At the same time, sales in the January-March period slipped by 4.0 percent, to 3.1 billion euros (3.4 billion dollars) due to lower prices and volumes, Stora Enso said.

"The results were slightly positive, and operating performance was better than expected, while the outlook was reiterated, so there were no big surprises here," Katja Keitaanniemi, analyst with Conventum Securities, told

Stora Enso's share price rose by 1.87 percent to 9.78 euros on the Helsinki stock exchange following the news.

"This year demand will be quite soft in Europe, with a lot of overcapacity problems and weak demand, particularly in the German market," she said.

"The outlook is much more optimistic in North America, where there is room for price increases during this spring and summer, and we expect quite a good recovery on that continent," Keitaanniemi said.

Stora Enso's earnings per share for the quarter amounted to 0.10 euros, a sharp drop from the 0.18 euros registered in the same period a year ago.

"The outlook for advertising spending is bleak in Europe but more optimistic in North America," Jukka Haermaelae, Stora Enso's chief executive, conceded.

"In Europe it still remains to be seen when consumer confidence will pick up and advertising markets recover. Some price pressure persists in coated printing papers due to overcapacity."

The paper sector has been badly hit by falling advertisement revenues at magazines and newspapers, the industry's most important customers.

To prevent prices from going through the floor the paper industry's main players have cut production to between 87 and 90 percent of their capacity, Keitaanniemi pointed out.

In Stora Enso's case it cut production by 202,000 tonnes during the first quarter, while deliveries totaled 3.3 million tonnes in the period, it said.

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