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If you source paper-based packaging for food, snacks, dairy or beverages, the financial health of Europe’s pulp and paper producers is worth your attention. Recent first-quarter results point to cost pressures and a cautious outlook that could ripple into your packaging budgets.
Following what most industry insiders called a challenging business year in 2025, the first quarter of 2026 did not offer the European pulp and paper (P&P) industry much space to catch its breath.
Continued market uncertainty arising from continuing trade tensions, escalating geopolitical conflicts and their effects on global macroeconomic conditions, input costs and currency movements weighed on the sector and left their mark on the sector’s financial performance in the period from January to March.
The results reported by the companies surveyed by Fastmarkets – International Paper/DS Smith (IP/DSS), Metsä Group, MM Group, Mondi, Norske Skog, SCA, Smurfit Westrock, Södra, Stora Enso, The Navigator Company (Navigator) and UPM – were mostly weaker or roughly on par with the previous year, and their outlook on the remainder of the business year remained cautious at best.
In the first quarter, IP/DSS generated sales of $5.97 billion, up from $5.26 billion in the same period a year earlier. The company’s adjusted operating earnings rose from $73 million in the first quarter of 2025 to $81 million in the reporting period; its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations dropped from $689 million to $677 million in the same comparison.
“This quarter, we delivered meaningful progress across the business. In North America, our commercial actions are gaining traction and helping us outgrow the market, while we advance cost-out efforts and make solid gains in mill and box plant productivity. In Europe, the Middle East and Africa (EMEA), we’re accelerating commercial and cost initiatives while a small core team is focusing on the planned separation,” said IP chairman and chief executive officer Andy Silvernail.
According to the company, its Packaging Solutions EMEA (PS EMEA) business segment generated an operating loss of $51 million in the first quarter of 2026, while net sales of $2.3 billion, up from $1.6 billion in the year-earlier period, reflected higher sales volumes. “Sales prices for paper were lower but were offset by improved packaging margins. Cost of products sold increased, driven by higher sales volumes and slightly higher energy costs,” it said in its results statement.
Metsä Group generated sales of €1.36 billion ($1.58 billion) in January-March 2026, down from €1.64 billion a year earlier. The company’s operating loss amounted to €17.7 million, down from an operating profit of €51.4 million the previous year. EBITDA fell from €189.5 million in the first quarter of 2025 to €114.6 million this year.
According to the company, demand for market pulp was muted in both Europe and China. “At the end of the period, a market-driven shutdown began at the Joutseno pulp mill, which will continue for the time being,” it said, adding that average invoicing prices for softwood market pulp decreased by 4% in Europe and increased by 2% in China compared with the previous quarter.
The delivery volumes of paperboard reportedly declined from the previous quarter, mainly due to US import tariffs, and the rise in oil and natural gas prices caused by the conflict in the Middle East was putting upward pressure on logistics and raw material costs.
“Metsä Group’s first-quarter result improved significantly compared with the second half of 2025, but the comparable operating result showed a loss of €3.8 million,” president and chief executive officer Jussi Vanhanen commented.
“In the short term, our positive result development is threatened by rising logistics and raw material costs resulting from the closure of the Strait of Hormuz. We have begun to pass on the increased costs to our selling prices, but there is typically a certain delay before the impact is felt. This further underscores the need to continue curbing other cost factors,” he added.
MM Group looked back to what it called a persistently challenging market environment marked by intense competitive pressure and subdued consumer demand.
At €927.5 million, the company’s consolidated sales were 11.0% below the previous year’s figure of €1.04 billion. Adjusted EBITDA dropped from €119.3 million in the first quarter of 2025 to €104.1 million in the reporting period, and MM Group’s adjusted operating profit fell from €61.0 million to €49.1 million in the same comparison.
“Overall, the pricing and volume environment proved more challenging than in the fourth quarter of 2025. In addition, from March onwards, significant cost pressures arising from the recent escalation in the Middle East had a negative impact, particularly affecting energy, but also transportation and chemicals,” the company said.
