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Stora Enso Warns of Weak Profits, Cost Cuts, Shift to Sweden

Timber and paper group Stora Enso will be moving a larger part of its Finnish operations to Sweden, according to the company’s head Jouko Karvinen.

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Stora Enson tehdas.
Stora Enso vähentää hallinnosta 2 000 henkilöä. Uuden säästöohjelman vaikutusta Imatralla ei osata vielä arvioida.YLE

Karvinen told Swedish financial newspaper Dagens Industri on Wednesday that Finnish-Swedish pulp and paper company Stora Enso wants to take advantage of the weak Swedish krona, adding that timber is currently cheaper in Sweden.

The biggest cuts in production will be made in Finland, Karvinen said.

Poor Q1 Profits Prompt Cost Cuts

Stora Enso warned that its first quarter profits will be weak because of lower demand and said it would slash production and investment in 2009.

The company said in a statement that its January-March operating profit, excluding non-recurring items, was expected to be "clearly down" from the 28.4 million euros it reported in the fourth quarter of 2008.

To save money, Stora said it would cut investments in 2009 by one-fifth to 400 million euros. It also said the expansion of its Veracel pulp mill project, which it owns with Aracruz in Brazil, would be postponed for at least a year.

Production cuts in the first quarter had reduced capacity by some 20 percent, the company said.

Stora Enso said it saw European market demand remaining weak for at least the first half of 2009 due to the crisis.

Finnish Job Cuts Already Announced

Like other paper makers, Stora has for years struggled with overcapacity and lower demand, and the firm has introduced cost-cutting programmes and slashed jobs and capacity.

In January it said it was planning temporary lay-offs of more than 5,000 employees in Finland to adapt production to dwindling demand.

Last September it announced it would slash 1,700 jobs in Germany, Finland and Russia in the next few years.

Lähteet: YLE, Reuters

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