Stora Enso has described 2007 as one of the most challenging years in its recent history.
The company, announcing its full-year results, also warned that it was preparing to meet the “real threat” of increasing Russian duties on log supplies, including the possibility of capacity reductions.
“The fact is we will have to launch some of these actions in the next few months to be ablt to cope with the steep increases in duties,” said Stora Enso CEO Jouko Karvinen.
Stora Enso recorded sales of €13.3bn during 2007, up from €12.9bn in 2006, while its net profits of just €71.5m compared to €700m a year ago were impacted by non-recurring costs.
Profit deterioration in the fourth quarter, mainly due to the wood products division’s performance, meant the group could not continue its year-on-year improvement.
Wood product sales in the fourth quarter were down 11% to €393.7m because sales prices and deliveries decreased as markets deteriorated. Operating profit was zero and already announced production curtailments are likely to continue at least into the second quarter of 2008.
Wood product deliveries in 2007 totalled 6.3 million m3, down from 6.5 million m3 in 2006.
“Despite the ongoing recovery in demand in Japan, the general outlook for wood products demand remains depressed, and prices are likely to decline further,” the company said.
