Ian Melin-Jones
Cogeneration Provides Energy Efficiency
From contributing to a more environmentally-friendly energy economy, to saving company’s money by using in-house energy, to generating revenues by selling off excess energy, co-generation has undoubted benefits for pulp mills around the world.
A new article in Biomass Power & Thermal adds a new benefit to the pot: energy efficiency.
“The ability to produce electricity on-site rather than being reliant on the grid not only provides consistency and reliability…but also reduces grid congestion and avoids distribution costs,” writes Anna Austin, the Associate Editor for the magazine.
Cogeneration is essentially recycled energy. Cogeneration facilities capture energy and steam used in the pulping process and converts them to power which can be re-used both within the mill and sold to power grids.
At their soon-to-be converted specialized dissolving pulp mill in Thurso, Quebec, Fortress Paper Ltd. are in the midst of building a large-scale cogeneration facility that will see the mill export almost 75 per cent of its recycled energy to the provincial power grid.
For Austin, however, the energy saved for the mill is a crucial element as it allows for more energy security on site. A report on cogeneration in the US released in 2008 says that capitalizing on cogeneration could mean a very different energy future across the board.
“Notably, the report points out that while [combined head and power] has been around in one form or another for more than 100 years—it is a proven, not speculative, technology and still remains vastly underutilized even though it’s one of the most compelling sources of energy efficiency that could, with even modest investments, quickly move the U.S. toward greater energy security and a cleaner environment,” she writes.
At their mill in Thurso, Fortress Paper expects to have their large-scale cogeneration facility up and running on site by late 2012.
SOURCES:
Biomass Power & Thermal: “Cogeneration Sensation”
Specialty Cellulose: “The Benefits of Biomass Cogeneration”
European Paper Week: ‘At the core of green growth’
Registration for this year’s European Paper Week is open until Tuesday 2 November 2010. The networking event of the year within the pulp and paper industry will take place in Brussels at the Crowne Plaza – Le Palace Hotel in Brussels. From 16-18 November representatives of the paper industry will discuss with industry stakeholders the latest key issues and challenges facing the industry.
European Paper week is open to all and the main events include the CEPI Dinner and CEPI Annual meeting as well as several seminars on current topics of interest, such as ‘Transport’, ‘Climate Change’, ‘Recycling’, ‘Raw materials and ‘Research’. For more details on the registration policy and to access the registration form, visit www.cepi.org/epw
Transport and Future EU policy
Climate change, sustainability and jobs are clearly the top challenges for our society. In December 2009, EU leaders called for international action in line with the EU objective of reducing greenhouse gas emissions by between 80%-95% by 2050 compared to 1990 levels. As far as energy-intensive industry sectors - the paper industry is one of them – are concerned, ambitious CO2 emissions reductions targets through the EU Emission Trading Scheme have been adopted for 2020.
Raw Materials, By-products and Biomass - Green Growth with Fibres, Fuels and By-streams
Raw Materials are currently receiving increased attention by EU policy makers. Several initiatives aim at a better grip on raw materials, a more efficient use of resources and at boosting recycling. At the same time, there is a strong focus on renewable energy, exacerbating competition for renewable raw materials, most often fuelled by subsidies. The European Paper Industry is at the crossroads of these discussions, since it is using renewable raw materials for its products and produces renewable energy from them.
Climate Change from 2012 to 2050
This interactive seminar will start where last year’s seminar on the future of the EU Emission Trading System ended and brief you on the state of play on EU ETS benchmarks and free allocation. However, there are many more developments that deserve your attention. The Copenhagen Accord right after CEPI 2009 Paper Week has brought commitments of countries and the EU to a -50% global carbon reduction target by 2050. For the developed world this would mean an almost complete decarbonisation by 2050. In the coming year the European Commission will launch its vision on the 2011-2020 Energy policy, a Roadmap for a 2050 Low Carbon Economy, possibly even including interim targets for 2030 and 2040. The European Council still has to finalise its discussion on a -30% target by 2020, heavily debated this year. The upcoming climate conference in Cancun will most likely not bring a global agreement on climate change, however will bring progress on key issues as land use change and forestry accounting.
