A Word from the President
2011 was another difficult year for forest products industry companies. Several significant problems — the earthquake and tsunami in Japan, the European debt crisis, and geopolitical strife in North Africa and the Persian Gulf, among other difficulties — contributed to widespread economic uncertainty.
Still, all four CellMark divisions “soldiered on,” and contributed sound, positive results. In fact, despite a difficult global economy, CellMark’s total volume increased by 300,000 tons over 2010, although we did not quite reach our goals in terms of profitability.
By Division, CellMark Packaging leveraged strong demand in Latin America, Asia and much of Africa and the Middle East throughout 2011. Thanks to a continued focus on product and market diversification, it significantly increased both its trading volume and gross sales. The Paper Division improved trading volume significantly and profitability even more, thanks to efficiency measures and a focus on price stability. It also increased its focus on healthier paper grades, and leveraged its numerous strategic marketing arrangements.
The Pulp Division further developed its position in China to accommodate growing demand in that market, and increased its participation with several key suppliers and customers. The Division also expanded its efforts to grow in non-core but strategic areas, such as biomass based fuels for energy generation as well as waste-to-energy programs. CellMark Recycling grew its trading volume further, opened a new facility in British Columbia and invested in critical technologies.
As a whole, CellMark increased its presence in key markets all over the world and made several important acquisitions that position us well for future growth. Chief among these was the acquisition of Alcan International Network, which was completed at the end of 2011. In terms of size and scope, it is the most important acquisition in the company’s history. In addition to increasing the company’s number of employees from 525 to above 700, the move resulted in the establishment of two new product Divisions: CellMark Metals and CellMark Chemicals.
We are delighted to welcome these talented and hardworking professionals into the CellMark fold. While there are few obvious product synergies between these new Divisions and CellMark’s traditional pulp and paper products, they dovetail very well with the company from an operational perspective. Specifically, they align well with ways we go to market and optimize our expanding “toolbox”; the ways we deploy working capital and the ways we manage commercial risk. We look forward to helping our Metals and Chemicals colleagues leverage our global network and infrastructure. At the same time, CellMark benefits from its immediate connection to these new Divisions’ business network.
After just a few months, our new colleagues have demonstrated that they embrace CellMark’s long-established values of integrity, trust, transparency and accountability. As such, we have no doubt that the move to expand our services beyond forest products will reap substantial rewards. We are grateful to these new CellMark employees, and to all of our global professionals, for their unmatched commitment to the development of our company.
We are also grateful to our supportive suppliers and customers and to the co-operation by our banks and credit insurers. In 2011, we relied on their cooperation numerous times. As such, we were able to invest in the kind of strategic opportunities that have kept the organization at the forefront of the industry for 27 years. We look forward to continuing our mutually beneficial relationships with all of our partners in the future.