M-real Corporation, part of Metsäliitto Group, is planning to increase the annual folding boxboard capacity of Simpele mill by about 80 000 tonnes. At the same time the sheeting capacity is planned to be expanded. The total value of the potential investments in Simpele, which are planned to be done during summer 2011, is approximately EUR 26 million. Following the investment the total folding boxboard capacity of Simpele would be approximately 300 000 tonnes per annum. The production would mainly be sold to food packaging purposes.

“Demand outlook for folding boxboard is very good and through the innovative product and service development M-real's market shares have steadily increased. As the market leader M-real is planning to take this step to moderately increase the capacity to be able to serve customers even better. After the potential investment Simpele machine is the biggest and most competitive folding boxboard machine in Europe,” says CEO Mikko Helander.

To improve profitability M-real is considering to transfer the Simpele speciality paper production to Gohrsmühle mill in Germany and consequently to close the Simpele paper machine. The statutory cooperation negotiations related to the possible closure and the investment in board production will be commenced on 24 September 2010. The planned personnel reduction is maximum 80 people. The potential transfer of the production would improve M-real's operating result by approximately EUR 4 million per annum. As a result of the planned Simpele paper machine closure Consumer Packaging's 4Q 2010 result will as non-recurring item include EUR 12 million write offs. Related non-recurring cash costs, if any, will be determined once the negotiations with employees are completed latest by 5 November 2010. The planned closure would reduce European annual speciality paper overcapacity by about 50 000 tonnes.

“M-real is a leading European speciality paper producer. M-real is further focusing its speciality paper business to packaging related grades. The planned transfer of Simpele speciality paper production would strengthen the competitiveness of Gohrsmühle mill and improve M-real's profitability. M-real is planning to increase the share of speciality grades in Gohrsmühle further,” concludes CEO Helander.
 
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