Stora Enso Fourth Quarter and Full Year Results 2007
Operating profit burdened by high wood costs; corrective actions underway;
proposed dividend per share unchanged at EUR 0.45.
Summary of Fourth Quarter Results (compared with Q4/2006)
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| Continuing Operations: | | Q4 / 20 | Q4 / 20 | 2007 | 2006 |
| | | 07 | 06 | | |
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| Sales | EUR | 3 372.7 | 3 319.9 | 13 373. | 12 957. |
| | million | | | 6 | 2 |
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| Operating Profit excl. | EUR | 340.1 | 217.8 | 1 171.7 | 884.4 |
| non-recurring items (NRI) | million | | | | |
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| Operating Profit excl. | EUR | 156.3 | 223.8 | 906.0 | 871.8 |
| NRI, non-operational | million | | | | |
| items and forest | | | | | |
| revaluation gains from | | | | | |
| associated companies | | | | | |
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| Operating Profit | EUR | -48.4 | 254.4 | 246.2 | 741.5 |
| | million | | | | |
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| Profit Before Tax excl. | EUR | 292.9 | 165.2 | 1 002.8 | 691.1 |
| NRI | million | | | | |
--------------------------------------------------------------------------------
| Profit Before Tax | EUR | -95.6 | 234.8 | 77.3 | 711.2 |
| | million | | | | |
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| Net Profit excl. NRI | EUR | 229.0 | 153.2 | 780.0 | 550.7 |
| | million | | | | |
--------------------------------------------------------------------------------
| Net Profit | EUR | -50.8 | 302.3 | 71.5 | 700.4 |
| | million | | | | |
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| EPS excl. NRI | EUR | 0.29 | 0.19 | 0.99 | 0.69 |
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| EPS | EUR | -0.06 | 0.38 | 0.09 | 0.88 |
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| CEPS excl. NRI | EUR | 0.52 | 0.49 | 2.01 | 1.84 |
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| ROCE excl. NRI | % | 12.8 | 8.8 | 11.3 | 8.7 |
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| ROCE excl. NRI, | % | 5.9 | 9.0 | 8.7 | 8.6 |
| non-operational items and | | | | | |
| forest revaluation gains | | | | | |
| from associated companies | | | | | |
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Message from CEO Jouko Karvinen:
“The year 2007, especially its fourth quarter, was one of the most challenging
in the recent history of Stora Enso. Although we made progress in improving
operational performance in many areas, the operating profit for the fourth
quarter excluding non-recurring items and upward revaluations of forest assets
of associated companies was clearly less than for the fourth quarter of 2006.
The fourth quarter's profit deterioration, which was mainly due to Wood Products
and certain one-time functional costs, meant we could not stay on our path of
year-on-year improvement. Whilst Fine Paper and Industrial Packaging did improve
their profit compared with the previous year, we cannot be satisfied with the
results for the last quarter. Newsprint and Book Paper, Magazine Paper and
Consumer Board enjoyed stronger demand in the fourth quarter than a year ago,
but raw material cost increases and adverse exchange rate changes reduced their
profitability.
“We made clear progress during 2007 in several areas. The divestment of our
operations in North America at fair market value not only released significant
capital, but also allows us to focus and further invest in Stora Enso's future.
The deal with New Page also created a strong entity with good prospects in the
North American market.
“Another area where we were able to respond to both short-term and long-term
threats was the issue of wood imported from Russia. In 2007 we managed to reduce
the amount of wood imported by nearly three million cubic metres by changing
some of our pulping lines from birch to pine and by increasing consumption of
domestically sourced Finnish wood. That not only kept our integrated paper and
board mills running and several thousand employees working; crucially, it also
enabled us to maintain supplies to our paper and board customers throughout the
year.
“Despite tremendous efforts we still had to import more than four million cubic
metres of wood at prices already dramatically higher due to the mild winter in
2007, and under the threat of increasing Russian duties. Our plans to close down
the pulp mills at Kemijärvi and Norrsundet are based on the clear objective of
reducing the need to buy excessively expensive imported wood, thereby
safeguarding the future of the larger entities and Stora Enso as a whole. The
closures of Summa Mill and part of Anjala Mill in Finland are due to long-term
profitability issues that we were unable to solve despite the tremendous efforts
of our employees and earlier investments. We remain convinced that our
responsibility to all our stakeholders is to secure the profitability of Stora
Enso operations and to do our utmost to support new business creation and
re-employment of the people affected by our restructuring programmes.
“A real threat to the future of the whole forest products industry in Finland is
the impending increases in duties on wood exported from Russia. We are preparing
for a number of scenarios that include capacity reductions and some investments
in order to minimise the effects of the duties, especially on our financial
performance and thereby employment too. The fact is we will have to launch some
of these actions in the next few months to be able to cope with the steep
increases in duties. As we have said before, the time to act is now, not at the
end of 2008.
“The economic outlook is uncertain in Europe and globally. We expect to face
average unit cost inflation of 2.5 to 3.0% this year. However, our business
units have concrete plans to reduce costs and improve margins and productivity
that should largely offset cost inflation for the year as a whole. We still see
big opportunities to improve our productivity and efficiency, and in balancing
and prioritising our investments in existing businesses and selected new
projects. We remain committed to our goal of improving long-term returns even
with these realities and external challenges.”
Near-term Market Outlook
In Europe demand for newsprint should remain steady; contract negotiations are
still ongoing in Europe. Overseas prices for newsprint have increased in the
first quarter. The magazine paper market has strengthened and prices for coated
and SC magazine paper are rising. Fine paper demand is expected to strengthen
for seasonal reasons in the next few months, but no price changes are foreseen.
Normal seasonal strengthening in demand for consumer board is anticipated,
although slightly less than a year ago. Markets outside Europe are very
competitive due to unfavourable exchange rates, but a slight rise in prices in
local currencies is predicted. Demand for industrial packaging products is
forecast to remain firm, leading to some price increases.
Despite the on-going recovery in demand in Japan, the general outlook for wood
products demand remains depressed, and prices are likely to decline further.
Judging by the current outlook, the already announced production curtailments
will continue at least into the second quarter of 2008.
In Latin America demand for coated magazine paper is expected to remain firm
with prices rising further. In China the outlook for fine paper demand and
prices remains positive.
Markets
Compared with Q4/2006
In Europe market demand was stronger for magazine paper, consumer board and
industrial packaging, and slightly stronger for newsprint, but virtually
unchanged for fine paper and clearly weaker for wood products.
Prices were higher for newsprint, uncoated fine paper, industrial packaging and
wood products. Prices were lower for all magazine paper grades and slightly
lower for coated fine paper and consumer board, mainly due to exchange rate
trends.
Producer inventories were lower than a year ago in magazine paper and higher in
newsprint, fine paper and wood products.
In Latin America market demand for coated magazine paper was stronger and prices
increased.
In China market demand for coated fine paper continued to grow and prices were
higher than a year ago.
Compared with Q3/2007
In Europe demand was seasonally stronger for newsprint, magazine paper and
coated fine paper, but slightly weaker for uncoated fine paper and consumer
board. Industrial packaging demand remained healthy. Demand for wood products
sharply deteriorated as the market became oversupplied following the very
buoyant first half of 2007.
Prices were largely unchanged for newsprint, magazine paper and uncoated fine
paper, but coated fine paper and consumer board prices declined slightly. Prices
for some industrial packaging products increased. Wood product prices clearly
decreased due to heavy oversupply, high inventories and weaker demand.
Producer inventories increased in wood products, were virtually unchanged in
fine paper and decreased in newsprint and magazine paper.
In Latin America market deliveries were lower, but prices higher.
In China market demand for coated fine paper continued to grow and prices
increased.
Stora Enso Deliveries and Production from Continuing Operations
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| | 2006 | 2007 | Q4/06 | Q3/07 | Q4/0 | Change | Change |
| | | | | | 7 | % Q4/ | % Q4/ |
| | | | | | | 07-Q4/ | 07-Q3/ |
| | | | | | | 06 | 07 |
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| Paper and board | 12 48 | 12 47 | 3 160 | 3 112 | 3 14 | -0.4 | 1.1 |
| deliveries (1 000 | 9 | 7 | | | 7 | | |
| tonnes) | | | | | | | |
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| Paper and board | 12 54 | 12 45 | 3 135 | 3 119 | 3 05 | -2.5 | -2.0 |
| production (1 000 | 7 | 9 | | | 6 | | |
| tonnes) | | | | | | | |
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| Wood products | 6 551 | 6 348 | 1 653 | 1 545 | 1 42 | -14.0 | -8.0 |
| deliveries (1 000 | | | | | 1 | | |
| m3) | | | | | | | |
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Q4/2007 Results from continuing operations (compared with Q4/2006)
Sales at EUR 3 372.7 million were approximately the same as a year earlier.
Higher average prices for industrial packaging and consumer boards were largely
offset by lower deliveries in wood products.
Key Figures
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| EUR million | Q4 | 20 | Q1/ | Q2/ | Q3/ | Q4/ | 200 | Chan | Chan | Chan |
| | /0 | 06 | 07 | 07 | 07 | 07 | 7 | ge % | ge % | ge % |
| | 6 | | | | | | | Q4/ | Q4/ | 200 |
| | | | | | | | | 07-Q | 07-Q | 7-20 |
| | | | | | | | | 4/06 | 3/07 | 06 |
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| Continuing Oper | | | | | | | | | | |
| ations | | | | | | | | | | |
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| Sales | 3 | 12 | 3 4 | 3 3 | 3 2 | 3 3 | 13 | 1.6 | 4.3 | 3.2 |
| | 31 | 9 | 10. | 55. | 34. | 72. | 373 | | | |
| | 9. | 57 | 5 | 9 | 5 | 7 | .6 | | | |
| | 9 | .2 | | | | | | | | |
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| EBITDA | 42 | 1 | 518 | 445 | 382 | 288 | 1 6 | -32. | -24. | -3.7 |
| excluding NRI | 9. | 69 | .2 | .1 | .6 | .4 | 34. | 9 | 6 | |
| | 6 | 7. | | | | | 3 | | | |
| | | 4 | | | | | | | | |
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| Operating profi | 21 | 88 | 327 | 252 | 252 | 340 | 1 1 | 56.2 | 35.0 | 32.5 |
| t excluding NRI | 7. | 4. | .2 | .4 | .0 | .1 | 71. | | | |
| | 8 | 4 | | | | | 7 | | | |
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| Operating profi | 22 | 87 | 311 | 231 | 207 | 156 | 906 | -30. | -24. | 3.9 |
| t excl. NRI, | 3. | 1. | .6 | .0 | .1 | .3 | .0 | 2 | 5 | |
| non-operational | 8 | 8 | | | | | | | | |
| items and fore | | | | | | | | | | |
| st | | | | | | | | | | |
| revaluation gai | | | | | | | | | | |
| ns from associa | | | | | | | | | | |
| ted | | | | | | | | | | |
| companies | | | | | | | | | | |
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| NRI (operationa | 36 | -1 | -12 | 24. | -54 | -38 | -92 | n/m | 29.3 | n/m |
| l) | .6 | 42 | .0 | 4 | 9.4 | 8.5 | 5.5 | | | |
| | | .9 | | | | | | | | |
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| Operating margi | 6. | 6. | 9.6 | 7.5 | 7.8 | 10. | 8.8 | 53.0 | 29.5 | 29.4 |
| n excluding NRI | 6 | 8 | | | | 1 | | | | |
| , % | | | | | | | | | | |
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| Operating profi | 25 | 74 | 315 | 276 | -29 | -48 | 246 | -119 | 83.7 | -66. |
| t | 4. | 1. | .2 | .8 | 7.4 | .4 | .2 | .0 | | 8 |
| | 4 | 5 | | | | | | | | |
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| Net financial i | -1 | -3 | -38 | -56 | -26 | -47 | -16 | -140 | -75. | n/m |
| tems1) | 9. | 0. | .7 | .1 | .9 | .2 | 8.9 | .8 | 5 | |
| | 6 | 3 | | | | | | | | |
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| Profit before t | 16 | 69 | 288 | 196 | 225 | 292 | 1 0 | 77.3 | 30.1 | 45.1 |
| ax and minority | 5. | 1. | .5 | .3 | .1 | .9 | 02. | | | |
| interests exclu | 2 | 1 | | | | | 8 | | | |
| ding NRI | | | | | | | | | | |
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| Profit before t | 23 | 71 | 276 | 220 | -32 | -95 | 77. | -140 | 70.5 | -89. |
| ax and minority | 4. | 1. | .5 | .7 | 4.3 | .6 | 3 | .7 | | 1 |
| interests | 8 | 2 | | | | | | | | |
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| Net profit for | 15 | 55 | 219 | 153 | 178 | 229 | 780 | 49.5 | 28.2 | 41.6 |
| the period | 3. | 0. | .2 | .2 | .6 | .0 | .0 | | | |
| excluding NRI | 2 | 7 | | | | | | | | |
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| Net profit for | 30 | 70 | 207 | 179 | -26 | -50 | 71. | -116 | 80.8 | -89. |
| the period | 2. | 0. | .2 | .2 | 4.1 | .8 | 5 | .8 | | 8 |
| | 3 | 4 | | | | | | | | |
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| EPS from contin | 0. | 0. | 0.2 | 0.1 | 0.2 | 0.2 | 0.9 | 52.6 | 26.1 | 43.5 |
| uing operations | 19 | 69 | 8 | 9 | 3 | 9 | 9 | | | |
| excluding NRI, | | | | | | | | | | |
| Basic, EUR | | | | | | | | | | |
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| EPS from contin | 0. | 0. | 0.2 | 0.2 | -0. | -0. | 0.0 | -115 | 81.8 | -89. |
| uing operations | 38 | 88 | 6 | 2 | 33 | 06 | 9 | .8 | | 8 |
| , | | | | | | | | | | |
| Basic, EUR | | | | | | | | | | |
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| CEPS from conti | 0. | 1. | 0.5 | 0.4 | 0.4 | 0.5 | 2.0 | 6.1 | 8.3 | 9.2 |
| nuing operation | 49 | 84 | 5 | 6 | 8 | 2 | 1 | | | |
| s | | | | | | | | | | |
| excluding NRI, | | | | | | | | | | |
| EUR | | | | | | | | | | |
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| ROCE from conti | 8. | 8. | 12. | 9.6 | 9.4 | 12. | 11. | 45.5 | 36.2 | 29.9 |
| nuing operation | 8 | 7 | 7 | | | 8 | 3 | | | |
| s | | | | | | | | | | |
| excluding NRI, | | | | | | | | | | |
| % | | | | | | | | | | |
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| ROCE excl. NRI, | 9. | 8. | 12. | 8.7 | 7.7 | 5.9 | 8.7 | -34. | -23. | 1.2 |
| non-operational | 0 | 6 | 1 | | | | | 4 | 4 | |
| items and fore | | | | | | | | | | |
| st | | | | | | | | | | |
| revaluation gai | | | | | | | | | | |
| ns from associa | | | | | | | | | | |
| ted | | | | | | | | | | |
| companies, % | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total Operation | | | | | | | | | | |
| s | | | | | | | | | | |
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| EPS from total | 0. | 0. | 0.2 | 0.1 | -0. | -0. | -0. | -151 | 69.6 | -136 |
| operations, | 33 | 74 | 8 | 8 | 56 | 17 | 27 | .5 | | .5 |
| Basic, EUR | | | | | | | | | | |
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| EPS from total | 0. | 0. | 0.2 | 0.1 | 0.2 | 0.2 | 0.8 | 116. | -13. | 60.0 |
| operations, | 12 | 55 | 6 | 3 | 3 | 6 | 8 | 7 | 0 | |
| excluding NRI, | | | | | | | | | | |
| Basic, EUR | | | | | | | | | | |
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1) Includes capital gains totalling EUR 163.0 million in 2006, comprising EUR
130.0 million (sale of Sampo shares) in Q1/2006 and EUR 33.0 million (sale of
Finnlines shares) in Q4/2006
NRI = Non-recurring items
CEPS = (Net profit for the period + depreciation and amortisation)/average
number of shares
Non-recurring items are exceptional transactions that are not related to normal
business operations. The most common non-recurring items are capital gains,
additional write-downs, provisions for planned restructuring and penalties.
