Stora Enso will start codetermination negotiations with employees at its Hylte Mill in southwest Sweden regarding a plan to reorganize the mill, including permanent closure of paper machine PM3 and the deinking plant (DIP). After the planned restructuring, the mill would run on 100% thermomechanical pulp (TMP), improving the competitiveness of the mill.
The planned closure of PM3 and the reorganization of the mill would impact a maximum of 140 persons.
PM3 is planned to be closed by the end of 2020 and the DIP latest in Q2 2021.
The plan would result in annual cost savings of EUR 14 million. Stora Enso will book restructuring costs of approximately EUR 12 million as an item affecting comparability (IAC) in its Q3 2020 results, of which about EUR 8 million will have a cash impact. The planned closure would not have material impact on Stora Enso's sales or operational EBIT.
"The decline in global newsprint demand continues due to changes in consumer behavior, and it is not expected to recover," said Kati ter Horst, EVP, Paper division. "This has led to global overcapacity, low operating rates, and poor profitability at the Hylte Mill. The planned measures would improve the competitiveness of the mill.
"Also, Stora Enso has invested in the future of the site to produce formed fiber products and biocomposites," she added.
No decisions regarding the planned reorganization or employee impact will be taken until the codetermination negotiations have been concluded.
Hylte Mill currently operates two newsprint machines with an annual capacity of 480 000 metric tons. Production at Hylte Mill would continue on one line, PM4, for standard newsprint paper.
The planned shutdown would decrease Stora Enso's annual newsprint capacity by 26% or 235 000 metric tons, which represents 4% of total European newsprint paper capacity.
The planned shutdown would reduce Stora Enso's total paper capacity by 5%.
Stora Enso noted that it will continue to produce standard newsprint at Hylte, Langerbrugge and Sachsen mills, and the closure of Hylte Mill PM3 would not impact the company's newsprint product offering to its customers.
TAPPI
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