UPM Raflatac plans to increase production capacity for its film labelstock business in Europe by investing approximately EUR 13 million in a new coating line at the company’s self-adhesive labelstock factory in Nowa Wies, Poland. This initiative will support UPM Raflatac’s target to secure cost competitive growth in films in the long term. The start-up of the new assets is estimated to take place in Q1/2015. Following the planned investment, an older film coating line in Tampere, Finland and the UPM Raflatac siliconizing line in Tervasaari, Finland will be closed.

In addition, UPM Raflatac plans to improve productivity in its sheet labelstock business by closing sheet labelstock coating operations and reducing capacity in sheets finishing in Polinya, Spain. The sheet coating will be centralized to Nowa Wies.

The planned actions are estimated to result in annual cost savings of about EUR 4 million starting from 2015 and exceeding EUR 6 million in 2016.

If all plans are implemented, the estimated total personnel impact would be a maximum of 122 positions in the affected countries: a maximum of 86 positions in Spain and a maximum of 36 positions in Finland. The final decisions will be taken after employee consultation and negotiations in the relevant countries. The majority of restructuring is estimated to be completed by the end of 2014.

“In our film business we have enjoyed robust growth in Europe in recent years and therefore we are planning to increase filmic coating capacity in Nowa Wies, Poland. The majority of the film market is in Central and Southern Europe and with this capacity we will be able to serve our customers in those market areas better in future. According to the plan, we aim to streamline our capacity in Tampere, Finland to meet the needs of the reduced service area”, says Tapio Kolunsarka, executive vice president, UPM Raflatac.

“In past years, the sheets market has been affected by changes in customer buying behavior and the market segment has been stagnating. As a consequence we have seen a sharp increase in competition in the market and thus we are planning to centralize sheet production to Nowa Wies, Poland to be able to remain competitive in this segment in the future.”

“After these planned changes in our manufacturing and supply chain platform in Europe, we will have a highly productive capacity serving each of our key product segments with sufficient capacity to meet the needs of the future,” Tapio Kolunsarka concludes.

In Q2/2014 UPM will book a EUR 3 million write-off from fixed assets and restructuring costs of EUR 8 million. These initiatives will support UPM’s growth target of adding EUR 200 million of EBITDA in the coming three years.