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La Seda to expand despite financial problems

By Richard Higgs
Posted 26 July 2012

Leading European PET producer La Seda de Barcelona (LSB) is continuing to expand its plastic packaging operations despite falling short in its recent attempt to raise €40m in new capital.

In mid-July, the Spanish group abandoned a plan to increase its share capital, aimed at funding its new growth strategy, when it managed to raise less than €12.3m of that target.  LSB blamed “current economic conditions in Europe” for the failure. 

Now, the board of the Barcelona-based group is set to consider an alternative source of financing to fund its business plan, which includes moves into new markets and materials by its packaging offshoot APPE.

In spite of the setback, APPE is still due to announce its first steps into processing high density polyethylene (HDPE) with improved technology, aiming to move into new markets like the dairy sector. The firm expects to reveal this plan in the autumn.

The PET preforms and bottles producer is also preparing to launch its latest plant located in Katowice, Poland on 1 December this year. This €15m project, part of APPE’s plan to maximise its sales opportunities particularly in Eastern Europe, follows on from two major contracts the firm has signed with two unnamed multinational groups.

APPE Polska will offer a full range of the company’s production from PET preforms and bottles, through its advanced technologies, including ‘Heat Set’, ‘Deep Grip’ and barrier containers to the provision of ‘through-the-wall’ (TTW) integrated services for its clients’ operations.

This project has been spurred on by APPE’s need to raise its profile in the vibrant markets of northern and Eastern Europe, which seen rapid growth not least in Russia and the Ukraine.

In addition, the packaging division is planning to construct a new plant in Italy  -  one of Europe’s biggest markets for plastics packaging  -  next year. This facility is due initially to focus on the bottled water, soft drinks and personal care segments.

Beyond this, LSB has bold plans to integrate all its upstream polymer and chemical businesses in a single enterprise to reduce production and logistics costs, making it more competitive.

This offshoot would bring together LSB’s production of PET and its raw materials glycol and PTA as well as chemical PET recycling and technology in a single division. The new division will have PET plants in Spain, Italy, Turkey and Greece; raw materials units in Spain (glycol) and Portugal (PTA) along with recycling plants in Spain and Italy.

The group aims to find an industrial partner to share the development of this major subsidiary to help ensure it becomes the region’s leading integrated PET producer.

Then, it is considering adding a new 400,000 tpa PET plant to its existing PTA unit in Sines, Portugal.

When it first came up with its ambitious new growth strategy, the LSB board recognised that raising the necessary funding would be difficult, with the current credit shortage in the financial markets. That is why the company embarked on the €40m bid to increase its share capital.

On the packaging front, the group is also looking to expand the number of APPE’s TTW (‘through-the-wall’) integrated PET packaging sites. It is looking to provide customers with more on-site PET preform and bottle blowing facilities, linked directly with their own production lines. That way, the packaging firm believes it can develop new markets.

APPE already has a string of packaging plants across Europe, located in the UK, Germany, France, Spain, Belgium, Morocco, Turkey and Greece.

Earlier this year, LSB reported a consolidated turnover for 2011 of almost €1.2bn, a 17.6% increase on its performance the year before. The packaging division increased its turnover by 17.2% against 2010, achieving nearly €662m. 


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