Russia's supply chain is under severe strain as Western sanctions take a toll on one of the country's largest forestry and paper companies, which has been forced to raise funds through the Moscow Stock Exchange. This move led to a sharp decline in the company's share price, dropping over 20% in a single trading day.<\/p>\n
Segezha Group Segezha,, reported a 24% loss in the first half of 2024. The company's losses have now reached 9.5 billion rubles (approximately $103 million), with its total debt swelling to 144.2 billion rubles ($1.56 billion) by June 2024.<\/p>\n
The company's financial woes are largely attributed to the impact of ongoing sanctions. Since losing access to its key European market due to the European Union's embargo on Russian products\u2014such as plywood, lumber, and pellets\u2014enforced in July 2022, Segezha has struggled to maintain its footing.<\/p>\n
Russia's forestry and paper sector is facing significant challenges, including high logistics costs, a slowdown in demand from China, and growing competition from countries like India, Brazil, and Argentina. These pressures have led many mills to reduce production volumes. In response to these challenges, some mills have attempted to increase domestic sales by lowering pulp prices and shifting production focus. Segezha, for instance, has redirected large volumes of kraft paper to the domestic market to meet local demand.<\/p>\n
Segezha's current financial crisis comes just three years after the company, once the world's second-largest producer of multiwall sack paper and industrial paper sacks, planned to list on the European Stock Exchange. These plans were set for either 2022 or 2023 but were derailed following Russia's invasion of Ukraine.<\/p>\n
The Moscow-listed Segezha, which owns forestry assets in Russia and previously operated paper packaging plants in Europe and Turkey, had aimed for annual earnings of 100 billion rubles ($1.4 billion) by 2025, up from 17.5 billion rubles the previous year. The company's leadership had also considered a dual listing of shares, primarily targeting Europe, where the majority of the pulp and paper industry is concentrated.<\/p>","protected":false},"excerpt":{"rendered":"
Russia’s supply chain is under severe strain as Western sanctions take a toll on one of the country’s largest forestry and paper companies, which has been forced to raise funds through the Moscow Stock Exchange. This move led to a … Continue reading