STOCKHOLM (Thomson Financial) - The forestry sector is facing a crisis,
Holmen AB chief executive Magnus Hall said in an interview with Swedish daily
Svenska Dagbladet, after his group on Thursday posted a 33 percent pretax profit
decline for the first quarter.
"We do not earn enough money, none of us," he said, adding that companies in
the sector have been unable to pass on their increasing costs to customers.
"You can see the crisis when all other raw materials related industries such
as steel and energy are performing really well, while we have not taken part of
this booming business cycle," he said.
Svenska Dagbladet said the problem originates in oversupply on the European
paper market combined with rising prices of timber and energy.
Holmen, which will cut a third of 900 jobs at its paper machine in
Hallstavik, may also reduce production at other locations if necessary, said CEO
Hall.
"We are now focusing on Hallsta, but we are prepared to do other things if
it can have a positive impact on our result," he said.
He said the last years' share price decline for peers including Norske Skog
and Stora Enso is not surprising taking the weak result development into
account.
The forestry sector may well have to consolidate if the situation is to
improve, Svenska Dagbladet said.
gustav.sandstrom@thomsonreuters.com
gs/slj
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