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Matussière et Forest SA

Matussière et Forest SA

27 avenue du Granier, BP 18
38241 Meylan Cedex
France
Telephone: (33) 4-76-61-42-00
Fax: (33) 4-76-41-90-88
Web site: http://www.matussiere-forest.com

Public Company
Incorporated:
1858
Employees: 1,847
Sales: EUR 365.4 million ($382.6 million)(2002)
Stock Exchanges: Euronext Paris
Ticker Symbol: 6057.PA
NAIC: 322121 Paper (Except Newsprint) Mills; 551112 Offices of Other Holding Companies

Group Matussière & Forest SA (MF) is one of Frances leading makers of communications paper, which includes newsprint and coated papers as well as paper products for the book publishing industry. The company is one of Frances primary producers of papers for this latter category. In addition to its communications papers, which accounted for 75 percent of the companys sales of EUR 365 million in 2002, MF produces paper products for industrial use, such as papers for envelopes, painting papers, and packaging. For the last-named category, the company has developed the only papers approved for food-contact in Europe. MF has also long been a leader in the use of recycled papers, having pioneering de-inking and other recuperation technologies since the early 1970s. The companys technology enables it to produce high-quality paper from recycled newsprint, packaging, and other sources. By 2002, more than 80 percent of the companys raw material supply was provided by recycled papers. MF operates eight facilities in France, accounting for 54 percent of the groups revenues, while operations in the rest of Europe account for 44 percent. MF has been expanding at the turn of the century, absorbing Papeterie de Voiron in 2000 and, in December 2002, the Papeteries de Lancey. The addition of Lancey was expected to boost the companys revenues by as much as EUR 100 million by the end of 2003, despite the difficult climate for the European paper industry. The company also operates sales and marketing subsidiaries in England, Germany, Italy, Belgium, and Spain and sales agents in a number of other western and eastern European markets. MF remains controlled by the founding Matussière and Forest families, at more than 49 percent of the companys stock, which is traded on the Euronext Paris Stock Exchange. The company is led by Michel Soriano, who holds the position of president.

18th-century Roots

Matussière & Forest resulted from the combination of a number of French paper-making concerns, some of which had roots stretching back to the early 18th century. The oldest of the companys branches can trace its origins to the town of Turckheim, where a paper mill was founded in 1713. That mill was later purchased by Ignace Schwindenhammer in 1798. In the next century, other paper mills appeared in Turckheim, notably the Scherb mill, which, under the leadership of Jacques Scherb, began producing paper tubes and wrapping papers in 1861.

By then, another important center of Frances paper industry had begun to develop further south, in the forests of the Isère region. Among the new entrants in the countrys paper industry was Amable Matussière. Born in 1828, Matussière had studied engineering at the Ecole Céntrale des Arts et Manufacturers, along with fellow student Aristide Bergès. In 1856, Matussière went into business, acquiring a firm near the Domènon river that produced parquet flooring.

Matussière, however, had already developed an interest in papermaking and had recognized the possibility of harnessing the force of the areas water falls to the newly developing wood pulp-based papermaking methods of the time. Indeed, the paper industry was undergoing a revolution during this period, transitioning from paper made from rags and other cloth to more plentiful wood-pulp based papers. The first mechanical wood pulp machine was invented in Germany. This device used millstones to in order to break down wood into its fiber, which was then combined with water to form the pulp for paper. The new mechanical pulp made large-scale production of paper pulp possible for the first time.

Matussière had already begun producing wood pulp in 1858, but it was his discovery of the new German mechanical method that enabled him to move into full-scale paper production, founding the Papeteries du Domeynon. In this, Matussière was aided by his acquaintance with Aristide Bergès, an engineer and inventor who had created a steam-driven asphalt pulping machine used to pave the square around the Arc de Triomphe in Paris.

Bergès had worked at his fathers paper mill in the Isere region in the early 1860s and had begun working on his own improvements on the traditional wood pulping techniques. He then when into business on his own, opening his first paper mill in 1864 at Mazeres sur Salat while continuing to work on improvements for a de-fibering machinery. By the end of the decade, Bergès had perfected a de-fibering machine that used hydraulic power in the grinding process, producing a more consistent, higher-quality wood pulp. The Bergès machine quickly overtook its German predecessor as the most sought after device of its kind.

