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Presentation of the groupPresentation of Sequana 1Coated US divisionAppleton Coated manufactures premium coated papers for thecommercial printing and book publishing industries under theUtopia brand. The division has carved out a strong position inthe educational textbook market supplying many well-knownpublishers. Thanks to its excellent service and high-end offering,the division is a major supplier to many high profile brands inindustries including fashion, automotive and financial services.Demand in these markets is driven largely by advertising expendituresand government spending for education.As a leader in environmental papers, Appleton Coated offersFSC®-certified products made with post-consumer recoveredfibre and products made with green power, all produced at theCombined Locks mill in the United States.Appleton Coated is the fourth largest manufacturer of coatedpapers in volume terms in the United States. Its main competitorsin the US coated paper market are Newpage, Sappi and Verso.2012 highlights■■Stable volume at the top end of the coated product line-up.■■Consolidation of solid leadership position in coated papers forhigh-speed inkjet web technology.■■Expansion of the product line and volume growth of ecofriendlyproducts.■■Strategic partnerships drive growth in specialty and uncoatedvolume.2012 resultsIn 2012, the slow pace of economic recovery and the increasingmigration to electronic communication continued to adverselyaffect the North American paper industry. The especially toughbusiness environment led to fresh capacity reduction measuresand renewed growth in exports: after the 5% slump in volumesfor printing and writing papers in 2011, volumes in the NorthAmerican market fell a further 6% in 2012.Consistent with the overall printing and writing sector, demandfor coated freesheet papers declined about 5% in North America,with more dramatic declines in the textbook publishing segmentdue to US state budget cuts and some migration to the use of electronictextbooks.Full-year sales for the division were down 1.7% at €249 milliondue to falling volumes in both the commercial web printing andpublishing sector where competition is fierce. Growth in specialtycoated and uncoated products help to offset those reductions.EBITDA was at breakeven thanks to the positive impact of lowerpaper pulp prices. EBITDA margin represented 0.4% of sales.Consolidated leadership in digital printingDespite the very tough business environment, Appleton Coatedcontinued to bolster its leading positions in coated papers forhigh-speed inkjet web technology, as reflected in the success ofthe Utopia Book Inkjet range whose sales increased nearly 70%year-on-year.The division also added glossy coated paper developed jointlywith HP to its range of digital printing papers in March 2012.The Utopia Inkjet range now provides customers with a comprehensivedigital offering: matte coated paper (Utopia Book Inkjet)for publishing, matte and glossy paper (Utopia Inkjet Dull &Gloss) for commercial printing, publishing and direct marketing,and uncoated paper (Utopia Uncoated Inkjet). This has enabledAppleton Coated to keep one step ahead of the competition andto position itself as the only North American paper manufactureroffering customers a complete range of papers adapted to digitalprinting technologies for all publishing and direct marketingapplications.Sales remained buoyant in the specialty uncoated paper businesses.Relentless commitment to innovationAppleton Coated was the first US coated paper producer to becertified FSC® and to develop a range of papers manufacturedfrom FSC®-certified virgin or recycled pulp using electricityfrom renewable sources. Its most eco-friendly products continueto show robust growth in 2012.Leveraging its strong market positions, Appleton Coated intendsto continue expanding its eco-friendly product range and to helpcustomers in their quest for environmentally responsible solutions.Appleton Coated was the first producer to offer productsmade with 30% post-consumer recovered fibre and to stock thoseproducts making them readily available in smaller quantities. In2012, the company began production of coated products with60% post-consumer recovered fibre.In addition, many Appleton Coated products bear the green-e®logo which certifies that 100% of the electricity used to producethose products is matched with renewable energy credits (RECS),from certified clean energy sources, mainly wind power, and enablescustomers to benefit from energy credits. Close on 20% ofcoated products sold now bear this logo.Appleton Coated has stepped up the use of biomass energy inplace of coal as part of its strategy to reduce its carbon footprint.In 2012, alternative energy sources represented 30% of totalenergy consumption. Coal has declined from 56% in 2008 to lessthan 25% of total energy in 2012.The division also continued to deploy measures designed toenhance industrial efficiency and reduce costs, particularly logisticsand energy-related costs.Key figures – Coated US division(€ millions) 2012 2011Sales 249 253EBITDA 1 (1)Recurring operating income (loss) (2) (5)Operating margin -0.7% -2.0%Sequana | 2012 Document de référence (English version) | 37