Vapo Group launches streamlining programme

Dec 13, 2011. /Lesprom Network/. Vapo Group’s operating loss for 2011 is estimated to be almost Euro 30 million. To secure the development of the Vapo, the management will immediately launch a streamlining programme to cut costs by more than Euro 10 million annually as well as to clearly and permanently strengthen the cash flow, as the company said in a press release received by Lesprom Network. 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. Cutting investments and selling balance items will improve next year’s cash flow by at least Euro 20 million. The program will cover all Group operations and market areas. For the duration of the programme, the Group’s organisation and management structure will be streamlined to ensure a speedy implementation of the changes. While the process is under way, the Boards of Directors of the Business Areas will take on more managerial responsibility, and in the markets outside Finland there will be a shift from a matrix organisation structure to a line organisation – in practice, this applies to the Baltic and Scandinavia. According to CEO Tomi Yli-Kyyny, the company is currently revising its strategy. The weaker-than-expected financial development in the Timber-, pellet- and wood fuel businesses, the poor peat production season as well as the tax increases in peat and increased environmental investments 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. Our goal is to reach a Euro 40 million operative profit and an equal pre-tax cash flow. When this goal is met, our equity ratio will increase clearly above current 35%,” Mr. Yli-Kyyny says. Vapo operates three Finnish sawmills with a 720,000 cubic metres production capacity.