U.K.-based packaging and paperboard maker sells plastics production assets to U.S.-based equity firm.
London-based DS Smith Plc has agreed to sell its Plastics division to United States-based equity firm Olympus Partners for what it calls “an enterprise value of $585 million.”
According to DS Smith, the sale price “represents a multiple of 9.9 times EBITDA [earnings before interest, taxes, depreciation and amortization] based on the past 12 months to Oct. 31, 2018.” The transaction, subject to closing conditions including regulatory approvals, is expected to become final in the second half 2019.
The Plastics division of DS Smith consists of operations that produce flexible plastics, rigid plastics and foam products. “This sale represents an important step in DS Smith’s continued progress as a leader in sustainable packaging and accelerates the program of deleveraging, alongside organic cashflow,” states the firm.
DS Smith also has issued on update on other activities, stating that “in the period since Nov. 1 2018, trading has continued to be strong, in line with our expectations.” Adds the firm, “We continue to see good corrugated box volume growth with continued market share gains driven by the quality of our offering to large and e-commerce customers and our fast moving consumer goods (FMCG)-weighted customer base.”
The company also indicates its Christmas period was “especially busy for our e-commerce-focused customers, with our sector-leading offering supporting our customers over this critical period.”
DS Smith says of its late January acquisition of Spain-based Europac, “We are delighted to welcome our new colleagues to the business and are very pleased with the initial progress on integration and the customer reaction so far.”
The packaging and containerboard producers says its U.S. business “continues to perform well with strong margins and returns ahead of our acquisition case.”
Comments Miles Roberts, DS Smith’s group chief executive, “My colleagues in the Plastics division have worked hard to build the business into the success that it is today, and that quality has been recognized by Olympus Partners. The [Plastics division sale] is attractive both financially and strategically for DS Smith as, together with the acquisition of Europac, we reinforce our position as a leader in sustainable packaging with a clear focus on our fiber-based business.”
He adds, “We are pleased with the performance of the business during the second half of the year. While macroeconomic conditions remain uncertain, we are confident of continued strong demand for our innovative and high-quality sustainable packaging and the resilience of our FMCG-focused customer base. At the same time, the sale announced today will further strengthen our robust balance sheet and the board of directors continues to view the prospects for the business with confidence.”
A late February presentation by Moore & Associates addressed what the industry needs to know about the massive oversupply of mixed paper.
The mixed paper grade has presented an ongoing concern for recyclers in recent months. The average value of this grade has been exceptionally low throughout all of 2018 and into 2019. According to Fastmarkets RISI’s PPW Yellow Sheet report on Feb. 5, average prices in the United States for mixed paper were -$3.
Bill Moore, president of Atlanta-based Moore & Associates, and Dan Gee, a senior associate there, offered a presentation on the topic at the Southeast Recycling Conference (SERC) Feb. 24-26 in Orlando, Florida.
Moore said the primary stumbling block to the demand for mixed paper comes in the form of high levels of non-paper contaminants in mixed paper bales. Moore added that mixed paper “won’t always be no cost,” but he said it could take years before the market for mixed paper is robust again.
For many years, paperboard mills have used some level of mixed paper as a low-cost source of fiber, including at recycled-content paperboard mills, containerboard mills, roofing felt mills and brown toweling mills. Yet beginning with the rise in the collection of residential mixed paper in the mid-1990s, the quality of the grade began to deteriorate, and many domestic mills did not upgrade their stock preparation systems, according to Moore.
However, China had built mills that could use U.S. mixed paper. Ultimately, the result was that very little mixed paper was used by U.S. mills, with the exception of those built by Conyers, Georgia-based Pratt Industries.
With China’s new paper mills having new technology in place by the early 2000s that could accept lower grades of mixed paper, China’s demand grew stronger. This increased the prices of mixed paper even though the quality of the commodity was declining. Thus, U.S. containerboard mills could not compete for the grade, for the most part, excluding Pratt.
More recently, China has closed its doors on importing most recovered fiber commodities—particularly mixed paper. Thus, mixed paper bale demand has plummeted. Moore estimates at least 500,000 metric tons of baled mixed paper collected for recycling in the U.S. may have been landfilled in 2018.
Outlook for mixed paper today
While demand for the mixed paper grade is low, some countries are increasing their imports of the grade. Moore said countries such as India, the Philippines and Indonesia are importing mixed paper. Also, he said more capacity is expected to be built to consume mixed paper in Southeast Asia, specifically in Laos and Cambodia.
