By Anna Ringstrom
HELSINKI (Reuters) - Finnish tissue and cooking paper maker Metsa Tissue sees sustained demand for its products despite a slowing economy, and expects to be able to recoup heavier costs with higher prices, its head said on Wednesday.
Hannu Kottonen, chief executive of the firm which operates in Europe with brands such as Lambi, Serla, Mola and Katrin, said he was not concerned about demand, and so far it had dropped "very little".
"Our businesses are quite recession resistant overall. Consumption and demand is there and I don't see a big dip," Kottonen told the Reuters Paper Summit in Helsinki.
Metsa Tissue is the fifth biggest tissue player by volume in Europe, a market led by Sweden's SCA (SCAb.ST: Quote, Profile, Research, Stock Buzz) and U.S. Kimberly-Clark (KMB.N: Quote, Profile, Research, Stock Buzz).
Hygiene products are less cyclical than the hard hit forest and paper industry, but tissue makers are being hit by rising costs too.
"(We are hit by) variable costs -- pulp, recovered fiber, energy, transportation, chemicals. Just name it," Kottonen said, adding the firm has however been "quite successful" in passing on the cost increases to its customers.
He said the firm was bracing itself for continued high transport and electricity costs.
"We have a lot of projects to reduce consumption and improve our logistical setup to compensate," he said. "Our chances to pass (costs) on further aren't any worse than they have been."
Kottonen said focus for the firm in the coming years was to improve profitability, which is lower than many rivals'. The firm's operating profit is near 4 percent.
"Our goal is to achieve 8 percent. We can't do it overnight, but say in the next three or four years."
"Metsa Tissue was formed from a number of acquisitions in the late 1990's, early 2000 and the business integration is not fully done so we can do a lot in that area."
He said that would happen through growing the firm's share on its core markets and making the product mix more profitable.
Kottonen said he was open to acquisitions in existing markets longer term, but the firm had no plans on expanding into emerging markets.
An improved product mix and higher volumes are expected to raise sales to above 900 million euros ($1.33 billion) this year from 861 million in 2007, he said.
Metsa Tissue is owned by forest industry group Metsaliitto, which also makes wood products and other fiber based products such as paper. Metsaliitto is owned by Finnish forest owners.
(Editing by David Cowell)
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