UPM-Biofore-Magazine-1-2016-EN

grow. Label consumption will benefit from the same trends. More goods are being packed and e-commerce is gaining ground, which requires additional logistics labelling. All this is resulting in growth in overall label consumption,” says Nikkilä. Broadening portfolio Even though the labelling materials market is still relatively small compared to many other paper market segments, it has great potential. Asian label paper customers with their multiple end-use applications clearly represent new opportunities for UPM . For example, the manufacturing industry is increasingly replacing traditional fasteners such as screws with self- adhesive tapes, which will increase the demand for release liners. “In addition to self-adhesive label applications, there are manifold opportunities for release liners in graphic arts, industrial, tape, hygiene, medical and other end uses. We have a great deal of confidence in the future growth potential of a variable range of release liners,” says Nikkilä. Office papers hold a significant share of UPM’s business in the Asia- Pacific region. UPMPaper Asia regards China as its home market and is focusing on the high and upper mid-range segments, where the company is a market leader. Also in other APAC regions UPM is a sizeable player in office paper markets. Within the graphic paper segment, which includes paper for magazines, books, brochures and advertising material, UPMhas chosen a more selective approach, and is concentrating on lower substance papers. “We feel that we have the expertise for this segment,” says Nikkilä. “It also gives us a sustainable approach to focus on paper that consumes less material.” New applications for speciality paper “We will also produce wood-free uncoated speciality papers and thereby enter newmarket segments by tailoring new products for our customers. These paper grades can be stronger, smoother and bulkier, with tailored properties such as higher density or different shades. There are vast opportunities for speciality grades in different converting applications. We have the necessary expertise in the company and are familiar with the targeted applications,” says Nikkilä. Even though Chinese economic growth is slowing down, he believes there will always be certain segments and “growth pockets” that will offer new opportunities for UPM. “We have a reputation for consistently delivering high quality both in our products and in howwe serve our customers. For UPM, this is a long- term business. Our environmental and sustainability performance is the strongest promise we can give to our customers. Many of them choose us because of that,” says Nikkilä.

PROFITABLE FROM THE GET-GO

Currently, the PM3 project is UPM’s largest invest- ment worldwide. A relatively large part of the project’s inputs are being sourced from China, thus UPM has chosen to finance it partly from Group capital and partly from UPM China’s cash flow. “For us, it means we are on a true growth path for UPM Paper Asia. All the machines at the mill have good operating rates. PM3 will give us more capacity, and growth is very strong in Asia for the types of paper we will produce. It means we will have a valuable asset that is 100 per cent owned by our company in a very good loca- tion in the very heart of Asia,” says Raul Ikonen , Vice President for Business Control and Finance at UPM China and Asia-Pacific. Ikonen believes that the investment will be “prof- itable from the beginning even if output is lower initially, but the cash flow will be larger in the coming years,” he says. The entire investment is highly capital-efficient, which means that UPM should reap good returns on the capital it has employed.

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