02.12.2012 Views

Mill Capacity (tonnes) Grade Personnel - Stora Enso

Mill Capacity (tonnes) Grade Personnel - Stora Enso

Mill Capacity (tonnes) Grade Personnel - Stora Enso

SHOW MORE
SHOW LESS

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

Stora Enso continues the change

Jouko Karvinen, CEO & Markus Rauramo, CFO

19 August 2009


It should be noted that certain statements herein which are not historical facts, including, without limitation

those regarding expectations for market growth and developments; expectations for growth and

profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or similar

expressions, are forward-looking statements within the meaning of the United States Private Securities

Litigation Reform Act of 1995. Since these statements are based on current plans, estimates and

projections, they involve risks and uncertainties which may cause actual results to materially differ from

those expressed in such forward-looking statements. Such factors include, but are not limited to: (1)

operating factors such as continued success of manufacturing activities and the achievement of

efficiencies therein, continued success of product development, acceptance of new products or services

by the Group’s targeted customers, success of the existing and future collaboration arrangements,

changes in business strategy or development plans or targets, changes in the degree of protection created

by the Group’s patents and other intellectual property rights, the availability of capital on acceptable terms;

(2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future

global market prices for the Group’s products and the pricing pressures thereto, price fluctuations in raw

materials, financial condition of the customers and the competitors of the Group, the potential introduction

of competing products and technologies by competitors; and (3) general economic conditions, such as

rates of economic growth in the Group’s principal geographic markets or fluctuations in exchange and

interest rates.

August 2009 2


Contents

Stora Enso continues the change

Actions

Financial impact on the company

Support measures

Summary

Appendix

August 2009 3


Stora Enso continues the change


Stora Enso continues the change

Stora Enso plans further reductions of manufacturing

capacity:

– Continuing weak demand

– Long-term cost pressure on wood fibre and energy

– Loss making since the fourth quarter of 2008; continued during

the first half of 2009

– Earlier actions not sufficient in the present environment

August 2009 5


Wood costs 2003–2008

Currency rates are not the reason or the solution to the problems

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Source: Stora Enso

Wood costs in Finland compared to Sweden

road-side price

2003 2004 2005 2006 2007 2008 2009e

birch pulp wood spruce pulp wood

pine pulp wood

pine sawlogs

spruce sawlogs

August 2009 6

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

2003 2004 2005 2006 2007 2008 2009e

Based on fixed currency rates in 2003


Pulp costs in Brazil, Sweden and Finland

1-6/2009, pulp transported to the port of Rotterdam

Pulp mill in

Brazil

Pulp mill in

Sweden,

short fibre

Pulp mill in

Sweden, long

fibre

Pulp mill in

Finland, short

fibre

Wood costs Other costs (incl. trasnportation)

Pulp mill in

Finland, long

fibre

The figures do not include the cost of capital.

