Segezha Group Increases Plywood Production Capacity

Segezha Group, as part of its plywood production development strategy, is investing in the Vyatsky Plywood Mill (VPM) Capacity Expansion Project. The investments amount to about RUB 6 billion. A new production building is planned, which will upgrade the raw materials reception area and existing production lines. As construction is completed, the total mill floor space would increase by 9,900 sq m. The new facility will be commissioned at the end of 2022.

The annual output will rise by 33 %, or 63,500 m3: from 192,000 to 255,000 m3. The share of special, high added value products will expand substantially, more than doubling from 22 % to 47 % (42,000 to 119,000 m3). This will lead to additional manufacturing of laminated and Computer Numerical Control (CNC) machine products, as well as products with UV cured coatings.

Thanks to this higher production capacity and more advanced products, Segezha Group will increase domestic and international market share, profitability, and portfolio margin. The company will also increase the amount it pays in taxes. These efforts will also create 180 new high-tech jobs for the local population.

Alexey Stepanov, Vice President and Plywood and Board Division Head of Segezha Group:

‘Such projects cannot be implemented without government support. For instance, we require an appropriately-sized felling coupe. It is very important for us that we received the green light for priority forest development investment projects.’

Segezha Group is the world's 5th largest manufacturer of large birch plywood sheets. Segezha Group is a global leader thanks to its key asset: Vyatsky Plywood Mill (VPM) in the Kirov Region. So far, it is the only enterprise in the Group that manufactures birch plywood. Annual output is 192,000 m3. Its products are made of 100 % veneer grade birch plywood logs. Approximately 38 % of the raw material needs are derived from VPM's own forest sites. All the felling coupes are operated responsibly and sustainably by Segezha Group with subsequent reforestation in full compliance with domestic legislation in addition to the Group's voluntary obligations under its international forest certification.

In 2020, Segezha Group's plywood revenue share totalled 11 %. At the same time, this business segment achieved an Operating Income Before Depreciation and Amortization (OIBDA) of 38 %, the highest of the Group.

Industry analysts believe that from 2019–2025, global demand for birch plywood will continue to rise. The key drivers include ongoing large-scale construction and retrofitting projects, manufacturing of furniture, light commercial vehicles, as well as LNG tankers.

79 % of Segezha Group plywood is exported. The top five importers of VPM products are the USA, Germany, the Netherlands, Kazakhstan and Canada.

Segezha Group will boost its plywood output as early as this year when yet another asset, Galich Plywood Mill in the Kostroma Region, will be commissioned. This will be Russia's first manufacturing facility dedicated to maxi size plywood sheets: 7×13 feet. The annual output of the Galich Plywood Mill's is 125,000 m3. By the end of this year, Segezha Group's combined annual plywood production capacity will increase by 65 % to 317,000 m3, and it is expected to reach 380,500 m3 by the end of 2022 (including the VPM project).

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