June 2, 2020 / 11:12 AM / a month ago

UPDATE 1-UPM to close plywood mill in central Finland

(Adds details, union, analyst, shares)

June 2 (Reuters) - Finnish forestry group UPM-Kymmene said on Tuesday it would permanently close its Jyvaskyla mill, which produces spruce and birch plywood in central Finland.

“Competition in the birch plywood market is increasing constantly. New birch plywood capacity has been built especially in Russia, where the production cost level is significantly more competitive than in Finland,” it said in statement.

Closure of the mill, which employs 167 people, will result in annual savings of around 11 million euros ($12.3 million).

“The closure of Jyvaskyla plywood mill by UPM will support their long term competitiveness in plywood,” Jefferies analysts said in a note, adding that although the savings were welcome they were not enough to impact analysts’ consensus forecasts.

UPM said it would book 22 million euros in restructuring charges in its April-June results.

“In Finland, a full run of the capacity has not been feasible due to the terms in the woodworking industry. In addition, repeated labour market disturbances have weakened the delivery reliability of Finnish mills,” Mika Sillanpaa, head of UPM’s Plywood business, said in a statement.

Industrial Union, a labour union which stopped Finnish plywood and sawmills for weeks earlier this year, said everything should be done to keep the factory running and workers protected, particularly during the coronavirus crisis.

Shares in UPM were 0.4% higher in the afternoon trade.

$1 = 0.8949 euros Reporting by Tarmo Virki in Tallinn; editing by Jason Neely and Mark Potter

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