Prior to its proposed joint venture with Brazil’s Petropar which is scheduled to complete on July 31, Fiberweb reports that its sales volumes have been down in the first half of 2009, but that margins have continued to improve as a result of cost reduction programmes, improvements in operating efficiencies and lower raw material prices.
Civil engineering markets have seen a stronger performance with Terram benefiting from innovation and increased sales resource, the company says. In Europe, Fiberweb is expanding its position in specialist medical fabrics while the European consumer fabrics business has won additional volumes for hygiene applications.
Fiberweb’s new Italian spunbond line is now fully operational.
The company reports that its industrial markets have remained challenging due to the generally poor economic environment, while airlaid markets in Asia have been particularly impacted by poor volumes at a major customer, although some recovery is expected here in the second half.
The proposed Joint Venture with Petropar S.A. announced on 26 June is expected to complete on 31 July and, subject to shareholder approval, will create a leading producer of spunbond nonwovens in the Americas, with the potential to serve customers more effectively from its leading asset and technology base. Implementation of the Joint Venture, as noted in the announcement made on 26 June, will initially increase net debt as a result of the transfer of Fiberweb plants in Mexico and the USA although it will remain within management expectations.
On June 26, Fiberweb announced that it has conditionally entered into an agreement with Petropar to establish a 50/50 joint venture intended to create the second largest producer of spunbond nonwoven fabrics in the Americas.
The joint venture will be named FitesaFiberweb and will focus on the large and growing markets for lightweight nonwoven fabrics, serving producers of disposable hygiene products such as baby and adult diapers and feminine care products.
It will initially comprise Fiberweb’s plants in Washougal, US and Queretaro, Mexico, land and buildings at Fiberweb’s Simpsonville site and Petropar’s existing nonwoven business consisting of plants in both Brazil and North America. There are advanced plans for the joint venture to invest in a new production line in the US in the near term.
For the year ended 31 December 2008 the joint venture would have had proforma combined sales of US$191.7 million, EBITDA of US$22.9 million and 345 employees.
From the outset, the two ompanies plan to:
- Combine manufacturing capabilities in the US, Mexico and Brazil with the geographic reach to supply major hygiene consumer products manufacturers across the Americas.
- Construct a new manufacturing facility in the US to meet growing demand for sophisticated and ultra-lightweight fabrics.
- Expand Fiberweb’s geographical footprint into large and growing markets in South and Central America, enhancing its customer base.
- Allow Fiberweb to access low cost manufacturing of the state-of-the art production facilities of Fitesa in Brazil.
- Expand Fitesa’s geographical footprint into North America.
- Provide Fitesa with access to Fiberweb’s global customer base and leading technology capabilities.
“We are delighted that Petropar and Fiberweb have been able to negotiate the creation of this imaginative venture swiftly and smoothly,” said Fiberweb CEO Daniel Dayan. “We share a common interest in building a leading player in all parts of the Americas and in accelerating and derisking investment plans that both parties were considering individually. In these challenging times, we are implementing a model that focuses scarce capital on cost-effective investment to meet customers’ needs for leading-edge products on a regional and global basis and that allows economies of scale to be achieved.”
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