UPM-Kymmene Oyj, Europe’s second-largest paper maker, fell the most in three months after it cautioned investors that the outlook for the European paper market remains bleak after a fourth-quarter loss.
UPM fell as much as 5.2 percent to 9.03 euros, the biggest intraday decline since Oct. 25. The shares traded at 9.10 euros at 12:08 a.m. in Helsinki trading. Volume exceeded 1.9 million shares, almost reaching the daily six-month average.
“The paper business seems to be in a downward spiral,” Henri Parkkinen, an analyst at Pohjola Bank Oyj, said by phone.
Lower prices for paper for publications, adverse currency development and declining shipments will cut the European paper unit’s profitability, the company said today in a statement. European paper makers are struggling to cut production as the region’s sovereign debt crisis, unemployment and austerity measures diminish newsprint demand. Paper companies need to seek long-term growth from non-paper operations and emerging markets, Moody’s said on Jan. 24.
UPM said its fourth-quarter net loss was 1.5 billion euros ($2 billion) after 1.8 billion euros of writedowns and other charges.
The company said Jan. 17 it will cut 860 jobs and it closes and shuts facilities in Finland, Germany and France. UPM last week reached an agreement to sell its Stracel paper mill in France.