The Townsend Hook paper mill in Kent will be rebuilt earlier than planned. Production is to stop as early as 1 July 2013.
Smurfit Kappa Group (SKG) is accelerating the modernisation plans for its British Townsend Hook site. The mill's two recycled corrugated case material machines will be closed as early as 1 July 2013 instead of 2014 as initially planned, the company writes in its report on Q1 2013.
Employees are yet to approve the closure after a consultation phase. The machines have a combined annual recycled corrugated case material capacity of 250,000 t which is converted internally at SKG’s corrugated mills in the UK and Ireland.
The company said it had wanted to bring the closure forward to speed up the commissioning and start-up phase of the new paper machine which will be installed at Townsend Hook. Smurfit Kappa acquired the machine from the assets of insolvent Italian Cartiera di Cadidavid back in 2010. After the rebuild, the paper machine will have a production capacity of 250,000 tpy of lightweight corrugated case material.
Production on the rebuilt machine will also start earlier than initially planned and has been scheduled for the fourth quarter of 2014 instead of the beginning of 2015. The total investment volume amounts to €114m, Smurfit Kappa disclosed earlier.
For the first quarter of 2013 Smurfit Kappa reported sales of €1,89bn, up 4% from the previous year. Operating profit decreased from €176m in Q1 2012 to €126m in Q1 this year. The profit for the financial period amounted to €33m compared to €61m back in Q1 2012. According to the company, SKG’s performance reflects the margin compression in Europe following OCC and recycled paper price increases that are not yet reflected in corrugated pricing. The company however believes that paper price increases and a good inventory position across Europe are creating an environment for corrugated price recovery in the second half of 2013.