Investment case

Leadership in attractive market segments

No. 2 globally
producer of kraft paper and industrial packaging
+2.5%
Market growth forecast for 2019–2025 (CAGR)1
  • Growth in the construction market, a key consumer of industrial paper packaging
  • Growth in retail and online retail
  • Increased environmental awareness leading to bio-degradable paper packaging being increasingly preferred over plastic packaging
No. 5 globally
producer of large-format birch plywood
+1.4%
Market growth forecast for 2019-2025 (CAGR)1
  • Growth in the DIY market2
  • Growth in construction and furniture manufacturing
No. 1 in Russia
producer of sawn timber
+2.0%
Market growth forecast for 2019–2025 (CAGR)1
  • Growth in residential housing construction
  • Growth in exports, especially to China
  • Increased environmental awareness
1CAGR - compound annual growth rate

Extensive and fast-growing forest resources

Segezha Group has the largest forest resources of any publicly traded forestry company globally, and also the highest level of wood self-sufficiency at 93%. This gives Segezha Group a serious competitive advantage as the Company has far greater control over production costs.

Segezha Group controls the largest area of leased forests in European Russia with an annual allowable cut of approximately 23.2 mln cubic metres, incl. 1.9 mln cubic metres to be accessed under priority forest development investment projects



1 - As of 31 December 2020, the company had access to 8.1 million hectares of forest plus an additional 1.1 million hectares contingent on the signature of new leases and creation of new infrastructure by the company 
Source: company data for 2020

Highly efficient resource base thanks to continuous investments

Segezha Group has a large number of highly diversified assets located in close proximity to the group's forest resources, as well as converting factories strategically located to serve key markets. 

In addition, since 2015, the company has invested over RUB 49 billion in the construction and upgrading of its production platform.


Sack paper
Paper sacks
Plywood
Sawn timber
CTL panels
R&D centre
Карта

2

Pulp&Paper mill

3

Converting
factories (paper
sacks and packaging)

8

Sawmills

4

Plywood mills

2

Refractory panel production facilities

1

CLT panel production
facilities

1

Manufacturing facility specialising
in prefabricated house
kits and glued beams

2

R&D centres

Strong track record of project execution

> 10

Implemented investment projects

~
 
RUB
 
49
 
billion

Total CAPEX in 2015-2020

High quality

Projects implemented within budget and on schedule

High profitability due to low production costs and vertically integrated business model

Segezha Group has some of the highest profit margins in the industry for the segments in which it operates. The unique competitive advantages of the company are:

  • low production costs owing to access to its own raw materials, which enables the company to have near-full control over its production costs;
  • its vertically integrated business model, allowing the company to control the entire supply and production chain from logging to the manufacture of high added-value finished products.
  • график 1

    An integrated business model

    The company's vertically integrated business model allows it to make maximum use of its raw timber sources, thus enabling it to sustain continued development. 

    The share of raw timber sources within Segezha Group - 80%

    Business model
    An integrated business model

    A well-balanced revenue structure and geographic diversification

    Segezha Group strives to maintain an export-oriented strategy with a high degree of diversification of markets, distribution channels and products. In 2020, 72% of Segezha Group's revenue came from exports to a broad range of countries. 

    The company exports its key products to more than 100 countries. To maximise its margins the company is always striving to increase the share of direct sales of its products to end consumers.


    Diversified sales structure and focus on export activities

    Диаграмма
    Легенда

    Diversified sales structure (with sales to more than 100 countries around the world)

    5 key export markets (% of total sales in 2020)
    график 1 график 2 график 3 3
    Х%
    The share of export sales, 2020

    A reliable portfolio of projects to ensure organic growth

    Segezha Group actively invests in its own growth. The main goals of Segezha Group's investment projects are to increase production capacity by upgrading its existing production facilities and building new ones, launching new products and reducing the company's environmental impact, partly by increasing the recycling of the waste by products from its main production activities, optimising its energy consumption and implementing other environmental projects.

    Ambitious development strategy

    Implementation of high added-value projects
    >25%
    Internal rate of return (IRR)
    Expanding the forest fund
    15-20
    million hectares
    The total area of the forest fund in 2030
    Increase in the capacity for key products
    >1,5X
    Over the next 5 years

    Effective corporate governance

    Segezha Group follows the best corporate governance practices. Adherence to the highest standards of corporate governance ensures: 

    • Equal and fair treatment of all shareholders
    • Professionalism and leadership of the Board of directors and its accountability to the shareholders
    • Openness of information about the company
    • Zero tolerance of corruption

    Карточка 1
    The company has a ranking of 21.4 among the top 25% of global companies in the pulp and timber-harvesting sector
    Карточка 3
    SSegezha Group has been a participant in the UN Global Compact since 2021.
    1
    Segezha Packaging's European assets were awarded the EcoVadis Gold Level after audits of its Environment, Social Practices, Ethics, Suppliers and Sustainable Purchasing.
    2
    Segezha Group is a leader among environmentally responsible domestic forestry companies according to the RAEX-Europe ranking.
    3
    Segezha Group is certified for compliance with the international standard ISO 45001 Health and Safety Management System.