|
Dear colleagues, friends!
The past year 2008 was hard time for our enterprise. It was a challenge for the Company to achieve high results and we were close to be a success but for the global crisis. Up to October, we have been operating ahead of the schedule demonstrating the approved production parameters and financial results. Now the prices on the main kinds of our produce — pulp and board — have fallen by 20–30% against August–September.
Nevertheless, APPM gained profit in 2008 and continued operational activities. Production output is rather high. However, financial prosperity of the Company depends on the situation inside the country and prices on the global markets. Taking into account the overall crisis, our position can hardly improve for the better.
2009 will be the year of strength test for the Company’s staff. Both a worker and a manager must contribute much to pass severe crisis with minimal losses.
We are to decrease costs but it does not mean to cut the wages fund, to reject the regulations of the Collective Agreement, to reduce the staff of Arkhangelsk PPM. Unfortunately, staff reduction will take place but less than 20–30%. First, it is the result of implementation of new equipment, automation of processes, organizational upgrading, as it happened after launch of the wood treatment plant–4. We will put many efforts to avoid mass employee layoff. All social guarantees secured by the Collective Agreement will be in force.
In 2009 APPM plans to realize arrangements in accordance with the technical upgrading program. In January we will modernize BM-2, in March — the boiler ¹2 at the pulp production. Other arrangements will be performed, but in less volume than it was planed. Last year Arkhangelsk PPM was entered the list of 295 key Russian enterprises, which may receive financial support from the state. Thus, due to the support we will start realization of the large investment project for reconstruction of the cardboard production, presupposed by the program of the Company’s strategic development. This project the Company would begin financing from own funds, if not the crisis.
The economic difficulties will be over sooner or later. Thus, the Company will have the potential for a new challenge, producing more goods with better quality minimizing losses. The mill has already survived several times in difficult periods. Cost reduction, increase of the production efficiency and improvement of sales are the priorities of the Company’s activities in 2009.
Despite the objective problems, we may sum up the results of the year. I would like to wish understanding, patience and harmony to all our partners, the management and employees. The last but not the least is optimism. Qualitative and friendly work will result in quicker overcome of the crisis time. In the hard year of 2009 I wish you success and progress. We can indeed see bright future in our joint effort!
Beloglazov V.I.,
General Director OJSC «Arkhangelsk PPM»
Dear shareholders, partners and friends
The economic crisis which has gripped almost all regions of the world, strongly affected the pulp and paper industry. We had to face a dramatic downturn of demand for pulp and board, prices went down with incredible speed to levels which we never had expected. While 2008 had started very well the fourth quarter destroyed almost all what had been achieved the three earlier quarters.
Only one year ago many companies had published development plans but now most producers of pulp, paper and board postponed them and had to reduce volumes of production, of investments, had to reduce working hours and reduce number of employees. Arkhangelsk Pulp & Paper Mill is no exception. We faced and still have to cope with difficulties as the result of the economic stagnation. We have to postpone some capital intensive projects until liquidity situation improves.
Nevertheless, it is evident that APPM is a healthy and strong company which will withstand the crisis and soon return to the good financial results and high grow rates, to sound economic activities and development of the previous years once the worst of the crisis will be over.
Besides avoiding losses which is the prime target for now, we, however, must not forget our long term strategic perspectives. The strategic tasks in front of the management and the staff to improve efficiency of the work at APPM, to improve competitiveness and to finally reach the target of 1 Mio tons of cooked pulp are as valid as ever before.
Even in times of crisis we will keep the specialists which are willing and able to fulfill these tasks. We will fulfill our social obligations towards our employees and their families and will do what we can to help the city of Novodvinsk to maintain all its services for the citizens.
In spite of the presently critical situation of the industry and the country the mill and its employees have every reason to look into the future with optimism. I am certain that the joint efforts taken by both, the shareholders, the management and the employees, will help the mill to resist the economic crisis and come back to the impressive level of positive economic and financial results of the recent past.
Last but not least I would like to thank all partners, the management and the employees for the hard work and congratulate them for the results achieved considering the extremely difficult circumstances towards the end of the previous year.
Heinz Zinner,
President of the Supervisory Board
| 
