Heidelberg: the plot thickens
Last month’s Europe newsletter reported on Heidelberg’s surprising decision to sell digital label press manufacturer CSAT GmbH to the French-American giant Markem-Imaje. Now comes the discombobulating news that conventional press manufacturer Gallus, which is 30% owned by Heidelberg, will continue to hold the distribution rights for the CSAT press after the change of ownership. This sounds like the magical “you’ve got it, you sell it, you’ve still got it” that applies to certain professions but is not normally found in the label business. Gallus, by all accounts, is actively marketing the CSAT press. In April of this year the Swiss press manufacturer hosted a two-day open house event devoted to digital printing, and specifically to the CSAT press (or Linotype L as Gallus prefers us to call it) shown operating with the Gallus ECS C on- or off-line finishing equipment. For Gallus to market a digital label press makes sense; it is not clear (at least not to your correspondent) what is in it for Markem-Imaje, a group with little experience in the narrow web business. Gallus’ very successful and long-standing distributor for France is TMT Label, which also markets the Durst digital press and could find it tricky to fit CSAT, under whatever name, into its product portfolio. Heidelberg in the meantime is pressing on with the announcement of further new developments in the label sector, including another innovation in digital label printing, this time in association with partners like Ricoh or Fujifilm, and due to be revealed in the fall of this year. Heidelberg’s strategists plan to develop a 200 million euro business in digital printing, and to this end they are allocating one third of their total R&D budget to these projects. If the company’s digital print strategy looks convoluted at present, it will no doubt all fall into place, sometime.
Even the most fanatic cheerleaders among graphic paper manufacturers have now come to accept that their core product is going down the tube, and will not, short of a miracle, be coming back up again. Business consultants of all stripes have been called in and have advised them (as you or I could have told them for free) to cut capacity and move into specialty grades like tissues, packaging and label papers. One such paper maker is following this advice in a big way. Sappi’s paper mill at Alfeld in Germany is being totally refitted at a cost of €61 million ($85 million). According to Sappi’s management, this rebuild “…will substantially raise the group’s capacity to produce a wide range of paper and packaging products including coated and uncoated papers for flexible packaging, premium SBS board for luxury boxes, topliner for high quality corrugated packaging, label papers for wet glue applications, and last but not least, siliconized release liners for self-adhesive products.” The only possible problem for Sappi may be that there are already quite a lot of producers in the release liner business, and a wide-web paper machine (see photo) with a capacity of over 130,000 tons/year needs long runs if it is to operate efficiently. Can Sappi accommodate such an extensive range of products and still cover operating costs? The new machine came on stream only recently so it is probably too soon to say. The Sappi group as a whole returned an EBITDA of around €150 million in each of the last two quarters so they must be doing something right.
Another paper group also doing some things right is Helsinki-based UPM-Kymmene. Their first quarter 2014 results register an EBITBA of $435 million, a ten percent increase on the same quarter of 2013. This is at least in part due to UPM’s Raflatac division, which plans to invest €13 million ($18 million) in restructuring and upgrading its production plants in Europe. This program will see a new labelstock coating line installed at Raflatac’s plant in Nowa Wies, Poland, and the partial closure of two plants in Finland and one in Spain, with the loss of up to 120 jobs. This restructuring, apart from the obvious cost-saving aspect of expanding modern plants and closing older ones, also reflects Raflatac’s expanding business in Eastern Europe.
Let’s finish this chapter on a note of ebullient optimism by looking at German labelstock producer Herma (total 2013 sales $360 million). Labelstock accounts for 57% of Herma’s business and in this division 2013 turnover rose by a healthy 6%. Exports remained buoyant at $200 million and the group’s labelstock sales in Germany also grew, despite falling economic growth rates in Germany, and mostly even worse economic news from other European markets.
France: some bad news, some could-be-worse news
While Herma over in Germany is doing very nicely, Paris-based paper group Sequana/ArjoWiggins is not – at least, not in its home market where two of its paper mills are up for sale with no buyers in sight so far. Sequana is desperate to sell or close them, but the recently appointed French Economy Minister Arnaud Montebourg has met the unions at the two plants, and has (presumably) used friendly persuasion on the management who have just announced a one-year moratorium on any closures. This will see the embattled government through next month’s European elections and (with luck) into calmer waters in 2015. It will not do much to help the equally embattled paper producer.
Further downstream in the French label business, things are not so dire. When the French label association UNFEA met in March for its “Economy Day,” around 130 converters and suppliers turned up to the imposing but austere Maison du Sport Français in Paris. UNFEA Board member Dominique Durant des Aulnois and Christophe Bosschaert of label converter Reynders kicked off the proceedings with a double-act presentation of the French label market. The year 2013 saw a slight fall in the volume of PS label shipments, but this was more than compensated by a rise in average price per m2. The pharmaceutical label sector was singled out as being particularly vibrant last year.
This presentation was followed by a one-man show in the person of Jules Lejeune of FINAT whose survey of world label markets (given in fluent French – how many languages does that man speak?) showed global consumption of labelstock inching its way up to the six billion m2 mark, with encouraging sales in Asia (unsurprising) and – rather more surprisingly – in Eastern Europe, which had a 6% growth rate in label consumption last year. Visitors to the annual FINAT congress in June 2014 in Monte Carlo will be able to hear a repeat (in English) of both the French and the global presentations.
Was this the IPEX to end all IPEXes?
Regular readers of this column may remember the tribulations of the IPEX print show (“Britain’s answer to drupa”), which took place in March in London, and it looks as if Britain may have to find another answer. Several big exhibitors pulled out, but a number of label press manufacturers stayed put, including Japan’s Konica Minolta which took the largest booth at the show to demonstrate, inter alia, its first ever digital label press. Konica’s development manager Mark Hinder reportedly said after the show that his company “…was confident of securing €3.5m (£2.9m) new business as a direct result of Ipex.” Other digital label press manufacturers at the show included EFI, Domino, Fujifilm, Screen, Primera and Xeikon, the last-mentioned demonstrating its Xeikon 3500 label press. These and many printing machinery manufacturers exhibited at the show, but only a handful of them were actually showing presses. One such press maker remarked: “Pulling out would have cost us almost as much as exhibiting, that’s why we’re here.” Alas for Ipex, others clearly made the opposite decision witness the large number of “rest & relaxation” areas dotted around both halls at the show. The previous Ipex, in 2010, occupied half a million square feet of exhibition halls, and attracted some 50,000 visitors. The corresponding figures for this year were just 150,000 sq.ft. and 23,000 visitors. The pre-show hype included quotes from show organizer Trevor Crawford of Informa Exhibitions to the effect that the show was being rebranded as a “Digital, Print and Marketing Communication Event” and as such was “a new departure.” However, the most newsworthy departure was Crawford’s own. A few days after the show, he resigned.