In North America, the consumption market is beginning to see some activity for the mixed paper grade. Moore indicated that all new board mill projects under construction in the U.S. are planning to use mixed paper in a range from the 10 to 50 percent level. He said many of these projects were originally planning on only consuming old corrugated containers (OCC).
Some domestic mill projects that offer optimism for recyclers that pack the mixed paper grade include:
Moore added that many other mills are considering ways to consume mixed paper. He said these projects require major capital expenditures, but the additional contaminants removal equipment is relatively low cost.
Although the demand for mixed paper is low today, Moore predicted the U.S. mixed paper market will recover over the next two to three years as a result of mill conversions, export market growth, recycled pulp investment, improved supply quality and long-term OCC supply tightness that will cause some OCC buyers to look to other grades—including mixed paper.
State legislators are introducing more legislation related to single-use plastics, auxiliary containers, bottle bills and extended producer responsibility, which would ultimately impact paper and plastic recyclers.
An increasing number of bills have been pursued at the state level that could impact the recycling industry, according to Institute of Scrap Recycling Industries (ISRI), Washington. Across the U.S., state legislators are introducing bills pertaining to single-use plastics (such as banning straws or disposable flatware), auxiliary container bills, bottle bills and bills related to extended producer responsibility (EPR).
Bernie Lee, research analyst of commodities at ISRI, reports that about 30 bills have emerged at the state level that are focused on changing single-use plastics in 2019. Similarly, state legislators have introduced 135 auxiliary container bills in 2019. Lee notes that there is some “overlap” in bills that fall under the single-use plastics and auxiliary container categories.
“It’s not clear-cut,” he says. “The way we categorize them is single-use plastics has the key word ‘single-use plastics’ in the bill language.”
Lee adds that only 106 bills at the state level related to auxiliary container bills were introduced in 2017 and 2018 combined.
There have been 112 bottle bills introduced at the state level in 2019. Lee says many of these have been focusing on increasing deposit values for the program. However, he says many of these bills do not have clear definitions on how these costs will be handled.
“The number of bills in play may have sort of effects on how plastics will be priced in the marketplace,” Lee adds. “If redemption rates are higher than they’re worth, it will create a squeeze. We need to make sure these bills won’t have deleterious market effects.”
Lee notes that paper and plastics processors might want to track the bottle bill legislation in Maine, Massachusetts and Oregon, specifically.
Also, 11 bills emerged related to EPR this year. In the past, Lee says this type of legislation was more related to the electronics recycling sector. Now, he says, there is more concern around packaging materials.
“We’re seeing marked increases already compared with last year on the number of bills addressing extended producer responsibility,” Lee says, noting that paper and plastics processors should keep an eye on packaging EPR bills.
Lee adds that two EPR bills are on the floor in Massachusetts; however, these are moving slowly. He says Texas also has an EPR bill that aims to stimulate materials as a feedstock for manufacturing.
While neither Lee nor ISRI can make predictions on what bills would clearly impact the industry, Lee stresses that state legislation related to single-use plastics, bottle deposit laws and EPR need to be tracked by the paper and plastics processors.
“There has been an increase in the number of bills,” he adds. “The public has a vested interest in seeing these bills—they are focused on climate change and ocean plastics. Your markets could change. I don’t know how, but these are some drivers that could change markets.”
Both feature engines that meet EPA Final Tier 4 requirements without a diesel particulate filter.
LBX Co. of Lexington, Kentucky, has introduced the new Link-Belt 250 X4 Material Handler (MH) and 250 X4 Scrap Loader/Handler (SL) for the U.S. and Canada. Both feature an electronically controlled 177-horsepower Isuzu engine that meets EPA Final Tier 4 requirements without the need for a diesel particulate filter (DPF).
The 250 X4 MH and 250 X4 SL are built for material handling and demolition applications, featuring a two-piece attachment with hose burst check valves. The MH configuration has a curved boom and straight arm, while the SL has a straight boom and droop-nose arm. The hydraulics package features Spool Stroke Control (SSC) technology designed to achieve maximum control and productivity.
Preset hydraulic motor and pump for a 15-kilowatt, hydraulically driven generator with a controller installation mount comes standard on the 250 X4 SL.
“The new hydraulics package delivers up to 7 percent faster cycle times than its predecessor,” says LBX Product Manager Adam Woods in a press release. “This performance increase is largely due to a new proprietary control valve with a 30 percent larger hydraulic passage area. But we didn’t stop there. We increased the size of arm, boom and auxiliary spools to reduce pressure loss and distribute oil more smoothly. Two electrically controlled Kawasaki pumps and one Kawasaki gear pump assure that hydraulic flow gets delivered precisely when and where it’s needed. The end result is more smoothness, maneuverability and precision across all operating modes.