“This gives rise to earnings risks for the full year, especially as the industry is characterized by structural overcapacity and intense competition,” it added.
Mondi reported underlying EBITDA of €212 million for the period from January to March 2026, down from €290 million in the first quarter of 2025.
“Significantly heightened geopolitical tensions in the Middle East further increased volatility in an already complex operating environment. We have a limited direct exposure to the region, and all operations continue to run safely, with the well-being of our colleagues remaining our highest priority,” the company said.
“Across the business, we have, however, experienced increased energy, raw material and logistics costs. We are actively responding with pricing actions. While there is a customary lag, we expect the impact of these price increases to take full effect in the third quarter of this year,” it added.
Meanwhile, Mondi is continuing to take targeted actions to strengthen its competitive advantage. In April, the company announced the closure of a further three converting plants comprising a Consumer Flexibles plant in Hungary and Corrugated Solutions plants in Poland and Germany.
Together, these closures will reduce headcount by 450 over the course of the year. and bring the total number of recently announced plant closures to six, according to Mondi.
Norske Skog generated an operating profit of 407 million Norwegian kroner ($43.6 million) and EBITDA of 451 million kroner on sales of roughly 2.9 billion kroner in the first quarter of 2026. This compares with an operating profit of 489 million kroner and EBITDA of 612 million kroner on sales of 3.1 billion kroner in January-March 2025.
According to the company, its publication paper segment experienced seasonally lower deliveries and a strengthened Norwegian kroner, resulting in reduced operating revenue in the quarter. However, profitability improved due to, among other things, lower costs of materials, reflecting reduced pulpwood prices, reduced manning and higher market shares in all publication paper segments.
The packaging paper segment delivered strong operational progress with record recycled containerboard (RCCM) deliveries of 106,000 tonnes in the quarter. Improved operating efficiency, stable prices and a higher share of European deliveries reportedly supported profitability.
“Bruck PM3 delivered positive EBITDA of 15 million kroner, while losses at Golbey PM1 were significantly reduced […]. Full utilization at Golbey PM1 remains targeted for the first half of 2027,” Norske Skog said.
Exchange rate effects dent SCA results: SCA’s net sales declined 8% year on year to 4.7 billion Swedish kroner ($501.3 million) from 5.2 billion kroner in the first quarter of 2025. The company attributed the development to lower selling prices and negative exchange rate effects.
SCA’s first-quarter EBITDA amounted to 1.1 billion kroner, down from 1.7 billion kroner in the same period a year earlier. “The decrease was primarily attributable to lower selling prices, negative exchange rate effects, and higher raw material costs,” the company said, adding that its operating profit declined from 1.1 billion kroner to 543 million kroner in the same comparison.
“The uncertain market situation, dominated primarily by geopolitical turmoil, trade barriers and currency fluctuations, has a negative impact on market conditions. While the recent events in the Middle East have a limited direct impact on SCA, there is an indirect negative impact mainly in the form of higher oil prices and increased uncertainty,” the company said.
Smurfit Westrock generated sales of $7.7 billion, which was on par with the year-earlier period. The company’s EBITDA and operating profit, however, declined by 14% and 54% year on year to $1.1 billion and $253 million.
“Our net income and adjusted EBITDA for the first quarter were negatively affected by $65 million due to adverse weather events, primarily in our North American business,” president and chief executive officer Tony Smurfit commented.
According to him, Smurfit Westrock’s North American business represents the company’s largest value creation opportunity, and demand across all paper grades improved progressively during the quarter.
“Reflecting this, containerboard pricing increased by a net $20 per ton in the quarter, with further price increases of $30 per ton implemented in April,” he said.
In the company’s EMEA segment, containerboard prices increased during March and April, primarily as a result of increased energy costs and better demand. “Our corrugated business will be implementing this containerboard increase with the usual time lag, which we expect to happen in the second half of the year,” Smurfit said.
