April 23 (Bloomberg) -- Stora Enso Oyj Chief Executive Officer Jouko Karvinen, who diversified Europe’s largest papermaker toward becoming a renewable consumer-package supplier in China and South America, will step down this year.
The 56-year-old CEO will continue in his job until a successor is found, the Helsinki-based company said in a statement today.
Karvinen assumed Stora Enso’s top post in March 2007, a time of industrywide cost cuts as papermakers began responding to a consumer shift to electronic media. He expanded operations beyond newsprint and sought growth in emerging markets, moving operations closer to Stora Enso’s customers. Karvinen also accelerated job reductions at the company as the slowdown in the global economy weighed on its profitability.
“It’s been the most difficult job in my life, and also the most exciting,” Karvinen said on a conference call. He didn’t say what plans he has for the future. There had been “no disagreement with the board about the strategy,” he said.
Stora Enso shares have lost 41 percent since Karvinen’s appointment compared with a 7.6 percent decline in the OMX Helsinki 25 Index. The stock of Helsinki-based UPM-Kymmene Oyj, Stora Enso’s largest competitor in Europe, has lost 38 percent in the same period.
Stora Enso shares rose as much as 3.6 percent today as the company reported a 54 percent jump in first-quarter earnings before interest and tax, beating estimates in a Bloomberg survey of 10 analysts. The shares climbed 3 percent to 7.76 euros at 2:48 p.m. in Helsinki.
“Karvinen initiated discussions with the board of directors late last year about his wish to retire from the company during 2014,” Chairman Gunnar Brock said in the statement. “The board regrets his decision.”
Six months after taking the helm, Karvinen sold Stora Enso’s assets in North America for $2.1 billion. The value of the Consolidated Papers Inc. assets, acquired for $4.9 billion in 2000 under the leadership of then-CEO Jukka Haermaelae, had been eroded by a downturn in the North American paper market as advertising spending fell.
Finland’s forestry companies have reduced 28 percent of their workforce in the past decade and closed mills in response to overcapacity in the European paper market, according to the Finnish Forest Industries Federation.
As online media has crimped demand for newsprint, the industry has sought to branch off into different markets. UPM-Kymmene, as well as tapping into growing pulp demand, this year introduced a prototype car using wood-based materials in a bid to replace plastic while Stora Enso is building a 1.6 billion-euro ($2.2 billion) consumer board mill in Guangxi as it bets China’s growing middle class will need more containers for foodstuffs.
Metsae Fibre Oy, a unit of a Finnish forest-industry cooperative group, today said it will invest 1.1 billion euros in a mill using wood to make pulp, other bio-products and generate energy. The investment will be the biggest in the history of the Finnish forest industry.
Stora Enso’s Montes del Plata pulp mill in Uruguay is ready for startup “in the coming weeks” pending an operation permit from local authorities, it said today. The company forecasts its second-quarter sales and operational Ebit to be similar to first-quarter figures.
To contact the reporter on this story: Kasper Viita in Helsinki at email@example.com