Finnish Stora Enso, Europe's leading paper and cardboard maker, is to cut up to 2,000 jobs in the next two years in order to save 250 million euros. The company also announced a net loss of 36.1 millions euros in the first quarter.
AFP - Stora Enso, Europe's leading paper and cardboard maker, said Thursday it would cut up to 2,000 jobs globally in the next two years to boost profitability, as the company reported a first-quarter loss.
The company, which said paper demand in Europe was dented by the decline in newspaper circulation and the slump in advertising, said it aimed to save up to 250 million euros (326 million dollars) annually by streamlining its management structure by the end of 2010.
Shares in Stora opened higher after the announcements and were up by 8.5 percent to 4.05 euros at 0800 GMT.
Stora Enso has in recent years reorganised it operations, announcing massive cuts in production capacity and jobs.
Last September Stora said it would slash 1,700 jobs in Germany, Finland and Russia in the next few years, and it has said it expects to temporarily lay off 5,000 workers in Finland in the first half of the year.
The company said the new reductions were the result of "the recent, radical change in the operating environment of the forest products industry" and that the global financial crisis had forced it to react.
Stora plans to achieve the cost cuts by reducing top and middle management and by downscaling staff functions and country organisations by one third.
In 2008 Stora had around 33,800 employees worldwide, half of whom were in Finland and Sweden. The company did not specify which countries would be affected by the job cuts.
Stora also announced Thursday a net loss in the first quarter of 36.1 million euros, compared to a net profit of 66.1 million euros in the same period in 2008.
Sales in January-March shrank by nearly 25 percent to 2.1 billion euros.
"It is increasingly clear that the sharp volume declines we are experiencing in our markets are driven more by underlying declines in demand, than customer destocking," chief executive Jouko Karvinen said in the earnings report.
Karvinen said the company would continue production curtailments during the second quarter, especially in Finland where costs are high. The company will also continue to review possibilities for permanent capacity cuts.
Stora forecast that demand for paper would to continue to be weak in Europe and in China in 2009.
Date created : 2009-04-23