Stora Enso, the world's largest producer of paper and paperboard, yesterday said that the market for its paper-based products appears to be picking up following the end of the war in Iraq.
The comments came after the Finnish-Swedish group announced pre-tax profit for the three months to March 31 of €129.3 million, down 46 per cent on the year-ago period. Sales were down 4 per cent at €3.1 billion.
Commenting on the market outlook, Stora Enso's CEO Jukka Härmälä said, "The global economy is still suffering from the uncertainty caused by the Iraq war, and the current fear of a global epidemic is affecting consumer confidence. The outlook for advertising spending is bleak in Europe but more optimistic in North America. Increased pulp and waste paper prices will have a stabilising effect on paper prices."
The company said that in Europe it still remains to be seen when consumer confidence will pick up and advertising markets recover. Some price pressure persists in coated printing papers due to overcapacity. Markets for office papers, packaging boards and timber products are expected to remain stable.
In North America the geopolitical uncertainty has decreased the demand for advertising-driven paper grades after a relatively good start of the year. The company said that in that market it appears that the demand will recover, and the latest advertising spending figures suggest that the negative sentiment towards advertising spending due to the war will fade away. The proposed price increases are expected to be introduced gradually. The demand for timber products in the USA can also be affected by economic uncertainty, but fundamentally it is driven by interest rates, which remain low.
Stora Enso is an integrated forest products company producing magazine papers, newsprint, fine papers, packaging boards and wood products, areas in which the group is a global market leader. The company's sales totalled €12.8 billion in 2002. The group has some 42 500 employees in more than 40 countries in five continents and about 15 million tonnes of paper and board annual production capacity. Stora Enso's shares are listed in Helsinki, Stockholm and New York.