Huhtamäki Oyj is reviewing alternatives for its rigid plastic consumer goods operations, the company announced Sept. 2.
The division may be put up for sale as it has not met the Espoo, Finland-based company's criteria for financial performance and its profitability is below the Huhtamäki average. Huhtamäki said its goal is a 15 percent return on investment.
Huhtamäki plans to focus on its paper-based packaging operations. ``We have good positions in smooth and rough molded fiber products, release films, flexible packaging, food-service paper cups and other products based on our paper-forming technology,'' said Chief Executive Officer Jukka Moisio.
``We have no particular advantage in [rigid plastics consumer packaging goods], he added.
Company spokeswoman Minna Staffans said there are several reasons for the review of the rigid plastic consumer goods operations: ``The competition is very tough, we have seen overcapacity in the market and so the price level has been low.''
While rising raw material prices have affected profitability, ``that has not been the only reason,'' she said.
Some rigid plastics processing sites and products that support the food-service business are not subject to the review, she added. One example is a plant in Alf, Germany, that makes plastic cups for vending machines as part of the food-service business and not for the consumer goods area.
Huhtamäki's rigid plastic consumer goods operations are located mainly in Europe and have annual sales of about 400 million euros ($580.8 million).