Metsä Board Invests in Boxboard Machine at Husum Mill in Sweden, Seeks to Divest Struggling Paper Business

 

Metsä Board Corp., part of Metsä Group, Helsinki, Finland, announced in a company release yesterday it would be investing EUR 170 million in a new folding boxboard machine at its Husum mill in Sweden. The production capacity of the new machine is approximately 400,000 metric tpy. It is planned to start up in early 2016. Full production capacity is expected to be reached by the end of 2016.

 

Husum mill’s paper production is planned to be discontinued mostly at the end of 2015 and fully by the end of 2017. 

Metsä Board is working to eliminate losses at its Gohrsmühle mill in Germany. The primary target is to divest the mill during the first half of 2015. If the divestment does not materialize in the set time frame, the group will introduce other measures to eliminate the unit’s heavy losses. Gohrsmühle mill has 480 employees and its main products are cast coated and label papers. The mill’s annual sales amount to approximately EUR 85 million. The annual operating loss is currently EUR 20 million based on 1–3Q 2014 performance.

 

 

 

Metsä Board will renew its management and reporting structure to support successful implementation of the new growth and restructuring actions and to strengthen its position as a leading paperboard company.

 

"These final steps of our transformation to a paperboard company allow us to grow significantly our core business and exit the weak paper production. Our profitability will be raised to a new improved level without compromising the solid balance sheet," commented CEO Mika Joukio.

Metsä Board announced its new strategy is to grow profitably through its fresh forest fibre paperboard business and continually reduce its exposure in the declining paper businesses.As the company leaves the paper business, it expects total paperboard capacity will increase from 1.4 million to over 2 million annual metric tpy by 2018.

 

"We have experienced good growth in our folding boxboard and linerboard businesses in recent years. Demand for our sustainable, safe and cost-competitive folding boxboards has recently increased especially in North America. In order to continue profitable growth, we must increase folding boxboard production capacity. After extensive planning work, we have decided to invest in the new folding boxboard machine at Husum, which is our biggest mill integrate including a large two line pulp mill, state of art coating technology, an efficient power plant, and own harbor. This is a very cost-competitive alternative to increase our capacity," continued Joukio.

 

Metsä Board started to produce uncoated fully bleached fresh forest fibre linerboards at Husum mill in 2013 and expanded to coated grades in 2014. At the moment, the linerboard sales volume run rate is over 100,000 metric tpy. Husum’s annual linerboard production is planned to be increased to nearly 300,000 metric tpy by 2018.

 

Metsä Board plans to discontinue standard paper production at Husum mostly by the end of 2015. Total paper capacity planned to be ceased is approximately 600,000 metric tpy. Personnel impacts will be clarified in statutory negotiations that commence immediately.

 

After the investment and the planned paper capacity closures, there will be two paperboard machines at Husum mill:

• Board Machine 1 with annual folding boxboard production capacity of about 400,000 metric tpy.
• Board Machine 2 (current Paper Machine 8) with annual linerboard capacity of about 300,000 metric tpy. Uncoated fine paper business reel production will be continued in the Board Machine 2 until the linerboard sales volumes have been grown to the full capacity of the machine.