STORA ENSO on Thursday announced it will initiate a re-structuring programme geared toward restoring its operational profitability.
The Finnish forest industry giant revealed that the programme seeks to improve annual operational earnings before interest and taxes by 80 million euros by, for example, reducing around 1,000 employees without any production site closures.
The employee terminations are to be implemented primarily during the first half of this year, following a series of local consultative negotiations that will be launched as soon as the country-specific plans have been drawn up. The cost-savings, in turn, are to be realised during the course of next year.
The programme is expected to improve long-term competitiveness by focusing on core business activities that can drive the company strategy supported by a de-centralised operating model.
“Although difficult, this plan is necessary to ensure our long-term success and competitiveness,” commented Hans Sohlström, the CEO of Stora Enso.
“We are facing persistent weakness in the macroeconomic and geopolitical environment and need to focus on core business activities which align with our strategy. Through this programme we would strengthen our focus on profitability, making us more competitive and resilient to market uncertainties.”
Helsingin Sanomat highlighted in its report that the downturn of the forest industry has hit the company hard.
Stora Enso saw its revenue decrease by 24 per cent year-on-year to 2.15 billion euros between October and December of 2023, with the fourth-quarter operating result for consequently falling 326 million euros into the red. Excluding non-recurring items, however, its operational earnings rose to 51 million euros.
Its operational earnings for the full year stood at 324 million euros, but the reported operating result was -322 million euros.
Stora Enso is in a difficult position. After posting a record-breaking result in 2022, it forked out about a billion euros to acquire De Jong Packaging Group in the Netherlands and invested about a billion euros in converting an idle paper mill into a high-volume cardboard line in Oulu, North Ostrobothnia.
Last year, the company sought to restore its profitability by terminating some 1,150 jobs worldwide and shutting down its production plant in Kotka, Finland.
Stora Enso stated in its press release that it does not expect demand for its products – various types of paperboard and wood products – to necessarily increase this year, either, due to “continuing pressures” on demand, prices and margins.
Aleksi Teivainen – HT