2012 Nonwovens Sales: $315 million
Key Personnel: Shlomo Liran, CEO
Plants: Tel Aviv, Israel; Mocksville, NC; Jingmen, City, Hubei Province,
China; Uzlovaya, Russia
Processes: Spunbond, meltblown, hydroentangled spunlace
Brands: Zebra, Avspun, Avsoft Major Markets Hygiene, medical and construction
Sales decreased slightly for Israeli-based Avgol Nonwovens due to a decrease in the average selling prices of its nonwovens. The company, in fact, reported an increase in sales volumes in 2012 due to the start up of new plants in China and the U.S.
“Avgol has concluded a year of growth in its production capacity and an increase in the quantity of nonwoven fabrics that we sold to our customers compared to last year,” says Shlomo Liran, Avgol’s CEO. “Avgol continues to show an increase in sales compared to last year after neutralizing the volatility in the raw material prices throughout the year.”
For the full year, sales decreased about 4.4% from $329 million to $315 million. Gross profi t was $63.2 million, which declined due to low operating effi ciency in the U.S.
Liran says, “Demand for our products continues to be favorable with many of the products and solutions that we offer to our customers being at the forefront of technology, an advantage that helped us considerably when working with our customers during a challenging year.”
At the end of 2012, the controlling interest in Avgol changed when a new major shareholder, HFH International, took over the company from Israel Petrochemcial Enterprises.
With six older lines operating at its Israel headquarters, Avgol operates sites in North Carolina, China and Russia, from which it serves global hygiene markets. Recent investments include a fourth line in North Carolina and a third line in China and executives have hinted at the possibility of a second line in Russia where it began making nonwovens in Uzlovaya in late 2007 to better serve emerging markets in Eastern Europe, Russia, the Ukraine and other “-stan” countries.
Meanwhile, in the U.S., Avgol’s fourth line began operation in Mocksville, NC in August 2012. The new line added 15,000 tons of capacity to the site. Combined with another 15,000 tons added in China around the same time, Avgol’s capacity increased 30% in 2012 to reach 140,000 tons.
Avgol first entered the U.S. market in 2001 when it purchased an existing spunbond line from textile maker Unifi. The company has continuously added to the site since then, becoming a leading player in the hygiene market in the Americas. The Chinese site was started in 2005 as a joint venture agreement with Hubei Gold Dragon. A second line was added to the site in 2011.
Since the establishment of this Chinese arm, Avgol has invested heavily in new lines and steadily increased its ownership position in the company, which now stands at 83-84%. With the establishment of the third line, the site can make 40,000 tons of nonwovens per year.
“It should be noted that, coupled with the robust demands in China, we are beginning to see entry by global companies that are investing in the construction expansion of plants in China and we believe that we will be seeing increasing competition in this territory,” Liran says. “Such competition will benefit the entire diaper industry operating in China and will deepen the penetration into additional population segments that have not been using diapers until now.”
Beyond China and Russia, Liran admits his company is considering entering other areas that show similar levels of growth potential. These include India, where customers indicate that the market is expanding and a surge in growth is expected to occur soon due to a high infant population.
“Avgol’s momentum in substantial strategic investments in new infrastructure last year with the establishment of two production lines in China and the U.S. will ensure the strengthening of Avgol’s business and competitive positioning and improve profitability in coming years,” Liran says. “Notwithstanding, the investment of some $52 million in the new production lines in 2011, Avgol’s level of leveraging did not increase significantly and its strong and stable financial position will also enable the company to prepare for strategic moves in the market, if needed.”