Weakening demand hits Finnish big guns

The third quarter has proved a challenging time for both Stora Enso and Metsäliitto Group, as weak demand continues to hit profits.

Metsäliitto, which includes Finnforest, saw its operating profits tumble from €93m to €19m and pre-tax results fall from €38m to a loss of €36m.

However, Stora Enso's operating and pre-tax losses narrow to €138.7m from €305.3m a year ago and to €161.7m from €329.2m respectively.

Stora Enso's sales fell marginally from €2.88bn to €2.87bn, while Metsäliitto’s reduced from €1.69bn to €1.59bn.

Stora Enso chief executive officer Jouko Karvinen said the improvement means “the storm we have faced over the past 18 months has changed”, with global currencies, reduced energy costs and internal cost and capacity cuts improving the situation.

“However, we now also face accelerating softening in market demand for most grades,” he said.

“This reality makes the actions we have taken in the past year-and-a-half, from cost and capacity cuts, focus on pricing quality, increasing Finnish wood sourcing and strengthening our balance sheet through investments, critically important.”

North American forest products company Rayonier has also reported a downturn in the results of its timber operations during the third quarter, with sales down US$7m to US$41m and operating income falling US$13m to a loss of US$600,000.

Rayonier said current trading conditions mean it will continue its “planned reduction in sawn timber harvest for the balance of the year, thereby preserving higher value timber until markets improve”.