Segezha Group is the largest forest user in Russia. 86 % of the company's leased wood is certified in accordance with the responsible forest management standards of the Forest Stewardship Council (FSC). Own forest resources cover 59 % of demand for raw wood, ensuring security of raw wood supplies and competitive advantages in terms of production cost in all business segments; the proximity of wood processing facilities to the resource base provides Segezha Group with logistical advantages. In 2018, Segezha Group carried out reforestation on leased forest plots in Karelia as well as the Krasnoyarsk, Arkhangelsk, Vologda, and Kirov regions on a total area of 22,900 ha, which is 25 % greater than in 2017.
In 2019, Segezha Group acquired the right to use and develop its first seed production and plant breeding centre in the Kostroma region, where it plans to grow 2 M pine saplings and 2 M European spruce saplings per year with a subsequent expansion of production to 6-8 M seedlings annually to implement the reforestation programme and sell planting materials.
Segezha Group includes modern converting facilities in Russia and Europe producing paper sacks for industrial needs and consumer packaging.
In 2018, output of paper packaging increased 6 % to 1,286m sacks. The growth in production was due to the launch of the second bag-making line in Salsk (the Rostov region) with a capacity of 25 M bags per year and increased productivity because of the improved order planning system.
In 2018, the share of sales of Segezha Packaging in the Russian market was 64 %. Products for the construction industry account for more than 82 %. The company surpassed its historical record by producing 590 M sacks during the year.
Segezha Group includes Lesosibirsk Woodworking Plant No 1, one of Russia's largest producers of sawn timber. In 2018, Segezha Group enterprises increased output of sawn timber by 3 % to 924,000 cubic metres. Segezha Group exports 99 % of its sawn timber to more than 30 countries, with more than 95 % exported to China, Egypt and the EU. The main consumers of the Group's products are construction and furniture manufacturing sectors.
The production of biofuels from sawmill by-products is one of the important areas of Segezha Group's environmental policy. At the end of 2018, Lesosibirsk WP No 1 launched a plant for the production of wood pellets made from sawdust without any chemicals. Heat transfer of this modern type of fuel 1.5x higher than that of ordinary firewood. The heating value of pellets is almost equal to that of coal. The launch of the pellet production line will enable the Group to optimise the utilisation of wood by transforming the by-products of timber sawing into fuel pellets and heat power. Today, the entire volume of pellets is supplied to industrial consumers and to large power plants in Europe. In the future, it is planned to double the capacity of pellet production in order to provide Russian consumers and customers in the EU with biofuels, including for heating public buildings and individual houses.
Another type of biofuels is fuel briquettes from sawdust. Briquettes do not contain any harmful substances and are absolutely safe and environmentally friendly. Compared to other types of fuel, briquettes emit significantly less sulphides during combustion (less than 0.08 %), have density twice that of regular firewood and produce 3-4x more heat: one tonne of fuel briquettes (100 packs) replaces 5 cubic metres of dry birch firewood. Since 2013, Vyatka Plywood Mill has been producing RUF fuel briquettes, which can be used in both domestic and industrial boiler rooms.
Segezha Pulp and Paper Mill (PPM) is a leader in Russia in terms of production and export of unbleached sack paper. Segezha Group exports 95 % of market-grade sack paper. The key export markets for Segezha Group's sack paper are Southeast Asia, Africa, and Central and South America.
The key event of 2018 was the completion of the three-year modernisation programme at Segezha PPM. As a result, Segezha Group increased paper output by 18 % to 375,400 t. The growth in production indicators was mainly due to the launch of the new paper-making machine and its achievement of design capacity. Sales of sack paper increased 20 % to 244,000 t, mainly due to an increase in shipments under current contracts and expansion of the client portfolio.
In 2018, Segezha Group increased plywood output by 36 % YoY to 135,700 cubic metres, thanks to the commissioning of a new plywood plant in the Kirov region in July 2018, which allowed the company to double the mill's capacity to 192,000 cubic metres and to enter new markets with long-grain plywood. The share of exports in plywood sales was 80 % in 2018. Segezha Group's key strategic markets are are Germany, the United Kingdom, the United States, Benelux and Asia-Pacific.
Segezha Group produces laminated wood structures and prefab glulam houses, and also designs and builds wooden houses from glued laminated timber.
In 2018, Segezha Group increased sales of prefab glulam houses by 45 % due to active work with construction dealers, marketing, higher quality of products and launch a new premium product – houses made of glued beams with a height of 280 mm or more.
In 2018, sales of laminated wood structures grew 19 % YoY due to increased productivity and optimisation of production process. A significant contribution to increased sales was also made by the entry into new markets: Spain, Turkey and Israel.
In June 2019, Segezha Group launched a project to build a new CLT plant in Sokol, the Vologda region, as part of the priority task of creating the first modern material for wooden house-building in Russia. This area is actively supported by the state: the Russian Government launched a pilot programme for subsidised loans, and Segezha Group's investment project for the construction of a CLT plant in Sokol was included by the Ministry of Industry and Trade in the list of high-priority investment projects in the field of forest exploitation. The first CLT panel will be produced in the autumn of 2020, with industrial-scale production to be launched by the end of 2020. Segezha Group is also developing, together with partners from Etalon Group, pilot projects for two wooden high-rise buildings in Moscow.