The group's operating losses sank to 19.4m (Euro28.1m), a reversal from a 20m profit in the same period last year.

This was due to asset write downs at its Savon Sellu fluting mill in Finland and the Reflex mill in Germany, which totalled 37.4m. Profitability also suffered due to annual maintenance shutdowns.

Operating losses for graphic products and speciality papers continued to rise in the third quarter to 23.2m, due to write downs of 21.6m on the restructuring at Zanders Reflex mill, and falling prices.

However, M-real senior executive vice president and chief operating officer Hannu Anttila said that in the last three months the market performed better than had been expected.

Pointing to continued growth in paper demand, Anttila repeated the remarks of his rivals, that price increases will go ahead.

"Thanks to continued strong demand, we are still confident in our ability to implement price increases for both coated and uncoated fine paper."

Price increases would also be applied to folding boxboard by the year's end.

However, Anttila said the effect on the results for 2004 would be "minor", also warning that M-real's fourth quarter result would be seasonally weaker than that of the third quarter.

Story by Andy Scott