Metsä Group's second-quarter sales fell 3% to Euro 1.38 billion, while comparable EBITDA rose 89% to Euro 129 million from Euro 68 million a year earlier. The comparable operating loss narrowed to Euro 3 million from Euro 37 million.

Demand for market pulp remained weak in Europe and China. Economic uncertainty reduced demand for paper and paperboard, while customers continued to replace softwood pulp with hardwood pulp in some products. The structural decline in printing and writing paper also reduced softwood pulp demand in Europe and North America.

Softwood pulp invoicing prices rose 8% in Europe from the first quarter but fell 3% in China. Compared with the first half of 2025, average prices were 8% lower in Europe and 13% lower in China. The market-driven shutdown at the Joutseno pulp mill continued throughout the second quarter, while oversupply persisted in the softwood pulp market.

Capacity closures, particularly in North America, constrained softwood pulp supply. Financial difficulties and closures among Central European and Canadian producers strengthened Metsä Group's relative competitive position, although profitability remained insufficient.

Paperboard pricing and demand improved toward the end of the first half, supporting the operating environment for the second half. First-half folding boxboard deliveries fell to 427 thousand tonnes from 488 thousand tonnes, with US import tariffs reducing demand and delivery volumes. White kraftliner deliveries rose to 260 thousand tonnes from 240 thousand tonnes.

The tariffs also weakened the competitiveness of Metsä Group's products in the US and may increase supply in Europe if deliveries to the US decline. Currency movements, including hedges, reduced the group's first-half operating result by about Euro 61 million, including Euro 42 million in pulp and sawn timber and Euro 24 million in paperboard.

Sawn timber demand improved seasonally in the second quarter but remained below previous years because construction activity stayed low in major markets. Limited supply supported the spruce sawn timber market, while pine supply exceeded demand. Geopolitical conditions reduced demand in the Middle East and Africa.

Weak construction markets also reduced demand for Kerto LVL and spruce plywood. Wood Products sales fell 18% in the first half, and engineered wood-product deliveries dropped to 174 thousand m3 from 212 thousand m3. The company curtailed production, closed the Suolahti softwood plywood mill and reduced jobs in the UK, Finland and Estonia.

Tissue paper demand remained stable. Second-quarter tissue volumes rose 7% from a year earlier, while average selling prices fell 6%. Long-term demand growth is expected to remain moderate, but increased Chinese competition continues to create uncertainty for greaseproof paper in Europe.

The Euro 300 million cost-saving and profit-improvement programme reduced fixed and variable costs through procurement changes, supplier consolidation, logistics optimisation and production-efficiency measures. The programme's EBITDA run-rate target was expected to be achieved at the beginning of the third quarter.

Management now expects permanent annual savings to significantly exceed the original Euro 300 million target. At least two-thirds of the programme's result impact is expected in 2026, with the full effect expected in 2027.

Higher oil and gas prices reduced the programme's second-quarter result benefit by about Euro 12 million through logistics, energy and raw-material costs. An oil price of $100 a barrel would increase annual costs by about Euro 200 million compared with a price of $70.

Third-quarter earnings will be reduced by maintenance shutdowns at the Äänekoski bioproduct mill, the Rauma pulp mill and the Husum mills. Sawn timber demand is expected to decline slightly for seasonal reasons, while construction demand in much of Europe and the UK will remain weak. Engineered wood prices in Europe are expected to rise slightly to cover higher delivery costs, and US LVL prices are expected to increase.