Stora Enso expects pressure from high wood costs and market uncertainties to continue throughout 2024, the Finnish forestry firm said, after it posted lower-than-expected revenue in the second quarter of the year.
Nordic forestry firms have suffered from weakened demand, elevated wood expenses and low pulp prices. Stora Enso also announced job reductions earlier in the year citing prolonged market uncertainty.
Revenue in the quarter fell 3% year-on-year to €2.30 billion.
Analysts had expected 2.38 billion euros on average in a company-provided poll.
Structural Changes
Stora Enso CEO Hans Sohlstrom, in a statement, attributed the sales dip due to structural changes.
"I am encouraged by the fact that our Q2 performance met our expectations, reinforcing our recently upgraded 2024 guidance," he said. "Advances in our profitability and cash flow improvement initiatives, coupled with more favourable market conditions in some segments, have supported an improved earnings trend for the third consecutive quarter.
"Additionally, this has strengthened our leverage ratio in the quarter despite record high growth investments. This positive development is a testament to our team's dedication and sets a strong foundation for future success. "
'Gradual Market Recovery'
The company said it expects a 'gradual market recovery' in 2024 and reported its adjusted operating profit in the quarter at €161 million, roughly in line with €160 million expected by analysts.
However, it said that high fibre costs will affect its Packaging Materials unit in the second half of the year, while demand and price fluctuation could continue through the end of 2024.
Uncertainties such as high inflation, potential strikes, and fluctuations in demand and prices are anticipated to persist throughout the year, it added.
Additional reporting by ESM
