The decision about the future of StoraEnso's Oulu mill will be taken before the end of June, potentially removing more than 1 million tonnes of coated woodfree paper from the market and affecting a quarter of the group’s paper capacity.
An environmental assessment report has already recommended the closure of PM6 and the sheeting plant at the mill and the conversion of PM7 to produce kraftliner substrates instead. In the company’s Q1 statement, StoraEnso says that the final decision will betaken after completion of the co-determination process, before the end of the first half or 2019.
Ironically the paper division has recorded record profitability thanks to higher prices on slightly lower sales of €760 million (772 million). It shipped 1.08 million tonnes of paper in the quarter (1.17 million tonnes) and produced 1.10 million tonnes (1.18 million tonnes). The company still anticipates further decline in demand for paper within Europe.
In contrast demand for packaging grades across Europe has been increasing even if StoraEnso has not felt the benefit. Corrugated production and sales have shown a slight rise to a record €338 million, up 1.6%, while sales on consumer board are slightly down. Neither division is as large as paper.
Overall the company is enjoying the fruits of reorganisation in recent years. Sales for the quarter were higher by 2% at €2.64 million (€2.58 million) and would have been 3.6% higher if not for the paper division. Group operating profit was depressed slightly at €313 million (€355 million). CEO Karl-Henrik Sondström calls it “a promising start to the year” with a strategy of seeking to balance value creation and profit protection, something he says “that appears to be paying off”.
The company is exploiting growing interest in sustainability with investment in Hylte to produce moulded fibre products that are fully reusable and recyclable while demand for cross laminate timber is increasing as architects and builders look at the potential for woos, now seen as much for its carbon storage capabilities as for its strength.
Stora has joined a number of initiatives to promote the use of recyclable materials over single-use plastics with new films for flexible packaging and other applications close to commercial availability.
By Gareth Ward