Top 10 global paper companies: 'shrink to fit industry' grapples with overcapacity.2005 saw red splattered splat·ter v. splat·tered, splat·ter·ing, splat·ters v.tr. To spatter (something), especially to soil with splashes of liquid. v.intr. across the balance sheets of the world's pulp and paper companies as writedowns and closures combined with higher costs. Obviously, it was not a year to remember for most of the world's paper groups. However, it possibly is one that could presage a long-awaited resurgence in the sector, as many of the major corporations take steps to downsize Downsize Reducing the size of a company by eliminating workers and/or divisions within the company. Notes: When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability. It is sometimes referred to as trimming the fat. excess capacity. There was certainly little joy to be found in many of the annual reports, and CEOs explained the rash of closures and layoffs taking place throughout almost all of the developed markets. Inevitably, the picture painted to explain the need for the various "streamlining operations" and "efficiency initiatives" covered overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. , higher energy costs and increased chemicals prices. But there is a still more fundamental change taking place as capacity ramps up in Asia and the major players shift their fiber sourcing to locations such as Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Russia. It seems highly likely that the pulp and paper industry The global pulp and paper industry is dominated by North American (United States, Canada), northern European (Finland, Sweden) and East Asian countries (such as Japan). Australasia and Latin America also have significant pulp and paper industries. of 2016 will look dramatically different from that seen today. Outside the fast-growing emerging markets, demand for the most part appears to have held reasonably steady across many grades, even if it lacked any grip on growth. But even the prospect of a slim recovery and strengthening prices did little or nothing to halt the financial slide seen across the major pulp and paper corporations. Currency effects affected the Top 10 this year, but the Top 3 remain the same with International Paper in the top slot, Weyerhaeuser at No. 2 and Georgia-Pacific in third. G-P G-P Gel'fand - Pinsker (channel code) is now under control of Koch Industries Koch Industries, Inc. (pronounced "koke") is a private corporation based in Wichita, Kansas. According to Forbes Magazine, it is the largest privately owned company in the world by revenue (surpassing Cargill in 2005 with the acquisition of Georgia-Pacific), with subsidiaries , and its numbers are educated estimates, since Koch does not release financial data. Indeed, fourth place is also problematic given that Procter & Gamble's corporate breakdown does not allow us to strip out paper-related earnings; but what we do know is that something must have gone right in the hygiene sector since P&G and Kimberly-Clark in the number six spot both showed strong sales growth. In the Nos. 6-8 slots, European companies It may never be fully completed or, depending on its its nature, it may be that it can never be completed. However, new and revised entries in the list are always welcome. This is a list of companies from the countries in the European Union. illustrate how tough the markets were in 2005. Stora Enso
UPM Universiti Putra Malaysia UPM University of the Philippines - Manila UPM Unit Production Manager (film and video production) UPM User Profile Management UPM United People's Movement all reported curtailed profits; and despite signs of some resilience in the market, the main topic of conversation for CEOs seemed to revolve around Verb 1. revolve around - center upon; "Her entire attention centered on her children"; "Our day revolved around our work" center, center on, concentrate on, focus on, revolve about efficiency, cutbacks and layoffs. Two Japanese groups--Nippon Paper Group and Oji Paper--take up the last two Top 10 slots, highlighting the globally competitive nature of today's markets. Here again, the tale is familiar as energy costs play a vital part in the equation while the groups are looking to expand in China. Overall, it's fair to say that 2005 will not go down as a great vintage, but with signs that capacity creep and geographical imperatives are so much to the fore, it could be that 2005 will go down as the year when the industry reinvented itself. #1 INTERNATIONAL PAPER 400 Atlantic St. Stamford, CT 06921 Phone: +1 203 541 8000 Web: www.InternationalPaper.com Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. : John Faraci Pulp, Paper & Converting Sales US$ 24.1 billion PROFILE International Paper is the