31 July 2025
Metsä Group’s result in the second quarter of 2025 was clearly negative. This was mainly due to the increased uncertainty in world trade. The US administration first raised tariffs on Chinese imports and later on nearly all other countries’ imports. Metsä Group’s customers reacted as any rational company would: cautiously. In the short term, uncertainty about the level of tariffs was no less problematic than the tariffs themselves. In addition, consumer confidence weakened in both Europe and the US in the first half of the year.
In the second quarter, Metsä Group’s pulp deliveries declined by more than 30% from the first quarter. Our pulp customers in Asia especially were concerned about their sales and profitability development and significantly reduced their sales volumes at the beginning of the quarter. This led to a decrease in prices. Demand in Asia recovered slightly towards the end of the quarter. In Europe, demand decreased to some extent in most end-use sectors due to increasing economic uncertainty.
Our US paperboard customers reduced their order volumes due to the uncertain tariff situation. We have avoided losing customers permanently so far, but prolonged uncertainty increases the risks. In Europe, demand remained stable.
Higher costs – especially those of wood raw material – also weakened the profitability of all Metsä Group business operations in the second quarter. The purchase prices of Metsä Group’s wood took a downward turn during the quarter but remained at a historically high level.
In recent years, Metsä Group’s operations have focused on growing the business, which is important for the company and its owner-members in the long term. In line with our ownership strategy, all our production is in Northern Europe, but a third of our sales go outside Europe. Metsä Group is therefore susceptible to changes in global trade flows.
After the review period, the United States and the EU reached a preliminary agreement under which the US will impose a 15% tariff on almost all imports from Europe, including forest industry products. The competitiveness of Nordic forest industry on the US market will depend both on local competition and on the tariff agreements the US makes with other countries. At this stage, it seems that our competitiveness is weakening compared to both American and Canadian operators. The regionalisation of supply chains initiated by the pandemic will probably continue. Our significant growth investments in the tissue paper business and wood products industry will be completed during the next year. They are based on demand in Europe.
Metsä Group’s equity ratio remains strong, and we must ensure that it continues to do so. Our current profitability level is unsustainable and does not enable new growth investments. We cannot just wait for a potential improvement in economic cycles but must instead focus on improving profitability. We are therefore initiating the planning of launching a cost savings and profit improvement programme, aiming for cost savings of at least EUR 300 million by the end of 2026.
We have considerable savings opportunities in procurement and logistics, fixed costs, and the optimisation of wood consumption. This calls for increasingly close internal cooperation throughout the organisation. More detailed planning of cost savings projects is underway and will be completed by the end of the third quarter.
Over its history, Metsä Group has faced various challenges and change and development needs, to which our employees have always responded with persistent effort. We will also address the current profitability challenge through determined cooperation.
Jussi Vanhanen
President and CEO
Metsä Group
