"Stora Enso enters the new year with market softness and variable cost pressures which are expected to be more challenging in 2023 than in 2022 weighing on our results this year," the company said in a statement.

Despite a 5% increase in sales, operational earnings before interest and tax (EBIT) in the fourth quarter decreased 17% to 355 million euros ($385 million) year-on-year, missing the 403 million euros expected by analysts in a company-provided poll.

Stora expects demand for its containerboard to be hurt by weak consumer confidence and lower private consumption while a slowdown in construction will affect demand for sawn wood negatively.

"Compared to 2022, group margins are expected to be squeezed by increasing costs, particularly in relation to energy, wood, chemicals and logistics", the company said.

The company's board of directors proposed an all-time high dividend of 0.60 euros per share.

($1 = 0.9227 euros)

(Reporting by Anne Kauranen, editing by Terje Solsvik)