Sequana to shutdown Three Arjowiggins Plants in Europe, Latin America
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Sequana, France, reports that as part of its strategic plan announced this past July along with a EUR 150 million capital increase, Arjowiggins has presented plans to close the Dalum Papir A/S plant in Denmark (graphic papers), the Ivybridge plant in the U.K. (papers used for security documents, creative papers), and the Witcel plant in Argentina (creative papers). The group's strategic production model is designed to bring capacity into line with demand and reduce its cost structure, and to pursue development in emerging economies and growth markets on the distribution side of the business.
Sequana is a major player in the paper industry with two businesses:
- Antalis, a European leader in the distribution of paper and packaging products, present in 44 countries, with more than 6,000 employees
- Arjowiggins, a world leader in creative and technical papers, with more than 5,200 employees.
The company notes that the particularly tough conditions the paper industry has faced since 2008 have accelerated the fall in demand for graphic papers, with the market contracting by approximately 6% every year. Given the structural decline and overcapacity on the market, Sequana adds, and following the shutting down of a machine at the Chartham plant (creative papers) in the U.K. last month (August), Arjowiggins has decided to continue to adjust its capacity in line with demand and to close the Dalum Papir A/S, Ivybridge, and Witcel operations.
These capacity reductions represent a total of 126,000 metric tpy (including 103,000 metric tpy for Dalum Papir A/S), or around 10% of the group's total production capacity. Thanks to the flexibility of Arjowiggins' production model, all product ranges concerned will be transferred and manufactured at other group plants in France, the U.K., and Brazil, according to Sequana. The closure of the Dalum Papir A/S and Witcel plants should be effective by the end of 2012, and the closure of the Ivybridge plant in the first quarter of 2014. Around 430 employees are affected.
Approximately EUR 25 million will be booked in the third quarter of 2012 to reflect these restructuring operations. Around EUR 8 million of this amount will be disbursed in the last three months of 2012 and most of the remaining balance in 2013. The restructuring measures will result in full-year net cost savings of around EUR 17 million, the bulk of which will be generated beginning in 2013.
Additionally, in line with its development strategy focusing on fast-growing market segments and geographical regions, Antalis has finalized two acquisitions of packaging product distributors, in Chile (Abitek) and in the Czech Republic (Branopac). These acquisitions were carried out for an enterprise value of EUR 17 million and will contribute additional full-year sales of around EUR 15 million.
These operations follow Antalis' early-2012 acquisitions of Ambassador in the U.K. and Pack 2000 in Germany in the same sector, helping it to continue building its presence in packaging distribution, a fragmented market currently growing at more than 5% annually. All of these acquisitions will provide Antalis with additional expertise and a strong platform for launching its packaging business development program in Latin America (it is now No. 2 in Chile) and in Eastern Europe in line with its strategy of expanding in emerging economies.
Sequana reported sales of EUR 3.9 billion in 2011, and employed some 11,000 people worldwide.
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