Europe's leading paper maker Stora Enso reported a second-quarter loss on Thursday due to lower newspaper circulation and a slump in advertising, and announced new capacity and job cuts.
Stora made a net loss of 368.3 million euros (524.7 million dollars) in April-June, compared to a net profit of 28.6 million euros in the same period in 2008.
Its operating loss was 209.4 million euros, down from an operating profit of 71.3 million euros a year earlier, while sales fell by nearly 24 percent to 2.2 billion euros.
"We were unfortunately right about the demand remaining weak" in April-June, chief executive Jouko Karvinen said in a statement and noted there was no speedy recovery in sight.
"We foresee that demand will continue to be weak during the third quarter of 2009."
Global financial turmoil has dented the market for newspapers and print advertisements, dealing a further blow to paper makers which have for years been struggling with overcapacity.
Stora has in recent years reorganised its operations, announcing massive cuts in production capacity and jobs, but more cuts are ahead.
The company said it would continue curbing production during the third quarter, but was also mulling permanent capacity cuts in its native Finland where high costs have eaten up the profit it makes elsewhere.
"We are... preparing plans for not only continuing curtailments, but also permanent capacity closures in areas where we cannot see a rapid recovery to clearly positive returns," Karvinen said, adding that the new plan would be announced by the end of September.
Since last September Stora has announced plans to shed some 3,700 jobs globally in the next few years. In 2008 Stora had around 33,800 employees worldwide, half of whom were in Finland and Sweden.
Although demand for paper is forecast to remain weak during the third quarter in Europe, Japan and the United States, Stora said some improvement was expected compared to the second quarter.
It added that in China the economy was recovering and demand for magazine paper was seen to be picking up. |