world's largest paper company operating a range of pulp, paper and packaging and converting plants, as well as merchanting companies, wood product facilities and specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. plants. IP is active in practically every part of the forest products supply chain worldwide, covering 31 pulp, paper and packaging mills; 148 converting and packaging plants; 27 wood products facilities; 11 specialty chemicals plants; and two specialty panels and laminated laminated /lam·i·nat·ed/ (-nat?ed) having, composed of, or arranged in layers or laminae. laminated made up of laminae or thin layers. products plants, along with significant distribution assets. PRODUCTS IP's output stretches across a broad range of product lines, including pulp, fluff pulp, coated and uncoated printing and writing papers, specialty papers, diapers, sanitary napkins, containerboard con·tain·er·board n. A corrugated or solid cardboard used to make containers. , bleached packaging board, converting and specialty industrial papers. Lumber and other forest products account for a major part of the product mix, alongside distribution and specialty chemicals. ANALYSIS International Paper took some bold steps in 2005 with the July announcement of its Transformation Plan. Under this scheme, the group is reinventing itself by focusing on packaging and uncoated papers (including xpedx), while spinning off segments to pay down debt. This so-called 'Play to Win' strategy is already well advanced, but the full impact will not come through until the full-year financials are published for 2006. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , some US$ 8 billion of assets, such as the group's Carter Holt Harvey Carter Holt Harvey is an Australasian forest products company, with significant interests in wood products, pulp, paper and packaging. The company employs approximately 10,500 people across Australasia. stake, have been or are being sold. The focus will be to see where the new management strategy takes IP, and whether it become a truly profitable player in the markets it has chosen. The group has ambitious goals and is targeting a US$ 1.2 billion non-price profit improvement over the next three years. Management believes this is achievable through lowering supply chain costs, growing sales and, inevitably, downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing . As a result, the 2005 results are somewhat of a diversion, but we can see that over the year the company showed a modest increase in sales for its ongoing businesses to reach US$ 24.1 billion, up 3.2% on the previous year. The result meant that profits were pushed into positive territory at US$ 1.1 billion, giving a return on investment for continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of 4% before special items. #2 Weyerhaeuser PO Box 9777 Federal Way, WA 98063-9777 Phone: +1 253 924 2345 Web: www.Weyerhaeuser.com Chairman, President and CEO: Steven Rogel Pulp, Paper & Converting Sales US$ 22.6 billion PROFILE Weyerhaeuser Co. is one of the largest pulp and paper companies in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . The group owns or leases around 38 million acres of forestland for·est·land n. A section of land covered with forest or set aside for the cultivation of forests. in five countries, the majority of which is in Canada. As well as growing, harvesting and distributing pulp, paper and other forest products, the company operates a sizeable real estate division. PRODUCTS Weyerhaeuser's wood products businesses produce and sell softwood softwood Timber obtained from coniferous trees (mainly of the pine and fir families). With the exception of bald cypress, tamarack, and larch, softwood trees are evergreens. and hardwood lumber, plywood, veneer veneer (vənēr`), thin leaf of wood applied with glue to a panel or frame of solid wood. The art of veneer developed with early civilization. , oriented strand board Oriented strand board, or OSB, or waferboard, or Sterling board (UK), is an engineered wood product formed by layering strands (flakes) of wood in specific orientations. , panels, engineered lumber products and treated products. The pulp and paper businesses cover pulp, coated and uncoated papers, business forms and bleached board. In addition, Weyerhaeuser produces a wide range of containerboard and other packaging and operates an extensive paper recovery and recycling system. ANALYSIS Not exactly a memorable year for Weyerhaeuser in 2005. Net earnings declined from US$ 1.28 billion in 2004 to US$ 733 million last year. Management cited a host of reasons for the decline, including adverse currency movements, hurricanes Rita and Katrina, new containerboard capacity in Asia, the impact of electronic media on paper