Finland's Stora Enso has reported second-quarter operating profit well below market expectations, hit by a slump in prices, high costs and customers destocking.
"Unfortunately, we see no imminent signs of improved market demand and we expect destocking to persist for most of our segments also in the second half of 2023," Annica Bresky, the CEO of the forest products and packaging firm said in a statement.
Restructuring Plan
Stora Enso has struggled with cost pressures and falling demand this year. In June, the Helsinki-listed group announced a wide restructuring plan, involving the reduction of more than 1,000 jobs and shutdowns of plants in Europe.
Elsewhere, it recently opened a new corrugated facility in the Netherlands.
Higher wood costs caused by the ban on wood imports from Russia and lower sawmill activity added to the falling demand for pulp amid a sluggish recovery in the Chinese market.
Operational Earnings
The company posted quarterly operational earnings before interest and tax (EBIT) of €37 million, missing the €141 million seen in a Refinitiv poll of analysts.
This was a 93% slump from the €505 million Stora Enso had booked for the same period in 2022, when it had benefitted from strong demand for packaging materials.
Bresky said the biomaterials unit, which booked an operational loss of €13 million in the quarter, had faced the "fastest ever decline" in global market pulp prices.
"We continue to focus on what we can impact and control: investing and restructuring to improve our future business profitability, cost-competitiveness and asset footprint, controlling our costs, and curtailing production to manage our own and customer inventories," she said.
[Additional reporting by ESM]
