From a domestic perspective, it’s positive that, to my understanding, machines here haven’t been idle for such long periods that there would have been layoffs. So how weak are UPM’s machine operating rates elsewhere in Europe, when here they are in the 90-100% range…
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Forestry expert Antti has prepared a new company report on Stora Enso, late on Sunday evening. 
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We reiterate our Add recommendation for Stora Enso and our target price of 9.00 euros for the company. The industrial business is likely to be a struggle for the company this year as well, and the stock is not cheap based on earnings in the short term. However, we believe there is value hidden in the balance sheet (2024 TOT P/B 0.6x), and the company is also taking measures to unlock this value. We therefore still see the stock’s return expectation as higher than the required return when viewed through the balance sheet play.
Quoted from the report:
Stora Enso’s P/B ratio is significantly below its medium-term median at 0.6x. When evaluating the balance sheet, it should be noted that the forest’s share of the balance sheet is significant, amounting to 9.3 billion euros or just under 12 euros per share. If this valuation is accepted for the forest, the value of the industrial businesses would be only just over 2 billion euros, considering the company’s debts and forest-related tax liabilities. In this scenario, even with the company’s modest average earnings in the coming years, the value of the industrial businesses would remain low (2025e-2028e average “industrial EV/EBIT” clearly single-digit).
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About half, or slightly more than half after the closure of Ettringen, of UPM’s graphic paper capacity is in Finland. If the utilization rate in Finland has been over 90%, then elsewhere, mainly in Germany, it must have been around 50%. Finland’s share of UPM’s graphic paper capacity has been rising again for 3-4 years, whereas before that it declined for about 10 years.
According to Massimo, however, the price of wood is at an unsustainable level in Finland, and this has traditionally predicted capacity reductions. Perhaps in Germany, the energy price is then at an even more unsustainable level. Go figure.
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Metsä Board Interim Report Q1/2025:
Metsä Board Interim Report
January–March 2025 (compared to 1–3/2024)
• Sales were EUR 480.8 million (483.7).
• Comparable operating result was EUR 22.8 million (31.5), or 4.7 per cent of sales (6.5). Operating result was EUR -3.8 million (23.0).
• Comparable earnings per share were EUR 0.04 (0.06), and earnings per share were EUR -0.02 (0.04).
• Comparable return on capital employed was 3.9 per cent (5.7).
• Net cash flow from operations was EUR -27.9 million (-7.9).
Outlook for April–June 2025
Metsä Board’s comparable operating result in April–June 2025 is expected to be weaker than in January–March 2025 (1–3/2025: EUR 22.8 million
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Metsä Board’s new CEO Esa Kaikkonen’s interview is now available to watch and listen to. 
Metsä Board’s survival from the weak market situation is not made easier by the ongoing tariffs, which erode sales development. The company expects the operating environment to remain unstable in the near future as well. New CEO Esa Kaikkonen comments on his thoughts on the current situation and short-term outlook.
Topics:
00:00 Start
00:13 New CEO introduces himself
00:51 In what development phase is the company through the eyes of the new CEO?
02:09 Q1 result’s main drivers
03:04 Q2 guidance
04:09 Current level of tariffs and their impact on Metsä Board’s products
05:46 Price increases due to tariffs
06:33 Are tariffs already visible in US orders?
07:42 Changes in trade flows
09:15 Customers transferred from Takko mill
09:59 Metsä Fibre
10:48 Outlook for softwood pulp markets
11:25 Outlook for raw material markets
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Viljakainen has prepared a new company report after Metsä Board’s Q1 results were released.
We reiterate our Reduce recommendation for Metsä Board and our target price of 3.25 euros. The overall picture from Metsä Board’s Q1 report did not clarify the company’s challenging outlook for the coming years. Metsä Board has recently suffered significantly from cautious consumer behavior and the tightening Nordic timber market. When tariff risks and a strengthened EUR/USD exchange rate are added to the equation, problems have already piled up. Considering this overall picture, we do not see Metsä Board’s return expectation as attractive in the short or medium term, even considering our again lowered forecasts.
Quoted from the report:
Cash flow was also very weak
Metsä Board’s operating cash flow was negative 28 MEUR in Q1 (Q1’24: -8 MEUR). Cash flow is burdened by weak results, but working capital also absorbed cash as the company’s production ran significantly faster than sales due to, among other things, upcoming production shutdowns (especially the 5-week maintenance shutdown of the Kemi integrated mill in Q2). The commitment of working capital in Q1 is also seasonal for Metsä Board.
