Stora Enso to permanently close 310,000 m3/year Kopparfors Sawmill, 160,000 tonnes/year pellet mill in Sweden, says several years of effort to turn losses around have failed

HELSINKI , March 22, 2011 (press release) – Stora Enso is planning to permanently close down Kopparfors Sawmill in Sweden by the end of 2011 due to several years of losses and no feasible options for improvement. The plan also includes closing down the pellet mill.

“Despite several years of focused efforts to turn around the losses of Kopparfors Sawmill, we have been unable to achieve the improvements needed in efficiency and profitability. The slowness of the recovery in markets combined with poor operational efficiency, high raw material costs, unfavourable exchange rates and lack of cost flexibility have kept Kopparfors loss-making.

In our analysis, even in the most optimistic scenario, we can see potential for only marginal improvement,” says Hannu Kasurinen, EVP, Stora Enso Wood Products.

“This is of course a difficult message for our employees in Kopparfors. The closure would affect not only the people who work at Kopparfors Sawmill and the pellet mill, but also many people in the community. We will do everything we can in close co-operation with the local community and authorities to help every employee affected by the plans to find re-employment options.

“We are investigating alternatives for supplying our key customers and plan to utilise some of the sawmill and pellet mill machinery at other Stora Enso locations. The planned mill closure would not affect wood purchasing in Sweden.”

The Group will record a one-time non-cash fixed asset and working capital write-down of approximately EUR 20 million and in addition a restructuring provision with a cash impact of approximately EUR 9 million as non-recurring items in its first quarter 2011 operating profit. Based on 2010 annual figures the closure would reduce Stora Enso's annual sales by approximately EUR 65 million but have no material impact on the Group's annual operating profit. The planned closure will have a positive tax impact of approximately EUR 8 million in the first quarter of 2011.

Kopparfors Sawmill has an annual production capacity of 310 000 m3 of sawnwood, of which 150 000 m3 can be further processed by planing. The pellet mill has an annual capacity of 160 000 tonnes. Kopparfors has 110 employees.

The measures are subject to negotiations under the Swedish Co-determination Act (MBL).

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Stora Enso is a global paper, packaging and wood products company producing newsprint and book paper, magazine paper, fine paper, consumer board, industrial packaging and wood products. The Group is the world leader in forest industry sustainability. We offer our customers solutions based on renewable raw materials. Our products provide a climate-friendly alternative to many non-renewable materials, and have a smaller carbon footprint. Stora Enso is listed in the Dow Jones Sustainability Index and the FTSE4Good Index. Stora Enso employs some 26 000 people worldwide, and our sales in 2010 amounted to EUR 10.3 billion. Stora Enso shares are listed on NASDAQ OMX Helsinki (STEAV, STERV) and Stockholm (STE A, STE R). In addition, the shares are traded in the USA as ADRs (SEOAY) in the International OTCQX over-the-counter market.

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