M-real's operating result excluding non-recurring items EUR 16 million for January-September


                        
M-real Corporation Stock Exchange Release   22 October 2008

Result for January-September 2008

*  Sales EUR 2,514 million (Q1-Q3/2007: 2,671)
*  Operating result excluding non-recurring items EUR 16 million
  (66). Operating result including non-recurring items EUR 100
  million (139)
*  Result before taxes excluding non-recurring items EUR -91 million
  (-37). Result before taxes including non-recurring items EUR -7
  million (36)

Result for the third quarter of 2008

*  Sales EUR 826 million (Q2/2008: 829)
*  Operating result excluding non-recurring items EUR 3 million (-1).
  Operating result including non-recurring items EUR -8 million (71)
*  Result before taxes excluding non-recurring items EUR -34 million
  (-36). Result before taxes including non-recurring items EUR -45
  million (36)

Events during the third quarter

*  On 29 September 2008, M-real announced the sale of the Graphic
  Papers business to South African company Sappi Limited for EUR 750
  million. The sale is expected to be completed at the latest during
  the first quarter of 2009. The sale is subject to approvals by
  Sappi's extraordinary shareholders' meeting and the competition
  authorities, and the implementation of Sappi's planned rights
  offering. Transaction includes several, at maximum 8 year-long
  mainly pulp and paper supply agreements, which in total correspond
  to about EUR 3 billion in sales during the term of agreements.
*  The successful implementation of paperboard price increases

-"We took a major step in our strategic review by announcing the
divestment of our Graphic Papers business to Sappi. After the closing
of the transaction, M-real's profitability, financial position and
future prospects are significantly improved. M-real will be a more
focused paperboard and paper company with a strong core in
high-quality cartonboards. Our recent price increases in paperboard
have been successful."

Mikko Helander, CEO, M-real Corporation



KEY FIGURES              2008    2008  2008   2007  2008   2007  2007
                           Q3      Q2    Q1     Q3 Q1-Q3  Q1-Q3
Sales, EUR mill.          826     829   859    870 2,514  2,671 3,499
EBITDA, EUR mill.          49     127    96     99   272    333   398
  excl. non-recurring
items, EUR mill.           60      55    73     94   188    247   313
Operating result, EUR
million                    -8      71    37     44   100    139   -49
  excl. non-recurring
items, EUR mill.            3      -1    14     37    16     66    75
Result before taxes
  from continuing
operations, EUR mill.     -45      36     2      9    -7     36  -192
  excl. non-recurring
items, EUR mill.          -34     -36   -21      2   -91    -37   -84
Result for the period
  from continuing
operations, EUR mill.     -44      37     0     -1    -7     19  -169
  from discontinued
operations, EUR
  mill.                  -212     -45   -19     -7  -276    -22   -27
  Total, EUR mill.       -256      -8   -19     -8  -283     -3  -196
Result per share
  from continuing
operations, EUR         -0.15    0.10  0.00   0.00 -0.05   0.06 -0.51
  from discontinued
operations, EUR         -0.64   -0.14 -0.06  -0.02 -0.84  -0.07 -0.08
  Total, EUR            -0.79   -0.04 -0.06  -0.02 -0.89  -0.01 -0.59
Result per share excl.
  non-recurring items,
EUR                     -0.13   -0.12 -0.06  -0.03 -0.31  -0.19 -0.17
Return on equity, %     -10.1     7.9   0.0   -1.3  -0.6    0.3  -8.5
  excl. non-recurring
items, %                 -8.3    -7.4  -4.8   -2.7  -7.2   -5.1  -2.8
Return on capital
employed, %              -0.5     8.9   5.7    5.9   4.9    6.1  -0.8
  excl. non-recurring
items, %                  1.0    -0.2   2.9    5.1   1.3    3.2   2.8
Equity ratio at end of
period, %                32.5    36.5  35.0   34.5  32.5   34.5  34.4
Gearing ratio at end of
period, %                 129     112   120    117   129    117   124
Net gearing ratio at
end of period, %          114     100   100    107   114    107    99
Interest-bearing net
liabilities             1,865   1,888 1,892  2,187 1,865  2,187 1,867
Gross investments, EUR
mill.                      38      30    21     66    89    178   259
Paper deliveries, 1,000
tonnes                    488     497   527    511 1,513  1,599 2,110
Paperboard deliveries,
1,000 tonnes              302     309   298    297   908    912 1,201
Personnel at end of
period                  8,838   9,357 9,127 12,448 8,838 12,448 9,508
EBITDA = Earnings before interest, taxes, depreciation and
amortization


The Graphic Papers business area units, which are to be transferred
to Sappi under the deal announced at the end of September, are
reported in discontinued operations. In the segment reporting, the
Graphic Papers business area's units remaining in M-real have been
reported as part of the Other Papers business area. In addition,
resulting from the changed company structure market pulp and energy
are reported as part of the Market Pulp and Energy business area. The
restated historical figures have been published separately on 22
October, 2008. M-real's new management structure and the final
business area structure will be communicated at a later date.

Result July-September compared with the previous quarter

M-real's sales totalled EUR 826 million (Q2/08: 829). Comparable
sales were down 0.4%. The operating result was EUR -8 million (71),
and the operating result excluding non-recurring items was EUR 3
million (-1). A net total of EUR 11 million was recognised as
non-recurring costs in the operating result for July-September. The
total consisted of the following items:

*    EUR 13 million cost provision in other operations for a
  guarantee on behalf of the energy supplier of Pont Sainte Maxence
  (PSM) mill divested in June 2006 and a write-down of receivables
  from PSM
*    EUR 2 million gain related to the sale of land of earlier closed
  mills.

In addition to items recognised in the operating result, a
non-recurring item of EUR 225 million was booked as an impairment
charge and non-recurring costs related to the sale of Graphic Papers
to Sappi published on 29 September, 2008.

The non-recurring items for the previous quarter totalled EUR 72
million net. The total consisted of the following items:

*    EUR 74 million in other operations as realised fair value and
  gain from the sale of Pohjolan Voima shares.
*    EUR 2 million cost provision in other operations related to the
  programme for efficiency improvement of sales network.

The operating result was improved by a stronger US dollar against the
euro, a higher capacity utilisation rate of the pulp mills, excluding
Husum, and an increased euro-denominated price of pulp as well as
implemented price increases in coated magazine paper and paperboard.
The result was also weakened by a rise in wood raw material costs.

