Stora Enso Fourth Quarter and Full Year Results 2006

STORA ENSO OYJ  Stock Exchange Release 7 February 2007 at 13.00


Stora Enso Fourth Quarter and Full Year Results 2006
Annual results boosted by profit improvement actions; proposed dividend unchanged
at EUR 0.45 per share.

Fourth quarter operating profit excluding non-recurring items largely unchanged
from the third quarter. Sales volumes and some prices rose moderately from the
previous quarter, which were offset by higher fixed costs.

Summary of Fourth Quarter Results (compared with Q3/2006)
* Sales were EUR 3 731.8 (EUR 3 638.1) million.
* Operating profit was EUR 186.0 (EUR 195.2) million excluding non-recurring
  items. Operating profit was EUR 246.0 (EUR 18.0) million including 
  non-recurring items.
* Profit before tax was EUR 141.4 (EUR 197.0) million excluding non-recurring
  items. Profit before tax was EUR 234.4 (EUR 19.8) million including 
  non-recurring items
* Earnings per share were EUR 0.13 (EUR 0.18) excluding non-recurring items. 
  Cash earnings per share were EUR 0.49 (EUR 0.52) excluding non-recurring items.
  Earnings per share including non-recurring items were EUR 0.33 (EUR 0.07).
* Cash flow after investing activities was EUR 415.2 (EUR 473.8) million.

Markets
Compared with Q3/2006
In Europe market demand for the Group's products was slightly better than in the
previous quarter.

Market demand was seasonally stronger in publication paper grades, with prices
stable except for some price erosion in coated magazine paper.

Market demand for fine paper strengthened in Europe. Prices for uncoated fine
paper rose and were unchanged for coated fine paper during the quarter. 
Packaging board demand was seasonally weaker, but the market for industrial 
packaging grades was stronger and prices for packaging boards were unchanged.

Demand for wood products remained good in Europe, Asia, North Africa and the
Middle East. Buoyant demand and low stock levels supported further price 
increases in these markets. In North America demand for wood products was still 
weak and prices were depressed.

In North America demand for newsprint and uncoated magazine paper strengthened
during the quarter, mainly for seasonal reasons, but demand for coated magazine
paper weakened. Newsprint and magazine paper prices decreased. Market demand for
coated fine paper weakened and coated fine paper prices declined slightly.

In Latin America demand for coated magazine paper was clearly better than in the
previous quarter and prices were stable.

In China demand for coated fine paper was weaker than in the previous quarter and
downward price pressure intensified.

Compared with Q4/2005
In Europe market demand for the Group's products was generally firmer than a year
ago.

Demand was stronger in newsprint and uncoated magazine paper, but somewhat weaker
in coated magazine paper. Prices were higher in newsprint and virtually unchanged
in magazine paper. Market demand was stronger than a year ago in coated fine 
paper but slightly weaker in uncoated fine paper. Uncoated fine paper prices rose
slightly, whereas coated fine paper prices remained stable. Demand for packaging
boards was steady and prices were unchanged. In wood products, demand and prices
were higher than a year ago.

In North America demand for magazine paper was firmer, but newsprint demand was
clearly weaker than a year ago. Newsprint prices rose, uncoated magazine paper
prices remained stable and coated magazine paper prices declined. Market demand
for coated fine paper was stronger and coated fine paper prices were higher.

In Latin America demand for coated magazine paper was clearly better than a year
ago with prices stable.

In China demand for coated fine paper strengthened during the year and prices 
were unchanged.


Key Figures
EUR million        Q4/05    20054)    Q1/06    Q2/06    Q3/06    Q4/06      2006
Sales            3 636.1  13 187.5  3 607.7  3 616.3  3 638.1  3 731.8  14 593.9
EBITDA1)2)         411.6   1 487.4    463.3    451.2    462.8    470.9   1 848.2
Operating
profit2)           120.9     357.5    194.1    182.2    195.2    186.0     757.5
Non-recurring
items 
(operational)     -430.8    -417.3    -23.2      6.7   -177.2     60.0    -133.7
Operating
margin2), %          3.3       2.7      5.4      5.0      5.4      5.0       5.2
Operating
profit            -309.9     -59.8    170.9    188.9     18.0    246.0     623.8
Net financial
items5)            -48.9    -151.6    115.2   -149.2     -8.4    -37.0     -79.4
Profit before
tax and
minority
interests2)         96.4     273.1    210.9     53.2    197.0    141.4     602.5
Profit before
tax and
minority
interests         -334.4    -144.2    317.7     59.9     19.8    234.4     631.8
Net profit for
the period        -239.4    -107.4    226.4     40.9     57.1    264.8     589.2
   
EPS2), Basic,
EUR                 0.13      0.28     0.20     0.05     0.18     0.13      0.55
EPS, Basic, EUR    -0.30     -0.14     0.29     0.05     0.07     0.33      0.74
CEPS2)3), EUR       0.50      1.70     0.54     0.39     0.52     0.49      1.94
ROCE2), %            4.2       3.3      6.7      6.4      7.0      6.7       6.6

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
4) The impact of the 7-week labour dispute in Finland in 2005 distorts the
   comparison of the year-on-year figures
5) See separate table "Net Financial Items" below

Financial Results 2006 (compared with previous year)
The impact of the 7-week, industry-wide labour dispute in Finland in 2005 
distorts comparison of the year-on-year figures. It is estimated that the 
dispute negatively impacted operating profit in 2005 by approximately 
EUR 190 million.

In 2006 paper and board deliveries totalled 14 618 000 tonnes, which is 
468 000 tonnes more than in 2005, and production increased by 380 000 tonnes 
to 14 699 000 tonnes. Deliveries of wood products decreased by 169 000 m3 to 
6 572 000 m3. Market-related production curtailments totalled 
467 000 (141 000) tonnes, mostly in coated magazine paper, due to some lost 
market share.

Sales at EUR 14 593.9 million were EUR 1 406.4 million or 10.7% higher than 
in 2005. Higher prices, especially in newsprint, and increased deliveries 
accounted for two-thirds of the sales increase. The Schneidersöhne and Arapoti 
acquisitions, partly offset by the divestments of Grycksbo, Pankakoski, Celbi 
and Wolfsheck mills, accounted for the remainder of sales growth.

Operating profit excluding non-recurring items increased by EUR 400.0 million 
to EUR 757.5 million and was higher in all segments. Operating profit includes 
a negative non-cash effect of EUR 12.1 million (negative EUR 8.0 million) 
comprising EUR -17.0 million due to the fair valuation of share-based 
compensation, partly offset by EUR 4.9 million from the released government 
grant related to CO2 emission rights. Both these non-cash items are reported 
under other operations.

Publication Paper operating profit improved as prices increased. The standstill 
at Port Hawkesbury Mill in Canada burdened operating profit by approximately 
EUR 45 million during the year. The mill restarted production in the fourth 
quarter. Fine Paper operating profit improved as sales volumes increased, and 
Merchants operating profit was considerably boosted by the Schneidersöhne 
acquisition. Packaging Boards operating profit improved as sales volumes 
increased. Wood Products operating profit improved as sales prices rose. Currency 
movements, mainly weakening of the US dollar, had a negative impact on operating 
profit of EUR 12.2 (positive 33.6) million net of currency hedges.

Operating profit including non-recurring items totalled 
EUR 623.8 (EUR -59.8)million. The non-recurring items in operating profit 
amounted to EUR -133.7 million, the main items being EUR -166.2 million of net 
capital gains and losses and restructuring provisions related to the previously 
announced Asset Performance Review (APR), EUR -24.0 million due to impairment of 
assets in Wood Products, EUR 30.0 million due to release of provisions following 
the settlement of tax cases and EUR 30.0 million due to a decrease in pension 
expenses related to a change in the Group's accounting policy with respect to 
the recognition of actuarial gains and losses arising from defined benefit 
pension plans.

The share of associated company results amounted to EUR 87.4 (EUR 67.2) million;
the main positive contributors were Bergvik Skog AB and Veracel.


