Nordic paper maker Stora Enso makes fourth-quarter profit of $64 million

By Matti Huuhtanen, AP
Thursday, February 4, 2010

Paper maker Stora Enso makes $64 million Q4 profit

HELSINKI — Nordic paper maker Stora Enso on Thursday reported a fourth-quarter net profit of euro46 million ($64 million), boosted by cost cuts and strong newsprint earnings.

The company turned to profit from a net loss of euro655 million in the same period in 2008. Revenue in the quarter fell 8 percent to euro2.4 billion compared to a year earlier.

Chief Executive Jouko Karvinen said he was pleased with the result but cautioned that there are more hard times ahead.

“The year 2009 ended on a strong note for Stora Enso. The highlight of the year … is the result of active working capital management that we started already in late 2008,” Karvinen said.

“Global economic recovery is under way but any pickup in demand for the group’s products is forecast to be slow and insufficient to restore supply and demand balance in the short term and alleviate overcapacity,” he said.

Stora stock closed down more than 2 percent at euro4.37 ($6.05) in Helsinki.

The Finnish-Swedish group said the quarterly result was helped by “a solid and improving cost base” in newsprint, but was hit by a euro30 million fine by Finnish antitrust officials for price fixing of raw timber with other forest products companies.

Stora announced that its joint venture with Chilean company Arauco will begin a feasibility study in Uruguay for a possible pulp mill in Punta Pereira, which it described as “a promising location.”

“We have come out with a decision which is based on our preliminary economic, operational and environmental findings,” Karvinen said. “The identification of Punta Pereira will allow us to proceed to the next phase — a detailed feasibility study.”

In the full-year, Stora’s net profit deepened some 20 percent to euro880 million and sales fell to euro9 billion from euro11 billion in 2008.

“After three consecutive years of very significant if different challenges, we could have hoped for an easier 2010,” Karvinen said, adding that the group might make more savings.

He said the company’s “early actions, such as significant cost and capacity cuts,” had been crucial.

“Our production capacity needs to be in line with sustainably profitable demand for our products, and we will therefore not hesitate to take further temporary or permanent capacity cuts if necessary,” Karvinen said.

Like other paper makers in the global downturn, Stora has been plagued by tough competition, overcapacity and weakening demand. It has cut thousands of jobs, closed mills and cut production.

“The overcapacity in European paper production has to disappear permanently so that the situation can right itself,” Karvinen said.

Stora Enso is one of the world’s largest forest product companies making magazine paper, newsprint, fine paper, pulp and packaging boards. It employs 27,400 — down 17 percent from a year earlier.


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