Paper manufacturer Stora Enso has said it will continue to significantly curtail production during the first half of 2009 to adjust to weaker demand, which could temporarily affect over 5,000 staff in Finland.

In the fourth quarter of 2008, the company reduced its paper and board production by 15%, pruning 490,000 tonnes. Pulp production was cut back by about 240,000 tonnes, reducing capacity by 20%.

As a result, it said its fourth quarter 2008 operating profit has been negatively impacted.

The company will also take an impairment charge of €670m (£605m) on the fourth quarter operating profit.

It said this is mainly due to the weaker outlook for many products, and will provide further details when it announces its full-year results next month.

Metso Paper, the supplier of machinery to the pulp and paper industry, has also said it will start staff negotiations, which are estimated to affect between 900-1,200 jobs in Finland.

It said it would look at a possible reduction of the number of its units and the consolidation of operations into bigger units.

President and chief executive Jorma Eloranta said: "It is our understanding that the new machine market will not return to the level of the recent years, so we will adjust our cost structure."

It is estimated that investment in the pulp and paper industry in the upcoming years will decrease by around one third compared to 2004-2008.

The paper market has been hit by the closure of customer mills in Europe and North America, and the globally decreasing markets for new machines.