consumption and higher energy and transport costs. Overall, sales were up at US$ 22.63 billion compared with US$ 21.93 billion the previous year. Much of the increase in consolidated sales was attributable to movements in the housing market. Increases were seen in the realized prices for fine paper and corrugated cor·ru·gate v. cor·ru·gat·ed, cor·ru·gat·ing, cor·ru·gates v.tr. To shape into folds or parallel and alternating ridges and grooves. v.intr. packaging, but higher input costs eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. much of the profitability. The company also noted another year of closures as Weyerhaeuser continues its ongoing rationalization program, leading to one-off charges and writedowns over the year. The majority of the 2005 charges were because of decisions to close facilities such as a Washington pulp mill A pulp mill is a manufacturing facility that converts wood chips or other plant fiber source into a thick fiber board which can be shipped to a paper mill for further processing. ; a paper machine in Dryden, Ontario Dryden (2006 population 8,195) is the second largest city in the Kenora District of Northwestern Ontario, Canada located on Wabigoon Lake. It is currently the smallest community in the province of Ontario designated as a city. ; a containerboard unit in Plymouth, NC, and the Prince Albert, Saskatchewan Prince Albert is the third-largest city in Saskatchewan, Canada. It is situated in the centre of the province on the banks along the North Saskatchewan River. The city is known as the "Gateway to the North" because it is the last major centre along the route to the resources of pulp and paper mill. The company also announced that it is selling its composite panels business. The strategic review is ongoing and the group has not ruled out further closures or sales. #3 Georgia-Pacific 133 Peachtree St. Atlanta, GA 30303 Phone: +1 404 652 4000 Web: www.GP.com CEO: Joseph Moeller Pulp, Paper & Converting Sales approx US$ 20.0 billion PROFILE G-P is among the largest producers of tissue products in North America and holds significant positions in markets in Europe and elsewhere. The group is also a major player in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. containerboard market, as well as operating large-scale businesses producing and distributing building products. PRODUCTS Georgia-Pacific operates across several business areas, including tissue, napkins, containerboard and packaging, pulp and paper and the production and distribution of building products, including various industrial wood products, lumber and gypsum gypsum (jĭp`səm), mineral composed of calcium sulfate (calcium, sulfur, and oxygen) with two molecules of water, CaSO4·2H2O. It is the most common sulfate mineral, occurring in many places in a variety of forms. board. ANALYSIS The big news for G-P in 2005 was the US$ 21 billion purchase of the company by Koch Industries, which has now de-listed the U.S. giant. The deal was finalized See finalization. Dec. 23, and G-P now operates as a privately held, indirect, wholly-owned subsidiary of Koch. Announcing the deal, Charles G. Koch, chairman and CEO of Koch Industries, said, "We believe that as a wholly-owned Koch subsidiary, Georgia-Pacific can be even more successful by combining the capabilities of our two companies. As a private company, we have the flexibility and resources to pursue strategies and opportunities that we couldn't as a public company. Beyond viewing Georgia-Pacific as a high quality investment, we view it as a whole new set of platforms for growth." Former Koch COO Joseph W. Moeller took over as Georgia-Pacific's president and CEO, while A.D. "Pete" Correll maintained his position as chairman to assist in the transition. Koch Industries is based in Wichita, KS, and owns a diverse group of companies engaged in trading, operations and investments worldwide, including a presence in 50 countries in such core industries as trading, petroleum, chemicals, energy, fibers, resins, fertilizers, pulp and paper, ranching, securities and finance. As a private company, it is not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to release accounts for G-P. As a result, it is difficult to say exactly how the newly structured group performed, but it is clear that the new management is realizing its ambitions for the company as new investments in its fluff pulp operation in Georgia and the closure of its Maine mill show. #4 P&G One Procter & Gamble Plaza Cincinnati, OH 45201-0599 Phone: +1 513 983 1100 Web: www.PG.com Chairman, President and CEO: A.G. Lafley Pulp, Paper & Converting Sales US$ 19.7 billion PROFILE Procter & Gamble is one of the world's largest consumer goods consumer goods Any tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or