Oct 23, 2008. /Lesprom.com/. Stora Enso Oyj, Europe's largest papermaker, posted a third-quarter loss that was smaller than analysts expected and announced plans to curtail production and investment and increase prices, Bloomberg reported. Stora will curtail production ``to realistic delivery volumes'' this quarter, with a ``clearly unfavorable impact'' on earnings, Chief Executive Officer Jouko Karvinen said in a statement. It will raise newsprint and magazine paper prices in 2009 ``despite the softening macroeconomic outlook,'' he said. European paper prices have declined as much as 25% since 2001 on the shift to online media, while demand for both paper and board has been trimmed by slowing consumer confidence during the worldwide economic slowdown. Stora last month announced the closure of a paper machine in Germany and consumer packaging lines in Finland in another move to counter falling demand that has not revived after past industry closures. ``Now we're saying market demand is going down without exception,'' Karvinen said on a call with reporters. ``We will still continue on our pricing quality task.'' Stora rose as much as 9.7% to Euro 6.42, and closed up 7% at Euro 6.26 in Helsinki. That put its market value at Euro 4.93 billion ($6.3 billion), down 39% this year. Lower Investment Stora will reduce capital expenditures to Euro 650 million to 700 million and ``replan 2009 investments,'' according to the earnings presentation on the company's Web site, less than the Euro 700 million to 750 million it estimated in July. Last year it spent Euro 820.4 million. The company needs to spend about Euro 250 million on maintenance to keep machines running, executives said on a teleconference. No decision has yet been made on a planned Russian mill project in Nizhny Novgorod, they said. The papermaker said it will transfer maintenance work at six mills in Finland to a joint venture it's forming with ABB Ltd., the Zurich-based supplier of electricity grids and engineering services. Stora will own 51% of the new company, which it predicted will have sales of $200 million to $270 million and employ 1,450 current Stora workers. The third-quarter net loss narrowed to Euro 119.5 million, or 15% a share, from Euro 273 million, or 56 cents, a year earlier, Helsinki-based Stora Enso said today in a statement. Sales slipped 5.3% to Euro 2.72 million. Analysts surveyed by Bloomberg predicted a loss of Euro 195 million on sales of Euro 2.83 billion. Karvinen declined to quantify his long-term outlook or strategy. ``We're not going past the fourth quarter, but you can think what that would imply for 2009,'' Karvinen said. ``What I think my team is saying is, `Let's plan for a brutal outlook.' '' Newsprint Demand European newsprint demand fell 7.6 percent in August from a year earlier, while coated magazine paper demand fell almost 12 percent, according to Cepiprint, a lobbying association for European makers of publication paper. M-real Oyj, Finland's third-largest papermaker, said yesterday that it sees demand for uncoated office paper declining. Karvinen said the newsprint price hikes are ``significant,'' without giving numbers. Norwegian rival Norske Skogindustrier ASA announced European newsprint increases of 15 to 20% last week. The credit crisis may create some new chances for industry consolidation, Karvinen said. ``There's a lot of nervousness, and any consolidation actions with significant cash amounts probably generically would be more difficult, but there may be unique opportunities coming too,'' he said.