Flexible Packaging Newsletter - Q3 2019

TKO Miller Market Analysis 

• Flexible packaging’s ability to replace other packaging formats has resulted in growth in the U.S. Flexible Packaging segment, increasing from 17 percent of the U.S. packaging industry in 2000 to 19 percent in 2018. Converter expectations for sales revenue are projected to rise about 3 percent to 5 percent per year and volume to increase about 5 percent to 6 percent per year. [Flexible Packaging Association – 2019 State of the Industry Report]
• TKO Miller saw a 7 percent decline in its proprietary flexible packaging valuation index (see below) from 2 to Q3. Part of this is attributable to the decline in both Berry Global Group and Mondi Plc’s TEV/EBITDA multiples (12 percent and 10 percent, respectively). Berry has suffered poor performance in its Engineered Materials and Health & Hygiene segments while Mondi has been hit by softening demand and an unfavorable pricing environment. The index’s performance contrasts with the S&P 500 index (see below), which has seen a 3 percent increase from Q2 to Q3.
• The average flexible packaging converter is a small to medium-size company with annual sales totaling $70 million [Flexible Packaging Association]. This fragmentation sets the stage for heavy M&A activity in the future, with many large strategic acquirers pursuing national roll-up strategies.
• TKO Miller continues to see larger players expressing a strong appetite for acquisitions, but demand continues to outweigh the supply of available businesses for sale.

Recent Flexible Packaging Transactions

By Joe Froehlich on Oct 20, 2019 9:05:00 AM