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Weidenhammer releases annual balance sheet shows good earnings in 2011 and cautious outlook for 2012

Group sales for the Weidenhammer Packaging Group (WPG), Europe’s leading supplier of composite cans, composite drums and plastic containers, increased in the 2011 financial year to €230 million (2010: €215 million). The company’s cash flow decreased over the same period by one percentage point to 13 per cent. Key investments in plants and personnel were successfully completed in 2011 and have strengthened the group’s position for further growth. In fiscal 2012, the WPG primary focus will be on raw material costs, expansion in the areas of research & development and regulatory affairs. Other priorities involve implementing the company’s sustainability strategy and pursuing important new developments, including "gas-tight containers" (both cardboard and plastic). The currently tense situation on international commodity markets is regarded as increasingly problematic by the WPG. Rising commodity prices pose a serious challenge for the corporate group.

With a sales increase of around €15 million over the previous year’s figures, the WPG reported a positive balance for the 2011 fiscal year. Strategic company objectives have been achieved and the expansion of business in the UK and other key markets is moving forward as planned. Both divisions, cardboard and plastic, contributed to the company’s positive financial result. "We are pleased with our financial performance in 2011 – but at the same time, we can see that rising commodity prices have had a disproportionate impact on our earnings," explained WPG CEO Ralf Weidenhammer. "Nevertheless, we are clearly on the right track and will continue to invest in our plants, our workforce, and in new product developments." Weidenhammer described the outlook for the current fiscal year as "cautiously wait and see" and expects sales to remain stable and, despite a slow start, reach the same levels as in the previous year. "We are especially pleased to see that, for the first time, all of our sites will be fully profitable in 2012," said Ralf Weidenhammer. "This is a direct result of the wide-ranging efficiency and investment programme in recent years."

The WPG invested €33 million, equivalent to the company’s total cash flow, last year in new plant construction and expansion. Further investments of roughly €27 million are planned in 2012. A substantial part of these funds will go towards implementing the group’s sustainability concept, and more specifically towards expanding the generation and use of renewable energies. The WPG currently maintains twelve large-scale photovoltaic systems on its plant sites. These systems will cover roughly 20 per cent of the group’s electrical power needs this year. "We are well on our way to achieving our goal and covering a quarter of our energy consumption with renewable energy sources by 2015," explained Ralf Weidenhammer.

The opening of new Weidenhammer UK plant in Bradford, England in November 2011 paved the way for further expansion in the lucrative UK market. In 2010, the company built major new plants in Greece and Hockenheim, Germany. In 2012, the focus will shift to building up the customer base and increasing production capacity.

Expansion in the plastics business
This also applies to the Weidenhammer plastic packaging business, which continued to grow over the past year. Weidenhammer Plastic Packaging (WPP) based in Zwenkau, Germany, currently accounts for 10 per cent of group sales. The plastics division gained two new customers for PermaSafe packaging last year, Appel Feinkost and Metten Fleischwaren GmbH & Co. KG. PermaSafe, Weidenhammer’s "reinvention of the can" offers all of the benefits of plastic packaging to the canned foods market. It also attracts more attention in the market for pasteurized and sterilized foods. The PermaSafe tray developed by Weidenhammer for Appel’s seafood specialities received the German Packaging Award 2011 from the German Packaging Institute. The expert jury praised the functional benefits, convenience, innovation and design options offered by PermaSafe packaging.

"This award confirms that, with PermaSafe, we introduced an important innovation in plastics to the market," said Ralf Weidenhammer. "We are generally seeing a positive development of our In-Mould Labelling (IML) packaging business and plan to continue building this segment in the coming years." The construction of a second production facility at the company’s site in Zwenkau is a clear witness of this strategy. A 10,000-square-metre plastics factory is currently being built with production of plastic packaging for German and European markets being scheduled to start in mid-2012.

The WPG is also planning to open a new IML plastics production facility at Bradford, UK, in mid 2012. The acquisition of the plastic injection moulding business from packaging manufacturer L&D Mouldings Ltd in July 2011 was the first step for plastic packaging production. The plan for this year is to increase plastic production and start moving toward high-end IML products. "There is great potential for IML packaging in the UK. We have already signed the first contract there and we are currently negotiating with other potential new customers," said Ralf Weidenhammer.

Strengthening the core business in composite cans
Composite cans will remain the company’s core business. The WPG continues to expand production operations in Germany. Construction of a second, 4,000-square-metre factory, which double the size of the existing plant, was started in the town of Bunde in East Friesland in October 2011. Two more production lines for EvoCan, the newest generation of composite cans, were installed in March. In Bunde, WPG produces composite cans for customers in Germany and the Netherlands. Total investment in the project is more than €10 million.

To increase business with existing and new customers, the WPG focuses on the development of new gas-tight container solutions in the composite cans segment. At Interpack 2011, Weidenhammer introduced a composite can with a new Peel-off Top. Thanks to its gas impermeability, this solution can be used for perishable products, including powdered milk or coffee, a segment that is currently dominated by metal cans. "This is an important step toward attracting new customers for our composite can business," said Ralf Weidenhammer. "The development of gastight containers is one of our top priorities this year. It makes our packaging solutions even more appealing to manufacturers, retailers and consumers."

Strengthening research & development and regulatory affairs
To reinforce the development of gas-tight containers and other products, the WPG is investing substantial sums in research & development in 2012. The company is also adding human resources in this area. A new management position in regulatory affairs was recently created in the WPG. "The demands for product safety from regulatory authorities and customers have steadily increased over the past few years," Weidenhammer explained. "These demands can be very complex and must be responded to on a group-wide level. With a dedicated point of contact for regulatory affairs, we ensure that we can continue meeting the highest market expectations."

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