M-real to Reduce Annual Coated Paper Capacity by 145,000 Tonnes

M-real's restructuring measures will reduce the company's annual coated paper capacity by 145,000 tonnes.

Nov. 2, 2011 - M-real today announced plans to restructure its coated paper business in order to improve its annual operating results by about EUR 20 million.

In a written statement, M-real said paper production at the Husum mill in Sweden is planned to be reorganized. The annual coated paper capacity on the mill will be increased from 285,000 tonnes to approximately 340,000 tonnes without material investments. The reel production of Aanekoski paper machine is planned to be transferred to Husum.

Aanekoski millís coated fine paper machine is planned to be closed and the sheeting capacity converted fully to folding boxboard sheeting. Statutory negotiations related to the possible closure of the paper production and the development of sheeting capacity covering the whole of Aanekoski paper and board millsí personnel of approximately 370 people will be commenced on 9 November 2011. Amount of personnel at the Aanekoski mills is expected to reduce by 180 at the maximum.

Currently there is one machine at Aanekoski paper mill with an annual capacity of approximately 200,000 tonnes of coated fine paper. After the planned closure of paper production, the paper and board sheeting operations at the site are planned to be combined. This would increase the folding boxboard sheeting capacity and improve M-realís profitability.

M-realís coated papers will also in the future be sold by Sappi Fine Paper Europe. Based on the planned measures M-realís annual coated paper capacity would reduce by approximately 145,000 tonnes. M-realís annual sales would reduce by approximately EUR 60 million and operating result would increase by approximately EUR 20 million based on the actual performance of the coated paper production in the first half of 2011. The full annual financial impact of the planned measures is expected to be seen from 2012 onwards.

ďProfitability of coated paper production is very weak due to the worsened market situation and the structural overcapacity in Europe. The situation is not expected to materially improve in the future either, due to which we are planning to reduce our coated paper production and to focus it to our most efficient unit in Husum where M-real has one of the most modern and efficient coated paper production lines in Europe. Husum is one of Europeís largest paper and pulp integrated sites which productivity has been increased to a very good level thanks to successful improvement measures.Ē says M-realís CEO Mikko Helander.

Consumer Packagingís 4Q/2011 operating result is expected to include approximately EUR 25 million non-recurring impairments and cost provisions related to the planned measures in ńšnekoski. Total net cash impact of the planned measures is expected to slightly positive taken into consideration also the reduction of working capital.

SOURCE: M-real