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Stora Enso says to cut 600 jobs amid weak European demand

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(Globalpost/GlobalPost)

Finnish paper and packaging company Stora Enso said on Tuesday it would cut 600 jobs and warned of a deterioration in the European paper market and its building materials unit.

The company announced annual cost reduction measures worth 54 million euros ($73.2 million), including the closing of two of its Swedish paper machines, representing 3.4 percent of its European newsprint capacity.

"The plans to shut down capacity are due to continuing structural weakening of newsprint demand in Europe," the company said in a statement.

The company said it would also streamline customer service operations by consolidating sales, order handling and logistic services positions in Europe.

The measures will result in 88 million euros in one-off charges in the first quarter of the year.

Group sales were expected to be roughly in line with those in the previous quarter, but on the operational level earnings before interest and taxes were expected to be a third lower than in the fourth quarter of last year, it said.

The decline was "due to a deterioration in European paper and building and living markets," it said.

Stora Enso on Tuesday posted a 43 percent rise in 2012 net profit to 10.8 billion euros, mainly due to non-recurring items. Sales were down by one percent.

Last year, the company announced a 48 million euro ($65 million) annual cost cutting package citing challenges in the operating environment for coated magazine paper.

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http://www.globalpost.com/dispatch/news/afp/130205/stora-enso-says-cut-600-jobs-amid-weak-european-demand