ANALYSIS: Stora needs to tread carefully in the US in future.(Brief Article)

Stora's US profit enhancement plan was no surprise, but what does it mean for the firm? Andy Scott reports

Last week's announcement by Stora Enso that it was to push through a profit enhancement plan to aid its struggling North American operations, has come as no surprise to the market's observers.

The Scandinavian company admitted that it had failed to see improvements in business across the pond and will absorb a one-time charge of pounds 736m (EUR1.1bn) in its third-quarter figures for this year.

However, the warnings from financial analysts about investing in Stora Enso stock have become increasingly louder in the last six months.

So was the European paper giant a little hasty in its pounds 3.1bn acquisition of Consolidated Papers in 2000?

One industry analyst believes that it was, and that the price paid was too expensive.

'Shortly after the deal was done the market started to plunge into general decline. If Stora Enso had waited, it may have been able to considerably reduce its offer,' says the source.