Non-recurring items are normally specified individually if they exceed one cent
per share.
Reconciliation of Operating Profit, Continuing Operations
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| EUR million | 2006 | 2007 | Chan | Q4/0 | Q3/0 | Q4/07 | Change | Change |
| | | | ge % | 6 | 7 | | % Q4/ | % Q4/ |
| | | | 200 | | | | 07-Q4/ | 07-Q3/ |
| | | | 7-20 | | | | 06 | 07 |
| | | | 06 | | | | | |
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| Profit from | 783. | 831. | | 197. | 189. | 143.5 | | |
| Operations, | 8 | 6 | | 8 | 6 | | | |
| excl. NRI | | | | | | | | |
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| Associated | 88.0 | 74.4 | | 26.0 | 17.5 | 12.8 | | |
| Companies, | | | | | | | | |
| operational | | | | | | | | |
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| Operating | 871. | 906. | 3.9 | 223. | 207. | 156.3 | -30.2 | -24.5 |
| profit excl. | 8 | 0 | | 8 | 1 | | | |
| NRI | | | | | | | | |
| and | | | | | | | | |
| non-operational | | | | | | | | |
| items | | | | | | | | |
--------------------------------------------------------------------------------
| Non-operational | 12.6 | -1.3 | | -6.0 | -3.1 | -35.2 | | |
| Items* | | | | | | | | |
--------------------------------------------------------------------------------
| Non-operational | | 267. | | | 48.0 | 219.0 | | |
| Items, | | 0 | | | | | | |
| Associated | | | | | | | | |
| Companies* | | | | | | | | |
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| Operating | 884. | 1 17 | 32.5 | 217. | 252. | 340.1 | 56.2 | 35.0 |
| Profit, excl | 4 | 1.7 | | 8 | 0 | | | |
| NRI | | | | | | | | |
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| NRI | -142 | -925 | | 36.6 | -549 | -388. | | |
| | .9 | .5 | | | .4 | 5 | | |
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| Operating | 741. | 246. | -66. | 254. | -297 | -48.4 | -119.0 | 83.7 |
| Profit, as | 5 | 2 | 8 | 4 | .4 | | | |
| reported | | | | | | | | |
--------------------------------------------------------------------------------
*) Non-Operational Items include fair valuation of Total Return Swaps, synthetic
options and CO2 emission rights, and valuations from associated companies'
forest
Operating profit excluding non-recurring items, non-operational items and
valuation gains in forest assets in associated companies decreased by EUR 67.5
million to EUR 156.3 million, which is 4.6% of sales. Operating profit was
higher in Fine Paper and Industrial Packaging mainly due higher sales prices,
approximately the same in Merchants, but lower in Newsprint, Magazine Paper and
Consumer Board, mainly due to higher recycled paper and wood costs.
Profitability clearly deteriorated in Wood Products due to weakening demand and
higher wood raw material costs.
Changes in exchange rates, mainly depreciation of the US dollar and British
pound, decreased operating profit by some EUR 20 million compared with the
fourth quarter of 2006.
Deliveries of wood to the Group's mills totalled 10.8 million cubic metres,
approximately the same as in the fourth quarter of 2006. Wood costs were
considerably higher than a year earlier.
The share of associated company results amounted to EUR 231.8 (EUR 26.0)
million, with EUR 219 million of increase coming from the IAS 41 fair valuation
of Bergvik Skog AB (EUR 163 million), Tornator Oy (EUR 17 million) and Veracel
Celulose S.A. (EUR 39 million) forest asset holdings due to higher estimated
wood prices and harvesting volumes. The shares of Bergvik and Tornator results
are presented in the segment Other and the share of Veracel results in Fine
Paper.
Operating profit includes a negative net effect of EUR 35.2 million (negative
EUR 6.0 million) from the accounting of share-based compensation, Total Return
Swaps (TRS) and CO2 emission rights. These non-operational items are reported in
the segment Other.
Non-recurring items had a net impact of EUR -388.5 (EUR 36.6) million on
operating profit. The final net impact of the planned restructuring programme in
Kymenlaakso, Kemijärvi, Norrsundet and Group administration announced in October
amounted to EUR -335.5 million. The remaining EUR -53.0 million of net impact
arises from other provisions and write-downs due to various additional personnel
reductions, site clearance and spare part inventory write-downs. Non-recurring
expenses at EUR -388.5 million for the fourth quarter of 2007 were EUR 14.0
million lower than announced on 22 January 2008 as a result of decreased
restructuring cost estimates.
Operating profit of the segment Other excluding non-recurring items,
non-operational items and valuation gains in forest assets of associated
companies was EUR -10.6 (19.2) million in the fourth quarter of 2007, a
deterioration of EUR 29.8 million. Comparative figures for the fourth quarter of
2006 include internal reallocation of additional logistics costs related to
starting up a new shipping system that increased the operating profit of Other
operations by EUR 20.7 million and correspondingly decreased segmental operating
profits. In addition, there were credit losses in sales companies of EUR 3.0
million in the fourth quarter of 2007.
Net financial items were EUR -47.2 (EUR -19.6) million. Net interest expenses
increased to EUR 42.4 (EUR 39.7) million and net foreign exchange losses on
borrowings, currency derivatives and bank accounts were EUR 5.5 (EUR 11.0)
million. Income from other financial items decreased to EUR 0.7 (EUR 31.1)
million. A non-recurring capital gain of EUR 33 million on the sale of Finnlines
shares was included in the fourth quarter of 2006.
Profit before tax and minority interests excluding non-recurring items increased
by EUR 127.7 million to EUR 292.9 million and profit before tax amounted to EUR
-95.6 (EUR 234.8) million including non-recurring items.
Net taxes including non-recurring items totalled positive EUR 44.8 (positive EUR
67.5) million, leaving a net loss for the quarter of EUR -50.8 (positive EUR
302.3) million.
Earnings per share excluding non-recurring items increased by EUR 0.10 to EUR
0.29. Earnings per share including non-recurring items were EUR -0.06 (EUR
0.38). Cash earnings per share were EUR 0.52 (EUR 0.49) excluding non-recurring
items.
The return on capital employed was 12.8% (8.8%) excluding non-recurring items.
The return on capital employed excluding non-recurring items, non-operational
items and forest asset valuations was 5.9% (9.0%). Capital employed was EUR
10 502.6 million on 31 December 2007, a net decrease of EUR 1 643.5 million,
mainly due to restructuring and impairments of the Group's fixed assets and
goodwill.
Financial Results 2007 from continuing operations (compared with previous year)
Sales at EUR 13 373.6 million were 3.2% higher than in 2006, largely due to
clearly higher average prices for wood products and industrial packaging, and
increased deliveries in Industrial Packaging and Magazine Paper as market demand
improved. The acquisition of Arapoti Mill in September 2006 increased Magazine
Paper deliveries by 121 000 tonnes and sales by EUR 85 million. Deliveries
decreased slightly in all other segments. In Fine Paper deliveries decreased by
6.5%, mainly due to the permanent shutdown of Berghuizer Mill in 2007 (89 000
tonnes and EUR 74 million impact) and the inclusion of Celbi Pulp Mill in the
comparative figures until July 2006 (187 000 tonnes and EUR 85 million impact).
Deliveries of wood products were 3.1% lower, mainly due to market-related
production curtailments at sawmills in the fourth quarter of 2007.
Operating profit excluding non-recurring items, non-operational items and
valuation gains in forest assets in associated companies increased by EUR 34.2
million to EUR 906.0 million, and was clearly higher in Wood Products as higher
average sales prices more than offset higher average wood costs. Operating
profit was clearly lower in Consumer Board, mainly due to higher wood costs and
production curtailments at Enocell Pulp Mill. Operating profit was lower in
Newsprint despite higher newsprint prices, because wood, recycled paper and
energy costs rose. Magazine Paper operating profit was lower as sales prices
decreased while recycled paper and wood costs increased. Operating profit was
higher in Fine Paper because higher office paper prices more than offset higher
wood costs and the divested Celbi Pulp Mill's EUR 29.1 million operating profit
in 2006. Operating profit was higher in Industrial Packaging mainly due to
higher prices and volumes.
Changes in exchange rates, mainly depreciation of the US dollar, decreased
operating profit by some EUR 60 million compared with 2006.
The share of associated company results amounted to EUR 341.4 (EUR 88.0)
million, which includes EUR 267 million from the IAS 41 fair valuation of forest
asset holdings in the associated companies Bergvik Skog (EUR 163 million),
Tornator (EUR 65 million) and Veracel (EUR 39 million). These non-operational
items are reported in the segments Fine Paper (EUR 39 million) and Other (EUR
228 million). The share of associated company results excluding the forest
valuations decreased by EUR 13.6 million.
In 2007 the research and development expenses of continuing operations were EUR
87.5 (EUR 79.4 million), equivalent to 0.7% of sales.
Net financial items were EUR -168.9 (EUR -30.3) million. The 2006 figure
includes a non-recurring capital gain of EUR 163.0 million from the sale of
shares in Sampo Oyj and Finnlines Oyj.
Profit before tax and minority interests excluding non-recurring items increased
by EUR 311.7 million to EUR 1 002.8 million. Profit before tax including
non-recurring items was EUR 77.3 (EUR 711.2) million.
Net taxes totalled EUR 5.8 (EUR 10.8) million.
Earnings per share excluding non-recurring items increased by EUR 0.30 to EUR
0.99. Earnings per share including non-recurring items were EUR 0.09 (EUR 0.88).
The return on capital employed was 11.3% (8.7%) excluding non-recurring items.
The return on capital employed excluding non-recurring items, non-operational
items and forest asset valuations was 8.7% (8.6%).
Discontinued Operations
On 21 December 2007 Stora Enso finalised the divestment of its North American
subsidiary Stora Enso North America, Inc (SENA) to NewPage Corporation. Stora
Enso North America is classified as a discontinued operation according to IFRS,
so its net loss is reported in a single line after the net profit from
continuing operations. This loss on the discontinued operation includes the loss
on disposal, including cumulative exchange rate differences and equity hedges.
The operating profit from discontinued operations, excluding loss on disposal
and other NRI, for 2007 was EUR -0.4 (EUR -14.9) million and EUR 3.7 (EUR -5.7)
million including NRI. The loss on disposal before tax was EUR 28.3 million, net
of positive cumulative exchange rate differences and equity hedges.
Q4/2007 Results from continuing operations (compared with Q3/2007)
Sales at EUR 3 372.7 million were 4.3% higher than the previous quarter's EUR
3 234.5 million. Merchants' sales rose by 9.5% for seasonal reasons. Deliveries
increased in Newsprint, decreased in Wood Products and were almost unchanged in
the other segments.
Operating profit excluding non-recurring items, non-operational items and
valuation gains in forest assets of associated companies decreased by EUR 50.8
million to EUR 156.3 million. Wood Products' operating profit decreased to zero
(EUR 37.1 million), mainly due to the rapid fall in prices and significantly
lower deliveries as demand from the construction sector weakened, in addition to
the usual seasonal slowdown. Operating profit increased slightly in Consumer
Board and Industrial Packaging but decreased in Fine Paper, Newsprint and
Magazine Paper.
Operating profit includes EUR 219 (EUR 48) million of IAS 41 forest valuation
gains from associated companies, comprising EUR 180 (EUR 48) million in the
segment Other and EUR 39 (EUR 0) million in Fine Paper. Operating profit
includes a negative net effect of EUR 35.2 (EUR -3.1) million from the
accounting of share-based compensation, Total Return Swaps (TRS) and CO2
emission rights. These non-operational items are reported in the segment Other.
Changes in exchange rates, mainly depreciation of the US dollar and British
pound, decreased operating profit by some EUR 10 million compared with the
previous quarter.
Profit before tax amounted to EUR 292.9 (EUR 225.1) million excluding
non-recurring items and EUR -95.6 (EUR -324.3) million including non-recurring
items.
Earnings per share were EUR 0.29 (EUR 0.23) excluding non-recurring items and
EUR -0.06 (EUR -0.33) including non-recurring items. Cash earnings per share
were EUR 0.52 (EUR 0.48) excluding non-recurring items.
The return on capital employed was 12.8% (9.4%) excluding non-recurring items.
The return on capital employed excluding non-recurring items, non-operational
items and forest asset valuations in associated companies was 5.9% (7.7%). Group
capital employed was EUR 10 502.6 million on 31 December 2007, a net decrease of
EUR 1 466.2 million mainly due to divestment of Stora Enso North America, Inc
and divestment of Arapoti's forest holdings. Capital employed was also decreased
by provisions and write-downs related to the planned mill closures in Kemijärvi,
Summa and Norrsundet.
Capital Structure
--------------------------------------------------------------------------------
| EUR million | 31 Dec | 31 Mar | 30 Jun | 30 Sep | 31 Dec |
| | 06 | 07 | 07 | 07 | 07 |
--------------------------------------------------------------------------------
| Fixed assets | 11 234. | 11 029. | 11 029.5 | 10 200. | 8 493.2 |
| | 7 | 2 | | 6 | |
--------------------------------------------------------------------------------
| Associated companies | 805.2 | 868.3 | 907.3 | 963.6 | 1 154.5 |
--------------------------------------------------------------------------------
| Operative working | 2 183.6 | 2 415.4 | 2 497.4 | 2 527.3 | 2 084.3 |
| capital | | | | | |
--------------------------------------------------------------------------------
| Non-current | -1 204. | -1 050. | -954.3 | -929.4 | -610.8 |
| interest-free items, net | 0 | 7 | | | |
--------------------------------------------------------------------------------
| Operating Capital Total | 13 | 13 262. | 13 479.9 | 12 762. | 11 121.2 |
| | 019.5 | 2 | | 1 | |
--------------------------------------------------------------------------------
| Net tax liabilities | -873.4 | -888.3 | -889.1 | -793.3 | -618.6 |
--------------------------------------------------------------------------------
| Capital Employed | 12 146. | 12 373. | 12 590.8 | 11 968. | 10 502.6 |
| | 1 | 9 | | 8 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to | 7 799.6 | 7 642.0 | 8 052.9 | 7 592.6 | 7 476.1 |
| Company shareholders | | | | | |
--------------------------------------------------------------------------------
| Minority interests | 103.5 | 106.2 | 117.0 | 43.6 | 71.9 |
--------------------------------------------------------------------------------
| Net interest-bearing | 4 243.0 | 4 625.7 | 4 420.9 | 4 332.6 | 2 954.6 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Financing Total | 12 146. | 12 373. | 12 590.8 | 11 968. | 10 502.6 |
| | 1 | 9 | | 8 | |
--------------------------------------------------------------------------------
Financing (compared with Q3/07)
Cash flow from continuing operations was EUR 314.8 (EUR 319.7) million and cash
flow after investing activities EUR 10.7 (EUR 122.0) million. Cash flow from
continuing operations was approximately the same as in the previous quarter.
Weak cash flow due to lower profitability was offset by a decrease in working
capital.
At the end of the period, interest-bearing net liabilities were EUR 2 954.6
million, a decrease of EUR 1 378.0 million mainly due to divestment of Stora
Enso North America, Inc. Total unutilised credit facilities and cash and
cash-equivalent net reserves increased by EUR 0.7 billion to EUR 2.3 billion.
