Addressing analysts at a capital markets day at Storas London offices, Hrml said merger and acquisition opportunities for the Finnish-Swedish producer were in North America, where it was an open field.

It remains a platform for growth, but only synergistic, profitable acquisition opportunities will be sought, he added.

But with valuations at unreasonably high levels, and a lack of motivated sellers, current options remained limited.

Hrml expected prices to improve in both magazine papers and newsprint. In the fine paper market, prices remained flat for woodfree coated and uncoated grades, he said, but demand was seasonally improving.

Hrml said Stora Enso had started a plantation project in China, and that it was also conducting a feasibility study for an integrated pulp and paper operation in the south of the country.

Stora Enso also hopes for savings of up to 83m (E120m) by 2006 by expanding its wood supplies from Russia and the Baltic States.

It wants to source around 40% of its wood supply from Eastern Europe, compared to 25% in 2002.

Raw material costs are 40% lower in Russia and about 20% lower in Estonia, Latvia and Lithuania than in the Nordic Countries and Central Europe.

Story by Andy Scott