Plastic label converter CCL investing $30 million in developing markets

Far afield from its North American headquarters, plastics packaging processor / converter CCL Industries Inc., best known in this industry for its label conversion capabilities and plastic tube extrusion, plans to invest $30 million this year and next to expand its CCL Label operations in emerging markets. The company will build three new greenfield plants and also invest in additional capacity at some of its existing facilities. More than 80% of CCL's earnings stem from its labels business.

The investment cited is in Canadian dollars but at present these convert almost one-to-one with U.S. dollars.

New will be a facility in Bangkok, Thailand, joining one already there, with the new facility designed to provide increased capacity and new technologies to support customers in the home / personal care (HPC) and beverage industries in Southeast Asia. CCL expects its Asian operations to approach 10% of global label revenues in 2012.

Construction has also begun on a new pressure sensitive label facility in Vinhedo, Brazil, near Sao Paulo, to support the company's HPC and healthcare customers in Brazil. The new site will more than double the size of existing operations there. Additional capacity will also be added to the Brazilian plastic sleeve converting plant in Criciuma to support what CCL describes as "rapid growth in the food and beverage sector."

The company also is planting its flag in the Middle East as part of its joint venture with the Pacman Group, a label converter and printer based in Dubai. The two companies will open a new greenfield plant in Jeddah, Saudi Arabia this fall. Pacman is the CCL licensee in the region for CCL label conversion.

Geoffrey Martin, president and CEO of CCL Industries Inc., commented, "Emerging market revenues now represent approximately 20% of the company's total sales and we expect growth to continue to accelerate at a premium to the developed world in the coming years as our customers invest to drive improvement in consumers' lives in these regions. It therefore makes both strategic and shareholder value sense to allocate a higher portion of capital to these geographies. Despite this investment we do not expect overall expenditures to exceed depreciation company-wide in either 2011 or 2012."

CCL is based in Toronto, Canada, and employs about 6000 at its 63 (as yet) production facilities. CCL Label is the world's largest converter of pressure sensitive labels. CCL Container and CCL Tube produce aluminum cans, bottles and plastic tubes for the consumer products industry in North America.

As we reported last year the company then signed a global licensing agreement with packaging machinery manufacturer Krones giving that company the right to market applicator machine systems for CCL's patented TripleS stretch sleeves for a one-time fee. Read our article on that development here.



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