Recycling - Closing the European fibre loop
In policy making, waste was long seen as a disposal problem. The Thematic Strategy on recycling (2005) has changed this perspective and recognizes materials such as recovered paper as a valuable resource. For the European Paper Industry recycling means efficient use of its resources, closing the carbon and fibre loops in forests and paper industry, and contributing to EU targets on sustainable production and consumption. The seminar will inform the participants about the review of the thematic strategies on the efficient use of natural resources and recycling, and discuss the paper industry’s position in these developments.
At this year's Annual Meeting on 18 November CEPI is proud to present European Parliamentarian Herbert Reul, as well as Antonio Tajani, European Commissioner for Industry and Entrepreneurship. The discussions and presentations will include topics such as Bio-economy, Green Growth, Raw Materials and Transport.
For more information with regard to the European Paper Week, please contact Daniela Haiduc, CEPI Communications and Public Affairs Manager at +32 2 627 49 15 or This email address is being protected from spambots. You need JavaScript enabled to view it.
Ahlstrom announces specified long-term financial targets
Ahlstrom Corporation's Board of Directors has today approved specified long-term financial targets for the Group, supporting its profitable growth strategy.
The Group's minimum target on return on capital employed remains at 13 percent over the cycle and Ahlstrom's objective is to reach the target by 2012. With the current balance sheet structure, an operating profit margin of 7 percent or above is required to reach the target. In July-September 2010, ROCE was 6.0 percent and 7.4 percent in the first nine months of the year.
Ahlstrom maintains its gearing ratio target at 50-80 percent. The figure stood at 47.7 percent as of September 30, 2010.
As an additional target, Ahlstrom targets annual net sales growth of at least 5 percent at constant currency rates, including acquisitions.
For further information, please contact:
Jan Lång
President & CEO
Tel. +358 10 888 4700
Seppo Parvi
CFO
Tel. +358 10 888 4768
Ahlstrom in brief
Ahlstrom is a global leader in the development, manufacture and marketing of high performance nonwovens and specialty papers. Ahlstrom´s products are used in a large variety of everyday applications, such as filters, wipes, flooring, labels, and tapes. Based upon its unique fiber expertise and innovative approach, the company has a strong market position in several business areas in which it operates. Ahlstrom's 5,800 employees serve customers via sales offices and production facilities in more than 20 countries on six continents. In 2009, Ahlstrom's net sales amounted to EUR 1.6 billion. Ahlstrom's share is quoted on the NASDAQ OMX Helsinki. The company website is at www.ahlstrom.com.
Embracing a new evolution within stainless steel
* Stainless steel family gains a new duplex member
Duplex stainless steel is fast becoming the material of choice for a wide range of stainless steel applications from architectural landmarks to a host of industrial processes. This trend is gaining further impetus with the launch by Outokumpu of a new duplex stainless steel grade featuring a higher mechanical strength than the major duplex grades on the market.
Duplex stainless steel grades are commonly grouped into lean duplex, standard duplex and super duplex grades depending on their alloy content and corrosion resistance. The newest addition to this continuum, Outokumpu LDX 2404®, shares the properties of lean duplex grades but differs from all other duplex grades in that it offers higher mechanical strength.
As such, the new grade is excellently positioned over the standard austenitic grade 316L and other duplex grades wherever the new grade’s high strength can be utilised – in bulk liquid storage tanks, road and rail tankers, pulp and paper machinery and water treatment facilities, among many other uses.
The new LDX 2404® is also significantly more corrosion resistant than 316 due to a higher PRE value (higher Cr and N). This makes it excellently suited to the salty atmospheric conditions of buildings located close to the sea, for example, which can otherwise be prone to discolouration and pitting. The grade’s higher mechanical strength, which often allows thinner gauges to be used, offers additional benefits.
Chemical tankers today transport various types of loads, but in general, they all have strict requirements regarding pitting corrosion. The combination of corrosion resistance and higher strength of LDX 2404® makes it a highly cost-effective solution for such applications.
Duplex stainless steel, an unbeatable formula
What makes duplex stainless steel special is that for the corrosion resistance offered by any specific traditional austenitic grade, there is nearly always a duplex counterpart that offers the same or better corrosion resistance, but also twice the strength. This, combined with the fact that these properties have been achieved with a lower overall alloy content than similar-performing austenitic grades, effectively ensures that the material can be used to achieve major thickness reductions and cost savings in a host of applications.
