Belarusian mill TechnoNicol bought from Lithuania's VMG still in the red

MINSK. July 23 (Interfax) - Swoods Export, the wood processing business outside Minsk that TechnoNicol acquired from Lithuania's VMG a year ago, is still operating at a loss, the co-owner of the Russian building materials manufacturer, Sergei Kolesnikov said in an interview with Kommersant.

"I'm happy with the asset, although this business is still carrying losses, like virtually all players in the sector," Kolesnikov said.

"In Russia we're seeing overproduction of lumber due to the loss of European markets, and these volumes cannot be redirected to eastern and southern markets at this time because of the particulars of pricing and high logistics costs. The industry is still restructuring and looking for a new balance between demand and supply. The process will take several years," Kolesnikov said.

He said "we reduced capacity by half, working two shifts instead of four," but "within the context of the holding these losses are not a big deal."

About 20% of the Belarusian company's products are shipped to Russia and the rest go to Kazakhstan, Uzbekistan, Armenia, Azerbaijan, China and India, he said. "We're now looking for a way into countries in Africa and the Middle East, but everything comes down to the high cost of logistics," Kolesnikov said.

TechnoNicol closed the purchase of Swoods Export from Vakaru medienos grupe (VMG), one of the largest wood board and furniture makers in the Baltic countries, in June 2023 for an undisclosed price. The company estimated it would need to invest more than 20 million euros in the development of the mill, which is located in Borisov, Minsk region.

TechnoNicol, which was founded in 1992, is a major manufacturer of roofing, waterproofing and thermal insulation materials. The company now has more than 70 production facilities, according to its website.