Stora Enso

Stora Enso Oyj
Julkinen osakeyhtiö
Traded as OMX: STEAV
OMX: STERV
OTCQX: SEOAY
ISIN FI0009005953, FI0009005961
Industry Paper and packaging
Founded 1998 (1347)
Headquarters Helsinki, Finland
Key people
 Gunnar Brock (Chairman),
Karl-Henrik Sundström (CEO)
Products Packaging board, biomaterials, wood products and paper
Revenue €10.213 billion (2014)[1]
€400 million (2014)[1]
Profit €90 million (2014)[1]
Total assets €12.847 billion (end 2014)[1]
Total equity €5.237 billion (end 2014)[1]
Owners Solidium Oy (25.1% of voting rights), FAM AB (27.3% of voting rights)[2]
Number of employees
 27,200 (end 2014)[1]
Website www.storaenso.com

Stora Enso Oyj (Swedish: [stuːra] and Finnish: [enso]) is a pulp and paper manufacturer headquartered in Helsinki, Finland, with significant operations in four continents. The company was formed by the merger of Swedish mining and forestry products company Stora AB and Finnish forestry products company Enso Oyj in 1998. It has approximately 27,200 employees (2014). For 2012, Stora Enso was ranked fifth in the world by sales, among forest, paper and packaging industry companies.[3]

History

Stora Enso was formed by the merger of Swedish mining and forestry products company Stora and Finnish forestry products company Enso Oyj in 1998.

History of Stora

1/8 share of the Stora Kopparberg mine, dated June 16, 1288.

The Swedish copper mining company Stora Kopparberg ("great copper mountain") in Falun was granted a charter from King Magnus IV of Sweden in 1347, although the oldest preserved share in the company (granting the Bishop of Västerås 12.5% ownership) dates from 1288. Some claim this to be the oldest existing corporation or limited liability company in the world.[4][5]

For some periods during the 17th century, the mine provided two thirds of the world production of copper. In the 18th century, the copper mining gradually decreased in importance, and therefore, in 1731, the company bought its first iron ore mine. By the 1860s, iron ore was economically more important to the company than copper.

Stora Kopparbergs Bergslags AB was incorporated as a modern shareholder company in 1862. Towards the end of the 19th century, it diversified from mining and entered pulp and paper production. In the 1970s, most of the mining and steel mill operations of the company were divested, and the focus changed to forestry-related activities. In 1984, the company name was shortened to Stora AB. The copper mine closed down in 1992.

In 1997, the year before the merger with Enso, Stora had 20,400 employees and a turnover of 44.5 billion SEK. The company owned 2.3 million hectares of forest of which 1.6 million hectares (an area larger than Connecticut) in Sweden and the rest in Canada, Portugal and Brazil. It also produced 7.5 TWh of mostly hydroelectric power.

A 1997 article in Harvard Business Review praised Stora's ability to adapt to changing circumstances over the centuries.[5][6]

In 1998, the company merged with Enso to form Stora Enso.

History of Enso

Headquarters built for Enso-Gutzeit Oy in the port area of Helsinki, designed by Alvar Aalto, 1962

Enso-Gutzeit Oy was founded in the 19th century in Norway as W. Gutzeit & Co. by Wilhelm Gutzeit, the half-brother of industrialist Benjamin Wegner. His son Hans Gutzeit moved the company to Finland, where it became the largest forestry company in the country.

Enso-Gutzeit Osakeyhtiö bought A. Ahlström Osakeyhtiö's forest industries at Varkaus in December 1986. In 1995 a decision was made to merge two state owned forest giants together. The merger materialized next year when Enso-Gutzeit Oy and North Finland based Veitsiluoto Oy formed Enso Oyj.

In 1998, the company merged with Stora to form Stora Enso.

History of Stora Enso

After the merger, Stora Enso expanded its operations by acquiring wood products businesses and bought paper merchant businesses in Europe. In 2000 the company bought Consolidated Papers in North America. Stora Enso also slowly expanded its operations in South America, Asia and Russia.

In 2000, Stora Enso acquired the North American pulp and paper manufacturer Consolidated Papers for EUR 4.9 billion.[7] The acquisition has, in hindsight, been noted in the financial press as a massive value destroyer.[8][9] In the same year, Stora Enso and AssiDomän formed a joint company, Billerud AB, to produce packaging paper.

