Swedish paper maker SCA to slash 2,200 jobs in Europe
Published on: 28 Apr 2009 14:23 CET
"The packaging market continues to be very weak," said SCA CEO Jan Johansson in a statement.
"Profitability in SCA's packaging operations weakened further during the first quarter as a result of low volumes and price pressure."
SCA, which produces packaging, hygiene and paper products, will also bring forward the closure of a paper mill in New Hythe in Britain to mid-2009, the statement said.
The measures, which would make 14 percent of the company’s European employees redundant, would generate annual savings of 1.07 billion kronor ($129 million), SCA said.
In 2008, the company employed 52,000 people in 60 countries worldwide, 16,000 based at its European packaging operations.
SCA also released its financial data for the first quarter of 2009, beating analyst expectations.
The group announced a 1.11 billion kronor profit in the first quarter of 2009, down 22 percent down from 1.53 billion kronor for the same period last year.
A survey of analysts by Dow Jones Newswires had predicted a 759 million kronor profit for the first quarter.
SCA's sales rose by 3.0 percent to 28.3 billion kronor from 27.5 billion the same period the previous year.
The company pointed to low demand for its packaging products as the reason behind the dip in profits.
"Profitability in SCA's packaging operations weakened further during the first quarter as a result of low volumes and price pressure," SCA said in its first-quarter report.
On the Stockholm exchange, the prices of shares in SCA rose by 9.0 percent on the news to 78.78 kronor at 1138 GMT in a market down by 3.86 percent.
Paper makers across Europe have also announced job cuts in recent months as they aim to deal with dwindling demand and overcapacity.
Finland's Stora Enso, Europe's leading paper and cardboard maker, said late last month that it would cut 2,000 jobs globally in the next two years to boost profitability.
Its Finnish rival UPM-Kymmene said in March it would temporarily lay off all 900 employees working in its Finnish timber unit in the second quarter due to weak demand.