Swedish paper, tissue and airlaid maker Duni has announced its intent to discontinue part of the business within its Rexcell subsidiary. Among the activities affected by this decision is an M&J type airlaid line built in 1995 in Skapafors, Sweden. The 2.65-meter, 20,000 ton-per-year line primarily makes secondary topsheet substrates and some absorbent core material for Procter & Gamble as well other hygiene materials for additional customers.
According to sources familiar with Duni/Rexcell’s business strategy, the company has been working to reduce its reliance on P&G—and this business’s low margins—for the past several years. It is estimated the line supplies about 15,000 tons per year to the European hygiene market.
The closure of the production unit entails a one-off cost of SEK 83 million ($13 million), which was incurred in the fourth quarter of 2012. However, it is calculated that Duni's net debt will fall in the long-term as a consequence of the decision. The line will be fully closed in the first quarter of 2014 and will impact about 110 employees. Duni/Rexcell’s second airlaid line will continue to operate, serving the tabletop market.
“Duni’s core business comprises products which enhance the atmosphere around the set table and it is there that the company shall grow. The new Evolin table covering material, for which we have made significant investments in production within Rexcell in recent years, provides a good example,” the company reports. “The consequence of the decision is that, after having attempted to develop the business, Duni will no longer continue to invest in the production of input materials for the hygiene products sector. The decision is a difficult one since it affects many people, but it is important for Duni to follow the strategy and focus on the business which provides the best return for the future.”