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Renewable Packaging escapes brunt of Stora Enso restructure

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Renewable Packaging escapes brunt of Stora Enso restructure

April 20
10:45 2013

Renewable Packaging has escaped the full impact of Stora Enso plans to restructure aimed at achieving annual fixed cost savings of €200m.

Stora Enso CEO Jouko Karvinen said the segment, along with the Biomaterials business area would remain as they are and concentrate on growth markets and businesses and innovation.

In its interim review, the firm said operational EBIT of €118m in Q1 2013 fell compared to €150m in Q1 2012 but Biomaterials and Renewable Packaging saw improvements.

Renewable Packaging operates throughout the chain, from pulp production to production of materials and packaging, and recycling and comprises of the Consumer Board, Packaging Solutions and Packaging Asia units.

Demand and price

Demand for consumer board in Europe was stronger in Q1 2013 compared with Q1 and Q4 2012 but price was slightly lower to stable based on the same time period.

Corrugated packaging stayed mostly stable in terms of demand but was slightly weaker in Q1 2013 from Q4 2012 and slightly higher in terms of price compared to Q4 2012.

Clearly higher volumes, mainly in Consumer Board, were partly offset by higher costs due to increased activity related to growth initiatives in Asia and ramp-up of the Ostrołęka containerboard machine which started up in January.

Establishment of the joint venture Bulleh Shah Packaging (Private) Limited with Packages Ltd. of Pakistan is expected to be completed during the second quarter of 2013.

Final approvals to build integrated plantation-based board and pulp mills at Beihai city in Guangxi in China are still pending.

Legal issues

The firm also reiterated its position to forcefully demand itself from legal proceedings in Finland relating to competition law infringements.

Metsähallitus of Finland initiated legal proceedings against Stora Enso, UPM and Metsäliitto claiming compensation for damages allegedly suffered due to the competition law infringements in March 2011.

The total claim against all the defendants’ amounts to €160m and the secondary claim against Stora Enso to €85m.

Finnish municipalities and private forest owners have initiated similar legal proceedings, with the total amount claimed from all the defendants at €75m and the secondary claims and claims solely against Stora Enso to €25m.

2013 outlook

Stora Enso said group sales for Q2 2013 are expected to be slightly higher and operational EBIT in line with or slightly higher than Q1 2013.

“Ostrołęka Mill PM 5 is not expected to have a material impact on sales in 2013 due to sales being mainly internal, but the EBITDA margin of PM 5 from the second half of 2013 is expected to be approximately 20%.

“Montes del Plata Pulp Mill is expected to have limited impact on the group’s sales and slightly negative impact on operational EBIT in 2013.”

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