Future Valmet concludes statutory negotiations in its Energy and Fabrics businesses in Finland
Metso Corporation's stock exchange release on December 3, 2013 at 10:00 a.m. local time
Metso Pulp, Paper and Power's, the future Valmet's, Energy and Fabrics businesses have concluded the statutory negotiations initiated on October 21, 2013 in Finland.
The process is part of Valmet's 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 the end of 2014.
As a result of the statutory negotiations concluded in Finland, the Energy business will reduce its headcount by 172 positions in Finland. A reduction of 20 positions has also been implemented in other countries. The negotiations to reduce the headcount by 120 positions in Sweden and an additional 20 positions in other countries, which were announced earlier, are still on-going. The decisions will be taken and the implementation of these measures will start after the negotiations have been completed in the affected countries. Initially, the estimated total headcount reduction in Energy business was 390 positions globally, of which 220 are in Finland, 120 in Sweden and 50 in other countries.
The reductions in Finland will be implemented through redundancies, retirements and terminations of temporary contracts. In addition to the position reductions, temporary layoffs may be implemented in Finland during the latter part of 2013 and 2014, as required by the workload or financial situation of the company. The possible temporary layoffs may affect all personnel groups.
As one of the cost reduction measures, the Energy business will downsize its in-house boiler manufacturing in Finland and Sweden. In the Finnish production facilities in Tampere, this means closing the production line in Messukylä by the end of 2013 and reducing production capacity in Lahdesjärvi. In Sweden, production capacity will be reduced in the Gothenburg workshop.
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 these cost reduction measures, the Energy business aims to improve its financial performance, secure its long term competitiveness and adjust to the continued challenging market conditions.
The competitive situation in the paper machine clothing and filter fabrics markets continues to be demanding which has decreased profitability. The Fabrics business is reorganizing its operations and lightening its cost structure in order to improve its profitability and cost competitiveness.
As a result of the statutory negotiations, the Fabrics business will reduce its headcount by 23 positions in Finland. A reduction of 10 positions has also been implemented in other countries. The reductions will take place through redundancies and retirements. Initially, the estimated total headcount reduction was 35 positions globally, of which approximately 25 positions are in Finland and 10 in other countries.
Implementation of the measures
In both businesses, the majority of the reduction measures are expected to be implemented during the last quarter of 2013.
As a result of the cost reduction measures, the aim is to achieve savings of approximately EUR 25 million in annual costs. It is estimated that the savings will be realized in full as of the fourth quarter of 2014. The majority of the consequent one-off restructuring costs are estimated to be booked during the last quarter of 2013.
As part of the EUR 100 million cost competitiveness program, Valmet announced reduction measures earlier this year, which will result in annual cost savings of approximately EUR 75 million.
Valmet will provide a range of support measures for those affected by the restructuring in Finland through its "Polku" employment support program, which includes providing support for entrepreneurship, studying, re-employment, such as job-to-job training, and relocation support.
The future Valmet Corporation is a leading global developer and supplier of services and technologies for the pulp, paper and energy industries. Our 11,000 professionals around the world work close to our customers and are committed to moving our customers' performance forward - every day.
Valmet's services cover everything from maintenance outsourcing to mill and plant improvements and spare parts. Our strong technology offering includes entire pulp mills, tissue, board and paper production lines, as well as power plants for bio-energy production.
The company has over 200 years of industrial history and will be reborn through the demerger of the pulp, paper and power businesses from Metso Group on 31 December 2013. Valmet's net sales in 2012 were approximately EUR 3 billion. Valmet's objective is to become the global champion in serving its customers.
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.
Further information, please contact:
Jyrki Holmala, Head of the Pulp and Energy business line, Metso Corporation, tel. +358 (0)10 672 0000
Jari Stålhammar, Head of the Fabrics business unit, Services business line, Metso Corporation, tel. +358 10 404 9000
VP, Investor Relations
NASDAQ OMX Helsinki Ltd