“All of these performance enhancements don’t compromise fuel efficiency, either,” Woods continues. “A 3 percent DEF consumption rate, combined with a large DEF tank, gives it the longest DEF refill interval in the industry.”
The X4 cab features a standard air suspension seat with +/- 5-degree tilt. Armrests move proportionally with the console, which means that the distance and angle between joysticks and operator remain the same no matter how the seat is adjusted. Full bar guard, hinged bar guard and mesh guarding packages are available.
The hydraulic cab riser features an operator view of 16 feet 10 inches at eye level height. A new in-line drift valve and shockless cab riser are designed to improve operator comfort and control.
A 7-inch LCD color monitor allows the operator to easily navigate a full menu of user-friendly controls to take full command of the excavator and attachments. The standard rear-view camera is accessible through the monitor, displaying a panoramic view of the worksite from the rear of the machine, with sight guidelines that can be turned on or off by the operator. Rear and side lights can also be added to the camera system. An under-cab camera option provides all-around visibility and safety.
For more visibility, the Wide Angle Visual Enhancement System (WAVES) can be added. “WAVES is an exclusive, award-winning feature for Link-Belt X4 material handlers and scrap loaders,” Woods says. “The system is easy to use and includes three closed-circuit, high-resolution cameras that provide a seamless 270-degree viewing envelope with no blind spots.”
Other notable cab features include dual LED cab lights; a cup holder and storage areas for cell phones and other small items; newly designed joysticks with easy-to-hold grip and radio mute buttons; and an MP3 audio input with Bluetooth capabilities for hands-free communication.
RemoteCARE GPS telematics system allows round-the-clock remote monitoring and security. The system allows daily fuel economy and machine performance tracking with ease. If potential failure conditions arise, flashing diagnostic codes on the monitor quickly alert the operator to potential trouble and an e-mail alert is automatically sent. The system also provides machine location in real time for better job supervision and remote security monitoring. A lifetime subscription is included at no extra charge.
Both machines feature a heavy-duty high-wide undercarriage, oversized turntable and larger drive motors. As with all Link-Belt products, the bearing tub extends down through the top plate of the x-pattern car body and is welded to the bottom and top plates of the car body for strength and durability.
Both models also feature ground-level access to all routine service points, including sample ports for engine and hydraulic oil. All service ports are easily accessed via hand-turn knobs.
The technology breaks down polyester-based products into their polymer building blocks.
Leading specialty materials company Eastman, Kingsport, Tennessee, has announced that it will pursue the launch of circular recycling technology that uses polyester scrap that cannot be recycled using mechanical methods currently available. Using the process of methanolysis, Eastman says its technology breaks down polyester-based products into their polymer building blocks, which can be reintroduced to produce new polyester-based polymers.
In a news release announcing the launch, Eastman says it has more than three decades of expertise in methanolysis, making the company “uniquely qualified to be a leader in delivering this solution at commercial scale.”
The technology enables the recycling of low-quality polyester, or polyethylene terephthalate (PET), scrap that would typically be diverted to landfills into high-quality polyesters suitable for use in a variety of end markets, including food-contact applications, according to the company.
“We recognize that plastic waste is a complex problem that needs advanced solutions. As we have engaged potential partners, it is clear there is high interest across the entire value chain,” says Mark Costa, Eastman board chair and chief executive officer. “Our long history of technical expertise in chemical processes, including methanolysis, and our leading position in copolyester chemistry, enables us to provide this innovative solution to address the growing challenges of plastic waste in our environment.”
Eastman says it is executing an engineering feasibility study on the design and construction of a commercial scale methanolysis facility to meet its customers’ demands and has engaged in initial discussions with potential partners across the value chain regarding the development of such a facility. The company’s goal is to be operating a full-scale, circular recycling facility within 24 to 36 months.
The company says its efforts to find new end-of-life solutions to advance the circular economy align with its “innovation-driven growth strategy and commitment to create value through sustainability.”
“We believe we have an obligation to enhance the quality of life in a material way,” says David Golden, senior vice president, chief legal and sustainability officer and corporate secretary for Eastman. “As the desire grows for products that have a sustainable life cycle, Eastman continues to build on its heritage of world-class technology platforms and product innovation to offer solutions at the molecular level. Today, more than ever, the world needs innovation, and Eastman is excited about the possibilities we can achieve by working along the value chain, across industry sectors and with community partners to expand our efforts and make the greatest collective impact.”
For more information, visit www.eastman.com/Circular-Economy.