Stora Enso wood products division records loss in Q1, 2023
3 May 2023Forest Products giant Stora Enso has reported a challenging environment for its wood products division with a Q1 operating loss being recorded by the business unit.
Stora Enso’s wood products division posted operational earnings before interest and tax (EBIT) of €-11m in Q1, down from €118m in Q1, 2022. Divisional sales of €454m decreased by 21% or €119m in Q1 compared to a year ago, while wood product deliveries were down 14.4% in Q1, totalling 1.044 million m3 (2022 Q1: 1.21million m3).
“Wood products continue to be challenged by the weaker construction market with fewer building permits and lower rates of home renovations,” said Stora Enso CEO Annica Bresky.
Sales and profit were impacted by a significantly weaker sawn wood market and the exit from Russian operations in Q2/2022.
The results were impacted by lower sawn wood prices, lower volumes and continued high raw material costs.
However, Stora Enso said wood product demand in Q1, 2023 was stronger compared to the preceding Q4, 2022 period.
Building Solutions showed growth due to finalised projects, especially in France and the UK, supported by the new Cross Laminated Timber (CLT) site in the Czech Republic.
Group-wide, Stora Enso said its full-year 2023 operational EBIT is expected to be significantly lower than for the full-year 2022.
“The market outlook is worsening and accelerated towards the latter part of the first quarter,” the company said.
“Cost pressures and market uncertainties are expected to be significantly more challenging in 2023 than in 2022, weighing on our results and lowering the short-term visibility this year. “Compared to 2022, Group margins are expected to be adversely impacted by increasing costs, particularly in relation to energy, wood and chemicals.
The lower demand in construction and housing, it added, was expected to have a “temporary impact” on demand for the wood products division this year.
To protect margins, Stora Enso will take actions to respond to fluctuations in demand with reinforced cost controls. In Finland, Stora Enso has completed negotiations on potential furloughs at its divisions' production sites. Capacity adjustment activities are in place to respond to fluctuations in demand.
