Finnish forestry company Stora Enso missed market expectations for third-quarter operating profit and said it expected the gradual market recovery seen so far this year to slow down in the fourth quarter.
It sees a sequential slowdown in its markets due to weak consumer board demand, corrugated board overcapacity and weakness in the construction sector.
Nordic forestry firms have been suffering from weakened demand, elevated cost of wood and low pulp prices.
"Pulp prices have been falling in China, the world's largest pulp market, since the end of July," CEO Hans Sohlstrom told Reuters, adding the prices had also fallen in Europe since then.
He said that while the prices in China have been stabilised for several weeks now, the impact would still be felt in Stora Enso's fourth-quarter results.
Finland is a major producer and exporter of pulp, paper and other products that are based on logging in the country's vast forests.
Quarterly Highlights
Stora Enso's adjusted operating profit rose to €175 million ($189 million) in the third quarter from €21 million a year earlier, but missed the 194.4 million euros expected by analysts polled by Vara Research.
"The biomaterials division demonstrated strong performance, though demand weakened during the quarter with rapidly decreasing pulp prices," Sohlstrom said in the statement.
Challenges persisted in the wood products segment due to the weak construction sector, while packaging solutions faced price lags and market overcapacity, he added.
High wood costs are likely to continue compressing margins, the company said.
To combat the prolonged market uncertainty, Stora Enso has announced job cuts and earlier this month put some of its Swedish forest assets up for sale to reduce debt.
Sohlstrom said the company was in talks with multiple potential buyers for the assets.
