(Recasts with comment, details on outlook)
* Q4 profit weaker than market expected
* Plans to close paper machines, cut 600 jobs
* Shifts focus from paper to pulp and packaging
By Jussi Rosendahl
HELSINKI, Feb 4 Finnish forest group Stora Enso
said it plans to cut paper production capacity and
600 jobs to cope with falling paper demand in Europe.
The company also reported a lower-than-expected profit for
the fourth quarter and forecast more weakness for the first
three months of 2013, sending the shares down 2.6 percent to
4.96 euros by 1145 GMT.
Europe's recession has exacerbated a decline in paper
demand, driven by consumers shifting to online media from
newspapers and magazines.
Stora and rivals such as UPM-Kymmene have tried
for years to bolster paper prices by shutting production
capacity, but such cuts have so far been outpaced by the fall in
Stora said it would shut down two paper machines in Sweden,
representing 3.4 percent of European newsprint capacity. It also
launched a plan to cut annual costs by 54 million euros ($73
Its fourth-quarter operational profit rose 6 percent
year-on-year to 155 million euros ($210 million) but missed the
average forecast of 162 million euros in a Reuters poll.
It forecast first-quarter operational profit to be about
one-third lower than in the previous quarter.
Chief executive Jouko Karvinen said the planned capacity
cuts would help the paper business "avoid running cash zero or
"The past six years have been persistently challenging in
some of our markets, with both structural deterioration and
cyclical economic weakness," he said.
The company, looking to shift its focus from paper to more
profitable products such as pulp and packaging board, is
currently building a $2 billion pulp mill in Uruguay together
with Arauco, a unit of Chile's Copec.
It is also planning an integrated pulp and packaging board
mill worth 1.6 billion euros to Guangxi, China.
($1 = 0.7376 euros)
(Reporting By Jussi Rosendahl; Editing by Ritsuko Ando)