For Texas, commercial production only began in October, so it hasn’t yet helped the figures. On the other hand, this has been an important investment for us, not only to increase capacity but also as a message to our customers that we can continue to help them grow. In other words, this year’s growth in food service packaging in North America has been aided by this investment, even though it hadn’t yet started during Q3. The Texas investment is approximately 30 million USD in size, but that’s only for equipment. The building is under a leasing agreement, which partly increased net debt at the end of Q2 (together with a small acquisition made in April). With this technology (i.e., the conversion of carton-based products), an asset velocity of approximately 1.5x (i.e., how much revenue is generated annually for every euro invested) is typically achieved. So, revenue can be expected to settle in the 40+ (mUSD) range when fully utilized. On the EBIT side, this is not among the highest profitabilities in the segment, but due to the fast turnover, its return on capital is typically very good. We believe there is demand for this capacity.
Regarding Hammond, the start-up of production has been slower than expected due to certain technical challenges. In the USA, for example, many customers want colored egg cartons (especially when replacing foam packaging), which we have not done before. A significant bird flu outbreak some time ago also slowed down the process. We now expect the pace to accelerate in the coming quarters. Production has thus already been ongoing, but not at full capacity. Following the logic above, in Hammond, we built an extension next to the existing factory, including the building and infrastructure. In addition, fiber packaging production is significantly more capital-intensive, and thus the asset velocity is typically around 0.5-0.8x (generalizing). The investment was 100m USD, and this will generate approximately 50+ mUSD in revenue when fully utilized. On the other hand, it is clearly a more profitable business, which is also necessary for a good return on capital.
Hope this helps!
/Kristian