 |
A large part of the price rise should be seen as
compensation for higher costs for input materials
and a lower exchange rate for USD. Development
was modest at the start of the year but market pulp
reported profits in the third and final quarters.
Stable market position
During 2006 there was a balance between supply and
demand on the pulp market. One of the main reasons
for this is the structural changes taking place in the
industry. The competitive situation has forced the
closure of many older mills, primarily in North
America. Meanwhile, new mills have been built in
South America and South East Asia for the production
of short-fibre pulp.
Billerud is one of Europe’s leading manufacturers
of Nordic long-fibre sulphate pulp and a strategic
supplier to several leading paper producers in Europe.
Billerud’s mills produce more pulp than the Group
uses in its paper mills. The surplus, around one
quarter of the total, is sold as market pulp.
Increased consumption of various paper products
More than half of Billerud’s market pulp is used to
produce writing paper and printing paper. Another
major application area is tissue and packaging paper.
The raw material is 100% primary fibre from trees
that grow in northern Europe. This gives a strong, pure paper of high quality that also contributes to
efficient handling in converters’ processes.
An increasing number of manufacturers use
short-fibre pulp for various types of paper, while
consumption of bleached long-fibre sulphate pulp
is increasing by 1 to 2% per year. The reason for this
is increased consumption of various paper products,
primarily in Asia.
Billerud’s long-fibre pulp is used for reinforcement
when making tissue paper, for example. Pulp is used for
around 10-20% of the total fibre mix. The rest is often
short-fibre pulp produced from eucalyptus wood.
Eucalyptus pulp, which has short fibres, gives paper
good printing characteristics, while Billerud’s long-fibre
pulp gives the paper sufficient strength to withstand
stresses in the production process and for additional
handling by converters and printers.
Focus on special products
Billerud is progressing positively in terms of sales
of market pulp for production of special products.
Examples of special products include air filters for
cars, artificial leather used to decorate jeans and
insoles for shoes. Pulp is also used as a binding
agent for medical pills.
Deliveries in this segment increased during the year
and there is further potential for growth, mainly in Asia.
By listening to the market and maintaining broad contacts, Billerud can initiate co-operation with several
actors in end-user niches.
Strong relations with Asia
Over the years Billerud has built up close relations
with customers, some of whom have been buying
from Billerud since the 1960s. Europe is the largest
single market for market pulp, while most growth is
occurring in Asia.
To retain its strong market positions Billerud
has developed more in-depth relations in China and
as a result a Billerud sales office will open in Shanghai
during 2007. Paper is experiencing positive trends.
Changed consumption patterns and increased
environmental awareness are creating new business
opportunities.
A clear environmental profile
Increasing numbers of consumers are demanding
environmentally certified products and Billerud’s pulp
mills have FSC and PEFC certification. Certification
means that Billerud may sell certified products
corresponding to the volume of certified wood
material the company purchases.
The Forest Stewardship Council, FSC, is an
international organisation that works for environmentally
adapted, socially beneficial and economically viable
management of the world’s forests. PEFC stands for
Programme for the Endorsement of Forest Certification
schemes.
Smart, eco-friendly transport
Billerud works proactively to improve the efficiency
of pulp transportation from its mills to customers’
factories. Trucks have been largely replaced by trains
and Billerud is today one of five owners of ScandFibre
Logistics AB, a company that exclusively provides rail
transport and which currently handles around two
million tonnes of products per year.
Earnings trend
Compared with 2005 net turnover climbed by 13% to
MSEK 1,348. Operating profit increased by MSEK 24
compared with the previous year. Higher costs and a
weaker exchange rate for USD were countered by
higher prices and higher volumes.
|
|
|