Net Financial Items
EUR million                   Q4/05    2005  Q1/06   Q2/06  Q3/06  Q4/06    2006
Interest income, deposits       5.5    23.8    4.8     5.0    5.2    6.5    21.5
Interest expenses,
borrowings, net of interest
capitalised                   -67.6  -240.5  -66.5   -70.1  -69.6  -69.8  -276.0
Interest rate swaps (incl.
TRS interest)                   8.7    51.7   17.5     5.4    4.0    2.8    29.7
Net Interest Expense          -53.4  -165.0  -44.2   -59.7  -60.4  -60.5  -224.8
   
Foreign Exchange Gains and
Losses                          1.2    14.4   -7.0   -11.1    4.0  -11.0   -25.1
   
Other Financial Items, 
of which                        3.3    -1.0  166.4   -78.4   48.0   34.5   170.5
 Capital gains, listed shares   3.9     5.8  136.7       -   -2.1   37.6   172.2
 Unrealised fair valuation
 of option hedges (TRS)         0.9     9.7   41.7   -61.2   36.0   -7.4     9.1
 Unrealised fair valuation
 of other financial items      -4.5   -17.8   -8.9   -10.7   15.7   -5.2    -9.1
 Other items                    3.0     1.3   -3.1    -6.5   -1.6    9.5    -1.7
Net Financial Items Total     -48.9  -151.6  115.2  -149.2   -8.4  -37.0   -79.4

Stora Enso utilises Total Return Swaps (TRS) to partially hedge the exposure to
changes in the share price of synthetic options granted under the option
programmes for Management, which are settled with cash payments. While these TRS
instruments allow the Group to partially stabilise the future cash flows related
to the settlement of outstanding synthetic options, they expose the Group to
certain market risks. The TRS instruments do not qualify for hedge accounting;
therefore periodic changes to their fair value are recorded in the income
statement.

Net financial items were EUR -79.4 (EUR -151.6) million, including non-recurring
capital gains of EUR 163.0 million from the sale of Sampo and Finnlines shares.
Net interest expenses increased by EUR 59.8 million to EUR -224.8 (EUR -165.0)
million, mainly due to higher average net debt and interest rates. The net 
foreign exchange loss on borrowings, currency derivatives and bank accounts was 
EUR 25.1 (gain of EUR 14.4) million.

Other financial items, excluding non-recurring capital gains of EUR 163.0 million,
rose to EUR 7.5 million from EUR -1.0 million, mainly due to unrealised changes 
in fair values of financial instruments, including Total Return Swaps. These
unrealised fair value changes are non-cash items.

Profit before taxes and minority interests excluding non-recurring items totalled
EUR 602.5 (EUR 273.1) million.

Net taxes totalled EUR -42.6 (EUR 36.8) million; taxes were positively impacted 
by EUR 102.0 million of tax provisions released following the settlement of tax
cases. The tax rate for the year was 27.1% excluding non-recurring items.

The profit attributable to minority shareholders was EUR 4.2 (EUR 3.7) million,
leaving a profit of EUR 585.0 (EUR -111.1) million attributable to Company
shareholders.

Earnings per share were EUR 0.55 (EUR 0.28) excluding non-recurring items.
Earnings per share including non-recurring items were EUR 0.74 (EUR -0.14). Cash
earnings per share were EUR 1.94 (EUR 1.70) excluding non-recurring items.

The return on capital employed was 6.6% (3.3%) excluding non-recurring items.
Capital employed was EUR 11 331.8 million on 31 December 2006, a net decrease of
EUR 346.1 million. Operative working capital was EUR 2 174.5 million, a decrease
of EUR 158.5 million during the year as inventories were reduced.


Capital Structure
EUR million                31 Dec 05  31 Mar 06  30 Jun 06  30 Sep 06  31 Dec 06
Fixed assets                11 616.8   11 454.3   11 200.6   10 956.3   11 234.7
Operative working capital    2 333.0    2 509.6    2 537.0    2 298.0    2 174.5
Non-current interest
free items, net             -1 207.3   -1 312.1   -1 292.4   -1 352.3   -1 204.0
Operating Capital Total     12 742.5   12 651.8   12 445.2   11 902.0   12 205.2
Net tax liabilities         -1 064.6   -1 125.5   -1 083.9     -967.2     -873.4
Capital Employed            11 677.9   11 526.3   11 361.3   10 934.8   11 331.8
Associated companies           719.9      754.7      762.2      782.1      805.2
Total                       12 397.8   12 281.0   12 123.5   11 716.9   12 137.0
   
Equity attributable to
Company shareholders         7 220.1    7 072.4    7 104.4    7 162.3    7 799.6
Minority interests              93.6       93.0       91.6       91.8      103.5
Net interest-bearing
liabilities                  5 084.1    5 115.6    4 927.5    4 462.8    4 233.9
Financing Total             12 397.8   12 281.0   12 123.5   11 716.9   12 137.0

Financing
Cash flow from operations was EUR 1 892.9 (EUR 1 057.0) million and cash flow
after investing activities EUR 1 309.5 (EUR -88.3) million.

At the end of the year, interest-bearing net liabilities were EUR 4 233.9 million,
a decrease of EUR 850.2 million mainly because improved cash flow and the
divestment of Celbi Pulp Mill more than offset the acquisition of Arapoti Mill in
Brazil. Unutilised credit facilities and cash and cash-equivalent reserves
totalled EUR 2.1 billion.

Shareholders' equity amounted to EUR 7 799.6 million or EUR 9.89 (EUR 9.16) per
share. Due to the change in the Group's accounting policy with respect to the
recognition of actuarial gains and losses arising from defined benefit pension
plans, the equity decreased by EUR 305.3 million. However, the fair valuation of
assets held for sale increased equity by EUR 388.0 million. Both these valuation
items were non-cash. The market capitalisation on the Helsinki Stock Exchange on
31 December 2006 was EUR 9.5 billion.

The debt/equity ratio at 31 December 2006 was 0.54 (0.66).


Cash Flow
EUR million             Q4/05      2005   Q1/06   Q2/06   Q3/06   Q4/06     2006
Operating profit       -309.9     -59.8   170.9   188.9    18.0   246.0    623.8
Adjustments*)           559.2   1 439.4   307.6   249.6   223.2   289.6  1 070.0
Change in working
capital                 -79.6    -322.6  -189.9   -31.6   361.3    59.3    199.1
Cash Flow from
Operations              169.7   1 057.0   288.6   406.9   602.5   594.9  1 892.9
Capital expenditure    -279.4  -1 145.3  -167.7  -107.3  -128.7  -179.7   -583.4
Cash Flow after
Investing Activities   -109.7     -88.3   120.9   299.6   473.8   415.2  1 309.5

*) Adjustments include depreciations, other non-cash income and expenses and
 capital gains and losses which are included in proceeds from the sale of fixed
 assets and shares.

Capital Expenditure
Capital expenditure in 2006 totalled EUR 583.4 million, which is 54% of scheduled
depreciation and 4% of sales. The Group's capital expenditure for 2007 is 
expected to be about EUR 900 million.

The main projects during the year were the Skoghall Energy 2005 project 
(EUR 34.3 million), the new boiler at Hylte Mill (EUR 27.0 million), land 
acquisitions in Latin America (EUR 25.8 million), the completion of the new paper 
machine 12 at Kvarnsveden Mill (EUR 18.7 million) and the plantation project at 
Guangxi (EUR 18.5 million).

Fourth Quarter Results (compared with previous quarter)
In the fourth quarter of 2006 paper and board deliveries totalled 
3 735 000 tonnes, which is 49 000 tonnes more than in the previous quarter, 
and production increased by 108 000 tonnes to 3 740 000 tonnes. Deliveries of 
wood products totalled 1 670 000 m3, which was 77 000 m3 more than in the 
previous quarter. Market-related production curtailments increased from 
93 000 tonnes to 119 000 tonnes in the fourth quarter.

Sales at EUR 3 731.8 million were 2.6% or EUR 93.7 million higher than the
previous quarter's EUR 3 638.1 million. The acquisition of Arapoti Mill in 
Brazil, effective from 1 September 2006, increased the Group's sales by 
EUR 41.6 million in the fourth quarter.