The total paper delivery volume in July-September was 488,000 tonnes
(497,000). Production was curtailed by 63,000 tonnes in line with
demand (49,000). Paperboard deliveries amounted to 302,000 tonnes
(309,000) and production curtailments were 7,000 tonnes (17,000).

Financial income and expenses totalled EUR -37 million (-34). Foreign
exchange gains and losses from accounts receivables, accounts
payable, financial income and expenses and the valuation of currency
hedging were EUR 1 million (-1). Net interest and other financial
expenses amounted to EUR 38 million (-33). Other financial expenses
include EUR 2 million of valuation loss on interest rate derivatives
(valuation loss: 1).

In July-September, the result from continuing operations before taxes
was EUR -45 million (36). The result from continuing operations
before taxes, excluding non-recurring items, totalled EUR -34 million
(-36). Income taxes, including the change in deferred tax
liabilities, came to EUR 1 million (1).

Earnings per share were EUR -0.79 (-0.04). Excluding non-recurring
items, earnings per share from continuing operations were EUR -0.13
(-0.12). Return on equity was -10.1% (7.9), excluding non-recurring
items EUR -8.3 (-7.4). The return on capital employed was -0.5%
(8.9); excluding non-recurring items, 1.0% (-0.2).

Result for January-September compared with the corresponding period
last year

M-real's sales totalled EUR 2,514 million (Q1-Q3/2007: 2,671).
Comparable sales were down 3.9%. The operating result was EUR 100
million (139), and the operating result excluding non-recurring items
was EUR 16 million (66).

The net total of non-recurring items for January-September was EUR 84
million, the most significant being:

*    EUR 74 million in other operations as realised fair value and
  gain from the sale of Pohjolan Voima shares.
*    EUR 24 million positive effect on the result of the Graphic
  Papers business area related to the sale of the New Thames mill and
  the agreement of the pension liabilities of industrial operations
  in the UK, and other liabilities related to the closure of the
  Sittingbourne mill
*    EUR 13 million cost provision in other operations for a
  guarantee on behalf of the energy supplier of Pont Sainte Maxence
  (PSM) mill divested in June 2006 and a write-down of receivables
  from PSM.

Non-recurring items in January-September 2008 totalled EUR 73
million, the most significant being:

*    EUR 135 million capital gain on the sale of Metsä-Botnia shares
*    EUR 7 million cost provision for completing the closure of the
  Sittingbourne mill
*    EUR 29 million cost provision for finalising the closure of the
  Wifsta mill
*    EUR 16 million impairment loss from the valuation of assets held
  for sale at the expected selling price in compliance with IFRS 5
*    EUR 8 million cost provision and asset write-down related to the
  profit improvement programme of operations in Finland.

Compared with the previous year, the operating result, excluding
non-recurring items, was weakened by increased wood raw material and
energy costs, the stronger euro against the US dollar and British
pound, and the production curtailments at Metsä-Botnia's mills in
Finland. The result was improved by implemented cost saving actions
and price increases as well as the start up of the Metsä-Botnia's
Uruguay pulp mill in November 2007.

The total paper delivery volume was 1,513,000 tonnes in
January-September (1,599,000). Production was curtailed by 126,000
tonnes (67,000) in line with demand. Paperboard deliveries amounted
to 908,000 tonnes (912,000) and production curtailments were 25,000
tonnes (48,000).

Financial income and expenses over the period totalled EUR -106
million (-103). Foreign exchange gains and losses from accounts
receivables, accounts payable, financial income and expenses and the
valuation of currency hedging were EUR 2 million (-3). Net interest
and other financial expenses amounted to EUR -108 million (-100).
Other financial expenses include EUR 3 million of valuation gains on
interest rate derivatives (valuation gains: 9).

The result from continuing operations before taxes was EUR -7 million
(36). The result from continuing operations before taxes, excluding
non-recurring items, totalled EUR -91 million (-37). Income taxes,
including the change in deferred tax liabilities, were EUR 0 million
(-17).

Earnings per share were EUR -0.89 (-0.01). Earnings per share from
continuing operations excluding non-recurring items were EUR -0.31
(-0.19). Return on equity was -0.6% (0.3), and -7.2% (-5.1) excluding
non-recurring items. Return on capital employed was 4.9% (6.1);
excluding non-recurring items 1.3% (3.2).

Personnel

The number of personnel was 8,838 on 30 September 2008 (31 December
2007: 9,508), of which 3,140 worked in Finland (3,390). In
January-September 2008, M-real employed an average of 9,204 people
(Q1-Q3/07: 13,370). These numbers include 30% of Metsä-Botnia's
personnel.

Investments

Gross investments in January-September totalled EUR 89 million
(Q1-Q3/07: 178), including a EUR 24 million share of Metsä-Botnia's
investments (95). Metsä-Botnia's investment share is based on the 30%
share of ownership.

Structural change

M-real's profit improvement and complexity reduction programme,
launched in November 2007, has proceeded according to the targets. As
part of the programme, the Lielahti BCTMP mill and coated magazine
paper machine 2 of the Kangas mill were closed in early 2008. The
Publishing and Commercial Printing business areas were combined under
the Graphic Papers business area. At the same time, projects were
launched to simplify the coated magazine paper business operations
and to streamline the sales and marketing organisation. The total
annual profit improvement target is EUR 150 million. The full impact
on result will be achieved by the end of 2010.

In February 2008, M-real published a target of a minimum of EUR 200
million from asset divestments, which should be achieved by the end
of the first quarter of 2009. The target will be clearly exceeded
after the closing of the sale of Graphic Papers business area. In
addition, the programme included the sale of the New Thames mill and
the 100,000 Pohjolan Voima's B2 shares. The positive cash effect of
the New Thames mill sale, including the pension liabilities of the
industrial operations in the UK, was approximately EUR 82 million. A
profit of approximately EUR 24 million was booked from the
transaction. The positive cash effect from the sale of 100,000
Pohjolan Voima B2 shares was EUR 80 million and the non-recurring
effect on result EUR 74 million.

As announced on 13 June 2008, the sale of the Reflex mill to
Arjowiggins was cancelled. The European Commission granted a
conditional approval for the sale, but the conditions made the
transaction impossible to carry out in practice.

