AFRY: Costs have reached unprecedented highs: How to mitigate their worst effects

Tissue producers faced multiple challenges in 2021 as demand cooled down and input costs increased significantly. During the third quarter of 2021, modelled manufacturing costs in Europe and North America exceeded previous historical levels on both sides of the Atlantic. For good reasons, companies are increasing their attention towards additional fibre sources and energy efficiencies to take on cost fluctuations. Here, AFRY Management Consulting`s Pirkko Petäjä, Principal, Hampus Mörner, Manager, and Santtu Koskinen, Analyst, assess the situation.

In the wake of the pandemic, the tissue industry has been experiencing two very different but also somewhat extreme years. In short, 2020 was characterised by strong global sales (At-Home) combined with low and mostly stable input costs, while 2021 was the opposite in the form of declining or modest sales growth combined with soaring input costs. Last year, the tissue industry was exposed to surging fibre and energy costs simultaneously. A rare situation hardly observed historically. This overall rise in commodity and energy costs had of course a negative impact for all raw material and energy intense industries, including tissue.