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Nonwovens business to be grouped with hygiene films; Tracey to head business
November 19, 2015
By: Karen McIntyre
Editor
Berry Plastics is keeping its latest purchase—Avintiv—pretty much in tact. During a fourth quarter earnings call last week, company executives announced that all of Avintiv, the nonwovens producer acquired this fall, would be contained within its new health, hygiene and specialties division. This division will be led by 11-year Avintiv veteran Scott Tracey. The remainder of the Berry businesses will be grouped into two other divisions—consumer packaging and engineered materials. The health, hygiene and specialties business will represent 35% of Berry Plastics’ sales. In addition to the nonwovens operation, the division will contain Berry’s films businesses targeting personal care applications. About half of the new division’s sales are within North America while 23% are in Europe, the Middle East and Africa; 10% are in Asia-Pacific and 16% are in Latin America. Conversely, Berry’s sales outside of this unit are heavily weighted in North America—all of consumer packaging sales are in North America while the region represents 91% of engineered materials’ sales. This global reach was one of the top reasons executives say Avintiv was attractive to Berry Plastics. Avintiv has 23 locations in 14 countries in North America, Europe, Latin America and Asia. “The acquisition expands our global reach and accelerates our growth in developing markets,” says CEO Jon Rich who calls the reorganization a new chapter in Berry’s company history. “It also benefits our consumer packaged good customers around the world.” Following the Avintiv deal, 40% of Berry’s sales in growing personal care market and 80% are in stable, consumer-oriented markets. The company now has 13,000 customers, the largest of which represents less than 4% of total sales. Berry and Avintiv share several key customers in the hygiene space including many major diaper, feminine hygiene and adult incontinence manufacturers. In fact, the integration of the two companies is expected to achieve cost savings of $50 million, $30 million of which is expected in 2016. “We remain optimistic that we will overdrive this number as Berry has done with previous acquisitions,” Rich adds. A key component of these savings will be in resin sourcing—the deal has made Berry on of the biggest customers of polypropylene resins in the world. Together the two companies source just under two billion pounds of the material annually. For fiscal 2015, Avintiv reported independent sales of $1.9 billion. This included a 2% gain in North America as well as advances in both Latin America and the Asia-Pacific. The acquisition brought Berry Plastics’ total sales to $6.7 billion. With the reorganization, Avintiv CEO Joel Hackney announced he would leave the company to pursue other interests. Hackney had served at the helm of Avintiv since 2013 and led it through a series of acquisitions and investments that ultimately made it the world’s largest producer of nonwoven fabrics.
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