Most modern production site for corrugated packaging

2018 was a year of high paper prices that put pressure on the profit margin of corrugated cardboard packaging. VPK Packaging Group invested primarily and heavily in innovation and sustainability. Major investment projects at a glance:

• In Halden, Norway, work was started on the construction of what will become one of the sector’s most modern sites in Europe. By the end of 2019, all current operations in Sarpsborg will be transferred to the brand-new ultra-low emission site. 
• In Saint-Quentin, France, construction began on an automated high-bay warehouse to increase capacity and deliver a more competitive customer service. 
  In the Netherlands, too, we invested in additional storage space of 20,000m². It is the final outcome of a two-year investment project aimed at doubling the capacity of our Raamsdonkveer site.
• At Blue Paper in Strasbourg, France, we are closing the loop with a new waste-to-energy plant. The residual fraction will from now on be converted on-site into thermal energy, resulting in savings in natural gas and freight transport. 
• In Oudegem, Belgium, the site’s surroundings are being completely redesigned and rebuilt for increased security and liveability in collaboration with the local authorities. In addition, a new biogas engine and water treatment plant were installed, resulting in lower air and water emissions.

Pierre Macharis, CEO VPK Packaging Group: “Last year, we were confronted with extremely high paper prices. Although this constituted a source of profit for our paper division, its overall effect was that our margins as a net paper buyer of 750,000 tonnes came under pressure. Last year, we invested mainly and very heavily in the company’s future, with a number of ambitious projects aimed at innovation and development.

Consolidated financial statements in million euro*
	2018	2017	delta
Operating Income	1.273	1.205	+5,6%
EBITDA	140	103	+35,9%
Taxes	-33	-19
Net profit after tax	46	31	+48,4%
Net financial debt	163	176
Investments	96	84

*including proportional share of joint ventures

A look ahead at 2019: improved integration balance and market leader in tube segment

In the first half of 2019, VPK Packaging Group took over the European and Chinese divisions of Corenso, a leading manufacturer of both coreboard and finished tubes. The acquisition will add an additional €170 million to the group’s turnover this year. Corex, the group’s core division, will thus account for 16% of total turnover. 

With the integration of two additional paper mills, in France and Finland, the VPK group also continues to focus on achieving a sound balance between the production of raw materials and finished products.

Trends in the sector: impact of etailers, plastic ban, focus on end user

One of the most high-impact trends in the corrugated packaging industry is the growing impact of online retailers. Amazon has already developed a set of packaging guidelines that will affect many producers in the short term. The focal points are:  end-to-end customer experience, impact on the environment, cost efficiency. 

The single-use plastic ban also has a marked impact on producers, who are looking for alternative packaging solutions based on renewable and biologically degradable raw materials. These trends are the drivers of innovation in the paper and cardboard sector. 

Importance of qualitative sorting and increased sustainability

A key issue for the sector is the qualitative sorting and collection of recovered paper and cardboard. In this area, Belgium still scores better than neighbouring countries. It provides the basis for a circular economy, which is based on maximum recovery of raw materials.

Also within its own scope, the paper and cardboard sector will continue to focus on increasing the sustainability of production processes. We will do this by continuing to innovate in energy production, water recycling, waste reduction, as well as digitalization.

Knowledge centre and decision-making

In 2019 we will also be working on the expansion of our head office in Aalst. It is part of the group’s strategy to hire even more specialised profiles and to further optimize its role as knowledge centre within its international network. VPK thus underlines the importance of the local embedding of the growing group’s decision-making centre.