UPM Paper ENA to Cut Down 305,000 tonnes of Graphic Paper Capacity in Europe

The slackening SC paper demand and adverse market conditions are the reasons behind the permaner closure of some machines

November 3, 2016

UPM Steyrermühl, Austria. The closure plan at mills in Austria and Germany would result in annual cost savings of about EUR 30 Million.

UPM is planning to permanently reduce its graphic paper capacity in Europe by 305,000 tonnes. The capacity reductions are planned to take place in Austria and Germany. UPM plans to permanently close two paper machines, i.e. SC paper machine 3 at UPM Steyrermühl, Austria and SC paper machine 2 at UPM Augsburg, Germany.

Number of persons affected by the plan is estimated 150 for UPM Augsburg and 125 for UPM Steyrermühl. The employee consultation processes will start in the course of November in line with the local legislation. The machines are planned to be closed after the consultation processes have been finalized.

The plan would result in annual cost savings of about EUR 30 Million. UPM would book charges of approximately EUR 75 Million as an item affecting comparability in Q4 2016. Of the total, approximately EUR 45 Million would be cash costs. According to the plan both mills would continue paper production on the remaining cost-competitive paper machines at the mill sites.

The demand for SC papers, in line with other graphic papers, has been declining during the last years and the decline is expected to continue. Amidst the adverse market conditions, the planned closures would ensure an efficient use of remaining five SC paper machines. Earlier this year UPM sold its Schwedt mill. The annual production of 282,000 tonnes of newsprint will be ceased in the end of Q3 2017. The new owner will convert the mill into liner production.