The business said in a statement released yesterday (10 October) that Sappi Europe has continued to be faced with significant overcapacity in graphic paper that has forced it to take “extended periods of costly commercial downtime”.
It said the global economic downturn was proving to be “much tougher than anticipated” with depressed markets, geopolitical instability, and weak economic growth combining to put significant pressure on Sappi, particularly in Europe.
Steve Binnie, CEO of Sappi, said: “Sappi continues to position itself for growth and increased profitability in line with our group Thrive25 strategic focus. This includes reducing exposure to the graphic paper segment while expanding Sappi’s presence in packaging, speciality papers, pulp, and biomaterials.
“Recent investments across our South African, American, and European operating businesses demonstrate this priority. We will therefore continue to review the viability of all our operations and make changes when necessary.”
Marco Eikelenboom, CEO of Sappi Europe, added: “As the recent over-stocking by customers reduces it has become very clear that demand will not return to previous levels.
“Combined with input cost pressure, we do not see this situation, caused by factors beyond our control improving in the foreseeable future.
“We have therefore decided to inform both the mill management and the Works Council that we are today starting the consultation process on the potential closure of the Lanaken Mill. In parallel we are reviewing how best to reduce overall fixed and other overhead costs.”
Lanaken is an integrated pulp and paper mill that currently employs 644 workers and has a production capacity of 165,000tpa of pulp which is used to produce 530,000tpa of coated woodfree paper, mainly sold into the European print market.
Meanwhile, following its July decision to start a consultation process on the possible closure of its Stockstadt Mill – after a planned sale of the site fell through earlier this year, Sappi said it has now completed this process and agreed on the social plan for the employees, while an agreement has been signed for the sale of the site.
The closure of the site should be completed during the first calendar quarter of 2024 and once all closure elements are taken into account, the impact is expected to be cash neutral, Sappi added.
“Sappi Europe is focused on building a sustainably resilient company. This requires evaluating the future of all facets of the business based on market dynamics and the market segments Sappi believe will be strongest in the future,” the business stated.
“While continuing to serve the graphic paper market through its competitive assets, the overall priority of the European business will be to grow the packaging and speciality papers segment specifically within flexible packaging, functional papers, self-adhesives including glassine, labels as well as dye-sublimation categories.
“Restructuring measures result in a better utilisation of Sappi’s remaining assets to the benefit of customers.”
Stockstadt is an integrated pulp and paper mill with a production capacity of 145,000tpa of pulp (for internal use) and 220,000tpa of coated and uncoated woodfree paper, mainly sold into the European print market.