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It’s interesting that, according to Hämälä’s interviews, Metsä has not been running its pulp mills at full capacity in the early part of the year due to weak demand (source e.g. MT 29.4.)
UPM, on the other hand, seems to have run its pulp mills at full capacity in both Q1/2025 and Q4/2024. According to UPM’s website, annual global pulp capacity is 5.8 Mt, or 1.45 Mt per quarter. Deliveries in Q1/2025 were 1.43 Mt and in Q4/2024 were 1.45 Mt. (Source Q1 interim report page 8). When delivery figures are this close to global maximum capacity, it must mean that Finnish plants have also been run at full capacity for over half a year.
What could be the reason that UPM is able to produce at nearly 100% capacity in Finland in the same market situation, but Metsä has to slow down? However, these are bulk products. Yet, Metsä has two relatively brand new large plants in Finland. UPM’s pulp mills are on average smaller and older. And furthermore, Metsä’s purpose of existence is to buy wood from its owners.
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Regarding that 100% pulp capacity, a thought comes to my mind. Is this already preparation for next year’s collective bargaining negotiations, where customer and all own inventories in Finland and Europe are filled to ensure delivery security in case of a strike?
UPM’s negotiations have traditionally been difficult, and now that many legal provisions enable even big changes to collective agreements, those negotiations probably won’t be a walk in the park again. I hope I’m wrong, but even now, one of UPM’s negotiations has been in a stalemate for a long time, and it’s not about salary increases…
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Q2 has maintenance shutdowns, and because of that, they have stocked up in advance.
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Mondi gains 420,000 t/a additional capacity for packaging board products made from recycled fibers (until ramp-up is complete). Mondi acquired the mill located in Northeast Italy from Burgo Group in 2022 for 40 million euros and, according to a 2022 press release, invested an estimated 200 million euros in a new machine. The mill’s previous life under Burgo was to produce magazine papers, most recently LWC grades.
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Indeed, this pulp price curve from Trading Economics looks grim:
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Stora Enso has applied for an environmental permit from AVI concerning sawmill operations at the Imatra mills.
Case ESAVI/16917/2025Imatra Sawmill’s Environmental Permit and Permit to Commence Operations, Imatra
Applicant
Stora Enso Oyj
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It certainly helps at Kymi, as paper grades that consume a lot of pulp are produced there with two large machines. At Kaukas, the internal pulp trade of the integrated mill seems to be quite modest, due to that one machine that even produces grades that do not consume much pulp.
Q2 maintenance shutdowns could indeed explain the matter. On the other hand, Metsä also has a 5-week maintenance shutdown in Kemi, but they still didn’t run at full capacity into storage. “The five-week maintenance break at the Kemi pulp mill comes at a good time. In addition, the Joutseno pulp mill is being idled,” said Hämälä.
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What/which existing units will be closed if a new sawmill is built in Imatra? Surely no one in Finland is increasing capacity in the current situation, when there is already a shortage of wood?
The closest is the Honkalahti sawmill in Lappeenranta (310,000 m3 per year) and then the sawmill connected to EnoCell’s pulp mill in Uimaharju (240,000 m3 per year). Both of these are relatively small or medium-sized compared to Metsä Group’s or UPM’s sawmills in Finland. It seems, however, that both the Uimaharju pulp mill and sawmill are on SE’s closure list if wood does not come from Russia in the coming years. Perhaps this is even a preparation for that? The CEO has stated in the media that SE has no intention of resuming wood imports from Russia, even if it were to become possible again sometime in the future.
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Björn Wahlroos, Jussi Pesonen, and Antti Herlin’s companies have significantly reduced their ownership in UPM
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Now Metsä is also idling the Rauma mill. How about others? Is UPM still running its Finnish mills at full capacity?
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”The sawmill uses 60% pine logs and 40% spruce logs, a total of approximately 1.7 million cubic meters per year. Production is 800,000 cubic meters of finished sawn timber, of which approximately 250,000 cubic meters is planed.
The sawmill is single-line, and 2.07 cubic meters of wood are needed for one cubic meter of sawn timber. Construction would begin as early as next year, and operations would start gradually in 2028.”
I suppose there’s still wood to be found somewhere in this southeastern corner, since Finland’s largest sawmill is planned to be built 
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Most likely 2-3 old sawmills will be closed if/when that one is completed. That’s what Metsä also did when the new Rauma sawmill was completed.
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I’m also quite sure that this will happen. Doesn’t Stora have the Honkalahti sawmill in Joutseno, i.e., next to Imatra, or has that been shut down too?
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My guess: Honkalahti sawmill and the entire Uimaharju plant closed (pulp mill + sawmill)
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