In September 2008, M-real agreed to sell its Graphic Papers business
to the South African company Sappi Limited. The total value of the
divestment is EUR 750 million. The transaction consideration consists
of EUR 500 million in cash and assumed debt, a EUR 200 million vendor
loan note from Sappi to M-real and EUR 50 million of newly issued
shares in Sappi. After the closing of the transaction, M-real's net
debt will decrease by EUR 630 million. The sale comprises the
Kirkniemi and Kangas mills in Finland, the Stockstadt mill in Germany
and the Biberist mill in Switzerland, with a total capacity of 1.9
million tonnes. As part of the transaction, M-real and Sappi have
also entered into a long-term agreement on the supply of pulp and
BCTMP and other smaller services and supplies. Of the Graphic Papers
Business Area's units, the paper mills in Hallein, Gohrsmühle, Reflex
and Äänekoski, as well as the Husum mill's paper machine 8 will
remain in M-real's ownership. Once the transaction is completed, the
Äänekoski paper mill and Husum mill's PM8 will continue production
for Sappi under a long-term contract. The transaction is estimated to
reduce M-real's annual sales by approximately EUR 1 billion. The
operating result of the units included in the transaction was about
EUR 30 million negative in the first half of 2008. The sale is
subject to approvals by Sappi's extraordinary shareholders' meeting
and the competition authorities, and the implementation of Sappi's
planned rights offering. This is expected to happen during the first
quarter of 2009 at the latest.

M-real plans to discontinue the production of standard coated fine
paper in the Hallein and Gohrsmühle mills. As a result of this plan,
the coated fine paper capacity in Europe is expected to be reduced by
approximately 0.6 million tonnes. M-real's intention is to develop
Gohrsmühle and Reflex mills together as the speciality paper unit as
well as to extend uncoated fine paper production in Gohrsmühle.
M-real continues to investigate various options for the development
of the Hallein mill with selected partners.

M-real's strategic review of the paper business will also continue
after the sale of Graphic Papers business.

Financing

At the end of September, M-real's equity ratio was 32.5% (31 December
2007: 34.4) and the net gearing ratio 114% (99). Some of M-real's
financing agreements set a 120% limit on the company's net gearing
ratio and a 30% limit on the equity ratio. Calculated as defined in
the loan agreements, the net gearing ratio at the end of September
was approximately 97% (86) and the equity ratio some 38% (40).

Interest-bearing net liabilities totalled EUR 1,865 million at the
end of September (1,867). Foreign-currency-denominated loans
accounted for 14%, 92% were floating-rate and the rest were
fixed-rate. At the end of September, the average interest rate on
loans was 7.6% and the average maturity of long-term loans 3 years.
The interest rate maturity of loans was 3.8 months at the end of
September. During the period, the interest rate maturity has varied
between 3 and 6 months.

In January-September, cash flow from operations amounted to EUR 102
million (Q1-Q3/2007: 228). Working capital was up to EUR 19 million
(32).

At the end of the report period, an average of 5.5 months of the net
foreign currency exposure was hedged. The level of hedging varied
between 5 and 6 months during the period. Approximately 99% of
non-euro-denominated equity was hedged at the end of the review
period.

Liquidity is at a good level. Liquidity at the end of the period was
EUR 1,004 million, of which EUR 868 million consisted of committed
long-term credit facilities and EUR 136 million of liquid assets and
investments. In addition, to meet its short-term financing needs, the
company had at its disposal non-binding domestic and foreign
commercial paper programmes and credit facilities amounting to about
EUR 500 million.

Shares

In January-September, the highest price of M-real's B shares on the
NASDAQ OMX Helsinki Ltd was EUR 3.28, the lowest EUR 0.97, and the
average price EUR 1.66. At the end of September, the price of the B
shares was EUR 1.26.

The trading volume of B shares was EUR 913 million, or 190% of the
share capital. The market value of the A and B shares totalled EUR
425 million at the end of September.

At the end of September, Metsäliitto Cooperative owned 38.6% of
M-real Corporation's shares, and the voting rights conferred by these
shares was 60.5%. International investors' holdings were 25%.

On 9 January 2008, Norges Bank's (Central Bank of Norway) holding in
M-real increased to 5.3% of the share capital and 1.7% of the voting
rights.

On 2 May 2008, Hermes Focus Asset Management Europe Ltd's holding in
M-real decreased to 4.9% of the share capital and 2.3% of the voting
rights.

On 29 September 2008, Financier de l'Echiquier SA's holding in M-real
increased to 5.1% of the share capital and 1.6% of the voting rights.

The Annual General Meeting on 13 March 2008 resolved to delete from
the company's Articles of Association the stipulation on the minimum
and maximum share capital, the record date provisions of book-entry
system and the section concerning the par value of company's share.

Outlook

The demand for M-real's main products in Europe is expected to remain
relatively stable for the rest of the year although order books are
somewhat lower than at the same time last year. The general weakening
of the economy may pose challenges in the future. Measures to raise
product prices will continue in all business areas. The
implementation of the price increases for folding boxboard and coated
magazine paper is progressing. Also in coated fine papers at least
part of the announced price increases seems to go through as the
market balance is improving. The need for price increases in uncoated
fine papers is great.

Production costs will remain high for the rest of the year. The
decrease in oil prices will have a delayed effect mainly through
natural gas prices. Limitations in the use of wood will continue.
This year, M-real will not be able to fully cover the cost inflation
with its own profit improvement measures. Further profit improvement
measures are planned. The internal corporate structure will be
reviewed based on the new situation after the sale of the Graphic
Papers business area.

The profit improvement and business concept simplification programme
published in November 2007 is proceeding according to plan.

The sale of the Graphic Papers business is subject to approvals by
Sappi's extraordinary shareholders' meeting and the competition
authorities, and the implementation of Sappi's planned rights
offering. This is expected to happen during the first quarter of 2009
at the latest.

The year 2008 is challenging due to rising production costs, pulp
production curtailments, the decrease in the sales volume of fine
papers, the stronger euro and the delays of price increases for
coated fine paper. As stated in the release published in July 2008,
M-real's operating result for 2008, excluding non-recurring items,
will remain weaker than last year's operating result due to the
factors mentioned above.

The operating result for the fourth quarter of 2008, excluding
non-recurring items, is expected to weaken seasonally compared to the
third quarter.

