The company said operating profit reduced by more than half to €142m (2017 Q2: €317m) for the period.

However, its biomaterials and wood products divisions were able to reach their strategic operating capital targets during the quarter. “This was an especially great achievement as Stora Enso is facing challenging markets,” it said. 

“Further deteriorating trading conditions caused by geopolitical uncertainties related to trade wars and a possible hard Brexit are expected to impact Stora Enso negatively.”

It said demand growth is forecast to slow down for Stora Enso’s businesses in general, while costs are forecast to increase in 2019 compared to 2018.

Stora Enso’s CEO Karl-Henrik Sundström said the company continued its proactive portfolio management and evaluation of expansion in wood products to respond to the renewable materials construction demand in line with the global megatrend of green building.

Stora Enso has initiated a feasibility study for a possible cross laminated timber (CLT) unit with 120,000m3 capacity in connection with its Zdírec sawmill in the Czech Republic and a new 60,000m3 construction beam mill located at the Ybbs sawmill in Austria. 

It is also building a pilot facility for producing bio-based carbon materials based on lignin. Wood-based carbon can be utilised as a crucial component in batteries typically used in consumer electronics, the automotive industry and large-scale energy storage systems. 

Meanwhile, Stora Enso plans to consolidate the Finnish spruce (whitewood) production to Varkaus sawmill. The plan includes a permanent closure of Kitee sawmill and production increase to Varkaus.

The objective is to improve profitability and competitiveness by creating a fully integrated sawmill for spruce production in Varkaus, optimising the synergies from the existing LVL, pulp and board mills.

The consolidation plan is part of Stora Enso’s profit protection programme of €120m, targeting reductions in variable and fixed costs. The possible consolidation is subject to completion of the co-determination negotiations at Kitee sawmill which will start in August. The production at Kitee sawmill is planned to be stopped gradually over the coming months.

The closure would results in a reduction of 85 full-time employees, with the increased production at Varkaus leading to 20 new positions.