Kymmene flags hit from weak pulp, fine paper markets in China
Oct 29 (Reuters) -Finnish forestry firm UPM-Kymmene UPM.HE on Tuesday said weak fine paper market in China, along with falling prices and demand for hardwood pulp in the country had hit its third-quarter profits, underscoring the slowing recovery in the forest industry.
WHY IT'S IMPORTANT
UPM's comments follow similar ones from Finnish peer Stora Enso STERV.HE which last week said pulp prices in China, the world's largest pulp market, fell in the third quarter and would also affect Q4 results despite having stabilised since then.
In 2023, China accounted for 1.53 billion euros ($1.66 billion) or 15% of UPM's net sales.
Some global companies have started to scale back activity in China as the world's second biggest economy continues to flag despite Beijing's efforts to turn things around.
KEY QUOTE(S)
"Pulp market demand slowed down during the summer and priced decreased significantly," UPM said, adding the slowdown was "more pronounced" for hardwood pulp in China.
CONTEXT
While Nordic forestry companies have struggled with high wood costs, low pulp prices and destocking among customers, both UPM and Stora Enso were expecting the market to recover gradually this year.
However, UPM warned earlier in October that the pulp market remained weak and costs of wood in Finland were still high, lowering its full-year outlook, while Stora Enso warned the market recovery would slow down further in the fourth quarter.
BY THE NUMBERS
Weakness in the Chinese paper market and peak fibre costs hit UPM's Specialty Papers business, where Q3 operating profit fell 40% from a year earlier to 22 million euros.
On the group level, UPM's adjusted operating profit rose 32% to 291 million euros, in line with its preliminary announcement earlier this month.
($1 = 0.9244 euros)
Reporting by Boleslaw Lasocki in Gdansk; editing by Milla Nissi
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
