Weak US Dollar and Low US Prices Make Canadian Production Unprofitable
HELSINKI, June 5 /CNW/ - UPM (NYSE: UPM) will close its Miramichi mill
operations in August for up to one year. The paper mill is scheduled to close
late in August for 9 to 12 months. The nearby groundwood mill will also shut
down. About 600 employees will be impacted. The shutdown has a slightly
positive impact on UPM's operative result.
The Miramichi mill has two machines, producing lightweight coated paper,
with an annual capacity of 450,000 tonnes. Despite best efforts, Miramichi has
not been able to turn its exports to the U.S. profitable. The mill is
suffering from unprecedented strength of the Canadian dollar. Also, market
prices for the coated magazine paper have been decreasing in North America.
Demand for magazine grades in North America has been stable, but globally,
there continues to be overcapacity in magazine paper, suppressing the sales
In Europe, UPM has permanently ceased production of 530,000 tonnes of
coated magazine paper during 2006-2007 to reduce the structural overcapacity
and improve profitability of the business. The Voikkaa mill in Finland was
permanently closed and a production line in Jamsankoski, Finland, was
converted to another business area. UPM also closed 150,000 tonnes of coated
fine paper capacity at its Kymi mill, Finland last year.
"UPM's target is to improve the long-term profitability of the coated
paper business. With today's decision, UPM leaves all options open for
Miramichi. We will continue to explore solutions for Miramichi during the
shutdown but realize that there needs to be material changes in the business
environment for the mill to start up again," said Jyrki Ovaska, President of
UPM's Magazine Paper Division.
"The Miramichi management and employees have succeeded in steadily
improving the efficiency of the mill," said Mr. Ovaska. "Unfortunately, their
efforts could not overcome the challenges in the business environment."
Mr. Ovaska said UPM's North American magazine paper customers will
continue to be served by the company's other coated groundwood paper mills in
North America and Europe during the Miramichi shutdown. A decision on
restarting Miramichi will be made in 2008, based on market conditions.
Previous press releases and additional material related to UPM Miramichi
mill are available on www.upm-kymmene.com =(greater than) Media Relations
=(greater than) Press Kits =(greater than) UPM Miramichi
Executive Vice President, Corporate Communications
New York Stock Exchange
For further information:
For further information: Sharon Pond, Communications Manager, UPM, North
America, tel.: (630) 386-2681; Jyrki Ovaska, President, Magazine Papers
Division, UPM, tel.: +358-204-15-0564