Kruger Products reports 1Q results following TAD construction
Canadian manufacturer Kruger Products has posted an increase in its 1Q 2013 revenue after it completed the construction phase of its TAD project.
It reported revenue of $221.8 million, up 2.6% year over year. The figure was positively impacted by volume and mix increases mainly from five additional days of sales.
The increase was also driven by increases in consumer and AfH segment revenues.
Earlier this year, Kruger Products finished the construction phase of its $322 million new through-air-dried (TAD) tissue machine project at its Memphis, TN, mill.
When fully optimised, the new TAD tissue machine is expected to increase the company’s production capacity by approximately 20%, or 60,000tpy.
Chief executive Mario Gosselin said: “We are carrying out our strategy to gradually ramp up TAD product sales in 2013 which should generate positive EBITDA for the year as a whole.
“We have benefited from additional days of sales in the quarter and solid growth in the US business.”
He added that this was partly offset by the decision to cease production of parent rolls for sale last year.
“While our private label revenue was strong, sales in our Canadian branded business were somewhat soft in Q1 primarily due to the timing of our promotional activities. We expect revenue to improve in Q2 and Q1.”
EBITDA for the quarter was $25.1 million, a decrease of 7.8% year over year, but an increase compared to the EBITDA the company recorded in the 4Q of 2012. Gosselin said: “Q1 EBITDA benefited year-over-year from the business realisation programme we implemented last year along with reduced management fees.
“These gains were impacted by start-up costs for the TAD project and higher fire and energy costs. In addition, our AfH segment EBITDA returned to a more normalised level in the first quarter.
“We look ahead to the rest of 2013 with confidence in our business model considering the positioning of our brands and the strong initial reaction of customers to our TAD products in the premium private label market.”
Kruger Products is a Canadian manufacturer of quality tissue products for household, industrial and commercial use.
Green Innovations to launch North America’s first tree-free bamboo-based bath tissue
Green Hygienics is set to launch an exclusively licensed line of tree-free bamboobased bath tissue.
The Green Innovations subsidiary said it will be the first ever tree-free bamboo fibre-based toilet paper products available in the North American market. The new products will be sold under the GHI “Sensational” brand.
Philip Rundle, chief executive of Green Innovations, said: “The bath tissue market in North America is absolutely enormous, valued at an estimated $21.6 billion annually, and we feel that tree-free bamboo is going to quickly establish itself as the fastest growing and highest margin component of the industry.
“Our supply partners are at the cutting edge of the manufacturing capabilities that make these eco-friendly products possible on a global volume scale. We feel it could rapidly become our highest demand product and provide significant revenues to the company.
“GHI is currently finalising samples and packaging for the North American market and expects to be offering product to wholesalers and retailers in less than two months time.”
Green Innovations, through its wholly-owned subsidiary Green Hygienics, is the exclusive licensed North American distributor of American Hygienics Corporation’s 100% tree-free bamboo-based product line, including personal care and paper-based goods.
Southview in US first with gas fried boiler
Soundview has started using natural gas instead of oil as boiler fuel for its recycled tissue, towel and napkin operation in Putney, Vermont.
The move is a first in the US according to the business, which manufactures tissue and towel products in the private label, AfH, office and At-Home markets.
The Putney plant operates 24/7 making tissue, towel and napkin products from recycled material for AfH use at commercial and institutional facilities.
There is no natural gas pipeline in Putney, but the facility has been using natural gas in its boilers continuously since the end of March with trucks from NG Advantage delivering compressed natural gas (CNG).
The company said: “This “virtual pipeline” is the first time that US companies located beyond the reach of physical pipelines have been able to take advantage of inexpensive, clean North American natural gas.”
Soundview chief executive George Wurtz said: “Lower energy costs are crucial to being competitive and we are also focused on reducing the environmental impact of our products.
“Using CNG to run our Putney plant meets both our economic and environmental goals and our CO2 emissions are now 28% lower than with oil and there are practically no other emissions.”
Earlier this year, the company boosted its AfH product offering after it purchased Putney Paper, a subsidiary of towel and paper products manufacturer APC Paper Holdings.
