Groupe Rougier SA

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Groupe Rougier SA

155, avenue de la Rochelle
BP 247-79008 Niort Cedex
France
(5) 49 77 20 30
Fax: (5) 49 77 20 40

Public Company
Incorporated: 1923 as Etablissements Rougier et Fils
Employees: 2,000
Sales: FFr 912.67 million (1996)
Stock Exchanges: Paris
SICs: 2411 Logging; 2421 Sawmills and Planing Mills—General; 6719 Holding Companies, Not Elsewhere Classified

Groupe Rougier SA is the holding company for a forestry products group specializing in the logging and processing of tropical woods. From its headquarters in Niort, in the Poitou-Charentes province of France, Rougier presides over a vast forestry concession in the African countries (and former French colonies) of Gabon and Cameroon. The company also performs much of its wood processing activities from its African subsidiaries’ industrial plants. Closer to home, Rougier’s French-based subsidiaries are chiefly engaged in wood and wood products importation and to a lesser extent in value-added wood products, chiefly for the cabinetmaking, furnishings, and interior decorations sectors.

Rougier’s logging subsidiaries, Rougier Gabon, based in Libreville, Gabon, and Société Forestiére de la Doumé (SFID) and Cambois, both based in Douala, Cameroon, produce some 500,000 cubic meters of raw logs—chiefly of the species okoumé and origo—per year. These subsidiaries also operate facilities for wood processing, including sawing, veneering, and plywood processing. Nearly half of the company’s annual log production is processed directly by its subsidiaries each year. Rougier’s African subsidiaries, as well as its Rougier Sylvaco International subsidiary, based in Niort, are also involved in the trading and importation of its logging and wood processing products, an activity that accounts for approximately 30 percent of the company’s annual sales.

Together, Rougier’s logging, processing, and importation operations account for nearly three-quarters of the company’s revenues. Completing its wood products holdings are its French-based subsidiaries CEPAM, Neos, and Marotte, which produce such value-added and high-end products as molding, paneling, and specialty technical and acoustical panels.

After topping FFr 958 million in 1995, Rougier’s revenues slipped below FFr 913 million for 1996. Rougier is led by President Director General Jacques Rougier, grandson of the company’s founder. The Rougier family controls more than 56 percent of the publicly traded company.

Packaging Origins in the 1920s

Born and raised in France’s Normandy region, Alexandre Rougier began a career as a mechanical engineer, working in a factory that produced boxes and crates for the region’s famed camembert cheeses and butter. Rougier’s wife, however, came from Frontenay-Rohan, a village nearby Niort in the Deux-Sévres region of Poitou-Charentes, and it was on a visit there that Rougier decided to go into business for himself. During a dinner, one of the family suggested that Rougier could transfer his packaging experience to the region around Niort—equally famed for its butter and for its goat cheeses—where the logging of the region’s marshlands and their vast poplar forests was entering a period of intense activity.

Rougier took up the suggestion, moving to the Deux-Sévres region and creating Etablissements Rougier et Fils in 1923. The company’s first location was a small warehouse in the village of Magné. From its beginning the company was involved in two areas: logging and light packaging. In 1928, however, the company expanded into plywood production, opening a new factory in Niort and moving its headquarters to the Deux-Sévres capitol. In the years leading up to the Second World War, Rougier continued to grow, becoming one of the region’s premier businesses and boasting a payroll of some 400 employees. The company was also expanding its reach beyond its home province, particularly with the opening of a sales and distribution facility in Levallois, near Paris. Although the company continued its light packaging operations, supplying the casing and crating needs of the dairy industry, Rougier’s focus soon turned toward expanding its logging and wood processing activities.

