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commodity cliffOP/Papermakers'
plunge persists...

Paperless, printless trend
forces race to reinvent or
ruin for old brand leaders


Most leading OP, Paper & Print makers have now reported a Q1'19 sales slowdown. We analyse the market, comparative performance and any plans for reinvention. Paper demand is plunging, but price hikes disguise the decline, spiralling down 50% since 2008 Complete & updated for HP results today

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Paperless Office peopleOP, paper & printermakers Q1'19 Review

The Paperless Office (Pic right) is happening big time. Even papermakers know it and have taken action to minimise losses and maximise pricing power in the race to the bottom.

Back in 2007, the US communications papermaking capacity was 6.4M tons supplemented by 600k-1M tons of imports, mainly Europe, Brazil & Asia. Today, 12 years later, US capacity has shrunk to 3.3M tons and after Georgia Pacific's decision to close its Port Hudson (LA) mill will further reduce to 2.8M tons...a 56% reduction on 2007.

Meanwhile, IP who planned to convert 250k tons of paper at its Selma mill (AL) over to packaging production will probably postpone the move until June 2020. This together with the ITC's decision to backtrack on penalising Navigator (ex-Portucel, pic right) for allegedly dumping paper on the US market freed the Portuguese maker to ship 200k tons into the US in 2018.

So this left Domtar (1M tons capacity), PCA's Boise with 800k tons and IP with 600k tons as the US leaders all raising prices in concert with Navigator at an average of 8% in 2018.

sutton mark IP llThe world's leading papermakers have all 'repurposed' to new markets inc. Finlands's UPM/Stora Enso into packaging and biorefining; South Africa's Sappi & Mondi into packaging; IP is now the packaging powerhouse (70% sales); PCA in packaging and tissues; Domtar into towels/tissues after GP/K-C lead the move 10-15 years ago.

OP, paper & printermakers Q'19

• Acco - Sales decreased 3% to $394m, acquisitions added 2.9%. Comparable sales decreased 0.5% as lower volume (-3.4%) offset pricing which added 2.9%. Hit by wholesalers' woes e.g. Adveo bankruptcy, Spicers implosion; and uncertainty in US caused by #STRESS consolidation & Depot disintegration.

• Canon: Sales were Y864Bn ($7.8Bn) down 10%. The office segment sales were down 3.9% to Y426Bn; Imaging systems sales were Y176Bn down 17%; medical systems Y109Bn down 6.5% and Industrial Y176Bn down 17%.

• International Paper (Mark Sutton,pic right) Sales were $5.64Bn up 0.4% primarily through its acquisition of Weyerhaeuser pulp operations (aka GCF, 12%/mix) $689m up 1.8%; with Industrial packaging $3.8Bn (68% sales mix) up 0.1%; printed paper $1.06Bn (19% mix) up 1.1%....primarily from high price increases

• Stora Enso: Sales €2.63Bn (€2.58Bn) increased 2.2% with Paper sales (€760m or 29% sales mix) down 1.5%, all from price increases offsetting lower volumes, down 8.0%.

• PCA/Boise: Sales were $1.73Bn up 2.5% with packaging up 5% (Up 8% in Q4); but paper down 11%, or 21% down in volume offset by price increases up 10%. 
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williams john dumtar bin• UPM: Sales were €2.69Bn up 7%. Communication Paper division (45% sales mix) sales were €1.2Bn down 6.6% with higher selling prices (up 14%) offsetting lower volumes (down 6%)

• Domtar (Pic John Williams, pic right). Sales were $1.38Bn up 1.0%. Paper & Pulp sales were $1.15Bn (83%/sales mix) up 4.3% with price hikes c10% hiding a 4% volume drop. Personal Care sales were $247m (17% mix) down 5.7%

• Kimberly Clark: Sales of $4.63Bn down 2%, but up 3% organically, boosted by 4% price increases.Sales of $4.63Bn down 2%, but up 3% organically, boosted by 4% price increases.

• Georgia Pacific: Announced in Jan'19 closure of its comms/copy paper Port Hudson mill. This withdrawal takes 500k tonnes off the declining market. GPac is making a $120 million investment in the Naheola mill in Choctaw County (Alibama). The company announced plans for a new tissue machine and roll storage building to support the company’s retail bath tissue business.

• Sappi: Sales were $1.5Bn up 0.5% (down from 6.6% growth rate in Q4'18) Graphic paper markets were much weaker than expected during the quarter, with demand in our major product categories down between 8% and 13% in Europe and
North America.
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• Konica Minolta Q4'19 Sales were Y282Bn, up only 0.2%. In Office Business Y151Bn down 3.1%. Full year sales were Y1059Bn ($9.6Bn) up 2.7%. By business segment, revenue in the Office Business was Y588Bn up 0.7% driven by sales of color models, and the Professional Print Business also posted an 6% increase in revenue (Y228Bn), reflecting a higher number of sales of both color and monochrome models. 

• Kyocera Sales were Y393Bn ($3.5Bn) down 4.4%. Communications/printer sales revenue Y73Bn up 10.6%. Document Solutions' sales Y104Bn down 3%.

groth magnus essity brandsRicoh - Q4 sales were Y524Bn down 4.3%, Domestic sales were Y218Bn down 1.2%. Overseas sales were Y308Bn down 6.4%. Full year sales were Y2,013Bn down 2.4% or a marginal organic growth  of 0.4%"Office Printing was Y1,086Bn down 5%; Office Services Y481Bn up 7.5%; 

• Essity: (CEO Magnus Groth, pic right) Sales increased 9.4% to SEK 30,656m (28,020). Organic net sales increased 4.3% (+2.6% in Q3). In emerging markets, which accounted for 37% of net sales, organic net sales increased 9.1%

• The Navigator Co. Sales were €422m up 9.6%.. Printed paper demand was down 2%; price boosted sales by 8%+ 
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• Brother: "Sales were Y162Bn down 9.3% or 6.6% organically. Printing solutions sales were Y96Bn down 6.5% and 2.5% organically. 

• Epson Sales were Y261Bn down 3.0% with operating profits Y12Bn down 26% from Y16Bn. Revenue in the printing solutions segment was Y177Bn (68%/mix) down 3.3%. Visual comms and wearables were slightly down 2.5% and 3.1% respectively.

Laschinger mary xpedx• HP Inc  Sales were $14.0Bn up 0.2% compared with 1% in Q1'19 & 10% in Q4'18, with both Personal Systems up 5% organically and Printing down 2% organically. 

• Antalis (Euro #1 paper merchant) Sales were €551m down 6.7% or 4% on an organic basis. Paper volumes (68% mix) were down another 7% in spite of 20% price increases throughout 2018

• Mondi: Q4'19 Sales FY2018 were €7.5Bn  with Fibre packaging €4.1Bn up 10%; Consumer packaging €1.6Bn down 2% and Paper €1.9Bn up 2% with volume up only 0.2%

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• Smurfit Kappa: Sales were €2.3Bn up 2% organically. Europe +2%; Americas +3%. Higher prices boosted lower demand

• Veritiv: (CEO Mary Laschinger, pic right) Sales $1.94Bn, down 7.6%, even after 8% price hikes (Est: volume down 14%).

• LSC Comms the US OP conglomerate (inc Pendaflex, Ampad, TOPS, Quality Park) down another 9% (tailspinning)

• KP Tissue (Kruger) Revenue increased by 8.4% to $351m. (Growth rate in Q4 5.7%). Growth achieved through markrt share gains

 

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