Stora Cuts 2,500 Jobs as CEO Retreats Further From Print
Stock Chart for Stora Enso OYJ (STERV)
Stora Enso Oyj (STERV) will cut about 2,500 additional jobs, or 9 percent of its total, as Chief Executive Officer Jouko Karvinen reshapes Europe’s biggest papermaker amid shrinking markets for printed media.
The reductions announced today don’t include any capacity cuts, the Helsinki-based company said in a statement today. The measures to simplify and streamline the company are a part of a plan expected to generate 200 million euros ($266 million) in savings, first outlined on April 23.
“We have to respond to weakness in the European economy, structurally shrinking markets in some of our businesses and our poor profitability,” Karvinen said in the statement.
Stora is reducing its exposure to traditional markets such as supplying newsprint to global dailies, and expanding in the growing markets of more environmentally friendly packaging for consumer goods. Last week, it reported plans to convert a Finnish paper mill to make containerboard.
Stora Enso shares rose as much as 2 percent and traded up 1.6 percent at 5.30 euros by 11:03 a.m. in Helsinki. The shares have added 13 percent over the last year compared with an advance of 26 percent for the OMX Helsinki 25 Index.
The Nordic region will take the brunt of the job cuts announced today, with 750 positions to be eliminated in Sweden alone, Stora said. In April, the company reported a first-quarter net loss of 17 million euros, compared with a 73 million-euro profit a year earlier.
“I didn’t have any expectations regarding this, it’s neutral,” said Martin Melbye, an analyst at ABG Sundal Collier Holding ASA in Oslo. More capacity cuts in the industry will follow, he said.
Both Stora Enso and UPM-Kymmene Oyj (UPM1V), Europe’s largest papermakers, have shuttered mills this year as consumers shift to online media and the euro-area debt crisis hampers demand.
Paper exports from Finland will contract for a third year in 2013 and extend their drop next year on low demand as pulp and paperboard sales increase, PTT Research Institute said on April 9.
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