Helsinki, Finland 17 January 2013 -- The continuing challenges in European economy have significantly impacted the consumption of  paper, exacerbating the effect of structural changes in paper end-uses and resulting in further decline in the demand of graphic papers in Europe. High costs and significant overcapacity continue to challenge the industry operators in Europe.

UPM is planning to permanently reduce paper capacity in Europe  by a further 580,000 tonnes. The capacity reductions are planned to take place in Finland, Germany and France. The business environment also makes evident the need for streamlining of the Paper Business Group and UPM’s global functions to remain cost competitive in the new business scale.

In early January, UPM finalized the employee consultation process in UPM Stracel, France, implying reduction of 270,000 tonnes of coated magazine paper capacity. With UPM Stracel and today’s plans, UPM would reduce a total of approximately 850,000 tonnes of graphic paper capacity in 2013.

 UPM plans: 

• - a permanent closure of paper machine 3 at UPM Rauma mill in Finland, 
• - a permanent closure of paper machine 4 at UPM Ettringen in Germany, 
• - a sale or other exit of UPM Docelles mill in France, and
• - subject to further analysis, streamlining in the Paper Business and UPM’s global functions.

If all plans will be implemented, UPM’s personnel would be reduced by approximately 860 persons. The plans would affect several countries.

According to the plan the Rauma and Ettringen machine lines would be permanently closed by the end of first half of 2013. Both machines are producing uncoated magazine paper, in total 420,000 tonnes annually.

The employee information and consultation processes will start in line with the local legislation.  In case of Ettringen and Rauma the process will start immediately.

The process for selling the UPM Docelles mill will start immediately. The process will be given maximum six months. Docelles is producing uncoated woodfree papers, 160,000 tonnes annually.

As for Paper Business Group and global functions streamlining, the process will start after further analysis as of the beginning of February 2013.

Including UPM Stracel, the plans are estimated to result in annual fixed cost savings of EUR 90 million, and one-time cash costs of EUR 100 million.  

 “The target of the planned actions is to ensure the efficient use of UPM’s remaining capacity. The paper machines targeted for closure are either at the end of their technical age, have limited product flexibility or poor profitability. The situation is very regrettable for the personnel, however, in the overcapacity situation, we need to adjust our capacity to the level of profitable customer demand,” says Jyrki Ovaska, President of the UPM Paper Business Group.

“Healthy cash flow is critical for UPM and its employees. Therefore UPM must take action to secure it. Under these circumstances only the most efficient and the most flexible production lines and organizations are competitive,” says Ovaska.

UPM will publish its Financial Statement 2012 on January 31, 2013 with analyst conference call as well as Finnish press conference on the same day.

UPM Rauma and PM 3

UPM Rauma paper mill manufacturers LWC and SC papers with annual capacity of  1,210,000 tonnes. PM 3’s annual production capacity is 245,000 tonnes of SC paper and it employs 90 persons. Located in Western Finland the mill employs 710 people. The mill was founded in 1969.

UPM Ettringen and PM 4

UPM Ettringen paper mill manufactures uncoated magazine papers. Its two production lines have a combined annual capacity of 460,000 tonnes. PM 4 has a capacity of 175,000 tonnes of SC papers annually and it employs 155 persons. Located in Bavaria, south Germany, the mill employs 391 people. The mill was founded in 1897. 

UPM Docelles

UPM Docelles paper mill manufactures woodfree uncoated fine paper with the annual capacity of 160,000 tonnes. Located in Eastern France the mill employs 165 people. The mill was founded in 1478.

UPM Stracel

UPM Stracel paper mill manufactured coated magazine papers until 4 January 2013. Its annual capacity was 270,000 tonnes. Located in Eastern France the mill employed 250 people. The mill was founded in 1936.

UPM Paper has 22 modern and sustainable paper mills in Finland, Germany, the United Kingdom, France, Austria, China and the United States. Many of them are large recycling centres and bioenergy producers, as well as paper manufacturers. UPM Paper employs almost 13,000 people. In 2011, the business group’s net sales amounted to EUR 7.2 billion. To learn more, visit: www.upmpaper.com

UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Our products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 23,000 people and it has production plants in 17 countries. UPM's annual sales exceed EUR 10 billion. UPM's shares are listed on the Helsinki stock exchange. UPM – The Biofore Company – www.upm.com