In 2002, Stora Enso started investigating the possibility of establishing platations and production facilities in Guangxi, China.[10][11] In the same year, the company was the fifth largest pulp and paper manufacturer in terms of revenue, and in 2005, it was the world's largest pulp and paper manufacturer in terms of production capacity.

In recent years the company has gone through heavy restructuring. The North American operations were divested in 2007 to NewPage Corporation. Stora Enso has sold and closed down some of its mills in Finland, Sweden and Germany. The closure of a plant in Kemijärvi in 2008 and subsequent events were subject to significant Finnish media coverage.[12][13][14]

In 2009, Stora Enso entered into a joint venture in Uruguay, called Montes del Plata, with access to 250,000 hectares of woodland and the intention to build a large-capacity mill.[15][16][17] The mill started operating in June 2014.[18]

In 2010, Stora Enso acquired a 30 percent stake in the printed paper packaging manufacturer Inpac.[19][20] As of 2014, Stora Enso owned 49 percent of Inpac.[1]

In September 2012, Stora Enso signed an agreement with Packages Ltd., the largest packaging company of Pakistan, to set up a joint venture named Bulleh Shah Packaging (Pvt.) Ltd. at Kasur, Pakistan.

Between 2006 and 2014, the share of paper products of the total sales has decreased from 62 percent to 38 percent, while packaging and wood products have increased their shares of the revenue, as the company, according to Bloomberg News, is "betting on renewable packaging as online shopping grows."[18][21] Currently (2015), Stora Enso is investing in biomaterials and renewable construction products as possible future growth areas.[5][22]

Market

Products and services by division

As of 2015, Stora Enso offers products and services through five corporate divisions. Two of these were reported as one combined division up until 2014. The sales figures by division for 2014 were as follows.[1]

Sales by division 2014, million EUR External Internal Total
Consumer board and Packaging solutions 3,293 42 3,335
Biomaterials 649 455 1,104
Wood products 1,657 122 1,779
Paper 3,800 112 3,912
Other 814 1,753 2,567

Consumer board

The Consumer board division (previously, before 2015, part of a division called "Renewable packaging") sells varieties of paperboard for packaging of dry and liquid products, including food, as well as for graphic printing purposes.

Packaging solutions

The Packaging solutions division (previously, before 2015, part of a division called "Renewable packaging") sells corrugated fiberboard, other types of paperboard used in production of packaging containers, as well as complete packaging boxes and equipment and services related to packaging production.

Biomaterials

The Biomaterials division sells pulp, as well as additional products that can be extracted biochemically from wood and other sorts of biomass.

Wood products

The Wood products division (previously, before 2015, called "Building and living") sells construction materials and fuels that have been produced using wood as a raw material.

Paper

The Paper division (previously, before 2015, called "Printing and reading") sells paper for commercial printing and office use, as well as services for the printing industry, such as paper supply management.

Sales by region

In 2014, the regional sales distribution was as follows.

Region Percent of sales 2014
Europe 74.0%
Asia 15.5%
South America 2.4%
North America 2.3%
Other countries 5.8%

Operations

Stora Enso has the majority of its operations Europe but also a significant presence in the Americas and Asia. The following table lists the number of employees and the corporate divisions by region.[18]

Country/region Employees 2014, excluding joint ventures in Asia Divisions
Finland 6,300 In Europe, all divisions are represented
Sweden 4,800
Germany 2,100
Poland 1,900
Other European countries 3,900
Total for European countries 19,000
United States 40 Biomaterials
Brazil 700 Biomaterials, Paper
Uruguay 300 Biomaterials
China 5,500 Consumer board, Packaging solutions, Paper
Russia 1,100 Wood products, Packaging solutions
India 400 Packaging solutions
Pakistan - Consumer board
Laos 140 Biomaterials

Headquarters

The Stora Enso Headquarters in Helsinki was designed 1959-1962 by Alvar Aalto as the head office of Enso-Gutzeit Oy. The building has been in use since 1961. In 2008, Stora Enso sold the building to the German property company Deka Immobilien GmbH for €30 million and started renting the building from WestInvest InterSelect (part of Deka Group), while also declaring its intention to move to other rented premises in the Helsinki area. As of 2015, Stora Enso is still headquartered in the same building.[23][24][25][26]

Joint ventures

Stora Enso has a 35 percent stake in the packaging joint venture Bulleh Shah Packaging in Pakistan.