Storage tanks are an excellent example. The choice of duplex over austenitic grades offering similar corrosion resistance in the construction of tanks for the storage of liquid foods and chemicals has provided up to 50% material savings in some tank sections.
Commercial Manager Jan Engfeldt from Outokumpu explains: “As an example, the shell of a certain industrial storage tank would weigh 117 tonnes if built in standard stainless 4404 (316L). If built in LDX 2404® the shell weighs only 72 tonnes. This is a thirtyfive tonnes saving in just one tank. Calculating the costs over a large project the savings can be quite significant.”
Other characteristic benefits of duplex stainless steels are low nickel content for price stability, as well as good fabrication properties and excellent resistance to pitting, crevice corrosion and stress corrosion cracking – translating into less maintenance, longer service life and minimised lifecycle cost.
Future proof, environmentally sound
It is often too little appreciated that stainless steel is 100% recyclable. Today, the recycled content of Outokumpu stainless steel is approximately 85%, and higher than the global industry average of 60% (according to the International Stainless Steel Forum ISSF).
Furthermore, stainless steel releases a very low level of metal ions to the environment and requires no hazardous coatings. Thanks to the high strength of duplex stainless steel, it is possible to reduce the weight of structures and lower energy consumption in transportand construction.
A new landmark is nearing completion in downtown Stockholm, the Stockholm Waterfront project incorporating a major congress center. The ambitions of the project include bringing exciting contemporary architecture to one of the most defining sections of the Swedish capital and implementing a green building concept focusing on energy consumption and sustainable materials. Here, cifecycle was an important criterion in the materials selection. After consultation with Outokumpu about stainless grades, corrosion resistance and strength, the architects became convinced that duplex stainless steel would be the correct choice.
Outokumpu is a pioneer in duplex stainless steels
The leading stainless steel producer Outokumpu is also the world’s foremost supplier of duplex stainless steels, with over 50% global market share. Committed to duplex steels for more than three decades, Outokumpu has pioneered many revolutionary applications of the materials together with customers and continues to develop new grades and uses of duplex steels.
About Outokumpu
Outokumpu is a global leader in stainless steel with the vision to be the undisputed number one. Customers in a wide range of industries use our stainless steel and services worldwide. Being fully recyclable, maintenance-free, as well as very strong and durable material, stainless steel is one of the key building blocks for sustainable future. Outokumpu employs some 7 500 people in more than 30 countries. The Group’s head office is located in Espoo, Finland. Outokumpu is listed on the NASDAQ OMX Helsinki. www.outokumpu.com
For more information please contact:
Jan Engfeldt
Commercial Manager
Outokumpu - BU, Special Coil & Plate
Tel. +46 226 813 48
Mob. +46 730 620 900
Email. This email address is being protected from spambots. You need JavaScript enabled to view it.
Provider:
/Ins - Industrial News Service
Ben Idström
Managing Director
This email address is being protected from spambots. You need JavaScript enabled to view it.
Decision day for AbitibiBowater restructuring approaches
The U.S. Bankruptcy Court is planning to hear arguments on AbitibiBowater's reorganization plans on Nov. 5. The reorganization plan already has creditor approval in both the U.S. and Canada, and has been approved by the Quebec Superior Court. One subsidiary, Bowater Canada Finance Corp., failed to get creditor approval and would be excluded from the restructuring.
The Canadian Press reports (in a story in online edition of the Winnipeg Free Press on Oct. 22) that the restructuring plan allows AbitibiBowater to secure up to US$2.3 billion in loans minus cash on hand. It has negotiated an asset-backed revolving loan of up to US$600 million from Citigroup, Barclay's and JP Morgan. It also had a US$850-million debt offering and C$130 million from a NAFTA settlement with the federal government over a lawsuit filed against Newfoundland and Labrador.
AbitibiBowater said it hopes to earn more than US$1.5 billion in net profits over the next four years as it emerges as a lower-cost producer better able to absorb market and currency fluctuations. Revenues are forecast to grow by 14.5 per cent to US$5.34 billion in 2011 from US$4.66 billion in 2010. They would then remain stable through 2014.
