European Papermakers Face More Mill Closures, Mergers, Acquisitions

An economic slowdown in Europe may force the region's paper industry toward extensive mill closures and consolidation in the coming year, according to a Reuters news report this week. While the industry has been grappling with weak demand and overcapacity for several years, analysts say rising costs and an accelerated decline in print media mean executives need to do more, and faster, than previously planned.

Paper company top executives are outlining their strategies at Reuters' Forest Forum in Helsinki, Finland, this week, with investors focusing on how they plan to cut costs, expand into new business areas, and cut more merger and acquisition deals.

UPM is expected to cut up to 1 million metric tons of paper capacity, or 2% of Europe's total of around 51 million metric tons. One analyst said any cut smaller than 1 million metric tons would be a disappointment. Sappi, the world's biggest fine paper maker, is about to close down a paper mill in Switzerland with an annual capacity of 500,000 metric tpy. Also, M-real is looking to focus on making board products for consumer packaging, and wants to either sell or close paper mills in France and Germany.

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