(Reuters) - Finnish forestry firm Stora Enso Oyj (STERV.HE) reported a better-than-expected underlying profit in April to June on Tuesday and said tight cost control helped it mitigate some of the impact of the coronavirus crisis.
The pulp, paper and packaging-board maker, whose shares opened 3.3% higher, said adjusted operating profit in the quarter fell to 178 million euros (160.89 million pounds) from 299 million euros a year earlier, beating the average forecast of 144.6 million euros in a Refinitiv analyst poll.
The profit was driven by the packaging materials business, which generated 39% of group sales and majority of the profit.
The unit’s adjusted operating profit rose to 130 million euros helped by lower variable costs, especially for pulp and chemicals, and lower fixed costs due to postponed maintenance activities and a cost cutting programme.
In all other units delivery volumes dropped as the COVID-19 pandemic reduced demand, created uncertainty among clients and accelerated the fall in paper demand as offices closed and free newspapers halted publication.
“The pandemic’s biggest effect on our business has been in the paper division, accelerating the structural decline in all paper grades,” Chief Executive Annica Bresky said in a statement.
The company’s paper division, which generated 21% of the group’s sales during the quarter, reported an adjusted operating loss of 39 million euros compared to a profit of 50 million euros a year earlier.
Stora said the unit’s sales dropped 37% from a year earlier to 445 million euros, the lowest in the group’s 22-year history, as the pandemic placed additional pressure on prices and deliveries of all paper grades.
Reporting by Tarmo Virki in Tallinn; Editing by Shounak Dasgupta and Edmund Blair