Business News
Stora Enso takes next step towards more focused, efficient and faster-reacting company
Thursday 23. April 2009 - Annual cost savings target from Business Area consolidation and significantly leaner administration EUR 250 million by end of 2010
EUR 250 million annual cost reduction; planned headcount reduction up to 2 000 mainly from leaner management structures Majority of cost savings by end of 2009, remainder by end of 2010 New Group Executive Team and consolidated Business Area structure Simplified operating models for Group functions
Stora Enso is planning to reorganise its operations with the aim of reducing annual costs by EUR 250 million, majority of the reduction to be achieved during 2009 and the remainder by the end of 2010. Up to 2 000 employees will be affected, mainly as a result of the leaner management structures. The final outcome will depend on the result of the co-determination procedure.
“In the past two years Stora Enso has taken several proactive and even early steps to position the Group for a strong future. From divestments that strengthened our balance sheet to difficult restructuring programs in operations and de-layering the organisation, which together reduced our total fixed costs by 4 to 5 margin points in two years, we have had one consistent goal – to make the Group stronger, faster reacting and more focused. And yet – with the dramatic changes in our operating environment – this has been only the beginning of our journey,” says Stora Enso CEO Jouko Karvinen.
“Today we are also taking the next step to make Stora Enso a simpler, faster-reacting and more focused Group. Key objectives of this plan are consolidating the organisation and building stronger and more powerful businesses that can operationally and strategically react quickly in a rapidly changing environment. We aim to simplify decision-making, and move decisions clearly closer to the businesses serving our customers.”
The planned actions are partially motivated by the recent, radical change in the operating environment of the forest products industry. The global financial crisis and sharp economic downturn require rapid responses to adapt to change.
The savings will be obtained, according to the plan, mainly by reducing top and middle management and by downscaling staff functions and country organisations by one third. In addition, Group functions such as Wood Supply and Logistics will have a revised operational model and be brought closer to the Business Areas.
“The critical supply organisations Wood Supply, Logistics and Energy will be managed by Business Area driven user boards to increase the clarity and accountability of these P/L and balance sheet responsible organisations. Other Group functions, including Human Resources, Communications, R&D and Purchasing, will be focused by reducing Group and country-level organisations to the absolute minimum where quantifiable cross Business Area economies of scale are clearly greater than the benefits of being close to the business organisations,” says Jouko Karvinen.
New Business Area Structure
The new organisational structure as of 23 April 2009 will ensure strategic flexibility for possible industry consolidation. The new Business Areas are:
Publication Paper (comprising the former Newsprint & Book Paper and Magazine
Paper) headed by Juha Vanhainen
Packaging (comprising the former Consumer Board and Industrial Packaging) headed
by Mats Nordlander
Fine Paper headed by Hannu Alalauri
Wood Products headed by Hannu Kasurinen
The current transparent external segment reporting will not be changed.
New Group Executive Team
As of 23 April 2009, the Group Executive Team comprises the following eight
members:
Jouko Karvinen, CEO
Hannu Alalauri, EVP, Fine Paper
Hannu Kasurinen, EVP, Wood Products
Mats Nordlander, EVP, Packaging
Markus Rauramo, CFO
Bernd Rettig, EVP, Technology and Strategy, Country Manager Germany
Elisabet Salander Björklund, EVP, Wood Supply, HR, Sustainability, Country
Manager Sweden, regional responsibility for Latin America
Juha Vanhainen, EVP, Publication Paper, Country Manager Finland
Veli-Jussi Potka, who was a member of the Group Executive Team and head of the Industrial Packaging Business Area, has been appointed Head of Strategy and M&A, and Packaging Products within the new Packaging Business Area. Aulis Ansaharju, who was a member of the Group Executive Team and head of the Fine Paper Business Area, is responsible for the EUR 250 million cost savings and change project announced today, and in that role he will report to CEO Jouko Karvinen.
Changes below the Group Executive Team will be in place by 1 July 2009 at the latest. Stora Enso will proactively help the affected employees to find alternative employment within or outside the Group.