Leading industry consultants, AMI, has just published the eighth edition of its report on the Corporate performance and ownership among polyethylene film extruders in Europe. In the last edition, after 15 years at the top, British Polythene Industries, was pushed into second place in volume terms by the German group, RKW. For 2009 however, AMI once again ranks BPI as Europe’s largest producer, although RKW remains a close second and in turnover terms, is larger than BPI.
BPI has been a dominant force in European polyethylene film extrusion throughout the past two decades, at one time processing over 100,000 tpa more than its nearest rival. Its production is primarily based in the UK where it acted as a consolidator building a leading position through the 1980s and 1990s. In recent years, its strategy has focussed on the restructuring and reorganising of assets to improve profitability focusing on agricultural films and printed consumer markets. RKW similarly built its position as a leading European player through acquisition buying film extrusion businesses from UPM-Kymmene and BP Chemicals among others during the 2000s. It is a leading producer of hygiene films, agricultural, industrial and building films.
AMI’s report highlights the challenging market conditions for polyethylene film extruders in recent years and the varying responses of the leading players. For example many of the leading film extruders have become increasingly active in Central and Eastern Europe due to lower production costs and better growth prospects. Above average growth in CEE and the Balkan region has also resulted in the appearance of the first Central European owned company to be listed amongst Europe’s leading PE film producers; Granitol based in the Czech Republic produces film for the building, agriculture, hygiene and food markets.
Private equity investment also continues within the PE film sector, which often drives rationalisation as investors look to focus on core areas or improve profitability in order to eventually sell on the business. Nordenia, for example, which was acquired by Oaktree Capital in 2006, sold a plant in the Netherlands to another local investment group and divested a non-core business while at the same time investing in its three German extrusion sites and in printing and conversion operations in Poland and Russia. Other private equity owned operations such as Veriplast and Pregis have also reorganised or rationalised assets in recent years to improve returns.
Despite these changes, overall the share of Europe’s top 50 companies has not changed significantly in recent years and they continue to account for around 60% of polyethylene film production. Top 10 companies have a 25% share. This includes Armando Alvarez, BPI, Deriblok, Manuli, Papier-Mettler, Plastotecnica, Poli-Film, RKW, Sphere, Trioplast. The top 11-50 companies hold 35% share, while the other players hold a 40% market share.