Neo Industrial (HSE: NEO1V) announced it is temporarily shutting down production in its viscose fibres factory Avilon Ltd in Valkeakoski, Finland. The reason given is poor global market situation that is not only seasonal fluctuation but also a result of overheating. Stock levels are particularly high in China, which is the largest market for viscose fibre. The price has sunk nearly 30% in two months.
Avilon says it has stock to last until the end of Q3 and sales of those will generate revenue. The recovery of viscose fibre business is currently uncertain, whilst there is better visibility on fire retardant fibre. Neo Industrial has relatively tight short term liquidity. Only recently the company said that viscose fibre business had turned profitable.
Avilon says that commercializing the new innovation of converting paper pulp into dissolving pulp, that Neo Industrial made public in May, is going according to plan. The entire staff of Avilon has been given a 90 day temporary layoff notice. Neo Industrial is a Finnish industrial owner with current investments also in cable and single family housing businesses.
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