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Sales up by 5.6% to €848.4m and EBITDA up by 9% to €123.5m

Constantia Flexibles: ‘In the long term Russia will be an attractive market for flexible packaging’

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By Jenny Eagle+

28-Aug-2014

Constantia Flexibles has released its first half results for 2014 but admits the market is still highly fragmented.

Compared with the same period last year, group sales increased by 5.6% to €848.4m (previous period €803.4m).

High resistance to crises

Operative earnings before interest, taxes, depreciation and amortization (EBITDA) grew by 9.3% to €123.5m (€113.0m), resulting in a EBITDA margin of 14.6% (14.1%).  

Dr. Wolfgang Schwaiger, group communications, Constantia Flexibles told FoodProductionDaily, the flexible packaging market is characterized on the one hand by a generally high resistance to crises and on the other by strong, above average growth, especially in emerging markets.

The average growth in the developed markets ranges from 1-2% in Europe and 4-5% in the US, despite the generally weak economic situation,” he said.

The growth rates are higher in emerging markets, for example at 6% in Mexico or about 14% in India.

The Central and Eastern European region continues to develop positively with higher growth rates than in Western Europe, but due to the current situation in Russia and Ukraine these markets are currently showing weaker growth.

In the long term it is expected that Russia will be an attractive market for flexible packaging.”

Rising living standards

Schwaiger added consumer trends and social developments such as the establishment of middle classes with rising living standards in emerging countries, urbanization, the trend towards smaller households and higher life expectancy, and the substitution of flexible packaging for rigid packaging are affecting the market for flexible packaging. In most cases the sector exhibits higher growth rates than the economy as a whole.

The size of the market for flexible packaging amounts to about €58bn. Asia accounts for 40% of the market volume, North America 27%, Europe 22%, Latin America 6% and the Middle East/Africa 5%,” he said.

At present the market is still highly fragmented, with global and regional competitors. The five largest providers in the world have a combined market share of about 26% (Source: PCI Films Consul­ting). A clear trend toward or a clear expectation of market consolidation can be seen both in the developed markets of Europe and the US and in emerging markets.

On the demand side, the industry is faced with a trend toward supra regional or global behavior that not only affects the consumer (global brands, uniform market presence etc.) but is increasingly affecting the purchase of packaging materials. Globally active manufacturers of branded products in particular are trying to reduce the number of suppliers worldwide through the standardization and consolidation of purchasing volumes.”

Spear and Parikh Packaging

In the first half of 2014, the company increased sales and earnings mainly due to the acquisitions of Spear and Parikh Packaging in 2013 and driven by the Labels Division in Europe and the US and the Food Division in the emerging markets.

In the first half of the year some of our core markets were characterized by marked changes in consumer behavior of end consumers. For example, political unrest in the Ukraine, Syria and Iraq as well as a Mexican “Health Tax” introduced at the end of 2013 made growth difficult in these markets,” added Schwaiger.

European packaging demand was dampened due to the food information regulation (LMIV) and the associated change in package labeling, effective as of December 2014.”

He said the flexible packaging market encompasses different packaging for a range of sales markets from the dairy business to the confectionery industry and ready-made meals.

The products cater to daily needs and are therefore largely independent of economic cycles,” added Schwaiger.

In addition to an increasing global population and higher environmental and health awareness, demand in the food market is being positively influenced by ongoing urbanization among other things.

Rising demand for individually packed portions of coffee for domestic machines is continuing to change packaging systems and inspire innovation.

The demand in the emerging economies, especially in Russia, Asia and Latin America, continues to increase, in particular due to population growth and the emergence of new middle classes with corresponding consumer behavior.”

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Flexible packaging

Flexible packaging is a sustainable packaging solution as it makes less use of resources and materials. There is less wastage and less use of energy and water at the manufacturing level. Uflex Ltd is dedicated to the cause of reduced consumption of energy, water and petroleum based products and works constantly to achieve the same providing its customers more sustainable and ‘green’ film and laminates.

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Posted by sikha srivastava
04 September 2014 | 10h012014-09-04T10:01:47Z

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