Skriv- och tryckpapper respektive förpackningar Olika värdeskapande?

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1 Skriv och tryckpapper respektive förpackningar Olika värdeskapande? PPT gruppens vårseminarium Rainer Häggblom Styrelseordförande Vision Hunters Oy

2 Value Creation in ROIC WACC % 25 large stock listed companies Sweden Finland USA Canada Source: Bloomberg, Vision Hunters

3 Framework of Misery World economy slowdown Paper companies European economic crisis Measures Pragmatic Cost cutting Shut down capacity Invest elsewhere Grow other businesses in case these exist in the portfolio Potential Conversions (limited) New products (takes time and money) Lack of competitiveness unit costs EU/Government interference Collapse of printing paper markets

4 Paper Development Source: Risi, UPM

5 Graphic Paper Demand Decline in Europe... Mmt Western European Graphic Paper Demand e Turning Point : 3.8% : 1.3% : 2.5% : 4.5% : 4.6% : 5.9% 0 Year Source: Risi, Vision Hunters

6 Boxboard and in Selected Key Regions Total global consumption of boxboard is estimated at about 45 million tons/a (2010). The consumption is forecast to increase by about 4%/a leading to about 55 million tons/a in Asia accounts for about 48% of the total consumption of boxboard. North America Western Europe Eastern Europe Latin America in 1000 tons Asia Boxboard subgrades included: Western and Eastern Europe: Solid bleached boxboard, folding boxboard, white lined chipboard, liquid packaging board, unbleached cartonboard, other cartonboard. Asia: Coated boxboard, uncoated boxboard, liquid packaging board, other boxboard. NA: Bleached board, recycled board, unbleached folding for carton and beverage carriers, milk carton, food service, tube, can and drum board, recycled gypsum wallboard facing. Latin America: Boxboard as a total. Source: Risi, Vision Hunters

7 Containerboard and in Selected Key Regions Total global consumption of containerboard is estimated at about 125 million tons/a (2010). The consumption is projected to increase by about 5%/a reaching about 160 million tons/a by Asia accounts for about 48% of the global containerboard consumption North America Western Europe Eastern Europe Latin America Asia in 1000 tons Source: Risi, Vision Hunters

8 Global Drivers and Issues North America More attractive fiber based packaging design Western Europe More attractive fiber based packaging design China Rapid change in retail patterns Latin America Rapid change in retail patterns General drivers Environment CO 2 Recyclability Cost competitiveness Quality and intelligence Design

9 Growing markets Biofuels Dissolving pulp Only a multipurpose product composition: textiles explosives computer screens, etc. Nano technology Big potential in the long term? Costeffectiveness Does not compete with food production Competitiveness? Wood Construction Change of the legislation to favor wood construction Biodegradable plastics High strength and stiffness durable goods Packaging, hygiene and selected specialties Competitiveness Recyclability Evolution of existing products

10 The Number of Assets Economies of Scale Versus Diversification Benefits Conversion to new portfolio? Is in most cases difficult and time consuming. The raw material control The raw material consumption in relation to the optimal value Economies of scale versus diversification benefits (economies of scale and scope) The value of the assets globally billion USD Products marketing alliances Source: Vastatalo.fi, Vision Hunters

11 Conclusions Major value creation differences based on portfolio Difficult to escape from declining product portfolio New products will not help in the short/midterm A handful of companies have succeeded in transformation