LISBON, Feb 13 (Reuters) - Portugal’s pulp and paper maker Portucel should double or even triple its capital expenditure this year, with more borrowing likely as it enters a new cycle of growth after buying tissue producer AMS, whose output it wants to quadruple by 2017.
Portucel CEO Diogo da Silveira told Reuters in an interview Europe’s tissue market was expected to grow at an annual pace of over two percent for the next 10 years, while Portucel’s main market for uncoated woodfree paper was “at best flat” in Europe.
AMS, whose acquisition for 80 million euros ($91 million) Portucel announced this week, will double capacity from 30,000 tonnes by July. By early 2017, it will lift capacity to 120,000 tonnes.
After 50 million euros invested by Portucel in 2014, “capex will clearly grow significantly, I’d say times two or times three”, said da Silveira, who became CEO last April.
He said the company’s net debt/EBITDA ratio of 0.8 was below the average for the sector in Europe, and the planned increase in spending and borrowing will still leave Portucel with a comfortable debt level.
“In the short term, the ratio will rise maybe to around 1.2 times. But seeing what I see in the sector, I’d be calm if we raised it to 2.5-3 times. We don’t have that plan, but if necessary it would be acceptable,” he said. ($1 = 0.8767 euros) (Writing by Andrei Khalip)
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