Operating profit excluding non-recurring items decreased by 4.7% to 
EUR 186.0 (EUR 195.2) million, which is 5.0% of sales. Operating profit increased 
in Publication Paper and Merchants, and slightly in Fine Paper, but decreased in 
Packaging Boards and Wood Products. Publication Paper operating profit was 
boosted by higher sales volumes following the restart of Port Hawkesbury Mill. 
Fine Paper operating profit improved as sales prices for office papers rose; 
Merchants operating profit also improved. Packaging Boards operating profit 
decreased due to seasonally lower sales volumes and higher maintenance costs. 
Wood Products operating profit remained largely unchanged.

Internal reallocation of additional logistics costs related to starting up a 
new shipping system increased the operating profit of Other Operations by 
EUR 20.7 million and correspondingly decreased segmental operating profits 
(see Segment reviews). Weakening of the US dollar had a negative impact on 
operating profit of EUR 11.6 (positive 9.6) million net of currency hedges. 
Operating profit includes a negative non-cash effect of EUR 7.7 million, 
comprising EUR -4.9 million from the fair valuation of share-based compensation 
and EUR -2.8 million from the released government grant related to CO2 emission 
rights. Both these non-cash items are reported under other operations.

Operating profit including non-recurring items totalled EUR 246.0 million 
(EUR 18.0) million. The non-recurring items in operating profit amounted to 
EUR 60.0 million, comprising EUR 30.0 million due to release of provisions 
following the settlement of tax cases and another EUR 30.0 million due to 
a decrease in pension expenses related to a change in the Group's accounting 
policy with respect to the recognition of actuarial gains and losses arising 
from defined benefit pension plans.

The share of associated company results amounted to EUR 25.4 (EUR 10.2) million;
the main positive contribution was from Bergvik Skog AB.

Net financial items were EUR -37.0 (EUR -8.4) million, the difference being 
mainly due to changes in the fair valuation of the hedges for the employee option
programmes (Total Return Swaps, "TRS"). Net interest was 
EUR -60.5 (EUR -60.4) million and net foreign exchange losses on borrowings, 
currency derivatives and bank accounts were EUR 11.0 (gains of EUR 4.0) million.

Other financial items totalled EUR 34.5 (EUR 48.0) million, including a capital
gain of EUR 33.0 million from the sale of Finnlines Plc shares. The unrealised
changes in fair values of financial instruments, including TRS, amounted to 
EUR -12.6 (EUR 51.7) million. These unrealised fair value changes have no cash 
impact.

Profit before tax amounted to EUR 141.4 (EUR 197.0) million excluding
non-recurring items. Profit before tax amounted to EUR 234.4 (EUR 19.8) million
including non-recurring items.

Net taxes totalled a positive EUR 30.4 (positive EUR 37.3) million and were
positively impacted by EUR 102.0 million of tax provisions released following the
settlement of tax cases, leaving a net profit for the quarter of 
EUR 264.8 (EUR 57.1) million. The profit attributable to minority shareholders 
was EUR 1.8 (EUR 1.3) million, so the profit attributable to Company shareholders 
was EUR 263.0 million.

Earnings per share were EUR 0.13 (EUR 0.18) excluding non-recurring items.
Earnings per share including non-recurring items were EUR 0.33 (EUR 0.07). Cash
earnings per share were EUR 0.49 (EUR 0.52) excluding non-recurring items.

The return on capital employed was 6.7% (7.0%) excluding non-recurring items.

Financing during Fourth Quarter
Cash flow from operations was EUR 594.9 (EUR 602.5) million and cash flow after
investing activities EUR 415.2 (EUR 473.8) million. Cash flow decreased mainly
because capital expenditure increased. Interest-bearing net liabilities decreased
to EUR 4 233.9 million.

Fourth Quarter Events

October
Stora Enso initiated exclusive discussions with the aim of joint-venture 
ownership regarding assets of Stora Enso Arapoti in Brazil with Arauco, a Chilean 
forest products company. Although the period of exclusivity expired on 31 January 
2007, the negotiations continue.

Stora Enso announced investments in Finland, where the Group is investing 
EUR 32.4 million in rebuilding the finishing department at its Anjala Mill and 
EUR 25.3 million in a new sheeting line at its Oulu Mill, and in Austria, where 
Stora Enso is investing EUR 16.8 million in a cross-laminated element plant at 
Bad St. Leonhard Sawmill.

November
Stora Enso Oyj sold all its 2 209 340 shares in Finnlines Plc for 
EUR 35.5 million. The shares represented 5.43% of the total number of outstanding 
shares in Finnlines. The shareholding in Finnlines Plc had been a non-core 
financial investment. The sale was consistent with Stora Enso's objective of 
concentrating its capital resources on its core businesses.

December
Stora Enso announced that its subsidiary Corenso will rebuild and restart paper
machine (PM) 12 for coreboard production at Wisconsin Rapids Mill. The capital
expenditure will be approximately EUR 27 million (USD 35 million). This investment
also includes an upgrade of Corenso's recycled fibre facility. As a result of this
investment, board machine (BM) 13 will be shut down. The rebuild will start in May
2007 and is expected to be completed during the first quarter of 2008.

Stora Enso also announced that it is investing EUR 54.8 million in rebuilding fine
paper machine 3 (PM 3) at its Varkaus Mill in Finland to improve efficiency at the
mill and profitability in the Office Paper business area. This project, which will
increase mill specialisation within the division, is scheduled to be completed in
December 2007.

Inspections by Competition Authorities
In May 2004 Stora Enso was the subject of inspections carried out by the European
Commission and the Finnish Competition Authority at locations in Europe and
received subpoenas issued by the US Department of Justice as part of preliminary
anti-trust investigations into the paper industry in Europe and the USA.
Coincident with these investigations, Stora Enso has been named in a number of
class action lawsuits filed in the USA.

On 9 August 2006 Stora Enso was notified that the European Commission had closed
its investigation in respect of the fine paper sector and on 16 November the 
Group was notified that the Commission has closed its investigation in relation 
to a suspected cartel in the publication paper sector.

On 13 December 2006 the US Antitrust authorities announced that Stora Enso North
America Corp. had been indicted for its alleged anticompetitive conduct in
connection with the sale of coated magazine paper in the USA from autumn 2002
until spring 2003. No Stora Enso employee was charged individually. Stora Enso
denies any wrongdoing and has entered a plea of not guilty before the court at 
the arraignment in response to the indictment. The indictment concludes the
investigation that began in May 2004. The Group expects the trial to occur in
2007.

On 21 December 2006 Stora Enso announced that the Finnish Competition Authority
had proposed to the Finnish Market Court that a fine of EUR 30 million be imposed
on Stora Enso for violating competition laws in the purchasing of wood in Finland
in the period from 1997 to 2004. Stora Enso considers the proposal groundless.

No provision has been made in Stora Enso's accounts for the above-mentioned
investigations and lawsuits.

Changes in Group Composition during 2006
In February Stora Enso signed an agreement to sell its Grycksbo Mill in Sweden 
to Accent, a Stockholm-based private equity firm. The transaction, which was part 
of Stora Enso's Asset Performance Review (APR), was closed on 31 March 2006. The
sales price of the equity was SEK 350 million (EUR 37 million). The Group also
signed an agreement to sell its Linghed Sawmill in Sweden to Dalarna Lumber AB 
of Sweden. The sales price was SEK 10 million (EUR 1 million). The transfer took
effect immediately after the announcement on 28 February and included buildings,
stocks and production assets.

In June Stora Enso signed an agreement to sell Celulose Beira Industrial (Celbi)
SA, its main asset being Celbi Pulp Mill in Portugal, to Altri, a Portuguese
company with steel, pulp and paper operations. The sales price of Celbi's equity
was EUR 428 million. The transaction was finalised in August.

In July Stora Enso sold its Pankakoski Mill in Finland to an international group
of investors led by Dr Dermot Smurfit and including Lansdowne Capital Limited. 
The debt-free sales price was EUR 20 million.

In August Stora Enso reached an agreement to acquire from International Paper 
100% of the shares in Vinson Indústria de Papel Arapoti Ltda. and Vinson
Empreendimentos Agricolas Ltda., which were combined as Stora Enso Arapoti. 
These assets were formerly owned by Inpacel - Indústria de Papel Arapoti Ltda. 
and Inpacel Agroflorestal Ltda., subsidiaries of International Paper. The deal
comprised a paper mill producing coated mechanical paper, a sawmill and about 
50 000 hectares of land, including about 30 000 hectares of productive 
plantations; the enterprise value was approximately 
USD 420 million (EUR 333 million) and the transaction was closed on 1 September.

