Segezha Group is a fast-growing, vertically integrated forestry holding with a full cycle of logging and advanced wood processing operations. Group companies, based in Russia and Europe, produce high-quality unbleached sack paper, paper sacks, birch plywood, sawn timber and pre-fabricated glulam houses. Segezha Group's production facilities and offices are located in 11 countries and 6 Russian regions and employ over 13,000 people.
Segezha Group is the largest forestry operator in European Russia, with a total area of woodland in leasehold totalling 7.4m hectares. Segezha Group is No.1 in Russia and No.2 in Europe by paper sack production, No.1 in Russia and No.4 globally by production of high-quality unbleached sack paper, No.1 producer of sawn timber and pre-fabricated glulam houses in Russia and No.5 globally by production of large-size birch plywood.
Segezha Group's strategy is aimed at creating an industry leader in terms of efficiency. The Group is a major forestry holding producing quality and sought-after solutions that successfully compete in the global market. Its business model is based on the principle of vertical integration, which allows creating added value and ensuring business sustainability through diversification of risks. The Group's well-balanced portfolio, which includes high-quality leased forests, logging and wood processing assets, makes it possible to effectively monetise forest resources. The proximity of wood processing facilities to the resource base provides Segezha Group with logistical advantages. Its own forest resources are able to meet 59% of the company's demand for raw wood, thus ensuring security of raw wood supplies and competitive advantages in terms of production cost.
In 2018, Segezha Group retained its position as the number one producer of unbleached sack paper in Russia and climbed to the number three globally (from number four in 2017). Segezha Group’s main sack paper plant — Segezha Pulp and Paper Mill (PPM) — reached its design capacity in 2018 after the launch of a new paper-making machine at the end of 2017 and produced 355,000 tonnes of high-quality paper.
Segezha Group exports 95% of marketable sack paper (37% of produced paper goes to the company’s converting facilities to produce paper packaging). The key export markets for Segezha Group’s sack paper are Southeast Asia, Africa, and Central and South America. In 2018, Segezha Group increased paper output by 18% to 375,400 tonnes. The growth was mainly due to the launch and full ramp-up of the new paper-making machine. Sack paper sales increased by 20%, to 244,000 tonnes, mainly due to increased shipment volumes under current contracts and expansion of the client portfolio.
In 2018, Segezha Group’s paper packaging output increased by 6% to 1,286 million bags. Growth was driven by the launch of the second bag-making line in Salsk, Rostov region, with a capacity of 25 million bags per year. The year-on-year increase was also driven by improvements to the order planning system which boosted productivity.
In 2018, Segezha Packaging accounted for 64% of sales in the Russian market. Products for the construction industry account for more than 82% of this total.
In 2018, Segezha Group was the world’s fifth biggest producer of large-size birch plywood. In 2018, plywood output increased by 36% year-on-year to 135,700 cu m. Production growth was driven by the launch of a new plywood production line in the Kirov region in July 2018, which doubled the capacity of Vyatka Plywood Mill to 192,000 cu m and allowed the company to enter new markets with a new product — long-grained plywood. The share of plywood exports rose from 78% to 80% in 2018. Segezha Group’s key strategic markets are Germany, the UK, the US, Benelux and South Asia.
Segezha Group’s Lesosibirsk Woodworking Plant No. 1 is one of Russia's largest producers of sawn timber. In 2018, Segezha Group’s enterprises increased output of sawn timber by 3% year-on-year, to 924,000 cu m, due to increased production efficiency at Lesosibirsk Woodworking Plant. Segezha Group exports 99% of its sawn timber to more than 30 countries, with China, Egypt and the EU accounting for more than 95% of exports. The Group’s products are mainly used in construction and furniture manufacturing.
Laminated beams and prefab houses
Segezha Group manufactures laminated wood structures and prefabricated glulam houses, and also designs and builds wooden houses.
In 2018, Segezha Group increased sales of prefab houses by 45% by working closely with construction dealers, product promotion, the launch of a new premium product (prefab glulam houses with a height of 280 mm or more) and improved product quality.
Sales of laminated beams in 2018 grew 26% year-on-year. Growth was driven by increased productivity due to optimisation of the production process. A significant contribution to the increase in sales was Sokol Woodworking Plant’s entry into new markets such as Spain, Turkey and Israel.
In late June 2019, Segezha launched construction of a new cross-laminated timber (CLT) plant in Sokol, Vologda region. The plant will be the first in Russia to produce CLT, marking a move towards the development of wood-based multi-story construction. The Russian government is looking to increase demand for industrial-made wooden housing and has recently launched a pilot program for subsidising loans for wooden home kits. Segezha aims to produce its first CLT panel by early fall 2020 and begin industrial production by the end of 2020. Segezha is already in talks with Sistema portfolio company Etalon Group, one of Russia’s largest residential real estate developers, on the construction of two pilot projects involving multi-story wooden construction: one office building and one residential building in Moscow.
 According to Segezha Group's internal data as of 31 December 2018