By: E&P Staff
Finnish-Swedish papermaker Stora Enso plans to permanently shut down a 195 000-ton-per-year newsprint machine at its Maxau Mill, in Germany, by the end of November owing to a weak European market outlook and high production costs.
In its announcement, the company stated, “Sales prices have fallen significantly while recovered paper and wood costs have risen strongly. As a result, there is no realistic prospect of newsprint production at Maxau Mill becoming profitable again in the foreseeable future.”
The shutdown will reduce European newsprint capacity by approximately 1.5%, according to the company, which said the action will affect about 180 of the mill’s 617 jobs. Two uncoated magazine-paper machines will remain in operation.
Stora Enso expects the shutdown to have the following financial impact on its newsprint segment:
One-time non-cash fixed asset and working capital write-downs in Q3 2010, $16.5 million
One-time cash provisions in Q3 2010 as non-recurring items, $25.5 million
One-time working capital reduction, $5.1 million
Annual sales reduction, $51 million
Annual operating profit improvement, $15.3 million