Group shareholders' equity amounted to EUR 7 476.1 million or EUR 9.48 (EUR
9.63) per share, compared with the market capitalisation on the Helsinki Stock
Exchange on 31 December 2007 of EUR 8.1 billion. Distributable funds in Stora
Enso Oyj equity amounted to EUR 2 658.5 million.
The debt/equity ratio at 31 December 2007 was 0.40 (0.57). The currency effect
on equity was negative EUR 47.0 million net of the hedging of equity translation
risks.
Cash Flow
--------------------------------------------------------------------------------
| EUR million | 2006 | 2007 | Q4/0 | Q3/0 | Q4/07 | Change | Change | Change |
| | | | 6 | 7 | | % Q4/ | % Q4/ | % 200 |
| | | | | | | 07 - Q | 07 - Q | 7 - 20 |
| | | | | | | 4/06 | 3/07 | 06 |
--------------------------------------------------------------------------------
| Continuing | | | | | | | | |
| Operations | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 741. | 246. | 254. | -297 | -48.4 | -119.0 | -83.7 | -66.8 |
| profit | 5 | 2 | 4 | .4 | | | | |
--------------------------------------------------------------------------------
| Adjustments* | 780. | 1 21 | 216. | 672. | 154.7 | -28.6 | -77.0 | 55.8 |
| | 8 | 6.5 | 8 | 2 | | | | |
--------------------------------------------------------------------------------
| Change in | 191. | -237 | 70.6 | -55. | 208.5 | 195.3 | n/m | -224.3 |
| working | 4 | .9 | | 1 | | | | |
| capital | | | | | | | | |
--------------------------------------------------------------------------------
| Cash Flow | 1 71 | 1 22 | 541. | 319. | 314.8 | -41.9 | -1.5 | -28.5 |
| from | 3.7 | 4.8 | 8 | 7 | | | | |
| Operations | | | | | | | | |
--------------------------------------------------------------------------------
| Capital | -535 | -783 | -166 | -197 | -304. | 83.0 | 53.8 | 46.3 |
| expenditure | .6 | .8 | .2 | .7 | 1 | | | |
--------------------------------------------------------------------------------
| Cash Flow | 1 17 | 441. | 375. | 122. | 10.7 | -97.2 | -91.2 | -62.6 |
| after | 8.1 | 0 | 6 | 0 | | | | |
| Investing | | | | | | | | |
| Activities | | | | | | | | |
--------------------------------------------------------------------------------
| Discontinued | | | | | | | | |
| Operations | | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow fro | 152. | 95.8 | 61.6 | 23.5 | 59.0 | -4.2 | 151.1 | -37.2 |
| m a | 6 | | | | | | | |
| discontinued | | | | | | | | |
| operation aft | | | | | | | | |
| er | | | | | | | | |
| investing act | | | | | | | | |
| ivities | | | | | | | | |
--------------------------------------------------------------------------------
| Total Cash | 1 33 | 536. | 437. | 145. | 69.7 | -84.1 | -52.1 | -59.7 |
| Flow after | 0.7 | 8 | 2 | 5 | | | | |
| Investing | | | | | | | | |
| Activities | | | | | | | | |
--------------------------------------------------------------------------------
*) 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 for 2007 totalled EUR 820.4 million (including North
American operations and land acquisitions), which is 83.0% of scheduled
depreciation. The Group's total capital expenditure for 2008 is expected to be
about EUR 900 million, including land acquisitions.
The main projects during the year were the super-calendered (SC) paper machine
(PM 6) at Dawang Mill, China (EUR 76.6 million), which is a joint venture
between Stora Enso and Shandong Huatai Paper, land acquisitions and plantations
in South America (EUR 38.4 million), the third corrugated board plant in Russia
(EUR 33.7 million), plantations at Guangxi in China (EUR 38.1 million), and
woodhandling (EUR 32.7 million) and rebuilding PM 3 (EUR 50.9 million) at
Varkaus Mill in Finland.
Short-term Risks and Uncertainties
The global economic slowdown may reduce demand for the Group's products. The
impending Russian wood duties will severely increase wood costs and make some
production economically unviable in 2009. The direct impact of the weak US
dollar and its indirect impact on trade flows may also adversely affect the
Group's profitability.
Near-term Market Outlook
In Europe demand for newsprint should remain steady; contract negotiations are
still ongoing in Europe. Overseas prices for newsprint have increased in the
first quarter. The magazine paper market has strengthened and prices for coated
and SC magazine paper are rising. Fine paper demand is expected to strengthen
for seasonal reasons in the next few months, but no price changes are foreseen.
Normal seasonal strengthening in demand for consumer board is anticipated,
although slightly less than a year ago. Markets outside Europe are very
competitive due to unfavourable exchange rates, but a slight rise in prices in
local currencies is predicted. Demand for industrial packaging products is
forecast to remain firm, leading to some price increases.
Despite the on-going recovery in demand in Japan, the general outlook for wood
products demand remains depressed, and prices are likely to decline further.
Judging by the current outlook, the already announced production curtailments
will continue at least into the second quarter of 2008.
In Latin America demand for coated magazine paper is expected to remain firm
with prices rising further. In China the outlook for fine paper demand and
prices remains positive.
Fourth Quarter Events
October
On 25 October 2007 in response to dramatic cost increases and to safeguard
long-term profitability, Stora Enso announced its plans to close down
permanently Summa Paper Mill and one magazine paper machine at Anjala Mill, and
the pulp mills at Kemijärvi and Norrsundet. The closures would reduce annual
capacity by 505 000 tonnes of newsprint and magazine paper and 550 000 tonnes of
pulp. The number of personnel affected by these planned permanent mill closures
would total about 1 400 - about 1 100 in Finland and about 300 in Sweden.
On 25 October 2007 Stora Enso also announced its plans to divest its mills at
Kotka in Finland. The laminating paper business and the special coated magazine
paper operations at Kotka are to be divested as Stora Enso continues to focus
its portfolio. These two businesses do not compete directly with products of
other Group mills. The sawmilling operations at Kotka could also be sold if a
satisfactory offer is received. The mills at Kotka employ about 650 people.
On 25 October 2007 Stora Enso also announced its plans to reduce its
administrative staff by about 300 in Group administrative functions and shared
services (out of total Group administrative staff of about 850) in the UK,
Finland, Sweden and Germany.
November
On 1 November 2007 Stora Enso announced that it had finalised the partial
divestment of Stora Enso Arapoti in Brazil to Arauco as anticipated in the
announcement on 27 September 2007. Stora Enso sold 100% of the Arapoti sawmill,
80% of the shares of the forest holding company and 20% of the shares of the
coated paper mill company to Arauco. The total consideration was USD 208 million
(EUR 144 million).
On 5 November 2007 Stora Enso announced projects to improve energy efficiency
through investments totalling EUR 260 million at Langerbrugge Mill in Belgium
and Maxau Mill in Germany. Both projects are scheduled to be completed in the
second quarter of 2010.
On 7 November 2007 Stora Enso announced that it had launched actions, in close
co-operation with the local employment and business centres and the Finnish
government, to support the employees affected by the planned restructuring
measures in Finland announced on 25 October 2007. The planned actions, which
include financial and other resource support for re-employment, retraining and
relocation, as well as start-up assistance for new businesses, were proposed as
part of the co-determination negotiations at Kymenlaakso and Kemijärvi.
On 29 November 2007 Stora Enso announced additional temporary production
curtailments of about 120 000 m3 in glue-laminated products and about 500 000 m3
in mainly whitewood sawnwood in Austria, the Baltic States and Finland in the
fourth quarter of 2007 and early 2008.
December
On 7 December 2007 Stora Enso announced its intention to delist its American
Depositary Receipts (ADRs) from the New York Stock Exchange (NYSE) in the USA.
The delisting took effect on 28 December 2007, and since 31 December 2007 Stora
Enso's ADRs have been traded on the International OTCQX - a premium market tier
that distinguishes leading international companies from other securities traded
over-the-counter. The delisting was followed on 7 January 2008 by the filing of
Form 15F with the US Securities and Exchange Commission (SEC) to deregister and
terminate its reporting obligations under the Securities Exchange Act of 1934.
Inspections by Competition Authorities
In 2007, following US Federal District Court trial, Stora Enso was found not
guilty of charges by the US Department of Justice relating to the sale of coated
magazine paper in the USA in 2002 and 2003. Coincident with this case, Stora
Enso has been named in a number of class action lawsuits filed in the USA which
still are pending.
As a result of an investigation, the Finnish Competition Authority has proposed
to the Finnish Market Court that a fine of EUR 30 million should 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
investigation and lawsuits.
Changes in Group Composition
On 21 September 2007 Stora Enso signed a definitive agreement to sell its North
American subsidiary Stora Enso North America, Inc to NewPage Holding
Corporation. The combined company, to be called NewPage, will be among the North
American leaders in its field. The transaction was finalised in December 2007.
Stora Enso will hold 19.9% of the new company shares and a vendor note of
nominal value USD 200 million. They are both considered financial investments.
Changes in Group Management and Organisational Structure
Stora Enso's Board of Directors appointed Jouko Karvinen, M.Sc. (Eng.), as the
new CEO of Stora Enso. He joined the company on 1 January 2007 and took up the
position of CEO following the Annual General Meeting (AGM) on 29 March 2007.
Jukka Härmälä left the position of CEO at the AGM on 29 March 2007. Following
his special assignments period, former CEO Jukka Härmälä retired from Stora Enso
at the end of August 2007.
On 29 March 2007 Stora Enso's Board of Directors appointed Hannu Ryöppönen as
Deputy CEO in addition to his role as CFO.
Pekka Laaksonen, Senior Executive Vice President, Fine Paper and member of the
Executive Management Group (EMG), accepted the position of CEO with Valio Ltd.
He relinquished his duties with Stora Enso on 15 August 2007.
Kai Korhonen relinquished the position of Senior Executive Vice President,
Packaging Boards and member of the Executive Management Group (EMG) on 31 August
2007. He continued to undertake special assignments for CEO Jouko Karvinen until
the end of 2007.
Jussi Huttunen, Senior Executive Vice President, Market Services, left Stora
Enso in July 2007.
Stora Enso has reorganised its operations from four divisions into the following
seven current business areas: Fine Paper, Merchants, Consumer Board, Industrial
Packaging, Magazine Paper, Newsprint and Book Paper, and Wood Products.
Following this reorganisation, Stora Enso has a single management group called
the Group Executive Team (GET). In addition to CEO Jouko Karvinen, the other GET
members are:
Hannu Ryöppönen, Deputy CEO and CFO
Hannu Alalauri, EVP Magazine Paper
Aulis Ansaharju, EVP Fine Paper, Country Manager Finland
Mats Nordlander, EVP Consumer Board, Merchants and Market Services
Veli-Jussi Potka, EVP Industrial Packaging
Elisabet Salander Björklund, EVP Wood Products, Wood Supply, Pulp Supply and
Sustainability
Juha Vanhainen, EVP Newsprint and Book Paper
Christer Ågren, EVP IT and Human Resources, Country Manager Sweden
Bernd Rettig, EVP Technology and R&D, Operations Improvement, Logistics, Energy
and Investments, Country Manager Germany
Personnel
On 31 December 2007 there were 37 997 employees, 5 890 less than at the end of
2006. Most of the decrease
(4 451 employees) was due to the divestment of Stora Enso North America, Inc and
the permanent closures of Berghuizer and Reisholz Mills. The average number of
Group employees decreased by 2 240 persons during the year to 43 391. The
average number of employees in the continuing operations was 39 239 (41 036)
during the year.
Share Capital
During the quarter 335 377 A shares were converted into R shares. The latest
conversion was recorded in the Finnish Trade Register on 14 December 2007.
During the quarter the Company allocated 16 156 repurchased R shares under the
terms of the Stora Enso North America Option Plan.
On 31 December 2007 Stora Enso had 177 479 033 A shares and 612 059 466 R shares
in issue, of which the Company held no A shares and 918 512 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.
Changes in shareholdings
Stora Enso has been informed that the shares in the Company held by the
affiliated investment advisers of Franklin Resources, Inc. fell below 5% of the
paid-up share capital on 20 September 2007, and that the shares in the Company
held by NWQ Investment Management Company, LLC fell below 5% of the paid-up
share capital on 30 September 2007. The shares in the Company held by the Knut
and Alice Wallenberg Foundation and the Marianne and Marcus Wallenberg
Foundation were transferred to Foundation Asset Management (FAM) on 19 November
2007.
Events after the Period
On 10 January 2008 Stora Enso announced that it is investing EUR 29 million in
converting a coated magazine paper machine (PM 2) at its Anjala Mill in Finland
to produce coated and uncoated book paper. The project started in January 2008
and will be completed in the fourth quarter of 2008.
On 17 January 2008 Stora Enso announced that it had concluded the
co-determination negotiations at Summa, Kemijärvi and Anjala Mills, and the
Helsinki Headquarters. As the reasons for the capacity and resource cuts
announced on 25 October 2007 (excess capacity in standard and improved newsprint
and uncoated magazine paper, and dramatic cost increases, especially for
imported wood) had not changed in the meantime, Stora Enso had to take action to
safeguard its cost and competitive position, and thereby the future of the
Group.
As a result of the negotiations, the total number of personnel will be reduced
by 985, compared with the initial planned reduction of 1 100 as announced in
October 2007. Approximately 170 of these 985 have a fixed-term contract,
approximately 255 are taking retirement, and the announced retraining and
employment support is intended to assist the remaining approximately 560 people
affected.
On 25 January 2008 Stora Enso announced that it had signed a letter of intent
with Anaika Group to sell part of the Kemijärvi Mill real estate to Anaika Group
to enable it to start a high quality engineering works and gluelam beam
operations at the mill site. When in full production, Anaika Group's operations
will employ about 100 people directly and provide substantial indirect
employment in the region. Anaika Group will itself develop the production
facilities.
On 28 January 2008 announced that Stora Enso's Hannu Alalauri, EVP Magazine
Paper, and representatives of Huatai Paper and local government inaugurated
Stora Enso's 200 000 tonnes per year super-calendered (SC) paper machine at
Dawang Mill in Shandong province, China. The machine started production on 25
November 2007.
Annual General Meeting
The Annual General Meeting will be held at 16.00 (Finnish time) on Wednesday 26
March 2008 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
2007. If the proposal is approved, the dividend payment will be issued on 10
April 2008 to shareholders entered on the dividend record date of 31 March 2008
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, 13 February 2008
Stora Enso Oyj
Board of Directors
Segments Q4/2007 compared with Q4/2006
Newsprint and Book Paper
--------------------------------------------------------------------------------
| EUR | 2006 | Q4/06 | Q3/07 | Q4/07 | 2007 | Chang | Change | Change |
| million | | | | | | e % Q | % Q4/ | % 2007- |
| | | | | | | 4/07- | 07-Q3/ | 2006 |
| | | | | | | Q4/06 | 07 | |
--------------------------------------------------------------------------------
| Sales | 1 704 | 448.7 | 430.0 | 436.3 | 1 734 | -2.8 | 1.5 | 1.8 |
| | .0 | | | | .9 | | | |
--------------------------------------------------------------------------------
| Operating | 232.1 | 57.6 | 52.2 | 48.4 | 211.9 | -16.0 | -7.3 | -8.7 |
| profit* | | | | | | | | |
--------------------------------------------------------------------------------
| % of | 13.6 | 12.8 | 12.1 | 11.1 | 12.2 | -13.3 | -8.3 | -10.3 |
| sales | | | | | | | | |
--------------------------------------------------------------------------------
| ROOC, %** | 16.7 | 16.4 | 15.6 | 15.2 | 15.7 | -7.3 | -2.6 | -6.0 |
--------------------------------------------------------------------------------
| Deliverie | 3 091 | 812 | 753 | 803 | 3 061 | -1.1 | 6.6 | -1.0 |
| s, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
| Productio | 3 096 | 787 | 795 | 735 | 3 061 | -6.6 | -7.5 | -1.1 |
| n, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
Newsprint sales were EUR 436.3 million, down 3% on the fourth quarter of 2006.