more, and companies. The company employs almost 110,000 people in 80 countries and seeks to deliver top quality brands in a highly competitive global market environment. PRODUCTS The Top 10 will take into account P&G's family health business segment, which covers diapers, wipes, tissues and towels, among other products. Within this segment, P&G controls some major brands in the paper industry, including Pampers Pampers is a brand of disposable diaper (or nappy) marketed by Procter & Gamble worldwide. Product information Diapers Pampers Diapers come in sizes going all the way up to Size 7. diapers, Bounty paper towels and Charmin bathroom tissue. However, since this category also includes products such as Crest toothpaste toothpaste, n See dentifrice. and Prilosec heartburn heartburn, burning sensation beneath the breastbone, also called pyrosis. Heartburn does not indicate heart malfunction but results from nervous tension or overindulgence in food or drink. tablets, we are unable to offer a breakdown of P&G paper activities. ANALYSIS P&G's family health division saw strong growth in volume, sales and profits in 2005. Volumes were up 8% and sales climbed by a robust 11% in 2005, delivering net earnings growth of a very healthy 18%. Baby care products proved to be a big winner over the year, especially developments in the Pampers range. In the family care category that includes mega brands such as Bounty and Charmin, the group saw market share climb to more than 30% in the main U.S. market. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the company, baby care and family care also managed to secure price increases that helped offset much of the damage done by higher raw material and energy costs, boosting year-on-year profit growth. With four years of strong growth behind it, P&G is clearly going through a purple patch, but the group still has aggressive growth targets and is it seems unlikely that 2006 will see much of a slowdown in the group's growth. Add in the Gillette acquisition and it seems that this behemoth behemoth (bē`hĭmŏth, bĭhē`–) [Heb.,=plural of beast], large, fanciful primeval monster, like Leviathan, evoking the hippopotamus mentioned in the Book of Job. is going to be tough for competitors to hold back. #5 Kimberly-Clark PO Box 619100 Dallas, TX 75261-9100 Phone: +1 972 281 1200 Web: www.Kimberly-Clark.com Chairman and CEO: Thomas Falk Pulp, Paper & Converting Sales US$15.9 billion PROFILE Kimberly-Clark is one of the world's largest hygiene products groups, boasting a host of internationally recognizable brands. The company is focused on building its personal care, consumer care and businesses worldwide. The group and its equity companies have manufacturing facilities in 37 countries, selling products in more than 150 countries. PRODUCTS Kleenex, Huggies and Kotex are among a long list of major household brands that Kimberly-Clark brings to consumers around the globe. Three main business segments represent the company's products. Personal care includes the disposable diaper, baby wipe baby wipe baby n → lingette f (pour bébé) baby wipe baby n → Ölpflegetuch nt and feminine and incontinence products such as Huggies, GoodNites, Kotex and Poise poise n. A centimeter-gram-second unit of dynamic viscosity equal to one dyne-second per square centimeter. poise, n . The consumer tissue unit manufactures facial and bathroom tissue, paper towels, napkins, etc., including Kleenex, Scott and Cottonelle. And finally, the business-to-business division makes health and hygiene products for the away-from-home market sold under brand names such as Scott, Kimwipes, WypAll and Safeskin. ANALYSIS Kimberly-Clark has been pushing cost reduction measures hard over the past three years. Return on invested capital (ROIC ROIC Return On Invested Capital ROIC Return On Investment Capital ROIC Readout Integrated Circuit ROIC Resident Officer In Charge ROIC Regional Office Implementation Committee ) for 2005 stood at 15.2%. Sales were up a healthy 5.4% at US$ 15.9 billion, although profits were down slightly as the group boosted its R&D efforts and targeted expansion in countries such as Brazil, Russia, India, China, Indonesia and Turkey. The company has major growth plans and will double its 2004 R&D spend to more than US$ 400 million in 2009 as a means of leveraging growth across its existing markets and expanding its corporate footprint around the globe. Also, sales in developing and emerging markets showed a 30% increase in 2005, so there are certainly opportunities to be exploited. Of course, it is not all one-way traffic. A highly competitive business environment means that K-C is also pushing closures and asset sales to boost efficiency and fund growth. As a result, in 2005 the group announced