Holmen Net Misses Estimates as European Paper Demand Declines

Holmen AB, which supplies the pink paper for the Financial Times, reported fourth-quarter profit that missed analyst expectations as the decline in demand in Europe for newsprint and magazine paper accelerated.

Net income decreased to 902 million kronor ($142 million) from 2.94 billion kronor a year earlier, the Stockholm-based company said in a statement today. Analysts on average expected profit of 1.13 billion kronor, according to data compiled by Bloomberg. Fourth-quarter profit was boosted by about 911 million kronor from lower corporate taxes, while the company had a gain of 3.59 billion kronor a year earlier, after revaluing forest holdings.

European paper companies are suffering under declining demand and overcapacity, which has led Holmen to seek export potential outside Europe, Chief Executive Officer Magnus Hall said Jan. 23. The debt-ridden continent currently consumes about 90 percent of Holmen’s output. The decay in demand for newsprint and coated magazine paper accelerated last year in Europe, Stora Enso Oyj said Jan. 5.

“The market situation for paperboard was stable during the quarter, while demand for printing paper and sawn timber was weak,” Holmen said in a statement.

The stock fell as much as 2.6 percent in Stockholm and was down 1.3 percent to 191.8 kronor as of 1 p.m. in the Swedish capital.

Sales declined 7.6 percent to 4.28 billion kronor, falling short of the 4.42-billion kronor average estimate.

Paper demand has been shrinking about 5 percent a year since 2007 in Europe. Last year, demand for newsprint and coated magazine paper saw a decline of 9 percent, Stora Enso said, which prompted the Helsinki-based company to accelerate capacity cuts. Holmen said printing paper deliveries to Europe declined by 8 percent during the year.

Holmen in October said it would shut down the oldest paper machine at a mill in Hallstavik, Sweden in the second half of this year, reducing production of semi-coated paper by 140,000 tons per year. The grade is mainly used for consumer magazines, catalogs and advertising material.

To contact the reporter on this story: Janina Pfalzer in Stockholm at jpfalzer@bloomberg.net.

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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