Company Will Account for an Impairment Charge of About EUR 1 300 Million in Third Quarter of 2007
HELSINKI, Finland, Sept. 10 /Xinhua-PRNewswire/ -- Stora Enso is reorganising its operations from the current four divisions into eight separate business areas: Fine Paper, Merchants, Consumer Board, Industrial Packaging, Magazine Paper, Newsprint, North America and Wood Products. An impairment charge totalling about EUR 1 300 million will be accounted for as a non-recurring item without cash impact in the third quarter of 2007.
"The main objectives of the reorganisation are to give business area leaders and their teams clear responsibility for improving financial performance, remove layers of management and to speed up decision-making. These changes will also improve our external transparency through enhanced reporting. The new structure will further focus the portfolio analysis work and facilitate scalability for the future, strengthening Stora Enso’s position with regard to potential industry consolidation," says Stora Enso CEO Jouko Karvinen.
"Through these organisational changes, we also seek to improve the performance of our North American operations by reorganising them into a separate entity with full profit and loss responsibility reporting directly to me. Key criteria for defining the new business structure were identifying entities with strong synergies within the business and to a large extent their own customer base, while keeping customer interfaces simple and sharing relevant Group-level synergies."
The new organisational structure is effective immediately. Financial reporting in the third quarter results to be published on 25 October 2007 will be based on the new eight business areas. Historical figures based on the new business areas will be reported separately by 15 October 2007.
Executive Management Appointments
"I am delighted to be bringing several experienced Stora Enso leaders into the Group Executive Team (GET). As a team, we have one objective - to strengthen the company and improve profitability. The new Group Executive Team has a good balance of pulp, paper and board expertise combined with experience from outside the industry in Hannu Ryopponen and myself. We need to speed up decision-making and implementation of our cost-reduction programmes, while continuing to provide excellent customer service. This is what I need from the new team, and all the teams around them," says CEO Karvinen.
The new organisation and its leadership are as follows:
Reporting Unit Executive Responsible Responsibility
Fine Paper Business Aulis Ansaharju Fine Paper, Country Manager
Area Finland
Consumer Board Mats Nordlander Consumer Board, Merchants,
Business Area, Market Services
Merchants Business
Area
Industrial Packaging Veli-Jussi Potka Industrial Packaging
Business Area
Magazine Paper Hannu Alalauri Magazine Paper
Business Area
Newsprint Business Juha Vanhainen Newsprint
Area
North America Business John Gillen* North American businesses
Area
Wood Products Business Elisabet Salander Wood Products, Wood Supply
Area Bjorklund and Pulp Supply
Group Function Leaders
Hannu Ryopponen, Finance and Strategy,
Deputy CEO and CFO Purchasing
Bernd Rettig Technology and R&D,
Operations Improvement,
Logistics and Investments,
Country Manager
Germany
Christer Agren HR Services, Leadership
Development, IT, Country
Manager Sweden
All members other than the CEO and Deputy CEO are Executive Vice
Presidents (EVP).
* John Gillen will continue heading Stora Enso’s North America business
area through a transitional period. Details of the North American
business and organisational structure will be announced in due course.
Financial impact of the impairment charge
The impairment charge will comprise about EUR 300 million on goodwill and about EUR 1 000 million on fixed assets. The fixed asset impairment will have a one-time positive tax impact of about EUR 100 million. The estimated distribution of the impairment between the business areas will be announced by 15 October 2007. The impairment charge arises from a number of factors including the reorganisation into eight separate business areas, increased wood costs mainly driven by export duties on wood from Russia, the poor outlook for magazine papers, rising interest rates and adverse currency movements.
