COVID-19 food packaging trends unwrapped
In a trading update, Germany-headquartered Klöckner Pentaplast GmbH said food business EBITDA is up but net sales are down. Although the cost of raw materials has fallen in line with oil trends, this is not immediately passed on to the market. The pandemic is also likely to have drastically reduced purchases of on-the-go products, which explains a dip in mono film. However, declines in multi-layer films is “a bit more of a mystery”, the specialist said.
The Interview considered how major shifts in food consumption over Q1 is affecting Klöckner. “Food-to-go is a minority of the sales of KP’s food division, and retail would be the clear majority of KP’s sales. Over 75%,” the expert said. “I would expect to see that that’s going to have been a busy time for Klöckner as it filled the retail shelves.”
The Interview also discussed how the cost of polyethylene terephthalate (PET) has declined and what that means for substitution between PET and recycled polyethylene terephthalate (rPET). Although virgin PET is currently attractive economically, the expert anticipates that the long-term trend towards rPET will continue. Although rPET supplies are squeezed because of manufacturing challenges, Klöckner recently signed a five-year deal for supplier flake, the Interview revealed. The shift from PVC (polyvinyl chloride) to PET, and the role of COVID-19 in this, was also discussed.
Thinking about industry trends, the specialist compared Klöckner and competitor Sealed Air’s film barriers, noting that interest in new technologies here high. Another area of focus was industry consolidation, including which players might lead this and their potential targets. Consolidation is set to continue, according to the expert, but COVID-19 is unlikely to be either a driver or a barrier. The Interview concluded with an overview of how Klöckner is set to fare in Q2, Q3 and Q4.
To access all the human insights from Third Bridge’s Klöckner Pentaplast – food packaging Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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