UPM announces capacity cuts

Paper manufacturer UPM, headquartered in Helsinki, Finland, has announced plans to slash its capacity in the publication paper market by an additional 800,000 metric tons by closing paper machines in France, Finland and the United Kingdom. The capacity closures are expected to be completed by the end of the first quarter in 2015.

The closures include newsprint machines in France and the United Kingdom. Combined, the closure of the two newsprint machines will remove about 345,000 metric tons of newsprint from the market.

The company also will be close a supercalendered paper machine at its Jämsä River Mills in Finland, and a coated mechanical paper machine at its Kaukas mill in Finland. Combined, those cuts will total 460,000 metric tons of magazine paper, including 235,000 metric tons of supercalendered paper and 225,000 metric tons of coated mechanical paper.

All four mills will continue paper production on the remaining paper machines at those sites.
The company says it also will centralize UPM Paper ENA supply chain planning and order fulfillment activities at its facility in Germany.

While noting that the company has been able to return to profitability, in deciding to close the plants the company says the current operating rates are unacceptably low and the economic environment does not look promising for markets in 2015.

The company says it hopes the cuts, along with other moves by the company, will boost profits by around €150 million ($188 million) by the end of 2015.

Jussi Pesonen, president and CEO of UPM, says, “We plan to adapt our production to meet the profitable customer demand. We also ensure savings without endangering customer deliveries in the structurally declining market.”