Operating profit was EUR 48.4 million, down 16% on the fourth quarter of 2006
mainly due to price increases for raw materials such as recovered paper and
wood, and unfavourable changes in exchange rates.
Summa Mill in Finland permanently ceased production at the end of January 2008,
reducing standard and improved newsprint production by 270 000 tonnes per year.
Markets
Compared with Q4/2006
In Europe demand for newsprint was slightly stronger than a year earlier due to
the relatively buoyant circulations of paid-for newspapers and continuing growth
in free dailies. Newsprint imports from North America continued to increase
considerably, while domestic deliveries decreased slightly. Prices were higher
than in the last quarter of 2006. Average producer inventories ended 2007
slightly higher than a year earlier.
Compared with Q3/2007
Demand improved significantly in the traditionally strongest quarter of the year
as domestic deliveries increased while imports from North America decreased.
Prices remained stable and producer inventories declined significantly.
Magazine Paper
--------------------------------------------------------------------------------
| EUR | 2006 | Q4/06 | Q3/07 | Q4/07 | 2007 | Chang | Change | Change |
| million | | | | | | e % Q | % Q4/ | % 2007- |
| | | | | | | 4/07- | 07-Q3/ | 2006 |
| | | | | | | Q4/06 | 07 | |
--------------------------------------------------------------------------------
| Sales | 2 220 | 589.3 | 587.3 | 589.5 | 2 296 | 0.0 | 0.4 | 3.4 |
| | .3 | | | | .3 | | | |
--------------------------------------------------------------------------------
| Operating | 70.7 | 22.4 | 17.0 | 12.6 | 52.2 | -43.8 | -25.9 | -26.2 |
| profit* | | | | | | | | |
--------------------------------------------------------------------------------
| % of | 3.2 | 3.8 | 2.9 | 2.1 | 2.3 | -44.7 | -27.6 | -28.1 |
| sales | | | | | | | | |
--------------------------------------------------------------------------------
| ROOC, %** | 3.5 | 4.5 | 3.6 | 2.9 | 2.7 | -35.6 | -19.4 | -22.9 |
--------------------------------------------------------------------------------
| Deliverie | 2 765 | 761 | 774 | 785 | 2 993 | 3.2 | 1.4 | 8.2 |
| s, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
| Productio | 2 772 | 737 | 745 | 730 | 2 951 | -0.9 | -2.0 | 6.5 |
| n, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
Magazine paper sales were EUR 589.5 million, similar to the fourth quarter of
2006. Operating profit was EUR 12.6 million, down 44% on the fourth quarter of
2006 due to adverse exchange rate trends and rises in the prices of major raw
materials such as pulp, wood and recovered paper.
The SC paper machine at Dawang Mill in Shandong province, China started
production in November 2007, about a month ahead of schedule. The launch of the
SC grades into the market looks promising. Stora Enso's Reisholz Mill in
Germany, which had an annual capacity of 215 000 tonnes of SC paper, was
permanently closed down on 5 December 2007 as part of Stora Enso's profitability
improvement measures. Kabel Mill in Germany is to be restructured with a
significant reduction in personnel. An action plan to improve mill profitability
was launched at Corbehem Mill in France. The plan includes efficiency
enhancements and shutting down a coal-fired power plant, closing down the
maintenance company and reducing the maintenance workforce. Summa Mill in
Finland permanently ceased production at the end of January 2008, reducing
uncoated magazine paper production by 80 000 tonnes per year. Anjala Mill PM 2
in Finland will cease production of coated magazine paper immediately after the
first quarter of 2008, reducing coated magazine paper production by 155 000
tonnes per year.
Markets
Compared with Q4/2006
In Europe demand for magazine paper grades was much stronger than a year ago.
Producer inventories were lower in uncoated and coated grades. Prices were lower
for all grades due to full-year contract commitments.
In Latin America demand was stronger and prices higher.
Compared with Q3/2007
In Europe there was the usual year-end peak in demand for magazine paper, which
was seasonally stronger than in the previous quarter, especially for coated
grades. Producer inventories decreased. Prices remained virtually unchanged for
all grades, but some product and sales mix improvements were achieved.
In Latin America deliveries decreased but prices increased.
Fine Paper
--------------------------------------------------------------------------------
| EUR | 2006 | Q4/06 | Q3/07 | Q4/07 | 2007* | Chang | Change | Change |
| million | | | | *** | ** | e % Q | % Q4/ | % 2007- |
| | | | | | | 4/07- | 07-Q3/ | 2006*** |
| | | | | | | Q4/06 | 07*** | |
| | | | | | | *** | | |
--------------------------------------------------------------------------------
| Sales | 2 261 | 542.1 | 529.7 | 526.7 | 2 156 | -2.8 | -0.6 | -4.7 |
| | .8 | | | | .2 | | | |
--------------------------------------------------------------------------------
| Operating | 152.7 | 28.2 | 38.6 | 75.2/ | 208.6 | 166.7 | 94.8/- | 36.6/11 |
| profit* | | | | 36.2 | /169. | /28.4 | 6.2 | .1 |
| | | | | | 6 | | | |
--------------------------------------------------------------------------------
| % of | 6.8 | 5.2 | 7.3 | 14.3/ | 9.7/7 | 175.0 | 95.9/- | 42.6/16 |
| sales | | | | 6.9 | .9 | /32.7 | 5.5 | .2 |
--------------------------------------------------------------------------------
| ROOC, %** | 7.1 | 5.7 | 7.3 | 14.1/ | 9.8/8 | 147.4 | 93.2/- | 38.0/12 |
| | | | | 6.8 | .0 | /19.3 | 6.8 | .7 |
--------------------------------------------------------------------------------
| Deliverie | 3 022 | 730 | 696 | 681 | 2 826 | -6.7 | -2.2 | -6.5 |
| s, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
| Productio | 3 032 | 737 | 705 | 693 | 2 856 | -6.0 | -1.7 | -5.8 |
| n, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital *** Operating profit, % of sales and ROOC, % including/excluding Veracel
forest revaluation gain of EUR 39 million
Fine paper sales were EUR 526.7 million, down 3% on the fourth quarter of 2006
due to restructuring. Operating profit excluding Veracel forest valuation was
EUR 36.2 million, up 28% on the fourth quarter of 2006 due to higher sales
prices and improved productivity.
Berghuizer Mill in the Netherlands was permanently shut down. Paper machine PM 7
permanently ceased production in April 2007 and PM 8 in October 2007. These
machines had a total capacity of 245 000 tonnes of uncoated fine paper per year.
Markets
Compared with Q4/2006
In Europe coated fine paper demand was similar to a year ago. Coated fine paper
prices decreased slightly but industry inventories increased. Uncoated fine
paper demand was also similar to a year ago. Uncoated fine paper prices and
industry inventories rose during the fourth quarter of 2007.
In China coated fine paper demand and prices increased during 2007.
Compared with Q3/2007
In Europe coated fine paper demand was stronger than in the previous quarter for
seasonal reasons. Coated fine paper prices decreased slightly, but industry
inventories were unchanged. Uncoated fine paper demand was slightly weaker than
in the previous quarter, as demand softened in the fourth quarter following an
exceptionally strong third quarter. Uncoated fine paper prices and industry
inventories were unchanged.
In China coated fine paper demand strengthened and prices rose.
Merchants
--------------------------------------------------------------------------------
| EUR | 2006 | Q4/06 | Q3/07 | Q4/07 | 2007 | Chang | Change | Change |
| million | | | | | | e % Q | % Q4/ | % 2007- |
| | | | | | | 4/07- | 07-Q3/ | 2006 |
| | | | | | | Q4/06 | 07 | |
--------------------------------------------------------------------------------
| Sales | 1 907 | 508.2 | 474.4 | 519.3 | 2 006 | 2.2 | 9.5 | 5.2 |
| | .2 | | | | .0 | | | |
--------------------------------------------------------------------------------
| Operating | 32.7 | 12.5 | 7.9 | 12.2 | 44.9 | -2.4 | 54.4 | 37.3 |
| profit* | | | | | | | | |
--------------------------------------------------------------------------------
| % of | 1.7 | 2.5 | 1.7 | 2.3 | 2.2 | -8.0 | 35.3 | 29.4 |
| sales | | | | | | | | |
--------------------------------------------------------------------------------
| ROOC, %** | 5.5 | 9.3 | 6.1 | 9.6 | 8.6 | 3.2 | 57.4 | 56.4 |
--------------------------------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
Sales were EUR 519.3 million, up 2% on the fourth quarter of 2006 as prices and
volumes increased. Operating profit was EUR 12.2 million, down 2% on the fourth
quarter of 2006 due to lower margins.
Business was seasonally strong in the quarter, but weaker than usual around the
year-end holidays.
Consumer Board
--------------------------------------------------------------------------------
| EUR | 2006 | Q4/06 | Q3/07 | Q4/07 | 2007 | Chang | Change | Change |
| million | | | | | | e | % Q4/ | % 2007- |
| | | | | | | % Q4/ | 07-Q3/ | 2006 |
| | | | | | | 07-Q4 | 07 | |
| | | | | | | /06 | | |
--------------------------------------------------------------------------------
| Sales | 2 331 | 560.2 | 562.1 | 579.1 | 2 | 3.4 | 3.0 | -1.3 |
| | .9 | | | | 300.9 | | | |
--------------------------------------------------------------------------------
| Operating | 240.9 | 39.4 | 27.0 | 29.6 | 158.0 | -24.9 | 9.6 | -34.4 |
| profit* | | | | | | | | |
--------------------------------------------------------------------------------
| % of | 10.3 | 7.0 | 4.8 | 5.1 | 6.9 | -27.1 | 6.3 | -33.0 |
| sales | | | | | | | | |
--------------------------------------------------------------------------------
| ROOC, %** | 11.9 | 7.9 | 5.9 | 6.9 | 8.4 | -12.7 | 16.9 | -29.4 |
--------------------------------------------------------------------------------
| Deliverie | 2 537 | 609 | 632 | 622 | 2 532 | 2.1 | -1.6 | -0.2 |
| s, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
| Productio | 2 566 | 613 | 621 | 638 | 2 533 | 4.1 | 2.7 | -1.3 |
| n, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
Consumer board sales were EUR 579.1 million, up 3% on the fourth quarter of 2006
mainly due to higher volumes. Operating profit was EUR 29.6 million, down 25% on
the fourth quarter of 2006 due to higher wood costs and unfavourable exchange
rate trends.
Markets
Compared with Q4/2006
Delivery volumes were higher and average prices slightly lower than a year ago,
mainly due to the currency and sales mix.
Compared with Q3/2007
Delivery volumes and average prices decreased slightly.
Industrial Packaging
--------------------------------------------------------------------------------
| EUR | 2006 | Q4/06 | Q3/07 | Q4/07 | 2007 | Chang | Change | Change |
| million | | | | | | e % Q | % Q4/ | % 2007- |
| | | | | | | 4/07- | 07-Q3/ | 2006 |
| | | | | | | Q4/06 | 07 | |
--------------------------------------------------------------------------------
| Sales | 970.7 | 258.5 | 267.8 | 275.4 | 1 083 | 6.5 | 2.8 | 11.6 |
| | | | | | .5 | | | |
--------------------------------------------------------------------------------
| Operating | 85.0 | 22.3 | 24.9 | 28.2 | 112.1 | 26.5 | 13.3 | 31.9 |
| profit* | | | | | | | | |
--------------------------------------------------------------------------------
| % of | 8.8 | 8.6 | 9.3 | 10.2 | 10.3 | 18.6 | 9.7 | 17.0 |
| sales | | | | | | | | |
--------------------------------------------------------------------------------
| ROOC, %** | 13.6 | 14.2 | 15.1 | 16.6 | 17.1 | 16.9 | 9.9 | 25.7 |
--------------------------------------------------------------------------------
| Deliverie | 1 006 | 248 | 257 | 256 | 1 065 | 3.2 | -0.4 | 5.9 |
| s, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
| Productio | 1 014 | 261 | 253 | 260 | 1 058 | -0.4 | 2.8 | 4.3 |
| n, 1 000 | | | | | | | | |
| t | | | | | | | | |
--------------------------------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
Industrial packaging sales were EUR 275.4 million, up 7% on the fourth quarter
of 2006 due to higher sales prices and volumes. Operating profit was EUR 28.2
million, up 27% on the fourth quarter of 2006 mainly due to higher sales prices
across all businesses.
A project to build a new core factory at Tychy in southern Poland was started at
the end of 2007. The new factory is scheduled to begin production by the end of
2008. Corenso's core factory at Newcastle in the United Kingdom was closed down
as production was concentrated in two other factories in the UK at Bolton and
Milton Keynes to increase efficiency.
In Poland a new heavy-duty box production line at Lodz Mill will come fully on
stream in the first quarter of 2008, strengthening Stora Enso's position and
coverage as a supplier of value-added products. In Russia the corrugated
packaging plant at Lukhovitsy will start up during the first quarter of 2008. In
Hungary construction of an offset-printed micro-flute packaging plant at Komarom
will begin in the first quarter. At Wisconsin Rapids Mill in the USA conversion
of a paper machine (PM12) to produce coreboard is expected to be completed
during the first quarter of 2008. The coreboard it produces will be converted
into cores at Corenso's own core factory in North America and sold to other
North American core manufacturers.
Markets
Compared with Q4/2006
Prices of industrial packaging products were higher than a year ago due to good
demand, especially for containerboards. Delivery volumes were good and also
higher than twelve months earlier in all products.
Compared with Q3/2007
Demand remained healthy, despite seasonal weakness in converted products at the
end of the year. Prices rose in some products.
Wood Products
--------------------------------------------------------------------------------
| EUR | 2006 | Q4/06 | Q3/07 | Q4/07 | 2007 | Chang | Change | Change |
| million | | | | | | e % Q | % Q4/ | % 2007- |
| | | | | | | 4/07- | 07-Q3/ | 2006 |
| | | | | | | Q4/06 | 07 | |
--------------------------------------------------------------------------------
| Sales | 1 673 | 440.3 | 461.4 | 393.7 | 1 853 | -10.6 | -14.7 | 10.8 |
| | .0 | | | | .1 | | | |
--------------------------------------------------------------------------------
| Operating | 63.4 | 22.3 | 37.1 | 0.0 | 151.2 | -100. | -100.0 | 138.5 |
| profit* | | | | | | 0 | | |
--------------------------------------------------------------------------------
| % of | 3.8 | 5.1 | 8.0 | 0.0 | 8.2 | -100. | -100.0 | 115.8 |
| sales | | | | | | 0 | | |
--------------------------------------------------------------------------------
| ROOC, %** | 8.0 | 11.4 | 18.9 | 0.0 | 18.8 | -100. | -100.0 | 135.0 |
| | | | | | | 0 | | |
--------------------------------------------------------------------------------
| Deliverie | 6 551 | 1 653 | 1 545 | 1 421 | 6 348 | -14.0 | -8.0 | -3.1 |
| s, 1 000 | | | | | | | | |
| m3 | | | | | | | | |
--------------------------------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
Wood product sales were EUR 393.7 million, down 11% on the fourth quarter of
2006 mainly because sales prices and deliveries decreased as markets
deteriorated. Operating profit was EUR 0.0 million. There were large production
curtailments during the quarter, mainly in Finland, the Baltic States and
Austria.
During 2007 Wood Products continued its focused investment programme to add
value to its product portfolio and improve profitability. In the last quarter of
2007 investments in expanding joinery component production at Ala Mill in Sweden
and Honkalahti Mill in Finland, and in pellet production at Gruvön Mill in
Sweden and Zdirec Mill in the Czech Republic were announced.
