Business Strategies

Stora Enso gives up the Kabel paper mill in Germany…


Stora Enso has signed an agreement with Hagen-Kabel Pulp & Paper, a company owned by a group of German investors, to sell the Kabel site in Germany, which produces coated paper using wood. The transaction is in line with the strategic transformation of Stora Enso into a development company for renewable materials. The transaction should be completed during the third quarter of 2016. The cash amount for the transfer of the business is about 23 million euros, subject to adjustment on the valuation day. The loss on transfer overall amounts to 15 million euros. The effect on the operating result is about 5 million euros, whilst the negative tax impact is about 10 million euros. This data will be recorded as a non-recurring event in the second quarter of 2016 in Stora Enso’s results. About 17 million euros of pension liabilities will be transferred to the new owner with the transaction. «The Kabel paper mill», declares Kati ter Horst, Executive Vice President of the paper division in Stora Enso, «has an excellent reputation and a good client base. We believe that the site will be able to further develop its business under the new ownership».

On the basis of the 2015 annual data, the transfer should reduce Stora Enso’s annual sales by about 300 million euros. This transfer will also reduce the annual capacity of the paper manufacturing company by about 485 thousand tonnes. The Kabel plant employs about 540 people, staff who will be transferred to the new owner. The operation will not have a significant impact on the operating result of Stora Enso in the future. The company will continue to manufacture coated paper using wood under the Novapress brand name at its Veitsiluoto site, in Finland.

… and aims to consolidate the production of corrugated cardboard packaging

Stora Enso, on the other hand, intends to consolidate the production of corrugated cardboard packaging in Finland for its own Lahti plant. The aim is to improve profitability and competitiveness through the creation of a centre of excellence for corrugated cardboard packaging. In the context of this possible consolidation, it will invest about 19 million euros in new machinery and infrastructure: the largest investment item will be a new corrugator. The project started in November and should be complete by the end of the first quarter of 2018. According to the plan, the Heinola plant, responsible for manufacturing corrugated cardboard, will be permanently decommissioned and everything transferred to the Lahti site.

«The plan to consolidate our operations on corrugated cardboard packaging in Finland», says Peter Torstensson, SVP and Head of Corrugated Nordics, Packaging Solutions Division, «is largely due to the need to improve profitability and strengthen our competitive advantage. In addition to the expected investment, our strong infrastructure at Lahti will give us a world-class capital base to better serve our customers». The possible reduction of staff within the Lahti and Heinola sites is about 60 people. Decisions regarding consolidation, closing and reduction of employee numbers will be taken at the end of negotiations. The production of corrugated cardboard packaging will continue at the Kristiinankaupunki plant, whilst the Heinola Fluting plant for containerboard will not be affected. The plan will have a negative impact that will be recorded as an item affecting comparability (IAC) in the third quarter of 2016 of the results of Stora Enso, of about 9 million euros.

New name in Stora Enso’s human resources

From the beginning of November Malin Bendz will be the new Executive Vice President of human resources and a member of the Leadership Team Group of Stora Enso. Bendz came into the Finnish company in 2000, handling international human resources, but she has also worked in business development and in the purchasing sector. She holds a degree in personnel management and organisational development and an MBA. Malin Bendz has her office in Stockholm. «I am very pleased to welcome Malin into our Leadership Team Group», declares Karl-Henrik Sundström, CEO of Stora Enso. «With her wide and diverse experience in the field of human resources, she will provide a valuable input into our business while we are preparing to become a development company for renewable materials».