OVATO: KIWI INDUSTRY IN SHOCK AS NEW ZEALAND HEATSET CLOSED
Ovato has suddenly closed its New Zealand heatset print plant, and letterbox business, citing paper shortages as the reason for the shock decision, saying it can no longer operate profitably.
Some 100 staff have lost their jobs, with Ruth Cobb, CEO of PrintNZ describing the move as"devastating", and, "a sad day for the NZ print industry".
Ovato says it has been facing “dramatic” paper price increases on imported stock, allied with “an inability to source paper over the short and medium term”, due to global conditions, which have been, “particularly pronounced” in New Zealand.
Ovato says the paper situation together with effects of the ongoing Covid pandemic means it “can no longer operate profitably”.
Norske Skog closed the local Kawerau mill last year, leaving the local print industry entirely dependent on imported paper. The shipping crisis and skyrocketing prices for freight, energy and paper have persuaded Ovato to close New Zealand heatset. Paul Gardiner, managing director of Ovato NZ said, “We simply cannot run a sustainable heatset business without paper.”
James Hannan, CEO of Ovato said, “Due to the supply issues Oavto NZ was forecast to run critically low of paper in May. It is impossible to run a print business without a robust supply chain, and in the absence of one we have had to make the decision to close."
The company had already closed its Christchurch plant last September, with the loss of 60 jobs, today’s decision means it will only retain a sheetfed business in New Zealand, which it says is profitable. Some 100 staff at the Wiri plant will lose their jobs.
Ovato’s New Zealand business saw its revenue fall down by $6.1m to $83.9m in the 12 months to June, although EBITDA was up by 69 per cent, to $2.2m, thanks to tight cost control and government Covid subsidies, which offset lower print volumes.
In the six months to December 2021 revenue was down by $2m to $44.6m compared to the previous year, its EBITDA before significant items was $388,000 in the red, compared to $1m in the black pcp. The New Zealand cash generating unit was in deficit, and all associated assets had been impaired.
Ovato NZ said it was now working with the industry in New Zealand to ensure they could continue to have their products printed at other print businesses. Ruth Cobb said, "Our job is to ensure that the print first stays, and stays in New Zealand. We also need to ensure that the skilled workforce is not lost to the industry."