Packaging
Permanent closure of 130,000 tonnes of capacity
Friday 28. March 2008 - Market-related downtime of up to 80,000 tonnes
Smurfit Kappa Group plc (SKG or the Group), one of the worlds largest integrated manufacturers of paper-based packaging products with operations in Europe and Latin America, today announced further recycled containerboard capacity rationalisation as part of its capacity management programme.
SKG plans to permanently close 130,000 tonnes of less efficient containerboard capacity. It will also reduce 2008 production by up to 80,000 tonnes through market-related downtime.
SKG intends to permanently close its Valladolid recycled containerboard mill in Northern Spain in the second quarter of 2008. The Valladolid mill has an annual capacity of 130,000 tonnes. The closure will have the effect of reducing recycled capacity by 70,000 tonnes in 2008. The objective is to reduce operating costs and to maximize the continuing efficiency of our mill system.
In addition, SKG will take up to 80,000 tonnes of market-related downtime (the majority of which will be taken during March/April 2008) to optimise the Groups supply-demand balance and to address an increase in inventory levels of recycled containerboard.
SKG will continue to review its production capacity, the cost profile of its mills relative to integration requirements, broader market demand and industry inventory levels.
The cash cost of these actions is expected to be mitigated through exceptional gains in 2008. Further details of both the cash costs and impairment charges will be provided in SKGs 2008 first quarter results scheduled for release on 9 May, 2008.