According to Canadian Press, AbitibiBowater has cut 6,000 jobs and dramatically reduced its paper and wood capacity by shutting down mills as it prepares to exit creditor protection. As of the end of March, it employed about 11,900 people, mostly in Ontario and Quebec.
Final Determination by U.S. International Trade Commission Confirm Coated Free Sheet Paper Imports From China & Indonesia Cause Injury to U.S
Appleton Coated LLC, NewPage Corporation, and Sappi Fine Paper North America – together with the United Steelworkers (USW) -- welcomed the U.S. International Trade Commission's (ITC) finding today that imports of coated paper from China and Indonesia are causing material injury to U.S. producers and workers. That finding was based on a 6-0 vote by the bipartisan commission.
The ITC decision clears the way for the U.S. Department of Commerce to impose antidumping and countervailing duties on imports of coated free sheet paper from these countries. On Sept. 21, 2010, the agency issued its final determination citing imports from China and Indonesia as being both dumped and subsidized by significant margins.
The Commerce Dept. found that producers or exporters dumped coated paper in the United States at margins of 7.6-135.83 percent for China, and 20.13 percent for Indonesia. The agency also determined that these producers or exporters received countervailable subsidies ranging from 17.64-178.03 percent for China, and 17.94 percent for Indonesia.
Coated paper covered by the cases is used in many high-end commercial printing applications, including annual reports, coffee table books, magazines and brochures.
"NewPage is very pleased with the International Trade Commission's finding on injury," said George Martin, president and chief executive officer of NewPage. "Today's determination underscores the effects of unfair competition on the U.S. industry, where government subsidies and dumping have suppressed prices and forced mill closures," said Martin. "The decision will allow the Commerce Department to impose duties to offset the significant levels of dumping and government subsidies that were found to exist last month." Martin added, "We will remain committed to this effort and it's important to remember that we are willing to compete with anyone in the world as long as we have a level playing field."
"We've waited a long time for this decision, which will help restore a competitive market," added Mark Gardner, president and chief executive officer of Sappi Fine Paper North America. "For far too long, some of our competitors have been able to get away with unfair and illegal dumping and subsidies to sell their products. The ITC's decision puts us one step closer to being able to compete fairly based on the quality of our products, the investments we make in our mills, equipment and people, and the sustainable manufacturing and procurement practices we implement and pursue," said Gardner.
Sandra Van Ert, president and chief executive officer of Appleton Coated LLC said, "The ITC finding of injury is testimony to what we, our workers and the communities in which we operate have been experiencing for far too long. In this instance, our trade laws have worked and will help restore not only legal competition in the marketplace, but the faith of our employees that work hard, play by the rules and only want a fair chance to compete."
Jon Geenen, USW international vice president, declared, "Today's decision shows that these predatory trade practices by the Chinese and Indonesian exporters are unfair, illegal and injurious to our employers and their workers. We will not ignore the efforts of our foreign competitors who want to violate international trade standards to succeed at the expense of our union members' jobs -- that's a fight we'll never back away from."
Once the final antidumping and countervailing duty orders are published in the Federal Register, the U.S. Customs agency will begin applying duties on Chinese and Indonesian coated paper imports.
The companies and the USW filed unfair trade cases Sept. 23, 2009 with the Commerce Dept. and the ITC, alleging that certain coated paper from China and Indonesia had been dumped and subsidized, resulting in injury to the domestic industry and its employees.
The domestic industry has experienced capacity reductions and under-utilization resulting in the loss of jobs in communities all across the country. The petitions show that unfairly traded imports from China and Indonesia are a significant contributor to that underutilization of capacity, mill closures and resultant job loss.
The three companies employ about 6,000 production workers represented by the USW at 20 paper mills operating in seven states.
About Appleton Coated
Appleton Coated, headquartered in Combined Locks, Wisconsin, provides focused market leadership in premium coated and specialty paper products. The Appleton Coated product portfolio includes a range of commercial printing and book publishing papers marketed under the Utopia® brand as well as specialty and private label products. Known for their performance, aesthetics, and environmental attributes, Appleton Coated manufactures their products in a state-of-the-art facility in Combined Locks, Wisconsin, hosting the newest papermaking machine of its type in North America. For more information please visit our website at www.appletoncoated.com/.
