Navigator, which sells more than 80% of its output overseas in as many as 130 countries, said its sales fell 29% in the third quarter from a year ago to 481 million euros.

The company said in a statement that its paper sales fell 31% to 276,000 metric tons compared to the third quarter of 2022, but had risen by 6% on the previous quarter of 2023.

High inflation and falling demand have squeezed forestry sector profits, with several European companies also being hit by customer destocking.

Navigator said that in the third quarter there was a "slight improvement in the market context, which led to a slight increase in the level of incoming orders placed with European producers, particularly in September".

It said that instability in the Middle East generates uncertainty and is likely to increase volatility in financial, energy and raw materials markets.

However, it said that, in the paper segment, "order books are expected to improve in the fourth quarter", highlighting that delivery times from mills to distributors have increased, currently standing at 2021 levels.

"Despite the economic slowdown and uncertainty, the improvement in demand, reduction of supply in Europe, and the strong pressure on costs will likely result in a reversal of the fall of paper prices in Europe and some international markets," it said.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 40% from a year ago to 123.5 million euros, it said. Navigator said its EBITDA margin, a measure of profitability, dropped to 27.7% in the third quarter versus 30.5% a year ago.

($1 = 0.9463 euros)

(Reporting by Sergio Goncalves; Editing by Alexander Smith)

By Sergio Goncalves