The Finnish packaging and paper giant is planning to permanently close down its Sunila pulp production unit in Finland, the De Hoop containerboard site in the Netherlands, one containerboard line at its Ostrołęka site in Poland, and the Näpi sawmill in Estonia. These closures would target a reduction of approximately 600 employees.
The group will also initiate change negotiations regarding a planned reduction of office employees within its group functions. Around 1,300 employees are within the scope of the group function negotiations and the planned reduction is around 300.
Stora Enso has recently completed most of the change negotiations in its Packaging Materials division, with a reduction of around 250 positions in its management and support functions.
The group said the planned restructure would strengthen its long-term competitiveness, improve its profitability, and focus capital allocation in strategic growth markets.
The business added it is also continuing its journey towards a decentralised operating model targeting increased customer centricity, business focus, and cost reductions.
The planned restructure would decrease Stora Enso’s annual sales by approximately €380m (£325m), based on the 2022 figures. Operational EBIT is expected to improve by around €110m annually.
Stora Enso will record around €130m non-cash asset impairments related to the planned closures, and approximately €60m costs relating to the potential layoffs and restructuring expenses in its Q2 2023 results as an item affecting comparability with cash outflows impacting future quarters.
“These measures are of course very difficult and would not be proposed unless it was absolutely necessary for our long-term competitiveness,” said Stora Enso president and CEO Annica Bresky.
“We are at a critical juncture in our strategy advancement, and to further our market position an increased focus on capital allocation and decentralised empowerment is needed.
“This sadly means that assets suffering from challenged profitability would need to be closed, in combination with a more streamlined headquarter organisation.
“Through these actions we would be able to continue to deliver strategic growth from a more resilient and cost-efficient business platform, better equipped to support the long-term growing demand for Stora Enso’s renewable products.”
No decisions regarding the planned closures and employee reductions will be taken until the change negotiations have been concluded according to local regulations.
In April Stora Enso revised its guidance for 2023 and said its operational EBIT was now expected to be “significantly lower” than for 2022 due to the worsening outlook.
