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Moody's - European packaging firms’ credit quality under threat as calls to cut plastic waste intensify

- Growth potential of existing plastic packaging products shrinking as calls to reduce waste increase

- Profits under pressure unless consumers can shoulder rising costs

European plastic packaging companies' credit quality will come under pressure in 2019 as efforts to reduce plastic waste ratchet higher, Moody's Investors Service said today in a new report.

Pressure to substitute other materials and focus on recycled plastic rather than virgin material will shrink the growth potential of existing plastic packaging products, leaving newer, more sustainable packaging solutions to drive volume growth.

"Packaging companies' profits face pressure as rising demand for recycled materials and looming clean-up charges drive up costs," said Tobias Wagner, Vice President - Senior Analyst. "Successfully passing these added expenses on to customers will be crucial if companies hope to avoid sustained damage to profits."

Industry consolidation could accelerate as smaller companies with potentially limited financial flexibility may find it harder to adapt to ongoing changes, instead choosing to join forces.
www.moodys.com

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