Veracel is a joint venture between Stora Enso (50 percent ownership) and Fibria in Brazil.[1]

In Uruguay, Stora Enso (50 percent ownership) and Arauco operate the Montes del Plata joint venture.[1]

Governance

Key people

Since 2014, Karl-Henrik Sundström (born 1960) has been the CEO of Stora Enso.[27] Previous CEOs were Jouko Karvinen (from 2007 to 2014) and Jukka Härmälä (from the creation of Stora Enso in 1998 to 2007).[18][28][29]

At the Annual General Meeting 22 April 2015, the following persons were elected as members of the board of directors.[30][31]

Name Year of birth
Gunnar Brock (chairman) 1950
Juha Rantanen (vice chairman) 1952
Anne Brunila 1957
Elisabeth Fleuriot 1956
Hock Goh 1955
Mikael Mäkinen 1956
Richard Nilsson 1970
Hans Stråberg 1957

Ownership

As of October 2015, the Finnish state is, through the state-owned Solidium fund, the largest owner by number of shares and the second largest by number of votes. The Wallenberg family foundations, through FAM AB, is the largest owner by number of votes and the second largest by number of shares.[2]

Largest owners by votes (31 October 2015) Percent of shares Percent of votes
FAM AB 10.2 27.3
Solidium Oy 12.3 25.1
Social Insurance Institution of Finland 3.3 10.1
Varma Mutual Pension Insurance Company 2 6.6
MP-Bolagen i Vetlanda AB, MP Skog Aktiebolag, (Werner von Seydlitz) 1.2 2.2
Ilmarinen Mutual Pension Insurance Company 2.4 2.1
Erik Johan Ljungberg's Education Foundation 0.5 0.8
Nordea Investment Funds 1.3 0.4
The State Pension Fund 1 0.3
Bergslaget's Healthcare Foundation 0.3 0.3

Language

Following the merger, English became the lingua franca of the company. A study of the implications of this for the effectiveness of Stora Enso's internal business communication, published in the academic journal Business Communication Quarterly, concluded that the analyzed communication "seemed to work well".[32]

Controversies

Cartel

Metsä Group and Stora Enso received a sentence in value of €500,000 for forming a cartel in 2001.[33]

Accusations of wrongful accounting

The North American part of the group was sold in 2007 to NewPage Corporation with a net loss of about 4.12 billion dollars. According to a Swedish television documentary, there have been accusations that to cover the loss, the accounting was manipulated, which was revealed in 2010.[34] The documentary also claims that huge dividend payments were made illegally and top management was aware of that fact and on purpose manipulated numbers to be able to pay dividends.

Gerard Goodwyn, the company's head of accounting who spoke publicly about the accounting mistake, was fired in 2010.[35]

In 2013, Stora Enso published a report written by independent law firms, which the company had commissioned to investigate the accusations. According to the report, the investigations performed did not find any evidence of illegal acts or wrongful financial reporting, apart from mistakes that had already been communicated and corrected by 2009.[36][37] The findings of the investigations were also been reported to the Finnish Financial Supervisory Authority, which found no reason to take further action. In articles commenting on the report, the Finnish newspaper Helsingin Sanomat stated that they had been contacted by the source of the accusations in 2010 but that, after attempting to confirm the accusations, they had not considered that there were sufficient grounds for a news story.[38][39]

Environmental concerns

Eucalyptus cultivation of Stora Enso has been discussed critically.[40] Especially in relation to the 2011 documentary film Red Forest Hotel.[41]

Human rights concerns

The Swedish program "Kalla fakta" reported in 2014 that Stora Enso uses child labor in its activities in Pakistan, and that the company has been aware of it since 2012.[42] In response, the company denied that child labor exists directly in the operations of its joint venture partner in Pakistan, but admitted that it was present in its supplier networks. It stated that its partner, Bulleh Shah Packaging, is taking short-term action to remedy the situation in areas where child labor is known to exist, and is also working to mitigate child labour in the long term by addressing its root causes.[43]

