Citi sees late and slow recovery for European Paper and Packaging

Svenska Cellulosa Aktiebolaget SCA

08/02/2024 14:46

** Citigroup sees packaging recovery happening later and
slower than they had previously expected for European Paper and
Packaging 
    ** "Pulp looks favourable short term in Europe but upside
may be limited given substantial supply additions and weak board
production," Citi analysts wrote in a note
    ** It cuts Finnish forestry firm UPM  UPM.HE  to "neutral"
from "buy" due to the poor H1 outlook and as it no longer sees a
compelling thesis for "buy"
    ** "We still see little reason to be more positive on Stora
Enso, Billerud or SCA as dynamics are weak for packaging and
wood products, whilst high wood raw materials costs now
structurally depress margins," Citi says
    ** Citi remains "neutral" on Finnish Stora Enso  STERV.HE 
as it sees little upside in the near term, saying packaging
looks weak throughout H1 and wood costs continue to reduce
margins in most segments
    ** The broker remains "neutral" on Swedish Svenska Cellulosa
 SCAb.ST  where it says the discussion continues to be on forest
valuation, which has been more closely scrutinised than ever
recently but not quashed, in its view
    ** Citi remains "Sell" for Billerud  BILL.ST , with Citi
saying co looks fairly priced given the tough environment

 (Reporting by Elviira Luoma)
 ((Elviira.luoma@thomsonreuters.com))