BRUSSELS, Belgium, Jan. 9, 2020 (Fastmarkets RISI) -ERBI Group, a Polish cartonboard converter, plans to move to a new site in Lodz in April 2020, increasing production by up to 40%. The new 4,800 m² site replaces the company’s existing two plants with combined 3,000 m² in the central Polish city.
The firm, which employs 120 people and noted revenue of some Euro 8 million ($9.5 million) in 2019, has invested over Euro 1 million in the new site and will finance it from its own funds, Jakub Bielecki, the CEO and owner of company, toldPPI Europe.
The company plans to expand its production capacity, combine its folding boxboard (FBB) and leaflet production and streamline logistics at the new plant, Bielecki said. The firm, he said, is also considering how best to expand its international reach, and is in talks with several partners inside and beyond Poland.
“We want to tread slowly, though,” Bielecki said, adding that there was an issue in Poland of finding employees and also of over-supplying the market.
The company buys folding boxboard from two suppliers, International Paper from its mill in Kwidzyn, northern Poland, and Metsä Board in Finland. “We generally buy from IP, about 80%, and Metsä if there is a need, so about 20%,” he added.
The company has storage capacity of three-months at the IP Kwidzyn factory, but aims to produce for immediate transport.
Cartonboard prices have not come down for the company, Bielecki said. “They’ve stayed more or less the same for the last two years,” he explained, adding that he had not seen any significant changes in market dynamics in the last year. The cost of paper is between 40% and 70% of total costs, he said. “But falling pulp prices are not impacting us.”
ERBI produces finished end products exclusively for the pharma industry, with about 50% sold domestically and the rest mainly in the EU. Its main customers are Glaxo, Novartis and Pfizer, with large clients in Slovenia and Ireland among other countries.
“I think consolidation is somehow inevitable in the European cartonboard market. Margins are falling everywhere and it’s very difficult to raise finances for investment. Meanwhile, the expectations from the side of customers are increasing all the time,” Bielecki said.