Near-term business risks

The financial market crisis has to some extent brought down consumer
demand and investment activity. If the insecurity of the global
economy continues for a long time it may also have a negative effect
on the operational preconditions of the European paper and paperboard
industry.

M-real aims at price increases on a wide front. However, the risk of
not achieving all the targeted increases exists if demand for
paperboard and paper weakens. The risk that the euro would strengthen
was realised during the first part of the year. Production input
costs have remained at a high level. Additional curtailments to pulp
production may be necessary due to high raw material costs. The risk
of curtailments in the production of paper and paperboard due to
curtailments in pulp production or demand weakening still exist. In
addition, the risk of the euro still strengthening exists despite the
recent weakening especially against the US dollar.

Because the forward-looking estimates and statements of this
financial statements release are based on current plans and
estimates, they contain risks and other uncertain factors which may
lead the results to differ from the statements concerning them. In
the short term, M-real's result will be influenced, in particular, by
the price of, and demand for finished products, the availability and
price of wood, other raw material costs, the price of energy, and the
exchange rate of the US dollar. More information about longer-term
risk factors can be found on pages 28-29 of M-real's 2007 Annual
Report.

M-REAL CORPORATION

Further information:
Seppo Parvi, CFO, tel. +358 10 465 4321
Juha Laine, Vice President, IR and Communications, tel. +358 10 465
4335

Further information on 22 October, 2008 from 1 p.m. Finnish time (11
a.m. UK time)

BUSINESS AREAS AND MARKET DEVELOPMENT


Consumer Packaging   2008 2008  2008   2007   2007  2008  2007   2007
                       Q3   Q2    Q1     Q4     Q3 Q1-Q3 Q1-Q3
Sales, EUR million    241  244   235    225    231   719   709    934
EBITDA, EUR million    35   24    36     24     45    95   112    136
 excl. non-recurring
items                  35   24    37     25     45    96   117    142
Operating result,
EUR million            17    5    18      0     27    40    56     56
 excl. non-recurring
items                  17    5    19      8     27    41    63     71
Return on capital
employed,
 %                    8.8  2.9   9.6    0.1   15.3   7.3   9.9    7.5
 excl. non-recurring
items, %              8.8  2.9  10.1    4.3   15.3   7.5  11.1    9.5
Deliveries, 1,000
tonnes                302  309   298    291    297   908   912  1,203
Production, 1,000
tonnes                302  294   314    294    303   910   916  1,210
EBITDA = Earnings before interest, taxes, depreciation and
amortization


Result for July-September compared with the previous quarter

The operating result for the Consumer Packaging business area,
excluding non-recurring items, amounted to EUR 17 million (Q2/08: 5).
The result was mainly improved by lower fixed costs compared to the
second quarter and increased utilization rate of Metsä-Botnia's mills
in Finland. No non-recurring items were recognised in the third
quarter.

The deliveries of European folding boxboard producers decreased by 3%
compared with the previous quarter. Correspondingly, M-real's
deliveries of folding boxboard were down 2%. The average selling
price compared to the previous quarter was slightly higher due to the
stronger US dollar and implemented price increases.

The delivery volume of linerboard decreased to some extent from the
previous quarter. The stronger US dollar slightly improved the
euro-denominated selling price.

Result for January-September compared with the corresponding period
previous year

The business area's operating result for January-September excluding
non-recurring items totalled EUR 41 million (63). A non-recurring
item of EUR 1 million was recognised. The result was weakened by
strong cost inflation, production curtailments at Metsä-Botnia's
mills in Finland in the second quarter, as well as the stronger euro
against the US dollar and British pound. At the same time, the
profitability was improved by implemented cost saving actions and
achieved price increases.

The deliveries of European folding boxboard producers decreased by 2%
compared with the corresponding period last year. M-real's folding
boxboard deliveries increased by 1% compared with the last year's
level. The average euro-denominated price for folding boxboard price
was slightly higher than in the corresponding period last year, in
spite of the weaker US dollar and British pound.

The delivery volume for linerboard was lower than in the
corresponding period last year. The average euro-denominated price
remained the same. The selling price for wallpaper base paper
increased clearly from previous year.


Office Papers         2008 2008 2008    2007 2007  2008  2007    2007
                        Q3   Q2   Q1      Q4   Q3 Q1-Q3 Q1-Q3
Sales, EUR million     154  165  181     171  167   500   552     723
EBITDA, EUR million      7    8   16      25   21    30    28      53
 excl. non-recurring
items                    7    8   16      20   21    30    57      78
Operating result, EUR
million                 -5   -4    3    -173    7    -6   -14    -187
 excl. non-recurring
items                   -5   -4    3       7    7    -6    16      23
Return on capital
employed, %           -4.7 -2.4  3.1 - 114.8  4.9  -1.1  -2.2   -29.6
 excl. non-recurring
items, %              -4.7 -2.4  3.1     5.3  4.9  -1.1   3.4     4.2
Deliveries, 1,000
tonnes                 200  215  238     219  215   653   728     947
Production, 1,000
tonnes                 160  180  200     213  223   540   760     973
EBITDA = Earnings before interest, taxes, depreciation and
amortization


Result for July-September compared with the previous quarter

The third quarter operating result for the Office Papers business
area, excluding non-recurring items, totalled EUR -5 million (Q2/08:
EUR -4 million). No non-recurring items were recognised in the third
quarter. The result was mainly weakened by the lower delivery volume
and production curtailments in pulp and paper. The result was
improved by implemented cost saving actions and an increased average
selling price.

Compared with the previous quarter, total deliveries were down 5% for
European uncoated fine paper producers. Total deliveries for the
Office Papers business area decreased 7%.

Result for January-September compared with the corresponding period
previous year

The operating result for the Office Papers business area, excluding
non-recurring items, totalled EUR -6 million (16). Weakening factors
included increased raw material costs, especially of wood raw
material. Profitability was improved by the increased average selling
price and implemented cost saving actions.

Total deliveries by European coated fine paper producers decreased by
3%. The Office Papers business area's total deliveries decreased by
10% and included the impacts of the Wifsta mill closure.


