Packaging ‘needs consolidation and price increases’

The chief executives of SCA, M-real and UPM Kymmene were generally positive in their market forecast for the short to medium-term, but told the Reuters paper and packaging summit in Helsinki the sector still needs to change.

UPM chief executive Jussi Pesonen said the firm would be an “active player” in a consolidating market. “Definitely this industry needs to consolidate. There will be swaps or share deals. We most probably won’t see any cash deals in this industry for the next year or two,” he said.

M-real head Mikko Heland said he was confident operating losses would narrow in the second half of the year, and said the firm was planning price hikes in Europe that would be felt next year.

“We are still in recession and demand for paper, cartonboard and pulp is not year back to normal, but I’m definitely more optimistic than I was at the beginning of the year,” said Heland.

Meanwhile, SCA expects paper volumes to remain the same in the second half of the year. “I would say the market is reaching the bottom, but even if we have seen positive indications in certain areas, they haven’t resulted in increased consumption yet,” said chief executive Jan Johansson.

SCA’s packaging division is expected to record a lower result in the third quarter than the second, but said a lot depends on its EUR 100 price increase that comes in on 1 September.

“If that goes through, it is of course very positive, and if it goes through to some extent that would be enough to stop the downward trend,” said Johansson.

Today is the second and final day of the Reuters summit. For more information, click here.

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