Company will have a sustainability and circular economy vision

10/05/2022

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Amando Varella — Foto: Claudio Belli/Valor

Papirus, one of the most traditional Brazilian manufacturers of paperboard, is discussing a new long-term strategic plan with a sustainability and circular economy vision, which may culminate in a future expansion project with substantial investments.

The company, which has been operating at full capacity since the end of 2019, is concluding an investment package of around R$40 million to expand the production capacity in Limeira, São Paulo, to 115,000 tonnes per year in 2023, from 96,000 tonnes in 2019. According to the company, the capacity has already increased in 2022, to 105,000 tonnes per year.

“Apparently, the current machines do not allow a new round of growth and the investment would have to be much higher. We are studying how to do that and if we will set up a new expansion project,” Papirus Co-CEO Amando Varella told Valor.

Founded 70 years ago by the Ramenzoni family, the company hired Falconi Consultoria to help in the strategic planning for the next five years. The consulting firm participated in the preparation of the previous plan, in 2018.

Mr. Varella, the company’s chief commercial and marketing officer as well, told Valor that Papirus reached a new level in terms of financial results, which allows looking at the possibilities of improving efficiency and costs – and expansion.

The company does not disclose EBITDA figures. The projected revenue for 2022 is R$750 million, compared to R$460 million last year. Higher sales volume and higher prices boosted the results.

If the company decides to pursue a larger growth project, it will evaluate all available financing alternatives, including the eventual arrival of a new partner or an IPO. “We know there is potential for growth, but the decision is up to the shareholder,” he said.

Having concluded the first round of strategic planning discussions, it is time now to detail the potential expansion project. This stage will take at least six months.

Growth potential, both of the market and Papirus, comes from the increasingly stronger demand for more sustainable packaging. However, it is still necessary to develop barriers – which protect the packaging and its contents – that are more sustainable and make plastic replacement possible.

It will also be necessary to expand the collection of packaging and remove it from the environment. “Looking ahead, there is a lot of opportunity in sustainable packaging, but collecting it from the environment,” he said. To this end, the company is expected to expand partnerships with the so-called cleantechs, following the example of the pioneering recycling credit project already started with Polen.

According to Mr. Varella, the company tends to stand out by making cardboard with an increasing share of recycled content. Today, the use of recovered scrap by Papirus is around 35% to 40%. The company plans to reach 60%.

To assure that there will be demand for a more sustainable cardboard, the company has held talks with consumption companies that are clients of the printing companies to which Papirus supplies paper. “Large brands have established goals for the use of recycled content, and we want to approach these consumers,” he said.

*By Stella Fontes — São Paulo

Source: Valor International

https://valorinternational.globo.com/