Specialist
Former SVP at Klöckner Pentaplast GmbH
Agenda
- Demand, supply and pricing update for Klöckner Pentaplast amid coronavirus
- PET, PVC and rPET plastics volume update and coronavirus impact on transition speed
- Raw material pricing update and pass through
- Market consolidation
Questions
1.
Klöckner recently released a trading update. EBITDA is up 26% in the food business and net sales are down 6%, excluding foreign currency translations. Can you give us your opinion on what the major drivers are here?
2.
Let’s focus on the major changes to food consumption over Q1. Can you describe the pantry stocking, the shifts from eating out to eating in and the changes of mix? I think some of the UK food packaging players have reported higher consumption of meat.
3.
Can you describe regional performance for food-to-go sales for Klöckner over Q1?
4.
What would you imagine the food-to-go split to be between takeaways, deli and any other relevant categories?
5.
Takeaway food is coming back, but could the deli take a bit longer to recover?
6.
Is there a difference in margins between retail and the various food-to-go segments?
7.
On the changes in mix for the retail sales, is it important to break down meat, fresh produce, dairy and bakery for Klöckner? Do you think that changes in mix could lead to any margin changes for Klöckner either now or in the future?
8.
As the fresh meat category is potentially increasing its share, would you expect margin dilution?
9.
Has the shift to vegetarianism and veganism been slowed due to the pandemic, and would you expect that to increase fresh produce and be margin-accretive?
10.
Could you roughly estimate the share of meat and how that’s decreasing over time for Klöckner?
11.
How do you think the EPS business has performed over this period? It’s been under a lot of sustainability threats, but as the conversation changes slightly, what has happened to EPS [expanded polystyrene]?
12.
Focusing on the PET [polyethylene terephthalate] vs rPET [recycled polyethylene terephthalate] story over this period, what’s your opinion on how the prices of PET have declined and what that means for substitution between PET and rPET?
13.
For rPET pricing, can you outline the challenges associated with collection over the coronavirus period and what that means for flake manufacturers?
14.
Do you think that Klöckner will have struggled to secure rPET flake or rPET over this period?
15.
Can Klöckner access rPET through Viridor while other players might be struggling through this period? Would you expect the company to subsequently gain share?
16.
You mentioned the potential of smaller flake producers going bankrupt over this period. How likely do you think that is?
17.
There could be potential for consolidation in this market. Do you think that would have any structural impact?
18.
We mentioned the pass-through on PET. Do you think these pass-through dynamics will change given the volume increases? We also touched briefly on the potential in the multi-layered film for competitors to be decreasing price. Do you think there will be any changes to pass-through mechanisms?
19.
Could you estimate the split between the small player spot contracts and the large player indexed customers?
20.
On the spot pricing with the smaller players, do you get a higher than average margin for those smaller contracts?
21.
How does Klöckner typically grow through either onboarding smaller players or larger players?
22.
How do you expect the smaller players to perform over the coronavirus period, and do you foresee any challenging conditions?
23.
To what extent do you think the shift from PVC [polyvinyl chloride] to PET is going to be slowed due to the pandemic?
24.
Do you think the lower PET prices will help encourage the shift from PVC and encourage the CAPEX decisions, or do you think that that lower price won’t make a significant impact?
25.
For the CAPEX that doesn’t need to be made, can you give us your opinion from the customer’s perspective on how much CAPEX they would need to spend to shift from PVC to PET?
26.
Do you have an opinion on how PET will have performed against PVC over the pandemic period?
27.
Can you outline any supply or operational challenges that Klöckner might have faced during this period and whether or not different plants will have been impacted by international lockdowns?
28.
You mentioned the difference in volumes on the mono and the multi-layer films. How do you expect the mix change at the Klöckner factories to have changed at a volume level? Are there increases in volumes in other product categories in the trade?
29.
Which products that you mentioned would be taking up significant amounts of time, and so you might expect their production to be decreasing?
30.
Could there be any short-run-focused competitors that could gain share during this period?
31.
Do you have a rough estimate for the short-run vs long-run split for KP?
32.
Would you expect these short-run businesses to be able to hold on to that share when things return to a new normal and KP switches back on short run?
33.
Have you heard of any closures or significant supply chain challenges for any of Klöckner’s major competitors?
34.
What is your opinion on the potential for increased consolidation due to coronavirus? Who do you think might be leading this consolidation and which types of players might they target?
35.
What would be the typical characteristics of these small- to medium-sized players that are being acquired by RPC or KP, and how would you compare valuations over this period to a year ago?
36.
What do you think would be interesting technical niches for Klöckner or any of these other players at this point?
37.
Do you think Klöckner could significantly improvement its film barriers?
38.
Can you compare Klöckner and Sealed Air’s film barriers and describe where Sealed Air is better?
39.
Do you think that Klöckner could be losing share to players such as Sealed Air, due to its product portfolio in film?
40.
Where is industry growth coming from with these customers who are seeking new technologies? How significant is that growth, and why doesn’t Klöckner get involved?
41.
If a company has Sealed Air leading its technological improvements, how does the conversation typically run for shifting over volume of the remaining part of the company’s portfolio?
42.
For the smaller, family-run businesses that we mentioned earlier, do you have an opinion on whether or not they will be significantly changing hands over this period?
43.
What are you expecting for Klöckner over Q2, Q3 and Q4?