Other Papers              2008 2008 2008 2007 2007  2008  2007   2007
                            Q3   Q2   Q1   Q4   Q3 Q1-Q3 Q1-Q3
Sales, EUR million         235  231  240  241  247   706   731    972
EBITDA, EUR million         16   11   34   -3   19    61    24     21
 excl. non-recurring
items                       17   12   10    3   13    38    32     36
Operating result, EUR
million                     -1   -6   17  -19    6     9   -25    -44
 excl. non-recurring
items                       -1   -6   -7  -13   -2   -14   -20    -33
Return on capital
employed, %               -0.4 -2.7  8.1 -8.7  2.7   1.6  -4.0   -5.3
 excl. non-recurring
items, %                  -0.3 -2.4 -3.2 -6.1 -0.9  -2.0  -3.0   -3.9
Deliveries, 1,000 tonnes   289  282  290  292  297   860   871  1,163
Production, 1,000 tonnes   282  291  294  294  296   867   883  1,177
EBITDA = Earnings before interest, taxes, depreciation and
amortization


Result for July-September compared with the previous quarter

The third quarter operating result for the Other Papers business
area, excluding non-recurring items, was EUR -1 million (Q2/08: -6).
No non-recurring items were recognised in the third quarter. The
result was weakened by increased production costs. The result was
improved by Metsä-Botnia's Uruguay mill's increased production,
implemented cost saving actions and increases in the average selling
price of coated magazine paper and coated fine paper. There were no
non-recurring items in the third quarter.

Total deliveries by European coated fine paper producers were up by
4% compared with the previous quarter and the total deliveries of
European coated magazine paper remained at the same level. The Other
Papers business area's total deliveries increased 2% compared with
the previous quarter.

Result for January-September compared with the corresponding period
previous year

Other Papers business area's operating result excluding non-recurring
items was EUR -14 million (-20). Profitability was weakened by
increased wood raw material and energy costs, the stronger euro
against the US dollar and British pound and the production
curtailments at pulp mills. Profitability was improved by implemented
cost saving actions, the start-up of Metsä-Botnia's Uruguay mill and
the increased average selling price of coated magazine paper.

The result included a positive non-recurring item of EUR 23 related
to the sale of the New Thames mill and the agreement of the pension
liabilities of industrial operations in the UK, and other liabilities
related to the closure of the Sittingbourne mill.

The Other Papers business area's result compared with the
corresponding period previous year included a net non-recurring item
of EUR -6 million.

Total deliveries by European coated fine paper producers were down by
1% and the European coated magazine paper producers' total deliveries
decreased by 1% compared with the corresponding period last year. The
Other Papers business area's delivery volumes decreased by 1%. The
figure includes the impacts of capacity closure.


Market Pulp and Energy    2008 2008 2008 2007 2007  2008  2007   2007
                            Q3   Q2   Q1   Q4   Q3 Q1-Q3 Q1-Q3
Sales, EUR million         158  149  150  134  139   456   406    540
EBITDA, EUR million         25   21   20   12   16    66    43     55
 excl. non-recurring
items                       25   21   20   13   16    66    41     54
Operating result, EUR
million                     14   11    9    5    9    34    19     23
 excl. non-recurring
items                       14   11    9    6    9    34    19     24
Return on capital
employed, %                6.0  4.7  4.8  2.6  5.2   5.5   3.3    3.0
 excl. non-recurring
items, %                   6.0  4.7  4.8  3.2  5.2   5.5   3.3    3.2
Deliveries, 1,000 tonnes   291  279  281  247  261   851   750    997
EBITDA = Earnings before interest, taxes, depreciation and
amortization


The operating result of the Market Pulp and Energy business area,
excluding non-recurring items, was EUR 14 million (Q2/08: 11) in the
third quarter. There were no non-recurring items in the third
quarter. The result was improved by increases in pulp selling prices
and delivery volumes. The result was weakened by increased wood raw
material costs.

There were no non-recurring items in the previous quarter.

Result for January-September compared with the corresponding period
previous year

The result for the Market Pulp and Energy business area, excluding
non-recurring items, totalled EUR 34 million (19). Profitability was
improved by the start-up of Metsä-Botnia's Uruguay mill in November
2007 and weakened by increased wood raw material costs and production
curtailments at Metsä-Botnia's mills in Finland. The result included
no non-recurring items.

The operating result of the Market Pulp and Energy business area for
the corresponding period of the previous year did not include
non-recurring items.

The financial statements are unaudited.


Condensed consolidated
income statement              2008    2007 Change   2007   2008  2007
Continuing operations, EUR
million                      Q1-Q3   Q1-Q3                   Q3    Q3
Sales                        2,514   2,671   -157  3,499    826   870
Other operating income         172     179     -7    195     24    20
Operating expenses          -2,414  -2,517    103 -3,296   -801  -791
Depreciation and
impairment
losses                        -172    -194     22   -447    -57   -54
Operating result               100     139    -39    -49     -8    44
  % of sales                   4.0     5.2          -1.4   -1.0   5.1
Share of results in
associated
companies                       -1       0     -1     -3      0     0
Exchange gains and losses        2      -3      5      1      1     0
Other net financial items     -108    -100     -8   -141    -38   -36
Result before taxes from
continuing operations           -7      36    -43   -192    -45     9
  % of sales                  -0.3     1.3          -5.5   -5.4   0.9
Income taxes                     0     -17     17     23      1    -9
Result for the period
from continuing operations      -7      19    -26   -169    -44    -1
  % of sales                  -0.3     0.7          -4.8   -5.3  -0.1
Result from discontinued
operations                    -276     -22   -254    -27   -212    -7
Result for the period         -283      -3   -280   -196   -256    -8
                             -11.3    -0.1          -5.6  -31.0  -0.9
Attributable to
Shareholders of parent
company                       -292      -2   -290   -194   -261    -7
Minority interest                9      -1     10     -2      5    -1
Earnings per share for
result
attributable to
shareholders of
parent company (EUR/share)
  from continuing
operations                   -0.05    0.06  -0.11  -0.51  -0.15  0.00
  from discontinued
operations                   -0.84   -0.07  -0.77  -0.08  -0.64 -0.02
Total                        -0.89   -0.01  -0.88  -0.59  -0.79 -0.02


Taxes include taxes corresponding to the result for the period under
review.


