ARCTIC PAPER S.A. LAUNCHES PROFIT IMPROVEMENT PROGRAM

Arctic Paper announces the "Profit Improvement Program 2015/2016”, containing an evaluation of measures to eliminate further losses at the Mochenwangen mill.

Arctic Paper has decided to further increase the speed of its structural changes. This is due to a continued complicated paper market in combination with the effects of the policy of the European Central Bank (ECB), which has led to a dramatic strengthening of the US Dollar during the last months.

The ‘Profit Improvement Program 2015/2016’ involves all units and has the target to lessen cost by about 50 MPLN annually. The intentions included in the Program are creation of enhanced Shared Service Centres for our different units, individual mill profitability improvements and an audit of external service costs. As a result of the described Program, the Management Board expects an increase in operating profitability, as well as in all support functions of the Group.

With the aim to eliminate losses at the Mochenwangen mill the management of Arctic Paper is initiating further cost reduction measures, which will also include evaluations to possibly cease the production. The employee information and consultation processes will start in line with the local legislation. Simultaneously a prospective sale of the mill is being examined. The management expects that the impact of excluding the losses of the Mochenwangen mill from consolidated results, will amount to approximately 18 MPLN in 2015.

Arctic Paper started to transform the Arctic Paper Mochenwangen mill into a production unit of special technical papers (greaseproof, flooring industry papers, special wallpapers) in 2013 and closed the PM 1 in the Mochenwangen unit the same year. Since then the mill management and the employees have made significant efforts to change the portfolio of the mill. Solely in 2015, several new greaseproof products and two new products for the flooring and the wallpaper industry were created, with clear cost benefits for the customer. Despite these efforts, the cash flow of the unit, not least due to the development of the USD, continues to be negative.

Further information for the media provided by:

Wolfgang Lübbert
CEO, Arctic Paper S.A.
tel. +49 40 51 48 5310
e-mail: wolfgang.luebbert@arcticpaper.com

Per Skoglund
COO, Arctic Paper S.A.
tel. +46 31 63 1703
e-mail: per.skoglund@arcticpaper.com

Tuesday, 28 Jul, 2015