UPDATE 2-Stora Enso Q3 beats forecasts, outlook still dim
* Underlying EBIT of 131.5 mln euros, vs forecast 70 mln
* Sales of 2.23 bln euros towards high end of estimates
* Company says market outlook remains weak
* CEO says more cost-cut benefits to come
* Shares rise 2.7 percent
(Adds detail, quotes, share price)
By Brett Young
HELSINKI, Oct 22 (Reuters) - Top European paper and board maker Stora Enso (STERV.HE) (STEr.ST) reported better than forecast underlying third-quarter earnings on Thursday thanks to cost cutting, but said its market outlook remained gloomy.
"Looking forward, the markets remain generally weak and the structural overcapacity in Europe continues to put pressure on prices in several product ranges," chief executive Jouko Karvinen said in a statement.
"That, combined with unclear macroeconomic and raw material cost development trends, makes visibility poor and quarter-by-quarter predictions difficult," he said.
Stora's underlying July-September operating profit rose to 131.5 million euros ($196 million) in the third quarter from 125.5 million a year earlier, beating all forecasts in a Reuters poll of 16 analysts.
Stora shares were 2.7 percent higher at 5.34 euros at 0750 GMT, outperforming a weaker Dow Jones Basic Resources index .SXPP.
Including a steep hit of 655 million euros in the quarter, mostly from one-time charges for planned mill closures and lay-offs in Finland, Stora notched a loss of 519.7 million euros for the three months.
The global paper industry has struggled for the better part of a decade to climb out of a slump as soft demand and overcapacity have kept prices down, leading to poor earnings, production curtailments and layoffs.
The current global economic downturn has further eroded demand for basic materials, including paper, as print advertising has dropped steeply in the crisis.
Stora has cut thousands of jobs in Finland alone, and announced plans to temporarily or permanently close mills, to try to balance supply with the weak demand. [ID:nLJ534535]
Karvinen told a conference call some two-thirds of the benefits from the cost cuts were still to come.
Net sales slid 18 percent to 2.23 billion euros, against a consensus of 2.22 billion in the poll but within the range of analysts' estimates.
"We already know the fourth quarter will be negatively impacted by seasonally weaker demand than in the third quarter, and by maintenance and upgrade stoppages in certain segments," Karvinen said, adding it was too early to forecast 2010.
Stora's result kicks off the Nordic forestry reporting season. Smaller rival M-real (MRLBV.HE) reports results later on Thursday, with UPM-Kymmene (UPM1V.HE) due on Oct. 29 and Norway's Norske Skog (NSG.OL) on Nov. 5. (Reporting by Brett Young; Editing by Hans Peters) ($1 = 0.6697 euro)
