News
Stora Enso and UPM warn of declining profits
Higher pulpwood costs and escalating oil prices are just some of the issues Stora Enso and UPM have warned will considerably affect their profitability.
Stora Enso announced yesterday (18 June) that its second-quarter 2008 operating profit is expected to be around half the €223m (£175m) that it achieved in the same quarter last year.
It is also predicting its profitability in the second half of 2008 to be negatively affected by the impact of rising fossil fuel prices on energy, transportation and chemical costs.
In a statement, the paper giant said: "After three quarters of deteriorating performance, combined with the uncertain macro-economic outlook, Stora Enso is reviewing its plans for production curtailments in the second half of 2008, as well as permanent capacity reductions."
UPM has also said it expects its full-year operative profitability for 2008 to be below last year, citing higher than estimated costs of wood fibre sourcing.
The magazine paper manufacturer has been involved with on-going price increases for its magazine papers.
Its financial results for April-June will be released on 24 July this year.
Earlier this week, it cited weakening results for its sawn timber business due to uncertainty over raw material supply and has said it will start staff negotiations over the possible closure of its Leivonmäki sawmill.
UPM produces printing papers for magazines, newsprint and fine papers and has already responded to the weaker markets and reduced its sawmilling over spring and summer.
Located in central Finland, the Leivonmäki mill produces spruce sawn timber and employs 63 staff. It has generated constant losses, according to the company.
Pulpwood costs and rising oil prices 'will affect profits'
Comments
Simon Biltcliffe- Webmart - 19 June 2008
Hardly looks like they are riding on the wave of higher profits from their paper prise rises- which kind of re-enforces the view that there is only one way for paper prices to go from here- up,Up,UP.
How far? Well I found a paper purchase order from 1988 which has woodfree 100gm at just under £1000/tonne. Current price = just over half of that. Plus 20 years inflation. Eeeek*
Simon Biltcliffe
MD
WEBMART Ltd
www.FreePrintSales.com
*potentially!
Matthew Parker - 20 June 2008
I remember woodfree at £1,000/tonne as well - and that was for reels not sheets! That memory goes back about 12 years, so £1,000/tonne stayed around for quite a bit!
Even if prices don't reach these heady heights (and lets hope they don't: a cyclical market helps no-one), print buyers are going to have to consider their specifications carefully in the future and really think about which grade of paper is right for their product. I suspect that the first issue will be a lack of education in the sector...
Stock management is going to be another interesting issue!
Matthew Parker
www.printandprocurement.com
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