Forest company Stora Enso plans to permanently close one newsprint machine and recycled pulp deinking plant at its Hylte mill in Sweden due to newsprint overcapacity.

As a result of the measures, the company will start co-operation negotiations to reduce the maximum number of employees by 140.

The restructuring would result in annual savings of EUR 14 million, the company says in a press release.

The paper machine would be closed by the end of this year and the deinking plant by the second quarter of next year at the latest.

- Changes in consumer behavior will further reduce global demand for newsprint, and demand is not expected to recover.

The change has led to global overcapacity, low utilization rates and poor profitability at the Hylte mill, says Kati ter Horst, head of Stora Enso's Paper division, in a press release.

The annual capacity of the two newsprint machines at the Hylte mill is 480,000 tonnes.

Production at the mill would continue with a single newsprint machine that would produce newsprint from thermomechanical pulp alone.

The closure of the second paper machine would reduce Stora Enso's annual newsprint production capacity by 26 percent, or 235,000 tonnes.

This is 4% of the total newsprint capacity in Europe.

The planned closure would reduce Stora Enso's total paper production capacity by five percent.

Stora Enso will record restructuring costs of approximately EUR 12 million in the third quarter of this year as an item affecting comparability.

Approximately EUR 8 million of the item has a cash effect.

The planned closure of the paper machine and deinking plant will not have a significant impact on Stora Enso's net sales or operating profit, the company says.

Stora Enso will continue to produce newsprint at its Hylte, Langerbrugge and Saxony mills.