Glatfelter plans to accelerate Sontara hygiene brand growth, which accounts for 50% of company's spunlace business, shows highest margins; company is also seeking solutions to be more competitive in medical gowns amid China, Turkey now importing material

Sample article from our Health Care Sector

CHARLOTTE, North Carolina , May 11, 2023 () –

Thomas Fahnemann, CEO of Glatfelter, shared the company's plans for its spunlace business during its Q1 earnings call, Seeking Alpha published May 5.

Fahnemann said the Sontara brand, which represents around 50% of its spunlace business, has the highest margins in its overall product portfolio due to the fact that "price sensitivity at the customer level is not as high as in other areas they are participating in." The company has a "clear plan" in place to "accelerate the growth of their Sontara business," including forming a group focused solely on marketing the brand.

"...about 50% of our Spunlace businesses is Sontara, and around about 50% is hygiene and wipes," he said. "Now talk about the Sontara business, we are really changing our approach. This is a branded product mainly used right now in critical cleaning, and we are expanding our volumes there."

According to Fahnemann, spunlace volumes increased in Q1, but Glatfelter "did not see a sequential increase in profitability compared to the fourth quarter, due to a less favorable product mix."

The company is also seeking solutions to be more competitive in the medical gowns business, where its "superior" product is too expensive in certain areas. 

"This was not a problem during the pandemic, because there was just -- you just had to have material and price did not matter," Fahnemann said. "But now, it's very difficult for us to be competitive compared to mainly China, Turkey and other countries, which are importing material. But we are also looking here at finding a solution, which is really fitting the customer needs. And in these areas, we have to take attributes out of the product and make it cheaper."

The primary source for this article is Seeking Alpha, published May 5, 2023. To read the original call transcript, click here

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