Corporate responsibility

In April 2015, Stora Enso entered into a partnership with ILO, with the aims of progressively eliminating child labor from the supply chain in Pakistan and promoting decent work conditions.[44][45][46][47] The experiences in Pakistan have also prompted Stora Enso to appoint an executive vice president for sustatainability to its group leadership team, and to include sustainability managers in its division leadership teams.[48][27]

Since September 2014, Stora Enso has collaborated with Save the Children around children's rights. The collaboration concerns policies and processes, as well as supply network evaluation in India.[49][50]

See also

References

  1. 1 2 3 4 5 6 7 8 9 10 "Financial Report: Part of Stora Enso's Annual Report 2014" (PDF). Stora Enso. 2015. Retrieved 16 November 2015.
  2. 1 2 "Shareholders and ownership changes". Stora Enso. Retrieved 16 November 2015.
  3. ↑ "Global Forest, Paper & Packaging Industry Survey: 2013 edition – survey of 2012 results" (PDF). PwC. 2013. Retrieved 8 December 2015.
  4. ↑ "Can a company live forever?". BBC News. January 19, 2012.
  5. 1 2 3 Groom, Brian (10 November 2015). "Founders' vision keeps engine running". Financial Times. Retrieved 16 November 2015.
  6. ↑ de Geus, Arie (1997). "The Living Company". Harvard Business Review (March–April). Retrieved 16 November 2015.
  7. ↑ "Stora Enso to acquire Consolidated Papers for EUR 4.9 billion" (PDF). Bit. Stora Enso. 22 February 2000. Archived (PDF) from the original on 1 May 2004.
  8. ↑ "The assumptions behind an acquisition: Case Stora Enso - Consolidated Papers" (PDF). Aalto University. 2010. Retrieved 16 November 2015.
  9. ↑ "A study reviews the reasons for the failure of the American merger of Stora Enso" (PDF). Aalto University. 14 July 2010. Retrieved 16 November 2015.
  10. ↑ "Stora Enso explores supply, plant options in China". Milwaukee Business Journal. 12 June 2002. Retrieved 8 December 2015.
  11. ↑ Dauvergne, Peter; Lister, Jane (2013). Timber. John Wiley & Sons. Retrieved 8 December 2015.
  12. ↑ Valtion rahoittama liimapuutehdas pysähtyi 24.1.2012 B3
  13. ↑ KHO hylkäsi Stora Enson valituksen - Kemijärven jätealtaan puhdistus selvitettävä yle 28.8.2013
  14. ↑ "Stora Enso sells part of Kemijarvi mill to Anaika". New Europe. 2 February 2008. Retrieved 10 December 2015.
  15. ↑ "Stora and Arauco Spend $344 Million in Forest Deal". New York Times. 18 May 2009. Retrieved 8 December 2015.
  16. ↑ Rucinski, Tracy; Lamppu, Eva (18 May 2009). "Stora Enso buys Uruguay paper assets from Ence". Reuters. Retrieved 8 December 2015.
  17. ↑ Ward, Andrew (19 January 2011). "Papermakers to build $1.9bn pulp mill". Financial Times. Retrieved 8 December 2015.
  18. 1 2 3 4 "Progress Book: Part of Stora Enso's Annual Report 2014" (PDF). Stora Enso. 2015. Retrieved 16 November 2015.
  19. ↑ "Actis sells Inpac International to Stora Enso". Private Equity Wire. 31 October 2010. Retrieved 8 December 2015.
  20. ↑ Marino, Jonathan (28 October 2010). "Actis Exits Inpac". Mergers & Acquisitions. Retrieved 8 December 2015.
  21. ↑ Viita, Kasper (3 March 2015). "Finnish Papermakers Embrace Online World as Slump Ends". Bloomberg News. Retrieved 16 November 2015.
  22. ↑ Hirtenstein, Anna (22 September 2015). "Biomaterials May Be Next Growth Engine for Paper Industry". Bloomberg News. Retrieved 16 November 2015.
