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
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