Helsinki, Finland 03 October 2016 -- UPM is planning to permanently reduce its graphic paper capacity in Europe by 305,000 tonnes. The capacity reductions are planned to take place in Austria and Germany. UPM plans to permanently close two paper machines: SC paper machine 3 at UPM Steyrermühl, Austria, and SC paper machine 2 at UPM Augsburg, Germany.

Number of persons affected by the plan is estimated 150 for UPM Augsburg and 125 for UPM Steyrermühl. The employee consultation processes will start in the course of November in line with the local legislation. The machines are planned to be closed after the consultation processes have been finalized.

The plan would result in annual cost savings of about Euro 30 million. UPM would book charges of approximately Euro 75 million as an item affecting comparability in 4Q 2016. Of the total, approximately Euro 45 million would be cash costs.

According to the plan both mills would continue paper production on the remaining cost-competitive paper machines at the mill sites.

"The demand for SC papers, in line with other graphic papers, has been declining during the last years and the decline is expected to continue. Even under challenging market conditions our employees have always given their best and we regret the impact of the planned closures on the personnel. However, we have to adjust our operations to match with long-term customer demand," says Winfried Schaur, Executive Vice President, UPM Paper ENA.

Earlier this year UPM sold its Schwedt mill. The annual production of 282,000 tonnes of newsprint will be ceased in the end of 3Q 2017. The new owner will convert the mill into liner production.

UPM Steyrermühl manufactures newsprint and uncoated magazine papers (SC) with the annual capacity of 485,000 tonnes. Located in Upper Austria the mill employs about 400 people.

UPM Augsburg manufactures coated (LWC) and uncoated magazine papers (SC) with the annual capacity of 498,000 tonnes. Located in Southern Germany the mill employs about 440 people.