Stora Enso CEO sees customers reducing inventories in Q4 for fine paper, wood products; company plans to further curtail manufacturing
October 21, 2011
– “We finished the third quarter as planned. The business areas performed as expected, but associated companies underperformed, essentially due to currency impact.
“In July we forecast rapidly increasing economic uncertainty and the need to plan for alternative demand scenarios going forward. We described the early signs of weakening demand and sales channel inventory reductions in Fine Paper and Wood Products. Whereas we see for example in coated fine paper stabilisation after inventory corrections, it is clear that going into the fourth quarter our customers, as well as ourselves, will reduce inventories and therefore we will further step up the manufacturing curtailments which we already increased significantly in the third quarter. If temporary lay-offs are planned, they will be subject to co-determination negotiations.
“As before, in a rapidly changing business environment our priorities are clear: cash preservation, defending our margins through active capacity management, minimising the number of underutilised assets by product swaps and continued cost-efficiency actions. The good news is that we are now in a stronger position than a few years ago due to lower fixed costs. We have enhanced flexibility through outsourcing and other means of decreasing the negative earnings impact of reduced demand. This path of improvements in costs and productivity, but also flexibility is one we will continue to follow.
“Looking further ahead, our current strategic projects - the Montes del Plata pulp mill in Uruguay, the Ostrołęka containerboard machine in Poland and the cross-laminated timber investment in Austria - are proceeding according to plan. Inpac acquisition was completed in the third quarter. Our strong balance sheet and cash position gives us a solid platform to pursue our future in our selected growth areas.”