Stora Enso North America cutting costs

Helsinki, Finland-based Stora Enso says that its North American division will implement a $65-million (EUR 60-million) reduction in annual fixed costs by extending the profit enhancement program announced in August 2002.

This program will have its full financial impact by mid 2005 and will increase the profit per share by EUR 0.04 on top of the EUR 0.05 increase from the earlier program.

The new program includes a reduction in Stora Enso North America’s total workforce of about 12% or 700 employees by mid 2005. Some 350 of the reductions in the previous program remain to be implemented. Stora Enso North America currently employs about 6,050 people, a number which will be cut to about 5,000.

In Wisconsin, Stevens Point mill’s PM 32, which produces 25 000 tonnes of specialty papers annually, and, as previously announced, Biron mill’s PM 24, which produces 69 000 tonnes of lightweight coated paper annually, were permanently shut down 1 September 2003. This removal of 94 000 tonnes of annual capacity affected about 60 full-time positions.

Stora Enso will include a non-recurring pre-tax restructuring charge associated with these changes of about $24 million (EUR 22 million) during the third quarter; of this charge $2 million is non-cash.

Stora attributed the measures to: a lagging economy slow to recover from the downturn of the past three years; increased competition from lower-priced imports; higher energy costs; higher production and labor costs. Sales prices for paper products in North America continue to be at historic lows.

Stora Enso North America president Lars Bengtsson noted “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 program as well as departmental reorganizations.”
The entire Division is included in the cost reductions. Salaried and hourly workforce reductions will be consistent with the need to ensure a safe workplace and quality production.

Workforce reductions will include severance, retirement and attrition, and will be in accordance with applicable collective bargaining agreements. The reductions have already begun and will continue through mid 2005. Outplacement services will be offered.

www.storaenso.com.

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