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March 31 , 2010

Rengo to Permanently Shut Down Containerboard Paper Machine and Adjust Paper Production Structure

Rengo Co., Ltd. (Head Office: Kita-ku, Osaka; President & CEO: Kiyoshi Otsubo) announces the following changes to equipment at the Kanazu Mill and the production structure at the Yashio Mill.


 

1. Permanent Shutting Down of Kanazu Mill’s No. 1 Paper Machine

Equipment

Corrugating medium paper machine

Annual capacity Approx. 140,000 tons

Details

Demand for containerboard has declined approximately 10% over the last two years and does not look likely to rebound suddenly in the near future. Given these circumstances, the decision was made to permanently shut down the No. 1 Paper Machine and record a special loss of approximately 800 million yen under loss on impairment of fixed assets for the year ending March 31, 2010.

 

2. Return to Regular Operation of Yashio Mill’s No. 2 Paper Machine

Equipment

Tube board paper machine

Annual capacity Approx. 28,000 tons

Details

Demand for tube board is recovering, and as such the Yashio Mill is aiming to return in May this year to a 4-group, 3-shift schedule from the current 3-group, 3-shift schedule for its No. 2 Paper Machine.

 

Effects of Above Changes

Although the Kanazu Mill’s No.1 Paper Machine will be permanently shut down, we aim to strengthen our supply structure by increasing the production efficiency of other corrugating medium paper machines and as such we are confident that there will be no adverse impact on product deliveries to customers. Regarding the special loss to be recorded in relation to permanently shutting down the No. 1 Paper Machine, this fact has already been factored into the earnings forecast for the fiscal year in question and thus will have only a minor effect on earnings.

Further, the shift increase and related change in production volume of the Yashio Mill’s No. 2 Paper Machine will have only a slight impact on Rengo’s production volume of paperboard for fiscal 2010 as well as related sales and earnings.