THE GLOBAL PANEL SURFACING BUSINESS

WOOD-BASED PANELS AND VALUE ADDING

Economic downturn, restructuring and new trends

2

BACKGROUND Pöyry Management Consulting has published two well received panel surfacing business multiclient reports in the past – 1997 (European focus) and 2001 (Global focus). Since then, the global panel/surfacing landscape has undergone changes, new substitution dynamics have emerged and the sector is going through a period of restructuring. These developments are leading the industry to a new direction. Therefore Pöyry is launching a new multiclient report analysing these key fundamentals that will shape the future of this business. The report will build on our previous work and provide in-depth market and industry analysis for panel surfaces in all major markets worldwide. We trust that it will be a valuable source of reference for decisionmaking and strategic planning.

The geographic market coverage is global with the following breakdown: Western Europe • Regional • Germany • Italy • Spain

North America • Regional • Canada • United States

Eastern Europe • Regional • Poland • Russia • Turkey

South America • Regional • Argentina • Brazil • Chile

The key issues: • How and when will the sector emerge from global economic downturn? • What are the materials of the future? • How is the manufacturing landscape shaping? • Which technologies are emerging? • What is the impact of bioenergy/ environmental/ sustainability aspects on the value chain?

Asia (incl. Middle-East) • Regional • China • Republic of Korea • Malaysia • Thailand • Japan • Australia • New Zealand

3 Contents

The key elements of the report are: • Products -- Low pressure melamine, laminates, veneer, paper foils (incl LBWP), paints/lacquers and plastics (thermoplastics, PVC, PP, PET etc.) • Markets -- Supply/demand situation -- Segmentation -- Business cycle outlook -- Market drivers (furniture/construction/flooring) -- Design trends -- Prices and costs analysis -- Substitution dynamics

• Industry Structure -- Key players -- M&A/consolidation -- Technology development -- Profitability (selected companies) -- Route-to-market -- Profiles of key players • New Trends -- Bioenergy impact on the value chain -- Product end-life assessment (waste, carbon etc.)

SNAPSHOTS Pöyry Management Consulting has undertaken more than 3,000 engagements within the global wood products and surfaces sector. Key players – melamine impregnators The leading Western European wood-based panel producers are also the leading global melamine impregnators. • The global melamine impregnation landscape is controlled by the leading wood-based panel producers who have integrated impregnation, with the largest companies coming from Western Europe – Kronospan, Egger, Swiss Krono, Pfleiderer, Sonae, Mauro Saviola and Finsa. As per their asset footprint, the vast majority of this capacity is in Europe.

Kronospan

Egger

E AG EP L MP Route to market – paper foils SA

Coveright

Swiss Krono

• The share of independent melamine impregnators has decreased over the years as integrated panel business models have become the norm. Coveright is the largest global independent impregnator followed by 2D Holding (Dakor) and Impress.

Pf leiderer

Sonae

• Consolidation is relatively high with the leading top 10 The paper foil chainaccounting is similar LPMhalf with the impregnation/lacquering steps being integrated melamine impregnators for to roughly of the total printing global capacity with the top 5 accounting for independent and open. into in many cases. Fabrication is more approximately one third.

Finsa

Impress

Europe North America South America Asia Africa Middle East

• In Asia, especially in China, there are a great number of small scale impregnators operating one or two Player overview in page: impregnation lines. This landscape is very fragmented 70 and destined mainly to satisfy the domestic demand.

• Impregnators tend to be the same companies as with LPM and laminates together with the leading printing companies who have forward integrated into impregnation and paper lacquering.

75 1

• Paper foils are of lower basis weight when compared to LPM or laminates. Producers are somewhat the same but there are a few specialised foil producers, especially for LBWP in Asia. Paper producers are not normally forward integrated.

E AG EP L MP SA

74

Source: Pöyry Management Consulting 74

• Printers are the same as with LPM and laminates but command a higher degree of integration with paper foils due to integration into lacquering.

Malaysia – market drivers

• Domestic fabrication is relatively independent and laminators are operated mainly by independent fabricators, Malaysia also felt the recession not dramatically. Economic growth should be back on track converters and furniture/construction materialbut producers.

by 2011 together with construction output but furniture production contracted more and is likely

• The chain has less involvement from the panel producers to LPM be back close to pre-crisis levels in 2012. as with and laminates.

2

Source: Pöyry Management Consulting

• Paper foils are traditionally used in furniture and • Particleboard and MDF have LPM grown appears strongly by 4.7% and 3.6% per annum on average respectively. On the other construction applications where “overhand, the shrank by ancharacteristics average rate of -8% per annum until 2007. engineered” in plywood terms market of performance (resistance etc.). • Due to the drop in plywood demand, the total demand for the three panels has declined by an average rate of -2.2% per annum until 2007. The plywood market is not expected to deteriorate further and hence the total demand is expected to continue growing by 6.3% per annum till 2015.

GE PA E PL

Wood-based panel demand

Demand drivers 20%

M SAOceania – paper-based surfaces 20%

15%

15%

10% 5%

10%

5%

0% Oceanian markets are stable but paper-based surfaces felt the recession. LPM markets decline -5% by 9%, laminates by 13% and paper foils by 8%. Market recovery is likely to be long.

0% -5%

-10%

-10%

-15%

-15% -20%

Forecast

25%

Forecast

Y-o-y growth

M auro Saviola

Y-o-y growth

2D Holding

-20%

150

Million m2

-25%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Construction Output (value, real)

Furniture Production (value, real)

Low pressure melamine

25

Forecast

Laminates

Million m2

Forecast

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Particleboard (volume)

GDP growth

MDF (volume)

20

GE PA E PL

Plywood (volume)

100

15 10

50

5

3

Source: Pöyry Management Consulting

0

0

2000

2005

2009

2010

2011

Supply

10

2012 Demand

Paper foils

Million m2

Forecast

8

2013

2014

2015

M SA

2005

2009

2010

2011

Supply

2012

2013

2014

2015

Demand

• LPM markets are very stable and no changes are expected. • Demand for laminates decreased by 1% until 2008 and this trend is expected to continue.

6 4 2 0 2000

2005

2009

2010

2011

Supply

4

2000

2012 Demand

Source: Pöyry Management Consulting

2013

2014

2015

• The paper foil market is small and has been growing by 3% per annum until 2007. Growth is expected to remain at similar levels and demand is forecast to grow by 2% till 2015.

Why Pöyry? Our expertise covers the entire panel surfacing value chain from procurement to technology, markets and customers. We are also active within the financial sector and have undertaken a number of sector related M&A assignments. Furthermore, we work with the products and processes related to the panel surfacing sector – both downstream and upstream, e.g. wood-based panels, decor paper, chemicals (resins etc.), furniture to name a few. Our extensive international experience, in-depth industry knowledge and long-term practical experience are the cornerstones of our services.

For more information, please contact: Dr George Goroyias Tel. +44 20 8770 3200 E-mail: [email protected]

Pöyry Management Consulting Portland House, Bressenden Place London SW1E 5RS United Kingdom

www.poyry.com

Mr Tomi Hartikainen Tel. +44 20 8770 3200 E-mail: [email protected]

THE GLOBAL PANEL SURFACING BUSINESS Economic downturn, restructuring and new trends

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Tel: +44 20 8770 3200 Fax: +44 20 8770 2115 [email protected]

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THE GLOBAL PANEL SURFACING BUSINESS Economic downturn, restructuring and new trends 2010 Edition

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Pöyry Management Consulting Portland House, Bressenden Place London SW1E 5RS, UK Tel: +44 20 8770 3200 Fax: +44 20 8770 2115 [email protected]; [email protected]