Helsinki, Finland, 24 September 2010 -- M-real Corporation, part of Metsäliitto Group, is planning to increase the annual folding boxboard capacity of Simpele mill by about 80,000 metric tons and expand the sheeting capacity.
The total value of the potential investments in Simpele, which are planned to be done during summer 2011, is approximately EUR 26 million. Following the investment, the total folding boxboard capacity of Simpele would be approximately 300,000 metric tons per annum. The production would mainly be sold to food packaging purposes.
"Demand outlook for folding boxboard is very good and through the innovative product and service development M-real's market shares have steadily increased. As the market leader M-real is planning to take this step to moderately increase the capacity to be able to serve customers even better. After the potential investment, Simpele machine is the biggest and most competitive folding boxboard machine in Europe," said CEO Mikko Helander.
To improve profitability, M-real is considering to transfer the Simpele speciality paper production to the Gohrsmühle mill in Germany and consequently to close the Simpele paper machine. The statutory cooperation negotiations related to the possible closure and the investment in board production will be commenced on 24 September 2010. The planned personnel reduction would affect a maximum of 80 people. The potential transfer of the production would improve M-real's operating result by approximately EUR 4 million per annum.
As a result of the planned Simpele paper machine closure, Consumer Packaging's fourth quarter 2010 result will as nonrecurring item include EUR 12 million write offs. Related nonrecurring cash costs, if any, will be determined once the negotiations with employees are completed latest by 05 November 2010. The planned closure would reduce European annual speciality paper overcapacity by about 50,000 metric tons.