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Clariant beats expectations and shows 3Q09 profit. Paper chemical business remains weak.

Clariant reported its third quarter 2009 results and overall the company showed better than expected performance, showing a profit driven by restructuring and a higher capacity utilisation. 3Q09 Sales were down 14% in local currencies and 19% in Swiss Francs. The high Euro high Swiss Franc situation had a negative impact on the results.

Details of Clariant's performance are given on their web site.

In the webcast, Patrick Jany stated, 'The paper business remains weak and shows no sign of improvement'.

Use paper towels for dying your hands - Cascades report

Cascades reinforces the advantages of using paper towels for drying hands - 'hand paper towels are the most hygienic choice for drying your hands'. They show a study comparing the drying efficiency and bacterial contamination of conventional warm air dryers, new high-performance air jet dryers and hand paper towels.

Cascades opens new green building in Lachute

Cascades of Canada, a leader in green packaging and fibre recovery, announced it had opened its first LEED ('Leadership in Energy and Environmental Design') certified building as part of the expansion of its tissue paper facility in Lachute, Quebec.

Van Houtum Papier target battle against influenza with C2C paper

van Houtum Papier (VHP) was the first paper company to produce Cradle to Cradle paper towel and toilet paper. In the current period of uncertainty regarding influenza in its many forms, especially swine flu, the paper towel offers one of the best options for drying hands. The VHP C2C paper towel is disposable and why not use a sustainable paper grade to wipe your hands, especially when it has been certified as C2C. C2C certification ensures that the best measures are taken to make the paper either recyclable or biodegradable

Why not join the Cellulose Community?

The Cellulose Community:

'The Cellulose Community is a worldwide group, believing general pulp and paper information should be fast, free, or at a very low cost'.

The community provides a network of like-minded people and there are now 345 members. The Cellulose Community is also featured on LinkedIn (661 members).

Why not join our Cellulose Community?

Clariant a target for Solvay's cash?

After Solvay sold its drug unit, Abbott, on Monday for EUR4.5 billion, speculation has started as to what Solvay will spend the money on. In a Reuters article, it was pointed out that the ailing Clariant could be a target.

Clariant's share price rose by as much as 4% on the back of the speculation, but many analysts remain sceptical.

DyStar files for Bankruptcy

Following earlier rumours, it has now been confirmed that DyStar Textilfarben GmbH, DyStar Textilfarben GmbH & Co Germany and DyStar Holdings have all filed an insolvency petition with the local court in Frankfurt for the company's operations in Germany.

The insolvency petition includes the company's sites in Frankfurt, Leverkusen, Brunsbuttel, Geretsried and Ludwigshafen which in total employ around 1,300 people.

It has been stated that the insolvency filing was necessary after DyStar exhausted alternative solutions to their liquidity problems.

DyStar hold a wealth of dyes technology and it will be interesting to see where it all ends up.

DyStar to file for bankruptcy

The rumour mill has picked up that DyStar will file for bankruptcy. The company's market focus is on textiles and leather and not the paper industry.

DyStar is a conglomeration of textile dyes businesses - founded in 1995 as an amalgamation of the Bayer, Hoechst and Mitsubishi textile dye businesses, they later acquired the BASF, Mitsui, Zeneca, Colour Solutions and Yorkshire Americas businesses. In 2004 DyStar was acquired by the private equity company, Platinum Equity and is recognised as a leader in the textile and leather markets

More news is expected, but the complex collection of companies in a rapidly changing market may have proved too difficult for the private equity company in the 'credit crunch' era. There will surely be some interest from the surviving market players in purchasing some or all of DyStar; however, it is a good opportunity to take capacity out of the ailing European market.

50 million chemical substances! CAS reaches milestone.

On the 7th september, 2009, the Chemical Abstracts Service (CAS) announced that it had registered its 50 millionth substance --> CAS 1181081-51-5, a novel heterocycle with analgesic properties.

The 40 millionth substance was registered just 9 months ago, indicating an acceleration of the sysnthesis and innovation in science. We are not voulnteering to do the research, but it would be interesting to know how many paper chemicals there are among the 50 million.

Clariant sells USA silicone business

Clariant has sold its silicone business based in Gainesville, Florida to SiVance LLC, an affiliate of GenNx360 Capital Partners, a private equity comany. This has little impact on Clariant's paper chemical business.