In the meantime, Matussière had recognized the potential of harnessing the water power of the Dauphinè regions mountain waterfalls for use in driving the wood pulp machinery. In 1864, Matussière convinced fellow classmate Alfred Fredet to join him at his mill. The following year, Matussière set up a saw and paper mill using a 35-meter waterfall from the Domènon river.

Matussière then called on Bergès to come and install one of his de-fibering machines in the new plant. In 1867, Matussière proposed that the three former schoolmates go into business together, setting up a new paper mill at a site in nearby Brignoud. Fredet accepted but Bergès preferred to go into business on his own. In the end, however, when Matussière lacked the capital to continue, Fredet went into business on his own, and in 1872 set up what became one of the regions largest and most well-known paper mills, Papeterie Fredet. At the time, the Fredet mill was served by the areas tallest waterfall. Fredet and Bergès were later to come together, when, in 1921, Papeteries Fredet and Papeteries de Lancey merged to form Papeteries de France.

The competition among the three former schoolmates led Matussière to install a new waterfall in 1880, increasing the mills production capacity. In the meantime, Bergès went off on his own, setting up a paper mill in nearby Lancey. Yet, despite being surrounded by the Belledonne mountain chain, the Lancey mill was served by a relatively small waterfall, not powerful enough to drive Bergès machinery. Instead, Bergès began looking higher uptopping Matussières own waterfall. More importantly, Bergès had begun developing a technique for harnessing the water power of mountainous regions, which he called Houille Blanche, or white coal. That phrase was to become famous throughout the world.

Amable Matussières son Louis Matussière took over his fathers business and began expanding it at the turn of the century, adding a pulping plant at Salau in 1897, as well as a second paper mill, Papeteries de Modane. In 1908, Matussière moved beyond the Isère region in order to acquire the Papeteries de Lédar, near Frances southern border, which originally produced wrapping papers for oranges from Spain. The Lédar plant was then expanded in 1918, taking over the pulping operations from the Salau plant.

Recycling Pioneer in the 1970s

By the beginning of the 1960s, the Matussière familys paper business expanded again with the acquisition of Andre Scherb paper mill in Turckheim, which by then had been expanded to included the former Schwindehammer site as well. The Scherb business was afterwards placed under control of Papeteries de Modane in 1967. By then, Matussière had formed a joint-venture, Société Française dAchats de Rondins, in partnership with Papeteries de France, in order to supply plants for both companies with wood for their pulp production.

In 1970, the Matussière-led paper mills began looking for a new source of raw material for their pulp production. The company pioneered the use of recycled paper in France, adopting a de-inking process in order to transform newsprint into higher-quality papers. Over the next 30 years, the Matussière group continued to invest in developing new recovery technologies, including methods for recovering the paper from plastic-coated milk and juice cartons. (The plastic was transformed for reuse by the plastics industry). The company also developed a technique for recovering aluminum, which in turn was used as part of the recovery process.

The company in the meantime continued its development into its modern form. In 1977, the Andre Scherb company took over Papeteries Metenett, based in Raon-Letape, in the Vosges region, and changed its name to Société des papeteries Scherb et Metenett. Two years later, the papermaking operations at the Modane plant were placed under Scherb et Metenett.

Matussière, by then under the leadership of Louis Matussière, great-grandson of the founder, continued restructuring its holdings in the 1980s. In 1983, the company regrouped the Domeèe paper mill and the Lédars Saint-Girons mill under Scherb et Metenette. At that time, the groups paper production business was renamed Papeteries Matussière & Forest. The following year, the companys restructuring combined Papeteries du Domeynon, Papeteries de Lédar, and the Modane mill under a new group, named CFI de Lédar. Meanwhile the companys development of new recycling technologies came to fruition in 1985 with the unveiling of a new, company-patented wood fiber recovery industrial system.

Company Perspectives

The companys strategy is based on process and product research and development, product and market sector specialization at each mill site, and adding value to recycled fibre (RCF).

Toward the end of the decade, the Matussière group began looking forward to going public in order to place a value on family members shareholdings. That move was achieved in 1989 through the acquisition of publicly listed Papeteries Henry Boucher, which operated, through subsidiary PPT (Pâtes Pa-piers et Textilose), two paper mills in Entre Deux Guiers and Echelles, close to the original Matussière site. In 1990, PPT was converted into a holding company and renamed Matussière et Forest SA, transforming MF into a publicly listed company.

