135000

Alfeld PM 1

Alfeld (D)

135000 36000

Alfeld PM 3 MG Alfeld PM 2 MG Volumes

46000

Alfeld PM 4 MG Volumes Sappi Alfeld

35000

Alfeld PM 5 MG

300 ktons Portfolio:

SBS Cartonboard Coated White Premium Topliner Coated and uncoated Flexpack Coated siliconizing base paper

| RISI March 2014 | B. Wiersum | 11 March 2014 27

Coated siliconizing base paper Coated label

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New revenue streams

  • Pulp and paper products are fabricated from

t i bl d f t

Current status

sustainably managed forests

  • Paper/pulp is made from a renewable

resource is biodegradable and easily resource, is biodegradable and easily recycled, is largely circular (on fibre) , is largely circular (on fibre)

  • A large portion of the energy used in the

g p gy manufacture of pulp and paper is renewable

  • Pulp mills basically have always been

p y y biorefineries, already for centuries.

  • Yet

Yet biomass is more and more used for large biomass is more and more used for large Yet Yet biomass is more and more used for large biomass is more and more used for large scale energy production under favoured scale energy production under favoured conditions, driving up costs for more conditions, driving up costs for more sustainable applications sustainable applications

| RISI March 2014 | B. Wiersum | 11 March 2014 28

sustainable applications sustainable applications

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Why a circular bio-based economy?

Clear targets

  • 80% reduction in CO2 emission
  • 50 % added value in products

Only a circular biobased economy will enable us to reach this!

| RISI March 2014 | B. Wiersum | 11 March 2014 29

Source: Cepi

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From tree to molecule

Used by P&P industry to manufacture to manufacture products

Cellulose 45% Lignin 23% % Hemicellulose 30%

Used by P&P industry

| RISI March 2014 | B. Wiersum | 11 March 2014 30

to generate heat

Source: Royal Society of Chemistry

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Why a circular bio-based economy:

We must reverse the downward trend in an industry that: d ti bl t i l

  • sources domestic renewable raw materials
  • has the infra-structure and the know-how to collect and process

biomass into valuable materials

  • creates jobs in a broad range of sectors in Europe, triggering rural

j g p , gg g growth across regions

  • places sustainability smart and efficient use of resources at the heart

places sustainability, smart and efficient use of resources at the heart

  • f industrial, business and social activities

By creating a higher value through the current P&P-operations, Thus leading to sustainability in both economic AND ecologic terms.

| RISI March 2014 | B. Wiersum | 11 March 2014 31

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Which translates into….

Redesigning the current P&P- i d i h industry into a sector that produces “food, feed, fuel, materials and products made from biomass and waste.”

In a circular process In a circular process

| RISI March 2014 | B. Wiersum | 11 March 2014 32

Source: BioBased Industries Consortium

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A stunning breakthrough

| RISI March 2014 | B. Wiersum | 11 March 2014 33

Source: Cepi

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| RISI March 2014 | B. Wiersum | 11 March 2014 34

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THANK YOU

| RISI March 2014 | B. Wiersum | 11 March 2014 35