Kemira's paper chemicals business struggles on

Kemira announced their first half 2009 results - as is the norm for this sector at the present time, sales decreased - Kemira's overall sales decreased by 5% for the period April-June, 2009 - as customer demand decreased.

For the paper business its seems to be a trend to using hyperbole (eg Clariant's use of the word MASSIVE) - For Kemira, 'The paper segment's revenue in April-June shrank by 8% to EUR221.6 million as demand in customer industries PLUMMETED.'

If interested in the detail, see the Kemira web site. What is refreshing about Kemira is that their business is transparent and unlike some companies (eg Clariant, BASF/Ciba, Ashland) it is possible to see exactly how their paper chemicals business is performing.

Clariant experience 'massive' decline in sales for 1H09

Clariant announced their first half 2009 sales with a degree of honesty which was unusual for the conservative Swiss company:

'Despite persistent poor business conditions resulting in a massive decline in sales, the Textile, Leather and Paper Chemicals Division returned to profitability at the operating level. Sales dropped 22% in local currencies and 25% in Swiss francs.'

The outlook? As we have stated before, this is a watershed year for the paper chemicals business which requires new vision and leadership.

Some recent reports (see bloomberg.com):

22-Jun-09: Clariant, the world’s largest maker of chemicals used in printing ink based in Muttenz, Switzerland, said on June 22 it plans to cut additional jobs on top of 1,350 reductions announced earlier this year.

02-Jul-09: Clariant AG dropped 8.6 percent to 6.36 Swiss francs for the biggest decline on the Stoxx 600. The world’s largest maker of chemicals plans to sell 225 million francs ($209 million) of convertible bonds.

13-Jul-09: Clariant, The world’s biggest maker of chemicals used in printing ink expects monthly profit of as much as 18 million Swiss francs ($16.6 million) in the “coming period,” Finanz & Wirtschaft said, citing an interview with Chief Executive Officer Hariolf Kottmann. Clariant will probably cut more jobs this year and in 2010 before restructuring is complete, he said.

30-Jul-09: Clariant, the world’s biggest maker of chemicals used in printing ink reports first-half earnings. The shares rose 2.1 percent to 6.96 francs.

After 65 years Buckman adjusts its brand

Buckman Laboratories has announced that it will 'rebrand' itself, shed the 'laboratories' and become Buckman. In an announcement which resembles a rite of passage, Buckman has decided to shorten its name and recognise, 'Its growth from a small laboratory selling a few chemicals to a global supplier .......... ' C'est la vie. For the skeptic, this is just one of those meaningless and costly exercises. For the branding enthusiast it is a chance to refresh the message given to customers.

Buckman is undergoing changes and was a fully grown company many years ago. In the last few years it has faced challenges so perhaps now is the time to go for it and drop the Laboratories! Most of us knew the company as Buckman anyway so loosing the long name is a help!

BASF Blitz Ciba - 3,700 jobs to go in an EU approved acquisition.

In a not too surprising move, BASF announced that it will further its own agenda and slash the newly-acquired Ciba Specialty Chemicals organisation. In the rather disjointed announcement (lost in the translation, if you want to be kind), BASF announced:

• 23 of the sites acquired with Ciba are under review (management or poor PR speak for, 'Will be shut')
• Synergies of at least EUR400 million per year, in other words, site closures and the planned loss of 3,700 jobs - synergies is a rater out dated word!
• Fair and transparent decisions - a PR strip line which has no credibility whatsoever. BASF decide and you will obey! It bewilders us why large companies continue with their old fashioned PR statements - no one believes that the decisions are fair or transparent! We planned it, you do it and those we want will be employed as long as you support our decisions! Too cruel? Not according to our feedback.

Perhaps, for the paper chemicals business there are some glimmers of commitment. The centre for the business will be in Basel (a tax dodge), but feedback from the people based in Ludwigshafen is far from positive - many will not move to Switzerland and why should the heart of the business be relocated to save taxes - the EU needs to take a stand against the Swiss and support its EU members. Clariant, Hercules, BASF .......... how many more will dodge paying EU taxes?

In a straw poll of the paper industry there is a decided unease regarding the merger and a general belief now that the trend to consolidation ('one stop shop') has had its day and the opportunities for India, China and smaller companies is gaining momentum. The growth in the importation of paper chemicals into the EU bears testament to this view.

