Huhtamaki Oyj plans to close a flexible packaging operation in Malvern, Pa., because of slumping demand.
The Espoo, Finland, company said Nov. 4 that it is beginning the restructuring and will take a one-time charge of 18 million euros ($23.3 million) in its fourth quarter to discontinue the money-losing operation. The charge is non-cash and will improve profitability and cash flow for the firm's global flexibles and films segment.
A films operation in Malvern and its 80 employees will continue in business, Huhtamaki said in a news release. That operation mainly makes hygiene and industrial release films.
The 80-employee flexibles unit mainly makes retort pouches, according to spokeswoman Kia Aejmelaeus. Market share of retorts in the wet pet food market has declined, hurting volumes and profitability for the flexibles operation. Huhtamaki will serve the North American market through affiliates in other countries. It has 10 plants making flexible packaging in Europe, Asia, South America and Oceania. It recently expanded capacity in India and Thailand.
``This move will support the growth of our films business in North America and strengthens our position to enter new markets and applications from a local supply base,'' said Jukka Moisio, Huhtamaki chief executive officer, in a news release.
Aejmelaeus said Malvern's flexibles and films operations each have annual sales of about 20 million euros ($26 million). The flexibles and films global segment has annual sales of about 700 million euros ($905 million).