UPDATE 1-Stora Enso to invest 350 mln euros in Oulu mill, cut jobs

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HELSINKI, May 28 (Reuters) - Finland’s Stora Enso will invest 350 million euros ($391 million) at its Oulu mill to boost output of kraftliner board used in packaging and reduce glossy magazine paper production, the company said on Tuesday.

Oulu’s paper machine 7 will be converted to produce 450,000 tonnes of virgin-fibre-based kraftliner board a year used for packaging food, fruit and vegetables, as well as heavy duty packaging.

Until September 2020 it will produce wood-free coated papers, which are typically used for high-quality advertising and magazines.

Stora said it would also close another paper machine at the site and revamp other operations in Oulu, cutting 365 jobs in total.

“The market dynamics of wood-free coated paper have deteriorated further, and therefore Stora Enso must accelerate its transformation by increasing capital expenditure,” the company said.

“The conversion of Oulu Mill will enable Stora Enso to further improve its position in the growing packaging business,” CEO Karl-Henrik Sundstrom said in a statement.

The plan will boost its capital expenditure in 2019 to 610-660 million euros from a previous estimate of 540-590 million, Stora said.

Stora shares were 1.3 percent lower at 9.77 euros at 0944 GMT.

$1 = 0.8943 euros Reporting by Tarmo Virki; editing by Jason Neely and Edmund Blair