Following the Second World War, Rougier began expanding its sales and distribution network, creating in 1946 a subsidiary, Bois Particules Contreplaqués, and opening offices and warehouses in Paris and the suburbs around Paris, and in Marseilles, Tourcoing, Lyon, Metz, Nice, Béziers, and Strasbourg. The company’s product line by then included veneer panels, especially for the cabinetmaking trade, precut veneer products, and lath panels. Two years later, Rougier added a second factory in the area around Niort. This factory added to Rougier’s plywood production capacity, but it also allowed the company to enter an entirely new category, that of particle board production. This move was something of a risk for the company because particle board was largely unknown in France at the time. Rougier was among the first to bring particle board to France, and its risk paid off: By the beginning of the 1950s, it more than doubled its staff, and by the beginning of the 1960s, Rougier, by then led by Alexandre Rougier’s son Roger, had added two more factories for its particle board production.

Shifting to Africa in the 1950s

The company’s expansion soon led to a supply problem. The exploitation of the region’s forests was nearing its maximum, while Rougier’s raw products needs continued to grow. At the same time, the company’s move into particle board introduced the need for other types of wood, such as oak, birch, and chestnut. The company was soon forced to expand its purchasing activities throughout much of France. But by this time, its reliance on poplar decreased to only 20 percent of its production needs. Before long, the company began importing supplies from the tropics, beginning the company’s association with exotic woods.

Faced with a need to ensure a ready and affordable supply of raw lumber, Rougier entered a new phase in its corporate development. In 1952, the company acquired Compagnie Forestiére d’Azingo, a logging concern based in Gabon, which held concessions for some 21,000 hectares of the country’s forest lands, as well as properties in Port-Gentil and Labaréné. Rougier also began acquiring logging concession in Gabon in its own right throughout the 1950s. Although much of the company’s log production would supply its factories in the Niort area, the company also began developing its exporting activities. By the beginning of the 1960s, Rougier was selling as much as 20 percent of its raw lumber production to the United States, Great Britain, and Cuba. Between 1955 and 1960, the company revenues nearly tripled, from 2.7 billion ancient francs (equal to FFr 27 million after the conversion of the French currency) to FFr 70 million.

Success in Gabon led Rougier to expand into the forests of other former French colonies. In 1962, the company turned to French Guyana, building up logging concessions of 200,000 hectares there by 1963. While exploring the tropics, Rougier also continued to expand its home-based operations. In 1958, it added its second particle board factory, an automated facility using a recently developed manufacturing technique. In 1962, the company added a third factory, which, at 13,600 square meters and with a production capacity of 255 cubic meters per day, was larger than both its predecessors combined. On the plywood side of its business, Rougier had continued expanding its original factory, which would grow to a size equal to the company’s three particle board factories. In 1966, the company added a second plywood facility, in Fontenay-le-Comte, specializing in exterior-grade plywood. The new factory’s initial capacity of 130 cubic meters per day would more than double by the end of the decade.

The Rougier group itself was growing with the acquisition of related companies, including Placomax in 1963, and the creation of subsidiaries, especially for its packaging operations, including MAT-BOIS, based in Toulouse, in 1965. In Gabon, the company expanded its logging concession with the takeover of Forestiére de Lambaréné in 1966. In that year, the company also established the first of its Gabon-based industrial operations, creating the subsidiary Société Africaine de Déroulage des Ets Rougier (SADER) and building a veneering plant for logs that were of too small diameter for processing in Rougier’s French factories. A similar veneering facility was established in French Guyana in that same year. The mid-1960s saw Rougier continue its exploration for new logging concessions. In 1966, the company journeyed to the New Hebrides, establishing a subsidiary there to exploit the company’s newly gained concession of 33,000 hectares.

Trimming in the 1980s

By the end of the 1960s, Rougier’s total plywood production of 550,000 cubic meters per year established the company as one of the leading producers in France, with 20 percent of a market fragmented among 50 companies. In terms of plywood exports, Rougier’s market share was still greater, with more than half of the country’s total plywood markets. Rougier’s exports had expanded by then to countries in the Middle East and Africa, in addition to its customers in North America and Europe. Rougier’s yearly revenues had reached more than FFr 300 million. The company had also gone public, trading on the Paris stock exchange, although the Rougier family controlled more than two-thirds of the company’s shares. By then, after Roger Rougier’s death in 1964, Jacques Rougier had taken over his father’s leadership of the company, joined by brother Francis Rougier.

