Canada’s CCL Industries, a speciality label, security, and packaging solutions provider, has confirmed its plans to permanently close its Innovia business operations in Merelbeke, Belgium.

The move will be undertaken during the first quarter (Q1) of next year.

Innovia specialises in manufacturing multilayered surface-engineered films and is a producer of biaxially-oriented polypropylene films offering products made using bubble, stenter, and cast manufacturing processes. 

It has film extrusion, coating, and metallising facilities located across the UK, Belgium, and Australia.

CCL first announced signing a definitive agreement to acquire UK-based Innovia Group in December 2016 for approximately C$1.13bn ($844m).

Following the latest decision to close the business in Belgium, Innovia will now consolidate all its ‘bubble film’ volume into its existing UK and Australian operations.

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By GlobalData

Once the business is consolidated, Innovia is expected to record approximately $17m to $20m of incremental operating income annually.

For Q4 2023, the company is expecting to register an estimated non-cash, goodwill impairment expense of nearly $120m and a one-time pretax restructuring charge.

This one-time charge covers closure cash costs, as well as employee severance accruals ranging between $25m and $30m.

CCL CEO and president Geoffrey T Martin said: “Our operation in Belgium is a smaller two-bubble line plant using older equipment with the highest cost to serve in our global network.

“Given the softer post-Covid demand environment, it is essential we optimise existing capacity for the future, while enhancing financial performance for 2024.

“Additionally, planned new technology investments in Germany and Mexico, plus the impact of building Ecofloat volume in Poland, should drive further gains in our operational effectiveness and profitability in 2025 and beyond.”