About NewPage Corporation
Headquartered in Miamisburg, Ohio, NewPage Corporation is the largest coated paper manufacturer in North America, based on production capacity, with $3.1 billion in net sales for the year ended December 31, 2009. The company's product portfolio is the broadest in North America and includes coated freesheet, coated groundwood, supercalendered, newsprint and specialty papers. These papers are used for corporate collateral, commercial printing, magazines, catalogs, books, coupons, inserts, newspapers, packaging applications and direct mail advertising.
NewPage owns paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada. These mills have a total annual production capacity of approximately 4.4 million tons of paper, including approximately 3.2 million tons of coated paper, approximately 1.0 million tons of uncoated paper and approximately 200,000 tons of specialty paper. For more information, visit www.NewPageCorp.com.
About Sappi Fine Paper North America
Sappi Fine Paper North America (SFPNA) is a leading North American producer of coated fine paper used in premium magazines, catalogues, books and high-end print advertising. Headquartered in Boston, Massachusetts, Sappi Fine Paper North America is known for innovation and quality. Its brand names, including McCoy, Opus, Somerset and Flo, are some of the industry's most widely recognized and specified. SFPNA is a division of Sappi Limited (NYSE, JSE), a global company headquartered in Johannesburg, South Africa, with manufacturing operations on four continents in 10 countries, sales offices in 50 countries, and customers in over 100 countries around the world. Learn more about Sappi Fine Paper North America at: www.sappi.com/na/.
About the United Steelworkers
The United Steelworkers (USW) is a North American union headquartered in Pittsburgh. The union negotiates labor agreements representing 850,000 active workers employed in a variety of major industries that include metals, mining, pulp, paper, timber, rubber, chemicals, glass, auto parts, oil, and energy renewables. The USW also represents service and professional sector workers to include healthcare, municipalities and pharmaceuticals. For more information: www.usw.org/.
SOURCE NewPage Corporation
Rottneros: Interim report January - September 2010
(For table, see attached file)
* Profit after net financial items amounted to SEK 125 (-69) million for the period January to September 2010. Operating profit amounted to SEK 123 (-172) million for the first nine months of 2010. Profit after net financial items amounted to SEK 64 (43) million for the third quarter of 2010.
* Cash flow from operating activities amounted to SEK 163 (85) million for the period January to September 2010.
* An interest-bearing net receivable of SEK 116 million was reported as at 30 September 2010, compared with SEK 10 million at the start of the year
* Demand for pulp continues to be good, although the strong krona has led to a reduction in net proceeds.
CEO's statement
Rottneros' profit before tax amounted to SEK 64 million in the third quarter of the year, which was about 30 per cent higher than the previous quarter. Return on capital employed for the quarter amounted to 21 per cent. Vallvik Mill was producing at full steam during the quarter, while Rottneros Mill had its planned long holiday break. The negative impact of this shutdown on the quarterly result amounted to almost SEK 10 million. Production at both mills has been excellent and the quality of the outcome has been very good. During the quarter, the board approved the investment in a biological water treatment plant at Vallvik Mill, which has been under discussion for a long time. The plant will be installed in 2011 and be fully operational towards the end of the year.
A lot of preparatory work was done at Vallvik Mill prior to the extended shutdown in the autumn, which is taking place now in October and will last for almost three weeks. Preparations included building up stock levels to cover the supply of customers during the standstill. The negative impact that the loss of production and major periodic maintenance work will have on the result for the last quarter of the year will be approximately SEK 35 million.
As I wrote in my last CEO statement, the fairly weak demand for pulp in China in 2010 has now resulted in price reductions for all pulp qualities. Since the summer, the main reference mark for pulp prices – namely NBSK, i.e. bleached long-fibre sulphate pulp – has fallen in China from just under USD 900 to just over USD 800 per tonne. This has resulted in market leaders in North America reducing their price by USD 50 per tonne in their home territory. There has not been a reduction in the official prices of NBSK in Europe, but the weakened dollar in relation to the Euro has given European purchasers of pulp a considerable cost relief. The impact of the strong krona is significant for Rottneros, as our costs are almost entirely in SEK and the underlying revenues are completely dominated by USD. The average USD rate was SEK 7.27 for the third quarter and SEK 6.71/USD at the end of the quarter, a change of eight per cent.
