Suzano grows and marks territory in LA
Valor Econômico
Fifteen days after taking full control of Consórcio Paulista de Papel e Celulose (Conpacel), now called Limeira unit, Suzano Papel e Celulose is ready to consolidate the leadership in the Latin American market of printing and writing paper, strengthen the distribution network in the region and thus try to contain the increase of competition in Latin America. Major rival of Suzano in this segment, International Paper (IP), largest manufacturer of paper of the United States, has already pointed its cannons towards the region and it will pursue the goal of selling in Latin America 100% of the paper it produces in the three plants it operates in Brazil.
In general lines, 75% of the sales of Suzano, according to Director of the paper business unit of Suzano, Carlos Anibal, are made in Latin America, same percentage of IP Brasil. The strategy is different though: being present in other markets at the same time it strengthens its position in the region. "It makes no sense to relegate markets where the brand Report is positioned in special segments, such as Europe and the United States", he says. With the acquisition of the entirety of Conpacel, the productive capacity of printing and writing paper and paperboard of Suzano rose to 1.3 million tons. In 12 months, until September, 100 thousand tons of paper were exported by the company to the European market, volume similar to that shipped to North America. Assuring scale in Latin America, on the other hand, is equivalent to taking advantage of significant growth rates in the consumption and preventing the high cost of freight.
In 2010, the global consumption of uncoated printing and writing paper, according to data of the consulting firm RISI presented by IP, grew 4% from 49.1 million tons in 2009 to 51 million tons. The most expressive level of growth was registered in Latin America, 6%, ahead Europe and Asia, both regions with a growth rate of 5%. In North America, the consumption was stable.
Regional movements of consolidation, as played by Suzano in the purchase of the entirety of Conpacel, are also a trend in other countries and they aim at forming large local suppliers that will compete on a par with the large global groups in the sector. "Great players will more and more have regional dominance. Thus, Suzano will strengthen its presence here to remain the leader", he says. The goal is foreseen in the 2024 plan, a reference to the year in which the company will become centenarian. In the segment of distribution of paper, the Brazilian company will look at opportunities, eventually of acquisition, in other countries of Latin America - it already has an operation of the kind in Argentina.
Suzano announced the purchase of part of Fibria, which was a partner in Conpacel, at the end of last year for R$ 1.45 billion (US$ 852.9 million). In the deal, the company of the Feffer family also included KSR distributor of paper of the former Votorantim Celulose e Papel (VCP) that merged with Aracruz in Fibria, for another R$ 50 million (US$ 29.4 million). The integration of the distributors, said Anibal, will increase the geographic presence of Suzano and complement the portfolio of SPP-Nemo. The network of 10 subsidiaries of SPP will add up to the 20 units of KSR, which will increase the direct presence of Suzano throughout the country. In Brazil, there are nearly 24 thousand printing companies and between 500 and 1 thousand are directly catered by the industry. All the rest is supplied by distributors.