Stora Enso is embarking on another “profit improvement” program that could result in laying off up to 1,000 employees, the company revealed in its fourth-quarter and full-year 2023 earnings release on Thursday.
The new plan is intended to “improve Stora Enso’s long-term competitiveness by focusing on core business activities,” the company said in a separate news release, citing the reason as “the continued weak and uncertain market environment.” The company aims for the plan to produce an annualized improvement of 80 million euros in operational earnings before interest and taxes.
Most of the layoffs are planned for the first half of 2024, and the majority of cost savings are expected to be realized in 2025. Layoffs and closures are slated across all divisions, although the Finland-based company did not specify exactly where. The company said no decisions would be made until change negotiations are completed in accordance with local regulations.
“Although difficult, this plan is necessary to ensure our long-term success and competitiveness,” President and CEO Hans Sohlström said in the statement.
Last year, Stora Enso underwent a series of changes as it attempted to turn around months of financial troubles. In June, the company announced a restructuring plan that would result in facility closures and about 1,150 layoffs over the next year. This week’s earnings report said the company finalized those activities in Q4, resulting in an improvement to Stora Enso's operational earnings before interest and taxes by approximately 110 million euros annually.
In September, the company replaced its CEO. Sohlström took over for Annica Bresky, who held the CEO position for nearly four years.
Stora Enso reported a “historical low fourth quarter in 2023,” pointing to ongoing low demand, prices and volume in both the packaging materials and wood products divisions. Its Q4 sales were 2.17 billion euros, down 24.1% year over year. Full-year sales came in at 9.4 billion euros, down 19.6% year over year.
All variable costs eased in the fourth quarter except for wood, a trend that is predicted to remain steady in Q1, according to the report. But there is potential for future cost increases as transportation challenges from the Red Sea conflict persist.
The company predicts continued uncertain market conditions throughout this year, while anticipating that Q1 results likely will not show significant improvements over Q4. On the plus side, the company noted potential improvements stemming from decreased customer destocking, lower inflation and increasing pulp prices.