Several leading pulp market observers consider that this price reduction is less than previously anticipated, which may be due to a combination of a weaker dollar rate, an increase in purchases from China and increased paper production in Europe. These observers expect that pulp prices rise again after the turn of the year, at least in dollars.
Ole Terland
President and CEO
FOEX Indexes and Wood Resources International to partner in the launching of Global Wood Chip Price Indices
FOEX Indexes and Wood Resources International to partner in the launching of Global Wood Chip Price Indices
More than 80 million tons of wood chips, valued at almost ten billion US dollars, are traded annually in the open market worldwide and the shipment volumes are increasing.
FOEX and WRI have agreed to partner in the launching of global wood chip price indices. As for all price benchmarks in FOEX's PIX-index family, the indices will be based on a large number of actual trades and the data will be collected from both sellers and buyers of wood chips. The combined efforts of FOEX and WRI, and the PIX-index system, will ensure that the indices, whose launch is planned for early 2011, will be statistically reliable and thus well suited for numerous market participants. These include forest and energy companies who can use price indices for benchmarking, as well as the financial community, which can use the Indices as price risk management tools.
To learn more about this new, unique benchmark service, may contact either the FOEX representative in bio-indices, Mr. Matti Sihvonen (This email address is being protected from spambots. You need JavaScript enabled to view it.), Timo Teräs, the Managing Director (This email address is being protected from spambots. You need JavaScript enabled to view it.), or Mr. Håkan Ekström, the President of WRI (This email address is being protected from spambots. You need JavaScript enabled to view it.).
The full press release can be found in the attached PDF file.....
Sonoco Reports Strong Third Quarter 2010 Results; Quarterly Base Earnings Reach Record
Sonoco, one of the largest diversified global consumer and industrial packaging companies, today reported strong third quarter 2010 results with sales and earnings significantly exceeding prior year results.
Highlights
- Third quarter 2010 GAAP earnings per diluted share were $.57, compared with $.47 in 2009.
- Third quarter 2010 GAAP results include noncash impairment and restructuring charges of $.07 per diluted share primarily associated with an asset impairment charge in the Flexible Packaging unit and $.01 per diluted share of acquisition related costs.
- Base net income attributable to Sonoco (base earnings) for third quarter 2010 was a record $.65 per diluted share, up 30 percent, compared with $.50 in 2009. (See base earnings definition and reconciliation later in this release.)
- Third quarter 2010 net sales of $1.05 billion were 13 percent higher than the $931 million in 2009.
- Guidance for full-year 2010 base earnings is moved to $2.32 to $2.36 per diluted share, from the previously forecast $2.27 to $2.34.
Commenting on the Company's third quarter results, Chairman, President and Chief Executive Officer Harris E. DeLoach Jr. said, "Our focus on growth and improving operating performance continued to pay off as base earnings for the quarter reached a record on strong volume, lower pension costs and improved productivity along with a neutral price/cost. In addition, base earnings per diluted share for the quarter met the high end of our previous guidance and equaled First Call's consensus of $.65 per diluted share.
"Much of the quarter's year-over-year improvement came from our industrial-focused businesses which continued to rebound strongly from last year's recession-impacted results. Operating profits in our Tube and Core/Paper segment experienced a 76 percent improvement, and our industrial-related businesses within All Other Sonoco reported over a 100 percent year-over-year improvement. The majority of our industrial businesses experienced strong volume and benefited from solid productivity improvements.
"On the consumer side, our Consumer Packaging segment recorded year-over-year gains in operating profits for the eleventh consecutive quarter, due primarily to productivity improvements and acquisition gains. However, results declined in our Packaging Services segment due to weak volume stemming from previously reported business losses in point-of-purchase displays and fulfillment, which were only partially offset by productivity improvements."
Third Quarter and Nine Months Results
Third quarter net income attributable to Sonoco was $59.0 million, or $.57 per diluted share, compared with $47.7 million, or $.47 per diluted share, in 2009. Base earnings were $67.0 million, or $.65 per diluted share, in the quarter, compared with $50.9 million, or $.50 per diluted share, in 2009. Base earnings and base earnings per diluted share are non-GAAP financial measures adjusted to remove restructuring charges, asset impairment charges, acquisition costs and other items, if any; the exclusion of which the Company believes improves comparability and analysis of the underlying financial performance of the business.
