THE CONTINUING DECLINE IN PAPER use has pushed Sequana group into a reorganisation of its debt and a rights issue to raise €64 million to fund its “major operational and financial restructuring plan”.
The Arjowiggins paper making subsidiary into the decision to shut down or shed capacity. Sister company Antalis has rescheduled its debt repayments as the European market for paper fell a further 7% in 2013. The outlook is for decline to continue although not so quickly. This is shown in the Antalis sales figures, bolstered by €40 million from taking on Xerox’s paper distribution, which fell to €2.5 billion (€2.7 billion). Operating profit fell to €70 million (€83 million) with margin squeezed to 2.8% (3.1%).
ANTALIS IS SHIFTING EMPHASIS AWAY from commodity papers towards the visual communications and packaging products which held up. It is running down inventories, across the group these fell from €448 million in 2012 to €378 million in 2103, and through action to reduce overheads in its logistics network. It is to set up a factoring programme to refinance €200 million of debt and will reschedule the repayment of €320 million, extending this to the end of 2018.
But the real bite is applied to the paper making division where it will either sell or close the Wizernes mill in France, which produces 140,000tpa of coated paper; where creative paper production will be concentrated on the Stoneywood mill in Aberdeen leading to the sale or closure of its Charavines mill. The Chartham mill in Kent, producing transparent papers will lose shifts and its Gelida mill in Spain will focus on bookbinding materials.
ON A WIDER SCALE, ARJOWIGGINS will pull out of the US coated paper market. There will be investment in a de-inking line for the Bessé mill in France, home to its MCS papers. The aim the company says is to exist from low margin customers and geographic areas.
Once the reorganisation is complete Arjowiggins will have strengthened its position in recycled papers and pulp (that from the Greenfield mill will be sold on the open market) while reducing costs and retaining its position in speciality papers.
THE YEAR HAS STARTED WITH SIGNS of improvement to confirm the company’s assessment that the rate of decline is slowing. During 2014 the company predicts that the packaging and visual communications arms of the paper merchanting business “should fare better while the Arjowiggins speciality business should perform well”.
Pascal Lebard, Sequana chairman and CEO, says: “In order to put Arjowiggins on as competitive a footing as possible, the operational restructuring plan will help reduce Arjowiggins’ exposure to the standard coated paper segment, strengthen our position as European market leader in recycled paper and give the group a real competitive edge in the creative papers segment.”