UPM to close and sell Pestovo mill site in Novgorod region

Novgorod, January 14. UPM announces a production curtailment at its Pestovo sawmill in Novgorod region and begins negotiations with employees. The negotiations will affect all of the approximately 180 sawmill employees. Starting today, production at the mill will be curtailed to the level necessary to fulfill the on-going contracts. At the same time UPM announces a search for a buyer for the Pestovo mill production area for restructuring or reorientation of production.

The measures taken in Pestovo follow UPM’s renewed Timber business strategy announced in April 2012. UPM concentrates on the development of sawmills closely integrated with the company’s pulp and paper mills. Sawmills have a central role in UPM’s wood sourcing supply chain as their by-products are used in the production of pulp, paper and energy.

“The profitability of the sawmills and further processing units located furthest from our integrated mills has been weak for a long time, and Pestovo sawmill is no exception”, says Anssi Klinga, Senior Vice President, UPM Timber.

UPM’s decision to curtail production and put the Pestovo sawmill on sale have no effect on current customer commitments or other valid contracts.

After completion of this sale, UPM will still own several capacities in Russia, namely a plywood mill in Chudovo (Novgorod region) and two UPM Raflatac terminals. “There are no plans to divest the plywood mill, as UPM’s restructuring strategy deals only with lumber business”, UPM Corporate Communications Russia director Natalia Malashenko told WhatWood.

The Pestovo mill was launched in 2004. Its rated capacity is 260,000 cu m of lumber annually.