Excluded from base earnings in the third quarter of 2010 were the previously mentioned after-tax impairment and restructuring charges of $6.9 million, or $.07 per diluted share, primarily related to noncash asset impairment charges in the Company's Flexible Packaging unit. The impairment charges were taken after the Company was advised by one of its customers that its current contract to provide certain packaging will not be renewed in its entirety. According to the customer, the business reduction will be phased out over the next two years. The expected loss of business will not impact current year sales. Acquisition-related costs of $1.1 million, after tax, ($.01 per diluted share) were also excluded from 2010 third quarter base earnings. After-tax restructuring charges of $3.2 million, or $.03 per diluted share, were excluded from base earnings in the 2009 quarter. Additional information about base earnings and base earnings per share along with reconciliations to the most closely applicable GAAP financial measures is provided later in this release.
The Company's overall gross profit margin in the third quarter improved to 19.0 percent of sales, from 18.6 percent in the same period in 2009, due to productivity gains, higher volumes, lower pension expenses and cost-control initiatives.
Net sales for the third quarter were $1.05 billion, compared with $931 million in the same period in 2009. This 13 percent increase during the quarter was due to improved Companywide volumes, higher selling prices, open-market sales of corrugating medium previously produced under a cost-plus-fixed-management-fee arrangement and acquisitions. These factors were partially offset by a $6 million negative impact from foreign currency translation, primarily as a result of the weaker euro. The impact of higher selling prices was realized almost exclusively in the Tubes and Cores/Paper segment, where the gains were principally driven by higher recovered paper prices.
Cash generated from operations in the third quarter was $145 million, compared with $176 million in the same period in 2009. Higher earnings were offset by an increased use of cash to fund working capital resulting from significantly higher levels of business activity, compared with the prior year quarter. Capital expenditures and cash dividends paid to shareholders were $42 million and $28 million, respectively, during the third quarter of 2010, compared with $25 million and $27 million, respectively, in the same period in 2009. On June 29, 2010, Sonoco paid approximately $120 million in cash to acquire Associated Packaging Technologies, Inc. (APT), a leading provider of rigid plastic food packaging serving the frozen food industry in North America, Europe and Australia/New Zealand.
For the nine-month period ending September 26, 2010, net sales increased 15 percent to $3.0 billion, compared with $2.6 billion in 2009. Net income attributable to Sonoco for the 2010 nine-month period was $166.5 million ($1.63 per diluted share), compared with $104.4 million ($1.03 per diluted share) in the same period in 2009. Earnings for the 2010 nine-month period were negatively impacted by previously mentioned after-tax impairment, restructuring and acquisition charges of $12.1 million ($.12 per diluted share), compared with $16.6 million ($.17 per diluted share) in the 2009 period.
Base earnings for first nine months of 2010 were $178.6 million ($1.75 per diluted share), compared with $121.0 million ($1.20 per diluted share) during the same period in 2009. Significantly higher Companywide volumes, lower pension costs and productivity improvements drove the 48 percent, year-over-year gain in base earnings. Gross profit as a percent of sales was 18.9 percent, compared with 18.2 percent in the first nine months of 2009.
For the 2010 nine-month period, cash generated from operations was $261 million, compared with $358 million in the same period in 2009. Higher earnings were offset by an increased use of cash flow to fund working capital resulting from significantly higher levels of business activity, compared to the prior year. Capital expenditures and cash dividends were $101 million and $83 million, respectively, compared with $83 million and $81 million, respectively, in the same period in 2009. In addition, the Company used cash to fund acquisitions totaling $134 million and $1 million in the first nine months of 2010 and 2009, respectively. At the end of the third quarter of 2010, total debt was $626 million, compared with $581 million as of the end of December 31, 2009. The Company's debt-to-total-capital ratio as of September 26, 2010 was 29.4 percent, basically flat with the 29.6 percent at the end of 2009. The Company had $43 million outstanding under its $500 million commercial paper program as of September 26, 2010. Cash and cash equivalents totaled $169 million, compared with $185 million at the end of 2009.