Condensed consolidated        30.9.         30.9.         31.12.
balance sheet                  2008    %     2007    %      2007    %

EUR million
Assets
Non-current assets
Goodwill                         71  1.4      375  6.3       172  3.1
Other intangible assets          63  1.3       45  0.8        38  0.7
Tangible assets               1,868 37.2    2,933 49.3     2,820 51.4
Biological assets                54  1.1       45  0.8        47  0.9
Shares in associated
and other companies             453  9.0      357  6.0       390  7.1
Interest-bearing
receivables                      23  0.5       34  0.6        27  0.5
Deferred tax receivables          5  0.1       29  0.5         4  0.1
Other non-interest-bearing
receivables                       6  0.1        6  0.1        14  0.3
                              2,543 50.7    3,823 64.4     3,512 64.1
Current assets
Inventories                     533 10.6      714 12.0       619 11.3Interest-bearing
receivables                      67  1.3       57  0.9        62  1.1
Non-interest-bearing
receivables                     687 13.6    1,192 20.0       908 16.6
Cash and cash equivalents       133  2.6      128  2.1       380  6.9
                              1,420 28.1    2,091 35.0     1,969 35.9
Assets classified as held
for sale                      1,065 21.2       33  0.6         0  0.0
Total assets                  5,028  100    5,947  100     5,481  100

SHAREHOLDERS'
EQUITY AND LIABILITIES
Shareholders' equity
Equity attributable to
shareholders of parent
company                       1,566 31.1    1,997 33.6     1,830 33.4
Minority interest                65  1.3       51  0.9        52  0.9
                              1,631 32.4    2,048 34.5     1,882 34.3
Non-current liabilities
Deferred tax liabilities        274  5.4      330  5.5       290  5.3
Post-employment benefit
obligations                     102  2.0      190  3.2       159  2.9
Provisions                       38  0.8       65  1.1        72  1.3
Other non-interest-bearing
liabilities                      12  0.2       39  0.7        38  0.7
Interest-bearing
liabilities                   1,532 30.5    2,122 35.7     1,883 34.4
                              1,958 38.9    2,746 46.2     2,442 44.6
Current liabilities
Non-interest-bearing
liabilities                     611 12.2      860 14.4       704 12.8
Interest-bearing
liabilities                     422  8.4      281  4.7       453  8.3
                              1,033 20.6    1,141 19.1     1,157 21.1
Liabilities relating to
assets
classified as held for sale     406  8.1       12  0.2         0  0.0
Total liabilities             3,397 67.6    3,899 65.5     3,599 65.7
Total shareholders'
equity and liabilities        5,028  100    5,947  100     5,481  100



Condensed consolidated cash flow statement
                                             2008  2007  2007  2008
EUR million                                 Q1-Q3 Q1-Q3          Q3
Result for the period                        -283    -3  -196  -256
Total adjustments                             404   263   479   278
Change in working capital                     -19   -32    42    41
Cash flow arising from operations             102   228   325    63
Net financial items                           -64   -88  -160   -10
Income taxes paid                             -20   -32   -38     3
Net cash flow arising from
operating activities                           18   108   127    56

Investments in tangible and
intangible assets                             -89  -178  -259   -38
Divestments of assets and other               141   280   628     3
Net cash flow arising from
investing activities                           52   102   369   -35

Share issue, minority interest                  2     3     6     0
Changes in long-term loans and
other financial items                        -297  -246  -282    40
Dividends paid                                -20   -20   -20     0
Net cash flow arising from
financing activities                         -315  -263  -296    40
Changes in cash and
cash equivalents                             -245   -53   200    61

Cash and cash equivalents at
beginning of period                           380   182   182    73
Translation difference in cash and
cash equivalents                                1    -1    -2     2
Changes in cash and cash equivalents         -245   -53   200    61
Assets held for sale, folding carton plants    -3     0     0    -3
Cash and cash equivalents
at end of period                              133   128   380   133



Statement of changes in shareholders' equity
                                             Fair
                                            value
                                Trans-        and    Re-    Mi-
                         Share  lation      other tained nority
                 Share    pre-    dif-        re-  earn- inter-
EUR million    capital    mium ference     serves   ings    est Total
Shareholders'
equity
according to
IFRS,
1 Jan. 2007
(as revised)       558     667       3        222    605     63 2,118
Translation
differences                        -16                       -2   -18
Net investment
hedge                               15                             15
Available for
sale
investments
 recorded in
equity                                        -31                 -31
 transferred
to
 income
statement's
 other
operating
income                                         -5                  -5

Currency flow
hedges,
 recorded in
equity                                        -26                 -26
 transferred
to income
 statement's
sales                                          16                  16

Interest flow
hedges
recorded in
equity                                          0                   0
Commodity
hedges
recorded in
equity                                         12                  12
Transferred to
income
statement's
purchases                                      -8                  -8
Tax on equity
components                          -4         11                   7
Net expenses
recognised
directly in
equity                              -5        -31            -2   -38
Result for the
period                                                -2     -1    -3
Total
recognised
income
and expenses
for the period                      -5        -31     -2     -3   -41

Related party
transactions
Changes in
minority
interest
Sale of
Metsä-Botnia
shares (9%)                                                 -11
Metsä-Botnia
restructuring
in Uruguay                                                    3
Total                                                        -8    -8
Dividends paid                                       -20     -1   -21
Related party
transactions                                         -20     -9   -29
Shareholders'
equity
30.9.2007,
IFRS               558     667      -2        191    583     51 2,048


Shareholders'
equity
according to
IFRS 1 Jan.
2008 (as
revised)           558     667     -11        225    391     52 1,882
Translation
differences                          3                        1     4
Net investment
hedge                                2                              2
Available for
sale
investments
 recorded in
equity                                         98                  98
 transferred
to
 income
statement's
 other
operating
income                                        -28                 -28

Currency flow
hedges
 recorded in
equity                                         -6                  -6
 transferred
to
 income
statement's
sales                                          -6                  -6

Interest flow
hedges
 recorded in
equity                                         -2                  -2
 transferred
income
 statement's
financial
items

Commodity
hedges
 recorded in
equity                                          2                   2
 transferred
income
 statement's
purchases                                       2                   2
Tax on equity
components                                    -15                 -15
Net expenses
recognised
directly in
equity                               5         43             1    49
Loss for the
period                                              -292      9  -283
Total
recognised
income
and expenses
for the period                       5         43   -292     10  -234
Related party
transactions
Changes in
minority
interest
Metsä-Botnia
restructuring
in Uruguay                                                    3
                                                              3     3
Dividends paid                                       -20          -20
Related party
transactions                                         -20      3   -17
Shareholders'
equity
30.9.2008,
IFRS               558     667      -6        268     79     65 1,631



