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UPDATE 2-Stora Enso boss to resign after strong first quarter
April 23, 2014 / 2:01 PM / 4 years ago

UPDATE 2-Stora Enso boss to resign after strong first quarter

* Says CEO Karvinen to leave during 2014

* Q1 adjusted EBIT 181 mln euros vs 166 mln in poll

* Uruguay pulp mill ready for start-up, awaits permits (Adds CEO comments, updates shares)

By Jussi Rosendahl and Sakari Suoninen

HELSINKI, April 23 (Reuters) - Finnish pulp and paper maker Stora Enso said CEO Jouko Karvinen, who has closed mills and cut jobs to help the firm cope with a drop in demand, would resign later this year.

Since taking the helm in 2007, Karvinen has been restructuring Stora Enso to help it adjust to a decline in demand for paper in Europe as consumers shift from magazines and newspapers to online reading.

The firm reported better-than-expected quarterly results on Wednesday as its latest cost cuts helped to boost profitability. Its packaging arm in particular performed better than expected, accounting for half the profit and beating analyst expectations.

“We had a rock-solid quarter, and we’re working hard on many more to come,” Karvinen told analysts. “It is good that there will be new thinking, new views,” he added.

Karvinen, previously the CEO of Philips Medical Systems in the United States, did not elaborate on why he was leaving, but said the decision was voluntary and there had been no disagreement on strategy between management and the board.

Chairman Gunnar Brock said Karvinen would remain as CEO until a successor was found, and Inderes analyst Antti Viljakainen did not expect the firm to embark on a new course.

“I don’t think Karvinen’s departure will herald strategy changes,” Viljakainen said.

Stora’s first-quarter core operating profit rose to 182 million euros ($251 million) from 118 million a year earlier, beating analysts’ average forecast of 166 million in a poll.

“Profitability was good, a positive surprise. Packaging and saw mills performed well, and there were no real weak points,” Viljakainen said.

Stora said it completed its 200 million euro cost-saving program three months ahead of schedule.

Its shares were up 6.4 percent at 8.015 euros by 1355 GMT.

Stora said maintenance costs would increase in the second quarter from the first by about 10 million euros, and added its long-delayed joint venture pulp mill in Montes del Plata, Uruguay, was now ready for start-up, but it was still waiting for the final permit which it expected in the coming weeks.

Due to the delay, Stora cut its estimate for its share of the mill’s 2014 production from 500,000 tonnes to 350,000-400,000 tonnes.

Karvinen said the plant would start to contribute positively to the company’s operating profit in the fourth quarter.

Asked about his personal plans, Karvinen, 56, said he wanted to do something else. He did not give details, but said he would not stop working.

“I will never retire, I promised my wife I wouldn‘t,” he said.

$1 = 0.7248 Euros Editing by Elaine Hardcastle and Mark Potter

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