At the end of this year, Papierfabrik Utzenstorf, Switzerland, will cease newsprint production, which will take 200,000 metric tpy of capacities off of the market. The company's recycling activities will be taken over from Perlen Papier. 

The company said the decision is in response to a massive decline in earnings, according to an article published this week by Euwid Pulp & Paper. Along with a shrinking market, margins have come under pressure due to the weakness of the euro and rising raw material costs, the company explained. 

Simultaneously, Papierfabrik Utzenstorf signed an agreement with Perlen Papier, a subsidiary of the CPH group, that will see Perlen take over the firm's distribution contracts, customer relationships, and warehouse, as well as its recovered paper procurement contracts and sorting facility for recovered paper as of Jan. 1, 2018. The two parties agreed not to reveal the transaction costs. 

With the revenues from the sale, Papierfabrik Utzenstorf, which currently has around 220 employees, wants to implement a social plan and meet its financial obligations from the operating business. The company, which generates sales of around CHF 100 million, had been loss-making lately. The removal of 200,000 metric tpy of newsprint from the market will be comprised of 30% improved grades and 70% standard grades. 

Perlen will continue operations at the recovered paper sorting plant in Utzenstorf, which processes 30,000 metric tpy of recovered paper and board. Perlen will take over the equipment and a small number of employees (currently said to be seven) and will rent the facility. The recovered paper sorting contracts cover around 260,000 metric tpy.