Finnish forestry firm Stora Enso said it expects weak market conditions to persist into next year, with no recovery in the final quarter of 2023, hit by low demand and prices.
'We anticipate no significant improvement in market demand or inventory levels for the year-end,' the company said in a statement.
Sales decreased by 28% to €2.13 billion, the group said.
Market Conditions
Hans Sohlstorm, who replaced Anita Bresky as CEO in September, said all Stora Enso's units were affected by tough market conditions and price pressure, as global pulp demand remained weak amid high supply, and high interest rates weighed on the construction market.
"We are now facing some challenges due to a demanding market situation," he said. "After two good years in 2021 and 2022, our financial performance and result have quickly decreased to a historically low level. In the third quarter, year-on-year sales were down by 28% and our operational EBIT by 96%.
"This is largely driven by a difficult macroeconomic environment which we now need to navigate, mitigate, and adapt to."
High Inflation, Falling Demand
Costs of high inflation and falling demand have squeezed profits in the forestry industry since late last year, with companies like Stora Enso and Finnish peer UPM-Kymmene taking a further blow from clients destocking.
Stora Esso has been trying to counter weak demand and high costs with a number of paper mill shutdowns and personnel reductions.
It reported third-quarter operational earnings before interest and taxes of €21 million, a 96% slump from €527 million in the same period last year.
Additional reporting by ESM