In the first quarter of 2026, net sales for the Södra Group amounted to 6.6 billion Swedish kroner, down 19% year on year. The company’s operating profit totaled 895 million kroner, representing an operating margin of 14%.
The result includes a capital gain from the divestment of forest in Latvia and Estonia, however. Excluding this, the operating loss amounted to 578 million kroner, down from an operating profit of 439 million kroner in the first quarter of 2025 and reflecting continued strained market conditions, a stronger Swedish kroner, and higher raw material costs.
“The first quarter of 2026 has confirmed the challenging start to the year, and our underlying profitability for the quarter was negative. We were strongly affected by geopolitics, currency, trade barriers and regulations, while developments in the Middle East also led to direct cost increases, mainly for logistics and input products,” Södra’s president and chief executive officer Lotta Lyrå said.
She added that persistent weak demand was noted in the markets for Södra’s products during the first quarter. Moreover, the strengthening of the Swedish kroner against the US dollar had a clear effect compared with the corresponding period in the preceding year. Combined with sustained pressure on the relationship between raw material costs and prices for finished goods, this had a negative effect on profitability.
“The pulp business was mainly affected by weak demand in Europe. Softwood pulp prices rose in Europe and the US, while price levels in Asia were more static. The global market featured a continued imbalance between supply and demand, with a relatively high supply of softwood and hardwood pulp, which contributed to the downward pressure on prices,” Lyrå said.
Stora Enso shows stable performance: Stora Enso generated stable year-on-year sales of around €2.4 billion in the first quarter. At €309 million, the company’s adjusted EBITDA was almost on par with the previous year’s result of €320 million. Its operating result declined from €171 million in the first quarter of 2025 to €85 million in the period under review.
According to president and chief executive officer Hans Sohlström, the first quarter of 2026 developed largely as expected, with stable performance in a market that remained challenging.
“Demand in our main end markets stayed at relatively low levels, and pricing pressure persisted in some business segments, while prices firmed up and increased in others. While market conditions remain challenging, we continue to drive performance through our own actions across operations, costs, commercial excellence and procurement,” he said.
According to Sohlström, the company saw a positive development in demand in the early part of the quarter. Toward the end of the quarter, however, geopolitical tensions escalated with the outbreak of the war in Iran.
“While the impact on the first quarter’s performance was limited, these developments have increased uncertainty and are expected to affect the operating environment going forward. The situation adds to volatility and raises the risk of higher cost levels, particularly related to energy, logistics and other variable costs such as chemicals, with effects becoming more visible in the second quarter,” Sohlström said.
Operationally, the ramp-up of the new consumer board line at Oulu continued. “We focused on improving the technical runnability of production. This, in addition to the weak market, affected profitability during the quarter and is expected to continue into the second quarter,” Stora Enso said. The company added that it remains confident in bringing the line to full operational performance during 2027.
Navigator saw its results slide year-on-year in the first quarter. On sales of €426.8 million, down from €529.3 million in the first quarter of 2025, the company generated an operating profit of €22.9 million, which was 69% lower than in the year-earlier period. EBITDA decreased 44% year on year to €64.8 million.
“The first quarter of 2026 was marked by extreme volatility in the world economy as a result of the significant worsening of geopolitical risks in the Middle East. This situation greatly added to the sense of uncertainty, in a challenging business environment, with a major impact on rising energy prices and significant repercussions for supply chains and logistical costs and flows,” Navigator said in its results statement.
In addition, in Portugal, a sequence of severe weather events, notably those brought by depression Kristin, caused significant disruption and damage in several parts of the country, hitting the central region particularly hard. These events resulted in temporary disruption to some of Navigator’s industrial operations, in particular at the units in Figueira da Foz and Vila Velha de Ródão, above all as a result of outages in external power and water utilities, as well as additional difficulties and costs in securing wood supplies, as storms and heavy rainfall devastated vast tracts of forest.
