Paper Maker Warns Of Shredding Production
Thu, 10/25/2007 - 5:59am
HELSINKI, Finland (AP) — Finnish paper maker Stora Enso Oyj said Thursday that third-quarter profit rose to almost euro179 million (US$255 million) on slightly growing revenue but warned of layoffs and production cuts caused by higher costs and a weakening dollar.
Net profit in the three-month period through Sept. 30 was euro178.6 million (US$254 million), up from euro163 million a year earlier, the Finnish-Swedish company said. Stora Enso said it swung into a net loss of euro264 million (US$375 million) if nonrecurring items are included — down from a net profit of euro180 million a year earlier.
Net sales in the period were euro3.23 billion (US$4.6 billion), up from euro3.21 billion.
''Stora Enso's results ... were negatively impacted by the same factors that affected our second quarter performance — higher wood costs and the weakening U.S. dollar. We were unable to maintain the trend of year-on-year improvement,'' chief executive Jouko Karvinen said, adding that the group would continue to suffer from ''high wood and recovered paper costs.''
Stora Enso said it will lay off 1,700 workers and cut production.
The company will close three mills in Finland and one in Sweden, ''in response to dramatic cost increases and to safeguard long-term profitability,'' cutting annual production of newsprint and magazine paper by 505,000 tons and pulp by 550,000 tons.
''These closures, production rationalizations and staff reductions, however painful, are crucial for Stora Enso to be competitive long-term. To wait in the hope of better times would lead to more severe actions in the future,'' Karvinen said. ''We will therefore curtail production in the fourth quarter.''
The company said it expects the measures to result in annual savings of up to some euro160 million (US$230 million) by 2009.
Stora Enso, one of the world's largest forest product companies, employs 44,000 people in more than 40 countries.
The group was formed in a 1998 merger between Finland's Enso and Stora of Sweden. The Finnish government is the major shareholder with more than 10 percent of the stock.