The company said its indirectly affiliated companies GHP GmbH and Tool GmbH will enter into negotiations with employee representatives and trade unions regarding the plan.

"The decision to enter into these negotiations is due to the continuous losses that are being incurred in the light of the lower demand for particleboard and the industry overcapacity as a whole," said Sonae.

Sonae said a decision to reduce activity at the plant would be consistent with its strategy of reducing the group’s industrial footprint and concentrating production on its more efficient and profitable plants.

Sonae recently announced a first half loss of €29m, with sales down 7% to €642m.