Segezha Group to launch production of paper packaging in the Moscow region

Segezha Group (part of Sistema PJSFC) has started the construction of a new production facility in the Moscow region town of Lobnya. The plant will house four new Holweg Weber and Garant Maschinen paper packaging production lines and produce more than 140 mln units of packaging a year. Investment in the project will total around RUB 1 bln, and the new facility will increase the Company's paper packaging production capacity by 8%. The new plant will launch in early 2021 and is expected to create 68 new jobs.

Alexander Kharitonov, Vice-President of Commerce at Segezha Group, said:

“Paper packaging is becoming an ever more important and more widely used solution. It is extremely versatile and the potential uses of this material will only continue to expand in the future. Paper packaging represents an exciting growth opportunity, especially due to its environmentally friendly nature and the simplicity associated with its disposal. This project forms part of the Company’s wider packaging development strategy to further expand its converting capacity. Launching production in the Moscow region will help us to be closer to the end user, provide a high level of service and ensure our prices remain competitive.”

The project's stand-out feature is its high-tech production lines, allowing for great flexibility in output of packaging formats, including switching between flat and curved handles. The factory will also produce new packaging products including miniature packaging and packaging with transparent windows.

The new production facility focuses above all on providing packaging for online, fashion and food retail, as well as pet products and packaging that extends the shelf life of perishable goods, such as fruit and vegetables. All Segezha products meet the highest standards: they are eco-friendly, biodegradable and are made using renewable resources.

According to Company forecasts, the Russian consumer packaging market will expand by about 6% year-on-year to around 1.1 bln units. Key success factors will include the use of high-tech solutions and a focus on excellent product quality and customer service.

Igor Timofeev, Vice President and Head of the Paper and Packaging Division at Segezha Group, said: “Our team continues to press on with our investment projects. Expanding Segezha Group's presence in the domestic paper packaging market is one of our main strategic priorities. Our product meets all modern sustainable development indicators and stands out above our competitors thanks to its high level of quality. As a result, we confidently predict a quick return on investment and the successful development of the new facility in the Moscow region.”

For reference

Segezha Group is Europe’s second-largest producer of paper sacks and the third-largest producer globally of unbleached sack paper. OIBDA for the Paper and Packaging segment was RUB 11 billion in 2019. In 3Q 2020, this figure was RUB 3 billion, a 1.5x increase year-on-year.

Segezha Group has paper packaging production centres in seven European countries: Germany, the Netherlands, Denmark, Italy, Romania, Turkey and the Czech Republic. The total capacity of these centres is 800 million units per year.

Segezha Group also has two paper packaging plants in Russia: LLC Segezha Packaging in Segezha, Karelia region (became part of Segezha Group in 2014); and a Segezha Packaging branch in Salsk, Rostov region (opened in 2016). The capacity of these Russian assets is 883 million units per year.

The Group’s total capacity will rise to 1.9 million units a year, thanks to the commissioning of the new plant in the Moscow Region.

The Group uses its own raw materials to minimise production costs, reduce volatility and increase margins. This competitive advantage has helped Segezha Group become a major player in the Russian and international paper packaging markets.

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