Segezha Group is a fast-growing Russian forest holding with a vertically integrated structure and a full cycle of logging and advanced wood processing. It is comprised of Russian and European producers of 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.
Segezha Group is the largest forest user in European Russia, with a total area of woodland in leasehold amounting to 6.8m ha. Segezha Group is No.1 in Russia (over 50% of the market) and No.2 in Europe (about 14% of the market) by paper sack production, No.1 in Russia (over 70% of the market) and No.4 in the world 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 develops as a major forest 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 the 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 more than 60% of the company's demand for raw wood, thus ensuring security of raw wood supplies and competitive advantages in terms of production cost.
Paper and Packaging
Segezha Group is among the top 5 global manufacturers of unbleached sack paper, while Segezha Pulp and Paper Mill (PPM) is its leading producer and exporter in the Russian market. Exports account for 92% of Segezha Group's paper sales. The high quality of raw materials and low costs enable Segezha Group to increase the production output of sack paper. In 2017, Segezha PPM's sack paper sales (including intra-group supplies) totalled 298,000 tonnes, having grown by 8% year-on-year due to the launch of a new high-tech paper-making machine (No.11) produced by the German Concern Voith in the end of the year. When the machine reaches its full design capacity, Segezha Group will be able to become the world's second biggest producer of kraft paper. The Group's paper is sold in more than 60 countries.
Segezha Group's share in the Russian market of paper sacks was 51% by the end of 2017. Segezha Group strengthened its leading positions in the European market with sales growing by 10% year-on-year. In 2017, it developed an innovative packaging solution: a smart sack with an embedded RFID tag enabling accurate product identification and tracking and making it possible to optimise logistics.
Plywood and wood boards
In 2017, Segezha Group's output of birch plywood increased by 5% year-on-year. The share of exports in plywood sales exceeded 70%. Segezha Group's key strategic markets are Germany, Benelux, the USA, France, Italy, Finland, South Africa, Spain, the Czech Republic and Denmark. In 2017, Segezha Group was selling its plywood to over 50 countries in total. In 2017, Segezha Group continued the construction of a new plywood mill in Kirov (on the basis of the Vyatka Plywood Mill) with the production capacity of 86,000 cu m. The new facility will enable Segezha Group to enter new markets with long-grain plywood and expand the production of short-grain plywood. The Kirov plywood mill will be commissioned in 2018.
Segezha Group includes Lesosibirsk Woodworking Plant No. 1, one of Russia's largest producers of sawn timber. In 2017, Segezha Group accounted for 2.5% of the total rough sawn softwood timber output in Russia. The Group exports 99% of its sawn timber to more than 30 countries for construction, furniture manufacturing and packaging. In 2017, about 47% of sawn timber produced by Lesosibirsk Woodworking Plant No.1 was sold to China and about 46% – to the countries of the MENA region: Egypt, Iraq, Lebanon, Syria. Sales to the European countries totalled approximately 6%.
Sokol Woodworking Plant, which is a part of Segezha Group, continued strengthening its leadership in the Russian market and in 2017 reached record production volumes of laminated beams and prefab glulam houses, which exceeded 60,000 cu m. Segezha Group's share in the prefab glulam houses market is roughly estimated at 17%. The glulam houses manufactured by Segezha Group meet the European standards EN 14081 and FSC. Segezha Group intends to increase the production of pre-fabricated glulam houses by 10% and enter the new markets of the Baltic region and Scandinavia (Estonia, Sweden and Norway) in 2018.
Segezha Group in cooperation with Kronstadt Group is developing high-tech solutions for the forest industry that ensure more accurate planning of forest resources. The new comprehensive data analysis and processing system, the first part of which will be ready by the end of 2018, will allow using drones for analysis of forest reserves and make it possible to significantly improve long-term planning for logging, construction of forest roads and management of logging fleet, reducing the cost of logging.
In 2017, Segezha Group's revenue grew by 1.6% mostly due to the increased sales of sack paper (on the back of a significant rise in demand for paper in the global market) and plywood. Segezha Group's investment programme is aimed at modernisation of production facilities, improvement of efficiency and product quality, reduction of environmental impact and increase of production output in key segments.
 According to Segezha Group's internal data as of 31 December 2017