WestRock To Build New Plant In Brazil To Meet Growing Demand

To meet growing demand in South America, WestRock Company (NYSE:WRK) is planning to build a new corrugated box plant in the Brazilian state of Sao Paulo. The state-of-the-art manufacturing facility will support the company’s team in Brazil to serve customers even better.

New Plant to Boost Corrugated Packaging Business in Brazil

Construction on the plant located in Porto Feliz is expected to begin later this year and will be concluded in mid-2019. On completion, the Porto Feliz plant will replace WestRock’s existing Brazilian corrugated operations in Valinhos. The plant will be integrated with the forestry and paper production operations of the Três Barras (Santa Catarina) mill.

Further, it will augment the consumption of the mill’s virgin fiber HyPerform corrugated paper, WestRock’s high-performance paper line. The plant will provide new capabilities and efficiencies for customers as well as help in further consolidation of the containerboard that is manufactured in Brazil.

WestRock’s corrugated packaging business in Brazil continues to perform well and developed strong relationships with customers in attractive growth markets. The new facility will serve all industry segments and markets both in the highly developed Sao Paulo region, as well other growing areas in Brazil’s southeast region.

Ample Growth Potential in Corrugated Packaging

WestRock has recently perked up its investment to tap growing demand for corrugated packaging. The global corrugated packaging market has witnessed a stellar rise in the past years and is expected to trend upward. Growth in food & beverages, personal care, pharmaceuticals & healthcare, paper industry, electronic goods have played a major role in the overall market growth. Corrugated Packaging is currently the preferred packaging for small, medium and large-sized products which in turn has increased the demand globally.

Growing e-commerce industry has triggered the demand in the corrugated packaging market. Further, given that corrugated packaging is a safer choice than plastic packaging has also contributed to the rising demand of corrugated packaging market.

The company recently bought the assets of Island Container Corp. and Combined Container Industries LLC, two independent producers of corrugated boxes, sheets and point-of-purchase displays. Through these buyouts, WestRock added more than 80,000 tons of containerboard into its corrugated packaging business. In early June, the company purchased five corrugated converting facilities in Ohio, Pennsylvania, and Louisiana, from U.S. Corrugated, a large independent manufacturer of corrugated products for packaging and displays.

Notably, WestRock anticipates realizing significant synergies from supply chain optimization, better procurement and integration of approximately 105,000 tons of the containerboard converted by the acquired facilities annually. It will also secure another 50,000 tons under a long-term contract with a newly created company, formed from the remaining assets of U.S. Corrugated.

In the past year, the company has also made several investments in areas like the attractive growing segments of consumer packaging in the fields of health care, cosmetics, confectionery and high-end spirits. The company is also divesting businesses that were not core to its goal of being a premier provider of paper and packaging solutions.

WestRock is a provider of paper and packaging solutions to consumer and corrugated markets. It falls under the Zacks Paper and Related Products industry along with other players like International Paper Company (NYSE:IP) , Clearwater Paper Corporation (NYSE:CLW) and Neenah Paper, Inc. (NYSE:NP) .

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