Holmens reversal of a long period of relative decline, which has been aided by recent management changes and improvements at its mills, including Braviken in Sweden, has boosted its prospects (PrintWeek, 8 February).

But the ratings of Stora Enso and UPM-Kymmene do not recognise the severity of the cyclical downturn in the market and the risk of longer-term decline.

Severe earnings downgrades are likely to accompany both companies first-quarter results for 2002, with share prices being driven down as much as 40%, the report claims.

Access to the Nordic long-fibre market no longer offers a competitive advantage, with both recycled fibre and hardwood fibre having proved successful in publication and fine paper production.

This is due to the new forms of papermaking being simpler in structure and less capital-intensive than the Nordic market.

Although the report says Holmen will never regain its 1988 position of third-largest European papermaker, the firms focus on just paper and paperboard has meant it has a strong European focus, rather than global.

Story by Andy Scott