Both companies will issue their results for the fourth quarter of 2003 within the next week, with M-real set to be among those hit the hardest.

Industry analysts are forecasting that the company will post a pre-tax loss of around 28m ($52m) for the three months to the end of December, due to weak prices, overcapacity in the market and cheap imports.

M-real warned earlier this month that it expected to post a loss for 2003, mainly due to reduced pricing levels and the weakening of both sterling and the dollar (PrintWeek 8 January).

The industry analyst forecasts exclude the 42m-50m in non-recurring items the group is set to post, resulting from loan restructuring, redundancies and credit losses.

Fellow manufacturer UPM-Kymmene is also set to see its results hit by low pricing levels and the weak dollar, with its pre-tax profits set to plunge by 36% on last years figure to 64m.

Paper prices have continued to be under intense pressure over the past year, as publishing companies have tried to minimise cost levels due to the reduction in advertising.

Stora Enso, a rival player in the magazine papers market to UPM-Kymmene, has already added itself to the pack of manufacturers issuing profits warnings, indicating that its operating fourth quarter operating profits will be half that of the previous quarter.

by Andy Scott