Acquisition of Swietajno sawmill in Poland is expected to be finalised and a
ThermoWood plant project started at Bad St. Leonhard in Austria in the first
quarter of 2008.
Markets
Compared with Q4/2006
Demand was clearly weaker, especially in North America and Japan, but prices
were higher than a year earlier.
Compared with Q3/2007
Following the very strong first half of 2007, markets for wood products became
heavily oversupplied during the fourth quarter of 2007. The situation was
aggravated by the seasonally weaker demand in Europe and continuing difficult
market conditions in Japan and North America. Prices clearly decreased,
especially in whitewood.
Financials
Key Ratios
--------------------------------------------------------------------------------
| | 200 | Q4/0 | Q3/07 | Q4/07 | 2007 | Change | Change | Change |
| | 6 | 6 | | | | % Q4/ | % Q4/ | % 200 |
| | | | | | | 07-Q4/ | 07-Q3/ | 7-2006 |
| | | | | | | 06 | 07 | |
--------------------------------------------------------------------------------
| Continuing | | | | | | | | |
| Operations | | | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | 0.8 | 0.38 | -0.33 | -0.06 | 0.09 | -115.8 | 81.8 | -89.8 |
| share (basic) | 8 | | | | | | | |
| , | | | | | | | | |
| EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | 0.6 | 0.19 | 0.23 | 0.29 | 0.99 | 52.6 | 26.1 | 43.5 |
| share | 9 | | | | | | | |
| excluding NRI | | | | | | | | |
| , EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Cash earnings | 2.2 | 0.72 | 0.61 | 0.40 | 2.05 | -44.4 | -34.4 | -8.5 |
| per share | 4 | | | | | | | |
| (CEPS), EUR | | | | | | | | |
--------------------------------------------------------------------------------
| CEPS excludin | 1.8 | 0.49 | 0.48 | 0.52 | 2.01 | 6.1 | 8.3 | 9.2 |
| g NRI, EUR | 4 | | | | | | | |
--------------------------------------------------------------------------------
| Return on cap | 7.3 | 10.2 | -11.1 | -1.8 | 2.4 | -117.6 | 83.8 | -67.1 |
| ital | | | | | | | | |
| employed (ROC | | | | | | | | |
| E), % | | | | | | | | |
--------------------------------------------------------------------------------
| ROCE excludin | 8.7 | 8.8 | 9.4 | 12.8 | 11.3 | 45.5 | 36.2 | 29.9 |
| g NRI, % | | | | | | | | |
--------------------------------------------------------------------------------
| Return on equ | 7.7 | 13.7 | -22.3 | -7.3 | -2.7 | -153.3 | 67.3 | -135.1 |
| ity | | | | | | | | |
| (ROE), %* | | | | | | | | |
--------------------------------------------------------------------------------
| Debt/equity r | 0.5 | 0.54 | 0.57 | 0.40 | 0.40 | -25.9 | -29.8 | -25.9 |
| atio* | 4 | | | | | | | |
--------------------------------------------------------------------------------
| Equity per sh | 9.8 | 9.89 | 9.63 | 9.48 | 9.48 | -4.1 | -1.6 | -4.1 |
| are, EUR* | 9 | | | | | | | |
--------------------------------------------------------------------------------
| Equity ratio, | 45. | 45.3 | 45.5 | 49.3 | 49.3 | 8.8 | 8.4 | 8.8 |
| %* | 3 | | | | | | | |
--------------------------------------------------------------------------------
| Operating pro | 5.7 | 7.7 | -9.2 | -1.4 | 1.8 | -118.2 | 84.8 | -68.4 |
| fit, % of sal | | | | | | | | |
| es | | | | | | | | |
--------------------------------------------------------------------------------
| Operating pro | 6.8 | 6.6 | 7.8 | 10.1 | 8.8 | 53.0 | 29.5 | 29.4 |
| fit excluding | | | | | | | | |
| NRI, % of sal | | | | | | | | |
| es | | | | | | | | |
--------------------------------------------------------------------------------
| Capital expen | 583 | 179. | 211.3 | 313.1 | 820. | 74.2 | 48.2 | 40.6 |
| diture, EUR | .4 | 7 | | | 4 | | | |
| million* | | | | | | | | |
--------------------------------------------------------------------------------
| Capital emplo | 10 | 10 2 | 10 69 | 10 50 | 10 5 | 2.8 | -1.8 | 2.8 |
| yed, EUR | 221 | 21 | 6 | 3 | 03 | | | |
| million | | | | | | | | |
--------------------------------------------------------------------------------
| Interest-bear | 4 2 | 4 24 | 4 333 | 2 955 | 2 95 | -30.4 | -31.8 | -30.4 |
| ing | 43 | 3 | | | 5 | | | |
| net liabiliti | | | | | | | | |
| es, | | | | | | | | |
| EUR million* | | | | | | | | |
--------------------------------------------------------------------------------
| Average numbe | 41 | 41 0 | 39 84 | 39 23 | 39 2 | -4.4 | -1.5 | -4.4 |
| r of | 036 | 36 | 8 | 9 | 39 | | | |
| employees, YT | | | | | | | | |
| D | | | | | | | | |
--------------------------------------------------------------------------------
| Average numbe | | | | | | | | |
| r of shares | | | | | | | | |
| (million) | | | | | | | | |
--------------------------------------------------------------------------------
| periodic | 788 | 788. | 788.6 | 788.6 | 788. | | | |
| | .6 | 6 | | | 6 | | | |
--------------------------------------------------------------------------------
| cumulative | 788 | 788. | 788.6 | 788.6 | 788. | | | |
| | .6 | 6 | | | 6 | | | |
--------------------------------------------------------------------------------
| cumulative, | 788 | 788. | 788.9 | 788.9 | 788. | | | |
| diluted | .9 | 9 | | | 8 | | | |
--------------------------------------------------------------------------------
NRI=Non-recurring items
* Total operations
Key Exchange Rates for the Euro
--------------------------------------------------------------------------------
| One Euro is | Closing Rate | | Average Rate | |
--------------------------------------------------------------------------------
| | 31 Dec 06 | 31 Dec 07 | 31 Dec 06 | 31 Dec 07 |
--------------------------------------------------------------------------------
| SEK | 9.0404 | 9.4415 | 9.2517 | 9.2517 |
--------------------------------------------------------------------------------
| USD | 1.3170 | 1.4721 | 1.2563 | 1.3710 |
--------------------------------------------------------------------------------
| GBP | 0.6715 | 0.7333 | 0.6819 | 0.6847 |
--------------------------------------------------------------------------------
| CAD | 1.5281 | 1.4449 | 1.4247 | 1.4692 |
--------------------------------------------------------------------------------
Transaction Risk and Hedges in Main Currencies as at 31 December 2007
--------------------------------------------------------------------------------
| EUR million | EUR | USD | GBP | SEK | JPY | Other | TOTAL |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales during 2007 | 7 | 1 500 | 900 | 1 400 | 300 | 1 400 | 13 30 |
| | 800 | | | | | | 0 |
--------------------------------------------------------------------------------
| Costs during 2007 | -7 3 | -600 | -200 | -2 40 | 0 | -1 20 | -11 7 |
| | 00 | | | 0 | | 0 | 00 |
--------------------------------------------------------------------------------
| Net operating cash | 500 | 900 | 700 | -1 00 | 300 | 200 | 1 600 |
| flow* | | | | 0 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Transaction Hedges as | | 395 | 327 | -742 | 85 | | |
| at 31 Dec | | | | | | | |
--------------------------------------------------------------------------------
| Hedging Percentage as | | 44% | 47% | 56%/7 | 28% | | |
| at 31 Dec, % | | | | 4%** | | | |
--------------------------------------------------------------------------------
| Average Hedging % | | 31% | 32% | 40%/5 | 30% | | |
| during 2007 | | | | 3%** | | | |
--------------------------------------------------------------------------------
*Continuing operations excluding NRI
** 56% and 40% represent the hedging ratios including the profit margin of the
Swedish production units. Hedging ratios 74% and 53% exclude the profit margin.
Condensed Consolidated Income Statement
--------------------------------------------------------------------------------
| EUR million | 2006 | Q4/0 | Q3/0 | Q4/07 | 2007 | Chang | Chang | Chang |
| | | 6 | 7 | | | e % Q | e % Q | e % 2 |
| | | | | | | 4/07- | 4/07- | 007-2 |
| | | | | | | Q4/06 | Q3/07 | 006 |
--------------------------------------------------------------------------------
| Continuing | | | | | | | | |
| Operations | | | | | | | | |
--------------------------------------------------------------------------------
| Sales | 12 95 | 3 31 | 3 23 | 3 372 | 13 37 | 1.6 | 4.3 | 3.2 |
| | 7.2 | 9.9 | 4.5 | .7 | 3.6 | | | |
--------------------------------------------------------------------------------
| Other | 364.9 | 39.4 | 25.7 | 33.1 | 113.8 | -16.0 | 28.8 | -68.8 |
| operating | | | | | | | | |
| income | | | | | | | | |
--------------------------------------------------------------------------------
| Materials and | -7 53 | -1 9 | -1 9 | -2 16 | -8 12 | -12.4 | -9.8 | -7.8 |
| services | 6.0 | 30.6 | 76.9 | 9.7 | 4.2 | | | |
--------------------------------------------------------------------------------
| Freight and | -1 24 | -322 | -294 | -294. | -1 18 | 8.6 | -0.1 | 4.5 |
| sales | 0.3 | .4 | .5 | 7 | 4.0 | | | |
| commissions | | | | | | | | |
--------------------------------------------------------------------------------
| Personnel | -1 89 | -457 | -451 | -492. | -1 88 | -7.8 | -9.1 | 0.4 |
| expenses | 0.5 | .4 | .6 | 9 | 3.7 | | | |
--------------------------------------------------------------------------------
| Other | -933. | -154 | -154 | -363. | -840. | -135. | -134. | 10.0 |
| operating | 8 | .1 | .6 | 2 | 1 | 7 | 9 | |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Share of | 88.0 | 26.0 | 65.5 | 231.8 | 341.4 | 791.5 | 253.9 | 288.0 |
| results of | | | | | | | | |
| associated | | | | | | | | |
| companies | | | | | | | | |
--------------------------------------------------------------------------------
| Depreciation | -1 06 | -266 | -745 | -365. | -1 55 | -37.2 | 51.0 | -45.2 |
| and | 8.0 | .4 | .5 | 5 | 0.6 | | | |
| impairment | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 741.5 | 254. | -297 | -48.4 | 246.2 | -119. | 83.7 | -66.8 |
| Profit / | | 4 | .4 | | | 0 | | |
| (Loss) | | | | | | | | |
--------------------------------------------------------------------------------
| Net financial | -30.3 | -19. | -26. | -47.2 | -168. | -140. | -75.5 | -457. |
| items | | 6 | 9 | | 9 | 8 | | 4 |
--------------------------------------------------------------------------------
| Profit / | 711.2 | 234. | -324 | -95.6 | 77.3 | -140. | 70.5 | -89.1 |
| (Loss) before | | 8 | .3 | | | 7 | | |
| Tax | | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | -10.8 | 67.5 | 60.2 | 44.8 | -5.8 | -33.6 | -25.6 | 46.3 |
--------------------------------------------------------------------------------
| Net Profit / | 700.4 | 302. | -264 | -50.8 | 71.5 | -116. | -80.8 | -89.8 |
| (Loss) for the | | 3 | .1 | | | 8 | | |
| Period from | | | | | | | | |
| continuing | | | | | | | | |
| operations | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Discontinued | | | | | | | | |
| Operation | | | | | | | | |
--------------------------------------------------------------------------------
| Loss after tax | -111. | -37. | -177 | -86.9 | -283. | -131. | 50.9 | -155. |
| for the period | 2 | 5 | .0 | | 9 | 7 | | 3 |
| from a | | | | | | | | |
| discontinued | | | | | | | | |
| operation | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net Profit / | 589.2 | 264. | -441 | -137. | -212. | -152. | 68.8 | -136. |
| (Loss) for the | | 8 | .1 | 7 | 4 | 0 | | 0 |
| Period | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable | | | | | | | | |
| to: | | | | | | | | |
--------------------------------------------------------------------------------
| Equity holders | 585.0 | 263. | -439 | -135. | -214. | -151. | 69.2 | -136. |
| of the Parent | | 0 | .9 | 3 | 7 | 4 | | 7 |
| Company | | | | | | | | |
--------------------------------------------------------------------------------
| Minority | 4.2 | 1.8 | -1.2 | -2.4 | 2.3 | -233. | -100. | -45.2 |
| interests | | | | | | 3 | 0 | |
--------------------------------------------------------------------------------
| | 589.2 | 264. | -441 | -137. | -212. | -152. | 68.8 | -136. |
| | | 8 | .1 | 7 | 4 | 0 | | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per | | | | | | | | |
| share | | | | | | | | |
--------------------------------------------------------------------------------
| Basic earnings | 0.74 | 0.33 | -0.5 | -0.17 | -0.27 | -151. | 69.6 | -136. |
| per share, | | | 6 | | | 5 | | 5 |
| EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Diluted | 0.74 | 0.33 | -0.5 | -0.17 | -0.27 | -151. | 69.6 | -136. |
| earnings per | | | 6 | | | 5 | | 5 |
| share, | | | | | | | | |
| EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | | | | | | | | |
| share from | | | | | | | | |
| continuing | | | | | | | | |
| operations | | | | | | | | |
--------------------------------------------------------------------------------
| Basic earnings | 0.88 | 0.38 | -0.3 | -0.06 | 0.09 | -115. | 81.8 | -89.8 |
| per share, | | | 3 | | | 8 | | |
| EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Diluted | 0.88 | 0.38 | -0.3 | -0.06 | 0.09 | -115. | 81.8 | -89.8 |
| earnings per | | | 3 | | | 8 | | |
| share, | | | | | | | | |
| EUR | | | | | | | | |
--------------------------------------------------------------------------------
Consolidated Statement of Recognised Income & Expense
--------------------------------------------------------------------------------
| EUR million | 2006 | Q4/06 | Q3/07 | Q4/07 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total Operations | | | | | |
--------------------------------------------------------------------------------
| Defined benefit plan | 135.1 | 135.1 | -2.1 | 16.8 | 17.3 |
| actuarial gains / | | | | | |
| (losses) | | | | | |
--------------------------------------------------------------------------------
| Tax on actuarial | -46.6 | -46.6 | 0.6 | -6.2 | -6.3 |
| movements | | | | | |
--------------------------------------------------------------------------------
| Aggregate fair value | 251.6 | 354.7 | -7.3 | 3.8 | 217.3 |
| movements in | | | | | |
| Available-for-Sale | | | | | |
| assets | | | | | |
--------------------------------------------------------------------------------
| Currency and commodity | -45.3 | -135.4 | 17.6 | -28.3 | 5.6 |
| hedges | | | | | |
--------------------------------------------------------------------------------
| Associate hedges | 11.1 | 3.9 | 1.7 | 0.1 | 5.1 |
--------------------------------------------------------------------------------
| Tax on Other | 50.2 | 50.2 | -4.0 | 7.8 | -3.2 |
| Comprehensive Income | | | | | |
| Movements (OCI) | | | | | |
--------------------------------------------------------------------------------
| Currency translation | -86.4 | -9.2 | -21.0 | -61.5 | -85.3 |
| movements on | | | | | |
| equity net investments | | | | | |
| (CTA) | | | | | |
--------------------------------------------------------------------------------
| Equity net investment | 118.0 | 42.1 | 11.9 | 18.8 | 53.7 |
| hedges | | | | | |
--------------------------------------------------------------------------------
| Tax on equity hedges | -30.7 | -11.0 | -3.1 | -4.1 | -13.2 |
--------------------------------------------------------------------------------
| Income & Expense | 357.0 | 383.8 | -5.7 | -52.8 | 191.0 |
| Recognised in | | | | | |
| Equity | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Items from Equity | -5.8 | -9.2 | -15.0 | 69.1 | 52.7 |
| Recognised in | | | | | |
| Income Statement | | | | | |
--------------------------------------------------------------------------------
| Net Income & Expense | 351.2 | 374.6 | -20.7 | 16.3 | 243.7 |
| Recognised in | | | | | |
| Equity | | | | | |
--------------------------------------------------------------------------------
| Net Profit/(Loss) for | 589.2 | 264.8 | -441.1 | -137.7 | -212.4 |
| the year | | | | | |
--------------------------------------------------------------------------------
| Total Recognised Income | 940.4 | 639.4 | -461.8 | -121.4 | 31.3 |
| & Expense | | | | | |
| for the year | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | 936.2 | 637.6 | -460.6 | -119.0 | 29.0 |
| Parent Company | | | | | |
--------------------------------------------------------------------------------
| Minority interests | 4.2 | 1.8 | -1.2 | -2.4 | 2.3 |
--------------------------------------------------------------------------------
| Total Recognised Income | 940.4 | 639.4 | -461.8 | -121.4 | 31.3 |
| & Expense | | | | | |
| for the Period | | | | | |
--------------------------------------------------------------------------------
Condensed Consolidated Cash Flow Statement
--------------------------------------------------------------------------------
| EUR million | 2006 | 2007 |