Also in August Stora Enso divested its Wolfsheck Mill to Rohner AG of Switzerland,
a subsidiary of the German finance investment company ARQUES Industries AG. The
transaction was an asset deal and the purchase price was one euro. The transaction
was closed on 1 September.

Changes in Group Management during 2006
Arno Pelkonen, Senior Executive Vice President, Strategy and Emerging Markets
resigned from Stora Enso on 12 January 2006.

Yngve Stade, Senior Executive Vice President, Corporate Support and Country
Manager Sweden, retired on 31 March 2006.

Magnus Diesen, Executive Vice President, Corporate Strategy, retired on 30
September 2006.

On 17 October 2006 Stora Enso announced that the Board of Directors had appointed
Jouko Karvinen, M.Sc. (Eng.), as the new CEO of Stora Enso. He joined the company
on 1 January 2007 and will take up the position of CEO following the Annual
General Meeting (AGM) on 29 March 2007. He was previously Chief Executive Officer
of Philips Medical Systems Division and a member of the Board of Management of
Royal Philips Electronics.

Jukka Härmälä will leave the position of CEO following the AGM on 29 March 2007.
He will continue to undertake special assignments specified by the Board of
Directors of Stora Enso until the end of August 2007.


Changes in Organisational Structure
The following changes took effect from 1 February 2006.


Finance and Strategy
Strategy, Mergers & Acquisitions, Business Intelligence, Investments and 
Corporate Affairs were merged with Finance, Accounting, Legal and IR. The new 
staff function, Finance and Strategy, is headed by Hannu Ryöppönen, CFO.

Latin America
The Latin America division, headed by Nils Grafström, Executive Vice President,
Latin America, reports to Jukka Härmälä, CEO.

The following changes took effect from 1 April 2006.

Corporate Technology and Asia Pacific
The new staff function Corporate Technology and Asia Pacific is responsible for
Energy Services, Corporate R&D, the Pulp Competence Centre, Asia Pacific and
Russia. It is headed by Markku Pentikäinen, Executive Vice President, who reports
to Jukka Härmälä, CEO.

Corporate Services
Corporate Services includes Corporate IT, HR, Business Excellence and Procurement,
and is headed by Christer Ågren, Senior Executive Vice President and Country
Manager Sweden.

Forest Products
Environment services report to Elisabet Salander Björklund, Senior Executive Vice
President, Stora Enso Forest Products.


Personnel
On 31 December 2006 there were 43 887 employees, 2 777 less than at the end of
2005. The average number of employees decreased by 535 persons during the year to
45 631. The decline resulted from the net effects of the Profit 2007 programme,
the divestments and closures resulting from the APR programme, and the acquisition
of Arapoti. Also, the acquisition of Schneidersöhne in 2005 increased the average
number of employees as it had a full-year impact in 2006.

Share Capital
On 5 December 2006 Stora Enso was informed that the shares in the Company held by
NWQ Investment Management Company had exceeded 5% of the paid-up share capital;
its shareholding was then 43 451 169 R shares, representing 5.50% of all shares
and 1.82% of votes.

The Annual General Meeting (AGM) of Stora Enso Oyj on 21 March 2006 authorised 
the Board to repurchase and dispose of not more than 17 700 000 A shares and 
60 100 000 R shares in the Company. There were no repurchases in 2006.

During the quarter 950 A shares and during the whole year a total of 
18 061 A shares were converted into R shares. The latest conversion was recorded 
in the Finnish Trade Register on 15 November 2006.

During the quarter the Company allocated 2 202 repurchased R shares under the
terms of the Stora Enso North America Option Plan. The number of shares allocated
during the whole year was 20 825.

On 31 December 2006 Stora Enso had 178 103 117 A shares and 611 435 382 R shares
in issue, of which the Company held no A shares and 952 627 R shares with a
nominal value of EUR 1.6 million. The holding represents 0.12% of the Company's
share capital and 0.04% of the voting rights.

Events after the Period
On 29 January 2007 Stora Enso announced that it had signed a loan agreement with
the European Investment Bank (EIB) for a EUR 140 million loan facility to finance
part of Stora Enso's investment in research and development in Finland and Sweden
for the next five years.

On 18 January 2007 the Group signed a five-year labour agreement with United
Steelworkers in Central Wisconsin, USA. The net reduction in the Defined Benefit
Obligation due to the new agreement is USD 125.1 (EUR 95.0) million, of which 
USD 40.8 (EUR 31.0) million will be recorded as non-recurring income to personnel
expenses in the first quarter of 2007, the remaining part being amortised over 
the average period to full retirement eligibility of eight years.


Profit Improvement Programmes
As the objectives and decisions related to the two programmes have been
successfully reached as reported below, it is intended to discontinue specific
reporting unless significant deviations from plan occur. The Group will complete
its profit improvement programmes as earlier announced.

Profit 2007
Stora Enso's Profit 2007 programme has proceeded well and by the end of 2006 the
annualised profit improvement reached was EUR 310 million. The initial target of
an improvement of EUR 300 million in annual pre-tax profit from mid 2007 onwards
was based on 2005 price and cost levels, and was net of implementation costs.

Reductions in personnel by the end of 2006 total approximately 1 600 out of an
anticipated 2 000 as part of the programme - half of them white-collar and half
blue-collar staff, and slightly more than half in the Nordic countries and the
rest elsewhere in Europe. Additionally, 180 of the 600-700 potential personnel
outsourcing opportunities identified have been implemented.

Asset Performance Review (APR) - mills under scrutiny
In October 2006, Stora Enso announced plans to close down its Berghuizer Mill and
Reisholz Mill. The closure processes are proceeding according to plan. Berghuizer
Mill is planned to be closed during 2007 and Reisholz Mill by the end of 2007. 
The timing of the closures will optimise volume transfers to other mills.

Near-term Outlook
In Europe the demand outlook for advertising-driven papers is fairly positive as
economic growth is expected to stimulate consumption. However, demand for
publication papers seasonally slows in the first quarter, and the coated magazine
paper market is expected to remain competitive. Price negotiations for contracts
renewing in early 2007 are still continuing.

In Europe the outlook for fine paper remains healthy, with demand and shipments 
in the first quarter predicted to be up on a year ago and the previous quarter.
Higher prices are anticipated in uncoated fine paper, and price increases have
been announced in coated fine paper. Demand in packaging board markets is 
forecast to be generally good with prices remaining stable. In wood products 
the demand outlook remains favourable despite some seasonal slowing in the 
construction sector; some further firming of prices is foreseen.

In North America markets will remain soft for publication paper grades, at least
in the short term, with some price erosion. The coated fine paper market is
expected to remain stable with unchanged prices.

In China coated fine paper demand is forecast to improve later in the spring 
and prices to firm up.

In Latin America modest demand growth is anticipated, but downward price pressure
is increasing.

The Group's operational cost inflation is forecast to be 2-2.5% in 2007 compared
with 2006 levels, primarily because of increased wood costs.


Annual General Meeting
The Annual General Meeting will be held at 16.00 (Finnish time) on Thursday 29
March 2007 at the Marina Congress Center, Katajanokanlaituri 6, Helsinki, Finland.

Distribution of Dividend
The Board of Directors will propose to the Annual General Meeting that a dividend
of EUR 0.45 per share be paid for the financial year ending 31 December 2006. If
the proposal is approved, the dividend payment will be issued on 17 April 2007 to
shareholders entered on the dividend record date of 3 April 2007 in the register
of shareholders maintained by the Finnish Central Securities Depository, Swedish
VPC and Deutsche Bank Trust Company Americas.


This report is unaudited.


