Heinzel to start talks on closure of Raubling plant

12 April 2024

Austria's Heinzel Group mulls over closing its Raubling containerboard and kraft paper mill Raubling Papier in Germany. The group decided to enter into talks with employee representatives on the potential closure of the Raubling plant citing "a persistently difficult market environment and challenging economic conditions."

Austria’s family owned pulp and paper manufacturer Heinzel Group has revealed plans for the potential closure of the Raubling Papier corrugated case material (CCM) and kraft paper mill in Germany. When publishing the financial results for 2024 in mid-April, the company said that the permanent shutdown of operations at the Raubling plant was under review, potentially affecting the mill’s 165 employees.

The situation of Heinzel Group subsidiary Raubling Papier in Germany in 2024 “continued to be characterized by a persistently difficult market environment and challenging economic conditions.” The company’s management therefore decided to enter into discussions with the local works council about a possible discontinuation of operations and develop socially responsible solutions for the mills staff, Heinzel Group announced. The Heinzel Group financial result for 2023 already includes an impairment for the Raubling plant, the company added.

At the paper mill in Raubling in Germany’s southern federal state of Bavaria, Heinzel Group runs two paper machines with a total production capacity of up to 240,000 tpy. Heinzel had acquired the mill on 1 January 2016 from Mondi. At that time and in the subsequent years, the mill was producing only CCM grades such as kraft-top liner, testliner and recycled fluting, reaching record production of 242,000 tpy in 2021.

In 2022, the Raubling Papier mill added kraft paper for shopping bags to its production portfolio in reaction to weak demand for corrugated case material. The mill is producing 100 per cent recycled kraft paper as well as mixed recycled and primary fiber-based kraft paper. The paper is sold under Heinzel’s Starkraft brand.

In 2023, the Raubling mill produced approximately 181,000 t of corugated case material and kraft paper – a reduction of approximately 20,000 tcompared to 2022 – and had net sales of €98m (2022: €156m). According to Heinzel, the 2023 financial year was extremely challenging for Raubling Papier due to the general decline in demand for corrugated case materials and the significant drop in selling prices, for kraft-top in particular. Even the specialization on niche products such as kraft paper for shoppers was unable to counteract this and the average net sales price achieved by Raubling Papier fell by around 32 per cent against the previous year, Heinzel said.

“In terms of costs, the unfavourable forward pur-chase agreements for gas concluded in the prior year combined with the rising costs of recovered paper and pulp from the third quarter to negatively impacted earnings,” the group explained. The company had a negative EBITDA of -€10.4m (-€6.9m) in 2023 and posted an EBIT loss of -€26.6m (-€10.4m), including €14m in impairment charges. Operating cash flow was also negative with -€6.6m compared to -€1m in 2022.

Against this background, rumours about the potential closure of the Raubling Papier site in Germany have been doing rounds on the market for a while.

Source: Euwid