M-real is planning to invest approximately EUR 26 million at Simpele mill

M-real Corporation Press Release on 17 September 2010 at 10.00 EET

M-real is planning to invest approximately EUR 26 million at Simpele mill 
 
M-real Corporation, part of Metsäliitto Group, is planning to increase the
annual folding boxboard capacity of Simpele mill by about 80 000 tonnes. At the
same time the sheeting capacity is planned to be expanded. The total value of
the potential investments in Simpele, which are planned to be done during
summer 2011, is approximately EUR 26 million. Following the investment the
total folding boxboard capacity of Simpele would be approximately 300 000
tonnes per annum. The production would mainly be sold to food packaging
purposes. 

“Demand outlook for folding boxboard is very good and through the innovative
product and service development M-real's market shares have steadily increased.
As the market leader M-real is planning to take this step to moderately
increase the capacity to be able to serve customers even better. After the
potential investment Simpele machine is the biggest and most competitive
folding boxboard machine in Europe,” says CEO Mikko Helander. 

To improve profitability M-real is considering to transfer the Simpele
speciality paper production to Gohrsmühle mill in Germany and consequently to
close the Simpele paper machine. The statutory cooperation negotiations related
to the possible closure and the investment in board production will be
commenced on 24 September 2010. The planned personnel reduction is maximum 80
people. The potential transfer of the production would improve M-real's
operating result by approximately EUR 4 million per annum. As a result of the
planned Simpele paper machine closure Consumer Packaging's 4Q 2010 result will
as non-recurring item include EUR 12 million write offs. Related non-recurring
cash costs, if any, will be determined once the negotiations with employees are
completed latest by 5 November 2010. The planned closure would reduce European
annual speciality paper overcapacity by about 50 000 tonnes. 

“M-real is a leading European speciality paper producer. M-real is further
focusing its speciality paper business to packaging related grades. The planned
transfer of Simpele speciality paper production would strengthen the
competitiveness of Gohrsmühle mill and improve M-real's profitability. M-real
is planning to increase the share of speciality grades in Gohrsmühle further,”
concludes CEO Helander. 
 
For further information, please contact:
Matti Mörsky, CFO, tel. +358 10 465 4913
Juha Laine, Vice President, Investor Relations and Communications, tel. +358 10
465 4335