the elimination of 10% of its workforce--some 6,000 jobs--primarily in North America and Europe. According to the group, operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. rose 1% in 2005 despite progress on sales prices and cost reductions, mainly as a result of higher energy and raw material costs. #6 STORAENSO PO Box 309, FIN-00101 Kanavaranta 1 Helsinki, Finland Phone: +358 2046 131 Web: www.StoraEnso.com CEO: Jukka Harmala Pulp, Paper & Converting Sales Euro 13.2 billion PROFILE Stora Enso is an integrated forest products group with some 45,000 employees in more than 40 countries spread across five continents. The group boasts more than 16.7 million metric tons/yr of paper and board production capacity, making it the largest in the world on this measure. PRODUCTS The group is active in several major segments including graphic and office papers, newsprint newsprint low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been , packaging board, and wood products. Most of the production capacity is located in the Nordic countries and Europe; but North America, Latin America and Asia are becoming more important as the group expands. ANALYSIS Stora Enso took a few hits as a strike in Finland disrupted operations and operating profits came under significant pressure, especially in packaging and forest products. As a result, sales increased to EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 13.19 billion, but profitability declined in 2005. In combination with writedowns, Stora Enso reported a net loss for the year of EUR 126 million. The company is determined to get the ship back on course, though, and a series of radical restructuring moves took place in 2005 to ensure that this happens. The North American units have been under review for several years as part of a Profit Enhancement Plan. The company is embarking on a series of new measures in Europe under the Profit 2007 banner. As a result, 400,000 metric tons/yr of capacity will be eliminated, and the company is targeting EUR 300 million in profit improvements by 2007. Oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies is at the core of the profitability issue, but the group believes that demand should be better in Europe this year. The picture in North America is less positive, especially with postal rates due to increase, but overall, there are some good signs that overcapacity issues are being addressed and the outlook for 2006 should improve. In 2005, the company bought the Schneiderschone merchanting group in Germany for Euro 442 million, started up its new EUR 470 million SC paper machine at Kvarnsveden and rebuilt PM 5 at Corbehem in France, and invested in a major energy project at the Skoghall mill. Further expansion in China and Brazil is progressing. #7 SCA Box 7827, SE-103 97 Stockholm, Sweden Phone: +46 8 788 51 00 Web: www.sca.se President and CEO: Jan Astrom Pulp, Paper & Converting Sales SEK SEK In currencies, this is the abbreviation for the Swedish Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 96 billion PROFILE SCA is Europe's largest tissue producer. The group produces a variety of hygiene products, which account for around half the company's total sales. Packaging solutions and forest products are also big earners. The packaging group is the second-largest business segment, contributing approximately 33% of turnover. Germany, the United Kingdom and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. are the company's top markets, with France, Sweden and Italy following behind. PRODUCTS Consumer items such as handkerchiefs, toilet tissue, feminine hygiene Feminine hygiene is a general term used to describe products used by women during menstruation, vaginal discharge, and other bodily functions related to the vulva. Sanitary Towels (also known as maxi-pads or napkins), pantiliners, tampons, and feminine wipes are the major , and baby diapers provide the largest proportion of the company's revenues. However, packaging solutions such as specialty packaging generate significant returns in addition to the company's paper interests. Pulp, solid wood products, and timber help make up the remainder of the group's turnover. ANALYSIS According to Jan Astrom, SCA's president and CEO, 2005 was a "challenging year." It was also the year that SCA took on its biggest restructuring program, initiating a plan to close more than 20 facilities, with some 5,000 jobs being affected. Market overcapacity played its part in the decision to make such radical changes. The measures being taken mean that by the start of 2008, some 350,000 metric tons/yr of containerboard capacity will have gone, along with 100,000 metric tons/yr of tissue in a bid to secure cost savings of SEK 2.7 billion. However, the company has also made