With the acquisition, the former owner of the Marcal paper plant in Elmwood Park in North America broadened its range of commercial towel manufacturing capabilities, expanding its finished paper product ranges to include tissue, towel and napkin products.
Soundview Paper Company is part of Atlas Holdings which owns and operates more than 70 facilities with nearly 9,000 employees worldwide.
It manufactures tissue and towel products in the private label, AfH, office and At-Home markets.
Wassau Paper reports 1Q nett loss
Wausau Paper has made “significant progress on repositioning itself to focus on tissue” as it reports a net loss of $1.7m in its first quarter results.
The results reflect the impact of the start-up of the $220m tissue expansion project in Harrodsburg, Kentucky, and the conversion of its new machine from conventional to ATMOS production.
The conversion was completed in February and the qualification process for a new portfolio of 100% recycled products has started.
During the quarter, the company announced its repositioning of the business to focus on tissue, as well as qualified a family of new products on ATMOS substrates to support the second-quarter launch of the DubINature brand.
Chief executive and president Henry C. Newell said: “The recent investment in the tissue business positions us for growth with a long term return on capital goal of 18% and achievement of 15% return on capital by the end of 2014.
“We remain committed to delivering 6% case shipment growth in our tissue business by the fourth quarter of 2013.”
First-quarter volume was “relatively flat” compared to the prior year, while volume in the support product categories was strong increasing 3%.
1Q end-product prices show little change for North American producers
Four tissue paper producers in North America reported mostly flat pricing for the first quarter vs their levels in first quarter 2012.
North America’s second and third largest tissue paper producers, Kimberly-Clark (K-C) and Procter & Gamble (P&G), reported pricing gains in the quarter of 1% and 2%, respectively.
K-C’s gain is for consumer tissue; P&G’s for a mixture of its consumer diaper and tissue businesses, so it’s unclear what the average was for tissue.
Clearwater Paper’s average for first quarter was down 0.4% because of a 2.6% decline in non-retail pricing “caused by lower machine-glazed and contract manufacturing pricing,” the company reported.
Clearwater is the second largest private label supplier in North America.
Small-capacity producer Orchids Paper Products reported a 1% price decline, quarter-over-quarter.
‘MIXED BAG’ FOR CLW.
Clearwater Paper (CLW) president and chief executive Linda Massman said first-quarter tissue performance was a “mixed bag,” and cited the “complexity and rebalancing (of) the network as our new customers came online, coupled with the low inventories and [the introduction of through airdried TAD] bath tissue were more challenging than I think could have been anticipated.”
Clearwater started up a new TAD machine in Shelby, NC, at the end of last year and also upgraded a TAD PM in Las Vegas to produce bathroom tissue. Massman told analysts based on a Seeking Alpha transcript of the firm’s earnings call this week that the company was working to fix the operational issues by “getting our mix of inventory back to healthy operational levels, reducing purchases of external paper, minimising paper machine changeovers wherever we can, and prioritising customer service related decisions.”
CFO John Hertz said “near-term customer demand for conventional bathroom tissue outstripped our ability to efficiently produce and transport it, which gave rise to the cost pressure that we experienced in the quarter.”
The Shelby TAD produced 13,000 tonnes in the quarter, in line with expectations for 55,000 tonnes this year and 70,000 by first quarter 2015, the company said.
The company shipped 94,000 cases in the quarter of TAD bathroom tissue, Hertz said. He said the company expected to ship about 18,000 to 20,000 tonnes and four million to five
million cases in 2013.
Clearwater’s consumer product sales were $285 million, up 2% vs fourth quarter sales. Retail grew 8% primarily in bathroom tissue and non-retail declined 7%, Hertz said.
Retail price per tonne declined 2% vs the fourth quarter and non-retail fell 1%.
Massman said Clearwater also announced a 1 May increase for its tissue and machine-glazed parent
COST CUT FOCUS FOR P&G
P&G’s diaper and tissue family/baby care unit increased sales by 3% in its fiscal quarter through March. Overall, 20% of P&G’s first quarter sales totaling $4.27 billion was from baby/family care. The unit’s share of company operating earnings was 28% ($939 million).
