Forest-based industries report declining profits

Finland's major forest-based industries have reported declining profits and smaller production output for the third quarter (Q3) of 2019.

On Tuesday, Stora Enso reported that its profit in July-September was down by a third to 231 million euros (256.6 million U.S. dollars) from 353 million euros a year ago. It said the decline is expected to continue into the fourth quarter. Stora Enso reported that both the sales volumes and the prices of its products had declined. It said it had cut costs in advance to match the sales levels.

Last week, another Finnish forestry giant, UPM, reported a 19-percent decline in its profits in Q3, compared to the same period in 2018. Its profit was 342 million euros. UPM recalled that its over two-billion euro investment in pulp production in Uruguay, south America, will later improve its profitability.

The stock values of the three major Finnish forest industry companies were dropping on the Helsinki exchange on Tuesday.

The Natural Resources Institute Finland (Luke) predicted last week that pulp exports will continue at record levels in 2020, but the average price will continue to decline. The institute said that the prices will recover next year, but will remain under the 2019 average.

The institute did not envisage a decline in the production volumes of pulp or cardboard, but expected the production of paper to diminish significantly.

Antti Viljakainen of the analyst company Inderes told the Finnish language business daily Kauppalehti on Tuesday that the end-of-year predictions from Stora Enso were surprisingly low. Also discussing the price issue, analyst Timo Jaakkola of Taaleri Kapitaali was quoted by local media as raising the question whether the pulp market has reached bottom already.