Key ratios                            2008     2007     2007     2008
                                     Q1-Q3    Q1-Q3                Q3
Sales, EUR million                   2,514    2,671    3,499      826
EBITDA, EUR million                    272      333      398       49
 excl. non-recurring items, EUR
million                                188      247      313       60
Operating result, EUR million          100      139      -49       -8
  excl. non-recurring items, EUR
million                                 16       66       75        3
Result from continuing operations
  before taxes, EUR million             -7       36     -192      -45
  excl. non-recurring items, EUR
million                                -91      -37      -84      -34
Result for the period
  from continuing operations, EUR
million                                 -7       19     -169      -44
  from discontinued operations,
EUR million                           -276      -22      -27     -212
Total, EUR million                    -283       -3     -196     -256
Earnings per share
  from continuing operations, EUR    -0.05     0.06    -0.51    -0.15
  from discontinued operations,
EUR                                  -0.84    -0.07    -0.08    -0.64
Total, EUR                           -0.89    -0.01    -0.59    -0.79
Earnings per share, excl.
non-recurring items
from continuing operations, EUR      -0.31    -0.19    -0.17    -0.13
Return on equity, %                   -0.6      0.3     -8.5    -10.1
  excl. non-recurring items, %        -7.2     -5.1     -2.8     -8.3
Return on capital employed, %          4.9      6.1     -0.8     -0.5
  excl. non-recurring items, %         1.3      3.2      2.8      1.0
Equity ratio at end of period, %      32.5     34.5     34.4     32.5
Gearing at end of period, %            129      117      124      129
Net gearing at end of period, %        114      107       99      114
Shareholders' equity per share at
end of period, EUR                    4.77     6.09     5.58     4.77
Net interest-bearing liabilities
at end of period, EUR million        1,865    2,187    1,867    1,865
Gross capital expenditure, EUR
million                                 89      178      259       38
Paper deliveries, 1,000 tonnes       1,513    1,599    2,110      488
Board deliveries, 1,000 tonnes         908      912    1,201      302
Personnel at end of period           8,838   12,448    9,508    8,838



Securities and guarantees            2008   2007   2007
EUR million                            Q3     Q3
For own liabilities                    62     60     61
On behalf of associated companies       1      1      1
On behalf of Group companies            5      4      4
On behalf of others                     3      3      3
Total                                  71     68     69

Open derivative contracts            2008   2007   2007
EUR million                            Q3     Q3
Interest rate derivatives           1,844  2,062  1,954
Foreign exchange derivatives        3,153  3,524  3,809
Other derivatives                     207    182    133
Total                               5,204  5,768  5,896


The fair value of open derivative contracts calculated at market
value was EUR -14.0 million at the end of the review period (EUR 14.7
million 31 December 2007 and EUR 14.4 million 30 September 2007).

The gross amount of open contracts also includes closed contracts,
totalling EUR 2,510.6 million (31 December 2007: EUR 2,713.9 million
and 30 September 2007 EUR 2,020.1).


Commitments related to fixed assets           2008    2007       2007
EUR million                                     Q3      Q3
Payments in less than a year                     0      35         22
Payments later                                   1       4          4

Changes in property,
plant and equipment                           2008    2007       2007
EUR million                                     Q3      Q3
Carrying value at beginning of period        2,820   3,156      3,156
Capital expenditure                             89     177        250
Decrease                                       -79    -153       -186
Assets classified as held for sale            -646
Depreciation and impairment losses            -160    -167       -228
related to discontinued operations            -149     -58       -118
Translation difference                          -7     -22        -54
Carrying value at end of period              1,868   2,933      2,820

Assets classified as held for sale include the Graphic Papers
business.
Depreciation and impairment losses related to discontinued operations
include Graphic Papers business and in 2007 also Map Merchant
business.










Related-party transactions
Transactions with parent company              2008    2007       2007
and sister companies EUR million                Q3      Q3
Sales                                           25      26         34
Other operating income                           2     137        138
Purchases                                      455     400        549
Interest income                                  4       3          3
Interest expenses                                3       6          8
Non-current receivables                         18      20         19
Current receivables                             74      61         41
Non-current liabilities                          0       1          1
Current liabilities                             57      45        149

Transactions with associated companies        2008    2007       2007
                                                Q3      Q3
Sales                                            0       0          0
Purchases                                        3       3          4
Non-current receivables                          0       7          0
Current receivables                              7       1          7
Current liabilities                              2       2          3


Accounting policies

The interim report was prepared in accordance with the IAS 34
standard Interim Financial Reporting and the accounting policies
presented in M-real's Annual Report 2007.

The figures in the financial statement release are unaudited.

Taxes include taxes corresponding to the result for the period under
review.

Calculation of key ratios


                           (Result from continuing operations before
Return on equity (%)  =    tax - direct taxes) per
                           (Total equity (average))

                           (Result from continuing operations before
                           tax + interest expenses, net exchange
Return on capital          gains/losses and other financial expenses)
employed (%)          =    per
                           (Total assets of continuing operations -
                           non-interest-bearing liabilities of
                           continuing operations (average))

Equity ratio (%)      =    (Total equity) per
                           (Total assets - advance payments received)

Gearing ratio (%)     =    (Interest-bearing liabilities) per
                           (Total equity)

                           (Interest-bearing liabilities - liquid
Net gearing ratio (%) =    funds - interest-bearing receivables) per
                           (Total equity)

                           (Profit attributable to shareholders of
Earnings per share    =    parent company) per
                           (Adjusted number of shares (average))

Shareholders' equity       (Equity attributable to shareholders of
per share             =    parent company) per
                           (Adjusted number of shares at end of
                           review period)




Quarterly information


Sales and result
by segment,           2008  2008  2008   2007  2007  2008  2007  2007
EUR million             Q3    Q2    Q1     Q4    Q3 Q1-Q3 Q1-Q3
Consumer Packaging     241   244   235    225   231   719   709   934
Office Papers          154   165   181    171   167   500   552   723
Other Papers           235   231   240    241   247   706   731   972
Market Pulp and
Energy                 158   149   150    134   139   456   406   540
Internal sales and
other operations        38    40    53     57    86   133   273   330
Sales                  826   829   859    828   870 2 514 2 671 3 499

