Stora Enso, UPM-Kymmene, SCA, M-real and Norske Skog all suffered major falls in their value over the past 12 months, according to the Wall Street Journals Networking/Europe 500 table.

Stora Ensos shares were down 38.9%, UPMs fell by 40.8%, SCAs by 22.3%, M-reals by 28.4%, and Norske Skogs slumped 40.4%. Stora Enso was ranked as the 140th biggest company in Europe with sales of 9bn (e12.8bn) and was 158th in market capitalisation.

Credit Suisse First Bostons European paper analyst, Lars Kjellberg, said the firms performances reflected the current state of the industry: The economy is basically not doing what these firms want it to do.

As well as being hit by the strong euro, Kjellberg said the firms were also suffering from a three-year down-slide in what was one of the most cyclical industries.

Share prices have been particularly close to an eight-year low, and this had enticed buyers to acquire stock over the past few weeks, he added.

Kjellberg said M-reals intention to buy a minority 25% stake in Portuguese state-owned pulp and paper group Portucel Soporcel was the right move, as the uncoated fine paper was in need of consolidation.

The deal made good sense at a time when the Finnish paper manufacturer had little money to spend on acquisitions, he said.

Story by Andy Scott