Holmen Seeks Expansion in Emerging Markets as Europe Stagnates
Holmen AB (HOLMB), the maker of publication paper and consumer packaging that generates 90 percent of its sales in Europe, will seek to boost profits by shipping value- added products in countries such as India and China.
“We are studying pretty intensely what other export potential there is to grow in other markets,” Chief Executive Officer Magnus Hall said yesterday in an interview in Stockholm. “China is slightly more interesting but India is also attractive” and North America is another option, he said.
Holmen would seek a competitive edge based on high quality and specialization and won’t compete on base products, Hall said. While the Stockholm-based company would subsequently consider investing in local production facilities, this won’t happen within the next five years, he said.
Competitors such as UPM-Kymmene Oyj (UPM1V) and Stora Enso Oyj (STERV), both based in Helsinki, have added plantations and mills in faster-growing markets such as South America and China as Europe’s sovereign debt crisis has reduced local demand. The euro-area economy declined 0.4 percent last year and won’t return to growth until the second quarter, when it will add 0.1 percent, according to median forecast in a Bloomberg News survey. China’s economy grew 7.9 percent in the fourth quarter.
The economic situation in Europe has been so bad that it’s more likely to get better than worse, though this will take a while, Hall said.
The crisis in the euro region has changed his mind about recommending Sweden adopt the currency, Hall said.
The harm caused by the strong Swedish krona is something Holmen can handle, he said. It is better for the business to have a stable currency, even if the currency remains strong, than for it to have a currency that fluctuates, Hall said, adding that a stable, weaker krona would be preferable.
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