  23. ↑ "Stora Enso myy pääkonttorinsa". Taloussanomat (in Finnish). 9 June 2008. Retrieved 16 November 2015.
  24. ↑ "Enso-Gutzeit Co. head offices". Alvar Aalto's architecture. Retrieved 16 November 2015.
  25. ↑ "Deka acquires Stora Enso HQ in leaseback deal". PropertyEU. 10 June 2008. Retrieved 16 November 2015.
  26. ↑ "Reach person or location". Stora Enso. Retrieved 7 December 2015.
  27. 1 2 "Group Leadership Team". Stora Enso. Retrieved 16 November 2015.
  28. ↑ "Annual Report 2006" (PDF). Stora Enso. 2007. Retrieved 16 November 2015.
  29. ↑ "Environmental Report 1998" (PDF). Stora Enso. 1999. Retrieved 16 November 2015.
  30. ↑ "Board of directors". Stora Enso. Retrieved 16 November 2015.
  31. ↑ "Stora Enso's Annual General Meeting and decisions by the Board of Directors". Nasdaq Nordic. Stora Enso. 22 April 2015. Retrieved 16 November 2015.
  32. ↑ Kankaanranta, Anne (2006). ""Hej Seppo, Could you pls comment on this!"—Internal email communication in lingua franca English in a multinational company" (PDF). Business Communication Quarterly 69 (2): 216.
  33. ↑ Asfalttikartelli kohta tuomilla, Talouselämä 9.6.2006 s. 10 (Finland's Talouselämä newspaper)
  34. ↑ Dokument inifrån, Dubbel bokföring, 2013-05-16
  35. ↑ Stora Enso: Accounting mistake was "human error"
  36. ↑ "Stora Enso publicerar sammanfattande extern rapport av utredningar angående anklagelser gällande äldre redovisningsfrågor" (in Swedish). Stora Enso. 7 October 2013. Retrieved 8 December 2015.
  37. ↑ Lindholm, Tomas; Isokorpi, Nina; Rasinaho, Vesa (4 October 2013). "Report on investigations on certain accounting issues" (PDF). Stora Enso. Retrieved 8 December 2015.
  38. ↑ Iivonen, Jyrki (8 October 2013). "Selvitykset vapauttavat Stora Enson väitetystä kirjanpidon peukaloinnista" [Reports free Stora Enso from the alleged tampering in accounting]. Helsingin Sanomat (in Finnish). Retrieved 8 December 2015.
  39. ↑ "Lähde otti yhteyttä Helsingin Sanomiin" [The source contacted Helsingin Sanomat]. Helsingin Sanomat (in Finnish). 8 October 2013. Retrieved 8 December 2015.
  40. ↑ Stora Enso etelän eukalyptusmailla Finnwatch 2009
  41. ↑ Mika Koskinen (2011). Red Forest Hotel. Finland. 87 minutes in.
  42. ↑ Stora Enso kände till barnarbete Dagens Nyheter 2014-03-09 (Swedish)
  43. ↑ "Mitigating Child Labour in Pakistan" (PDF). Stora Enso. March 2014. Retrieved 2014-04-10.
  44. ↑ "Stora Enso and ILO sign unique partnership to promote decent work and combat child labour". ILO. 22 April 2015. Retrieved 8 December 2015.
  45. ↑ "Stora Enso och ILO bekämpar barnarbete". Svensk Papperstidning (in Swedish) (4) (SPCI). 2015. p. 8.
  46. ↑ "Stora Enso partners with ILO to combat child labor in Pakistan". PPI Europe (RISI). 2015. Retrieved 8 December 2015.
  47. ↑ "Stora Enso and ILO partner to combat child labor". Labels and Labeling. 27 April 2015. Retrieved 8 December 2015.
  48. ↑ Ganson, Brian (2015). "From promise to performance: Stora Enso's journey towards mitigating child labour" (PDF). Global Child Forum. Retrieved 8 December 2015.
  49. ↑ "Focus on children's rights in the operations of Stora Enso". Save the Children. 22 October 2014. Retrieved 16 November 2015.
  50. ↑ "Stora Enson toimitusjohtaja lupaa lisää vastuullisuutta". Savon Sanomat (in Finnish). 21 July 2014. Retrieved 8 December 2015.

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