Palm Paper UK has posted a near-£66m loss for 2021 after operating expenses more than doubled.

The King’s Lynn mill is now the UK’s sole newsprint manufacturer since UPM sold its Shotton mill for conversion. It is part of the Germany-headquartered €1.7bn (£1.48bn) turnover Palm Papier group.  

In calendar year 2021, Palm Paper posted sales up 2.7% to £149m, but the operation’s operating loss ballooned to nearly £65.7m after the price of raw materials and consumables increased by 50% to £109.5m, while other operating expenses jumped from just under £40m to nearly £82.3m. The 2020 operating loss was £14.8m.

The pre-tax loss was £65.85m (2022 loss: £13.36m).

In his commentary, director Dr Wolfgang Palm said that the most significant impacts had been waste paper prices which were up 26%, and to energy requirements due to a “much tighter gas market” at the time. 

Palm implemented an energy surcharge and also raised prices.

"Market conditions allowed Palm Paper to put up prices during the year and increase market share," Palm stated. 

The newsprint and improved newsprint papers made at King’s Lynn are made using 100% recycled fibres. The plant’s PM7 paper machine is the largest in the world, and has the capacity to make 400,000tpa. 

The cutbacks in production at other newsprint mills resulted in the mill’s operating rate averaging 90%, and despite the HGV driver shortage that was exacerbated by Brexit, the mill achieved an “outstanding” 97% on-time delivery performance during 2021. 

Demand from heatset customers increased by 7.2% and Palm said the introduction of Palm Diamond, described as having “technical values similar to that of supercalendered alternatives” had been well received by the graphics market.

Palm also noted that newsprint capacity in Western Europe fell by 14.1% in 2021, and he expected “a further reduction of circa 670,000 metric tonnes of newsprint capacity in the next two years owing to conversion to packaging grades”.

Sales to UK customers increased by £5m to £86.6m, while sales to the rest of Europe nudged up to £61.5m. Sales to customers in the rest of the world dropped to below £1m. 

The King’s Lynn mill began production in August 2009, and Palm’s initial investment in setting up the site was more than £300m.

The business will target production efficiencies to reduce its operating costs.