The company said it faces increases in production costs, pulp production curtailments, a decrease in fine paper delivery volume, strengthening of the Euro and a delay in coated fine paper price increases.
M-real chief executive Mikko Helander said: "Most of M-real's product prices have been increased but the further weakened American dollar and the British pound have considerably offset the positive effect. Efforts to increase all product prices continue."
The company had not previously given any profit outlook for 2008.
Fellow paper manufacturers Stora Enso and UPM-Kymmene have also recently given profit warnings due to higher pulpwood costs and escalating oil prices.
During 2006, M-real revealed plans for a restructuring programme aimed to cut capacity and costs to improve competitiveness.
Helander said the internal profit improvement programme has "proceeded even better than planned".
However, he said it will not be enough to cover the cost of inflation this year.
The restructuring programme meant that production at M-real's Sittingborne mill in Kent stopped in January 2007, which resulted in the loss of 350 jobs.
M-real warns of price increases as full-year figures fail to beat 2007
Paper manufacturer M-real has warned that its full-year 2008 operating profit will be less than 2007 and it will need to impose further product price increases.
