Letter to stakeholders

2019, a better year

Sofidel returned to good levels of performance in 2019, in a difficult economic environment that was, however, more favourable than that of 2018.
The renewal of its products, part of an extensive strategy to differentiate and de-commoditise its offer, was implemented throughout all markets.
Together with rebalancing the cost of the raw material, this innovation allowed volumes, margins and profitability to be recovered, and also the acquisition of new customers.
The products presented, as well as the range extensions and the new generation of more sustainable packaging, developed with the aim of making people's daily lives easier and of meeting the growing demand for environmental responsibility, have found favour with markets and consumers, also thanks to the support of new advertising campaigns at the end of the year.
As far as the use of more sustainable packaging is concerned, Sofidel undertook to reduce conventional plastics in its production by 50% by 2030 (compared to 2013), equivalent to the elimination of more than 11,000 tonnes of plastic placed on the market per year.
The objective is pursued by introducing (starting from its main brands, many of which are leaders in their respective markets) packs in paper (a renewable material of plant origin, which is the most commonly recycled material in the countries where the Group operates), using recycled plastics or bioplastics and reducing the thickness of the plastic film used in the production process (a programme that has already been carried out for several years).
The recent new production capacity installed in Spain and Poland, for the first time at full capacity, had an impact on the entire year, making it possible to support the launch of the Regina brand in the Iberian market and, more generally, to achieve higher levels of logistic efficiency. Overall in Europe, thanks also to the presence of its own production facilities in the United Kingdom (which guarantees less worrying conditions in relation to Brexit), the Group sees its position strengthened.
The consolidation of Sofidel's presence in the US market continued. The big factory in Inola, Oklahoma, the Group’s second greenfield investment on American soil, already has nine converting lines in operation, while the full start-up of paper mill production - scheduled for the first half of 2020 - is confirmed.
This will be a fundamental step in the production and logistic efficiency drive that the company is implementing on this market and which, while waiting for the new plant to become fully operational, has already led to significant results in terms of optimisation of transport costs. In anticipation of the upcoming expansion of production capacity and further improvement of geographical coverage, Sofidel has intensified its visibility and relationship promotion activities and is preparing to launch a first test product on the US market.
Other highlights of the year include the growing attention that the Group is paying, at various levels, to the issues of smart production and digitisation and the implications that these transformations are bringing about in terms of production, distribution and communication.

Among the activities, in addition to the automation of the warehouses of the new plants, are the development of collaborations with some important distribution platforms, the further customisation and enrichment of logistics services offered to customers, a more massive use of big data analytics and an increased level of attention to cyber security.
On the corporate social responsibility front, we should highlight the results obtained in the WWF's Environmental Paper Company Index (EPCI) report (the two-yearly tool proposed by the environmental organisation to companies in the paper and pulp sector to assess their transparency and commitment to environmental issues), the acquisition of UNI ISO 20400 compliance, a guideline relating to supply chain sustainability, the adherence to CEOs Call to Action (CSR Europe's initiative to involve European companies that consider sustainability a qualifying factor in their strategy and that are willing to strengthen dialogue and join forces) and the awareness-raising and education activities that, from collaboration with schools and universities to the "NextGen" programme, Sofidel is carrying out in favour of the younger generations.
In the meantime, elements of concern are linked to the health emergency caused by COVID-19 coronavirus, whose spread is extending to many countries and whose health, economic and social impacts are currently difficult to assess.
Within this framework, Sofidel has launched a specific "Action Plan against the spread of COVID-19 coronavirus" on a precautionary and preventive basis in order to protect the health of its employees and the efficiency of its production and service levels, and closely monitors the evolution of the situation.

Emi Stefani President Sofidel Group

Luigi Lazzareschi CEO Sofidel Group