Stora Enso annual result: Finland is only a nuisance

CEO Jouko Karvinen is not overly concerned about the future of Finnish forest industry

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What lies behind the result?
      Store Enso, a forest industry giant owned by the State of Finland and the Swedish Wallenberg family, is in a more interesting situation than other forest industry players.
      The company is not just restructuring. It is seeking growth from paperboard and pulp - but not in Finland.
      Paperboard for milk and juice cartons is the company’s cornerstone. Last year nearly a third of the firm’s operating profit came from the paper board division.
      From its printing paper division, Stora Enso is losing money, and if needed the mills will be sold. In Europe the demand for paper is shrinking, but in Asia it is on the increase.
     
Strengths and weaknesses
      CEO Jouko Karvinen is not that much bothered by the future of the Finnish forest industry. The chairmanship of the field’s interest group, the Finnish Forest Industries Federation, did not interest him, to say nothing of other positions of trust within the sector. Karvinen has not made an appearance at the annual Independence Day Gala Reception hosted by the President of the Republic, either.
      Non-alliance gives Karvinen freer hands to resolve the cost problems of the factories in Finland. The final act for the company’s mill in Varkaus is yet to be witnessed, but by the same token sights should be set farther north.
      For a number of years now nothing much has happened at the Stora Enso mills in the northern town of Kemi, apart from some minor repairs. The machines in Veitsiluoto are approaching their use-by date and the mill is behind sheets of Gulf of Bothnia pack ice far away from the markets.
     
The future
      Every now and then CEO Karvinen speaks of his successor, who, in his opinion, should come from within the company. What is strange is that he speaks of a successor at all, for as far as is known he is not on his way out any time soon.
      It is not Karvinen but the Stora Enso Board who will decide if the next CEO should come from within the firm or from outside. If Karvinen’s successor was to be one of the members of the present executive team, the number one candidate would be CFO Markus Rauramo.
      And right now Karvinen cannot go anywhere, for he has unfinished factory projects both in Poland and Uruguay.
      In South America a giant pulp mill is in the making, and it requires at least PR activities from the CEO.
      In Uruguay, Stora Enso’s partner is the Chilean pulp producer Arauco. In Brazil Stora Enso co-owns a pulp mass factory with a company called Fibria.
      Apparently the competition regulations in South America are relatively loose, for in the Arauco-Stora Enso-Fibria triangle the Finnish company has the pivotal role. It knows in advance in which direction these large players will next shove the price of pulp.
     
The details of Stora Enso's annual figures are given in the press release issued on Wednesday.
      The company, employing around 28,000 worldwide, produced a net profit of EUR 342 million on sales totalling just under EUR 11 billion. EPS was halved at EUR 0.43.


Previously in HS International Edition:
  Industrial action brings Stora Enso building site to standstill in Uruguay (23.9.2011)

See also:
  State-subsidised laminate factory in Kemijärvi has come to a standstill (24.1.2012)
  Without paper production, UPM would be a decent company (2.2.2012)
  Stora Enso to close more mills in Finland (19.8.2009)

Links:
  Stora Enso Fourth Quarter and Full Year Results 2011, 8.2.2012
  Stora Enso (Wikipedia)
  Stora Enso

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