Insulation industry news from Global Insulation
Finland: Following negotiations with staff Paroc has decided to shut down its Oulu stone wool plant in July 2017. The closure will involve the transfer and centralisation of support functions currently in Oulu to other Paroc plants and locations. Production of building insulation will be moved mainly to the Paroc plant in Parainen and support functions will be moved to other Paroc locations. 64 members of staff will lose their jobs, including all of the production workers at Oulu, and five staff will be moved to other locations.
“The decision to shut down the factory was difficult due to the considerable impact it will have on the personnel. However, the utilisation rate of the current capacity of Finnish stone wool factories is too low to ensure competitive operations in Finland. The factory located in Oulu is old and, in addition to the already high cost structure, continuing operations would require significant investments in the near future,” says Kari Lehtinen, chief executive officer of Paroc Group.”
Finland: Paroc has described 2016 as ‘fairly challenging’ as its net sales fell slightly to Euro376m and its earning before interest, taxation, depreciation and amortisation (EBITDA) rose by 4% to Euro76.5m in 2016 from Euro73.3m in 2015. Despite reporting an improvement in construction activity in the second half of the year, sales fell in Russia. The insulation producer solid its Paroc Panel System (PPS) business to Kingspan Group in December 2016 and it announced plans to shut its Oulu stone wool plant in January 2017.
Finland: Paroc Group is planning to shut down the operations of its stone wool plant in Oulu. The decision has been blamed on overcapacity of Finnish production without a similar increase in consumer demand. The plan also includes transferring and centralising support functions to other Paroc factories at other locations. Approximately 70 workers at the site will be affected by the decision and negotiations are on going.
“Starting the cooperation negotiations is very unfortunate. However, the utilisation rate of Finnish stone wool factories’ current capacity is too low to ensure competitive operations in Finland. The factory located in Oulu is an old one, and, in addition to the already high cost structure, continuing its operations would require significant investments in the near future,” said Kari Lehtinen, chief executive officer of Paroc Group.
Brazil/Finland: Saint-Gobain Isover has obtained Environmental Product Declarations (EPD) for its products in Brazil and Finland. It has obtained five EPDs in Brazil where it has become the first insulation company in the country to obtain EPDs registered with Environdec. In Finland it has published three new verified EPDs through the Norwegian EPD platform EPD Norge.
Finland: Paroc Group has agreed to sell sale its Paroc Panel System (PPS) business to Kingspan Group. The personnel of PPS will all be transferred to the new owner. Along with the transaction, the parties have agreed on commercial cooperation in stone wool supply to the PPS factory in Parainen. No value for the deal has been disclosed.
"The arrangement supports the focus of Paroc on building and technical insulation. We will continue to seek market expansion and growth possibilities in those areas,” said Kari Lehtinen, chief executive officer of Paroc Group.
PPS is a subsidiary of Paroc Group Oy. In 2015, PPS sales totalled Euro47m, with about 100 employees in Finland, Sweden, Norway, Denmark, and Germany. Paroc Panel System panels are manufactured in Parainen, Finland.
Russia: Restrictions on imports have stopped Paroc from transporting stone from its Lapinlahti in Finland to its insulation plant in Russia. Joakim Westerlund, Paroc's chief operating officer, said that the import restrictions on crushed rock material were imposed with relatively short notice in summer 2016 according to the Savon Sanomat newspaper. Subsequently the insulation producer has had to source stone locally in Russia. Quarrying at Lapinlahti for Paroc by Fjäder Group has previously totalled 20,000t/yr.
Finland: Paroc’s net sales for its building insulation division has risen by almost 1% year-on-year to Euro215m in the first nine-months of 2016 from Euro213m in the same period of 2015. However, on an adjusted basis for comparable insulation rates the insulation producer says that its sales grew by 2.4%. It reported sales volumes growth in most markets except for the Baltic countries and Russia. Overall sales for the company rose slightly to Euro301m, boosted by growing sales for technical insulation.
Finland: Walki is answering increasing market demand for multilayer laminates by investing in a new production line at its Valkeakoski plant in Finland. According to Walki, there is an extensive growth potential, particularly in the construction business.
The new line, which, according to Walki executive vice president of construction Kari Salminen, will be 'unique on the market,' will start operations in the first quarter of 2016. It will be highly flexible and will cater to several different product segments in addition to the construction industry, such as consumer packaging and the pharmaceutical industry. This flexibility will significantly shorten lead times.
The European Union's 202020 target, which, among other things, aims at a 20% improvement in energy-efficiency, is putting pressure on energy-efficient housing. Efficient insulation is key in keeping heating and cooling costs down. Along with a recovery in the European economy, the construction business is expected to pick up, which will have a significant positive effect on the demand for insulation solutions, particular in those products requiring multilayer facings.
"With this investment, Walki strengthens its position as the premium supplier of multi-layer laminates globally. Further, the investment supports our strategy to focus on the growing segments of energy-saving laminates for building purposes and on value adding consumer packaging solutions," said Leif Frilund, president and CEO.
Finland: CVC Capital Partners has acquired Paroc Group for about Euro700m. Paroc produces stone wool insulation in the Nordic and Baltic regions, has approximately 2100 employees and a pan-European sales presence supported by nine production facilities in Finland, Sweden, Lithuania, Poland and Russia.
In a successful 5-year period under the ownership of its current shareholder group, Paroc has grown its revenues from Euro317m in 2009 to Euro433m in 2013 and EBITDA from Euro46m to Euro80m, which has been achieved through organic growth. The development of the group’s higher-value, higher-margin technical insulation division, aided by investment in the group’s production plant in Trzemeszno, Poland, has represented one of the group’s success stories during this period. Most recently, Paroc has invested in a new facility in Izoplit, Russia, enabling the expansion of existing sales into the rapidly growing Russian market.
“The last five years have been successful, especially given the challenging economic backdrop and we are grateful to our former owners for their support during this period,” said Kari Lehtinen, CEO of Paroc. “We see a strong future for our business, with recovery in many of our markets expected in the coming years, and with our presence in the fast-growing Russian market. We look forward to taking Paroc forward in close cooperation with CVC, which is supportive of our strategy. CVC offers us a depth of experience and a strong track record with value-creating investments, expertise in the building materials sector and in the Nordic region. We are excited to share with CVC the next phase of our growth.”
The transaction has been approved by Paroc’s current shareholder group and the completion of the transaction is subject only to the receipt of customary competition clearances.
Finland: A number of private equity firms, including TPG, Nordic Capital, CVC and Cinven, have made first round bids for Paroc, a Finnish manufacturer of insulation materials, according to Reuters. The bids value the company at between Euro700m and Euro750m. Paroc was acquired by Bahraini investment house Arcapita in 2006. The company underwent a debt restructuring three years later and is now owned by a consortium of banks and institutional investors.