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2009-12-16 14:28:47 CET 2009-12-16 14:31:57 CET REGULATED INFORMATION M-real - Company AnnouncementM-real plans new internal profit improvement measuresM-real Corporation Stock Exchange Release on 16 December 2009 at 15.25 M-real plans new internal profit improvement measures M-real Corporation, part of Metsäliitto Group, is planning new internal profit improvement measures of which the main ones are the following: - Plan to permanently shut down the Alizay pulp mill - EUR 22 million investment at Husum mill to improve its energy efficiency - New EUR 20 million internal profit improvement programme covering all M-real's business areas Additionally, M-real announced on 9 December 2009 a release regarding planned measures in M-real Zanders speciality paper mills in Germany. “These measures would form a major step in the re-engineering of our paper businesses addressing the most significant internal efficiency problem areas we have. Our profitability would clearly improve after the contemplated implementation of these measures. In addition to our internal improvements, the strategic review of our paper business continues with an aim to further support our profitability as well as to improve the business environment of European paper industry,” says Mikko Helander, CEO of M-real. Alizay's integrated site includes a pulp mill, an uncoated fine paper machine and three paper converting lines. Alizay's pulp mill has for a long time been unprofitable and the pulp quality is not fully in line with market requirements. Additionally, major investments would be needed during the coming years to fulfil environmental requirements. The pulp mill has been temporarily shut down since March 2009. The production of recycled fibre based office papers has increased since late 2008 and it currently corresponds to approximately half of the total paper production in Alizay. The need for chemical pulp in the paper production has thus clearly decreased. In the future M-real aims at increasing the volumes of recycled fibre based products in Alizay. Negotiations with employees on the possible closure of Alizay's pulp mill will commence without delay. Pulp mill will continue to be shut down during the negotiation process. Due to the possible pulp mill closure Office Papers 4Q 2009 result will include EUR 31 million write offs as a non-recurring item. Related possible non-recurring cash costs will be determined once the negotiations are completed, by the end of July 2010 at the latest. Husum energy efficiency investment, including a new turbine, is expected to total EUR 22 million. The planned measures are expected to improve the electricity self-sufficiency of the Husum site from 30 per cent to 50 per cent. The investment is expected to be completed by the end of 2010. Additionally, a new M-real level EUR 20 million internal profit improvement programme is being launched for 2010. The measures based on continuous improvement principle are evenly split between the business areas and include both variable and fixed cost savings. The planned measures, together with the earlier announced plans for machine closures and cost savings in M-real Zanders, are expected to improve M-real's annual operating result by EUR 80 million with full effect from 2011 onwards. The result improvement of the new planned measures in 2010 numbers is expected to be EUR 40 million. The result in 2010 is expected to improve in total by approximately EUR 100 million including the impacts of the new planned measures as well as the previous years' profit improvement programmes. M-real will arrange a conference call for analysts today at 16.30 Finnish time. Participating in the call will be CEO Mikko Helander and CFO Matti Mörsky. From Europe please dial +44 (0)20 7162 0125 (from US +1 334 323 6203). The live webcast can be accessed at http://qsb.webcast.fi/mreal/ For further information, please contact: Matti Mörsky, CFO, tel. +358 10 465 4913 Juha Laine, Vice President, Investor Relations and Communications, tel. +358 10 465 4335 [HUG#1362718] |
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