Paper Companies Report Weakened Profits, Will Increase Prices

Finland-based UPM-Kymmene, one of the world’s top magazine paper producers, today warned that it expects profitability for 2008 to be less than last year.

UPM says the potential financial fall-out is due to higher-than-estimated costs of wood fiber sourcing and the weakening result for the sawn timber business. While the company did not offer any specific forecasts it said in a statement that it will release its quarterly financial results next month. The company had estimated profits to be flat over 2007.

This spring, UPM responded to the weaker markets by reducing its sawmilling operations, temporarily limiting production at its seven sawmills in Finland, the company said.

UPM said it will continue to increase prices on its magazine papers although it was not clear by how much. A UPM spokesperson did not immediately return a request for comment.

As of presstime, UPM’s stock was listed at about $16.90, down nearly 5.5 percent from its previous close. Its 52-week high was about $30.15.

Another Finland-based paper producer, Stora Enso, reported that it expects second quarter operating profit to be about $172.8 million, about half of what the company pulled in during the same period in 2007. 

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