P&G remained steadfast about cutting costs, executives told analysts this week.
“We are on track to deliver more than $1.2 billion in savings (by the end of June),” CFO Jon Moeller told analysts, based on a Seeking Alpha transcript of the company’s earnings call. “Our efforts in this area include a targeted 5% net productivity increase across our manufacturing operations, even as we add new manufacturing capacity.”
Moeller said P&G is “shifting a greater portion of media spending to digital. This offers a higher return on investment. We’re also making good progress on cost savings in non-media marketing spending.”
K-C COTTONELLE GAIN
K-C reported gaining Cottonelle business in the quarter from a competitor, but president/CEO Thomas Falk didn’t expect the increased volume to remain for the rest of this year.
Falk also said that K-C “is not stopping at (a consumer tissue margin of) 15%.” He told analysts that the company expects to grow in flushable wipes that will be launched in North America after a “terrific launch in the UK” and “we are starting to look at other things that we can do with our great tissue brands that bring more margin and revenue into the category”.
News from RISI (www.risiinfo.com)
Forestal y Papelera Concepción invests in tissue line
Chilean company Forestal y Papelera Concepción has signed for a Metsosupplied Advantage NTT production line which will provide high product quality and flexibility.
The line will be supplied to the company’s Concepción-based site. The packaging board producer is entering the tissue business and is preparing to start up its first tissue production line.
The new line will be the world’s second tissue line based on Metso’s Advantage NTT concept and the first with a 5.5-metre paper width.
The line is scheduled to start up at the end of 2014. The value of the order has not been disclosed.
Metso said the Advantage NTT technology properties as well as providing energy savings compared to conventional or structured tissue grades.
The Advantage NTT concept is a flexible production tool and quickly enables change between production of conventional and premium tissue and towel products. It also features very high production capacity.
Guillermo Swett, chief executive of Forestal y Papelera Concepción, said: “We are entering the tissue business after operating in the newsprint and packaging paper segments and we are aiming for top level products.
“Therefore Metso’s Advantage NTT tissue line was the best choice for us.”
Metso’s scope of supply will comprise a complete Advantage NTT 200 tissue machine with a width of 5.5m equipped with an OptiFlo II TIS headbox, a Metso cast iron Yankee cylinder, an Advantage AirCap Yankee hood and an Advantage SoftReel reel.
The tissue line will also be equipped with an Advantage WetDust dust management system, sheet control, tail threading equipment and complete stock preparation systems.
The line will be fully automated and optimized to enhance final product quality.
The new tissue line will have a capacity of 70,000 tonnes per year of bathroom tissue, napkin and towel grades.
Forestal y Papelera Concepción was founded in 1995. Since 2009 it has mainly been producing recycled fibrebased packaging paper.
Its new tissue production line and converting facilities will deliver jumbo rolls and converted tissue products for the South American and US market.
Sepac increase operating speed after investment
Sepac has said its operating speeds on two paper machines have increased by 20% after it invested in two Hergen supplied Steel Yankee Dryers.
At the end of 2012 the Brazilian tissue producer replaced two existing cast iron Yankee dryers for its machine # 1 and # 2.
The two 10ft (3,048mm) nominal diameter dryers are manufactured in carbon steel and internally ribbed.
The machines changed from 1,000m/min to 1,200 m/min in the smallest basis weight.
According to Hergen, this improved the superiority of the drying capacity of the ribbed dryers in relation to conventional cast iron cylinders when working at the same steam pressure.
Due to the drying capacity increase, Hergen added that Sepac decided to turn off the steam showers previously installed at the suction presses of both machines and also eliminated the post dryers used in the production of high basis weight towel.
The new ribbed dryers resulted in a more stable and easy to control coating, which brought a much “more precise and uniform creping process that allowed producing higher quality papers with proven smoothness increase”.
Sepac was founded in 1974 and now produces over 75,000tpy of high quality paper.