DS Smith to close Taplow board mill

Promoting a more positive note, DS Smith reaffirmed the importance of its Kemsley board mill in Kent which has seen recent investment, and described the Taplow closure as a way to help make the group more profitable overall.

While not unexpected, the closure will be seen as yet another step in the direction of the UK becoming more an exporter of recovered paper and a growing buyer of new material from Europe and elsewhere. Factors behind the decision to close the plant are thought to be higher energy costs, the lower value of the packaging waste recovery note (PRN) and the high value of the land at Taplow.

Earlier this year DS Smith had announced that surveyors were pricing its site at Taplow. The site is in a valuable riverside location and has attracted a high propose because of the potential for industrial development as well as housing.

Difficult

DS Smith said today that it has sold the site to Towntalk Ltd, a commercial property developer, for a cash consideration of 30.25 million. So far the closure of the mill is only at “proposed” stage because of talks that have to take place with the workforce, but it is thought that the closure is more or less a certainty.

Taplow Mill, currently manufactures 95,000 tonnes per annum of corrugated case material (CCM), and DS Smith said it “has been adversely affected by difficult market conditions and substantial increases in energy costs.”

The mill made losses in financial year 2005/06 and is not expected to return to “adequate profitability”, a statement said.

Consultation will start immediately with the mill’s 85 employees, with a view to mitigating the effects of the proposed closure. It is proposed that the closure of the Mill will be implemented by the end of October 2006. The group’s Severnside waste collection depot and St Regis head office on the Taplow site, will be relocated.

Exceptional

On the financial side, DS Smith says that the consideration for the sale of the site “will result in an exceptional profit in the current financial year of 20.7 million, net of the book value of the site of 9.0 million and related disposal costs. It is also estimated that the proposed closure and relocation will result in an exceptional charge to the profit and loss account in the current financial year of the order of 12 million; approximately one third of which will be cash costs and the remainder will be the write-down of assets.”

DS Smith also noted that “the proposed closure of Taplow Mill is another important step towards raising the returns of the Group’s Paper operations. Following the proposed closure of Taplow Mill, St Regis’ principal mill at Kemsley will represent approximately 70% of the division’s output of over 840,000 tonnes per annum of paper; Kemsley mill is ranked in the top quartile of European CCM mills in terms of competitiveness.”

The decision to close Taplow comes just three months after the appointment of Huub van Beijeren, a new chief operating officer for packaging, who was appointed to oversee the St Regis side of the DS Smith business.