Stora Enso will restructure its North American bus

Stora Enso will restructure its North American business with an investment of US $250million

Stora Enso, Finland Sweden, fell 14.3pct year-on-year, and the details of the previously disclosed profit growth plan were announced on August 27 local time. The plan will be an important step for the company to further optimize its existing business, improve the financial performance of the North American Department, and cope with the continued downturn in the main product market in North America

plan is to significantly improve the competitiveness of Stora Enso in North America and enable its business to achieve profitable growth in this important market. The poor economic situation had an adverse impact on the assets acquired by the company in the United States in 2000, prompting the management to decide to withdraw a one-time loss of 115million euros (equivalent to 0.13 euros/share) in the third quarter

CEO Jukka harmala said, "in September 2000, we acquired consolidated papers Soon after, due to the sharp reduction of advertising investment, the North American paper market entered a long-term decline channel, especially publishing paper mills. The depression of the market continues to this day. The management of the group decided not to wait for recovery, but to take immediate action. We believe that this profit growth plan and some previous efforts will improve our profitability in the short term and determine our long-term competitive position. "

profit growth plan

the profit growth plan includes a set of measures that will significantly improve Stora Enso's competitive position in North America. The main contents of the plan include:

reorganization of specific manufacturing assets:

Wisconsin Rapids will switch to full bleached high-grade pulp

capital investment:

the paper machine No. 16 in rapids, Wisconsin, the paper machine No. 96 and 97 in Kimberly and the paper machine No. 26 in Biron were transformed

make changes to paper machines 43 and 44 in Niagara factory and 64 in whiting factory

if the cost is reasonable, expand the production of chemical thermomechanical pulp in port Hawkesbury factory recently.

permanently close the following production departments:

close the No. 12 paper machine of rapids factory in Wisconsin before the end of 2002. What customers are most concerned about is

close the No. 24 paper machine in Biron factory before the end of 2003 (depending on market conditions)

close the production of ground wood pulp and high yield pulp in port Hawkesbury factory

Close Kimberly's ground wood pulp plant before the end of 2002

layoffs:

due to this plan and other cost reduction measures, 500 jobs will be lost, mainly in rapids, Biron, Kimberly and port Hawkesbury factories in Wisconsin

impact on Stora Enso North America

the related costs of this plan are 266million euros (US $250million), which will be paid month by month in the next 36 months. After the completion of the plan, Stora Enso's production capacity in North America will not be affected

the total accounting write offs and expenses caused by the above measures are about 8million euros, of which 53million euros are non advanced. Due to cost reduction, the profits (earnings before interest, tax, depreciation and amortization, EBITDA) of North American companies will improve, and the production capacity will increase. After 2005, the high value-added production will reach 85million euros/year

asset loss

Stora Enso will draw a one-time asset loss of 1.15 billion euros and reflect it in its financial report for the third quarter of 2002, which is a non cash item

financial impact on the group

Department closures and asset losses will be included in annual depreciation and amortization, amounting to € 75million, or € 0.08 per share. The group's capital will decrease by 1.203 billion euros and the asset liability ratio will deteriorate by 7 percentage points. These costs and losses are one-time expenses

once the plan is fully realized (after 2005), the company's profit per share will increase by 0.05 euros, strengthening the supervision of the publishing industry