Stora Enso expects to shut down pulp and paper production at its mills in Kvarnsveden, Sweden, and Veitsiluoto, Finland, in the third quarter of 2021. This will affect 670 employees in Finland and 440 employees in Sweden.
The Demand for paper in Europe has been declining for over a decade. According to the company, this trend has accelerated further due to the pandemic and the resulting change in consumer behaviour.
As a result, there is considerable overcapacity on the European paper market, which could lead to a historically low price level and calls into question the cost competitiveness of many paper mills. Both the Kvarnsveden and Veitsiluoto mills are loss-making and profitability is not expected to improve in the future, the report continues.
„Unfortunately, we have to adjust our production capacities in order to improve the competitiveness of our entire paper business. Unfortunately, this means closing unprofitable plants. As announced last year, we have reviewed our strategy and are focussing our business on accelerated growth and value creation. We are therefore focussing on the areas of packaging, building solutions and biomaterials, where we see strong growth potential.“ Annica Bresky, President and CEO of Stora Enso
Plants in Sweden and Finland no longer profitable
The planned mill closures will reduce the paper production capacity of Stora Enso by 35 per cent to 2.6 million tonnes per year. The company's annual paper sales would fall by around EUR 600 million and the operating earnings before interest, taxes, depreciation and amortisation (EBITDA) would probably improve by around EUR 35 million per year. The paper division's share of Group sales would be reduced to just over 10 per cent following these planned closures.
Stora Enso plans to continue sourcing wood from northern Finland and central Sweden, as these regions remain important sources of wood for the company's operations.
Source: Stora Enso
