SCA Strengthens U.K. Tissue Business
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To meet the growing demand for high quality tissue and strengthen the product offering in the U.K., SCA is investing in a through-air drying (TAD) machine at its tissue plant in Skelmersdale, U.K. SCA has also decided to close an older tissue machine in Stubbins and signed an agreement to divest its tissue plant in Chesterfield to Sidcot Group Ltd.
These measures are part of the SCA Tissue Roadmap and are aligned with the company's strategy to streamline production and secure capacity for future growth to increase value creation in the tissue business area. Both initiatives are subject to customary consultation with employee representatives.
Following the investment at the Skelmersdale tissue plant of approximately SEK 160 million, the production capacity of TAD mother reels will be 28,000 metric tpy.
The cost for closing the older tissue machine in Stubbins, with an annual production capacity of 20,000 metric tpy, is expected to amount to approximately SEK 120 million. The cost will be recognized as an item affecting comparability, mainly taken in the first quarter of 2017. Approximately SEK 70 million of these costs are expected to impact cash flow.
Sidcot Group Ltd. will pay a consideration of approximately GBP 3 million (approximately SEK 35 million) for the production facility in Chesterfield. The facility produces mother reels but has no converting capacity. SCA will have no internal need for the type of mother reels produced at the plant. The annual production capacity is 31,000 metric tons. An impairment loss of SEK 10 million will be recognized as an item affecting comparability in the fourth quarter of 2016. Closing of the transaction is expected in the first quarter of 2017.