some strategic changes, concentrating the entire feminine hygiene production for Europe in Slovakia, for example. Overall, sales rose some 7% in 2005 with underlying organic growth accounting for 3-4%. Operating profitability also showed some improvement, SCA added, even if the net profit figure represents a low-point for a group that has been fairly good at delivering value over the years. Across the different business segments, personal care saw flat operating profits on rising sales; tissue was hit by price pressures and energy costs that hurt operating profits despite a sales increase; packaging saw a smallish boost in sales and a larger decrease in profitability; while forest products witnessed modest increases in both sales and profits. #8 UPM Eteloesplanadi 2 PO Box 380, FIN-00101 Helsinki, Finland Phone: +358 204 15 111 Web: www.UPM-Kymmene.com President and CEO: Jussi Pesonen Pulp, Paper & Converting Sales EUR 9.3 billion PROFILE UPM-Kymmene is the world's largest producer of magazine papers by volume but also produces a variety of other grades and wood products. The group has production facilities in 15 countries and a sales network spanning five continents. PRODUCTS The company operates five main business areas. Magazine papers accounted for 32% of the company's turnover in 2005, with fine and specialty papers making up 23% of the total and the remainder coming from wood products (13%), converting (14%), newsprint (13%), and other activities. ANALYSIS It was an interesting year for UPM as the group started up a second paper machine at Changshu in China, faced up to strikes in Finland and Canada, and confirmed its participation in the Metsa-Botnia pulp mill in Uruguay that is attracting major controversy. Like other companies, though, the group faced sluggish demand, oversupply in many of its markets, and higher input costs across its business areas. CEO Jussi Pesonen noted that a good degree of self-sufficiency in both energy and raw materials helped offset the worst of the rising costs, but this had to be supplemented by cost efficiencies and streamlining. Even so, return on equityremained stranded at 3.8% (excluding non-recurring items) for the year. Overall, sales were down almost 5% at EUR 9.3 billion and profits were hit even harder as strikes and closures made their impact on UPM, including a 6% drop in paper deliveries. The company believes that certain areas will improve in 2006, with printing paper demand due for an upswing Upswing An upward turn in a security's price after a period of falling prices. and prospects for higher prices and stronger demand in emerging markets. #9 OJI PAPER Giza 4-7-5 Chuo Ku Tokyo 104-0061, Japan Phone: +81 3 3563 1111 Web: www.ojipaper.co.jp President and CEO: Shoichiro Suzuki Pulp, Paper & Converting Sales Yen 1,213 billion PROFILE Oji Paper is one the largest Asian pulp and paper producers. The integrated producer is particularly active in the Japanese market, but it also boasts a broad portfolio of forest assets around the globe, which provide 70% of the group's woodchips. Australia, New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. , Vietnam, China, and Brazil provide much of the group's raw materials. PRODUCTS Like many of its Asian competitors, Oji Paper runs a wide range of diverse product lines, ranging from newsprint and publication papers to corrugating medium, tissue and thermal papers thermal paper n → papel m térmico . Much of the group's chip imports go into supporting production for domestic consumption, but Oji also promotes sales around the globe. ANALYSIS Sales climbed 2.4% for the year, but Oji Paper had a setback in terms of profitability. Tougher global competition meant that operating profits were down 12.6% on the previous year, driving ROE down to 4.1% from the 9% recorded previously. Nevertheless, the group is predicting a 5.5% sales increase next year and is optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that profits will climb back toward previous levels. In the meantime, the group is extending its ambitions in China with an agreement to press ahead with a forestry project in the Huizhou region of Guangdong Province Noun 1. Guangdong province - a province in southern China Guangdong, Kwangtung alongside Marubeni Corp. and the Guangdong Petrotrade Development Corp. During the first stage of the forestry project, 33,000 hectares of plantations will be established by 2008. Another 27,000 hectares will be planted during the second stage. Oji Paper has developed 10 overseas forests with an aggregate area of approximately 140,000 hectares in New Zealand, Australia, Vietnam, China, Laos and Brazil. It plans to increase the total area of its overseas forests to 300,000 hectares by 2010. Oji reports that the general