Stora Enso Restructuring Plans Include Shutdown of 475 000 Metric TPY of Newsprint Capacity
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Stora Enso, Helsinki, Finland, this week announced plans to restructure its operations through the permanent shutdown of two newsprint machines in Sweden. The company also plans efficiency improvements in the Printing and Reading customer service and the Building and Living Business Area. These profitability improvement actions are planned to reduce annual costs by EUR 54 million and reduce the number of employees by approximately 600 altogether.
Printing and Reading plans the permanent shutdown of PM 2 at the Hylte Mill in Sweden, which has an annual capacity of 205,000 metric tons of newsprint, and PM 11 at the Kvarnsveden Mill in Sweden, which has an annual capacity of 270,000 metric tons of newsprint, in the second quarter of this year. This represents 3.4% of European newsprint capacity. The plans to shut down capacity are due to continuing structural weakening of newsprint demand in Europe, the company notes.
In addition, Stora Enso plans to create a common platform for all of its Printing and Reading sales desk, order handling, and logistic services in Europe to improve customer service. These processes currently handled at seven customer service centers, mills, and logistic service centers will be centralized into five customer service centers in Finland, Sweden, Germany, Belgium, and the U.K. The company plans to establish a separate Logistics Service Center for overseas business in Gothenburg, Sweden, to serve all Stora Enso's business areas.
Building and Living plans to reduce costs, increase productivity, and find sustainable improvement in all operations to overcome continued poor profitability. The plans announced include downsizing of Sollenau Sawmill in Austria, transfer of some production from the high-cost Pfarrkirchen Mill in Germany to the low-cost Zdirec Mill in the Czech Republic, and efficiency improvement actions at Kitee and Honkalahti sawmills in Finland. In addition, Building and Living is planning cost reduction measures in all other units and in sales and general administration, as well as in support functions throughout the whole business area.
Stora Enso will record a restructuring provision and a fixed asset and working capital write-down as non-recurring items related to the restructuring plans described above with a negative impact of approximately EUR 88 million on the operating profit in its first quarter 2013 results.
No decisions regarding closures and employee reductions will be taken until the local co-determination negotiations have concluded. Stora Enso says it will make every effort in co-operation with local communities to help affected personnel find new employment opportunities, and all job openings in other Stora Enso units would be available to those affected
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