Stora Enso to Close Two Mills by End-2007

Oct. 4, 2006 - Stora Enso said that after a financial review of four of its mills, the company has decided to close down Reisholz Mill in Germany and Berghuizer Mill in the Netherlands. The two mills will be closed in phases by the end of 2007.

The other two mills under review, Summa Mill in Finland and Uetersen Mill in Germany, will remain in operation due to improved financial performance, Stora said.

The four mills have been under scrutiny since Stora Enso implemented an Asset Performance Review (APR) in October 2005.

During the past year, all four mills have implemented a number of actions to increase their competitiveness, Stora Enso said. However, Reisholz and Berghuizer mills lacked long-term profitability. Further increasing energy and wood prices in Germany also influenced the decision about Reisholz, Stora added

Reisholz Mill, which is part of Stora Enso's Publication Paper division, produces super-calendered (SC) papers with a total annual production capacity of 215,000 tonnes. The mill has 378 employees.

Berghuizer Mill, which is part of Stora Enso's Fine Paper division, produces woodfree uncoated (fine) paper and has an annual capacity of 235,000 tonnes. The mill has 297 employees.

Summa Mill, which is part of Stora Enso's Publication Paper division, has been gradually shifting its standard newsprint production towards higher-value-added products such as improved newsprint, book paper and magazine paper. In order to reduce costs, the mill has negotiated agreements on operator maintenance and sharing maintenance resources with other mills in Kymenlaakso, along with salary and wage freezes and changes to salary and wage structures.

Uetersen Mill, which is part of Stora Enso's Fine Paper division, has in combination with Oulu Mill in Finland an important role in the graphic (coated fine) paper business area's product portfolio. Uetersen Mill is centrally located close to large customer groups but has also improved its financial performance. The measures to improve financial performance include reduction of personnel and adjustments of local labour agreements.

"The work that has been done in Summa and Uetersen mills recently has resulted in improved profitability, but further profit improvement is still needed," said Stora Enso's CEO Jukka Härmälä. "The analysis of the alignment of the Group's strategy and its product and production asset portfolio continues. We are committed to further enhancing profits to achieve our return on capital target by continuing to monitor closely the performance of not only these two mills but all our assets."

SOURCE: Stora Enso

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