Stora Enso, a global provider in the paper, pulp, and biomaterials industry, has revealed its plans for a new profit improvement programme in response to the persistent challenges posed by the current weak and uncertain market conditions.
The initiative aims to achieve an annualised €80m ($87.10m) improvement of the company's operational earnings before interest and taxes (EBIT), potentially leading to a reduction of approximately 1,000 employees.
In a bid to enhance its long-term competitiveness, Stora Enso's profit improvement programme focuses on core business activities aligned with the group's strategy.
This strategy is supported by a decentralised operating model. Importantly, the company emphasises that the programme will be executed without closing any new production sites, mitigating the impact on its operational footprint.
Timeline and scope of impact
The majority of the anticipated savings from this programme are expected to materialise during 2025.
Concurrently, the bulk of employee reductions, efficiency improvements, and synergy opportunities are set for the first half of 2024.
Stora Enso underscores that these adjustments will affect all divisions and group functions, proportionate to their respective sizes.
Hans Sohlström, president and CEO of Stora Enso, acknowledges the difficulty of the plan but deems it necessary for the company's long-term success and competitiveness.
He cites persistent weakness in the macroeconomic and geopolitical environment, necessitating a strategic shift towards core business activities to align with the company's overall strategy.
Sohlström affirms that the profit improvement programme will enhance the company's focus on greater competitiveness and resilience against market uncertainties.
Decision pending on employee reductions
It is crucial to note that no decisions regarding the proposed employee reductions will be finalised until the completion of local change negotiations, in adherence to respective local regulations.
This cautious approach underscores Stora Enso's commitment to a fair and compliant process as it navigates the challenging market landscape.
Stora Enso completed a restructuring programme at the end of the previous year, initiated in June 2023. This prior initiative yielded an annual operational EBIT improvement of €110 million but also resulted in the reduction of 1,150 employees.
The company's current profit improvement programme is seen as a continuation of these efforts, aiming to fortify its position in the face of ongoing economic and geopolitical uncertainties.
