MOSCOW (MRC) -- The Retal Industries group sees the recent developments from a quite positive perspective. In Klaipeda FEZ, it owns one of the largest European PET producers - NEO GROUP- and an HDPE caps and APET film manufacturer, Retal Baltic, said Sustainableplastics.
The initial data indicate that Retal Baltic generated some €46m in revenue last year, a 4.2% decrease compared to the year before. However, the company’s output at 22,400 tons was only 2.6% below 2018. Retal suggests that a major part of revenue decrease can be attributed to plummeting PET prices. This notwithstanding, company, also saw its profit rise 6% last year.
This year, Retal Baltic plans to fully employ the expansion projects of 2019 and to increase output to 28,000 tons. Consequently, it expects revenue to grow by 20% to €54.5m.
"Both of our core products - HDPE caps for drinks packaging and food-grade APET film - remain strategically important, even under the circumstances of business and societal restrictions,” says Viktorija Jureviciute, the CEO of Retal Baltic.
“Since the COVID-19 outbreak, we have witnessed a slight increase in demand from our existing customers; however, some projects with our new and prospective customers have temporarily stalled. That is because some testing, equipment set up, auditing, aligning, and other processes are always needed when onboarding new customers.”
As Retal Baltic increased its production capacity of caps by 15% and 35% for film, the company expects the revenue from these segments to grow in line with these numbers. While the numbers from March and early April look good, prolonged lockdowns and quarantines may impact projects with new customers. "We aren't concerned too much, as we have been paving long term relations with our customers,” said Jureviciute. “However, we are aware that the pandemic impacts various processes for both us and our partners. For instance, we were planning to upgrade some of our equipment, but our suppliers from Northern Italy aren’t operating currently. We expect to be late with this particular project, but by a few months, not more. Another challenge is the decrease of deposit PET bottle collection and recycling: consequently, there are less materials in the secondary PET market and the prices are growing. However, oil, as the primary material for PET, is getting less expensive."
The company also admits that decisions for future investment and expansion projects are currently on hold at both Retal Baltic and its international partners. However, the company is eager to resume its investment considerations once the situation becomes more stable. In March, Retal Baltic provided more than 3 tons of special APET film to Lithuanian makers' community, manufacturing protective shields for medics. The company has even modified some of its production processes to pursue this initiative. Jureviciute says that this contribution was pro bono, however, the company sees demand for such materials from the commercial segment. In the short run, such materials for protective shields may account for 2-3% of Retal Baltic's portfolio; however, this demand should significantly decrease or disappear after the pandemic goes away.
"Speaking of the long run though, it's obvious that product safety, sterility and long shelf life have now become incredibly important factors in society,” Jureviciute notes.
“But only plastics industry insiders have been talking about this and were rarely heard. The current situation has shown that we should split the features of packaging materials from the questions of their use, collection, and recycling. I'm certain that the 'safety first' principle will stick around for a long time among the consumers. Of course, we do support the efforts in the circular economy, recycling and environmental fields, but it now becomes clear that the market and its regulators won't be able to ignore the basic need for safety.”
As per MRC's ScanPlast report, Russia's estimated PET consumption decreased to about 53,890 tonnes in February 2020, down by 3% year on year. 100,830 tonnes of PET chips were processed in Russia in the first two months of 2020. February PET production in Russia dropped to 45,800 tonnes, down by 5% year on year. Russia's overall PET production fell in January-February 2020 by 13% year on year.
MRC