SOURCE: Stora Enso Oyj

October 27, 2005 07:17 ET

Stora Enso Interim Review January - September 2005

Profitability Still Low; Initiatives to Strengthen Financial Performance Introduced; Third Quarter Results (Compared With Previous Quarter)

HELSINKI, FINLAND -- (MARKET WIRE) -- October 27, 2005 -- Stora Enso (NYSE: SEO) today announced that Stora Enso's earnings per share were EUR 0.08 (EUR 0.00) excluding non-recurring items. Operating profit excluding non-recurring items was EUR 106.2 (EUR 17.7) million. Profit before tax amounted to EUR 93.0 (EUR 0.1) million excluding non-recurring items. There were no non-recurring items in the third quarter.

Sales at EUR 3 219.2 million were 1.0% or EUR 31.9 million higher than the previous quarter's EUR 3 187.3 million. Cash flow from ongoing operations was EUR 351.2 (EUR 387.9) million and cash flow after investing activities excluding acquisitions EUR 94.9 (EUR 130.6) million. Cash earnings per share were EUR 0.44 (EUR 0.35) excluding non-recurring items. Net financial items were EUR -25.0 (EUR -34.6) million.

EUR million                   2003        2004      Q1-Q3/04    Q1-Q3/05
-----------                   ----        ----      --------    --------
Sales                       12 172.3    12 395.8     9 153.9     9 551.4
EBITDA(1)(2)                 1 707.7     1 510.9     1 179.7     1 075.8
Operating profit(2)            522.9       338.9       297.5       236.6
Non-recurring items            -54.4       369.7       189.8       -12.0
Operating margin(2), %           4.3         2.7         3.2         2.5
Operating profit               468.5       708.6       487.3       224.6
Profit before tax and
  minority interests(2)        316.3       271.8       248.6       176.7
Profit before tax and
  minority interests           207.8       641.5       438.4       164.7
Net profit for the period      136.0       740.8       591.7       114.9

EPS(2), Basic, EUR              0.24        0.26        0.23        0.15
EPS, Basic, EUR                 0.16        0.89        0.71        0.14
CEPS(2)(3), EUR                 1.63        1.67        1.29        1.20
ROCE(2), %                       4.5         3.0         3.5         2.8


EUR million                   Q3/04       Q2/05       Q3/05
-----------                   -----       -----       -----
Sales                        3 033.1     3 187.3     3 219.2
EBITDA(1)(2)                   425.8       298.4       388.6
Operating profit(2)            139.1        17.7       106.2
Non-recurring items             74.1       -12.0           -
Operating margin(2), %           4.6         0.6         3.3
Operating profit               213.2         5.7       106.2
Profit before tax and
  minority interests(2)        122.3         0.1        93.0
Profit before tax and
  minority interests           196.4       -11.9        93.0
Net profit for the period      136.1       -10.1        66.4

EPS(2), Basic, EUR              0.11        0.00        0.08
EPS, Basic, EUR                 0.16       -0.01        0.08
CEPS(2)(3), EUR                 0.46        0.35        0.44
ROCE(2), %                       5.1         0.6         3.7

(1) EBITDA = Earnings before Interest, Taxes, Depreciation and Amortisation
(2) Excluding net non-recurring items. Exceptional transactions that are
    not related to normal business operations are accounted for as
    non-recurring items. The most common non-recurring items are capital
    gains, additional write-downs, restructuring provisions and penalties.
    Non-recurring items are normally specified individually if they exceed
    one cent per share.
(3) CEPS = (Net profit for the period + depreciation and
    amortisation)/average number of shares
Short-term Outlook

Commenting on the outlook, Stora Enso's CEO Jukka Härmälä said, "In Europe demand for advertising-driven paper grades is expected to improve, thereby increasing demand for publication papers. Prices should remain stable in these grades for the rest of the year, but are expected to improve early next year. Seasonal strengthening in demand for fine paper is anticipated leading to moderate price rises in uncoated fine paper; further increases are expected in the beginning of next year. Packaging board demand should be stable, allowing prices for some grades to increase. Markets for wood products are likely to remain balanced with stable prices."

In North America magazine paper demand is expected to remain firm, but demand for newsprint is weakening. Price increases have been announced for publication paper grades. A seasonal rise in demand for coated fine paper should result in some price increases.

In Asia fine paper demand is predicted to be rather sluggish and further price erosion is anticipated.

Operating profit excluding non-recurring items is expected to be higher in the fourth quarter than the third quarter despite higher maintenance costs. Following the new Finnish labour agreement, capacity can be utilised during the whole year, allowing maintenance stoppages to be optimised.

The Group has estimated that the provisions and write-downs in the fourth quarter of 2005 related to the anticipated closures may be approximately EUR 300 million of which about EUR 50 million would have a cash impact. A release of EUR 30 million of net working capital of is also expected.

The full-length version of the Stora Enso interim review is available on the Stora Enso website at www.storaenso.com/investors

Stora Enso's results for 2005 will be published on 2 February 2006.

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
    SVP, Corporate Communications
    Stora Enso North America
    tel. +1 715 422 4023