business environment for paper is still relatively buoyant, but fuel costs and raw materials prices are hampering profitability. Demand for publication papers fared reasonably well along with newsprint, while hygiene products saw good volumes despite competitive pricing. However, paperboard and packaging proved to be somewhat weak. #10 NIPPON PAPER GROUP 1-12-1 Yurakucho, Chiyoda-ku Tokyo 100-0006, Japan President: Masatoma Nakamura Phone: +81 3 3218 9300 Web: www.np-g.com Pulp, Paper & Converting Sales Yen 1,152 billion PROFILE The Nippon Paper Group is one of Japan's largest papermakers and serves a large share of the domestic market for both paper products and housing and construction materials. PRODUCTS The group produces a wide variety of paper and board grades, including hygiene, specialties, and liquid packaging board, as well as chemicals and building products. Pulp and paper forms the vast majority of the company's sales, but the group also derives significant revenues from its other activities. ANALYSIS Another tough year for the Japanese group saw profits slip significantly as sales declined 2.3%. As a result, ROE dipped to 3.9% in 2005 from 5.6% for the previous reporting period. The group is forecasting a 4% increase in sales and a modest increase in net profits for the current year. On a positive note, the Japanese economy appears to be emerging from its previous torpor torpor /tor·por/ (tor´per) [L.] sluggishness.tor´pid torpor re´tinae sluggish response of the retina to the stimulus of light. tor·por n. 1. . However, energy and other input costs have played a part in halting halt·ing adj. 1. Hesitant or wavering: a halting voice. 2. Imperfect; defective: halting verse. 3. Limping; lame. progress on profitability. Yet again, the group has been looking at opportunities in China in an attempt to diversify sales away from its domestic market. On the plantation side, the group is also active in increasing raw material supplies. The group recently took delivery of some of the first chips from its holdings in the south of Australia. [ILLUSTRATION OMITTED] The group has also been active on the R&D front, developing a new coated wood-free paper and making several advances in the field of silviculture silviculture: see forestry. . Perhaps the most interesting new product, though, is a photocatalytic newsprint coating that helps purify Purify - A debugging tool from Pure Software. the air, combating odors Odors anosmia Medicine. the absence of the sense of smell; olfactory anesthesia. Also called anosphrasia. — anosmic, adj. halitosis bad breath; an unpleasant odor emanating from the mouth. from cigarettes and pets, for example.
TOP 10 COMPANIES 2005
2005 2004 2005 Net 2004 Net 2005
Sales Sales Profit Profit Employees
1 International Paper 24,097 23,359 1,100 (35) 68,700
2 Weyerhaeuser 22,629 21,931 733 1,283 49,887
3 Georgia-Pacific 20,000 20,000 na na 53,000
4 Procter & Gamble 19,700 17,700 2,300 1,900 110,000
5 Kimberly-Clark 15,903 15,083 1,568 1,800 59,000
6 Stora Enso 15,614 16,779 (149) 1,012 46,000
7 SCA 12,130 13,486 57 778 50,916
8 UPM-Kymmene 11,068 13,292 309 1,245 31,522
9 Oji Paper 10,330 11,046 179 404 4,863
10 Nippon Paper 9,805 10,995 146 227 na
2004 2005 % 2004 % Profit
Employees Sales Rank
1 International Paper 79,400 3.2% 1 na
2 Weyerhaeuser 53,646 3.2% 2 -42.9%
3 Georgia-Pacific 55,000 0.0% 3 na
4 Procter & Gamble 110,000 11.3% 4 21.1%
5 Kimberly-Clark 60,000 5.4% 5 -12.9%
6 Stora Enso 45,307 -6.9% 6 na
7 SCA 49,919 -10.1% 7 -92.7%
8 UPM-Kymmene 33,433 -16.7% 8 -75.2%
9 Oji Paper 4,863 -6.5% 9 -55.7%
10 Nippon Paper na -10.8% 10 -35.5%
Note: 2005 figures are U.S. dollars (in billions) based on conversion
rates at the close of the company's fiscal year.
RELATED ARTICLE: WHAT YOU WILL LEARN * A review of the 'Top 10 global paper companies' performance in 2005 * The outlook for 2006 * Profiles of the Top 10 companies ADDITIONAL RESOURCES * "Top Ten: Recovery is in the Air but Profits Remain Thin," by Jim Kenny, Solutions!, June 2005. To access this article, type the following product code in the search field on www.tappi.org: 05JUNSO28. Or call TAPPI Member Connection at 1 800 332-8686 (US); 1 800 446-9431 (Canada); +1 770 446 1400 (International). JIM KENNY, INTERNATIONAL EDITOR ABOUT THE AUTHOR Jim Kenny is international editor for Solutions! magazine, and is based in Brussels, Belgium. He is the former vice president of editorial for Paperloop and today heads his own company, DSI (Dynamic Systems Initiative) An umbrella term for a suite of Microsoft products that help manage the Windows environment in large enterprises. DSI was introduced in 2003. . Contact him by phone at +32 2 534 4960, or by email at jim.kenny@dsinow.com. |
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