MND, a multinational paper and packaging company, decided to divest its assets in Russia and become another giant that announced the launch of the Russian market after the outbreak of the war in Ukraine. Before the announcement, the company revealed that its board of directors was considering all options considered for the interests of the group earlier this year, including legal divestiture due to conflict.

Mengdi has suspended all its operations and major capital expenditure projects in Russia. “After evaluating all possible measures for the group’s interests in Russia and recognizing its corporate values and stakeholder responsibilities, the board decided to divest the group’s assets in Russia. So far, Mengdi’s enterprises in Russia have been dealing with restrictions in the supply chain. However, the situation remains unstable and pulp and paper production may be interrupted in the future,” the company said in a statement

Mengdi said that given that the divestiture process was “operationally and structurally complex and conducted in a changing political and regulatory environment”, it was not possible to determine the timing and structure of any possible transaction. The company currently has three processing plants in Russia, mainly serving the Russian domestic market. It has 5300 employees in the country. As of December 31, 2021, the net asset value of Mengdi Russia business was 687 million euros, accounting for 12% of the revenue divided by production location in the year.

In another development, the company reported that it achieved “strong” results in the first quarter of 2022, driven by strong demand and “extensive” innovative “sustainable packaging and paper solutions. For the first three months of 2022 as of March 31, Mengdi’s profit before interest, tax, depreciation and amortization (EBITDA) increased by 63% year-on-year to 574 million euros.

In March this year, the company announced to invest 280 million euros in corrugated packaging business in four countries to improve production and serve customers more effectively. Among them, 185 million euros will be used for corrugated box factories in central and Eastern Europe, and 95 million euros will be used for investment in box board paper factories in Poland. This shows Mengdi’s commitment to its customers, employees and responsible and sustainable production. Together, these investments represent an important part of the € 1 billion expansionary capital investment project announced by Mengdi this year to accelerate the growth of sustainable packaging.

As customers increasingly adhere to more sustainable packaging solutions, the demand for corrugated packaging in Europe is expected to grow at a rate of 2% – 4% per year in the medium term. In order to meet this growing demand, Mengdi will continue to invest in improving its ability to use resource-efficient factories and equipment to provide services to the growing FMCG, e-commerce and industrial markets.

“Sustainable development is at the core of our strategy. Our continued investment in corrugated packaging business will further promote our commitment to map2030 around cycle driven packaging and paper solutions, which are taken by people with the ability to take action against climate change. Together with our suppliers, we are further optimizing our production, using resources more responsibly, minimizing our environmental footprint and Contribute to a better world. At the same time, customers benefit from higher product quality and shorter delivery time, while our employees enjoy exciting job opportunities, operate the most advanced machines and have world-class safety standards. ” Marcus Gartner, CEO of Mengdi corrugated packaging division, said.

Prior to this, a series of companies have announced their withdrawal from the Russian market, including Stora Enso, UPM and finlin paper, the three giants of Nordic paper announced as early as March, as well as sylvamo, mm and international paper.

Amko, a multinational packaging company, previously also planned to reduce its business in Russia during Russia’s invasion of Ukraine. In response to the conflict, the company will reduce its activities in Russia and focus its manufacturing business on supporting only existing multinational customers. The company will also suspend new projects and investments in Russia and stop exports from the country “as soon as possible”. At the same time, AMCO continues to explore all strategic options of the business while evaluating the development situation. The company has a history of more than 20 years in Russia and currently operates three factories in the country, accounting for 2% – 3% of amko’s total sales.

In addition, Huhtamaki decided to launch the program to spin off its business in Russia. Huhtamaki believes that Russia’s current situation and long-term prospects will hinder its growth strategy. The company said in a statement that it would explore the market for potential buyers and would maintain operations during the transition period.

At the same time, the EU has also expanded its sanctions list against Russia and included the trade of paper, paperboard and pulp in its sanctions list. According to the official announcement, it is prohibited to import uncoated Kraft linerboard and paperboard in rolls or sheets from Russia. It is also applicable to wood pulp obtained through the combination of mechanical and chemical pulping process (CTMP), but Russian newsprint is not affected. At the same time, EU manufacturers are not allowed to export the grades of paper and paperboard listed in Annex 23 to Russia, including Kraft linerboard and kraft linerboard, imitation kraft linerboard, filter paper, special paper, printing and writing paper, paperboard and folding paperboard, as well as waste paper.