Stora Enso is targeting savings of €12m (£10.3m) with plans to permanently close a paper machine at its Kvarnsveden Mill in Sweden.
The closure of paper machine 8 (PM8) at the Kvarnsveden Mill, part of the paper giant’s broader ongoing restructure that includes the reorganisation of its Swedish site, will put around 140 jobs at risk. A consultation with employees is currently underway.
The manufacturer is proposing to close PM8 by the end of the second quarter this year. The machine has an annual capacity of 100,000 tonnes of super-calendered (SC) uncoated magazine paper. Production at the site will continue on two machines: PM10 for improved newsprint paper and PM12 for SC papers.
Stora stressed that the machine closure would not impact its SC paper offering, with production continuing at Kvarnsveden Mill’s PM12 as well as at Maxau Mill in Germany and Langerbrugge Mill in Belgium. Stora also has an SC paper facility at Dawang Mill in China.
The reorganisation of the mill is designed “to ensure its competitiveness in the structurally declining paper market” according to executive vice-president of Stora’s paper division, Kati ter Horst.
“This plan includes the permanent shutdown of PM8, which, due to its small size and technical age, is unfortunately no longer competitive in the current market conditions. We appreciate the efforts taken by the employees, and regret that this plan would be necessary to support the competitiveness of Kvarnsveden Mill going forward,” she added.
The move, which will bank annual savings of €12m for the company, will book restructuring charges of around €17m in Stora’s Q1 2017 results. It will have no material impact on the firm’s sales or operational EBIT.
It is the latest in a string of disposals by the group as it moves through its ‘strategic transformation’ into a renewable materials business with a focus on consumer board, packaging products, biomaterials and wood products.
In 2016 the Finnish-headquartered business, which employs around 25,000 across 35 countries, posted sales of €9.8bn.