Helsinki, 7 February 2007
Stora Enso Oyj
Board of Directors




Segments

Publication Paper
                                                                        Change %
EUR million           2005    Q1/06    Q2/06    Q3/06    Q4/06     2006    Q4/Q3
Sales              4 675.9  1 171.0  1 145.2  1 226.7  1 230.5  4 773.4      0.3
Operating profit*    193.3     70.3     55.3     57.0     69.0    251.6     21.1
 % of sales            4.1      6.0      4.8      4.6      5.6      5.3        -
ROOC, %**              4.7      6.8      5.4      5.7      7.0      6.2        -
Deliveries, 1000 t   7 008    1 666    1 662    1 741    1 860    6 929      6.8
Production, 1000 t   7 087    1 717    1 674    1 721    1 843    6 955      7.1

* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
  capital

Publication paper sales were unchanged on the previous quarter at 
EUR 1 230.5 million. Operating profit at EUR 69.0 million was 21.1% higher than 
in the previous quarter, mainly due to seasonal reasons, the restart of Port 
Hawkesbury Mill and improved performance at Corbehem Mill. Profitability 
continued to be impaired by market-related production curtailments in coated 
magazine paper; exchange rate trends towards the end of the quarter also had an 
adverse impact. Internal reallocation of logistics costs from Other Operations 
decreased Publication Paper operating profit by EUR 9.9 million; the operating 
margin excluding the reallocation of logistics costs was 6.4%.

Compared with Q3/2006
In Europe demand was stronger in all publication paper grades. Producer
inventories rose slightly. Prices were generally stable, except for some price
erosion in coated magazine paper.

In North America demand for newsprint improved and demand for uncoated magazine
paper experienced double-digit growth in the quarter as coated magazine paper
demand weakened. Inventories increased, and newsprint and magazine paper prices
declined slightly.

In Latin America demand for coated magazine paper was clearly better and prices
were stable.

Compared with Q4/2005
In Europe demand was stronger in newsprint and uncoated magazine paper, but 
weaker in coated magazine paper. Newsprint prices rose during the year, but 
magazine paper prices were virtually unchanged.

In North America demand was clearly weaker in newsprint but stronger in magazine
paper. Newsprint prices rose, uncoated magazine paper prices ended unchanged and
coated magazine paper prices declined during the year.

In Latin America demand for coated magazine paper was clearly better than a year
ago and prices were unchanged.


Fine Paper
                                                                        Change %
EUR million           2005    Q1/06    Q2/06    Q3/06    Q4/06     2006    Q4/Q3
Sales              2 690.3    776.3    738.9    722.8    718.3  2 956.3     -0.6
Operating profit*     62.2     52.7     46.3     32.4     34.6    166.0      6.8
 % of sales            2.3      6.8      6.3      4.5      4.8      5.6        -
ROOC, %**              2.4      8.2      7.2      5.4      6.4      7.1        -
Deliveries, 1000 t   3 521      994      945      954      946    3 839     -0.8
Production, 1000 t   3 554    1 029      944      941      947    3 861      0.6

* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
  capital

Fine paper sales were unchanged on the previous quarter at EUR 718.3 million. The
divestment of Celbi Pulp Mill reduced sales in the fourth quarter, but this was
offset by increased sales from the remaining capacity and higher prices in local
currencies. Operating profit was EUR 34.6 million, 6.8% up on the previous quarter
due to higher sales prices and improved production efficiency. Internal
reallocation of logistics costs from Other Operations decreased Fine Paper
operating profit by EUR 6.7 million; the operating margin excluding the
reallocation of logistics costs was 5.7%.

Compared with Q3/2006
In Europe fine paper demand was stronger than in the previous quarter. Inventories
were normal at the end of the quarter. Prices for uncoated fine paper rose and
were unchanged for coated fine paper.

In North America demand for coated fine paper weakened slightly. Inventories were
normal. Prices for reels declined during the quarter, while sheet prices were
stable.

In China coated fine paper demand weakened during the quarter and downward
pressure on prices increased.

Compared with Q4/2005
In Europe coated fine paper demand was stronger but uncoated fine paper demand
marginally weaker than a year ago. Uncoated fine paper prices rose slightly, but
coated fine paper prices were stable.

In North America demand for coated fine paper strengthened and prices rose during
the year.

In China coated fine paper demand strengthened and prices were unchanged.

Merchants
Sales were EUR 508.2 million, up 12.9% on the previous quarter mainly due to
higher volumes and some price increases. Operating profit was EUR 12.5 million, 
up EUR 4.8 million on the previous quarter. The integration of recent 
acquisitions is proceeding according to plan, yielding sustainable cost 
reductions and improved efficiency.


Packaging Boards
                                                                        Change %
EUR million           2005    Q1/06    Q2/06    Q3/06    Q4/06     2006    Q4/Q3
Sales              3 190.2    869.0    881.8    909.0    871.7  3 531.5     -4.1
Operating profit*    220.0     99.5     70.8     93.7     59.4    323.4    -36.6
 % of sales            6.9     11.4      8.0     10.3      6.8      9.2        -
ROOC, %**              7.6     13.9     10.0     13.5      8.6     11.5        -
Deliveries, 1000 t   3 621      959      971      991      929    3 850     -6.3
Production, 1000 t   3 678    1 005      958      970      950    3 883     -2.1

* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
  capital

Packaging board sales were EUR 871.7 million, down 4.1% on the previous quarter
mainly due to lower volumes. Operating profit was EUR 59.4 million, down 36.6% on
the previous quarter mainly due to lower volumes, higher fixed costs related to
maintenance and additional depreciation of EUR 6.0 million. Internal reallocation
of logistics costs from Other Operations decreased Packaging Boards operating
profit by EUR 4.1 million; the operating margin excluding the reallocation of
logistics costs was 7.3%.

Compared with Q3/2006
Packaging board demand was seasonally weaker, but the market for industrial
packaging grades was stronger. Prices were unchanged.

Compared with Q4/2005
Demand and prices were similar to a year ago.


Wood Products
                                                                         
                                                                        Change %
EUR million                2005   Q1/06   Q2/06   Q3/06   Q4/06     2006   Q4/Q3  
Sales                   1 588.3   377.1   437.8   418.5   443.0  1 676.4     5.9
Operating profit*          -3.1     3.8    14.9    21.4    19.0     59.1   -11.2
 % of sales                -0.2     1.0     3.4     5.1     4.3      3.5       -
ROOC, %**                  -0.5     2.3     8.9    12.7    11.6      9.2       -
Deliveries, 1 000 m3      6 741   1 563   1 746   1 593   1 670    6 572     4.8

* Excluding non-recurring items  **ROOC = 100% x Operating profit/Operating
  capital

Wood product sales were EUR 443.0 million, up 5.9% on previous quarter due to
higher sales prices and volumes. Operating profit was EUR 19.0 million, down 
11.2% on the previous quarter mainly due to raw material shortages caused by 
difficult weather conditions.

Compared with Q3/2006
Demand for wood products increased in Europe, Asia, North Africa and the Middle
East. Buoyant demand and low stock levels supported further price increases in
these markets. In North America demand for wood products was still weak and 
prices depressed.

Compared with Q4/2005
Demand in Europe was clearly better than a year ago and prices higher. In North
America demand and prices decreased significantly.

Wood Supply
Deliveries to the Group's mills in Finland, Sweden, the Baltic States, Russia and
Continental Europe were unchanged on the previous quarter at 10.3 million m3.
Deliveries were behind schedule in November and December owing to exceptionally
warm and wet weather, and related operational problems. Strong demand in the
fourth quarter increased wood costs.



