Segezha Packaging Group ("Segezha") announced today that it will close its paper sack factory Segezha Packaging S.A.U, which is located in Almeria, Spain, due to DUE TO CONTINUED LOSSES AND THE NEGATIVE MARKET SITUATION. The closing down production and the offices will happen in autumn 2010.
This measure has been announced to the Workers Representatives and a compensation plan for the plant's 61 employees will be negotiated.
The economic and financial crisis in the last years has hit the Spanish market hard and the building and construction industry in particular has been and is no exception. A dramatically reduced demand for paper sacks for cement and building-mix products, combined with surplus capacity where sack production is concerned, has resulted in a serious decline in sack prices on the Spanish market over the past few years. This has made it very difficult to create a balance between costs and income, which has led to a loss of earnings for the Spanish company and had a negative influence on the financial result. It does not appear at present that there will be any change in this situation within the foreseeable future and a decision was therefore made to withdraw from the Spanish market.
The customers will be supplied and served as usual so the closure will not affect our commitments currently in force.
The factory closure is part of the ongoing work on and strategy of consolidating Segezha's sack production units to meet the new, changed market conditions consequent on the economic crisis. The purpose of consolidating production units to create major units is to ensure a certain production volume for the individual units and make them efficient. This strategy allows Segezha to offer our customers the highest quality products and services in the most cost effective manner possible.
Segezha, which owned by the Russian ILP Group, is the world's second-biggest manufacturer of paper sacks. Segezha Packaging makes approximately 1.2 billion paper sacks a year at 11 high-tech factories in nine countries in Europe and Russia. Segezha Packaging has 1,200 employees.
If you have any questions regarding the information above, please contact:
Ben Verheijden
COO Segezha Packaging
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