Paperboard specialist Stora Enso announced today that it will close down its loss-making Kvarnsveden and Veitsiluoto pulp and paper production mills in the third quarter of 2021. Paper sales will fall by €600m.
The continued decline in demand for paper products, due to changing consumer habits, has made for an “extremely challenging market situation,” explained Stora Enso President and CEO Annica Bresky this morning in a conference call announcing the closure of two of the supplier’s paper and pulp mills. “To close down a site is always a last resort, and this is no exception. Our Kvarnsveden and Veitsiluoto mills have been unprofitable for quite some time. Our products are challenged from a market perspective and profitability simply is not there,” she added. The closures will deplete Stora Enso’s paper production by 35% and will result in annual paper sales declining by €600m. The Paper division’s share of group sales will be just more than 10% following the restructuring, while paper production capacity will fall to 2.6 million tons.
The closure of the Kvarnsveden mill in Borlänge, Sweden, specialized in newsprint and supercalendered magazine paper, will result in 440 layoffs, while Finland’s Veitsiluoto site in Kemi, manufacturer of uncoated office and magazine paper, as well as one-side coated packaging paper, will let go its staff of 670.
Sales of graphic paper in Europe have been decreasing by 5% annually since 2016 and the sector saw a further drop of 18% last year due to the pandemic. “This extreme situation has led to overcapacity in the market,” noted Bresky. “This structural decline will continue post-pandemic, and the situation is not sustainable; we have to adjust capacity for this new reality.”