Stora Enso North America announces fixed
STORA ENSO OYJ Stock Exchange Release 26 August 2003 at 16.00
Stora Enso North America announces fixed-cost reductions
Stora Enso North America will implement a USD 65 million (EUR 60
million) reduction in annual fixed costs through an extension of
the profit enhancement programme announced in August 2002. This
programme will have its full financial impact by mid 2005, and
it will increase the profit per share by EUR 0.04 on top of the
EUR 0.05 increase from the earlier programme.
The new programme includes a reduction in Stora Enso North
America's total workforce of about 12% or 700 employees by mid
2005. In addition, 350 of the reductions in the previously
announced profit enhancement programme remain to be implemented.
Stora Enso North America currently employs about 6 050 people.
After the programme has been fully implemented, the number of
employees will be about 5 000.
As part of this initiative, Stevens Point Mill paper machine 32,
which produces 25 000 tonnes of speciality papers annually, and,
as previously announced, Biron Mill paper machine 24, which
produces 69 000 tonnes of light-weight coated paper annually,
will be permanently shut down as of 1 September 2003. This will
result in the removal of 94 000 tonnes of annual capacity and
affect approximately 60 full-time positions.
Stora Enso will include a non-recurring pre-tax restructuring
charge associated with these changes of about USD 24 million
(EUR 22 million) during the third quarter, of this charge USD 2
million is non-cash.
Factors contributing to the need for these measures include: a
lagging economy that has been slow to recover from the downturn
of the past three years; increased competition from lower-priced
imports; higher energy costs; and higher production and labour
costs. Sales prices for paper products in North America continue
to be at historic lows.
Stora Enso North America President Lars Bengtsson notes that
many changes have already been made: "During the past three
years, Stora Enso North America has implemented major cost-
cutting initiatives, including a 20% reduction in the workforce.
We have put a freeze on hiring, placed restrictions on travel
and reduced the use of outside consultants. We will implement a
freeze on salaried employee wages and will consider cost-
effective modifications in the employee benefit programme as
well as departmental reorganisations."
Every facility and support group within the Division is included
in the current cost-reduction effort. Reductions in both the
salaried and hourly workforce will be implemented consistent
with the needs of each facility to ensure a safe workplace and
quality production.
Workforce reductions will be made in a number of ways, including
severance, retirement and attrition, and will be carried out in
accordance with applicable collective bargaining agreements.
These reductions have already begun and will continue on a
facility-by-facility and department-by-department basis through
mid 2005. Employees affected by this initiative will be offered
outplacement services to assist with finding other employment.
For further information, please contact:
Kai Korhonen, SEVP, Paper Product Area, tel. +44 7990 665 048
Esko Mäkeläinen, CFO, tel. +44 20 7016 3115
Kari Vainio, EVP, Corporate Communications, tel. +44 7799
348 197
Keith B Russell, SVP, Investor Relations, tel. +44 7775 788
659
www.storaenso.com
Stora Enso North America is a Division of Stora Enso. The
Division is North America's leading producer of coated and
supercalendered papers for the printing and publishing
industries. In addition, Stora Enso North America is a
premier producer of speciality papers. The Division produces
elemental chlorine-free kraft pulp, totally chlorine-free
mechanical pulp and recycled pulp from printed, preconsumer
and postconsumer scrap paper.
Stora Enso North America has papermaking operations in
Wisconsin Rapids, Stevens Point, Whiting, Kimberly, Niagara
and Biron, Wisconsin; Duluth, Minnesota; and Port Hawkesbury,
Nova Scotia, Canada.
STORA ENSO OYJ
Jyrki Kurkinen Ulla Paajanen-Sainio