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M-real Plans to Restructure Coated Paper Business

Metsa, Finland, 02 November 2011 -- M-real Corporation, part of Metsäliitto Group, plans to restructure its coated paper business to achieve an approximately EUR 20 million improvement in annual operating result.

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 metric tons to approximately 340,000 metric tons without material investments. The reel production of Äänekoski paper machine is planned to be transferred to Husum.

Äänekoski mill’s 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 Äänekoski paper and board mills’ personnel of approximately 370 people will be commenced on 09 November 2011. The number of personnel at the Äänekoski mill is expected to be reduced by 180 at the maximum.

The one machine at the Äänekoski paper mill has an annual capacity of approximately 200,000 metric tons 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-real’s profitability.

M-real’s coated papers also will be sold by Sappi Fine Paper Europe. Based on the planned measures, M-real’s annual coated paper capacity would reduce by approximately 145,000 metric tons. M-real’s annual sales would be reduced 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.

“Profitability 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 Europe’s largest paper and pulp integrated sites, which productivity has been increased to a very good level thanks to successful improvement measures.” said Mikko Helander, M-real’s CEO.

Consumer Packaging’s fourth quarter 2011 operating result is expected to include approximately EUR 25 million nonrecurring impairments and cost provisions related to the planned measures in Äänekoski. Total net cash impact of the planned measures is expected to be slightly positive, considering also the reduction of working capital.


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