--------------------------------------------------------------------------------
| Cash Flow from Operating Activities | | |
--------------------------------------------------------------------------------
| Operating profit | 735.8 | 249.9 |
--------------------------------------------------------------------------------
| Adjustments | 979.1 | 1 411.6 |
--------------------------------------------------------------------------------
| Change in net working capital | 289.0 | -330.9 |
--------------------------------------------------------------------------------
| Cash Flow Generated by Operations | 2 003.9 | 1 330.6 |
--------------------------------------------------------------------------------
| Net financial items | -293.5 | -319.2 |
--------------------------------------------------------------------------------
| Income taxes paid | -215.4 | -111.6 |
--------------------------------------------------------------------------------
| Net Cash Provided by Operating Activities | 1 495.0 | 899.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash Flow from Investing Activities | | |
--------------------------------------------------------------------------------
| Acquisitions of subsidiaries | -329.8 | -71.4 |
--------------------------------------------------------------------------------
| Acquisitions of associated companies | -19.4 | -91.6 |
--------------------------------------------------------------------------------
| Proceeds from sale of fixed assets and | 700.8 | 415.6 |
| shares | | |
--------------------------------------------------------------------------------
| Capital expenditure | -583.4 | -820.4 |
--------------------------------------------------------------------------------
| Proceeds from (payment of) the non-current | -21.4 | 17.8 |
| receivables, net | | |
--------------------------------------------------------------------------------
| Net Cash Used in Investing Activities | -253.2 | -550.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash Flow from Financing Activities | | |
--------------------------------------------------------------------------------
| Proceeds from issue of new long-term debt | 775.4 | 289.0 |
--------------------------------------------------------------------------------
| Repayment of long-term liabilities | -550.3 | -799.5 |
--------------------------------------------------------------------------------
| Change in short-term borrowings | -869.3 | 1 145.4 |
--------------------------------------------------------------------------------
| Dividends paid | -354.9 | -354.9 |
--------------------------------------------------------------------------------
| Minority equity injections less dividends | 6.6 | 7.0 |
--------------------------------------------------------------------------------
| Options exercised | -2.0 | -2.4 |
--------------------------------------------------------------------------------
| Repurchase / Sale of own shares | 0.2 | 0.3 |
--------------------------------------------------------------------------------
| Net Cash Used in Financing Activities | -994.3 | 284.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net Increase (Decrease) in Cash and Cash | 247.5 | 634.7 |
| Equivalents | | |
--------------------------------------------------------------------------------
| Cash and bank in acquired companies | 1.6 | 0.3 |
--------------------------------------------------------------------------------
| Cash and bank in sold companies | -20.2 | -110.8 |
--------------------------------------------------------------------------------
| Translation adjustment | -68.8 | 45.5 |
--------------------------------------------------------------------------------
| Net cash and cash equivalents at the | 149.5 | 309.6 |
| beginning of period | | |
--------------------------------------------------------------------------------
| Net Cash and Cash Equivalents at Period End | 309.6 | 879.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and Cash Equivalents at Period End | 609.0 | 970.7 |
--------------------------------------------------------------------------------
| Bank Overdraft at Period End | -299.4 | -91.4 |
--------------------------------------------------------------------------------
| Net Cash and Cash Equivalents at Period End | 309.6 | 879.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisitions of Subsidiary Companies | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 1.6 | 0.3 |
--------------------------------------------------------------------------------
| Working capital | 47.2 | -9.6 |
--------------------------------------------------------------------------------
| Fixed assets | 281.1 | 10.7 |
--------------------------------------------------------------------------------
| Tax liabilities | 1.2 | -0.1 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | -4.4 | -1.2 |
--------------------------------------------------------------------------------
| Minority interests | 1.1 | 71.3 |
--------------------------------------------------------------------------------
| Fair Value of Net Assets | 327.8 | 71.4 |
--------------------------------------------------------------------------------
| Goodwill | 2.0 | - |
--------------------------------------------------------------------------------
| Total Purchase Consideration | 329.8 | 71.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Disposal of Subsidiary Companies | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 20.2 | 110.8 |
--------------------------------------------------------------------------------
| Working capital | 59.5 | -155.0 |
--------------------------------------------------------------------------------
| Fixed assets | 217.9 | 1 779.9 |
--------------------------------------------------------------------------------
| Interest-bearing assets | 1.2 | 29.6 |
--------------------------------------------------------------------------------
| Tax liabilities | -18.0 | -49.6 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | -12.0 | -1 019.2 |
--------------------------------------------------------------------------------
| Minority interests | -0.2 | -0.6 |
--------------------------------------------------------------------------------
| Net Assets in Divested Companies | 268.6 | 695.9 |
--------------------------------------------------------------------------------
| Income Statement capital gain | 197.9 | 5.0 |
--------------------------------------------------------------------------------
| Total Disposal Consideration Received in | 466.5 | 700.9 |
| Cash & Kind | | |
--------------------------------------------------------------------------------
Property, Plant and Equipment, Intangible Assets and Goodwill
--------------------------------------------------------------------------------
| EUR million | 2006 | 2007 |
--------------------------------------------------------------------------------
| Carrying value at 1 January | 11 213.2 | 10 440.4 |
--------------------------------------------------------------------------------
| Acquisition of subsidiary companies | 283.1 | 10.7 |
--------------------------------------------------------------------------------
| Additions | 559.1 | 770.2 |
--------------------------------------------------------------------------------
| Additions in biological assets | 24.3 | 50.2 |
--------------------------------------------------------------------------------
| Change in emission rights | 54.4 | -92.9 |
--------------------------------------------------------------------------------
| Disposals | -19.4 | -52.9 |
--------------------------------------------------------------------------------
| Disposals of subsidiary companies | -217.9 | -1 780.0 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment | -1 068.0 | -1 550.7 |
| Cont. Oper. | | |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment, | -189.7 | -330.6 |
| Disc. Oper. | | |
--------------------------------------------------------------------------------
| Translation difference and other | -198.7 | -232.0 |
--------------------------------------------------------------------------------
| Balance Sheet Total | 10 440.4 | 7 232.4 |
--------------------------------------------------------------------------------
Borrowings
--------------------------------------------------------------------------------
| EUR million | 31 Dec 2006 | 31 Dec 2007 |
--------------------------------------------------------------------------------
| Non-current borrowings | 4 081.0 | 3 354.8 |
--------------------------------------------------------------------------------
| Current borrowings | 1 146.9 | 1 086.6 |
--------------------------------------------------------------------------------
| | 5 227.9 | 4 441.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | 2006 | 2007 |
--------------------------------------------------------------------------------
| Carrying value at 1 January | 6 055.6 | 5 227.9 |
--------------------------------------------------------------------------------
| Debt acquired with new subsidiaries | 4.4 | 1.2 |
--------------------------------------------------------------------------------
| Debt disposed with sold subsidiaries | -12.0 | -1 019.3 |
--------------------------------------------------------------------------------
| Proceeds from / payments of borrowings (net) | -683.7 | 358.3 |
--------------------------------------------------------------------------------
| Translation difference and other | -136.4 | -126.7 |
--------------------------------------------------------------------------------
| Total Borrowings | 5 227.9 | 4 441.4 |
--------------------------------------------------------------------------------
Discontinued Operations
--------------------------------------------------------------------------------
| EUR million | 2007 |
--------------------------------------------------------------------------------
| Sales | 1 769.9 |
--------------------------------------------------------------------------------
| Operating costs | -1 737.9 |
--------------------------------------------------------------------------------
| Operating profit before remeasurement to fair value | 32.0 |
--------------------------------------------------------------------------------
| (Loss) recognised on the remeasurement to fair value | -28.3 |
--------------------------------------------------------------------------------
| Operating (loss) | 3.7 |
--------------------------------------------------------------------------------
| Net financial items | -97.3 |
--------------------------------------------------------------------------------
| (Loss) before tax | -93.6 |
--------------------------------------------------------------------------------
| Tax related to operations* | -190.3 |
--------------------------------------------------------------------------------
| (Loss) after tax from a discontinued operation | -283.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash provided by operating activities | 30.6 |
--------------------------------------------------------------------------------
| Net cash used in investing activities | -1.7 |
--------------------------------------------------------------------------------
| Net cash provided by financing activities | -59.1 |
--------------------------------------------------------------------------------
| Net increase (decrease) in cash and cash equivalents | -30.2 |
--------------------------------------------------------------------------------
* Includes non-cash tax on CTA & Equity Hedge of (EUR 189.3) million
Condensed Consolidated Balance Sheet
--------------------------------------------------------------------------------
| EUR million | | 31 Dec 06 | 31 Dec 07 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fixed Assets and Other Non-current | | | |
| Investments | | | |
--------------------------------------------------------------------------------
| Fixed assets | O | 10 230.8 | 7 138.5 |
--------------------------------------------------------------------------------
| Biological assets | O | 111.5 | 88.7 |
--------------------------------------------------------------------------------
| Emission rights | O | 98.1 | 5.2 |
--------------------------------------------------------------------------------
| Investment in associated companies | O | 805.2 | 1 154.5 |
--------------------------------------------------------------------------------
| Available-for-sale: Listed securities | I | 41.2 | 161.8 |
--------------------------------------------------------------------------------
| Available-for-sale: Unlisted shares | O | 794.3 | 1 260.8 |
--------------------------------------------------------------------------------
| Non-current loan receivables | I | 149.2 | 126.5 |
--------------------------------------------------------------------------------
| Deferred tax assets | T | 53.5 | 63.7 |
--------------------------------------------------------------------------------
| Other non-current assets | O | 61.1 | 22.6 |
--------------------------------------------------------------------------------
| | | 12 344.9 | 10 022.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current Assets | | | |
--------------------------------------------------------------------------------
| Inventories | O | 2 019.5 | 1 992.6 |
--------------------------------------------------------------------------------
| Tax receivables | T | 66.6 | 34.3 |
--------------------------------------------------------------------------------
| Operative receivables | O | 2 156.6 | 2 063.1 |
--------------------------------------------------------------------------------
| Interest-bearing receivables | I | 185.5 | 227.8 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | I | 609.0 | 970.7 |
--------------------------------------------------------------------------------
| | | 5 037.2 | 5 288.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total Assets | | 17 382.1 | 15 310.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity and Liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to Company | | 7 799.6 | 7 476.1 |
| shareholders | | | |
--------------------------------------------------------------------------------
| Minority interests | | 103.5 | 71.9 |
--------------------------------------------------------------------------------
| Total Equity | | 7 903.1 | 7 548.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current Liabilities | | | |
--------------------------------------------------------------------------------
| Post-employment benefit provisions | O | 763.1 | 327.3 |
--------------------------------------------------------------------------------
| Other provisions | O | 308.3 | 135.9 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | T | 793.0 | 582.0 |
--------------------------------------------------------------------------------
| Non-current debt | I | 4 081.0 | 3 354.8 |
--------------------------------------------------------------------------------
| Other non-current operative liabilities | O | 193.7 | 170.2 |
--------------------------------------------------------------------------------
| | | 6 139.1 | 4 570.2 |
--------------------------------------------------------------------------------
| Current Liabilities | | | |
--------------------------------------------------------------------------------
| Current portion of long-term debt | I | 630.2 | 513.1 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | I | 516.7 | 573.5 |
--------------------------------------------------------------------------------
| Operative liabilities | O | 1 992.5 | 1 971.4 |
--------------------------------------------------------------------------------
| Tax liabilities | T | 200.5 | 134.6 |
--------------------------------------------------------------------------------
| | | 3 339.9 | 3 192.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total Liabilities | | 9 479.0 | 7 762.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total Equity and Liabilities | | 17 382.1 | 15 310.8 |
--------------------------------------------------------------------------------
Items designated with “O” comprise Operating Capital
Items designated with “I” comprise Interest-bearing Net Liabilities
Items designated with “T” comprise Net Tax Liabilities
Changes in Group Shareholders' Equity
--------------------------------------------------------------------------------
| EUR million | Share | Capit | Treas | OCI | CTA | Retai | Total |
| | Capit | al | ury | | | ned | |
| | al | Reser | Share | | | Earni | |
