Packaging And Design

Stora Enso Warns Soaring Energy Costs Will Bruise Q4 Profits

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Finnish forestry firm Stora Enso warned on Friday that fourth-quarter profit for its packaging business, its biggest division, would be hurt by soaring energy costs, sending its shares sliding.

Its stock fell 6% in early trade despite the company having posted a better-than-expected 29% jump in third-quarter operating profit.

Energy Prices

European manufacturers are grappling with sharp rise in energy prices caused by Russian curbs on natural gas. Consumer demand is also slowing as households tighten budgets amid a cost-of-living crisis driven by spikes in inflation.

"Looking ahead, we see the first signs of potential macroeconomic slowdown that could eventually also impact our business," chief executive Annika Bresky said in a statement.

Stora Enso said its paper division, while seeing solid demand, would also be hit by higher energy costs as well as maintenance work.

For the third quarter, operational earnings before interest and tax (EBIT) came in at €527 million ($515 million), it said, beating the €465.3 million expected in a company-provided estimate.

The company kept its guidance for 2022 operational EBIT to rise year on year.

Investment Plans

In a separate statement, the company said it would invest about €1 billion to convert another paper machine at its site in Oulu, Finland, to make consumer board in a further move to expand its packaging business.

This is its third paper-to-packaging conversion since 2016.

In recent years, Stora Enso has increased its focus on its packaging materials division after deciding to sell four out of its five paper mills, which it said were no longer profitable.

In September, it bought a Dutch packaging company to increase its corrugated packaging capacity.

News by Reuters, edited by ESM. For more packaging news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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