Top Nordic Paper Companies Post Losses

Stora Enso Oyj's fourth-quarter net loss swelled to $840 million, UPM-Kymmene Corp. -- the world's largest magazine paper maker -- swung into net loss of $267 million.

HELSINKI (AP) -- Top Nordic paper companies plunged into losses at the end of last year because of slumping demand from customers such as newspapers and magazines, company officials said Thursday.

Finnish-Swedish group Stora Enso Oyj's fourth-quarter net loss swelled to euro655 million ($840 million), from a net loss of euro60 million a year earlier. Finland's UPM-Kymmene Corp. -- the world's largest magazine paper maker -- swung into net loss of euro286 million ($267 million), from a net profit of euro29 million in 2007.

Both companies repeated plans to slash hundreds more jobs, cut production and close mills. Last year, they announced thousands of layoffs worldwide.

In Helsinki, both companies' share priced dived -- Stora Enso's by more than 8 percent, to euro4.62 ($5.92), and UPM's by 6 percent to euro7.29 ($9.34).

Norway-based Norske Skog also reported an increase in fourth-quarter net loss -- to 1.2 billion kroner ($185 million), from 683 million kroner.

But, in sharp contrast, its stock surged 7.6 percent to 15.60 kroner ($2.26) in Oslo because the result exceeded market expectations. Norske Skog also was upbeat.

"We have a seen a positive development throughout 2008. Our production is now more cost-efficient and important input factors have become more reasonably priced," Chief Executive Christian Rynning-Toennesen said.

Stora-Enso CEO Jouko Karvinen had little to smile about.

"Last year was miserable. The drop in customer demand in the last quarter of 2008 turned out to be as severe as we expected," Karvinen said. "We also responded as planned by aggressively curtailing our production by 15 to 30 percent of capacity."

Stora Enso had earlier issued several profit warnings and said cuts would continue in 2009.

UPM also said it will continue to close mills and curtail production, expecting poor demand to continue in 2009.

"Profitability declined clearly from the same period last year. UPM's paper deliveries for 2009 are forecast to be lower than last year," UPM said.

Henri Parkkinen, a forest sector analyst at Pohjola Bank in Helsinki, said part of the problem was caused by continuing over capacity because companies had been too slow in making structural changes.

And, the international credit crunch coupled by gloomy forecasts for 2009, made matters worse.

"The greatest challenge to paper makers has been, and will continue to be this year, the fall in economic growth," Parkkinen said. "It's having an extremely negative impact on paper and paperboard makers."

Finland's M-Real, a leading European producer of paper and paperboard, saw net loss deepen to euro225 million ($288 million) in the fourth-quarter, from euro256 million in the previous quarter, and saw a 12.5 percent fall in quarterly revenue to euro722 million ($925 million).

Also, Metsaliitto Group -- a Finnish producer of fine papers and paperboard -- reported an increase of net loss to euro211 million ($270 million) in the quarter, from euro169 million a year earlier. Sales also fell, to euro1.4 billion ($1.8 billion).

Parkkinen says things would only get worse this year.

"It looks very much like this year's results will remain below those of 2008," he said.

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