Finnish paper and packaging giant Stora Enso announced that it will implement a brand-new organizational structure to further optimize its operations and enhance its competitiveness. This structure will be more streamlined and flattened, and seven business areas will be established. This move aims to highlight the core position of renewable packaging in the group's business portfolio. The company stated that the new flat and streamlined structure will help enhance customer focus, improve operational efficiency through deepening integration, reduce management complexity, and further consolidate the group's performance culture.
Under this adjustment plan, the group's core business - renewable packaging - will consist of four business areas and is expected to contribute approximately 60% of Stora Enso's full-year revenue in 2024. These four business areas are: food services and liquid cardboard, cardstock, boxboard, and packaging solutions. The company pointed out that each business area is committed to providing a wide variety of renewable fiber-based packaging materials, covering various forms such as paper boxes, cartons, pallets, cups, and packaging bags, which are widely used in multiple industry fields including food and beverage, e-commerce, pharmaceuticals, and cosmetics.
The remaining business of the group, accounting for approximately 40% of Stora Enso's full-year revenue in 2024, will continue to be divided into three separate business areas: biomass materials, wood products and forests. Stora Enso said that these business areas, in addition to operating independently, will also provide strong support for the company's renewable packaging products in terms of wood procurement and raw material supply.
To further enhance the synergy between operation and supply, the operation and management of sawmills and "Building Solutions" factories located in the Nordic region will be adjusted to the nearest cardboard or pulp production base in their geographical locations. The construction solutions factories and sawmills in Central Europe will continue to remain in the wood products business field. The company also confirmed that customers in the wood products business area will continue to receive uninterrupted services through its global sales and service network.
One of the most notable changes in the new organizational structure is the reduction of management levels. This means that profit and loss liability will be further decentralized, thus being closer to customers and specific operational activities. After the adjustment, Stora Enso will have seven business areas. Under these business areas, they are further subdivided into 21 business departments. Stora Enso's President and CEO, Sault, commented: "Our meticulously planned new organizational structure aims to maximize customer and business focus, operational efficiency and synergy, ensure the full realization of the benefits of supply chain integration, and ultimately strengthen our performance and result-oriented corporate culture." "
In terms of new leadership appointments, Marku Luotto will lead the new food services and liquid paperboard business areas, Andreas Bermose will lead the cardstock business area, and Hanu Kasurinen will lead the boxboard business area. The company also pointed out that other business areas will continue to be led by the current leaders. They are: the packaging solutions business area led by Caroline Wagner, the biomass materials business area led by Johanna Hagelberg, the wood products business area led by Lars Volker, and the forest business area led by Thomas Hagelberg.
The new organizational structure is scheduled to come into effect on July 1, 2025. The company emphasizes that all relevant changes must be subject to joint decision-making negotiations and other potential legal procedures in all affected countries/regions. Stora Enso said that its existing external department reporting structure would remain unchanged.
In addition to the above-mentioned organizational structure announcement, Stora Enso's first-quarter 2025 results released on April 25th show that the company's sales increased by 9% year-on-year to 2.362 billion euros, mainly due to the rise in product prices and the increase in delivery volume. The adjusted EBIT increased year-on-year for the fourth consecutive quarter to 175 million euros, and the corresponding adjusted EBIT margin also rose to 7.4%. The company's analysis shows that the positive impacts brought about by the price increase, the rise in sales volume, and the net currency exchange rate and depreciation are sufficient to offset the adverse effects caused by the increase in fiber costs.
In terms of recent operational progress, the company's brand-new consumer packaging cardboard production line at its factory in Oulu, Finland, has started mass production since March this year. It is expected that the production line will achieve the break-even point of earnings before interest, taxes, depreciation and amortization by the end of 2025, and is planned to reach full production capacity by 2027. Furthermore, Stora Enso has also received approval from the competition regulatory authority and will continue to advance its acquisition plan for the Finnish sawmill Junika. This acquisition was announced in October 2024 and the transaction is expected to be completed early next month (referring to May 2025).
Looking ahead, Stora Enso predicts that market demand will continue to remain sluggish and volatile. The company believes that this is mainly influenced by factors such as the intensification of macroeconomic and geopolitical uncertainties and the decline in consumer confidence. Meanwhile, Stora Enso expects that due to the capacity ramp-up of the new packaging paperboard production line in Oulu, Finland, its adjusted EBIT for the full year of 2025 will be negatively affected by approximately 100 million euros, with the majority of the impact expected to occur in the second quarter of 2025.
For 2025, Stora Enso has set several key tasks: continuously building a more streamlined and agile organizational structure to enhance customer and business orientation and improve overall operational efficiency; Comprehensively implement the organizational structure reorganization, aiming to streamline operations and enhance the efficiency of core business areas (especially the renewable packaging business); Promote the transformation of packaging cardboard factories in the Nordic region towards a more integrated business model, thereby optimizing the entire value chain and strengthening the customer-centric concept; By integrating and transforming five independent departments into seven streamlined business areas and supplemented by efficient group-level support, business responsibilities were further clarified and management complexity was reduced. Increase production and make full use of the 1 billion euro investment in the new packaging cardboard production line at the integrated factory in Oulu, Finland, thereby enhancing Stora Enso's market competitiveness.