Like the rest of Frances paper industry, MF was hit hard by the recession of the early 1990s and the economic crisis striking the paper market in general. By the 1992, MF remained one of the lastand largestof Frances independent paper producers. At the end of 1992, the company, which had slipped into losses at the beginning of the year, was approached by Germanys PWA, which sought to extend its own production beyond its core new paper production by acquiring MFs recycled paper expertise. By then, MF had received international recognition for its recycled paper technology.

Last French Independent in the New Century

The company turned down the approach, however, keeping to its commitment to remain independentand controlled by its founding family. Through the mid-1990s, the company returned to profitability and restructured again as Matussière & Forest took over the former Henry Boucher paper works in 1995.

The late 1990s proved another difficult period for the company, as it once again struggled against losses. Amid these difficulties, Louis Matussière stepped down from the companys leadership, and was replaced by non-family member Michel Soriano.

Under Soriano, MF began an intensive investment program, spending FFr430 million (EUR 65 million) in a move to shift parts of its production into higher value-added paper categories. The company also launched a new expansion effort. In December 1999, the company made an offer to acquire part of Papeterie de Voiron, held by Guerimand, which itself was majority controlled by paper giant Arlo Wiggins Appleton (AWA). By February 2000, the two sides had worked out an agreement by which MF acquired 60 percent of Voiron while AWA retained a 40 percent stake.

MF began an upgrade program for the Voiron site, investing EUR 38 million to convert its production from photocopy paper to higher-value art paper and higher-margin recycled offset paper. By 2005, the company expected the Voiron sites production to rise from 100,000 tons per year at the time of the joint-venture with AWA to 200,000 tons per year.

MF, hit hard by rising pulp costs, stepped up its use of recycled papers, which topped 80 percent of its total production at the end of 2002. By then, the company had moved to take over full control of the Voiron site, paying AWA EUR 4 million.

In December 2002, MF came full circle, in a sense, when it agreed to acquire Papeteries de Lancey. That company had come under the control of Aussedat Rey in 1971, which itself was later acquired by International Paper in the 1980s. In 1997, Aussedat Rey decided to concentrate on its office paper products and sold off Lancey in a management buyout led by CEO Jean-Luc Dominici. The fusion of the Lancey paper mill into MF, in a share trade that brought Dominici in as a major shareholder, not only added nearly EUR 100 million to MFs annual sales, it also reclaimed an important part of the companys own nearly 150-year history.

Principal Subsidiaries

Curtas Technologic SA; Fertisere SAS; Groupement dAchat AVP SAS; Lancey Investissement SAS; Meylan 10 SAS; Meylan 20 SAS; MF Expansion SRL; MF Ltd (UK); MFB (Belgium, 80%); MFD (Germany); MFE (Spain); MFI (Italy, 80%); Papeterie de Voiron SAS; SA Papeteries Matussière & Forest; Société des Papeteries de Lancey SA; Sofar SAS; Sud Abies SARL.

Principal Competitors

International Paper Co.; Stora Enso AB; Svenska Cellulosa AB; Orkla ASA; D.S Smith PLC; Holmen AB; Sappi Papier Holding AG.

Key Dates

1856:
Amable Matussière acquires a factory producing parquet flooring.
1858:
Matussière begins producing wood pulp for paper in Domène.
1867:
A de-fibering machine is installed.
1897:
After adding a papermill and pulping plant in Modane, the company acquires a pulping plant in Salau.
1961:
The company acquires the paper works of André Scherb in Turckheim.
1970:
The company acquires de-inking technology and begins production based on recycled paper.
1989:
Publicly listed Papeterie Henry Boucher and subsidiary PPT are acquired.
1990:
PPT is converted to a holding company, which is renamed Matussière & Forest SA.
2002:
Papeterie de Voiron and Papeteries de Lancey are acquired.

Further Reading

Matussière et Forest, Description historique de Ientreprise, 2002.

Matussière et Forest sadapte a une conjoncture défavorable, Prline, July 16, 2003.

Matussière et Forest sort du rouge et mise sur le papier recycle, Les Echos, October 18, 2001, p. 16.

Les Papeteries de Lancey se rapprochent de Matussière & Forest, Entreprises Rhone-Alpes, December 2002.

Turckheim: Making Big News, Pulp & Paper International, April 1992, p. 40.

M.L. Cohen

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