Stora Enso to Permanently Shut Newsprint Machine in Germany

Sept. 7, 2010 Stora Enso will, subject to decisions by the respective German corporate bodies, permanently shut down the 195,000 tonnes per year newsprint machine at Maxau Mill in Germany by the end of November 2010.

In a written statement, Stora Enso said newsprint production at Maxau will end due to weak European market outlook and high production costs. Sales prices have fallen significantly while recovered paper and wood costs have risen strongly. As a result, there is no realistic prospect of newsprint production at Maxau Mill becoming profitable again in the foreseeable future.

"The European newsprint market is structurally heavily oversupplied and there has been no substantial recovery in demand since consumption collapsed in early 2009. The outlook for demand is negative too. In addition, the availability of wood and recycled fibre in Germany has been limited, so costs have been rising fast recently," says Juha Vanhainen, EVP, Publication Paper Business Area.

The permanent shutdown of the newsprint machine at Maxau Mill will reduce European newsprint capacity by approximately 1.5%.

The shutdown will affect about 180 of the 617 people employed at Stora Enso's Maxau Mill. Stora Enso is working on a social plan for the employees affected by the restructuring measures. The two uncoated magazine paper machines with total annual capacity of 530,000 tonnes at Maxau Mill will remain in operation.

Stora Enso expects the permanent shutdown of the newsprint machine at Maxau to have the following financial impacts on the Newsprint segment:

  • One-time non-cash fixed asset and working capital write-downs in Q3/2010: EUR 13 million
  • One-time cash provisions in Q3/2010 as non-recurring items: EUR 20 million
  • One-time working capital reduction: EUR 4 million
  • Annual sales reduction: EUR 40 million
  • Annual operating profit improvement: EUR 12 million

SOURCE: Stora Enso