2018 Nonwovens Sales: $693 million
Dante Parrini, chairman and CEO; Christopher Astley, senior vice president and CCO
Canada, Germany, U.S., France, Philippines
Feminine hygiene, wipes, tabletop, adult incontinence, food and beverage, wall coverings
Three major events occurred in 2018 that will influence sales at Glatfelter for years to come. For one, the company completed work on its 20,000-ton airlaid line in Fort Smith, AK; for another the company purchased competitor Georgia-Pacific’s European airlaid operation and finally, the sale of its Specialty Papers business unit, which has not impacted nonwovens sales but will open up new opportunities for the company in fast-growing markets like nonwovens.
The first major North American airlaid investment in nearly two decades, Glatfelter’s new facility in Fort Smith represents a $90 million investment for the company. Completed in the first quarter of 2018, the line is mainly serving the specialty wipes markets.
The site added 22,000 short tons of production capacity to Glatfelter’s global capacity bringing it to 129,000 tons, not including the Georgia-Pacific purchase.
At the official grand opening celebration for the new line, chairman and CEO Dante Parrini said, “We are excited to bring this new capacity and capabilities to our customers serving the growing North American market.”
Also in its airlaid business, Glatfelter announced in June 2018 it would acquire Georgia-Pacific’s European operation in Steinfurt, Germany. The 32,000 ton-operation achieves sales of just under $100 million per year and Glatfelter purchased it for $181 million. It makes high quality airlaid products for the tabletop, wipes, hygiene, food pad and other end use markets.
“Glatfelter’s agreement to acquire the European nonwovens business demonstrates our commitment to building leading positions in global growth markets for engineered materials,” says Parrini. “Steinfurt’s products and technologies complement our current airlaid business very well and the acquisition provides synergistic capacity increase opportunities and an improved cost structure to support our ability to serve customers in growing consumer and industrial markets. From a financial perspective, the investment provides an attractive return on capital, is immediately accretive and will deliver attractive EBITDA margins in a growing market.”
In 2018, airlaid sales increased from $256 million to $311 million thanks to the contribution of the new line in Arkansas. The most significant growth was in the specialty wipes market, which is a key focus of the new line, where sales grew from $29 million to $45.5 million as well as tabletop where sales increased from $6.7 million to $21 million. In fact, growth occurred across all of Glatfelter’s airlaid categories, which also include feminine hygiene, adult incontinence and home care. Looking ahead, executives expect to see 8-10% organic volume growth in coming years thanks to the contribution of the Fort Smith site, the Steinfurt acquisition and the unique value these products offer to consumers.
The purchase of G-P’s European assets was partially funded by the third major event of 2018—Glatfelter’s divestment of its Specialty Papers business to the Lindsay Goldberg private equity firm for about $320 million. Glatfelter announced the sale in August after saying in February it was undertaking a review of strategic alternatives for the Specialty Papers business, which was formerly its largest division.
Glatfelter’s third business unit, Specialty Papers, in part contains its wetlaid nonwovens operation, which largely targets market like single serve tea and coffee and wall coverings.
In 2018, sales to the food and beverage markets increased from $268 million to $279 million while its wall coverings sales remained flat at $103 million. In 2019, this segment is expected to grow about 3% in volume terms in line with market demand which is driven by demand for single-serve coffee, tea wipes and electrical products. Glatfelter will continue to manage risks associated with the all coverings market and high input costs.