IP blamed weak demand and declining prices for a 16% fall in third-quarter net earnings to 72m ($122m).

Chief executive John Dillon said the outlook was tough due to seasonally lower demand and high energy and wood prices. The groups net sales were stable at 3.7bn. It also took a pre-tax charge of 55m for plant closures and redundancy payments.

Operating profits in its printing papers segment fell by a third to 71m. Lower than average prices and low demand forced it to take downtime to bring production in line with demand.

But Dillon felt the groups cost-reduction measures had left it in a good position to benefit from any upturn in the market.

M-reals operating profits slumped 70% to 20m (e28.9m) in the third quarter and turnover dropped 9% to 971m.

However, the group has seen an upturn in demand for coated papers in Europe and a pick-up in the US economy.

The Finnish paper manufacturers Map Merchanting Group also suffered, with turnover down 11% to 231m. Map did, however, manage to halve its operating losses to 1.8m.

Story by Andy Scott