UPM reduces paper capacity

UPM reduces paper capacity

Finland-based company plans to sell newsprint mill, shut down paper machine to remain competitive in Europe.

September 12, 2019

UPM, Helsinki, Finland, has announced plans to sell its newsprint mill in Grand-Couronne, France, and permanently close a supercalendered (SC) paper machine in Rauma, Finland. UPM says the changes will reduce 265,000 metric tons of SC capacity and 240,000 metric tons of newsprint capacity from the company’s production total.

In a news release announcing the reductions, UPM says the paper machine and the newsprint mill are the least cost competitive UPM assets in their respective product segments. The measures will help “support the long-term performance of the business.”

The closure of the paper machine at the company’s Rauma paper mill is planned to be completed by the end of 2019. The company says production of the remaining two paper machines at the site will continue.

In addition, UPM says it will open a bidding process to sell its newsprint mill. The company says if no credible offer is received by early next year, a consultation process for a potential closure of the mill would be started while the search for a potential buyer would continue. The company is seeking to complete the process by the end of the second quarter of 2020.

“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,” says Winfried Schaur, executive vice president of UPM Communication Papers. “The plans announced today are 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.”

At the same time, UPM plans to establish a new Business Services Hub, Wroclaw, Poland, bringing together various customer and supplier-facing services and related finance services. UPM Finance & Control, UPM Communication Papers and UPM Raflatac will be the first users of the hub, which is planned to be in full operation by the end of the third quarter of 2020.