HELSINKI (Reuters) - The world's top magazine paper maker UPM-Kymmene (UPM1V.HE: Quote, Profile, Research, Stock Buzz) said it had a positive view on the future of magazine paper prices as oversupply was subsiding.
"It's a tight market, strong demand and good balance," CEO Jussi Pesonen told Reuters Paper Summit in Helsinki. "There has been good demand growth and actions to take capacity down too."
Pesonen declined to comment on plans for future price hikes, but said the company was able to increase magazine paper prices at the end of second quarter.
Smaller Swedish rival SCA (SCAb.ST: Quote, Profile, Research, Stock Buzz) told its clients last week it would increase magazine paper prices 4-6 percent, and its Chief Executive Jan Johansson told the summit said he was confident the price hike would go through even as slowing economies in Europe and U.S. hurt advertising markets.
UPM's Pesonen said the company's key priority was to improve profitability, but while many other large paper makers are ready to divest businesses to be more profitable, he said the firm was also looking for sales growth.
"Priority Number One is profitability but definitely the company also wants to grow," Pesonen said at the summit.
While many paper firms look for help from Brussels in solving a trade row with Russia, an important source of wood for Finnish producers, Pesonen said the firm was planning its future based on a 50-euro increase in duties from 2009.
"Our planning is based on the fact that they are coming into force," Pesonen said. "That's the basic starting point."
Russia raised export duties by 50 percent in April to 15 euros per cubic meter, and has said it would raise duties to 50 euros per cubic meter by 2009, which would more than double the cost of wood.
(Reporting by Sakari Suoninen and Tarmo Virki; Editing by David Cowell)
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