Huhtamaki to shut plant after local earnings fall 10% in 2010

Thursday 1st September 2011

Finnish packaging company Huhtamaki Oyj’s decision to shut its New Lynn plant comes after local earnings fell 10% last year.

The company yesterday said it will shut the flexible packaging plant in Auckland by July next year, shedding some 135 staff at the factory. Huhtamaki said the plant was unprofitable, and closing it will lift the segment’s earnings before interest and tax by an annual 5 million euros.

The decision comes after Huhtamaki (NZ) Holdings, the multi-national’s local holding company, reported net profit of $2.5 million in the 12 months ended Dec. 31, down from $2.8 million a year earlier, according to documents lodged with the Companies Office. Revenue fell 1.5% to $63.8 million.

The cuts to staff numbers will help reduce Huhtamaki’s local personnel bill, which fell 0.8% to $16.4 million in 2010 with smaller contributions to company plans, even as the wage and salary bill crept up $150,000 to $16.3 million.

The company will book a one-off 8 million euro charge on the closure of the plant in the third quarter of this year, and plans to shift the manufacturing operations to its Asian units mainly in India, Thailand and Vietnam.

Huhtamaki will keep its food service operation in Henderson and molded fibre unit in Otahuhu which collectively employ about 320 people.

Huhtamaki cut its external debt to $3 million as at Dec. 31 from $5 million a year earlier, though it breached the terms of its agreement with Citibank by completing its financial statements too late. The loan, which has a nominal interest rate of 4.98%, falls due this year.

The company’s directors said they believe they will get a dispensation from the bank for the event, and a similar event occurred in subsidiary Huhtamaki New Zealand Ltd. during the 2009 financial year.

(BusinessDesk)

BusinessDesk.co.nz

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