What’s in store for paper & board?

20 January 2011

As the UK paper and board industry emerged from the depths of recession in 2010 a fragmented industry appeared from the chaos. According to new research by leading industry analyst Plimsoll, the market is polarised between those getting it right and those struggling to recover.

David Pattison, Senior Analyst and author of the 2011 Plimsoll Industry Analysis – Paper & Board, explains: “Now that the storm is lifting, we have been able to assess the damage left behind. Some 211 companies are in a parlous state and starting the New Year clinging on for dear life. Falling demand was the final nail in the coffin for many. The mistake they made, though, was to not make those painful cuts early enough to protect their business.”

The Analysis gives a performance rating on the market’s top 890 companies: rating each Strong, Good, Mediocre, Caution or Danger.

Despite the number in the Danger range, the number rated as Strong has risen to 364, indicating that green shoots are appearing in the sector. And many in this category remained successful throughout the recession, so they are in pole position to capitalise this year.

Four key points are made in the Analysis with regard to the paper & board sector. Firstly, getting back to growth will be paramount this year, as costs and overheads continue to rise. Companies need to look to beat the current average profit margin of 2% if they are to cover costs and invest in other growth areas, according to Plimsoll.

Indentifying these growth areas will be vital as the market grows slowly. A group of 153 companies is leading the way with growth of over 10%. With bank funding still scarce, fast growing companies will have the resources to exploit new opportunities.

The 211 companies rated as Danger will be increasingly squeezed out of the market. Watch out for a wave of corporate failures among these companies in 2011, predicts Plimsoll.

Mergers and Acquisitions will continue, but the profile of companies involved will shift. There will still be distress sales this year as companies buy struggling competitors cheaply. However, there will be a return of more strategic acquisitions as larger companies look to buy into growth areas. The Plimsoll Analysis has named 99 distressed companies that could be bought for a discount and a further 53 fast growing companies that are sure to attract the attention of the larger players during 2011.

Converting Today readers are entitled to a £50 discount off The Plimsoll Industry Analysis – Paper & Board. Call +44 (0)1642 626400, and quote reference PR/P140.

Maureen Byrne,


Maureen Byrne

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