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UK Carton industry poised for recovery

Following five years of intense market pressure, the UK carton industry’s production and sales have declined to an unprecedented degree.

Packaging Focus is now forecasting a market pickup to begin towards the end of 2003, set to accelerate the following year.

Underpinning this recovery will be a turnaround in the industry’s export trade.

This is in line with a weakening in the value of sterling against the Euro.

The effect has already led to the UK achieving, in 2002, its lowest ‘net import’ balance of cart-ons in over a decade, the report notes.

It goes on to add that the UK will become a ‘net exporter’ of cartons in 2004.

While bullish about the prospects for the industry’s output over the next five years, the report is less confident about a short-term recovery in carton prices.

Supply chain pressures that led to a 16% price drop over the last five years are set to continue.

Despite the pressure on its prices, however, the industry did succeed in 2002 in halting the slide in its margins as a result of various efficiency gains.

A further modest improvement in profitability is now expected to take place over the next few years.