Stora Enso has announced a raft of restructuring efforts to reduce costs including the closure of a Finland plant and reductions in all the Swedish sites that have corrugated packaging operations.
The firm’s CFO Karl-Henrik Sundström said it will not be “an overnight process but the essence of our ongoing journey”.
Stora Enso plans the permanent closure of the corrugated packaging plant at Ruovesi in Finland in the second quarter of 2013 due to decreased demand for offset-printed corrugated packaging and poor financial performance of the plant and plans to serve Finnish offset customers through its other plants in Europe.
The firm plans to streamline operations by the end of Q3 2013 at the Heinola, Ingerois and Pori board plants in Finland and corrugated packaging operations at all the Swedish units to ensure long- term competitiveness.
In the renewable packaging segment, the firm predicted annual cost savings from Q4 2013 onwards of €13m with a planned reduction in personnel of 295.
In total, the restructuring operations will see 520 jobs lost and annual cost savings of €36m.
Sundström said they could not afford to wait for a transformation in the market and needed to take action.
“We want to be masters of our own destiny and therefore plan to take capacity action in media-driven European paper markets with overcapacity and a structural and cyclical decline of around 6% annually right now, and 4–6% in the coming years.”
“To transform our company, we must redirect the deep knowledge we have in production and development to products and markets that will offer value-creating growth.”
Q3 results reaction
Operational profit was €175m, an increase on Q2 2012 but down from the €224m reported in Q3 2011.
Sales for the quarter declined to €2.694bn from €2.739bn year on year as the firm cited a weak European market.
CEO Jouko Karvinen said: “Markets overall varied from weak in Europe in printing and reading and wood products, to a mixed picture in renewable packaging.
“The growth investments at Skoghall, Ostrołęka and Montes del Plata are reaching their final months and quarters of completion – living proof points of the transformation of Stora Enso into a value-creating renewable materials growth company.
“In parallel, we continue the planning for our China investment, as we do planning integration of our new joint venture in Pakistan.”