Pulp prices are on the rise, with European pulp and paper products benefiting from the ongoing conflict in the Red Sea—which is still causing a bottleneck for global paper.
At the same time, demand for finished timber products, including CLT and LVL, remains weak, with European producers struggling amid slowing construction demand and rising material and production costs.
That is according to Stora Enso, one of the world’s largest forest companies, which published its updated financial projects for 2024 yesterday, now projecting that earnings before interest and taxes will rise “by at least 50%” from 342 million euros.
“Pulp prices continue to increase, and the outlook for the rest of this year is stronger than previously estimated,” Stora Enso said in a statement, “which includes growing demand for consumer board.”
“In a continuously weak market, I am encouraged by Stora Enso’s sequential financial performance improvement,” Hans Sohlstrom, Stora Enso’s CEO, said in a forward to the financial statement.
Citing the “successful implementation” of a profit improvement plan targeting a reduction of about 1,000 jobs, Mr Sholstrom warned that uncertainties, including inflationary pressure or strikes, still threaten the forest giants’ profitability for the rest of the year.
“We anticipate adverse profit impacts in the second quarter due to higher maintenance costs and strikes in Finland,” he said, adding that “last year’s poor performance emphasised the need for efficiency, decisiveness, and focus on essentials.”
“Looking ahead, we anticipate a gradual recovery in 2024, with increased demand and higher prices for board and pulp.” Speaking to Reuters, JP Morgan said the “commentary regarding improved demand for consumer board and a more positive price outlook for consumer board and containerboard is an incremental positive.”
As for wood products, Mr Sholstrom warned that “wood costs remain high, especially in the Finnish market, which continues to challenge profitability.” Stora Enso’s Wood Products division dropped 23%, or 105 million Euros, from 349 million Euros – with Stora Enso (as well as UPM and Metsa Wood) hit hard by the sluggish European construction market.
- To learn more about Stora Enso’s financial performance, download the latest statement from the website here.
