Top 10 paper global paper companies, Solutions!, Online Exclusives, June 2003

TOP 10 PAPER GLOBAL PAPER COMPANIES

(Article continued from print edition of Solutions! Magazine, June 2003 issue, page XX)

8. Nippon Unipac Holding
www.nipponunipac.com/e
1-12-1 Yuraku-cho, Chiyoda-ku,
Tokyo, Japan
President and CEO: Takahiko Miyoshi

Pulp, Paper & Converting Sales
$10.2 billion

Profile: Nippon Unipac was formed in 2001 as a result of the integration of Nippon Paper Industries and Daishowa Paper Manufacturing. The unit is now the holding company for a whole host of pulp and paper related businesses such as Nippon Paper Industries, Daishowa Paper Manufacturing, Japan Paperboard Industries, Jujo, Kokuei Paper, Fuji Coated Paper, and a host of others. The group also has interests in Lintec and Daishowa-Marubeni International among other groups.

Products: Through its various companies, Nippon Unipac produces almost every conceivable grade of pulp and paper, as well being involved in distribution, building materials and chemical products.

Corporate Review: Since Nippon Unipac was only formed in 2001 with the integration of Nippon Paper Industries and Daishowa Paper Manufacturing, the group’s accounts really only show the first full year of operations. The company reported a small loss over the period, reflecting the weak economic situation and the difficulties involved in integrating such large and complex Japanese companies.

It will take some time to see whether Nippon Unipac is really up to the task of breaking away from Japan’s stagnant economic background and driving shipments, prices and profits into positive territory. However, on paper at least, the new group appears to be making all the right noises, looking to cost-cutting initiatives, keeping inventory levels down to support prices and reaping economies of scale from the merger via an ambitious restructuring program. As such, it will be interesting to follow Nippon Unipac’s progress throughout the coming financial year.

9. Oji Paper
www.ojipaper.co.jp
Oji Paper
Giza 4-7-5 Chuo Ku
Tokyo 104-0061
Japan
+81 3 3563 1111
President and CEO: Shoichiro Suzuki

Pulp, Paper & Converting Sales
$10.1 billion

Profile: Oji Paper is an integrated pulp and paper producer and is active in the global wood market. The group supplies some 24% of the Japanese market and ranks as one the largest Asian producers around.

Products: Like many other large Asian producers, Oji Paper’s product range is large and extremely diverse, ranging from newsprint and publication papers to corrugating medium, tissue and thermal papers. The group also has extensive forest holdings around the globe.

Corporate Review: Inevitably, economic stagnation has again weighed heavily on Oji Paper. The group saw net sales fall by 4% on 2001, while earnings just dipped very slightly into the red. Global economic uncertainty, domestic deflation and especially flat sales across the high-tech sector all worked against the company in 2002. Consequently, paper and paperboard sales were down and price levels weakened. Even so, the group did post a modestly positive operating profit before net earnings were sent into the red by write-offs in the group’s stock portfolio.

Oji’s management is currently pursuing a strategic plan that will guide the company through to 2005. The target is for a profit of Yen 100 billion for the fiscal year ending 31 March 2005. The group is already reshaping operating divisions to develop a more integrated and, hopefully, efficient structure. The company is also looking to expand even further in China. However, the future direction of the domestic economy is likely to determine exactly how successful Oji’s restructuring turns out to be in the end.

10. Svenska Cellulosa Aktiebolaget (SCA)
www.sca.se
SCA
Box 7827, SE-103 97
Stockholm, Sweden
+46 8 788 51 00
President and CEO: Jan Åström

Pulp, Paper & Converting Sales
$10.1 billion

Profile
SCA produces and sells absorbent hygiene products, packaging solutions and publication papers. The group has some 44,000 employees located across more than 40 countries. Although Western Europe remains very much the main market, the company also holds strong positions in certain segments in North America. SCA has acquired a number of companies in recent years to strengthen its market positions in the hygiene and packaging markets, mainly aiming at high added-value business areas. The also has ambitions to expend further in Asia, Central and Eastern Europe and Latin America.

