Glatfelter

As the market for its paper business continues to plummet, Glatfelter’s nonwovens businesses are going from strength to strength.

Glatfelter is anticipating an increase in sales for its Advanced Airlaid business of around 10% in 2018, as shipments from its new Fort Smith plant in Arizona commence.

The new US$85 million plant at Fort Smith – announced at the start of 2016 – is the most significant expansion of airlaid materials for some years, adding 22,000 tons of capacity and making Glatfelter the leading supplier globally.

Glatfelter achieved net sales of US$1,591 million in 2017, and EBITDA of US$159.4 million, based on the performance of its three business units:

·       Specialty Papers, with sales of US$791 million and EBITDA of US$46.2 million.

·       Composite Fibres, with sales of $544 million and EBITDA of US$90.6 million.

·       Advanced Airlaid Materials, with sales of US$256 million and EBITDA of US$39.7 million.

Overall, its operating profit increased by 15% in 2017 compared to 2016 and even stronger growth is anticipated for 2018.

Composite fibres

The company’s Composites Fibres business unit is now by far the most profitable, and holds the number one position worldwide in nonwovens for tea bags, single serve coffee filters and nonwoven wallcoverings. Of the 165,755 tons of nonwovens the company shipped diring 2017, 49% went to the food and beverage industry, 19% for wallcoverings and the remainder was supplied for technical specialities, metallised products and composite laminates.

Glatfelter reports that during 2017, there was a recovery in the wallcoverings markets and sales were up 19%. Technical specialities grew by 11% and food and beverage volumes were up 4%.

Going forward the company expects the tea bags market to grow by around 2%, that for coffee filters by 8% and wallcoverings growth of around 3%.

The Composites Fibres business unit successfully executed a cost optimisation programme during 2017 with a benefit of US$10 million.

Advance airlaid

Glatfelter’s Advanced Airlaid business unit holds the number one position in such materials supplied to the feminine hygiene market and it is the number two supplier to both wipes and adult incontinence product manufacturers.

Of its 102,110 tons of product shipped in 2017, 70% was to the feminine hygiene market. Shipments growth for this division has averaged 5% since 2010, and the femcare market is expected to grow by 2% going forward, wipes by 4% and adult incontinence by 6%.

The new Fort Smith plant is located in close proximity to major customers and will add 20% in capacity going forward. Customer commitments are in place for the majority of this new volume.

Specialty papers

Operating income for the company’s Specialty Papers business unit took a dive in 2017, to US$15.4 million from US$41.2 million in 2018 and a high of US$67.3 million back in 2012.

Glatfelter still holds leading positions in markets such as inkjet papers, greetings cards and trade book publishing but the company is currently exploring strategic alternatives for the business, which has had to adopt a culture of continuous improvement and aggressive cost control measures to adapt to prevailing market conditions.

This market hit an 11-year low in 2017, although the pricing environment is expected to improve in 2018.

A further boost, however, is anticipated from the new tax legislation introduced by Donald Trump’s government. The company had a one-time charge of US$20.9 million in the fourth quarter of 2017, but expects an effective tax rate of 33% in 2018, which will allow it to repatriate approximately $100 million, which it will use to reduce US debt.

Glatfelter is also now looking to make acquistions to further boost its two nonwovens businesses.

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