The Finnish packaging and paper giant had guided in January that its operational EBIT was expected to be “lower” for full-year 2023 than its 2022 figure of €1.891bn (£1.67bn).

It defines a lower EBIT as more than -15% but less than -50%. However, it defines “significantly lower” EBIT, which the figure has now been revised to in a statement released today (20 April), as falling by 50% or more.

“The change in earnings expectations for the full-year 2023 is a result of the worsening market outlook which accelerated towards the latter part of the first quarter,” the company said.

“Cost pressures and market uncertainties are expected to be significantly more challenging in 2023 than in 2022, weighing on our results and lowering the short-term visibility this year.

“This market situation will continue to weaken consumer confidence resulting in lower private consumption impacting all our divisions. Compared to 2022, group margins are expected to be adversely impacted by increasing costs, particularly in relation to energy, wood, and chemicals.”

The company added the “whole packaging market” is currently weakening, especially containerboard where demand is expected to remain weak, though consumer board is also showing signs of weakening, with the exception for liquid packaging board.

“The construction sector remains challenging with a lower number of issued building permits and new housing starts,” Stora said.

“This is expected to have a temporary impact on demand for the Wood Products division this year. In addition to higher pulpwood cost, a weakening global pulp market is expected to weigh on the Biomaterials division. Availability for pulpwood remains tight.

“To manage volatility, variable costs are continually reviewed, and preparatory actions are taken to respond to fluctuations in demand with reinforced cost control actions.”

Stora added other measures such as pricing, flexibility in product mix, capacity and inventory management, and sourcing and logistics have been put in place.

In Finland, the business has completed negotiations on potential furloughs at its divisions’ production sites. Capacity adjustment activities are also in place to respond to fluctuations in demand.

Operationally, the focus on decentralisation continues together with the reduction of overhead costs. Restrictive capital expenditure and working capital management to safeguard cashflow and to secure a solid balance sheet are also in place.

Stora Enso will publish its January–March 2023 interim report next Tuesday (25 April). The business employs around 21,000 staff and its 2022 sales were €11.7bn.

Last week it said it will consolidate its book paper production and permanently close one of its two paper machines at its Anjala mill in Finland.