Financials

Key Ratios
            Q1/05  Q2/05  Q3/05  Q4/05   2005  Q1/06  Q2/06  Q3/06  Q4/06   2006
Earnings 
per share 
(basic), 
EUR          0.08  -0.01   0.09  -0.30  -0.14   0.29   0.05   0.07   0.33   0.74
Earnings 
per share 
excl. 
non-
recurring 
items, EUR   0.07   0.00   0.08   0.13   0.28   0.20   0.05   0.18   0.13   0.55
Cash 
earnings 
per share 
(CEPS), EUR  0.42   0.36   0.45   0.43   1.65   0.63   0.39   0.59   0.73   2.34
CEPS excl. 
non-
recurring 
items, EUR   0.41   0.35   0.44   0.50   1.70   0.54   0.39   0.52   0.49   1.94
Return on 
capital 
employed 
(ROCE), %     4.6    0.5    4.1  -10.8   -0.5    5.9    6.6    0.6    8.8    5.4
ROCE excl. 
non-
recurring 
items, %      4.3    0.7    3.8    4.2    3.3    6.7    6.4    7.0    6.7    6.6
Return on 
equity 
(ROE), %      3.4   -0.2    3.9  -13.1   -1.4   12.5    2.3    3.2   14.0    7.7
Debt/equity 
ratio        0.54   0.61   0.65   0.70   0.70   0.72   0.69   0.62   0.54   0.54
Equity 
per share, 
EUR          8.95   8.93   9.13   9.16   9.16   8.97   9.01   9.08   9.89   9.89
Equity 
ratio, %     43.9   43.1   41.4   41.0   41.0   40.2   41.3   42.3   45.3   45.3
Operating 
profit, % 
of sales      3.9    0.4    3.6   -8.5   -0.5    4.7    5.2    0.5    6.6    4.3
Operating 
profit excl. 
non-
recurring 
items, 
% of sales    3.6    0.6    3.3    3.3    2.7    5.4    5.0    5.4    5.0    5.2
Capital 
expenditure,
EUR 
million     356.6  253.0  256.3  279.4 1145.3  167.7  107.3  128.7  179.7  583.4
Capital 
expenditure,
% of sales   11.3    7.9    8.0    7.7    8.7    4.6    3.0    3.5    4.8    4.0
Capital 
employed, 
EUR 
million     10705  10855  11318  11678  11678  11526   11361 10935   11332  11332
Interest-
bearing 
net
liabilities, 
EUR 
million      3928   4340   4699   5084   5084   5116    4927  4463    4234   4234
Average 
number of 
employees   44870  45670  46418  46166  46166  46056   46051 46490   45631  45631
Average 
number of 
shares 
(million)
 periodic   816.3  800.0  790.5  788.6  798.7  788.6  788.6  788.6   788.6   788.6
 cumulative 816.3  808.1  802.1  798.7  798.7  788.6  788.6  788.6   788.6   788.6
 cumulative, 
 diluted    816.9  808.7  802.6  799.2  799.2  789.1  789.1  789.1   788.9   788.9



Key Exchange Rates for the Euro
One Euro is                 Closing Rate                    Average Rate
                      31 Dec 05       31 Dec 06       31 Dec 05       31 Dec 06
SEK                    9.3885          9.0404          9.2824          9.2517
USD                    1.1797          1.3170          1.2446          1.2563
GBP                    0.6853          0.6715          0.6839          0.6819
CAD                    1.3725          1.5281          1.5087          1.4247


Transaction Risk and Hedges in 2006
EUR million                 EUR     USD     GBP     SEK     JPY   Other    Total
Sales                     7 300   3 500     800   1 300     300   1 400   14 600
Costs                    -7 100  -2 000    -200  -2 300       0  -1 100  -12 700
Net Operating Cash Flow     200   1 500     600  -1 000     300     300    1 900
   
Transaction hedges as
at 31 Dec.                          250     194    -334       0
Hedging percentage as
at 31 Dec.                          17%     32%     33%      0%
Average hedging
percentage during 2006              24%     28%     45%      6%                 

As at 31 January 2007 the USD hedging ratio was 34% for the next 12 months.


Condensed Consolidated Income Statement
EUR million                                                    2005         2006
Sales                                                      13 187.5     14 593.9
Other operating income                                         80.1        364.9
Materials and services                                     -7 232.3     -8 111.5
Freight and sales commissions                              -1 493.0     -1 751.4
Personnel expenses                                         -2 182.5     -2 225.5
Other operating expenses                                     -991.9       -988.9
Depreciation and impairment                                -1 427.7     -1 257.7
Operating Profit / (Loss)                                     -59.8        623.8
Share of results of associated companies                       67.2         87.4
Net financial items                                          -151.6        -79.4
Profit / (Loss) before Tax                                   -144.2        631.8
Income tax                                                     36.8        -42.6
Net Profit / (Loss) for the Period                           -107.4        589.2
   
Attributable to:
Equity holders of the Parent Company                         -111.1        585.0
Minority interests                                              3.7          4.2
                                                             -107.4        589.2
Earnings per share
Basic earnings per share, EUR                                 -0.14         0.74
Diluted earnings per share, EUR                               -0.14         0.74



Consolidated Statement of Recognised Income & Expense
EUR million                                                    2005         2006
   
Defined benefit plan actuarial gains / (losses)               -60.2        135.1
Tax on actuarial movements                                     27.0        -46.6
Net fair value movements in Available-for-Sale assets         352.5        251.6
Currency hedges                                               -25.7         20.3
Commodity hedges                                              105.6        -65.6
Associate hedges                                                1.7         11.1
Tax on Other Comprehensive Income Movements (OCI)             -33.7         50.2
Currency translation movements on equity net
investments (CTA)                                             240.6        -86.4
Equity net investment hedges                                 -201.4        118.0
Tax on equity hedges                                           52.4        -30.7
Net Income & Expense Recognised directly in Equity            458.8        357.0
Net profit / (loss) for the year                             -107.4        589.2
Total Recognised Income & Expense for the Year                351.4        946.2
   
Attributable to:
Equity holders of the Parent Company                          347.7        942.0
Minority interests                                              3.7          4.2
Total Recognised Income & Expense for the Year                351.4        946.2



Condensed Consolidated Cash Flow Statement
EUR million                                                  2005           2006
Cash Flow from Operating Activities
Operating profit                                            -59.8          623.8
Adjustments                                               1 439.4        1 070.0
Change in net working capital                              -322.6          199.1
Change in short-term interest-bearing receivables             9.8           89.9
Cash Flow Generated by Operations                         1 066.8        1 982.8
Net financial items                                        -108.2         -310.8
Income taxes paid                                          -209.0         -215.4
Net Cash Provided by Operating Activities                   749.6        1 456.6
   
Cash Flow from Investing Activities
Acquisitions of subsidiaries                               -323.9         -329.8
Acquisitions of associated companies                        -55.7          -19.4
Proceeds from sale of fixed assets and shares               104.9          700.8
Capital expenditure                                      -1 145.3         -583.4
Proceeds from (payment of) the non
current receivables, net                                     98.3          -21.4
Net Cash Used in Investing Activities                    -1 321.7         -253.2
   
Cash Flow from Financing Activities
Change in long-term liabilities                             671.3          -11.6
Change in short-term borrowings                             590.3         -632.6
Dividends paid                                             -365.3         -354.9
Minority equity injections less dividends                    -0.3            6.6
Options exercised                                             0.0           -2.0
Repurchase / Sale of own shares                            -344.6            0.2
Net Cash Used in Financing Activities                       551.4         -994.3
   
Net Increase (Decrease) in Cash and Cash 
Equivalents                                                 -20.7          209.1
Cash and bank in acquired companies                          10.3            1.6
Cash and bank in sold companies                               0.0          -20.2
Translation  adjustment                                      12.2          -30.4
Net Cash and cash equivalents at the beginning of
period                                                      147.7          149.5
Net Cash and Cash Equivalents at Period End                 149.5          309.6
   
Cash and cash equivalents at Period End                     351.4          609.0
Bank overdraft at Period End                               -201.9         -299.4
Net Cash and Cash Equivalents at Period End                 149.5          309.6
   
Acquisitions of Subsidiary Companies
Cash and cash equivalents                                    10.3            1.6
Working capital                                             171.4           47.2
Operating fixed assets                                      274.3          281.1
Interest-bearing assets                                       0.0            0.0
Tax liabilities                                             -59.8            1.2
Interest-bearing liabilities                               -274.6           -4.4
Non-cash share exchange                                      -5.0              -
Minority interests                                           93.3            1.1
Fair Value of Net Assets                                    209.9          327.8
Goodwill                                                    114.0            2.0
Total Purchase Consideration                                323.9          329.8
                                                                                
Disposal of Subsidiary Companies                                                
Cash and cash equivalents                                       -           20.2
Working capital                                                 -           59.5
Operating fixed assets                                          -          217.9
Interest-bearing assets                                       1.6            1.2
Tax liabilities                                                 -          -18.0
Interest-bearing liabilities                                    -          -12.0
Minority interests                                              -           -0.2
Net Assets in Divested Companies                              1.6          268.6
Income Statement capital gain (goodwill realised)               -          197.9
Total Disposal Consideration                                  1.6          466.5



Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million                                                  2005           2006
 Carrying value at 1 January                             10 715.5       11 213.2
 Acquisition of subsidiary companies                        388.3          283.1
 Additions                                                1 129.6          559.1
 Additions in biological assets, IAS 41                      15.7           24.3
 Change in emission rights                                   43.7           54.4
 Disposals                                                  -12.5         -237.3
 Depreciation, amortisation and impairment               -1 427.7       -1 257.7
 Translation difference and other                           360.6         -198.7
Balance Sheet Total                                      11 213.2       10 440.4



Borrowings
EUR million                                                  2005           2006
Non-current borrowings                                    4 353.9        4 081.0
Current borrowings                                        1 730.0        1 166.5
                                                          6 083.9        5 247.5
   
Carrying value at 1 January                               4 027.6        6 083.9
Debt acquired with new subsidiaries                         274.6            4.4
Debt disposed with sold subsidiaries                          0.0          -12.0
Proceeds from / payments of borrowings (net)              1 336.9         -692.4
Translation difference and other                            444.8         -136.4
Total Borrowings                                          6 083.9        5 247.5



Condensed Consolidated Balance Sheet
EUR million                                              31 Dec 05     31 Dec 06
   
Assets
   
Fixed Assets and Other Non-current Investments
 Fixed assets                                        O    11 092.7      10 230.8
 Biological assets                                   O        76.8         111.5
 Emission rights                                     O        43.7          98.1
 Investment in associated companies                  A       719.9         805.2
 Available-for-sale: Listed securities               I       211.6          41.2
 Available-for-sale: Unlisted shares                 O       403.6         794.3
 Non-current loan receivables                        I       127.6         149.2
 Deferred tax assets                                 T        72.2          53.5
 Other non-current assets                            O        28.3          61.1
                                                          12 776.4      12 344.9
   
Current Assets
 Inventories                                         O     2 150.5       2 019.5
 Tax receivables                                     T       108.5         124.8
 Operative receivables                               O     2 157.9       2 127.9
 Interest-bearing receivables                        I       309.2         214.2
 Cash and cash equivalents                           I       351.4         609.0
                                                           5 077.5       5 095.4
   
Total Assets                                              17 853.9      17 440.3
   
Equity and Liabilities
   
Equity attributable to company shareholders                7 220.1       7 799.6
Minority interests                                            93.6         103.5
Total Equity                                               7 313.7       7 903.1
   
Non-current Liabilities
Post-employment benefit provisions                   O       888.3         763.1
Other provisions                                     O       142.6         308.3
Deferred tax liabilities                             T       866.0         793.0
Non-current debt                                     I     4 353.9       4 081.0
Other non-current operative liabilities              O       204.7         193.7
                                                           6 455.5       6 139.1
Current Liabilities
Current portion of long-term debt                    I       385.0         630.2
Interest-bearing liabilities                         I     1 345.0         536.3
Operative liabilities                                O     1 975.4       1 972.9
Tax liabilities                                      T       379.3         258.7
                                                           4 084.7       3 398.1
   
Total Liabilities                                         10 540.2       9 537.2
   
Total Equity and Liabilities                              17 853.9      17 440.3

Items designated with "O" comprise Operating Capital
Items designated with "I" comprise Interest-bearing Net Liabilities
Items designated with "T" comprise Net Tax Liabilities
Items designated with "A" comprise Associate Companies



Statement of Changes in Equity
                                         Trea-                 
                       Share    Capital  sury                  Retained
EUR million            Capital Reserves  Shares    OCI     CTA Earnings    Total
Balance at 31
December 2003          1 469.3  1 237.4  -258.0  114.6  -197.1  5 571.9  7 938.1
Effect of adopting
amendment to IAS 19          -        -       -      -       -   -300.0   -300.0
Balance at 1 January
2004 (restated)        1 469.3  1 237.4  -258.0  114.6  -197.1  5 271.9  7 638.1
Repurchase of  Stora
Enso Oyj shares              -        -  -198.6      -       -        -   -198.6
Cancellation of
Stora Enso Oyj shares    -47.3   -228.5   275.8      -       -        -      0.0
Dividend (EUR 0.45
per share)                   -        -       -      -       -   -375.7   -375.7
Options exercised          1.3      0.3       -      -       -        -      1.6
Net profit for the
period                       -        -       -      -   -11.7    757.9    746.2
Net expense
recognised directly
to equity                    -        -       -  -47.0   -10.1   -129.1   -186.2
Balance at 31
December 2004          1 423.3  1 009.2  -180.8   67.6  -218.9  5 525.0  7 625.4
Repurchase of  Stora
Enso Oyj shares              -        -  -344.7      -       -        -   -344.7
Cancellation of
Stora Enso Oyj shares    -41.2   -224.4   265.6      -       -        -      0.0
Dividend (EUR 0.45
per share)                   -        -       -      -       -   -365.3   -365.3
Buy-out of minority
interests                    -        -       -      -       -    -43.2    -43.2
Net profit for the
period                       -        -       -      -     0.2   -111.1   -110.9
Net expense
recognised directly
to equity                    -        -       -  400.4    91.6    -33.2    458.8
Balance at 31
December 2005          1 382.1    784.8  -259.9  468.0  -127.1  4 972.2  7 220.1
Cancellation of
Stora Enso Oyj shares    -39.9    -15.9   249.1      -       -   -193.3      0.0
Dividend (EUR 0.45
per share)                   -        -       -      -       -   -354.9   -354.9
Options exercised                  -2.0     0.3                             -1.7
Buy-out of minority
interests                    -        -       -      -       -     -0.1     -0.1
Net profit for the
period                                                    -5.8    585.0    579.2
Net expense
recognised directly
to equity                                        267.6     0.9     88.5    357.0
Balance at 31
December 2006          1 342.2    766.9   -10.5  735.6  -132.0  5 097.4  7 799.6

CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income


Commitments and Contingencies
EUR million                                           31 Dec 05        31 Dec 06
On Own Behalf
 Pledges given                                              1.1              1.0
 Mortgages                                                212.8            146.8
On Behalf of Associated Companies
 Mortgages                                                  0.8              0.8
 Guarantees                                               359.3            343.0
On Behalf of Others
 Guarantees                                                13.7              9.5
Other Commitments. Own
 Leasing commitments, in next 12 months                    34.3             38.4
 Leasing commitments, after next 12 months                148.0            130.3
 Pension liabilities                                        0.7              0.2
Other commitments                                          97.6             17.1
Total                                                     868.3            687.1
   
 Pledges given                                              1.1              1.0
 Mortgages                                                213.6            147.6
 Guarantees                                               373.0            352.5
 Leasing commitments                                      182.3            168.7
 Pension liabilities                                        0.7              0.2
 Other commitments                                         97.6             17.1
Total                                                     868.3            687.1



Net Fair Values of Derivative Financial Instruments
EUR million                      31 Dec 05                31 Dec 06
                                  Net Fair     Positive     Negative    Net Fair
                                    Values  Fair Values  Fair Values      Values
Interest rate swaps                   88.1         83.4        -35.3        48.1
Interest rate options                 -1.9          0.1         -1.9        -1.8
Cross-currency swaps                  -6.5          0.0         -1.2        -1.2
Forward contracts                    -30.5         36.1         -7.9        28.2
FX options                            -5.7          6.5         -0.6         5.9
Commodity contracts                  129.6         75.6        -12.4        63.2
Equity swaps                          -1.8         27.7        -20.7         7.0
Total                                171.3        229.4        -80.0       149.4



Nominal Values of Derivative Financial Instruments
EUR million                                          31 Dec 05         31 Dec 06
Interest Rate Derivatives
Interest rate swaps
 Maturity under 1 year                                   620.1             177.4
 Maturity 2–5 years                                    1 000.6           2 152.1
 Maturity 6–10 years                                   1 738.3           2 490.5
                                                       3 359.0           4 820.0
Interest rate options                                    673.8             318.0
Total                                                  4 032.8           5 138.0
   
Foreign Exchange Derivatives
 Cross-currency swap agreements                           72.3               6.9
 Forward contracts                                     2 442.1           1 778.4
 FX Options                                            1 071.3             662.8
Total                                                  3 585.7           2 448.1
   
