SOURCE: Stora Enso Oyj

October 15, 2007 12:38 ET

Stora Enso's non-recurring items in third quarter 2007 and new segment reporting

HELSINKI, FINLAND--(Marketwire - October 15, 2007) - Stora Enso Oyj News Release October 15, 2007 at 15.30 GMT


HELSINKI, Finland - Stora Enso (NYSE: SEO) today announced that as already announced earlier, it will record two non-recurring items (NRI) in its third quarter of 2007 results. These non-recurring items will have a total negative net impact of EUR 550 million on operating profit and a positive tax impact of EUR 111 million in the third quarter, and will reduce the depreciation charge by about EUR 50 million on an annual basis.

The non-recurring items affecting operating profit are: - a non-cash impairment charge of EUR 560 million; - a positive NRI of EUR 10 million from the sale of Reisholz Mill site real estate.

The impairment charges by the new segments are as follows:

+--------------------------------------------------------+
| EUR million          | Fixed Assets | Goodwill | Total |
|----------------------+--------------+----------+-------|
| Magazine Paper       | 118          | 110      | 228   |
|----------------------+--------------+----------+-------|
| Fine Paper           | 33           |          | 33    |
|----------------------+--------------+----------+-------|
| Consumer Board       | 187          |          | 187   |
|----------------------+--------------+----------+-------|
| Industrial Packaging | 6            |          | 6     |
|----------------------+--------------+----------+-------|
| Wood Products        | 52           | 54       | 106   |
|----------------------+--------------+----------+-------|
| Group Total          | 396          | 164      | 560   |
+--------------------------------------------------------+


The results of associated companies will be reported as part of operating profit from the third quarter of 2007 onwards, as these companies are clearly part of the value chain of operations. Previous quarters have been adjusted accordingly. The five largest associated companies are:


+-----------------------------------------------------------+
| Associated Company | Business Area    | Reporting Segment |
|--------------------+------------------+-------------------|
| Bergvik            | Wood Supply      | Other             |
|--------------------+------------------+-------------------|
| Tornator           | Wood Supply      | Other             |
|--------------------+------------------+-------------------|
| Veracel            | Fine Paper       | Fine Paper        |
|--------------------+------------------+-------------------|
| Sunila             | Magazine Paper   | Magazine Paper    |
|--------------------+------------------+-------------------|
| Thiele Kaolin      | Other Operations | Other             |
+-----------------------------------------------------------+


As part of the reorganisation announced on 5 September 2007, the Speciality Paper Business Area was dissolved. The speciality paper machine (PM 6) at Imatra Mills in Finland was transferred to the Consumer Board Business Area and the speciality paper machine (PM 1) at Utersen Mill in Germany was transferred to the Fine Paper Business Area. Before the reorganisation, the Speciality Paper Business Area was part of the Packaging Board Division. Previous quarters have also been adjusted accordingly for these changes.

Commencing with the third quarter of 2007, the sales and operating profit of Wood Supply will be included in Segment Other and will not be reported separately because the earnings of this cost centre are relatively immaterial.

The historical figures based on the new segments are:

Sales by Segment

EUR million    2005   Q1/06   Q2/06   Q3/06  Q4/06     2006   Q1/07   Q2/07
Newsprint   1,435.8   406.6   421.5   427.2  448.7  1 704.0   438.7   429.9
Magazine
 Paper      2,129.7   533.6   526.7   570.7  589.3  2 220.3   566.6   552.9
Fine
 Paper      2,086.5   609.3   572.3   538.1  542.1  2 261.8   577.0   522.8
Merchants   1,173.2   496.3   452.6   450.1  508.2  1 907.2   532.9   479.4
 Consumer
 Board      2,094.3   584.5   583.8   603.4  560.2  2 331.9   589.6   570.1
Industrial
 Packaging    849.8   225.8   241.1   245.3  258.5    970.7   266.1   274.2
Wood
 Products   1,623.4   389.1   425.8   417.8  440.3  1 673.0   472.3   525.7
Other and
 elimination  -50.0   -53.3     9.4   -40.4  -27.4   -111.7   -32.7     0.9
Continuing
 Operations
 Total      11,342.7 3,191.9 3,233.2 3,212.2 319.9 12 957.2 3 410.5 3 355.9
Discontinued
 Operations  1 964.7   475.4   442.8   486.2  462.4  1 866.8  487.9   484.3
Elimination   -119.9   -59.6   -59.7   -60.3  -50.5   -230.1  -43.0   -35.0
Total     13,187.5 3,607.7 3,616.3 3,638.1 3,731.8 14,593.9 3,855.4 3,805.2


Operating Profit by Segment excluding NRI

EUR million            2005 Q1/06 Q2/06  Q3/06 Q4/06   2006 Q1/07 Q2/07
Newsprint             128.0  55.9  57.6   61.0  57.6  232.1  61.1  50.2
Magazine
 Paper                 41.1  24.0  12.3   12.0  22.4   70.7  13.0   9.6
Fine
 Paper                 56.4  44.4  50.3   29.8  28.2  152.7  60.2  34.6
Merchants               3.5   9.6   2.9    7.7  12.5   32.7  16.6   8.2
Consumer
 Board                191.7  81.3  55.9   64.3  39.4  240.9  72.4  29.0
Industrial
 Packaging             41.0  18.5  18.1   26.1  22.3   85.0  29.3  29.7
Wood
 Products              -6.4   4.1  15.0   22.0  22.3   63.4  54.8  59.3
Other                 -15.9  37.5 -67.0   23.3  13.1    6.9  19.8  31.8
Continuing
 Operations
 Total                439.4 275.3 145.1  246.2 217.8  884.4 327.2 252.4
Discontinued
 Operations            -1.0   3.3  -6.7   -6.7  -4.8  -14.9   4.3 -15.9
Total,
 excluding
 NRI                  438.4 278.6 138.4  239.5 213.0  869.5 331.5 236.5
Non-recurring
 items Total
 Operations -         417.3 -23.2   6.7 -177.2  60.0 -133.7  32.0  12.8
Total                  21.1 255.4 145.1   62.3 273.0  735.8 363.5 249.3

