UPM to End Paper Production at Kaukas Mill and Shift Coated Mechanical Output to Rauma

In response to persistent structural overcapacity in the graphic paper sector and to secure the long-term competitiveness of its operations, UPM Communication Papers has unveiled plans to halt paper manufacturing at the UPM Kaukas mill in Lappeenranta, Finland. The move would reduce the company’s annual coated mechanical paper capacity by approximately 300,000 metric tons.

 

The shutdown of Paper Machine 1 (PM 1) is scheduled for the end of 2025. Other activities at the UPM Kaukas integrated site – including pulp production, sawn timber operations, biofuels manufacturing and R&D functions – would continue without interruption.

 

The final decision will be taken following the completion of the statutory co-determination process as required under Finnish labour legislation. Should the plan be implemented, around 220 employees at the Kaukas paper mill are expected to be affected.

 

“While UPM is strategically positioned to grow in a number of business areas, the demand for graphic paper continues to decline globally due to ongoing digitalization, macroeconomic pressures and evolving consumer behaviour. The measures we are planning are designed to achieve healthier capacity utilization and to strengthen our overall cost structure and competitiveness in the international graphic paper markets. We fully acknowledge the significant impact this proposal would have on our dedicated employees in Lappeenranta and will work within local frameworks to find solutions together with employee representatives,” stated Gunnar Eberhardt, Executive Vice President of UPM Communication Papers.

 

“Our teams across all sites deliver outstanding performance, and this includes the workforce at UPM Kaukas. However, the market situation compels us to take proactive measures such as this plan, which continues our efforts to secure the competitiveness of our paper business as a whole. By transferring coated mechanical paper production from Kaukas to the Rauma mill, we aim to optimize our asset base and increase cost efficiency, particularly in production and logistics,” added Antti Hermonen, Senior Vice President Operations, UPM Communication Papers.

 

If carried out, UPM expects to record restructuring charges totalling €78 million in Q3 2025, consisting of €35 million in cash costs and a €43 million impairment. The planned actions are estimated to deliver recurring annual fixed cost savings of approximately €32 million.