17 May 2022 09:03

Stora Enso sells packaging plants in Russia

MOSCOW. May 17 (Interfax) - Stora Enso, one of Europe's largest forestry companies, has sold its corrugated packaging plants in Moscow, Nizhny Novgorod and Kaluga regions after divesting its sawmills in Russia.

"The Company's Lukhovitsy, Arzamas and Balabanovo packaging plants have been divested to local management," Stora Enso said in a press release.

The company said that, "due to the uncertainties in the Russian market, local ownership and operation will provide a more sustainable long-term solution for these businesses and their respective employees."

The three plants have capacity to produce 395 million cubic meters of corrugated packaging per year and employ 620 people. The plants primarily produce corrugated packaging for the grocery, home improvement, confectionery and pet food segments in the domestic Russian market.

Stora Enso took an impairment loss of 35 million in the first quarter due to "the reduced business prospects for these businesses."

The additional loss on the transaction under IFRS will be approximately 55 million euros, consisting mainly of currency translation adjustments to be recorded at the closing date, the company said.

Stora Enso owned the packaging plants through subsidiary Stora Enso Packaging Bb LLC, which closed 2021 with a net profit of almost 2 billion rubles on revenue of 11.7 billion rubles, the SPARK-Interfax system showed.

Stora Enso announced at the beginning of March that it was suspending production and sales in Russia, and in April it said that it was selling its sawmills in Russia to local management. The company recorded an impairment loss of 70 million euros in the first quarter on these businesses, and an additional loss of about 60 million euros on the deal to sell the mills.

Stora Enso owned the Impilakhti sawmill in Karelia and Nebolchi sawmill in Novgorod Region with combined capacity to produce 350,000 cubic meters of lumber annually. The legal entities of these sawmills, Setles LLC and Setnovo LLC, respectively, closed 2021 with net profit of 1.4 billion rubles on revenue of 4.5 billion rubles and 1.3 billion rubles on 4.9 billion rubles, the SPARK-Interfax system showed.