UPM to close down paper machine, sell newsprint mill

The Finnish forest industry company UPM has planned to permanently close a SC paper machine in Rauma, Finland and sell its Chapelle newsprint mill in Grand-Couronne, France, said a press release.

About 179 employees of the organisations will lose job following the closure and sale.

If the planning is implemented, it will reduce the production of 265,000 tonnes of SC capacity and 240,000 tonnes of newsprint capacity in UPM’s portfolio.

The closure of PM 2 at UPM Rauma is planned to be completed by end of 2019. The consultation processes started on Tuesday.

As for UPM Chapelle, the company will open a bidding process for the sale of the mill. The sales process would not impact the deliveries to the customers.

In case no credible offer is received by mid-January 2020, a consultation process for a potential closure of the mill would be started while the search for a potential buyer would still continue. The target is to close the processes by the end of Q2 2020. Currently 236 people are employed by the Chapelle mill.

“The graphic paper demand in Europe has declined structurally for more than 10 years. This year the decline has been accentuated by the adverse economic development. The plans announced today are therefore a necessary step to ensure profitable paper production on the remaining, competitive uncoated publication paper assets. They are supporting our commitment to remaining a high-performing and reliable partner for our customers in the graphic paper industry also in the long run,” said UPM Communication Papers Executive Vice President Winfried Schaur.

“The planned steps announced today will lead to a healthier capacity utilisation and help improve our overall cost structure and competitiveness. We are aware that these plans will have an impact on our committed employees, and we aim at respecting their interests in a socially responsible manner. Naturally, we will honour our commitments to our customers throughout the process,” said UPM Communication Papers News and Retail Business Senior Vice President Anu Ahola.

At the same time UPM plans to establish a new business services hub located in Wroclaw, Poland, bringing together various customer and supplier facing services and related finance services. In total 168 positions in 11 different locations would be affected. UPM Finance and Control, UPM Communication Papers and UPM Raflatac plan are to be the first users of the new business services hub. The hub is planned to be in full operation by the end of Q3 2020.

UPM will realise restructuring charges of approximately EUR 33 million (EUR 19 million cash impact and EUR 14 million as write-offs) as items affecting comparability in its Q3 2019 results, mainly related to the planned closure of Rauma PM2. The planned actions would result in annual savings of approximately EUR 20 million.