IV. Intervenciones
10. Intervención de los ciudadanos Edgar Hernán
After the economic stimulus measures adopted by governments, in particular in the United States and the Euro Zone, geared essentially to recapitalizing the banks and opening up new credit facilities for the economy, in order to soften the impact of the financial crisis of 2008 and 2009 on the real economy, borrowing terms were aggravated for the European countries facing the largest problems in terms of foreign debt and public deficits.
The member countries of the Euro Zone ceased to be regarded as a single undifferentiated whole by investors in sovereign debt, who started to demand interest rates based on individual risk assessments. Greece was the first country to admit, in April, that it was unable to service its debt and to request the intervention of the International Monetary Fund. This was followed by a series of measures adopted, or instigated, by the main European leaders – creation of a Stabilization Fund, increased intervention by the European Central Bank in the sovereign debt market and the launch of successive austerity measures. Later in the year, in November, it was Ireland’s turn to ask for help from the European Financial Stabilization Fund and the IMF in order to meet the costs of intervention in the financial system.
However, the adoption of emergency procedures failed to calm the markets in their assessment of other countries in the Euro Zone, stoking fears that other countries could also be pulled under.
The European Union has taken the line that public accounts need to be kept under tighter control, seeking to apply on the ground measures requiring member states to comply with the targets set. This caused a divergence in economic growth between the outlying economies and the more developed economies, the former struggling under the pressing need to consolidate their budgets, whilst the latter, led by Germany and France, recorded relatively sound levels of growth.
In the United States, where fears surfaced of a double dip recession, the economy eventually picked up in the second half of the year, although conditions in the labour market remained difficult.
At the same time, the changed array of forces in Congresses obliged the administration to back up on its fiscal reforms, at a time when the country was facing the largest budget and trade deficits in its history.
China established itself in 2010 as the world’s second largest economy, at a time when it is anticipated that the United States may impose trade sanctions,
PAPER sALEs TOTALLED
1.4 MILLION TONs, UP By 24%
ON ThE PREvIOUs yEAR.
accusing it of manipulating the yuan exchange rate and thereby severely penalizing the US economy. China has been increasing its position as lender to the more indebted western countries, holding the largest portfolio of US treasuries and keeping most of its extensive currency reserves in dollars.
Mozambique, which is one of the countries to which the Portucel Group is looking for its long term development, experienced a degree of social instability in September, with unrest in Maputo in reaction to the government’s decision to increase the price of essential goods and fuel, in a measures made necessary by commitments made to the IMF. The Mozambican government eventually gave in and froze the increases. Although this measure
came as a surprise to analysts, the IMF’s December report considers that the programme for maintaining economic growth remains valid and is progressing as planned, including acceleration of public spending, with full access to the foreign lending as previously agreed.
The sovereign debt crisis in Europe contributed to a significant depreciation of the euro against the US dollar, bringing it down from 1.45 at the start of the year to below 1.20 USD at the end of the first half. Uncertainties as to the economic performance of the United States, combined with positive overall growth in the Euro Zone, caused the European currency to rally, returning in October to values over 1.4 USD. In contrast with the previous year, the currencies of the main countries outside the Euro Zone competing with the Portucel Group on the international markets did not record fluctuations capable of significantly affecting their competitiveness. The Brazilian real and the Chilean peso again evolved in line with the US dollar, whilst the Swedish krona held steady against the Euro.
PAPER
markeT
Demand for uncoated woodfree (UWF) paper grew by 6% in Europe over 2009 – although still failing to make good all the losses experienced in 2009 – and was down again, by 1.5%, in the USA. The European and US markets are central to the Group’s commercial strategy, and are the main centres of consumption of the type of paper produced by the Portucel Group.
Growing demand in Europe, combined with a net reduction of approximately 150 thousand tons in production capacity at the end of the year, allowed the industry to improve its average occupation
rates by almost 8 percentage points, despite the start-up of the new Setúbal mill. The industry as a whole recorded an occupation rate of more than 92%, whilst the Portucel Group again operated at full capacity.
The market situation as described above, combined with strong pressure on various cost components, especially from BEKP pulp, allowed the Group to hike its prices on four occasions in the European market during 2010.
Overseas markets were subject to significant pressure from demand, especially during the first half of the year, resulting in consecutive price adjustments, which in turn led to growth in exports by European producers, and constrained imports into European markets.
The US market also presented a recovery in the average prices in USD/t, with the main price index for office stationery (in USD/t) rising 2.7%, on average, from 2009. This recovery was particularly clear in the first half of the year, when local industry
rates, to around 90%, but trailed off slightly in the second half.
Special attention should be drawn to the growing importance of the Portucel group on non-European markets, and in particular the large share of total European exports of UWF paper to these markets represented by the Group’s sales. In 2010, this share reached approximately 59% of exports to North America, 55% to Africa, 39% to the Middle East, 37% to Latin America and 2% to Asia.
performance
Paper sales totalled 1.4 million tons, representing growth of 24% in relation to 2009. This performance was achieved thanks to double digit growth in all world regions and expansion of sales operations into new geographical areas. The Group enjoyed growth of approximately 20% in Europe and 30% in the United States, whilst consolidating its position as one of Portugal’s main players in the international markets. In the European market alone, the Group expanded its market share by approximately 190 thousand tons.
The Group successfully placed on the market all the paper available, taking advantage of the moderately positive situation in Europe and the excellent conditions on overseas markets. This was achieved by means of careful management of the market and product mix, which led to improvements in prices. The overall growth in sales in quantity was driven in part by strong performance in sales of cut-size and
premium products. Significantly, premium products
continued to account for a large proportion of the Group’s sales, in a context of rapidly expanding sales in quantity.
prices
As reported above, sales prices for UWF paper in Europe started move upwards in the second quarter of the year, with the average for the PIX “A4-copy B” index up by 1.3% on the average for 2009.
Despite a substantial increase in sales by quantity, the Group’s sales price in Europe kept pace with market trends. However, thanks to the price environment on the overseas markets, combined with the favourable USD/EUR exchange rate, the Group achieved growth in its average price of approximately 4.2%.
bRAndInG
Thanks to the focus on developing an innovative branding strategy designed to foster the growth of its paper business over the years, the Group has built up an ever stronger international presence for its brands, once again achieving a leading position in European markets in 2010.
The leading independent study in the sector (Cut-size Mill and Mill Brand Positioning & Image Survey 2010, by EMGE Paper Industry Consultants), which considers the wholesale and retail trade in paper and office products throughout Western Europe, once again confirmed Navigator as the highest scoring brand for spontaneous awareness and the leader in terms of brand performance and brand reputation, calculated as
a weighted average of various technical and marketing attributes. In addition to Navigator, the Discovery, Pioneer, Inacopia and Explore brands were also highly placed on the list of the top brands in terms of brand performance.
Strong growth in sales quantities for mill brands, up by more than 20%, has enabled them to continue to account for 60% of the Group’s total sales, a figure unrivalled by other major manufacturers.
Special attention must be drawn to Navigator, the world’s top-selling brand in the premium office stationery segment, which enjoyed a worldwide growth of 13% and 9% growth in Europe when compared to 2009, and to Soporset, the leading brand in the printing segment in Europe, which expanded its sales quantities by 19%. 900 880 860 840 820 800 780 760 740 720 700
EVOLUTION OF THE AVERAGE PIX PRICE - “A4 COPY B”
2005 2006 2007 2008 2009 2010
EUR / ton
2004
SOURCE: FOEX