Stora Enso reorganisation may lead to lay-offs

Jouko Karvinen

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The structural upheavals announced at the Finnish-Swedish pulp and paper giant Stora Enso on Wednesday will also affect the personnel, CEO Jouko Karvinen predicts.
      In practice this means lay-offs, the scope of which Karvinen was unwilling to discuss in detail.
      According to Karvinen, the majority of the personnel will nonetheless benefit from the new structure, as it is simply "more satisfactory to work for a successful company".
     
After having worked for eight months at Stora Enso, Karvinen reported that the company is reorganising its operations from the current four divisions into eight separate business areas.
      At the same time, the company announced that an impairment charge totalling about EUR 1,300 million will be accounted for as a non-recurring item without cash impact in the third quarter of 2007.
      In practice, the company admitted having miscalculated the price development for paper, as well as the growing costs for raw timber and energy.
     
The eight separate business areas in prospect are Fine Paper, Merchants, Consumer Board, Industrial Packaging, Magazine Paper, Newsprint, North America, and Wood Products.
      "Through these organisational changes, we also seek to improve the performance of our North American operations by reorganising them into a separate entity with full profit and loss responsibility, reporting directly to me", Karvinen said.
      The CEO noted further that the main objectives of the reorganisation are to give business area leaders and their teams clear responsibility for improving financial performance.
      More than growth, Karvinen again stressed profitability, saying that as a team, they have one objective - to strengthen the company and to improve profitability.
     
As a result of reorganising, the Stora Enso Group Executive Team will be changed, with five of the business areas having a new leader.
      "I am delighted to be bringing several experienced Stora Enso leaders into the Group Executive Team”, said CEO Karvinen.
      Following the new organisation, the Stora Enso Group Executive Team will include five Finnish and four Swedish executives, as well as one from the USA.
      Hannu Ryöppönen will continue as the Deputy CEO and CFO.
      Jouko Karvinen joined Stora Enso in October 2006. He had earlier made a career with ABB and Philips, and his arrival was seen as presaging the major renewals necessary to improve the company's recent poor profitability.
     
After the news was announced on Wednesday morning, the price for Stora Enso R shares dropped by a couple of per cent.
      However, by evening it had turned upwards again and closed slightly above the closing price for Tuesday.


Previously in HS International Edition:
  Wood shortage threatens pulp production in Kemijärvi (15.6.2007)
  Jouko Karvinen surprise choice for Stora Enso helm (18.10.2006)

Links:
  Stora Enso Press Release 5.9.2007: Stora Enso launches new Group organisation to improve long-term profitability

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