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May 29, 2020

Graphic Packaging to close Michigan paperboard mill

Graphic Packaging Holding Co., an Atlanta-based provider of packaging solutions, has announced plans to close its coated recycled board (CRB) mill in White Pigeon, Michigan.

According to a news release from Graphic Packaging on its first-quarter 2020 earnings, the White Pigeon mill consumed about 70,000 tons of CRB (or paperboard) per year. Graphic Packaging had acquired the White Pigeon mill in July 2019, along with two Artistic Carton plants in Indiana and Illinois.

Graphic Packaging says it plans to close the White Pigeon mill June 30 “due to the operational strength of the company’s overall CRB mill network and a CRB supply agreement” with Delaware, Ohio-based Greif Inc. Graphic Packaging acquired seven folding carton plants from Greif in March for $85 million, which included establishing a long-term supply agreement with Greif for 90,000 tons per year of CRB from Greif’s three mills.

However, in September 2019, Graphic Packaging also announced plans to invest $600 million in a new CRB machine at its mill in Kalamazoo, Michigan, that is expected to have an annual capacity of about 500,000 tons. That machine is expected to ramp up in 2022.

Graphic Packaging also has announced that it is closing its PM1 containerboard machine in West Monroe, Louisiana, June 30, reflecting the company’s long-term confidence in the strength of its coated unbleached kraft (CUK) global beverage packaging platform. The company says it also is delaying its planned maintenance outage at the West Monroe mill from the second quarter of 2020 to the third quarter of 2020 because of increased near-term demand for CUK and contractor work-related implications associated with the COVID-19 crisis.

Graphic Packaging has reported a net loss for the first quarter of 2020. Its net income for the first quarter was $12.7 million compared with $57.9 million in the prior-year period. According to the company, the loss includes the previously announced net $89.7 million noncash charge related to the settlement of a U.S. pension plan.

In the first quarter, the company’s net sales increased 6.2 percent to $1,599.1 million compared with $1,505.9 million in the first quarter of 2019. According to Graphic Packaging, the increase was driven by $14.1 million of higher pricing and $89 million of improved volume and mix related to acquisitions and conversions to its paperboard packaging solutions. However, the company reports these benefits were partially offset by $9.9 million of “unfavorable foreign exchange.”

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of this year were $294.8 million compared with $259.7 million in the first quarter of 2019. According to Graphic Packaging, the increase in adjusted EBITDA was driven by the company’s positive net organic volume growth of 5 percent and solid productivity.