| | | ves | s | | | ngs | |
--------------------------------------------------------------------------------
| Balance at 31 | 1 423 | 1 009 | -180. | 67.6 | -218. | 5 525 | 7 625 |
| December 2004 | .3 | .2 | 8 | | 9 | .0 | .4 |
--------------------------------------------------------------------------------
| Repurchase of Stora | - | - | -344. | - | - | - | -344. |
| Enso Oyj shares | | | 7 | | | | 7 |
--------------------------------------------------------------------------------
| Cancellation of | -41.2 | -224. | 265.6 | - | - | - | 0.0 |
| Stora Enso Oyj | | 4 | | | | | |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Dividend (EUR 0.45 | - | - | - | - | - | -365. | -365. |
| per share) | | | | | | 3 | 3 |
--------------------------------------------------------------------------------
| Buy-out of minority | - | - | - | - | - | -43.2 | -43.2 |
| interests | | | | | | | |
--------------------------------------------------------------------------------
| Net loss for the | - | - | - | - | 0.2 | -111. | -110. |
| period | | | | | | 1 | 9 |
--------------------------------------------------------------------------------
| Net income | - | - | - | 400.4 | 91.6 | -33.2 | 458.8 |
| recognised directly | | | | | | | |
| to equity | | | | | | | |
--------------------------------------------------------------------------------
| Balance at 31 | 1 382 | 784.8 | -259. | 468.0 | -127. | 4 972 | 7 220 |
| December 2005 | .1 | | 9 | | 1 | .2 | .1 |
--------------------------------------------------------------------------------
| Cancellation of | -39.9 | -15.9 | 249.1 | - | - | -193. | 0.0 |
| Stora Enso Oyj | | | | | | 3 | |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Dividend (EUR 0.45 | - | - | - | - | - | -354. | -354. |
| per share) | | | | | | 9 | 9 |
--------------------------------------------------------------------------------
| Options exercised | - | -2.0 | 0.3 | - | - | - | -1.7 |
--------------------------------------------------------------------------------
| Buy-out of minority | - | - | - | - | - | -0.1 | -0.1 |
| interests | | | | | | | |
--------------------------------------------------------------------------------
| Net profit for the | - | - | - | - | -5.8 | 585.0 | 579.2 |
| period | | | | | | | |
--------------------------------------------------------------------------------
| Net expense | - | - | - | 267.6 | 0.9 | 88.5 | 357.0 |
| recognised directly | | | | | | | |
| to equity | | | | | | | |
--------------------------------------------------------------------------------
| Balance at 31 | 1 342 | 766.9 | -10.5 | 735.6 | -132. | 5 097 | 7 799 |
| December 2006 | .2 | | | | 0 | .4 | .6 |
--------------------------------------------------------------------------------
| Dividend (EUR 0.45 | - | - | - | - | - | -354. | -354. |
| per share) | | | | | | 9 | 9 |
--------------------------------------------------------------------------------
| Options exercised | - | -2.4 | 0.3 | - | 8.5 | -8.5 | -2.1 |
--------------------------------------------------------------------------------
| Buy-out of minority | - | - | - | - | - | 4.5 | 4.5 |
| interests | | | | | | | |
--------------------------------------------------------------------------------
| Net profit for the | - | - | - | - | 52.7 | -214. | -162. |
| period | | | | | | 7 | 0 |
--------------------------------------------------------------------------------
| Net income recognised | - | - | 224.8 | -44.8 | 11.0 | 191.0 |
| directly to equity | | | | | | |
--------------------------------------------------------------------------------
| Balance at 31 | 1 342 | 764.5 | -10.2 | 960.4 | -115. | 4 534 | 7 476 |
| December 2007 | .2 | | | | 6 | .8 | .1 |
--------------------------------------------------------------------------------
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
--------------------------------------------------------------------------------
| EUR million | 31 Dec 06 | 31 Dec 07 |
--------------------------------------------------------------------------------
| On Own Behalf | | |
--------------------------------------------------------------------------------
| Pledges given | 1.0 | 0.8 |
--------------------------------------------------------------------------------
| Mortgages | 146.8 | 135.9 |
--------------------------------------------------------------------------------
| On Behalf of Associated Companies | | |
--------------------------------------------------------------------------------
| Mortgages | 0.8 | 0.0 |
--------------------------------------------------------------------------------
| Guarantees | 343.0 | 249.7 |
--------------------------------------------------------------------------------
| On Behalf of Others | | |
--------------------------------------------------------------------------------
| Guarantees | 9.5 | 118.5 |
--------------------------------------------------------------------------------
| Other Commitments, Own | | |
--------------------------------------------------------------------------------
| Leasing commitments, in next 12 months | 38.4 | 30.6 |
--------------------------------------------------------------------------------
| Leasing commitments, after next 12 | 130.3 | 112.2 |
| months | | |
--------------------------------------------------------------------------------
| Pension liabilities | 0.2 | 0.2 |
--------------------------------------------------------------------------------
| Other commitments | 17.1 | 22.5 |
--------------------------------------------------------------------------------
| Total | 687.1 | 670.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Pledges given | 1.0 | 0.8 |
--------------------------------------------------------------------------------
| Mortgages | 147.6 | 135.9 |
--------------------------------------------------------------------------------
| Guarantees | 352.5 | 368.2 |
--------------------------------------------------------------------------------
| Leasing commitments | 168.7 | 142.8 |
--------------------------------------------------------------------------------
| Pension liabilities | 0.2 | 0.2 |
--------------------------------------------------------------------------------
| Other commitments | 17.1 | 22.5 |
--------------------------------------------------------------------------------
| Total | 687.1 | 670.4 |
--------------------------------------------------------------------------------
Purchase Agreement Commitments
--------------------------------------------------------------------------------
| EUR million | Scheduled Contract | | | |
| | Payments | | | |
--------------------------------------------------------------------------------
| Type of Supply | Contract | 2008 | 2009-10 | 2011-12 | 2013+ |
| | Total | | | | |
--------------------------------------------------------------------------------
| | Fibre | 2 279 | 251 | 451 | 411 | 1 166 |
--------------------------------------------------------------------------------
| | Energy | 1 578 | 345 | 603 | 303 | 327 |
--------------------------------------------------------------------------------
| | Logistics | 591 | 97 | 135 | 104 | 255 |
--------------------------------------------------------------------------------
| | Other production | 682 | 47 | 41 | 35 | 559 |
| | costs | | | | | |
--------------------------------------------------------------------------------
| | | 5 130 | 740 | 1 230 | 853 | 2 307 |
--------------------------------------------------------------------------------
| Capital Expenditure | 136 | 124 | 12 | - | - |
--------------------------------------------------------------------------------
| Total Contractual | 5 266 | 864 | 1 242 | 853 | 2 307 |
| Commitments | | | | | |
--------------------------------------------------------------------------------
Net Fair Values of Derivative Financial Instruments
--------------------------------------------------------------------------------
| EUR million | 31 Dec 06 | 31 Dec 07 | | |
--------------------------------------------------------------------------------
| | Net | Positive | Negative | Net |
| | Fair | Fair | Fair | Fair |
| | Values | Values | Values | Values |
--------------------------------------------------------------------------------
| Interest rate | 48.1 | 99.2 | -39.8 | 59.4 |
| swaps | | | | |
--------------------------------------------------------------------------------
| Interest rate | -1.8 | 0.9 | -7.0 | -6.1 |
| options | | | | |
--------------------------------------------------------------------------------
| Cross-currency | -1.2 | - | - | - |
| swaps | | | | |
--------------------------------------------------------------------------------
| Forward | 28.2 | 14.6 | -34.3 | -19.7 |
| contracts | | | | |
--------------------------------------------------------------------------------
| FX options | 5.9 | 25.9 | -8.7 | 17.2 |
--------------------------------------------------------------------------------
| Commodity | 63.2 | 94.1 | -2.1 | 92.0 |
| contracts | | | | |
--------------------------------------------------------------------------------
| Equity swaps | 7.0 | 3.6 | -37.9 | -34.3 |
--------------------------------------------------------------------------------
| Equity options | - | 0.0 | -0.6 | -0.6 |
--------------------------------------------------------------------------------
| Total | 149.4 | 238.3 | -130.4 | 107.9 |
--------------------------------------------------------------------------------
Nominal Values of Derivative Financial Instruments
--------------------------------------------------------------------------------
| EUR million | 31 Dec 06 | 31 Dec 07 |
--------------------------------------------------------------------------------
| Interest Rate | | |
| Derivatives | | |
--------------------------------------------------------------------------------
| Interest rate swaps | | |
--------------------------------------------------------------------------------
| Maturity under 1 year | 177.4 | 69.9 |
--------------------------------------------------------------------------------
| Maturity 2-5 years | 2 152.1 | 2 164.4 |
--------------------------------------------------------------------------------
| Maturity 6-10 years | 2 490.5 | 2 470.9 |
--------------------------------------------------------------------------------
| | 4 820.0 | 4 705.2 |
--------------------------------------------------------------------------------
| Interest rate options | 318.0 | 491.6 |
--------------------------------------------------------------------------------
| Total | 5 138.0 | 5 196.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Foreign Exchange | | |
| Derivatives | | |
--------------------------------------------------------------------------------
| Cross-currency swap | 6.9 | - |
| agreements | | |
--------------------------------------------------------------------------------
| Forward contracts | 1 778.4 | 3 114.1 |
--------------------------------------------------------------------------------
| FX Options | 662.8 | 2 607.7 |
--------------------------------------------------------------------------------
| Total | 2 448.1 | 5 721.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Commodity Derivatives | | |
--------------------------------------------------------------------------------
| Commodity contracts | 635.8 | 417.2 |
--------------------------------------------------------------------------------
| Total | 635.8 | 417.2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity swaps | | |
--------------------------------------------------------------------------------
| Equity swaps | 328.6 | 213.9 |
--------------------------------------------------------------------------------
| Equity options | - | 22.0 |
--------------------------------------------------------------------------------
| Total | 328.6 | 235.9 |
--------------------------------------------------------------------------------
Sales by Segment
--------------------------------------------------------------------------------
| EUR | Q1/ | Q2/ | Q3/ | Q4/ | 2006 | Q1/0 | Q2/0 | Q3/0 | Q4/0 | 2007 |
| million | 06 | 06 | 06 | 06 | | 7 | 7 | 7 | 7 | |
--------------------------------------------------------------------------------
| Newsprint | 406 | 421 | 427 | 448 | 1 70 | 438. | 429. | 430. | 436. | 1 73 |
| and Book | .6 | .5 | .2 | .7 | 4.0 | 7 | 9 | 0 | 3 | 4.9 |
| Paper | | | | | | | | | | |
--------------------------------------------------------------------------------
| Magazine | 533 | 526 | 570 | 589 | 2 22 | 566. | 552. | 587. | 589. | 2 29 |
| Paper | .6 | .7 | .7 | .3 | 0.3 | 6 | 9 | 3 | 5 | 6.3 |
--------------------------------------------------------------------------------
| Fine Paper | 609 | 572 | 538 | 542 | 2 26 | 577. | 522. | 529. | 526. | 2 15 |
| | .3 | .3 | .1 | .1 | 1.8 | 0 | 8 | 7 | 7 | 6.2 |
--------------------------------------------------------------------------------
| Merchants | 496 | 452 | 450 | 508 | 1 90 | 532. | 479. | 474. | 519. | 2 00 |
| | .3 | .6 | .1 | .2 | 7.2 | 9 | 4 | 4 | 3 | 6.0 |
--------------------------------------------------------------------------------
| Consumer | 584 | 583 | 603 | 560 | 2 33 | 589. | 570. | 562. | 579. | 2 30 |
| Board | .5 | .8 | .4 | .2 | 1.9 | 6 | 1 | 1 | 1 | 0.9 |
--------------------------------------------------------------------------------
| Industrial | 225 | 241 | 245 | 258 | 970. | 266. | 274. | 267. | 275. | 1 08 |
| Packaging | .8 | .1 | .3 | .5 | 7 | 1 | 2 | 8 | 4 | 3.5 |
--------------------------------------------------------------------------------
| Wood | 389 | 425 | 417 | 440 | 1 67 | 472. | 525. | 461. | 393. | 1 85 |
| Products | .1 | .8 | .8 | .3 | 3.0 | 3 | 7 | 4 | 7 | 3.1 |
--------------------------------------------------------------------------------
| Other and | -53 | 9.4 | -40 | -27 | -111 | -32. | 0.9 | -78. | 52.7 | -57. |
| eliminatio | .3 | | .4 | .4 | .7 | 7 | | 2 | | 3 |
| n | | | | | | | | | | |
--------------------------------------------------------------------------------
| Continuing | 3 | 3 | 3 | 3 | 12 9 | 3 | 3 | 3 | 3 | 13 3 |
| Operations | 191 | 233 | 212 | 319 | 57.2 | 410. | 355. | 234. | 372. | 73.6 |
| | .9 | .2 | .2 | .9 | | 5 | 9 | 5 | 7 | |
--------------------------------------------------------------------------------
| Discontinu | 475 | 442 | 486 | 462 | 1 86 | 487. | 484. | 485. | 449. | 1 90 |
| ed | .4 | .8 | .2 | .4 | 6.8 | 9 | 3 | 3 | 8 | 7.3 |
| Operation | | | | | | | | | | |
--------------------------------------------------------------------------------
| Eliminatio | -59 | -59 | -60 | -50 | -230 | -43. | -35. | -34. | -24. | -137 |
| n | .6 | .7 | .3 | .5 | .1 | 0 | 0 | 9 | 5 | .4 |
--------------------------------------------------------------------------------
| Total | 3 6 | 3 6 | 3 6 | 3 7 | 14 5 | 3 85 | 3 80 | 3 68 | 3 79 | 15 1 |
| | 07. | 16. | 38. | 31. | 93.9 | 5.4 | 5.2 | 4.9 | 8.0 | 43.5 |
| | 7 | 3 | 1 | 8 | | | | | | |
--------------------------------------------------------------------------------
Operating Profit by Segment excluding NRI
--------------------------------------------------------------------------------
| EUR | Q1/ | Q2/ | Q3/ | Q4/ | 2006 | Q1/0 | Q2/0 | Q3/0 | Q4/0 | 2007 |
| million | 06 | 06 | 06 | 06 | | 7 | 7 | 7 | 7 | |
--------------------------------------------------------------------------------
| Continuing | | | | | | | | | |
| Operations | | | | | | | | | |
--------------------------------------------------------------------------------
| Newsprint | 55. | 57. | 61. | 57. | 232. | 61.1 | 50.2 | 52.2 | 48.4 | 211. |
| and Book | 9 | 6 | 0 | 6 | 1 | | | | | 9 |
| Paper | | | | | | | | | | |
--------------------------------------------------------------------------------
| Magazine | 24. | 12. | 12. | 22. | 70.7 | 13.0 | 9.6 | 17.0 | 12.6 | 52.2 |
| Paper | 0 | 3 | 0 | 4 | | | | | | |
--------------------------------------------------------------------------------
| Fine Paper | 44. | 50. | 29. | 28. | 152. | 60.2 | 34.6 | 38.6 | 75.2 | 208. |
| | 4 | 3 | 8 | 2 | 7 | | | | | 6 |
--------------------------------------------------------------------------------
| Merchants | 9.6 | 2.9 | 7.7 | 12. | 32.7 | 16.6 | 8.2 | 7.9 | 12.2 | 44.9 |
| | | | | 5 | | | | | | |
--------------------------------------------------------------------------------
| Consumer | 81. | 55. | 64. | 39. | 240. | 72.4 | 29.0 | 27.0 | 29.6 | 158. |
| Board | 3 | 9 | 3 | 4 | 9 | | | | | 0 |
--------------------------------------------------------------------------------
