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Inapa is a leading European paper distributor that has not only adjusted to the post-crisis paradigm, but has in so doing become one of the most efficient companies of the sector


Inapa’s strategy involves an increasing extension to other segments, besides paper distribution. Inapa’s presence in the visual communication and packaging segments – two businesses with good growing perspectives and better margins – is and should be more important.

The company is currently the fourth largest European distributor with sales around one million tonnes, in a sector that is led by Antalis (2.7m tonnes), followed by Paperlinx (2.1m tonnes) and Papyrus (1.7m tonnes).

It is a multinational company with a strong presence in eight European countries: Germany, France, Switzerland, Spain, Belgium, Luxembourg, Portugal and the UK. Although based in Portugal, 93 percent of its turnover is achieved elsewhere: France and Germany, the two main markets in which Inapa is active, represent around 75 percent of the group’s total sales.

The group’s main activity is focused on the sale and distribution of paper for the graphics industry, publishers and offices.

The complementary businesses – and particularly the distribution of graphic and office consumables, the distribution of packaging materials and visual communication – are Inapa’s new areas, under a policy of repositioning of the group as a global paper service provider, started in 2007.

In Portugal, Inapa is leading with values very close to 50 percent of the market share in the paper distribution segment of writing and printing. In France, the group holds the second place, while in Germany and Switzerland it is in third. In Spain, the group is currently the third largest operator in the market, following its latest acquisition.

The group employs about 1,500 people and generates approximately €1bn in sales, bringing to the market a portfolio of over 12,000 paper references. Inapa, therefore, responds to the needs of more than 70,000 customers. Inapa executes more than 5,000 deliveries per day, assured by 28 warehouses and logistics centres, with around 180,000sq m of storage area and 300 trucks.

Inapa is the only European distributor that is listed and is part of the PSI 20, the major Portuguese Stock Index. Its shareholder structure has been very stable, and the two major shareholders are Parpública with 33 percent and Banco Comercial Português with 18 percent.

Post-crisis restructuring
In 2008-9 the paper distribution sector registered a strong downturn in demand (due to the international crisis), with a strong impact on business results. The price of paper, as a reaction to the demand slump and the offer incapacity of a fast adjust, registered a heavy decrease.

In this period of crisis, Inapa had, however, the ability to achieve results in counter-loop. The consistent and continuous improvement of its results, even in a crisis period like the present one, is a consequence of the profound restructuring that the company was able to implement in the last three years, and allowed it to have a more suitable structure to meet the new reality.

In 2010, the paper distribution sector registered a slight recovery of volumes and prices in key European markets. The exception in the five core markets of the group is Portugal, which has been affected by the instability of the national economy and doubts about the quality of its sovereign debt. However, the impact of the Portuguese market in the group’s results was insignificant, given the very limited weight of this market in the group’s overall activity.

The market for paper distribution in Europe is now a mature market with moderate growth prospects, closely linked to the economic performance.

In the future, Inapa foresees a positive evolution, as Germany, France and Switzerland should continue to register sustained economic growth in the coming years.

The group’s strategy
Inapa was born in Portugal on 24 November 1965 as a paper producer, later extending its activities to distribution. During its 45 years Inapa has proved itself a model of innovation and development.

In the late 90s, Inapa sold its industrial area, focusing on its distribution side. Since then, Inapa intensified its internationalisation to other European countries, mainly through acquisitions. This geographic diversification has enabled the group to reduce its exposure to the situation of each country.

The recent entry in Angola – where it was the first company of the sector to operate – represented the group’s first step outside Europe, in an emerging market with one of the best growth prospects worldwide.

Over the past three years the group has implemented a restructuring process, with the divestiture of non-strategic assets and the optimisation of its organisation and corporate governance, which allowed the company to improve its results in a sustainable way.

For the next three years, Inapa’s strategic actions will be (i) the consolidation of positions in the paper market, (ii) the enhancement of the complementary businesses, (iii) the implementation of a second wave of operational efficiency, (iv) the rebalancing of the capital structure, and (v) the optimisation of the capital structure to achieve a 12 percent ROCE.

i) Consolidation of paper
INAPA’s main focus for the coming years in the paper business involves the consolidation of its position in the top five core markets (Germany, France, Switzerland, Spain and Portugal). The recent acquisition of Burgo’s paper distribution business in Spain, under the brand name Ebix, integrates this strategy. With this operation, Inapa rose from fifth to third largest player in the Spanish market, doubling its market share, which enabled it to overcome the line to operate profitably in this market.

In parallel, the group foresees new investment projects in close and developing markets, where there are good growth prospects, and value creation opportunities. The entry into mature markets is not considered a priority.

ii) Complementary businesses
Some 6.5 percent of revenues and 10 percent of EBITDA generated by the group are already through its complementary businesses, including the packaging materials and visual communication. It is intended that these two business areas significantly increase their weight in the group, since they have synergies with the paper business and better growth prospects and profitability.

The growth will be achieved by taking advantage of some organic growth opportunities, but also through acquisitions.

iii) Efficiency of operations
Despite the rationalisation carried out in the last three years, it is understood as essential to further improve the group’s efficiency in order to extract the maximum possible value in the paper business, so Inapa will launch a new wave of operational efficiency. The centralisation of services by creating a shared services centre and the optimisation of IT costs are the two main drivers of this new wave.

iv) Capital restructuring
Although the group has been able to significantly reduce its debt levels, it is essential that Inapa rebalance its capital structure to ensure its sustainability, reducing the burden of the interest bearing debt. It is the company’s intention to move closer to industry levels, to ensure a lower exposure of results to external factors (such as Euribor).

Among other measures, there is the commitment to use at least two thirds of the operational cash flow generated to repay debt.

v) ROCE improvement
In addition to the aforesaid measures, the reduction of the invested capital is another measure that will help to increase the profitability of capitals employed and achieve levels of 12 percent.

The implementation of this strategic plan will transform Inapa’s profile, making it less dependent on a business with lower margins, which presents more limited growth prospects, and will enhance the group’s sustainability, creating value for shareholders and other stakeholders.