Huhtamaki spends $6.3M laying off staff at scuttled New Lynn plant
By Paul McBeth
Aug. 28 (BusinessDesk) - Finnish packaging company Huhtamaki Oyj spent $6.3 million on terminating staff at its loss-making plant in Auckland's New Lynn which it shut down last month.
Huhtamaki New Zealand, the holding company for the New Lynn business, made a loss of $19.5 million in calendar 2011, bigger than the loss of $13.6 million a year earlier, according to financial statements lodged with the Companies Office.
The company booked a $12.5 million expense on the restructuring of its flexible packaging division, which led to the plant closure and manufacturing farmed out to the group's Asian operations.
Of that, some $6.3 million was spent on laying off 135 staff at the factory, and $4.4 million was a writedown in the value of building and machinery. The remaining costs came from legal and consultancy fees, a make-good provision and an onerous contract expense.
As at Dec. 31, the New Lynn business had retained losses of $65.3 million, pushing the holding company deeper into negative equity of $21.1 million.
After shutting down the New Lynn operation, Huhtamaki's New Zealand businesses will consist of the food service operation in Henderson and moulded fibre unit in Otahuhu which collectively employ about 320 people.
Huhtamaki (NZ) Holdings, the multi-national's holding company for its Henderson plant, made a profit of $332,000 in 2011, from $2.6 million a year earlier. Sales rose to $57.1 million from $53.8 million.
The sister New Zealand holding companies had drawn down $9 million of a $50 million facility with Citibank as at Dec. 31.
The loans, which were split between the holding companies, were classified as current liabilities after Huhtamaki breached the terms of its loan agreement by having negative equity positions for both entities and failing to supply completed financial statements for Citibank to review with four months of the balance date.
The Finnish group boosted global sales 16 percent to 1.17 billion euros in the first six months of this year for pre-tax earnings of 83.2 million euros. Its shares, which are listed on the Nasdaq OMX Helsinki, rose 1.1 percent to 11.54 euro in trading yesterday, and have gained 25 percent this year.