“The operational limitations and logistical constraints caused by the severe weather, combined with lower opening stock levels, brought down production and took their toll on performance in the quarter, as reflected in our business activity and our market response capability,” Navigator said.
As part of its strategy for growth, the company took the final decision in early 2026 to invest in a new tissue machine with an annual production capacity of 70,000 tonnes, to be located at its Aveiro mill.
The new capacity is designed to supply Navigator’s operation in the UK, where the converting unit, currently without its own reel production operation, has capacity for processing approximately 130,000 tonnes per year. The investment in the new machine, planned to start up in March 2028, will total around €115 million and will benefit from support under the Portugal 2030 program.
UPM’s first-quarter sales totaled €2.5 billion and were 5% lower than the €2.6 billion in the first quarter of 2025. The company’s operating profit rose 29% year-on-year to €255 million, while its comparable EBITDA increased from €382 million to €395 million.
“We achieved a good start to the year, even if geopolitical events continued to introduce new uncertainties,” president and chief executive officer Massimo Reynaudo commented. “Our businesses maintained the focus on performance, and supported by our balanced portfolio, we delivered solid results.”
According to Reynaudo, UPM Energy achieved its best first-quarter results ever, supported by record electricity consumption in Finland and high prices during the winter months. He added that UPM Biofuels continued to improve its performance and posted strong results. “At our biochemicals refinery in Germany, the production of industrial sugars and lignin is ongoing, and the production of renewable functional fillers will start in the coming weeks,” Reynaudo said.
UPM’s advanced materials businesses, UPM Adhesive Materials and UPM Specialty Materials, continued to deliver steady performance. “Deliveries increased in both business areas compared with the previous quarter. Markets in Europe and Asia improved somewhat, whereas the US market continued to be challenging,” the company said. UPM Plywood performed well in stable markets, and its results improved from last year.
UPM Fibres improved its underlying performance from the previous quarter. According to the company, the average price of its pulp deliveries increased slightly.
UPM Communication Papers delivered solid results in the context of challenging paper markets and high energy prices. It increased paper deliveries compared with the previous quarter and optimized its energy consumption.
Elsewhere, preparations for the planned graphic paper joint venture with Sappi continued. The deal proceeded to phase II of EU merger control, which, according to UPM, is a normal step in the Commission’s merger review process in cases where initial concerns have not been fully resolved during phase I. “We continue to engage openly and constructively with the Commission,” the company said.
Sappi, whose financial year runs from October 2025 to September 2026, saw its second-quarter results decrease.
While sales were rather steady year on year at around $1.3 billion, the company’s adjusted EBITDA fell from $107 million in January-March 2025 to $52 million in the reporting period. The operating result was a loss of $133 million, down from a profit of $19 million the previous year.
“Although sales volumes increased year on year, selling prices declined across all regions,” Sappi said in its results statement. According to the company, North American paperboard volumes increased 27% year on year, reflecting continued progress in the ramp-up of its Somerset Mill PM2.
In Europe, underlying profitability benefited from solid sales volumes and continuing fixed-cost savings initiatives. In South Africa, profitability was materially affected by adverse exchange rate movements as well as significantly lower US dollar-denominated dissolving wood pulp prices.
With a view to Sappi’s third financial quarter, chief executive officer Steve Binnie said that against a backdrop of continued market uncertainty arising from continuing trade tensions, escalating geopolitical conflicts and their broader indirect effects on global macroeconomic conditions, input costs and currency movements, demand a cautious outlook. “On this basis, adjusted EBITDA for the third quarter […] is likely to be below that of the second quarter of 2026,” Binnie said.
These headwinds in Europe’s pulp and paper sector are important signals for procurement teams in the FMCG industries, particularly for food and beverages companies. Tracking these developments is crucial for strategic planning. Stay informed on how current market trends could impact your packaging costs.