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.