Pascal Bosse, Domtar’s vice president of corporate communications and investor relations spoke this week at Citi’s sixth annual Basic Materials Conference. Among the topics he discussed was Domtar’s recent acquisition of Laboratorios Indas and how it fits into the company’s strategy of growing its personal care business, which will now represent 23% of the company’s $5.6 billion in annual sales.
“This is remarkable for a business that didn’t exist two years ago,” Bosse said. “In two years, we have made five acquisitions to build this business as an offset of our pulp and paper business.”
Not only is absorbent hygiene attractive to Domtar because it is a consumer of fluff pulp, a material the company makes in North Carolina, the company also believes it is able to offer a differentiated product line in this market, which is valued at $9 billion worldwide and growing fast.
“We see a lot of opportunities to be a differentiated player,” Bosse says noting that the purchase of absorbent core specialist EAM in particular will allow Domtar to innovate in the personal care world. “The market is expected to grow 8% until 2017,” he adds. “We have the ability to at least grow with the market, if not grab some marketshare.”
The acquisition of Indas, which is expected to close before the end of the year will allow Domtar to become a truly pan-European supplier of adult incontinence products by bulking up its activity in the south of Europe with a manufacturing site and strong presence in Spain. Domtar already makes adult incontinence products in North Europe, at a Swedish plant acquired with the European business of Attends.
Meanwhile, the company’s acquisition of North American private label diaper manufacturer, AHP, earlier this year, should open up adult incontinence retail channels in North America for Domtar, which is currently much stronger on the institutional side of the business. “We hope to do some bundle packaging with the diaper business,” Bosse explains.
These personal care-related acquisitions should help Domtar reach the lower end of its goal of achieving $300-500 million EBITA by 2017 by the end of next year.