Keep posted as we gather more information regarding exactly what BASF intends to do with Ciba ............. so far the message is that they are taking a supplier out of the market. The strategy will not be easy to implement!

BASF remain pessimistic about economy

BASF remain pessimistic and say that slump will continue for the chemicals industry. Sales volumes in some segments had fallen by as much as 30-40% and small to medium sized companies were still having difficulties securing loans.

These comments support the view of those active in the industry that the 'green shoots of recovery' are not being seen yet.

RISI now 100% owned by UBM

United Business Media completed its acquisition of RISI, the news and information provider for the forest industries. Times are tough in the forest products industry and RISI have struggled to grow their service offering. For UBM this may be an opportunity to invest in the future although some rationalisation and streamlining of the RISI operation is expected.

UBM paid $14.3 million.

Pöyry Complete Negotiations Regarding Restructuring of Forest Industry Business in Finland

The consulting and engineering group, Pöyry has announced that statutory employee negotiations, started in April in the Forest Industry business group's units based in Finland have been concluded. Due to the reorganisation the business group will permanently lay off about 100 people in Finland at this stage. The remaining staff in Pöyry Industry Oy, Finland, may be laid off temporarily until further notice. In addition, temporary lay-offs may lead to permanent lay-offs, affecting a maximum of 150 people. Part of the capacity reduction will be implemented through pension arrangements.

In 2009 restructuring took place in Sweden, North America and Russia with a reduction of about 200 people. The non-recurring cost of the retructuring is estimated to be EUR 2.5 million, which will be booked in the second-quarter results.

Demand for print & graphic paper to decline sharply by 2010 - New market report

In  printweek.com article, it has been reported that a Stationers' and Newsprint Makers' Company Report, entitled, 'Future of Paper and Print in Europe 2008-2020', that there will be a dramatic drop in demand for print and graphic grades of paper in Europe.  Some highlights are:

• Total demand to drop by 32.5% by 2020
• Newsprint demand to decline by 56% between 2008 and 2020 
  
• Business papers and print to decline by 45.5%
• Magazine paper demand to decline by 32%
• Advertising and commercial print sector to decline by 14.5%

It doesn't take a rocket scientist to conclude that digital media and online publishing is the prime reason for the predicted decline in use of these papers.

For paper chemical producers this is a significant market for process chemicals and functional chemicals aimed at this market (eg OBAs, internal sizing, surface treatment).  To compound the agony, it is well know that imports of OBA (and other paper chemicals) from China and India into Europe have increased significantly in the last year or so.  The market report will also not make good reading for the suppliers of fillers and pigments (eg calcium carbonate, kaolin).

The market report was prepared by NLK Associates.

Van Houtum Papier set new standard - first in the world with 'Cradle to Cradle' paper

Van Houtum Papier, an independent paper company based in The Netherlands has announced that it is the first to produce paper according to the 'Cradle to Cradle' or C2C standards operated by MBDC - in Europe, the certification is overseen by EPEA.

The 'Cradle to Cradle' product and process design philosophy was the brain child of William McDonough and Michael Braungart who founded MBDC in 1995 to promote their eco-effective design concept. There are some overviews on YouTube: The man himself and a review of a conference in Maastricht (in Dutch).

MBDC/EPEA are commercial organisations (charge a significant fee for C2C certification) and not regulated (accountable, independent), so some critics argue that certification of this kind lacks credibility when it is self-regulating. However, there is no question that their approach to design is holistic and goes beyond the 'cradle to grave' concept which has been promoted for decades. In the words of MBDC, C2C describes an approach in which, "products and services are designed based on patterns found in nature, eliminating the concept of waste entirely ........ optimising materials to be food either for natures ecosystems or for humans industrial systems - perpetually circulating in closed systems that create value and are inherently healthy and safe".

For the paper chemical producers this philosophy offers opportunities to design products which are biodegradable, based on sustainable raw materials and which are inherently safe. The Van Houtum Papier initiative is one to watch, but in the words of Henk van Houtm, "We will first look at the market response"......... will C2C certified paper carve out a valuable niche in the market?

A book has been written by McDonough and Braungart giving details of their admirable philosophy and there are a number of reviews available in the blogosphere (eg blogcritics). There are also some excellent blogs giving some insight into MBDC (eg greencitizenship).