Paper maker Stora Enso in $270 million Q3 profit

AP News
Posted: Oct 27, 2010 12:58 PM
Paper maker Stora Enso in $270 million Q3 profit

Paper maker Stora Enso Oyj reported Wednesday a third-quarter net profit of euro194 million ($270 million) thanks to improved demand and cuts in costs and production.

The company, which had made a net loss of euro520 million a year earlier, said sales in the July-September period were euro2.6 billion, up more than 17 percent.

Stora gave "a generally favorable" outlook for the rest of the year but cautioned that variable costs and a weakness in seasonal demand would hit fourth-quarter earnings.

Its share price closed up less than 1 percent at euro7.50 ($10.35) on the Helsinki Stock Exchange.

The Finnish-Swedish company said its quarterly performance was significantly improved by "early cost reductions and active management of both pricing and customer mix."

Forest product companies were hard hit in the global downturn, forced to cut production, close mills and lay off thousands of workers in the past few years with overcapacity forcing prices to crash. CEO Jouko Karvinen has warned that overcapacity in the European newsprint market could reach 18 percent by year-end.

He said that this year alone the company was reducing paper making capacity by 700,000 tons by closing four machines in Europe.

Stora also announced it has acquired a 51 percent stake in Chinese consumer packaging company Inpac International. It had revenues of euro82 million in 2009 and specializes in making consumer packaging for global manufacturers of mobile phones and other consumer goods.

Karvinen described the deal as "a strategically perfect fit" which will offer "an excellent opportunity to increase our presence in China and India, the two fastest-growing consumer packaging markets in the world."

Stora Enso is one of the world's largest forest product companies, making magazine paper, newsprint, fine paper, pulp and packaging boards. It employs 27,000 people _ down from 29,000 a year ago.