FINLAND (From news reports) -- Stora Enso said it could lay off about 1,000 employees this year as part of a profit improvement plan, as the Finnish forestry firm and rival UPM-Kymmene both forecast a slow start to 2024 on Thursday.
"We are facing persistent weakness in the macroeconomic and geopolitical environment and need to focus on core business activities," Stora Enso CEO Hans Sohlstrom said.
The planned cuts add to the more than 1,000 layoffs Stora Enso announced last year when it decided to shut down several plants across Europe.
UPM said on Thursday that uncertainties in the global economy and geopolitics would continue to affect its operations after its fourth-quarter operating profit (EBIT) fell by a half.
Stora Enso's shares fell around 5% on Thursday, while UPM's had tumbled more than 9% by 0945 GMT.
Stubbornly high cost inflation, destocking by customers and subdued pulp demand hit the Finnish forestry industry in 2023, leading to a slump in results and a clouded outlook.
While UPM expects full-year EBIT to improve from 2023, it said first-half earnings would be lower than in the previous six months, also affected by planned maintenance shutdowns.
Stora Enso said it saw no improvement in first-quarter results and warned uncertain market conditions would weigh on demand, prices and margins in 2024.
"The potential risk of logistical challenges from the Red Sea area could disrupt the flow of goods and increase costs," said Stora Enso, which still expects 2024 operational EBIT to be higher than its 342 million euros ($369 million) last year.
But analysts at Jefferies and Inderes said this likely implied a smaller increase than the over twofold jump analysts' consensus was expecting.
Stora Enso said the savings plan, which targets an 80 million euro improvement in operational EBIT by 2025, would not lead to new plant closures.
Most of the job cuts will take place in the first half of 2024, and Stora Enso said it would begin local negotiations as soon as it has detailed country-specific plans.
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