Stora Enso says its wood products division continues to face challenges due to low demand, prices, volumes, and high wood costs.

In its Q1 interim report, the company says a seasonal demand improvement is expected in the classic sawn market during Q2. But it says the construction sector is still not improving.

The company posted adjusted EBIT of €156m for Q1 (2023 Q1: €234m), a 33% decrease from a year ago. Sales reduced by 20% to €2.16bn.

Stora Enso’s profit improvement programme, initiated in Q1, has progressed well and the annual profit improvement target has been increased to €120m, from the initial €80m, driven by additional fixed cost reductions. The programme does not include site closures and may result in the reduction of approximately 1,000 employees.

The forest division expects a gradual rise in wood demand as markets in the second quarter remain tight in Finland, Sweden, and the Baltics. Wood prices are estimated to rise throughout the rest of 2024 in both Finland and Sweden.

Stora Enso's full year 2024 adjusted EBIT is expected to be higher than for the full year 2023.

“In a continuous weak market, I am encouraged by Stora Enso's sequential financial performance improvement,” said Stora Enso’s president and CEO Hans Sohlström.