The 1970s started with a bang, as Rougier acquired Sté Mussy, based in Mauze-sur-le-Mignon, provider of 75 percent of the French army’s munitions cases. But during the 1970s, Rougier’s logging and packaging businesses faced increasing competition from such Eastern European countries as Czechoslovakia and Romania and from the Far East, especially Japan. Other Asian countries, such as India and Malaysia, with massive tropical rain forests, would soon join in the worldwide logging trade. Increased competition quickly led to an industrywide shakeout, with operations consolidating into a lesser number of large, diversified packaging concerns. Rougier, however, was determined to maintain its independence. By the end of the decade, the company was faced with a decision: to join the consolidation trend or to trim its operations.

The company chose the latter course. In 1982, Rougier spun off most of its packaging operations into Rougier Ocean Landex (ROL), ceding its share of the new company to Landex parent Saint Gobain, which itself had been recently nationalized by the French government. The move came as a shock to Rougier’s home base of Niort, as the formation of ROL contained virtually all of the company’s holdings in the area. With Saint Gobain as parent, ROL’s future appeared bright at the start of the 1980s. Yet, ROL floundered under Saint Gobain, and by the middle of the 1990s, much of ROL’s operations had ceased to exist. Meanwhile, Rougier, adopting its present name in 1983, entered into the 1980s with its operations trimmed down to little more than its profitable African activities.

During the 1980s, the slimmer Rougier recorded little of the rapid growth of its earlier decades. From revenues of FFr 455 million in the year following the ROL divestiture, the company’s sales would grow to more than FFr 650 million. The company posted modest profits during the decade, from 1983’s FFr 6.3 million to 1987’s FFr 7.2 million. At the end of the decade, Rougier attempted to re-ignite its growth, returning to acquisitions and to the light packaging industry of its youth. In 1989, the company acquired control of Plasti G, a Surgeres-based maker of plastic films and bags. This acquisition was followed by several other acquisitions, placing the company into both the wood-based and plastics packaging sectors. The addition of these new revenues helped boost the company’s revenues to FFr 785 million in 1990.

Rougier’s diversification moves, however, proved ill-timed. The economic recession of the early 1990s, which hit particularly hard in France and which would linger well into the middle of the decade in that country, caused Rougier’s French-based subsidiaries to struggle to remain profitable. The company’s total revenues slipped back to FFr 695 million in 1991, and profits slid from the previous year’s FFr 24 million to FFr 10 million. By 1993, the company’s packaging operations were losing money, and in that year the company started moves to return its focus once again to its core African-based logging and wood processing operations, now centered on Gabon and Cameroon.

On that front, at least, the company proved fortunate. In the 1990s, after years of intensive logging activity, many Far Eastern countries, including top producers Malaysia and Indonesia, put a brake on further deforestation. The result was a rise in lumber prices by more than a third, the first price increase Rougier saw in more than a decade. Meanwhile, worldwide lumber demand, stimulated in part by the rapid growth of the economies of much of the Asian world, remained high. At the same time, Rougier received another bonus, in the form of the devaluation by 50 percent of the franc CFA, the monetary unit used in the former French colonies. Rougier found itself in the enviable position of making payments in the devalued colonial currency, while making sales in the French franc. The company also stepped up its investments in new processing facilities in Gabon and Cameroon, moving to shift much of its industrial activity directly to its African subsidiaries. The result of these factors was a strong increase in the company’s revenues, which would reach FFr 958 million in 1995, and a net profit of FFr 30 million. The company’s strong performance also saw its stock price reach record highs, which induced the Rougier family to sell off part of its holdings, reducing its share of the company to approximately 56 percent. Nevertheless, Rougier remained firmly under the founding family’s control, and the company continued to enjoy the benefits of a revival in demand for African lumber and the company’s strong position in the growing African logging industry.