Finnish forest industry company Metsä Group reported a significant year-on-year improvement in its second-quarter 2026 results, supported by cost-saving measures and stronger profitability across most of its businesses.

EBITDA increased to €117 million, compared with €60 million in Q2 2025, while comparable operating profit improved to €-3 million from €-37 million a year earlier.

Despite the improvement, President and CEO Jussi Vanhanen cautioned that profitability remains below the level the company considers sufficient, with softwood pulp demand, exchange rates, geopolitical uncertainty and higher oil prices continuing to pressure the business.

Q2 Profitability Improves Across Most Businesses

According to Vanhanen, profitability improved year on year across all of Metsä Group’s business operations except its wood products business.

The comparison also reflects the difficult conditions experienced during the second quarter of 2025, when the company said changes in US tariff policy had a particularly severe impact on its pulp and paperboard businesses.

Although the latest results represent a substantial recovery, Metsä Group’s comparable operating result remained slightly negative.

Vanhanen said the group’s relative competitive position has strengthened amid financial difficulties and capacity closures affecting some Central European and Canadian competitors in the softwood pulp and paperboard markets.

€300 Million Cost-Saving Programme Ahead of Target

Cost reductions have played an important role in the improvement.

Metsä Group launched a programme in 2025 targeting €300 million in permanent annual savings by the end of 2027.

The company now expects to significantly exceed that original target.

Vanhanen credited personnel across the group with identifying savings opportunities and implementing projects, although he noted that some of the benefits have effectively been passed on to customers through lower sales prices.

Currency movements also continued to have a negative impact on the group’s financial performance.

Higher Oil Prices Create New Cost Pressure

While approximately 95% of the energy used in Metsä Group’s production is fossil-free, the company remains exposed to oil prices through other parts of its supply chain.

Transporting wood from forests to mills and delivering finished products to customers require significant logistics resources. Oil prices can also influence the cost of chemicals used in pulp, paperboard and other forest industry manufacturing processes.

Metsä Group estimates that if oil remained at US$100 per barrel, its annual costs would increase by approximately €200 million compared with an oil price of US$70 per barrel.

Vanhanen linked the current pressure to the continuing crisis in the Strait of Hormuz, emphasizing the need for further cost reductions and competitiveness improvements if elevated energy and transportation costs persist.

Softwood Pulp Market Faces Structural Pressure

Metsä Group remains cautious about the near-term outlook for softwood market pulp.

The company identified several factors currently weakening demand:

• Low consumer confidence
• Substitution of softwood pulp with hardwood pulp
• Structural decline in printing and writing paper demand
• Broader geopolitical and economic uncertainty

The substitution between hardwood and softwood pulp is particularly relevant for pulp producers because changing furnish strategies can alter demand depending on the performance requirements of individual paper and packaging grades.

At the same time, supply-side conditions are also changing.

Metsä Group said global softwood market pulp supply is being constrained by mill capacity closures earlier in 2026, together with additional production cuts announced for the coming months.

The combination of weaker demand and reduced supply creates a complex market environment for pulp producers heading into the second half of the year.

Metsä Group Highlights Economic Contribution in Finland

Alongside its quarterly results, Metsä Group highlighted an assessment conducted by KPMG examining the economic contribution of Metsäliitto Cooperative and Metsä Group to Finland.

According to the assessment, the group’s operations generated approximately €3.4 billion in annual value added for Finland between 2023 and 2025.

Its average annual tax contribution during the period was approximately €960 million.

Vanhanen emphasized that Finnish wood remains the foundation of the group’s business, linking Metsä Group’s industrial operations with forest owners, contractors and communities throughout Finland.

Outlook Remains Cautious Despite Q2 Improvement

Metsä Group’s second-quarter performance shows that its cost programme is translating into measurable financial improvement, but the company is not presenting the recovery as complete.

The improvement from €60 million to €117 million in EBITDA provides evidence that internal cost measures are having an effect. However, the slightly negative comparable operating profit demonstrates that market conditions remain challenging.

For the pulp and paperboard industry, the company’s outlook also points to two competing forces worth watching during the remainder of 2026: weakening demand for softwood market pulp and simultaneous reductions in global production capacity.

How that balance develops—alongside oil prices, currency movements and geopolitical conditions—will be important for Metsä Group and the wider European pulp and paper industry during the second half of 2026.

Last Updated on 11/08/2026 by Jota Machinery