3 - Stora Enso

STRATEGY
Strategy in action in 2005
Focusing on profi tability
Two profi t improvement programmes
were introduced in 2005 covering
Stora Enso’s European operations to
secure the competitiveness of the
Group’s assets in this key market.
The Profi t 2007 programme has targeted
improving Stora Enso’s pre-tax
profi t by EUR 300 million annually from
mid-2007 onwards. The measures needed
to achieve this will include streamlining
production costs and support, cutting
administrative costs, as well as optimising
the sales and production mix to
improve overall effi ciency. This is
expected to result in a reduction in per-
The competitive environment in 2005
Demand growth for printing and
writing paper remained modest
in the mature markets of Western
Europe and North America, but continued
buoyant in new growth markets.
Total world demand is estimated to have
grown by 1% in 2005.
Demand for packaging grades also
moved ahead faster in Eastern Europe
and Asia, and China in particular, than
in mature markets.
Demand for wood products grew
well in North America, but remained
marginal in Western Europe in 2005.
Western Europe
Production of printing and writing paper
in Western Europe in 2005 is estimated
to have totalled 36.2 million tonnes, and
demand to have totalled 30.4 million
tonnes, slightly up on 2004. Exports of
these types of papers to other regions
totalled some 7.3 million tonnes, and
imports 1.3 million tonnes.
Production of standard newsprint
production was down 1% on 2004, at
9.4 million tonnes, while demand was
up 1%, at 9.2 million tonnes. As exports
10• STORA ENSO COMPANY 2005
sonnel of 2 000, and by a further 600 to
700 if additional outsourcing potential is
taken up.
The Asset Performance Review has
resulted in a decision to close four production
units with 400 000 tonnes of
capacity, and divest six other units.
These actions will be fi nalised by the end
of 2006. A total of 730 jobs will be lost as
a result of the planned closures.
In addition, operations at four units
will be subject to close and ongoing scrutiny.
The units concerned are: Summa
Mill in Finland, Berghuizer Mill in the
Netherlands, and Reisholz Mill and
Uetersen Mill in Germany. A decision
to other regions declined and imports
increased, total deliveries were somewhat
lower than in 2004. The market for
improved newsprint continued to grow.
Western European production of cartonboard
is estimated to have totalled
6 million tonnes, down 2% on 2004.
Demand, at 4.5 million tonnes, was also
2% lower. The proportions of white lined
chipboard, folding boxboard, and solid
bleached sulphate board remained
unchanged, at 2.7 million tonnes,
1.5 million tonnes, and 0.3 million
tonnes respectively. Deliveries to Eastern
Europe continued to rise, while those to
other regions decreased slightly.
Production of wood products in
Western Europe is expected to total
81.4 million m³ in 2005, a 1% increase
on 2004. Consumption rose only marginally,
to 79.1 million m³.
Eastern Europe
Production of printing and writing paper
in Eastern Europe reached 3 million
tonnes, an increase of 6% on 2004, while
demand rose 7% to 4.6 million tonnes.
will be taken on the future of these mills
before the end of 2006.
The Profi t Enhancement Programme
in North America was largely completed
by the end of 2005. Five of the planned
six machine rebuilds and modernisations
have been completed and four machines
and pulp assets closed down. The number
of personnel in North America as of the
end of 2005 totalled 5 000, compared to
7 300 in 2000.
Closer to the customer
Stora Enso continued its strategy of moving
closer to the end-use customer in the
value chain in 2005, through the acqui-
Imports increased by 11% to 2.2 million
tonnes.
Demand for newsprint expanded by
6% to reach 1.8 million tonnes in 2005.
Imports totalled 0.6 million tonnes.
North America
Production of printing and writing paper
in North America totalled 28.2 million
tonnes in 2005, unchanged from 2004.
Total demand reached 30.2 million
tonnes, 2% down on 2004. Demand for
uncoated mechanical paper increased
the fastest, and was up by 3%. Imports
and exports were virtually unchanged
from 2004, accounting for 3.1 million
and 1.1 million tonnes respectively.
Total production of newsprint continued
to decline, and stood at 12.7 million
tonnes, down by 5% on 2004, as
capacity decreased by approximately 4%.
Demand in North America fell back by
over 5% to 10.4 million tonnes due to
the use of lighter grades, a continuing
fall in circulation fi gures, and a weaker
advertising market.
Exports totalled 2.6 million tonnes,
a slight increase on 2004.