SOURCE: Stora Enso Oyj

October 25, 2007 03:42 ET

Stora Enso Interim Review January-September 2007

Earnings negatively impacted by higher wood costs and weak US dollar; restructuring measures announced

HELSINKI, FINLAND--(Marketwire - October 25, 2007) -

Stora Enso Oyj News Release October 25, 2007 at 06.00 GMT

HELSINKI, Finland - Stora Enso (NYSE: SEO) today announced its third quarter of 2007 results. Summary of Third Quarter Results (compared with Q3/2006) Continuing Operations:

--  Sales were EUR 3 234.5 (EUR 3 212.2) million.
--  Operating profit excluding non-recurring items (NRI), non-operational
    items and valuation gain in Tornator forest asset was EUR 207.1 (EUR 216.7)
--  Operating profit was EUR 252.0 (EUR 246.2) million excluding NRI and
    EUR -297.4 (EUR 83.2) million including NRI, both including EUR -3.1 (EUR
    29.5) million net impact of non-operational items.
--  Profit before tax was EUR 225.1 (EUR 221.5) million excluding NRI and
    EUR -324.3 (EUR 58.5) million including NRI.
--  Net profit was EUR 178.6 (EUR 162.8) million excluding NRI and EUR -
    264.1 (EUR 93.1) million including NRI.
--  Earnings per share were EUR 0.23 (EUR 0.21) excluding NRI and EUR -
    0.33 (EUR 0.12) including NRI. Cash earnings per share were EUR 0.48 (EUR
    0.49) excluding NRI.
--  ROCE excluding NRI was 9.4% (10.0%).
--  Stora Enso North America is included in the accounts as a discontinued

Message from CEO Jouko Karvinen:

"Stora Enso's results for the third quarter of 2007 were negatively impacted by the same factors that affected our second quarter performance - higher wood costs and the weakening US dollar. Our reported operating profit before non-recurring items was higher than a year ago, but we were unable to maintain the trend of year-on-year improvement after adjusting for non-operational items, which is one of our key performance metrics. The financial performance of Magazine Paper was poor due to low sales prices and higher manufacturing costs. Conditions for Wood Products started to deteriorate rapidly after the first half, but its third quarter performance was still clearly ahead of the year before. Fine Paper continued to perform well, and the Newsprint and Industrial Packaging results remained good. Consumer Board in particular suffered from escalating wood costs and wood shortage in Finland and Russia.

"We are responding to the reality of the situation we are in, both in terms of the production side of our business as well as addressing key raw material costs, so that we can swiftly return to our long-term earnings improvement path. Simultaneously with this Interim Review, we are therefore announcing a plan of action to improve our marginal costs and reduce wood consumption - particularly in Finland but also in Sweden - by closing production capacity. At the same time, we will cut administrative costs across the Group. These actions, and my comments on them, are detailed in a separate press release we are issuing today.

"We also need to be clear that this is the response to the current situation, before implementation of higher Russian wood export duties from 1 January 2009. If the issue of these duties cannot be resolved or wood cost increases do not reverse, we will need to take further action, including additional permanent mill closures.

"During the remainder of 2007, we will continue to suffer from high wood and recovered paper costs. In addition to the planned permanent capacity closures, we will therefore curtail production in the fourth quarter in both Newsprint and Wood Products. Sunila Pulp Mill will cut production through a maintenance stoppage and Kemijärvi Pulp Mill will slowdown the production during the fourth quarter. In addition, our Finnish sawmills will reduce spruce volumes this quarter, and there will be a curtailment in newsprint production. All these actions will be taken during the fourth quarter of 2007. Although these actions will negatively impact the fourth quarter results, they will accelerate marginal cost improvements in the coming quarters and years."

Near-term market outlook

In Europe economic activity is expected to remain stable, although uncertainty is growing. The market outlook continues to be challenging and the sharp depreciation of the US dollar is further increasing competition in the marketplace. Moderate demand for the Group's products is anticipated, with a slight seasonal improvement in some of the business areas.

Demand for newsprint is forecast to be flat and prices unchanged, according to annual agreements. Magazine paper is benefiting from seasonally improved demand, which is expected to stay firm. However, market conditions in Europe will remain difficult and affected by US dollar weakness. Prices have stabilised, and some increases for non-contractual business in coated magazine paper are predicted, but no change in uncoated magazine paper prices is foreseen. Forecasts for fine paper demand and price increases are moderating. Flat demand for consumer board is anticipated, with price rises partly offset by US dollar weakness. Demand for industrial packaging should remain good, supporting some further price increases.

Following the very strong first half of 2007, markets for wood products are now oversupplied, rapidly depressing the outlook for deliveries and prices. The outlook for the next two quarters is also impaired by a temporary slowdown in demand in Japan. Raw material costs in Finland, Russia and the Baltic States are at record highs.

In Latin America coated magazine paper demand and prices are expected to improve slightly. In China demand for coated fine paper remains moderate, although some prices are rising.

Stora Enso maintains its cost inflation forecast of about 3.5% for the full year 2007.

The full Interim Review January - September 2007 is attached.

Stora Enso's full year 2007 results will be published on 13 February 2008.


Time:    11.30 local time
Location:        Wanha Satama, conference room H+
Address:           Pikku Satamakatu 3-5
Hosts:   Jouko Karvinen, CEO
Hannu Ryöppönen, Deputy CEO & CFO
Kari Vainio, Executive Vice President, Corporate Communications

The conference will be held in English. Questions can be asked from Jouko Karvinen and Hannu Ryöppönen after the presentation.

Webcast of press conference

A live webcast (audio with synchronised slide presentation) of the press conference may be accessed on The presentation material will be available on at 11.30 Finnish time (10.30 CET).

In case you are participating remotely in press conference and you would like to pose a question, please dial:

+44 (0)20 7162 0125      Continental Europe and the UK
+46 (0)8 5052 0114       Sweden
358 (0)9 2313 9202       Finland
+1 334 323 6203          USA


CEO Jouko Karvinen and Deputy CEO & CFO Hannu Ryöppönen will be hosting a combined conference call and webcast today at 16.00 Finnish time (15.00 CET, 14.00 UK time, 9.00 US Eastern time).

If you wish to participate, please dial (quoting 'Stora Enso'):

+44 (0)20 7806 1950      Continental Europe and the UK
+46 (0)8 5352 6408       Sweden
+358 (0)9 7251 9035      Finland
+1 718 354 1387          USA

The live webcast may be accessed at

Further details of replay numbers can be found at

It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by "believes", "expects", "anticipates", "foresees", or similar expressions, are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties, which may cause actual results to materially differ from those expressed in such forward-looking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development, acceptance of new products or services by the Group's targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the Group's patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group's products and the pricing pressures thereto, price fluctuations in raw materials, financial condition of the customers and the competitors of the Group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group's principal geographic markets or fluctuations in exchange and interest rates.


Contact Information

  • For further information, please contact:
    Tim Laatsch
    Senior Vice President, Communications
    Stora Enso North America
    tel. 715 422 4023