Business News
Stora Enso to permanently close down 195 000 tonnes per year newsprint machine at Maxau
Tuesday 07. September 2010 - Stora Enso will, subject to decisions by the respective German corporate bodies, permanently shut down the 195 000 tonnes per year newsprint machine at Maxau Mill in Germany by the end of November 2010.
Newsprint production at Maxau will
end due to weak European market outlook and high production costs. Sales prices
have fallen significantly while recovered paper and wood costs have risen
strongly. As a result, there is no realistic prospect of newsprint production at
Maxau Mill becoming profitable again in the foreseeable future.
“The European newsprint market is structurally heavily oversupplied and there
has been no substantial recovery in demand since consumption collapsed in early
2009. The outlook for demand is negative too. In addition, the availability of
wood and recycled fibre in Germany has been limited, so costs have been rising
fast recently,” says Juha Vanhainen, EVP, Publication Paper Business Area.
The permanent shutdown of the newsprint machine at Maxau Mill will reduce
European newsprint capacity by approximately 1.5%.
The shutdown will affect about 180 of the 617 people employed at Stora Enso’s
Maxau Mill. Stora Enso is working on a social plan for the employees affected by
the restructuring measures. The two uncoated magazine paper machines with total
annual capacity 530 000 tonnes at Maxau Mill will remain in operation.
Estimated financial impact
Stora Enso expects the permanent shutdown of the newsprint machine at Maxau to
have the following financial impacts on the Newsprint segment:
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| | EUR million |
——————————————————————————–
| One-time non-cash fixed asset and working capital | 13 |
| write-downs in Q3/2010 | |
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| One-time cash provisions in Q3/2010 as non-recurring | 20 |
| items | |
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| One-time working capital reduction | 4 |
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| Annual sales reduction | 40 |
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| Annual operating profit improvement | 12 |
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