Stora Enso’s Quarterly Profit Slumps As Weak Demand Persists
Stora Enso, a Finnish forest products and packaging firm, has reported second-quarter operating profit significantly below market expectations. The company was impacted by a combination of factors, including a decline in prices, high costs, and customers destocking their inventory.
Annica Bresky, the CEO of Stora Enso, expressed concern about the market demand, stating that there are no immediate signs of improvement. The company expects the destocking trend to persist across most of its segments throughout the second half of 2023.
This year, Stora Enso has faced challenges due to cost pressures and declining demand. To address these issues, the company announced a wide restructuring plan in June, which involves cutting over 1,000 jobs and shutting down plants in Europe.
However, it has also taken steps to expand its operations, such as opening a new corrugated facility in the Netherlands.
The company’s operational earnings before interest and tax (EBIT) for the second quarter were €37 million, a significant decline compared to the €141 million expected by analysts in a Refinitiv poll. This marks a 93% drop from the €505 million earned in the same period in 2022, when the company benefited from strong demand for packaging materials.
The biomaterials unit within Stora Enso faced a challenging situation as it reported an operational loss of €13 million in the quarter. This unit experienced an unprecedented decline in global market pulp prices, according to Bresky.
Despite the difficulties, Stora Enso remains focused on areas that are within its control, including investments and restructuring to improve future business profitability and cost-competitiveness.
The company is also managing costs and production levels to handle inventories, both for itself and its customers.