Finland's UPM-Kymmene, the world's largest maker of graphic papers such as magazine paper and newsprint, missed quarterly core profit expectations due to weakk paper deliveries and prices The company said on Tuesday its profit was boosted by cost cuts and favourable exchange rates, but that was offset by weaknesses in its paper and energy divisions.
UPM's first-quarter adjusted operating profit rose to 204 million euros ($222 million) from 196 million a year earlier, missing the 211 million expected by analysts polled by Reuters. Shares in the company were down 4.0 percent by 0728 GMT, though are still up around 31 percent this year. UPM in November launched its latest capacity reduction programme as it battles falling European paper demand amid a shift from print products to digital devices.
In the quarter, European demand for graphic papers fell 5 percent from a year ago, and publication paper prices dropped at the same pace. UPM said overcapacity plagued the newsprint business in particular, where the firm competes with the likes of Stora Enso and Norske Skog. "The demand and deliveries in the (European) industry are falling faster than what the announced closures correspond to ... There will be further pressure to downsize the graphic paper industry," Nordea analyst Harri Taittonen said.