Stora Enso has conceded that challenges regarding costs and the market are likely to increase in FY23. Credit: I99pema/commons.wikimedia.org.

Finnish company Stora Enso has issued revised guidance for the full year 2023 (FY23) due to the worsening market outlook.

The company said it has ‘significantly lowered’ the earnings forecasts for the year.

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In the financial results for FY2022, released on 31 January 2023, Stora Enso forecasted that its FY23 operational earnings before interest and taxes will be lower than the €1.89bn reported in FY22.

The company has attributed this revision to the deteriorating market outlook, which Stora Enso said has expedited more in the latter part of the first quarter of 2023.

Stora Enso has claimed that the overall ‘cost pressures’ and ‘market uncertainties’ will further increase in FY23.

Such increased challenges are also expected to lower the short-term visibility of the FY23 results.

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The potential downward trend can further be linked to the weakening confidence in consumers due to the current market situation. It will result in low amounts of private consumption.

Noting all such parameters, Stora Enso is now claiming that the impact will be seen across all its divisions, including a possible adverse effect on group margins driven by increasing costs in terms of energy, wood, and chemicals.

The company has further highlighted that both the containerboard and consumerboard demand in the packaging market will continue to remain ‘weak’, with an exception of liquid packaging boards. 

With the issuance of a revised forecast, Stora Enso has started reviewing and taking preparatory actions to manage the variable costs, volatility and uncertainties in the demands.

In addition, the company is taking measures to handle other factors such as pricing, capacity and inventory management, to respond to demand fluctuations, flexibility in product mixes and sourcing and logistics.

To manage cash flow and to secure a solid balance sheet, the company is also restricting capital expenditure and working capital.