The downturn in the global economy during the latter half of 2001 substantially reduced production and demand for forest products practically everywhere. In Finland the result was a drop in production of 7% for 2001 and as much as 12% in the fourth quarter.

According to information gathered by the Finnish Forest Industries Federation from its members, paper and paperboard production fell by 7.5% and pulp production by over 6% in 2001. Sawnwood production fell by 5% in 2001 to a total of 12.67 million m³. Production of pine sawnwood remained at the previous year’s level of 6.2 million m³, but production of spruce sawnwood fell by 9%.

Plywood production at a total of 1.14 million m³ was nearly 3% lower than the figure for 2000. Production of birch plywood remained at the previous year’s level while production of softwood plywood declined.

Turnover increased for the four largest Finnish forest companies – Stora Enso, UPM-Kymmene, Metsäliitto and Ahlstrom – partly as a result of acquisitions, but the market situation resulted in decreased profits. However, investment remained at a high level.

Sales for Stora Enso rose to €13.5bn in 2001, up 3.8% on the previous year but operating profits at €1.5bn showed a decrease of 22.4% compared with the previous year.

Stora Enso is making a major investment at its Langerbrugge mill in Belgium which includes a new production line that will use recovered paper as raw material. The new production line, which will also include a 75MW biofuel power plant and a de-inking plant, will start up in June 2003. The decision on this €500m investment was taken in August and construction is on schedule, with work on foundations for the building having started in January.

UPM-Kymmene made profits of €1.33bn in 2001 on a turnover of e9.91bn and the year was marked by the incorporation of four mills of Haindl‘sche Papierfabriken KgaA into the group on November 30 following clearance by the European Commission earlier that month. A further two Haindl paper mills were sold to Norske Skog. The total net cost of the Haindl acquisition, including net debt was approximately €2.7bn.

UPM-Kymmene is to invest €127m in a new recycled fibre pulp facility at its Shotton paper mill site in North Wales. The facility is scheduled to be commissioned in September 2003, with full production achieved by April 2004. In addition, Schauman Wood, part of UPM-Kymmene, is strengthening its position in Russia by acquiring the majority of shares of ZAO Chudovo-RWS, a birch plywood mill operating in the Novgorod region. The total value of the sale amounts to €3.9m. ZAO Chudovo-RWS will be developed with the addition of a new production line for high quality furniture veneer valued at €13m.

The Metsäliitto Group, which includes Finnforest, reported profits of €122.3m on a turnover of €8.7bn. The group’s turnover for 2001 was substantially bigger than for the previous year, not least because Moelven‘s figure is included from the beginning of July after its acquisition by Finnforest. Good profits were achieved by Finnforest’s Kerto LVL segment, Moelven and its UK business. However, the high cost of raw material and a further downward trend in product prices, as well as a continuing recession in Germany, depressed Finnforest’s result and it recorded a loss of $49m.

Investments by the Metsäliitto Group totalled €969m in 2001, the most significant ongoing investments being the rebuilding of the carton machines in Kyrofors and Äänekoski, modernisation of the birch plywood production at Suolahti and the rebuilding of the evaporation plant at the pulp mill in Kemi.

The weak market has also had an impact on operations in all divisions within Ahlstrom Corporation during 2001. The situation has led to production downtimes and to a reduction in shifts and thereby in personnel at some plants. The decline in raw material prices has improved margins in several product groups. January to September sales of €1.62bn showed an increase on the same period for 2000 (€1.5bn) but income for the period was down sharply to €6.1m (from €60.3m) Among the group’s investments in 2001 was LabelPack division’s La Gère plant in France in a second super calender to increase production. The new super calender uses state-of-the-art technology to create extremely dense, smooth papers with very even caliper characteristics that are critical to the release liner market. The investment is worth around €25m.