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Management Side
The Cost-competitiveness Program of Valmet
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Helsinki, Finland 21 October 2013 -- Valmet, the company to be formed in the demerger of Metso (currently Pulp, Paper and Power business), will continue its global cost competitiveness program launched in April 2013 (stock exchange release April 23, 2013) to adapt to changes in the marketplace. The global program, which has been speeded-up from the initial schedule, targets an annual cost reduction of approximately EUR 100 million by 2015. In the third stage of the program the business will begin statutory negotiations in Finland and Sweden on personnel reductions in its Energy business, which is part of the Pulp and Energy business line and in the Fabrics business, which is part of the Services business line.

In both businesses, the majority of the reduction measures are expected to be implemented during the last quarter of 2013.

The target is to achieve a reduction of approximately EUR 25 million in annual operating costs as a result of the negotiations. It is estimated that the savings will be realized in full as of the fourth quarter of 2014.

As part of the 100-million-euro cost competitiveness program, the business has announced reduction measures earlier this year, which will result in annual cost savings of approximately EUR 75 million.

Energy business

The competitive situation in the energy market continues to be challenging. The energy market in Europe is impacted by the slow economy and political uncertainty around renewable energy support schemes, while the market in North America is impacted by the low price of natural gas driving utilization away from biomass and coal. With this cost reduction program the Energy business aims to improve its financial performance, secure its long term competitiveness and adjust to the continued challenging market conditions.

The statutory negotiations in the Energy business will affect all personnel groups in Finland and Sweden. The estimated total necessary headcount reduction is 390 persons, of which 220 in Finland, 120 in Sweden and 50 in other countries. In addition, there might be temporary lay-offs affecting all personnel groups in Finland. The Energy business currently has a total of approximately 1820 employees globally, of which 1030 in Finland, 470 in Sweden and 320 in other countries. The estimated reductions are implemented for financial, production and restructuring reasons.

Cost reduction measures include plans to down-size in-house boiler manufacturing in Finland and Sweden. This plan could include the closing of the Messukylä Workshop in Finland, and reducing the production capacity in Gothenburg, Sweden and in Lahdesjärvi, Finland if so decided as a result of the negotiation process. Other cost reduction measures will include e.g. redundancies, internal transfers, early retirement options, terminations of temporary contracts and temporary layoffs, outsourcing and centralizing work if so decided as a result of the negotiation process.

Fabrics business

The competitive situation also in the paper machine clothing and filter fabrics markets continues to be challenging which has decreased profitability. The Fabrics business will reorganize its operations and lighten its cost structure in order to improve its profitability and cost competitiveness.

The statutory negotiations in the Fabrics business will affect all white collar employees in Finland. The estimated total amount of headcount reduction is 35, of which approximately 25 in Finland and approximately 10 persons in other countries. The Fabrics business currently employs approximately 1300 persons globally.

The cost reduction measures will include e.g. redundancies, early retirement options and termination of temporary contracts if so decided as a result of the negotiation process.

Metso’s pulp, paper and power professionals specialize in processes, machinery, equipment, services, paper machine clothing and filter fabrics. Our offering and experience cover the entire process life cycle including new production lines, rebuilds and services.

As of January 2014, Metso's Pulp, Paper and Power business will serve its customers with an even more focused and competitive approach as an independent, listed company, Valmet Corporation.

Metso is a global supplier of technology and services to customers in the process industries, including mining, construction, pulp and paper, power, and oil and gas. Our 30,000 professionals based in over 50 countries contribute to sustainability and deliver profitability to customers worldwide. Metso’s shares are listed on the NASDAQ OMX Helsinki Ltd.

 


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