Consumer Packaging      35    24    36     24    45    95   112   136
Office Papers            7     8    16     25    21    30    28    53
Other Papers            16    11    34     -3    19    61    24    21
Market Pulp and
Energy                  25    21    20     12    16    66    43    55
Other operations       -34    63   -10      6    -2    20   126   133
EBITDA                  49   127    96     64    99   272   333   398
  % of sales           5.9  15.3  11.2    7.7  11.4  10.8  12.5  11.4

Consumer Packaging      17     5    18      0    27    40    56    56
Office Papers           -5    -4     3   -173     7    -6   -14  -187
Other Papers            -1    -6    17    -19     6     9   -25   -44
Market Pulp and
Energy                  14    11     9      5     9    34    19    23
Other operations       -32    65   -10     -1    -6    23   103   102
Operating result        -8    71    37   -188    44   100   139   -49
 % of sales           -1.0   8.6   4.3  -22.7   5.1   4.0   5.2  -1.4

Non-recurring items
EUR million
Consumer Packaging       0     0    -1     -8     0    -1    -7   -15
Office Papers            0     0     0   -180     0     0   -30  -210
Other Papers             0    -1    24     -5     8    23    -6   -11
Market Pulp and
Energy                   0     0     0     -1     0     0     0    -1
Other operations       -11    73     0     -3    -1    62   116   111
Non-recurring items
in
operating result       -11    72    23   -197     7    84    73  -124

Consumer Packaging      35    24    37     25    45    96   117   142
Office Papers            7     8    16     20    21    30    57    78
Other Papers            17    12    10      3    13    38    32    36
Market Pulp and
Energy                  25    21    20     13    17    66    43    56
Other operations       -23    -9    -9      5    -2   -42    -5     1
EBITDA, excl. non-
recurring items         60    55    73     66    94   188   247   313
% of sales             7.3   6.6   8.5    8.0  10.8   7.5   9.2   8.9

Consumer Packaging      17     5    19      8    27    41    63    71
Office Papers           -5    -4     3      7     7    -6    16    23
Other Papers            -1    -6    -7    -13    -2   -14   -20   -33
Market Pulp and
Energy                  14    11     9      6     9    34    19    24
Other operations       -20    -9   -10      1    -4   -38   -13   -12
Operating result,
excl.
non-recurring items      3    -1    14      9    37    16    66    75
% of sales             0.4  -0.1   1.6    1.1   4.3   0.6   2.5   2.1

Return on capital
employed %            2008  2008  2008   2007  2007  2008  2007  2007
                        Q3    Q2    Q1     Q4    Q3 Q1-Q3 Q1-Q3
Consumer Packaging     8,8   2,9   9,6    0,1  15,3   7,3   9,9   7,5
Office Papers         -4.7  -2.4   3.1 -114.8   4.9  -1.1  -2.2 -29.6
Other Papers          -0.4  -2.7   8.1   -8.7   2.7   1.6  -4.0  -5.3
Market Pulp and
Energy                 6.0   4.7   4.8    2.6   5.2   5.5   3.3   3.0
Group                 -0.5   8.9   5.7  -22.4   5.9   4.9   6.1  -0.8

Capital employed      2008  2008  2008   2007  2007  2008  2007  2007
EUR million             Q3    Q2    Q1     Q4    Q3 Q1-Q3 Q1-Q3
Consumer Packaging     766   778   781    731   742   766   744   733
Office Papers          405   422   475    518   681   405   681   518
Other Papers           878   875   871    823   850   878   850   823
Market Pulp and
Energy                 897   898   852    698   651   897   651   698
Unallocated and
eliminations           -27   137   256    532   282   -27   282   532
Group                2,919 3,111 3,236  3,303 3,206 2,919 3,206 3,303


The capital employed for a segment included its assets: goodwill,
other intangible goods, tangible assets, biological assets,
investments in associates, inventories, accounts receivables,
prepayments and accrued income (excluding interest and taxes), less
the segment's liabilities (accounts payable, advance payments,
accruals and deferred income (excluding interest and taxes).


Personnel                       2008     2007      2007
Average                        Q1-Q3    Q1-Q3
Consumer Packaging             1,328    1,557     1,504
Office Papers                  1,322    1,695     1,657
Other Papers                   2,562    2,772     2,734
Market Pulp and Energy           594      581       571
Other continuing operations    1,134    1,918     1,801
Discontinued operations        2,264    4,847     4,408
Total                          9,204   13,370    12,675




Deliveries       2008 2008    2008   2007   2007   2007    2008  2007
1,000 tonnes       Q3   Q2      Q1     Q4     Q3     Q2   Q1-Q3 Q1-Q3
Consumer
Packaging         302  309     298    291    297    313     908   912
Office Papers     200  215     238    219    215    241     653   728
Other Papers      289  282     290    292    297    277     860   871
Paper segments,
total             488  497     527    511    511    518   1 513 1 599
Market Pulp and
Energy            291  279     281    247    261    227     851   750


Production       2008 2008    2008   2007   2007   2007    2008  2007
1,000 tonnes       Q3   Q2      Q1     Q4     Q3     Q2   Q1-Q3 Q1-Q3
Consumer
Packaging         302  294     314    294    303    302     910   916
Office Papers     160  180     200    213    223    257     540   760
Other Papers      282  291     294    294    296    296     867   883
Paper mills,
total             442  471     494    507    519    553   1,406 1,643
Metsä-Botnia
pulp 1)           270  233     252    235    203    200     755   607
M-real pulp       377  391     415    369    417    360   1,183 1,167

1) corresponds to M-real's share of 30% in Metsä-Botnia

About Us

Metsä Boardwww.metsaboard.com Metsä Board is a leading European producer of premium fresh fibre paperboards including folding boxboards, food service boards and white kraftliners. Our lightweight paperboards are developed to provide better, safer and more sustainable solutions for consumer goods as well as retail-ready and food service applications. We work together with our customers on a global scale to innovate solutions for better consumer experiences with less environmental impact. The pure fresh fibres Metsä Board uses are a renewable resource, traceable to origin in sustainably managed northern forests. The global sales network of Metsä Board supports customers worldwide, including brand owners, retailers, converters and merchants. In 2017, the company’s sales totalled EUR 1.8 billion, and it has approximately 2,350 employees. Metsä Board, part of Metsä Group, is listed on the Nasdaq Helsinki.

Subscribe

Documents & Links