Fourth Quarter 2010 Outlook
Sonoco expects fourth quarter 2010 base earnings to be in the range of $.57 to $.61 per diluted share. Base earnings in the fourth quarter of 2009 were $.58 per diluted share. For the full-year 2010, base earnings are currently projected to be in the range of $2.32 to $2.36 per diluted share, compared with the guidance given on July 21, 2010, of $2.27 to $2.34 per diluted share. The change is due primarily to achieving the upper end of the range of guidance in the third quarter. The Company's 2010 earnings guidance reflects an expected effective tax rate of approximately 30 percent.
The Company's base earnings guidance assumes sales demand will remain near the levels experienced during the past several quarters, adjusted for seasonality, and that it will experience a slightly negative price/cost relationship, due to increased cost of old corrugated containers (OCC). Although the Company believes the assumptions reflected in the range of guidance are reasonable, it cautions the reader that the outlook, given the volatility of OCC and plastic resin prices, as well as uncertain global economic conditions, remains equally uncertain, and there is a risk that actual results could vary substantially.
Commenting on the Company's outlook, DeLoach said, "While we have shown significant year-over-year improvement in sales and earnings during the past four consecutive quarters as the general global economy has improved, the 2010 fourth quarter will be the first tough comparison since the recession ended in 2009. In addition, OCC prices have strengthened entering the fourth quarter which could cause some short-term headwinds as we work to recover those higher prices. Our guidance also reflects a continuation of good performance in our Consumer Packaging segment and weak results in Packaging Services."
Södra's interim report for the January-September 2010 period
The gross price for softwood pulp in January - September 2010 was SEK 6,776 per tonne (4,854) and for hardwood pulp SEK 6,148 per tonne (4,126). On Friday 15 October, corresponding prices were SEK 6,338 per tonne for long fibre and SEK 5,698 per tonne for short fibre. Deliveries of market pulp for the period increased to 1,552,000 tonnes (1,388,000). Södra's stock of market pulp remained unchanged, at 157,100 tonnes (157,700) on 30 September compared with the corresponding period the year before.
"We are continuing to see strong deliveries within Europe and believe that deliveries to Asia will increase. The development of the dollar will be crucial for our earning capacity," said Leif Brodén, President and CEO, Södra.
"With a two-week maintenance stop at both Södra Cell Mönsterås and Södra Cell Tofte during the last quarter, we anticipate a reduction in our pulp stocks. 2011 will see limited volumes of market pulp. Together with a continuing improvement in the situation for our pulp customers, we are still seeing a good market balance," added Brodén.
After a dramatic fall in new build construction in the wake of the financial crisis, there are signs of an upturn from record low levels. Södra's principal markets in the UK, Sweden and Norway are showing positive growth and sales in the USA are expected to increase by 50 per cent in 2011. Activities in the important renovation sector continue to be good, especially in Scandinavia.
Export volumes to North Africa are at a stable level. So far, Södra Timber has been able to make up for the strong krona through price increases in local currencies. In the short term, during the last quarter of the year, uncertainty has been growing over this issue. Increased world production and the currency situation will be determining factors and the possibility of an extended production stop over the Christmas and New Year holiday cannot be ruled out.
"A growing proportion of the high actual productivity increase of 2.3 per cent (1.7) is coming from contributions made by our personnel. We were able to implement 2,421 (1,502) improvement suggestions over the period," Brodén commented.
"The fact that we are able to deliver an increase in productivity during bust as well as boom periods is the hallmark of our long-term creation of value and a great tribute to our employees."
Raw materials consumption within the industry continues to be high. After the summer's record high, supply from final felling has fallen but is still at a high level. Despite tough competition for raw materials, the timber market is reaching a balance after a period of rapidly rising prices.
Demand for hard pulpwood is particularly great and Södra is therefore raising the price of all hard pulpwood range by SEK 30 per m3 as of 18 October 2010. The new price of the range of birch pulpwood will be SEK 330 per m3.
There is a pressing need to thin out the forests and in order to stimulate a continuation in high thinning activity, Södra is increasing the thinning premium on pine and spruce pulpwood to SEK 50 per m3sub. The premium will apply until 31 December 2010.
The market for solid biomass fuel is balanced with good demand and good supply.
For further information please contact:
Leif Brodén, President and CEO, Södra +46 (0) 705 58 94 26
Mikael Staffas, CFO +46 (0) 705 11 64 97
Per Braconier, Director of Communications +46 (0) 70 534 51 66