Stora Enso Completes Second Phase of Restructuring Plan, Some 2,500 Jobs May Be Cut

Stora Enso's EUR 200 million plans do not include any capacity reduction actions, but estimates show 2,500 employees could be cut.

June 18, 2013 - On 23 April 2013, Stora Enso announced new plans to simplify and streamline its operations to focus its different businesses, simplify its operations and enable greater focus on growth in value-creating businesses. The potential EUR 200 million annual Group fixed cost reduction from actual costs in year 2012 to second quarter 2014 run rate will include the earlier announced EUR 30 million streamlining of the Building and Living Business Area.

All plans are subject to co-determination negotiations in the local units.

The EUR 200 million plans do not include any capacity reduction actions. In addition to the EUR 200 million, the effect of previously announced cost and capacity reduction actions between 2012 and the second quarter of 2014 will be EUR 75 million per year.

According to preliminary estimates, the plans could reduce the total number of employees by approximately 2,500 depending on the outcome of the co-determination negotiations and processes. The geographical split of the planned personnel reduction is as follows:

  • Finland - 650
  • Sweden - 750
  • Europe excluding Nordic countries - 850
  • Outside Europe - 250

The cost-efficiency and rightsizing actions are being planned by each Business Area, Group Service and Function. The actions planned in the Business Areas include identifying process efficiencies in production units and services, and the potential to reduce and centralise mill administration tasks, and to simplify organisation structures and reduce management layers in Business Area administration. The various Business Areas have reached different stages of their plans: for example, in the Building and Living Business Area the plans have progressed well and most of the co-determination negotiations have already been concluded and decisions taken.

Group Services and Functions are rethinking their priorities, rightsizing and simplifying structures. Some will go through further strategic assessment in order to optimise the service level and approach.

“This new round of streamlining is understandably very difficult for our employees, who have already experienced several cost-saving programmes in the recent past. However, we have to respond to weakness in the European economy, structurally shrinking markets in some of our businesses and our poor profitability. We must face reality, and then try to support the employees affected by these plans in a responsible way. We have a strong track record in restructuring operations. Delivering on our savings targets will be yet another proof of our ability and agility to rightsize operations quickly to match future needs,” says CEO Jouko Karvinen.

The one-time costs will be recorded in accordance with Stora Enso practice and accounted as non-recurring items mainly during the second and third quarters of 2013.

SOURCE: Stora Enso