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Corrugated producers in Germany: sales increased, profitability falls

10 June. 2020

According to the German industry association of the corrugated industry VDW (Verband der Wellpappen-Industrie), the industry ended the first quarter with an increase in sales of products by 1.4% compared to the same period last year. This corresponds to an increase in sales of corrugated products by 60.4 million square meters. In total, the enterprises included in the VDW association sold 2.07 billion square meters of products in the first three months of this year.

The decisive factor is an increase of 4.7% in March after corrugated board manufacturers achieved moderate growth of 0.7% in February and lost 1.1% in January.

“The special boom in the food retail sector caused by the spread of coronavirus in March affected the work of our members,” said Oliver Wolfrum, Managing Director of VDW.

Since almost two-thirds of all transported goods are packed in corrugated cardboard, the peak of demand from manufacturers of consumer goods is transferred to the packaging industry. “Thanks to our flexibility, our members were able to meet the increased demand without problems and, thus, make an important contribution to ensuring the security of our society,” said Oliver Wolfrum.

Many of the industries of corrugated board customers are facing serious problems because the German economy is in recession. Due to the crisis caused by coronavirus, gross domestic product decreased by 2.2% in the first quarter of 2020 compared to the previous quarter. Industrial production, which is important for corrugated board manufacturers, in March decreased in almost all areas by 9.2% compared with February. It becomes obvious that this situation will continue: new orders in the manufacturing sector in April were 15.6% lower than in March. According to Oliver Wolfrum, "corrugated board manufacturers will also have to accept a decline in sales this year."

In addition to the direct effects of lower demand, Oliver Wolfrum is also concerned about the earnings situation for corrugated board manufacturers. “The average revenue per square meter of corrugated board fell by 6.5% in the first three months compared with the same quarter last year,” said Oliver Wolfrum. - At the same time, our members had to come to terms with the growth of paper prices by 4.1% in March. This creates an additional burden on the tense economic situation of corrugated board manufacturers. ”