NRI by Segment

EUR million                2005 Q1/06 Q2/06  Q3/06 Q4/06   2006 Q1/07 Q2/07
Newsprint                  -4.7     -   1.3      -     -    1.3     -     -
Magazine Paper           -101.0  -2.9   1.2 -164.0   2.1 -163.6     -     -
Fine Paper                -40.4 -16.9   2.4   72.0   1.0   58.5     -     -
Merchants                  -7.4     -     -      -   0.4    0.4     -  24.4
Consumer Board            -16.3     -  -7.2      -   2.3   -4.9     -     -
Industrial Packaging       -2.6     -   1.7      -     -    1.7     -     -
Wood Products             -52.6   1.7   1.2  -24.0   0.4  -20.7 -12.0     -
Other                      -4.2  -5.1   6.1  -47.0  30.4  -15.6     -     -
Continuing Operations
 Total                   -229.2 -23.2   6.7 -163.0  36.6 -142.9 -12.0  24.4
Discontinued Operations  -188.1     -     -  -14.2  23.4    9.2  44.0 -11.6
Total                    -417.3 -23.2   6.7 -177.2  60.0 -133.7  32.0  12.8

Operating Profit by Segment

EUR million               2005 Q1/06 Q2/06  Q3/06 Q4/06  2006 Q1/07 Q2/07
Newsprint                123.3  55.9  58.9   61.0  57.6 233.4  61.1  50.2
Magazine Paper           -59.9  21.1  13.5 -152.0  24.5 -92.9  13.0   9.6
Fine Paper                16.0  27.5  52.7  101.8  29.2 211.2  60.2  34.6
Merchants                 -3.9   9.6   2.9    7.7  12.9  33.1  16.6  32.6
Consumer Board           175.4  81.3  48.7   64.3  41.7 236.0  72.4  29.0
Industrial Packaging      38.4  18.5  19.8   26.1  22.3  86.7  29.3  29.7
Wood Products            -59.0   5.8  16.2   -2.0  22.7  42.7  42.8  59.3
Other                    -20.1  32.4 -60.9  -23.7  43.5  -8.7  19.8  31.8
Continuing Operations    210.2 252.1 151.8   83.2 254.4 741.5 315.2 276.8
Total
Discontinued Operations -189.1   3.3  -6.7  -20.9  18.6  -5.7  48.3 -27.5
Total                     21.1 255.4 145.1   62.3 273.0 735.8 363.5 249.3

Associated Companies by Segment

EUR million                 2005 Q1/06 Q2/06 Q3/06 Q4/06 2006 Q1/07 Q2/07
Newsprint                      -     -     -     -     -    -     -     -
Magazine Paper              -1.8   2.3   0.8   3.2   3.8 10.1   3.6   1.2
Fine Paper                  -0.1   7.6  -1.6   5.0   1.5 12.5   5.1  -3.9
Merchants                    0.2     -     -     -     -    -     -     -
Consumer Board                 -     -     -     -     -    -     -     -
Industrial Packaging        -0.2   0.1   0.4  -0.2   0.1  0.4   0.1   0.1
Wood Products               -4.0   0.4   0.0   0.0   0.2  0.6     -     -
Other                       73.0  20.3  18.6   5.1  20.4 64.4  15.3  22.6
Continuing Operations Total 67.1  30.7  18.2  13.1  26.0 88.0  24.1  20.0
Discontinued Operations      0.1   0.9   2.0  -2.9  -0.6 -0.6   0.1  -0.2
Total                       67.2  31.6  20.2  10.2  25.4 87.4  24.2  19.8

ROOC/ROCE excluding NRI

%                      2005 Q1/06 Q2/06 Q3/06 Q4/06 2006 Q1/07 Q2/07
Newsprint               8.8  15.9  16.2  17.2  16.4 16.7  17.6  14.7
Magazine Paper          2.1   4.7   2.4   2.4   4.5  3.5   2.6   1.9
Fine Paper              2.5   7.8   8.7   5.5   5.7  7.1  11.7   6.5
Merchants               0.8   6.3   2.1   5.8   9.3  5.5  12.3   6.2
Consumer Board          9.2  15.7  10.8  12.7   7.9 11.9  14.6   5.9
Industrial Packaging    6.7  11.8  11.6  16.8  14.2 13.6  18.5  18.3
Wood Products          -0.8   2.0   7.2  10.9  11.4  8.0  27.3  28.6
ROCE excl. NRI,
 Continuing
 Operations Total       4.7  11.0   5.8  10.0   8.8  8.7  12.7   9.6
ROCE incl. NRI,
 Continuing
 Operations Total       2.3  10.0   6.1   3.4  10.2  7.3  12.2  10.5
ROCE excl. NRI,
 Discontinued
 Operations Total       0.0   0.6  -1.2  -1.3  -1.0 -0.7   0.9  -3.3
ROCE incl. NRI,
 Discontinued
 Operations Total      -8.1   0.6  -1.2  -4.0   3.7 -0.3  10.0  -5.7
ROCE excl. NRI          3.8   9.0   4.5   8.0   7.1  7.1  10.8   7.6
ROCE incl. NRI          0.2   8.3   4.8   2.1   9.1  6.0  11.9   8.0

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