Following months of reporting financial trouble, Finland-based Stora Enso announced it is restructuring, which will result in layoffs and permanently closing some facilities. The company said it aims to improve long-term competitiveness and profitability while focusing capital in strategic growth areas.
"These measures are of course very difficult and would not be proposed unless it was absolutely necessary for our long-term competitiveness,” Annica Bresky, Stora Enso president and CEO, said in a statement.
The restructuring, along with actions it says it previously initiated within the packaging materials division that are set to take effect over the next year, will result in a total of 1,150 employees being laid off. That number includes 300 office employees and 600 employees at the following facilities slated for closure:
- Sunila pulp production unit in Finland
- De Hoop containerboard site in the Netherlands
- A containerboard line at the Ostrołęka site in Poland
- Näpi sawmill in Estonia
The company said it is closing the facilities in the Netherlands and Poland because of an overcapacity of containerboard in the European market. Those respectively have a production capacity of 120,000 metric tons and 380,000 metric tons annually. After the facility closures — scheduled for Q4, pending negotiations — Stora Enso plans to supply its containerboard customers from other sites. Stora Enso took over the Dutch De Hoop site last year when it acquired De Jong Packaging Group.
On the pulp production side, the company said the entire Finnish wood market has been affected by increased competition for pulp wood and because Russia stopped its wood imports. This has resulted in significantly higher wood costs and makes the Sunila site not cost competitive.
The restructuring activities are expected to decrease Stora Enso’s annual sales by approximately 380 million euros, based on 2022 figures, while earnings before interest and taxes is expected to improve by 110 million euros annually.
In April, Stora Enso revised its earnings expectations for the year to be significantly lower and said the “whole packaging industry is currently weakening,” especially containerboard.
Numerous packaging manufacturers reported taking a volumes hit in Q1, in large part because of continued customer destocking, and they restructured, reduced production, closed facilities and/or performed layoffs.
