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Stora Enso to cut magazine paper, newsprint and pulp capacity and reduce administrative staff

Press release from the issuing company

HELSINKI, FINLAND -- Oct 25, 2007 -- today announced that Stora Enso plans to cut magazine paper, newsprint and pulp capacity and reduce administrative staff
In response to dramatic cost increases and to safeguard long-term profitability, Stora Enso today announces its intention to close down permanently Summa Paper Mill and one magazine paper machine at Anjala Mill, and the pulp mills at Kemijärvi and Norrsundet. The closures will reduce annual capacity by 505 000 tonnes of newsprint and magazine paper and 550 000 tonnes of pulp. The number of personnel affected by these planned permanent mill closures will total about 1 400 - about 1 100 in Finland and about 300 in Sweden.
Stora Enso also plans to divest its mills at Kotka in Finland. The laminating paper business and the special coated magazine paper operations at Kotka are to be divested as Stora Enso continues to focus its portfolio. These two businesses do not compete directly with products of other Group mills. The sawmilling operations at Kotka could also be sold if a satisfactory offer is received. The mills at Kotka employ about 650 people.
In addition, to reduce costs and streamline administration following the recent reorganisation, the divestment of North American operations and the above capacity reductions, Stora Enso intends to reduce its administrative staff by about 300 in Group administrative functions and shared services (out of total group staff of about 850) in the UK, Finland, Sweden and Germany.
All the planned personnel reductions are subject to local consultation.
"These closures, production rationalisations and staff reductions, however painful, are crucial for Stora Enso to be competitive long-term. To wait in the hope of better times would lead to more severe actions in the future. To reduce our wood costs as rapidly as possible, in parallel with the permanent closure plans we will start production curtailments in pulp and certain paper grades already in the current fourth quarter," said Stora Enso CEO Jouko Karvinen.
"These intended actions are based on specific analyses of marginal costs in wood supply and asset quality, including future investment needs, optimisation of fibre flows between the Nordic pulp mills, and decreasing the overall use of fibre by reducing newsprint and magazine paper production capacity. I also want to be clear that these plans are based on present conditions and the outlook before implementation of the announced 80% (or at least EUR 50 per cubic metre) duties on Russian wood exports from 1 January 2009. If the issue of the impending higher duties cannot be resolved soon and the dramatically increasing wood cost trends reversed, we will have to take further steps to rationalise pulp, paper, board and sawnwood production in Finland," Karvinen continued.
"I am aware of the impact today's announcement will have on the affected employees and their families. However, we are acting to safeguard the future of Stora Enso and the vast majority of our employees. We will, together with the local authorities, proactively help the affected employees to find alternative employment."
Summa Mill and Anjala magazine paper capacity closures Summa Mill, with annual capacity 415 000 tonnes of newsprint, uncoated magazine paper and book paper, is expected to be permanently closed down during the first quarter of 2008. Its customers will continue to be served by Stora Enso's other mills in Finland, Sweden and Western Europe.
The annual capacity of Anjala Mill's PM 2 is currently 155 000 tonnes of coated magazine paper. Immediately after the first quarter of 2008, Anjala PM 2 is to cease production of magazine paper and be converted to produce book paper, including for customers currently served by Anjala PM 1 and Summa Mill. Anjala PM 1, with annual capacity 120 000 tonnes of book paper, is planned to be permanently shut down in a manner that will ensure continuity of customer service.