European packaging sector steadies

- Last updated on GMT

Related tags: Marketing, Europe, Rexam

US Standard & Poor's Rating Services has said that Europe's
packaging sector is starting to see the benefits of restructuring
activities filter through, with some groups benefiting from higher
selling prices and better cost efficiencies, according to a report
from Platts.

US Standard & Poor's Rating Services has said that Europe's packaging sector is starting to see the benefits of restructuring activities filter through, with some groups benefiting from higher selling prices and better cost efficiencies, according to a report from Platts.

"In recent years, fierce competition, volatile raw material pricing, and loss of market share due to material substitution led many players to restructure their operations in an effort to cut costs, improve efficiency, and realign capacity,"​ said Tommy Trask, a credit analyst at S&P's Corporate Ratings Europe.

The S&P report said that the European glass container industry is still dogged by overcapacity, due to long-term factors such as substitution from polyethylene terepthalate, metal cans and cartons.

Meanwhile weak volumes continue to be a problem for most players, although this is being partially offset by price increases. Since the beginning of this year major players such as German beverage can specialist Schmalbach-Lubeca have been swallowed up by acquisitive international packaging players such as Amcor and Ball Corporation.

Other players such as UK-based Rexam have been streamlining their operations by selling off unprofitable parts of the business. Rexam has been applauded by market analysts for its "pruning" operation, which has seen it jump back into the black and vastly improved its business prospects.

Industry observers claim there is still room for yet more consolidation, with a number of the remaining larger players, who are still mainly confined to national business operations, expected to be bought out.

Related topics: Processing & Packaging

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