More cuts as Scandinavia battles poor trading
29 October 2012Stora Enso has launched into a round of closures and cost-cutting measures as weak demand and a strong krona have hit hard the fortunes of Scandinavian timber and forestry suppliers.
Announcing a 28.5% drop in pre-tax profits for the first nine months of the year, Stora Enso said it planned to cut 520 jobs in shutdowns and efficiencies, mostly in the paper, pulp and packaging segments. Savings at three sawmills would result in 25 job losses.
The company's wood product deliveries were down 8.2% and higher raw material costs and lower by-product prices hit profits in the sector.
A weak international economy and massive fluctuations in currency exchange rates plunged Södra SKr590m into the red for the first nine months of the year, compared with a SKr879m pre-tax operating profits a year before. Sales slumped close to SKr1bn at SKr12.9bn.
The company said it was seeking new market segments and cutting costs. "Profitability at the sawmills is characterised by a sawn timber market that remains weak," a spokesperson said.
Setra also reported a loss for the first nine months of 2012, finishing SKr24m in the red, compared with an operating profit of SKr1m a year before. Sales dipped 8.2% to SKr3.1bn.
CEO Johan Padel said: " It looks as if the autumn will continue to be tough. A strong krona combined with a very hesitant demand for wood products is putting strong pressure on profitability,"
Finnish timber prices and felling volumes are expected to be down for the year with Finnish shippers stepping up exports outside Europe to Asia and Africa. About 50 million m3 of timber a year will be felled for the forseable future, less than half the annual growth. Roundwood prices are 5-6% lower this year. Deliveries of sawnwood and planed products to the important UK are down 11% on last year.
