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Improved profitability through growth and asset-restructuring
The target is to participate actively in the forest industry consolidation process for the effective achievement of a more balanced industry structure leading to higher profitability. Stora Enso continuously reviews opportunities for expansion in existing or new geographic areas, however, balancing the corresponding risk, return potential and strategic fit. In Europe scope for mergers and acquisitions continues to exist, although a high market share, particularly in magazine paper, newsprint and consumer boards, is a limiting factor. Growth in North America is of vital importance but difficult in present circumstances due to the high valuation of North American assets. Asia is an interesting market because the rapid growth in GNP and consequently in paper demand. The Company closely monitors the on-going restructuring process of local industry.
Investment policy focuses on core businesses and units with long-term profitability. Non-core or poorly performing assets are either divested, run for cash or shut down. Stora Enso's size facilitates the building of new production lines and the simultaneous closing down of obsolete facilities, permitting asset restructuring and efficiency improvements without disturbing market equilibrium. Capital expenditure may not exceed the level of depreciation.
Apart from its own efforts towards growth and efficiency, Stora Enso's business and profitability are dependent on the world economy overall, specifically print advertising volumes, the need for packaging, in particular non-durable goods, and the development of the building and construction industry. Advertising and construction relate strongly to global economic development; packaging may be regarded as less cyclical. Despite the impact continuous internal efficiency programmes have on profitability, this will always be affected by external factors, such as the price of raw material, product prices and foreign exchange fluctuations, over which the Company has little influence.
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