February 3, 2017 / 12:02 PM / a year ago

UPDATE 1-Paper maker Stora Enso posts weak profit and outlook

(Adds analyst comments, background)

HELSINKI, Feb 2 (Reuters) - Finnish pulp, paper and packaging board maker Stora Enso said on Friday its quarterly core profit fell more than expected and gave a weak forecast for the start of the year, citing low pulp prices and ramp-up costs in China.

Shares in the company fell as much as 9 percent after the report which showed that adjusted operating profit in the quarter fell 21 percent to 191 million euros ($205 million), compared to 213 million euros in a Reuters poll of analysts.

For the first quarter of 2017, Stora said it expects sales and profits to be in line with that of the fourth quarter.

“Typically Q1 is stronger than Q4 for them, and considering the Q4 miss, this guidance is very soft,” said analyst Markku Jarvinen at Evli brokerage, with a “buy” rating on the stock.

In the poll, analysts had forecast 2017 core profit of 980 million euros, compared to reported 884 million euros in 2016.

“It is not a good start for the year,” Jarvinen said.

Stora is one of the world’s largest makers of graphic papers - such as newsprint and magazine paper - which have faced falling demand as publishing moves online.

The company has shifted focus towards pulp and packaging board, but overcapacity in the hardwood pulp industry has lately weighed on market prices.

Last month, Stora Enso said it would likely scrap its plan to build a 700-800 million euro pulp mill in China, where it is currently ramping up a paperboard mill.

Shares in the firm were down 7.5 percent by 1136 GMT, among the biggest losers in STOXX 600 index.

$1 = 0.9312 euros Reporting by Jussi Rosendahl and Tuomas Forsell; Editing by Elaine Hardcastle

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