Finnish sawmilling and biofuels group Vapo Group is launching a streamlining programme after estimating its operating losses for 2011 will hit €30m.
The move will aim to cut costs by more than €10m annually and permanently strengthen the cash flow.
The aim is also to improve capital turnover, improve purchasing and subcontracting practices and to adjust pricing.
A separate project will focus on selling assets that are not core for Vapo or are not in effective use, such as land areas that have been removed from or are unsuitable for production, as well as other similar assets during 2012.
The programme will cover all group operations and market areas.
CEO Tomi Yli-Kyyny said the company was currently revising its strategy. He said the weaker-than-expected financial development in the timber, pellet and woodfuel businesses, the poor peat production season and other factors have forced the company to speed up the streamlining measures with very wide scope.
“The objective is to see the full impact of the streamlining measures in the company’s results starting from the second quarter of next year in order for us to secure a sound basis for the responsible development of the company even in a difficult market environment,” Mr Yli-Kyyny said.
“Our goal is to reach a €40m operating profit and an equal pre-tax cash flow.”
Vapo operates three Finnish sawmills with a 720,000m³ production capacity.
