Stora Enso to Restructure Business Group
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Stora Enso, Helsinki, Finland, this week reported that it plans to launch a streamlining and structure simplification project to achieve annual fixed cost savings of EUR 200 million, including the earlier announced EUR 30 million in the Building and Living Business Area, with the full impact starting from the second quarter of 2014. The project will include all business areas and corporate functions. In addition to reducing costs, the planned project would reduce interdependencies between businesses and enable a stronger focus on growth in value creating businesses.
"We plan to clearly and decisively further reduce our fixed costs to revenue ratio not only to adjust to the decline in market demand, but also to clearly add resilience against the cyclical and structural changes in our revenue. The reality is that our European driven printed media markets have shrunk more than 20% since 2008, and there is no reason to believe that the structural change of the past five years in Europe will slow down or change direction in the foreseeable future," said Stora Enso CEO Jouko Karvinen.
The company plans to change from four business areas to three divisions by integrating the current Building and Living Business Area with the Printing and Reading Business Area in a new division mainly focusing on mature businesses and geographies. The other two divisions would be the existing Renewable Packaging and Biomaterials Business Areas, which would remain as they are and concentrate on growth markets and businesses, as well as innovation.
The divisions and corporate functions would undergo organizational streamlining. Further outsourcing alternatives in group shared services and sale of non-core assets will be considered. As far as possible, the company plans to centralize functions in one location instead of several.
"The planned project is vitally important in supporting our transformation towards a value-creating renewable materials company focusing on growth markets. We start the plans from a position of relative strength and with a solid balance sheet and liquidity, thanks to our earlier actions. These plans, combined with our financial strength, will give us flexibility and agility to make future choices and achieve our strategy," Karvinen said.
The planned new division combining the current Building and Living Business Area with the Printing and Reading Business Area would be led by Karl-Henrik Sundström, currently CFO of Stora Enso. The company will immediately begin the process of recruiting a new CFO. The leadership of the two other divisions will remain as it is today, with Mats Nordlander heading Renewable Packaging and Juan Bueno heading Biomaterials.
The division structure plans become effective July 1, subject to the outcome of co-determination negotiations.
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