UPM to Permanently Reduce Graphic Paper Capacity in Germany by 610,000 Metric Tons
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UPM Communication Papers said that it plans to permanently close its Hürth newsprint mill and to shut down one fine paper machine at Nordland Papier (PM 3) in Dörpen — both assets are located in Germany. If realized, the measures would result in annual reductions of 330,000 metric tons of newsprint paper capacity and 280,000 metric tons of uncoated fine paper capacity in UPM's portfolio. These plans are a continuation of necessary steps to proactively align with customer demand and ensure competitiveness.
Should the plans be implemented, the number of positions affected is estimated approximately at 135 in Hürth and 210 in Dörpen. The participation process with the workers council will start immediately in line with local legislation.
Both paper machines affected by the planned measure would stop graphic paper production latest by the end of 2024. Production on the remaining paper machines at Nordland Papier will continue as before.
UPM explained that graphic paper demand has continued to decline, reflecting the overall trend in paper consumption driven by digitalization. The decline in demand accentuated in 2023 and a durable recovery is not expected, resulting in significant overcapacity in the market.
"In recent years, we have already responded to overcapacities in the global paper markets with selective capacity reductions, always considering the competitiveness of our business," said Antti Jääskeläinen, Executive Vice President, UPM Communication Papers. "The planned closures would ensure an efficient and flexible use of our remaining paper assets and will therefore enable UPM Communication Papers to stay a reliable partner to our customers in the long run.
"However, we are aware that today's announcement is very difficult news for our employees in Hürth and in Dörpen. We are committed to conducting a fair dialogue with employee representatives to seek responsible solutions for our workforce," Jääskeläinen said.
UPM noted that the plans announced today would strengthen the overall cost competitiveness of UPM Communication Papers and are a prerequisite for consistent, long-term paper operations. UPM would recognize restructuring charges of EUR 113 million (EUR 68 million cash impact and an impairment of EUR 45 million) as items affecting comparability in its Q2 2024 result.
The planned actions are estimated to result in annual fixed cost savings of EUR 45 million, UPM concluded.