Products
Hygiene products represent the greatest sales by business area (51%), followed by packaging (35%), forest products (13%) and others (1%). SCA also owns 1.6 million hectares of productive forestland and conducts sawmill operations. SCA’s top ten markets are (in order) Germany, UK, US, France, Sweden, Italy, the Netherlands, Denmark, Spain and Belgium. The hygiene products group manufactures tissue, baby diapers, feminine hygiene products and incontinence products (eg the Libero, Libresse, Tork, Tena and Edet brands). Packaging covers a range of corrugated packaging and containerboard, while forest products produces publication papers, pulp, solid wood products, timber and forest fuel. SCA North America is also active in the Away-From-Home tissue market, as well as producing incontinence products and protective packaging.

Corporate Review
SCA turned in some fairly decent figures for 2002 as sales rose 7.2% to Euro 9.6 billion ($10.1 billion) and the group even managed to raise net earnings by some 2.8%. The group also completed several strategic investments, most notably with the acquisition of CartoInvest, an Italian tissue company. As a result of the acquisition SCA gained a 23% share of the consumer tissue market in Europe and a third of the market for retailers’ brands. In addition, the company was busy building up its worldwide protective-packaging operations with takeovers in the North American market, primarily businesses focused on temperature-controlling packaging solutions.

According to SCA, demand for consumer-related products remained favorable in the beginning of 2003, but the consumer tissue market has been affected by competitive pressures. Price levels for converted packaging materials are reportedly stable and prices for recycled fiber are believed to have bottomed out. SCA also expects improvements in the European printing paper segment, although these will be contingent on a general improvement in advertising trends. A similar tale is told for North America, where SCA notes that improvements may be delayed by general economic concerns in the wake of the situation in the Middle East.

Honorable Mention:

Company
Smurfit-Stone Container Corporation
www.Smurfit-Stone.com
150 North Michigan Avenue
Chicago, IL 60601
+1 312 346 6600
President and CEO: Patrick Moore

Pulp, Paper & Converting Sales
$7.5 billion

Profile
The Smurfit-Stone Container Corporation (SSCC) is primarily a North American group, although it does other relatively small interests around the globe. It bills itself as the world’s largest integrated producer of paperboard and paper-based packaging products and SSCC is undoubtedly one of the world heavyweights when it comes to packaging.

Products
SSCC is the industry’s leading integrated manufacturer of paperboard and paper-based packaging, including containerboard, corrugated containers, multiwall bags and clay-coated recycled boxboard. The company is also the world’s largest paper recycler. In addition, the group is a leading producer of solid bleached sulfate, folding cartons, Lithoflute and labels and has a complete line of graphics capabilities for packaging. The group has two main operational groupings – the containerboard and corrugated containers division, and consumer packaging.

Corporate Review
Smurfit-Stone Container’s net sales last year stood at $7,483 million, with net income coming in at $54 million. As such, net sales showed a 2.7% decline on 2001, while net income was down from $66 million the previous year.

Profitability – or lack of it - was probably not the main focus of SSCC’s year though. Despite a fairly well leveraged balance sheet, in September last year SSCC finalized the acquisition of an 830,000 ton/yr corrugating medium mill in Stevenson, Alabama along with seven corrugated container plants, one hardwood sawmill and approximately 82,000 acres of timberland from MeadWestvaco. The company subsequently closed three of the corrugated container plants acquired as part of the Stevenson Mill Acquisition.

Even more significantly, Madison Dearborn Partners completed a cash offer for the outstanding shares of JS Group, formerly a major stockholder of Smurfit-Stone. Following the MDP purchase, JS Group distributed the Smurfit-Stone common stock it owned (approximately 29.3%) to its stockholders. As such, the group has a far greater degree of strategic freedom than in the past and it will be interesting to see how the management team decides to use it.