Paper maker Stora Enso warns of higher costs
HELSINKI, April 20, 2011 (AFP) - Finnish-Swedish giant Stora Enso, one of Europe's largest paper makers, on Wednesday posted first quarter results above forecasts, saying its productivity measures have paid off.
It however warned that year-on-year improvements in the next quarter would be limited because of rising costs and production stops due to maintenance.
The net profit for the January-March period jumped to 155.9 million euros ($226 million) from 102.1 million euros for the same period in 2010.
Analysts surveyed by Dow Jones Newswires expected a net profit of 139.7 million euros.
Stora Enso said raw material prices were higher than a year ago "but productivity improvements and cost savings partly compensated for the cost increases.
"We are pleased to report first quarter results for 2011 showing significant profitability improvement driven by broad and strong year-on-year pricing improvement in every segment," chief executive Jouko Karvinen said.
He stressed the improvements were not only due to the "quite limited" recovery in the industry but "also reflect a conscious effort to improve pricing quality ... They are also a result of our cost base reduction we started several years ago."
He warned however about rising inflation, saying prices would rise 4.0 percent in 2011, above the previous estimate for 3.0 percent, notably because of a hike in the price of recycled fibre and some chemicals.
"Actions to improve costs, productivity, product and customer mix continue to be even more important," the company said.
"Cost inflation and maintenance stoppages will limit the second quarter earnings improvement year-on-year,"it warned.
In the first quarter, Stora Enso's sales rose to 2.73 billion euros from 2.3 billion euros a year earlier, marginally beating analyst forecasts for 2.67 billion euros.
Stora Enso used to be by far the largest paper maker in Europe but its Finnish compatriot UPM-Kymmene has now caught.
In early afternoon trade, Stora Enso shares were down 1.69 percent while the Helsinki stock exchange was up 1.07 percent.
