By Azer Sawiris
HELSINKI (Reuters) - Finnish engineer Metso (MEO1V.HE: Quote, Profile, Research, Stock Buzz) sees continued prospects in Asia and Latin America for sales of pulp and paper machinery while the North American market remains stagnant, a senior executive said.
Most of the recent new investment in paper machines has been in China, where Metso is boosting its presence strongly. South America is the continent where huge pulp mills are being built because of the availability of fast-growing timber.
"We are more and more focusing on strengthening our operations in the emerging markets, Asia and China in particular, India and South America," said Bertel Langenskiold, president of Metso Paper, one of the world's two biggest builders of paper machines along with Germany's Voith.
His comments came as Metso, which also supplies machinery to the mining industry, announced it would reorganize and form a new division for the energy and environment business.
Langenskiold, who remains head of the Paper and Fiber Technology division in the reorganized Metso, said that Metso Paper would not be split from the group.
The global paper industry, led by the big North American and Nordic producers, has struggled to escape a six-year slump due to weak demand and prices and overcapacity, which have pressured earnings and capital investment.
"We haven't seen any new investment in the North American market at all," Langenskiold said, adding that the American market continued to offer opportunities for selling services to maintain and upgrade existing mills.
More than 30 percent of Metso's pulp and paper division's business is service, Langenskiold, said. "We are looking at pushing it upwards towards 40 percent or more."
CHINESE OPPORTUNITIES
"Most of the new investments have gone to China," he said, referring to the paper machine business.
"We are building several service centers in China where the customers are," he said, adding that around 15 to 20 percent of his unit's total personnel would be working in China by the end of this year, up sharply from just several years ago.
Metso has for decades supplied power plant equipment, such as huge industrial boilers, to its forest industry clients.
Now, Langenskiold said, the Metso group will also look increasingly outside the pulp and paper sector to develop new business in the power and environmental technology areas -- in bioenergy and waste-to-power projects.
"We have built a number of waste-to-energy plants and want to develop that part also. We have a view that this area will increase in the future," he said.
"The biggest part of biofuels is wood residue. So biofuel for heat and power is to a great extent in connection with the forest industry, and the pulp mills in particular," he said. Continued...
© Thomson Reuters 2009. All rights reserved.
| Aerospace and Defense | Dec 15 - 17, 2008 | Aerospace/Defense |
| Investment Outlook | Dec 08 - 11, 2008 | Financial Services / Exchanges |
| Media | Dec 01 - 4, 2008 | Media/Tech/Telco |
| India Investment | Nov 24 - 26, 2008 | Country Summits |
| Health | Nov 17 - 20, 2008 | Health |
