Downturn in demand prompts cost-cutting at Metso
May 14, 2013 By Pulp & Paper Canada
Metso’s Pulp, Paper and Power business will initiate a global cost competitiveness program to adapt to changes in the marketplace and improve profitability. The program will target an annual cost reduction of approximately EUR 100 million…
Metso’s Pulp, Paper and Power business will initiate a global cost competitiveness program to adapt to changes in the marketplace and improve profitability. The program will target an annual cost reduction of approximately EUR 100 million by 2016.
“The program is aimed at improving our cost competitiveness in a market that is continuing to experience major structural changes,” says Pasi Laine, president of Metso’s Pulp, Paper and Power business. “We are also aiming to improve our profitability with the help of the program.”
Permanent structural changes in Metso’s Pulp, Paper and Power business’ operating environment have impacted its operations and undermined its competitiveness and profitability. The underlying reasons for the situation lie in the continuing downturn in demand for paper machinery and the growing trend towards cheaper technology solutions.
“New communications technologies are continuing to weaken the consumption of printing and writing paper grades and have been reflected in a slow-down in the market for new paper machines. A lighter cost structure and greater flexibility will be essential to competing more effectively as we move forward,” Pasi Laine says.
“In the power generating sector, we are also experiencing a slower investment cycle in Europe and a significant decrease in demand in North America due to low energy prices resulting from the increased use of shale gas. We must take action to reduce our overall costs if we are to be able to reach our targeted profitability level on new orders,” he adds.
Metso has launched a strategy study to review the possibilities of separating Metso into two independent listed companies.
Commenting on Metso’s results for the first quarter of 2013, Metso’s president and CEO, Matti Kähkönen, said:
“The market for pulp mills is expected to remain satisfactory, with good demand for rebuilds and services. Structural changes in the paper industry are likely to continue and the demand for papermaking lines is expected to remain weak and the outlook for services good. Demand for recovery boilers for the pulping industry is projected to continue stable, whereas shale gas will continue to have a negative impact on market of renewable energy solutions. All in all, we expect the demand for power plants and for related services to remain satisfactory.”
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