Commodity Derivatives
 Commodity contracts                                     391.0             635.8
Total                                                    391.0             635.8
   
Equity swaps
Equity swaps                                             408.5             328.6
Total                                                    408.5             328.6



Sales by Segment
EUR
million   Q1/05  Q2/05  Q3/05   Q4/05    2005   Q1/06  Q2/06  Q3/06  Q4/06    2006
Publica-
tion
Paper    1104.4 1125.3 1166.0  1280.2  4675.9  1171.0 1145.2 1226.7 1230.5  4773.4
Fine
Paper     708.7  618.3  625.4   737.9  2690.3   776.3  738.9  722.8  718.3  2956.3
Merchants 182.1  217.4  295.2   478.5  1173.2   496.3  452.6  450.1  508.2  1907.2
Packaging 
Boards    794.5  768.2  788.7   838.8  3190.2   869.0  881.8  909.0  871.7  3531.5
Wood
Products  366.9  433.7  398.0   389.7  1588.3   377.1  437.8  418.5  443.0  1676.4
Wood
Supply    674.7  563.2  612.4   651.6  2501.9   674.8  651.3  633.9  687.2  2647.2
Other    -686.4 -538.8 -666.5  -740.6 -2632.3  -756.8 -691.3 -722.9 -727.1 -2898.1
Total
Sales    3144.9 3187.3 3219.2  3636.1  13187.5 3607.7 3616.3 3638.1 3731.8 14593.9



Operating Profit by Segment excluding Non-recurring items
EUR
million   Q1/05  Q2/05  Q3/05   Q4/05    2005  Q1/06   Q2/06   Q3/06  Q4/06   2006
Publica-
tion
Paper      21.6   31.5   67.9    72.3   193.3   70.3    55.3    57.0   69.0  251.6
Fine
Paper      48.1  -13.6   -1.2    28.9    62.2   52.7    46.3    32.4   34.6  166.0
Merchants   2.7    1.6    0.9    -1.9     3.3    9.6     2.9     7.7   12.5   32.7
Packaging 
Boards     72.0   11.9   73.5    62.6   220.0   99.5    70.8    93.7   59.4  323.4
Wood
Products   -4.0    9.9   -1.8    -7.2    -3.1    3.8    14.9    21.4   19.0   59.1
Wood
Supply      3.1  -10.9   -0.3    -3.7   -11.8    8.9     1.3     5.0  -12.4    2.8
Other     -30.8  -12.7  -32.8   -30.1  -106.4  -50.7    -9.3   -22.0    3.9  -78.1
Operating 
Profit
excl.
Non-
recurring 
Items     112.7   17.7  106.2   120.9   357.5  194.1   182.2   195.2  186.0  757.5
Non-
recurring 
items       8.5   -3.5    8.5  -430.8  -417.3  -23.2     6.7  -177.2   60.0 -133.7
Operating 
Profit
(IFRS)    121.2   14.2  114.7  -309.9   -59.8  170.9   188.9    18.0  246.0  623.8
Net
financial 
items     -43.1  -34.6  -25.0   -48.9  -151.6  115.2  -149.2    -8.4  -37.0  -79.4
Associa-
ted 
companies  14.0   17.0   11.8    24.4    67.2   31.6    20.2    10.2   25.4   87.4
Profit
before
Tax and
Minority
Interests  92.1   -3.4  101.5  -334.4  -144.2  317.7    59.9    19.8  234.4  631.8
Income
tax
expense   -27.4   -0.5  -30.3    95.0    36.8  -91.3   -19.0    37.3   30.4  -42.6
Net
Profit     64.7   -3.9   71.2  -239.4  -107.4  226.4    40.9    57.1  264.8  589.2




Non-recurring Items by Segment
EUR million                                  
           Q1/05  Q2/05 Q3/05   Q4/05    2005  Q1/06 Q2/06   Q3/06 Q4/06    2006
Publica-
tion Paper   3.2    3.2   3.3  -198.3  -188.6   -2.9   4.4  -225.2  11.4  -212.3
Fine Paper   2.8    2.7   2.7   -38.1   -29.9  -22.0   3.8    72.0   8.5    62.3
Merchants    0.1    0.1   0.1    -7.7    -7.4      -     -       -   0.4     0.4
Packaging
Boards       1.8    1.8   1.8  -142.6  -137.2      -  -5.5       -   4.3    -1.2
Wood
Products     0.2  -11.8   0.1   -41.0   -52.5    1.7   1.2   -24.0   0.4   -20.7
Wood
Supply       0.2    0.2   0.2    -3.4    -2.8      -   1.5       -   0.7     2.2
Other        0.2    0.3   0.3     0.3     1.1      -   1.3       -  34.3    35.6
Total Non
recurring
Items        8.5   -3.5   8.5  -430.8  -417.3  -23.2   6.7  -177.2  60.0  -133.7



Operating Profit by Segment
EUR
million   Q1/05  Q2/05  Q3/05   Q4/05    2005  Q1/06   Q2/06   Q3/06  Q4/06   2006
Publica-
tion
Paper      24.8   34.7   71.2  -126.0     4.7   67.4    59.7  -168.2   80.4   39.3
Fine
Paper      50.9  -10.9    1.5    -9.2    32.3   30.7    50.1   104.4   43.1  228.3
Merchants   2.8    1.7    1.0    -9.6    -4.1    9.6     2.9     7.7   12.9   33.1
Packaging 
Boards     73.8   13.7   75.3   -80.0    82.8   99.5    65.3    93.7   63.7  322.2
Wood
Products   -3.8   -1.9   -1.7   -48.2   -55.6    5.5    16.1    -2.6   19.4   38.4
Wood
Supply      3.3  -10.7   -0.1    -7.1   -14.6    8.9     2.8     5.0  -11.7    5.0
Other     -30.6  -12.4  -32.5   -29.8  -105.3  -50.7    -8.0   -22.0   38.2  -42.5
Operating 
Profit    121.2   14.2  114.7  -309.9   -59.8  170.9   188.9    18.0  246.0  623.8
Net
financial 
items     -43.1  -34.6  -25.0   -48.9  -151.6  115.2  -149.2    -8.4  -37.0  -79.4
Associa-
ted 
companies  14.0   17.0   11.8    24.4    67.2   31.6    20.2    10.2   25.4   87.4
Profit
before
Tax and
Minority
Interests  92.1   -3.4  101.5  -334.4  -144.2  317.7    59.9    19.8  234.4  631.8
Income
tax
expense   -27.4   -0.5  -30.3    95.0    36.8  -91.3   -19.0    37.3   30.4  -42.6
Net
Profit     64.7   -3.9   71.2  -239.4  -107.4  226.4    40.9    57.1  264.8  589.2





Stora Enso Shares


Closing Price              Helsinki, EUR       Stockholm, SEK     New York, USD
                         A share   R share     A share  R share        ADRs
October                  12.66       12.68     117.25    117.00       16.13
November                 11.74       11.77     107.00    106.50       15.61
December                 12.30       12.00     108.25    108.00       15.79



Trading Volume                 Helsinki             Stockholm            New York
                         A share    R share     A share   R share          ADRs
October                  172 471  131 851 500   144 950  27 920 303     1 786 000
November                 208 446  109 104 160   286 712  19 592 897     1 358 200
December                 63 501    65 221 358   290 997  12 078 629     1 269 500
Total                    444 418  306 177 018   722 659  59 591 829     4 413 700




www.storaenso.com
www.storaenso.com/investors


Publication dates for financial information
Interim Review for January - March 2007  26 April 2007
Interim Review for January - June 2007  26 July 2007
Interim Review for January - September 2007 25 October 2007


Annual General Meeting   29 March 2007



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.


For further information, please contact:
Jukka Härmälä, CEO, tel. +358 2046 21404
Hannu Ryöppönen, CFO, tel. +358 2046 21450
Kari Vainio, EVP, Corporate Communications, tel. +44 7799 348 197
Keith B Russell, SVP, Investor Relations, tel. +44 7775 788 659
Ulla Paajanen-Sainio, VP, Investor Relations and Financial Communications,
tel. +358 40 763 8767



STORA ENSO OYJ


Jyrki Kurkinen  Ulla Paajanen-Sainio












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