The impact of the impairment charge on the Group’s financial figures will be as follows:
Annual depreciation reduction EUR 100 million
Capital employed reduction EUR 1 200 million
Earnings per share (annualised) EUR +0.11
Debt/equity ratio From 0.55 to 0.64
Return on capital employed (annualised) +1.4% -points
The discount rate used in the impairment calculation varied from 8.5% to 9.7% (pre-tax) based on business/country mix. The Group’s pre-tax weighted average cost of capital (WACC) is 9.1%. Currency rates prevailing at 31 July 2007 were used in calculating the impairment charge estimate; the actual impairment charge in euros will be determined using rates prevailing at the closing of the annual accounts for 2007.
APPENDIX CVs of the new members in Group Executive Team (GET)
Photos of new GET members are available at
http://bmt.storaenso.com/storaensolink.jsp?imageid=070904
Please copy the link into your web browser.
Printable photos of other GET members can be found at
http://www.storaenso.com/mediacentre/imagebank/executives
APPENDIX
New members in Group Executive Team (GET):
Aulis Ansaharju
Executive Vice President, Fine Paper
Born 1951. M.Sc.(Paper tech.), MBA. Finnish citizen.
Joined the company in 1975. Mill manager, Enso-Gutzeit Oy Tervakoski Mill 1990-1992. Mill manager, Enso Oy Imatra Mills 1993-1996. Vice President and Senior Vice President positions in Corporate Human Resources in Enso Oy and Stora Enso Oyj 1996-2000. Senior Vice President, Fine Paper in Stora Enso North America 2000-2003. Senior Vice President, Business Development, Stora Enso Fine Paper 2003 -2004. Senior Vice President, Graphic Papers, Stora Enso Fine Paper 2004-2007.
Mats Nordlander
Executive Vice President, Consumer Board, Merchants and Market Services
Born 1961. Dip.Eng. Swedish citizen.
Joined the company in 1994. General Manager Papyrus Sweden AB (previously Pappersgruppen AB) 1994-1998, Senior Vice President, Marketing and Supply, Papyrus AB 1998-2002, Vice President, Marketing and Sales 2002-2003, Stora Enso Fine Paper, London, President, Papyrus AB 2003-2007. Member of the Board of Directors of several subsidiaries and associated companies. Member of Swedish Industrial Board of Axcel private equity fund, Member of the Boards of Tysk Svenska Handelskammaren.
Marketing and Sales Director, SCA Fine Paper 1992-1994, Production Department Manager SCA Wifstavarf 1989-1992, Part owner of Flexible packaging company, Nordlandemballage AB 1983-1988.
Veli-Jussi Potka
Executive Vice President, Industrial Packaging
Born 1959. M.Sc. (Econ.). Finnish citizen.
Joined Enso-Gutzeit in 1983. Corporate Controller for Enso Group Oyj and Stora Enso Oyj 1993-2000. Managing Director, Stora Enso Packaging Oy 2000-2004. Senior Vice President, Business Development, Stora Enso Packaging Boards between April 2004 and April 2005. Senior Vice President, Industrial Packaging Business Area 2005-2007. Member of the Board of Directors of several subsidiaries and associated companies.
Hannu Alalauri
Executive Vice President, Magazine Paper
Born 1959, M.Sc. (Chem.). eMBA. Finnish citizen.
Joined the Chemical Division of Oulu mill site (former Oulu Oy) in 1985. Vice President of Varkaus Fine paper mill 1996-1999, Senior Vice President Stora Enso Office Papers 1999-2000, Senior Vice President Stora Enso Graphic Papers 2000-2004, Managing Director of Stora Enso Packaging Corrugated Business 2004-2005, Senior Vice President HR Finland and HR Packaging Boards Division 2006-2007. Member of the board of several subsidiaries and associated companies.
Member of the Business advisory board of BioFund Oy LTD. Chairman of Supervisory board of Pohto Management Training Institute.
Juha Vanhainen
Executive Vice President, Newsprint
Born 1961. M.Sc. (Eng.). Finnish citizen.
Joined Stora Enso Oulu in 1990. General Manager and Mill Director, Stora Enso Fine Paper, Oulu Mill 1999-2003. Senior Vice President, Stora Enso Fine Paper, Office Paper 2003-2007.
