Big Nordic Paper Maker to Lay Off Up to 1,100 Workers, Cut Production and Close Mills

By: MATTI HUUHTANEN Stora Enso Oyj said Wednesday it will lay off up to 1,100 workers, cut production and close mills in Finland as the Nordic paper maker continues to struggle with dwindling revenue.

The announcement came four weeks after the company reported a second-quarter net loss of $523 million and a 24% drop in net sales.

Stora Enso said it will close a pulp mill by the end of the year and a sawmill in 2010. Also, cutbacks and reorganization at other mills will be made to save costs, it said.

The company's share price rose 2.4% in afternoon trading in Helsinki.

Last month, Chief Executive Jouko said the company's numerous restructuring measures in the past two years, including heavy cost cutting programs and layoffs of hundreds of staff, had begun to pay off.

On Wednesday, however, he painted a bleak picture.

"Structural change will take place and it will take time," Karvinen told reporters and analysts. "Now, we must not look into the rearview mirror but face the truth."

Nordic paper companies plunged into losses at the end of last year because of slumping demand from customers such as newspapers and magazines, and this year total production in the forest sector has slumped by some 30%.

A year ago, both Stora Enso and the world's largest magazine paper maker, UPM-Kymmene Corp., warned they would lay off thousands, close mills and cut production to counter high costs and overcapacity in the industry.

Earlier this year, Stora forecast a weak third quarter and warned of further cutbacks.

Stora Enso is one of the world's largest forest product companies making magazine paper, newsprint, fine paper, pulp and packaging boards. It employs 29,000 people.

The company was formed in a 1998 merger between Finland's Enso and Stora of Sweden. The Finnish government holds more than 10 percent of the stock. The group has 29,000 employees.