UPM Shotton sale agreed
Monday, May 17, 2021
UPM has agreed to sell its Shotton newsprint mill in North Wales to a subsidiary of Turkish conglomerate Eren Holdings.
UPM announced last summer that it planned to sell Shotton, with the proviso that its paper machine would be converted to non-newsprint grades.
The deal is expected to be finalised in Q3. It involves the mill site and all its related assets, including its Renewable Energy Generation plant and MRRF (Material Recovery & Recycling Facility).
All 190 employees will transfer to the new owners.
Eren Paper is acquiring the operation. It is a UK subsidiary of Modern Karton Sanayi Ve Ticarate, which lays claim to being the biggest paper producer in Turkey manufacturing a range of corrugated packaging materials.
UPM said the negotiations had been “transparent and fair throughout”, and the two companies have agreed to cooperate on the transition process.
Winfried Schaur, executive vice president of UPM Communication Papers, said: “We are very pleased with this agreement. It will provide a long-term future for the employees at our Shotton paper mill and a continued use of the site infrastructure.
“It will help UPM to further consolidate its newsprint production capacity while leveraging the value of the site and its assets. This sale will also support Eren in expanding its business in the UK market.”
The disposal means UPM will reduce its annual newsprint capacity by 250,000 tonnes, and fixed costs by €30m (£25.9m).
It is expected that Shotton will stop newsprint production on 30 September, with Eren Paper taking over on 1 October.
Eren Paper has not yet commented on its plans for converting the mill.
UPM said the Flintshire site’s energy plant and MRRF would continue operations throughout the conversion process.
The Finland-headquartered pulp, paper and biomaterials giant said that it planned to continue serving its UK newsprint customers from its other facilities. UPM will also continue to source recovered paper in the UK.
UPM Communication Papers has 13 other mills in Europe and North America, with its remaining UK facility UPM Caledonian in Irvine, which makes LWC magazine papers.
In the group’s Q1 results, UPM president and CEO Jussi Pesonen said that UPM Communication Papers “achieved satisfactory results in the difficult market environment”.
Group sales slipped by 2% to €2.23bn, while EBIT was €279m, on a part with Q1 2020 and higher than the three preceding quarters.
“We took timely action last year, and now that the world economy is recovering, there is a good momentum going forward,” Pesonen stated.
He said the year had begun with good demand for almost all of the group’s products. “Pulp prices increased rapidly, while UPM Raflatac, UPM Specialty Papers and UPM Energy continued to perform strongly.”
Eren Paper sells products produced by Modern Karton into the UK, and posted sales up 77% to £18.1m in its most recent accounts, for 2018. The firm’s 2019 accounts are currently flagged as overdue at Companies House.