Finnish forestry firm Stora Enso has reported a 53% drop in first-quarter earnings, citing cost pressures and a fall in demand for packaging.
"Demand for most of our products is weak or weakening and market uncertainties are persisting," chief executive Annica Bresky said in a statement, adding the company's January-March results were "very disappointing."
Last week Stora Enso cut its full-year guidance, saying soaring costs would result in operational profit falling by more than half for 2023, compared to €1.89 billion reported for 2022.
Falling global demand for pulp and containerboard and weaker-than-expected recovery in China has hit the Nordic forestry sector, leading Finnish rival Metsa Board to cut its full-year guidance earlier in April.
Stora Enso reported a quarterly operational profit of €234 million against €503 million booked for the first three months of 2022.
The result is weak, even post lower guidance, Jefferies analysts wrote in a note to clients.
Read More: Stora Enso Completes Divestment Of Its Maxau Paper Site
Quarterly Sales Performance
Quarterly sales came at €2.72 billion, just 2.7% below the €2.80 billion the company booked in the comparable period of 2022.
But the high costs of energy and wood along with transport workers' strikes in Finland resulted in the adjusted operational margin for the period slumping to 8.6% from 18%.
The company has seen slower pulp market activity in China along with global inventories reaching "very high levels" at the end of the quarter, Bresky added.
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