A Word from the President

CellMark battled a difficult commercial environment in 2012. A slowly recovering economy, the debt crisis in Southern Europe and other factors combined to make profitable growth particularly challenging last year. While CellMark’s “traditional” product divisions handled about as many tons in 2012 as they did in 2011, price and margin pressures hindered profit-ability. Consequently, our result fell short of expectations. Still, the year was quite successful in several respects.

Overall sales increased by nearly 10 percent, thanks in part to our two new divisions, CellMark Chemicals and CellMark Metals. Tireless work from the Gothenburg team and from our 150 new employees, enabled these divisions to integrate seamlessly into their new parent company. Today, they are a valuable addition to CellMark’s global network and infrastructure and to our ability to leverage new opportunities. As expected, the acquisition and integration process has impacted our 2012 result with non-recurring costs.

Transitions such as these are always difficult. As such, we are especially thankful for the hard work and positive attitude these professionals demonstrated throughout the process. The acquisitions have been successful and the new divisions’ 2012 achievements are promising. We are confident that CellMark will benefit further from synergies between our operations in 2013.

Last year, we placed significant emphasis on several development programs. The Pulp Division is managing CellMark’s activities in the solid biofuels market, an initiative called CellMark Energy. This group has established CellMark as a market leading biomass supplier in France and has made significant progress developing our wood pellet business. Additionally, the Pulp and Recycling divisions jointly developed a successful waste-to-energy operation, which will grow significantly in 2013.

CellMark Chemicals has expanded its custom manufacturing and is continuing to do so in 2013. Furthermore, the Packaging and Paper divisions grew their trading volumes while penetrating new markets and developing new product segments. CellMark Recycling balanced a difficult market by enhancing its non-fiber business and by collaborating with CellMark Metals in metals recycling. It also acquired Environmental Management Consultants, integrated it into its Waste Stream Solutions practice and struck important deals with major retailers and newspapers.

CellMark also continued its diversification by adding a Basic Chemicals team late in 2012. This trading and distribution business focuses on acetic acid and caustic soda in Europe and the Mediterranean region. The team has also established itself in China, with ambitions to eventually become a global practice.

Finally, we wish to express our gratitude to our partners, who worked closely with CellMark in 2012 and supported our programs despite global economic difficulties. We rely on the exceptional support we receive from our customers, suppliers, financial institutions and insurance partners and are grateful for it. Our thanks also go to our hardworking, dedicated employees, who were truly tested in 2012. We are depending on their skills and commitment to CellMark’s long-established values of integrity, trust, transparency and accountability, to bring 2013’s performance back in line with our high expectations.

Hans Kling