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Stora Enso plans restructuring and profitability improvement actions

Permanent shutdown of 475 000 tonnes of newsprint capacity planned


Stora Enso plans to restructure its operations through the permanent shutdown of two newspaper machines in Sweden. Stora Enso also plans efficiency improvements in the Printing and Reading customer service and the Building and Living Business Area. The 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 to close capacity in Sweden and reorganise its Customer Service Centres
Printing and Reading plans the permanent shutdown of paper machine (PM) 2 at Hylte Mill in Sweden with annual capacity 205 000 tonnes of newsprint and PM 11 at Kvarnsveden Mill in Sweden with annual capacity 270 000 tonnes of newsprint in the second quarter of 2013. 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.

In addition, Stora Enso plans to create a common platform for all 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 centres, mills and logistic service centres will be centralised into five customer service centres located in Finland, Sweden, Germany, Belgium and the UK. It is planned to establish a separate Logistics Service Centre for overseas business in Gothenburg, Sweden to serve all Stora Enso’s Business Areas.

Building and Living to streamline operations throughout the whole Business Area
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 Zdírec 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.

Financial impacts
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.


Segment

Annual sales reduction

Annual cost savings

Fixed asset and working capital write-downs

Provisions with cash impact

Planned reduction in personnel

Printing and Reading

EUR 190 million

EUR 24 million,
starting Q3 2013, full impact Q1 2014

EUR 42 million

EUR 40 million

300

Building and Living

No impact

EUR 30 million, starting Q2 2013,
full impact early 2014

-

EUR 6 million

300

Total

EUR 190 million

EUR 54 million

EUR 42 million

EUR 46 million

600


No decisions regarding closures and employee reductions will be taken until the local co-determination negotiations have concluded. Stora Enso would make every effort in co-operation with local communities to help the affected personnel find new employment opportunities, and all job openings in other Stora Enso units would be available to those affected.


www.storaenso.com
www.storaenso.com/investors

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