| Industrial | 18. | 18. | 26. | 22. | 85.0 | 29.3 | 29.7 | 24.9 | 28.2 | 112. |
| Packaging | 5 | 1 | 1 | 3 | | | | | | 1 |
--------------------------------------------------------------------------------
| Wood | 4.1 | 15. | 22. | 22. | 63.4 | 54.8 | 59.3 | 37.1 | 0.0 | 151. |
| Products | | 0 | 0 | 3 | | | | | | 2 |
--------------------------------------------------------------------------------
| Other | 37. | -67 | 23. | 13. | 6.9 | 19.8 | 31.8 | 47.3 | 133. | 232. |
| | 5 | .0 | 3 | 1 | | | | | 9 | 8 |
--------------------------------------------------------------------------------
| Operating | 275 | 145 | 246 | 217 | 884. | 327. | 252. | 252. | 340. | 1 |
| profit | .3 | .1 | .2 | .8 | 4 | 2 | 4 | 0 | 1 | 171. |
| excl. NRI | | | | | | | | | | 7 |
--------------------------------------------------------------------------------
| NRI | -23 | 6.7 | -16 | 36. | -142 | -12. | 24.4 | -549 | -388 | -925 |
| | .2 | | 3.0 | 6 | .9 | 0 | | .4 | .5 | .5 |
--------------------------------------------------------------------------------
| Operating | 252 | 151 | 83. | 254 | 741. | 315. | 276. | -297 | -48. | 246. |
| Profit | .1 | .8 | 2 | .4 | 5 | 2 | 8 | .4 | 4 | 2 |
| (IFRS) | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 81. | -67 | -24 | -19 | -30. | -38. | -56. | -26. | -47. | -168 |
| financial | 3 | .3 | .7 | .6 | 3 | 7 | 1 | 9 | 2 | .9 |
| items | | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | 333 | 84. | 58. | 234 | 711. | 276. | 220. | -324 | -95. | 77.3 |
| before Tax | .4 | 5 | 5 | .8 | 2 | 5 | 7 | .3 | 6 | |
| and | | | | | | | | | | |
| Minority | | | | | | | | | | |
| Interests | | | | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | -91 | -21 | 34. | 67. | -10. | -69. | -41. | 60.2 | 44.8 | -5.8 |
| expense | .3 | .6 | 6 | 5 | 8 | 3 | 5 | | | |
--------------------------------------------------------------------------------
| Net Profit | 242 | 62. | 93. | 302 | 700. | 207. | 179. | -264 | -50. | 71.5 |
| from | .1 | 9 | 1 | .3 | 4 | 2 | 2 | .1 | 8 | |
| Continuing | | | | | | | | | | |
| Operations | | | | | | | | | | |
--------------------------------------------------------------------------------
| Discontinued | | | | | | | | | |
| Operation | | | | | | | | | |
--------------------------------------------------------------------------------
| Loss after | -15 | -22 | -36 | -37 | -111 | 15.3 | -35. | -177 | -86. | -283 |
| tax for | .7 | .0 | .0 | .5 | .2 | | 3 | .0 | 9 | .9 |
| the period | | | | | | | | | | |
| from a | | | | | | | | | | |
| Discontinu | | | | | | | | | | |
| ed | | | | | | | | | | |
| Operation | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net Profit | 226 | 40. | 57. | 264 | 589. | 222. | 143. | -441 | -137 | -212 |
| | .4 | 9 | 1 | .8 | 2 | 5 | 9 | .1 | .7 | .4 |
--------------------------------------------------------------------------------
NRI by Segment
--------------------------------------------------------------------------------
| EUR | Q1/ | Q2/ | Q3/ | Q4/ | 2006 | Q1/0 | Q2/0 | Q3/0 | Q4/0 | 2007 |
| million | 06 | 06 | 06 | 06 | | 7 | 7 | 7 | 7 | |
--------------------------------------------------------------------------------
| Newsprint | - | 1.3 | - | - | 1.3 | - | - | - | -110 | -110 |
| and Book | | | | | | | | | .0 | .0 |
| Paper | | | | | | | | | | |
--------------------------------------------------------------------------------
| Magazine | -2. | 1.2 | -16 | 2.1 | -163 | - | - | -218 | -231 | -449 |
| Paper | 9 | | 4.0 | | .6 | | | .0 | .0 | .0 |
--------------------------------------------------------------------------------
| Fine Paper | -16 | 2.4 | 72. | 1.0 | 58.5 | - | - | -32. | 21.0 | -11. |
| | .9 | | 0 | | | | | 6 | | 6 |
--------------------------------------------------------------------------------
| Merchants | - | - | - | 0.4 | 0.4 | - | 24.4 | - | - | 24.4 |
--------------------------------------------------------------------------------
| Consumer | - | -7. | - | 2.3 | -4.9 | - | - | -186 | -12. | -199 |
| Board | | 2 | | | | | | .8 | 5 | .3 |
--------------------------------------------------------------------------------
| Industrial | - | 1.7 | - | - | 1.7 | - | - | -5.9 | -1.0 | -6.9 |
| Packaging | | | | | | | | | | |
--------------------------------------------------------------------------------
| Wood | 1.7 | 1.2 | -24 | 0.4 | -20. | -12. | - | -106 | - | -118 |
| Products | | | .0 | | 7 | 0 | | .1 | | .1 |
--------------------------------------------------------------------------------
| Other | -5. | 6.1 | -47 | 30. | -15. | - | - | - | -55. | -55. |
| | 1 | | .0 | 4 | 6 | | | | 0 | 0 |
--------------------------------------------------------------------------------
| Continuing | -23 | 6.7 | -16 | 36. | -142 | -12. | 24.4 | -549 | -388 | -925 |
| Operations | .2 | | 3.0 | 6 | .9 | 0 | | .4 | .5 | .5 |
--------------------------------------------------------------------------------
| Discontinu | - | - | -14 | 23. | 9.2 | 44.0 | -11. | - | -28. | 4.1 |
| ed | | | .2 | 4 | | | 6 | | 3 | |
| Operation | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | -23 | 6.7 | -17 | 60. | -133 | 32.0 | 12.8 | -549 | -416 | -921 |
| | .2 | | 7.2 | 0 | .7 | | | .4 | .8 | .4 |
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Operating Profit by Segment
--------------------------------------------------------------------------------
| EUR | Q1/ | Q2/ | Q3/ | Q4/ | 2006 | Q1/0 | Q2/0 | Q3/0 | Q4/0 | 2007 |
| million | 06 | 06 | 06 | 06 | | 7 | 7 | 7 | 7 | |
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| Continuing | | | | | | | | | |
| Operations | | | | | | | | | |
--------------------------------------------------------------------------------
| Newsprint | 55. | 58. | 61. | 57. | 233. | 61.1 | 50.2 | 52.2 | -61. | 101. |
| and Book | 9 | 9 | 0 | 6 | 4 | | | | 6 | 9 |
| Paper | | | | | | | | | | |
--------------------------------------------------------------------------------
| Magazine | 21. | 13. | -15 | 24. | -92. | 13.0 | 9.6 | -201 | -218 | -396 |
| Paper | 1 | 5 | 2.0 | 5 | 9 | | | .0 | .4 | .8 |
--------------------------------------------------------------------------------
| Fine Paper | 27. | 52. | 101 | 29. | 211. | 60.2 | 34.6 | 6.0 | 96.2 | 197. |
| | 5 | 7 | .8 | 2 | 2 | | | | | 0 |
--------------------------------------------------------------------------------
| Merchants | 9.6 | 2.9 | 7.7 | 12. | 33.1 | 16.6 | 32.6 | 7.9 | 12.2 | 69.3 |
| | | | | 9 | | | | | | |
--------------------------------------------------------------------------------
| Consumer | 81. | 48. | 64. | 41. | 236. | 72.4 | 29.0 | -159 | 17.1 | -41. |
| Board | 3 | 7 | 3 | 7 | 0 | | | .8 | | 3 |
--------------------------------------------------------------------------------
| Industrial | 18. | 19. | 26. | 22. | 86.7 | 29.3 | 29.7 | 19.0 | 27.2 | 105. |
| Packaging | 5 | 8 | 1 | 3 | | | | | | 2 |
--------------------------------------------------------------------------------
| Wood | 5.8 | 16. | -2. | 22. | 42.7 | 42.8 | 59.3 | -69. | 0.0 | 33.1 |
| Products | | 2 | 0 | 7 | | | | 0 | | |
--------------------------------------------------------------------------------
| Other | 32. | -60 | -23 | 43. | -8.7 | 19.8 | 31.8 | 47.3 | 78.9 | 177. |
| | 4 | .9 | .7 | 5 | | | | | | 8 |
--------------------------------------------------------------------------------
| Operating | 252 | 151 | 83. | 254 | 741. | 315. | 276. | -297 | -48. | 246. |
| Profit | .1 | .8 | 2 | .4 | 5 | 2 | 8 | .4 | 4 | 2 |
--------------------------------------------------------------------------------
| Net | 81. | -67 | -24 | -19 | -30. | -38. | -56. | -26. | -47. | -168 |
| financial | 3 | .3 | .7 | .6 | 3 | 7 | 1 | 9 | 2 | .9 |
| items | | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | 333 | 84. | 58. | 234 | 711. | 276. | 220. | -324 | -95. | 77.3 |
| before Tax | .4 | 5 | 5 | .8 | 2 | 5 | 7 | .3 | 6 | |
| and | | | | | | | | | | |
| Minority | | | | | | | | | | |
| Interests | | | | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | -91 | -21 | 34. | 67. | -10. | -69. | -41. | 60.2 | 44.8 | -5.8 |
| expense | .3 | .6 | 6 | 5 | 8 | 3 | 5 | | | |
--------------------------------------------------------------------------------
| Net Profit | 242 | 62. | 93. | 302 | 700. | 207. | 179. | -264 | -50. | 71.5 |
| from | .1 | 9 | 1 | .3 | 4 | 2 | 2 | .1 | 8 | |
| Continuing | | | | | | | | | | |
| Operations | | | | | | | | | | |
--------------------------------------------------------------------------------
| Discontinued | | | | | | | | | |
| Operation | | | | | | | | | |
--------------------------------------------------------------------------------
| Loss after | -15 | -22 | -36 | -37 | -111 | 15.3 | -35. | -177 | -86. | -283 |
| tax for | .7 | .0 | .0 | .5 | .2 | | 3 | .0 | 9 | .9 |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
| from a | | | | | | | | | | |
| Discontinu | | | | | | | | | | |
| ed | | | | | | | | | | |
| Operation | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net Profit | 226 | 40. | 57. | 264 | 589. | 222. | 143. | -441 | -137 | -212 |
| | .4 | 9 | 1 | .8 | 2 | 5 | 9 | .1 | .7 | .4 |
--------------------------------------------------------------------------------
Associated companies by Segment
--------------------------------------------------------------------------------
| EUR | Q1/ | Q2/ | Q3/ | Q4/ | 2006 | Q1/0 | Q2/0 | Q3/0 | Q4/0 | 2007 |
| million | 06 | 06 | 06 | 06 | | 7 | 7 | 7 | 7 | |
--------------------------------------------------------------------------------
| Newsprint | - | - | - | - | - | - | - | - | - | - |
| and Book | | | | | | | | | | |
| Paper | | | | | | | | | | |
--------------------------------------------------------------------------------
| Magazine | 2.3 | 0.8 | 3.2 | 3.8 | 10.1 | 3.6 | 1.2 | -0.5 | -3.0 | 1.3 |
| Paper | | | | | | | | | | |
--------------------------------------------------------------------------------
| Fine Paper | 7.6 | -1. | 5.0 | 1.5 | 12.5 | 5.1 | -3.9 | 4.2 | 39.5 | 44.9 |
| | | 6 | | | | | | | | |
--------------------------------------------------------------------------------
| Merchants | - | - | - | - | - | - | - | 0.1 | - | 0.1 |
--------------------------------------------------------------------------------
| Consumer | - | - | - | - | - | - | - | - | - | - |
| Board | | | | | | | | | | |
--------------------------------------------------------------------------------
| Industrial | 0.1 | 0.4 | -0. | 0.1 | 0.4 | 0.1 | 0.1 | 0.2 | -0.2 | 0.2 |
| Packaging | | | 2 | | | | | | | |
--------------------------------------------------------------------------------
| Wood | 0.4 | 0.0 | 0.0 | 0.2 | 0.6 | - | - | - | 0.5 | 0.5 |
| Products | | | | | | | | | | |
--------------------------------------------------------------------------------
| Other | 20. | 18. | 5.1 | 20. | 64.4 | 15.3 | 22.6 | 61.5 | 195. | 294. |
| | 3 | 6 | | 4 | | | | | 0 | 4 |
--------------------------------------------------------------------------------
| Continuing | 30. | 18. | 13. | 26. | 88.0 | 24.1 | 20.0 | 65.5 | 231. | 341. |
| Operations | 7 | 2 | 1 | 0 | | | | | 8 | 4 |
| Total | | | | | | | | | | |
--------------------------------------------------------------------------------
| Discontinu | 0.9 | 2.0 | -2. | -0. | -0.6 | 0.1 | -0.2 | -0.7 | 2.1 | 1.3 |
| ed | | | 9 | 6 | | | | | | |
| Operation | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | 31. | 20. | 10. | 25. | 87.4 | 24.2 | 19.8 | 64.8 | 233. | 342. |
| | 6 | 2 | 2 | 4 | | | | | 9 | 7 |
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Stora Enso Shares
--------------------------------------------------------------------------------
| Closing Price | Helsinki, EUR | Stockholm, SEK | New York, USD |
--------------------------------------------------------------------------------
| | A share | R share | A share | R share | ADRs |
--------------------------------------------------------------------------------
| October | 12.65 | 12.66 | 116.25 | 116.25 | 18.41 |
--------------------------------------------------------------------------------
| November | 10.89 | 11.26 | 105.00 | 105.75 | 16.52 |
--------------------------------------------------------------------------------
| December | 10.19 | 10.24 | 96.75 | 97.25 | 14.85* |
--------------------------------------------------------------------------------
* The closing price for New York is for 28 December 2007, which was the last
trading day for Stora Enso's ADRs on the New York Stock Exchange.
--------------------------------------------------------------------------------
| Trading Volume | Helsinki | Stockholm | New York |
--------------------------------------------------------------------------------
| | A share | R share | A share | R share | ADRs |
--------------------------------------------------------------------------------
| October | 177 727 | 153 355 | 187 010 | 17 588 6 | 4 011 700 |
| | | 339 | | 24 | |
--------------------------------------------------------------------------------
| November | 195 902 | 96 095 4 | 388 461 | 10 448 5 | 4 052 000 |
| | | 12 | | 10 | |
--------------------------------------------------------------------------------
| December | 170 594 | 54 883 9 | 115 482 | 4 434 15 | 6 476 600* |
| | | 38 | | 9 | |
--------------------------------------------------------------------------------
| Total | 544 223 | 304 334 | 690 953 | 32 471 2 | 14 540 300 |
| | | 689 | | 93 | |
--------------------------------------------------------------------------------
* Trading volume up to 28 December 2007
Changes in Accounting Policy and Reclassification in 2006
Operating profit for 2006 has been reclassified. Total Return Swaps (TRS) which
are partially hedging cash settled synthetic option programmes for Management,
previously reported in other financial items, are now reported in operating
profit under personnel expenses, with an effect on operating profit of EUR 1.6
million and EUR 24.6 million in Q4/2006 and Q1-Q4/2006, respectively. TRS
instruments do not qualify for hedge accounting and therefore all periodic
changes to their fair value are recorded in the Income Statement.
The share of associated company results previously reported with financial items
is now reported in operating profit. The associated companies supply Stora Enso
with wood, pulp and logistic services, so this change in accounting policy has
been implemented to reflect the operational nature of these investments. The
change has increased operating profit by EUR 26.0 million and EUR 88.0 million
in Q4/2006 and Q1-Q4/2006, respectively.
Reclassifications have no effect on profit before tax. Comparative amounts
disclosed for each prior period presented have been restated.
For further information, please contact:
Jouko Karvinen, CEO, tel. +358 2046 21410
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's first quarter results 2008 will be published on 24 April 2008.
Press conference in Helsinki
Time: 11.00 local time
Location: Marina Congress Center, conference room Nautica
Address: Katajanokanlaituri 6
Hosts: Jouko Karvinen, CEO
Hannu Ryöppönen, Deputy CEO & CFO
Kari Vainio, Executive Vice President, Corporate Communications
Press conference in Stockholm
The audio feed from the Helsinki conference can be heard and the presentation
slides followed in a conference in Stockholm.
Time: 10.00 local time
Location: Ingerjörshuset/Citykonferensen, conference room Polhem
Address: Malmskillnadsgatan 46
Hosts: Christer Ågren, Executive Vice President, Head of HR & IT, Country
Manager Sweden
Keith B Russell, Senior Vice President, Investor Relations
Bo Eriksson, Vice President, Risk Management
The conferences will be held in English. Questions can be put live to Jouko
Karvinen and Hannu Ryöppönen from both of these press conferences after the
presentation.
Webcast of press conference
A live webcast (audio with synchronised slide presentation) of the press
conference may be accessed on www.storaenso.com. The presentation material will
be available on www.storaenso.com/investors at 11.00 Finnish time (10.00 CET).
ANALYST CONFERENCE CALL
CEO Jouko Karvinen and Deputy CEO & CFO Hannu Ryöppönen will be hosting a
combined conference call and webcast today at 16.00 Finnish time (15.00 CET,
14.00 UK time, 9.00 US Eastern time).
If you wish to participate, please dial (quoting ‘Stora Enso'):
+44 (0)20 8609 1270 Continental Europe and the UK
+358
(0)800 913 153 Finland
+46 (0)200 884 632 Sweden
+1 866 388 1926 USA
The live webcast may be accessed at www.storaenso.com/investors
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.
www.storaenso.com
www.storaenso.com/investors
STORA ENSO OYJ
pp. Jussi Siitonen Jukka Marttila
