Stora Enso will change its existing business area structure to focus on growth markets. Poor performance in the Printing and Reading and Building and Living said to have impacted first quarter results.
Stora Enso plans to streamline the group’s business segments and has announced a new structure organisation project which will see a change from four to three business areas. According to Stora Enso, the current Building and Living business area will be integrated with the Reading and Printing business area in a new division “mainly focusing on mature business and geographies.” Including the previously announced €30m cost savings project in the Building and Living segment, Stora Enso expects the project to yield €200m in annual fixed cost savings, with full impact starting from the second quarter of 2014. The new division structure would become effective by 1 July 2013, Stora Enso explained. Single steps of the plan were subject to the outcome of co-determination negotiations.
According to Stora Enso, the company’s "streamlining and structure simplification project" is planned to include all business areas and corporate functions, reducing interdependencies between businesses and enabling a stronger focus on growth in value creating business. Besides organisational streamlining in business and corporate functions, outsourcing alternatives and sale of non-core assets would also be considered, the company announced.
Stora Enso posts poor Q1 2013 results
Stora Enso posted a net loss of €16m in the first quarter of 2013 against a net profit of €74m in the same period last year. Company’s sales were almost unchanged at €2,667m in the first quarter 2013, with operating profit showing a significant 84% drop to €20m compared to the first quarter of 2012.
Stora Enso blames weak markets and profitability in its Printing and Reading and Building and Living business segments for poor results in the period under review: “The combination of continuing structural decline in media-driven paper grades and economic weakness in Europe led to year-on-year declines of 9% in the group’s operational EBITDA and 21% in operational EBIT despite the solid performance of the other two business areas,” Jouko Karvinen, CEO of Stora Enso commented. According to Karvinen, the company’s reading and printing paper markets have shrunk by more than 20% since 2008.