August 2009 7


Industrial electricity taxation in different countries

8

7

6

5

4

3

2

1

0

EUR/MWh

Finland UK Germany Austria France Sweden

Source: Finnish Forest Industries Federation

Electricity

tax

Additional electricity tax

(proposal) 2011

August 2009 8


Costs on distance

Comparison between Swedish and Finnish units

% Sales

FY 2008 3 year average

Unit/Sweden Unit/Finland Unit/Sweden Unit/Finland

August 2009 9


Company plans to reduce high-cost manufacturing base

further


Units planned to be permanently closed down

Mill

Sunila Pulp Mill 375 000

Tolkkinen

sawmill

Imatra PM 8 210 000

Capacity

(tonnes) Grade Personnel Timing

Long-fibre

pulp

250 2 nd quarter 2010

260 000 m 3 Sawn wood 55 By the end of 2009

Uncoated

fine paper

140 1 st quarter 2010

Tolkkinen

Varkaus

August 2009 11

Sunila

Kotka

Imatra


Kotka mills to be divested

Mill Capacity (tonnes) Grade Personnel

Kotka mills 185 000 MFC 530

175 000 Laminating paper

250 000 m 3 sawn wood

Tolkkinen

Varkaus

August 2009 12

Sunila

Kotka

Imatra


Varkaus Mills provisionally planned to be permanently

closed down in 2010

Mill Capacity (tonnes) Grade Personnel

Varkaus mills 290 000

310 000

Newsprint and

directory paper

Uncoated fine

paper

270 000 m 3 sawn wood

August 2009 13

630

Tolkkinen

Varkaus

Sunila

Kotka

Imatra


Support people affected


People affected in earlier restructurings

Kemijärvi and Summa

Employees 664

Retirement 107

New jobs 433

Training 38

Kemijärvi

Summa

August 2009 15


We will continue to help people affected

• Help to affected personnel in finding re-employment

• Internal job offering, outplacement services

Stora Enso to actively work with labour authorities to find new jobs and

training opportunities

• Support to those having to move to another location

• Financial support to those people that want to start own businesses

August 2009 16


Financial impact on the company


Financial impact on the company

• Non recurring items Q3 2009:

– Approximately EUR 245 million fixed asset and inventory write-

downs for the Q3 of 2009

– Approximately EUR 25 million restructuring provision of Sunila,

Imatra (PM8) and Tolkkinen

• The debt equity ratio will increase from 0.53 (09Q2) to 0.59 as a result

of the combined impact of the fixed asset impairment testing and asset

restructuring

• The targeted annual operating profit improvement of planned closure is

estimated to be in range of EUR 140 million to EUR 160 million

depending of the outcome of the provisional planned closure of

Varkaus Mills and the divestment of Kotka Mills from the beginning of

2011 onwards.

August 2009 18


Financial impact on the company

• Planned closures of Sunila Pulp Mills, Tolkkinen sawmill and PM 8 at

Imatra Mills:

– Reduction of external sales approximately EUR 150 million and

capital employed approximately EUR 50 million

August 2009 19


Summary


Summary

• Today’s announcement is based on the dramatic reduction in

demand we have seen during the past year – we predict that some

of that demand will not recur

• We need to balance our production to the changed demand

environment and reduce our capacity starting from the highest cost

units

• Finnish government has said in connection with state budget

preparations that it will consider actions which could improve

Finnish forest industry operating environment

• We appreciate that government has taken the necessary initiative

and we welcome all decisions which may improve the situation

• However, those initiatives will not affect the plans published today –

instead those longer term decisions will aim at safeguarding the

remaining Finnish forest industry assets from 2011 onwards

August 2009 21


Appendix


Permanent pulp, paper and board capacity reductions

since 2006

Mill Date Grade Capacity reduction, t

Corbehem PM 3 and PM 4 Jun 2006 LWC 250 000

Varkaus PM 1 End 2006 WFC 95 000

Berghuizer Mill Oct 2007 WFU 235 000

Reisholz Mill End 2007 SC 215 000

Summa Mill Jan 2008 Newsprint, SC, book paper 415 000

Anjala Mill PM1 Feb 2008 Coated magazine paper 155 000

Baienfurt Mill End 2008 FBB 190 000

Kabel Mill PM 3 End 2008 Coated magazine 140 000

Kemijärvi Pulp Mill April 2008 Long-fibre (SW) pulp 250 000

Norrsundet Pulp Mill Dec 2008 Long-fibre (SW), pulp 300 000

Varkaus Mill coreboard machine Dec 2008 Coreboard 100 000

Total 2 345 000

Totals % of capacity as at end 2005

(adjusted for disposals)

Paper and board 1 795 000 t/a 11%

Pulp 550 000 t/a 9%

August 2009 23


Permanent sawn wood capacity reductions since 2006

Mill Date Capacity reduction, m 3

Veitsiluoto Sawmill 2006 100 000

Honkalahti Sawmill 2006 90 000

Sauga Sawmill Jun 2007 130 000

Sollenau Sawmill 2007 110 000

Näpi Sawmill 2007-2008 100 000

Kotka Sawmill 2007-2008 70 000

Paikuse Sawmill End 2008 220 000

Zdirec Sawmill 2008 120 000

Ybbs Sawmill 2008 & Jun 2009 200 000

Kitee Sawmill 2008 & Jun 2009 130 000

Varkaus Sawmill Jun 2009 60 000

Total 1 330 000

Reductions equal 17% of capacity as at end 2005 (adjusted for disposals)

August 2009 24

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!