The higher cost of wood has hit third-quarter profits at Nordic timber giants UPM and Stora Enso.

Both companies issued profits warnings in advance of the results..

UPM, due to publish its results next week, said the higher cost of wood and a strengthened euro meant its third-quarter operating profits excluding special items would be “somewhat below” the 2006 level.

However, the group said group operating profit for the full year was forecast to exceed 2006.

Stora Enso, whose results were not yet published as TTJ went to press, said its quarterly results were “burdened” by continuing high wood costs and the weakening dollar, with operating results slightly lower than a year ago on a like-for-like basis.

The company also took a €550m hit from non-recurring items, including €106m to its wood products division.

Meanwhile, UPM has decided to close the Keuruu veneer mill after concluding negotiations about the future of the facility.

Discussions had centred on clarifying options for continuing operations in light of decreasing log availability for veneers and the need to improve profitability in the veneers business.

UPM has decided to concentrate manufacture of birch veneer at Lohja Veneer Mill and discontinue production of thin veneer plywood altogether.