The Finland-headquartered group announced the closure plans this morning (25 July).
Plattling is located in Bavaria and is part of the UPM Communications Papers business.
It runs two paper machines and closing the mill would result in a permanent reduction of 380,000tpa of uncoated publication paper, and 215,000tpa of coated publication paper.
The mill employs around 400. If the closure plan goes ahead, it will stop making paper by the end of this year.
UPM cited a 15-year declining trend in demand for graphic papers, with the decline “accentuated significantly over the course of this year”.
It also pointed to energy supply issues, and stated: “The uncertainty about reliability and cost competitiveness of the energy supply in Germany is currently a big challenge.”
UPM has seven mills in Germany and Austria with the others located at Nordland Papier, Hürth, Augsburg, Ettringen and Schongau, where it recently shut a paper machine.
It also closed down PM4 at its Steyrermühl mill in Austria.
UPM Communication Papers executive vice president Massimo Reynaud commented: “Mature graphic paper markets require continuous and relentless efforts to ensure cost competitive operations that also meet the future customer demand.
“UPM is committed to leading our business in a responsible manner. We respect the interests of both our workforce and our customers and consider them a central part of our plans. We recognise that today's announcement is very difficult news for our employees in Plattling. Together with the employee representatives, we will seek responsible solutions for our personnel and enter directly into a fair dialogue.”
The Plattling closure would involve restructuring charges of €122m (£105m) and a €100m impairment related to the leased combined heat and power plant. UPM said the annual fixed cost savings would be €60m.
The group also said that UPM Communication Papers planned to continue with temporary layoffs in Finland. The possible temporary layoffs could take place in several periods and would last a maximum of 90 days.
The total number of employees involved is around 1,100.
In its interim results the group posted sales up 5% at €5.35bn, but EBIT was down 29% at €470m.
UPM said that Q2 delivery volumes had been impacted by destocking “in various product value chains” which CEO Jussi Pesonen described as “extraordinary”, while global commodity prices for pulp and energy prices “fell from historic highs to cyclical bottom levels in six months”.
Regarding the outlook for the full year, UPM said that EBIT was likely to be down on 2022, but deliveries are expected to recover and will also benefit from the ramp-up of its new Paso de los Toros pulp mill in Uruguay and the OL3 nuclear power plant in Finland.
UPM’s share price rose by 3.17% on the news, to €29.64, but is down 17.13% this year (52-week high: €37.14, low: €26.62).
