Stora Enso Full Year Results 2003

STORA ENSO OYJ   Stock Exchange Release 4 February 2004 at 13.00

Stora Enso Full Year Results 2003
Operating profit weak; proposed dividend unchanged at EUR 0.45

Fourth Quarter Results
Stora Enso's earnings per share excluding non-recurring items were EUR 0.00 (EUR
0.09). Operating profit excluding non-recurring items was EUR 80.5 (EUR 139.8)
million, which is 42.4% less than in the previous quarter and 2.7% of sales.
Profit before taxes and minority interests excluding non-recurring items
amounted to EUR 7.8 (EUR 107.4) million. Non-recurring items in the operating
profit totalled EUR -14.5 million due to the write-down for the expected capital
loss on the sale of forestland in Ontario, Canada. Non-recurring items in net
financial items totalled USD -61.1 (EUR -54.0) million due to the provision for
the expected losses from the termination of the US cross-border leasing
contracts.

Sales of EUR 3 028.8 million were 1.4% higher than the previous quarter's EUR
2 987.4 million. Cash flow from ongoing operations was EUR 579.7 (EUR 373.8)
million and cash flow after investing activities EUR 190.5 (EUR 87.4) million.
Cash earnings per share excluding non-recurring items were EUR 0.36 (EUR 0.44).
Net financial items were EUR -67.7 (EUR -23.4) million. Market-related
production curtailments totalled 210 000 tonnes (170 000 tonnes).

EUR             2002      2003    Q4/02   Q1/03   Q2/03     Q3/03    Q4/03
million
Sales       12 782.6  12 172.3  3 212.1 3 099.1  3 057.0  2 987.4  3 028.8
EBITDA1)2)   2 172.0   1 722.9    473.7   500.6   399.7     443.2   379.4
Operating      926.5     538.1    206.9   211.1   106.7     139.8     80.5
profit2)
Non-        -1 078.1    -108.4     99.8       -       -     -39.9 -68.5 (3
recurring
items
Operating        7.2       4.4      6.4     6.8     3.5       4.7      2.7
margin2),
%
Operating     -151.6     483.7    306.7   211.1   106.7      99.9     66.0
profit
Profit         734.9     331.4    143.0   129.3    86.9     107.4      7.8
before tax
and
minority
interests2
)
Profit        -343.2     223.0    242.8   129.3    86.9      67.5    -60.7
before tax
and
minority
interests
Net profit    -222.2     146.6    477.5    85.3    56.3      47.2    -42.2
for the
period
                                                                          
EPS2),          0.57      0.25     0.12    0.10    0.07      0.09     0.00
Basic, EUR
EPS,           -0.25      0.17     0.54    0.10    0.07      0.06    -0.05
Basic, EUR
CEPS2)4),       1.97      1.64     0.44    0.43    0.41      0.44     0.36
EUR
ROCE2), %        7.1       4.6      7.1     7.1     3.6       4.6      2.7

1)       EBITDA = Earnings before Interest, Taxes, Depreciation and
Amortisation
2)       Excluding net non-recurring items. Exceptional transactions, which are
not related to normal business operations, are accounted for as non-recurring
items. The most common non-recurring items are capital gains, additional write-
downs, restructuring provisions and penalties. The amount of each individual non-
recurring item normally exceeds one cent per share.
3)       EUR -54.0 million included in net financial items
4)       CEPS = (Net profit for the period + depreciation and amortisation)/
average number of shares

Full Year Results
Full year sales decreased by EUR 610.3 million to EUR 12 172.3 million, a
decline of 4.8%. Operating profit excluding non-recurring items decreased by EUR
388.4 million, or 41.9% to EUR 538.1 million. Earnings per share were EUR 0.25
(EUR 0.57) and cash earnings per share EUR 1.64 (EUR 1.97), both excluding non-
recurring items.

Cash flow from operations totalled EUR 1 808.3 (EUR 2 083.8) million, with cash
flow after investing activities amounting to EUR 615.0 (EUR 1 247.7) million.

Outlook
Commenting on the outlook, Stora Enso's CEO Jukka Härmälä said, "In Europe
growing confidence in the economic recovery is expected to increase demand for
advertising-driven paper. Pressure on prices still persists in magazine paper
grades, and newsprint prices will at best maintain last year's levels. Prices
for packaging boards are rather stable, while fine paper prices seem to be
stabilising at low levels. Demand for wood products is fairly good, but prices
are under pressure. The weak US dollar and increasing competition will continue
to have an adverse effect on the Group's European operations."

In North America the economy is recovering, but that has only marginally
increased the demand for paper. There are some signs now that demand is
increasing, and this is expected gradually to affect paper prices during the
second half of 2004. In coated fine paper oversupply persists in the form of
imports, mainly from Asia. Stora Enso North America's results for the first
quarter of 2004 will be negatively impacted by the major rebuilding of fine
paper machine 16 at Wisconsin Rapids.

In China the economy is growing rapidly and boosting the demand for fine paper
and packaging boards.

The Group's intensified savings measures that started in 2003 are proceeding
according to plan. The objective remains to keep the capital expenditure in the
2003-04 period in line with the Group's depreciation charges.


For further information, please contact:
Jukka Härmälä, Chief Executive Officer, tel. +358 2046 21404
Björn Hägglund, Deputy Chief Executive Officer, tel. +46 70 528 2785
Esko Mäkeläinen, CFO, tel. +44 20 7016 3115
Kari Vainio, EVP, Corporate Communications, tel. +44 7799 348 197
Keith B Russell, SVP, Investor Relations, tel. +44 7775 788 659


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

An image bank of pictures that may be freely used to illustrate articles about
Stora Enso is available at www.storaenso.com/images


Stora Enso's first quarter results will be published on 28 April 2004.


Stora Enso Full Year Results 2003

Summary of Fourth Quarter Results (compared with the previous quarter)

-        Sales were EUR 3 028.8 million; previous quarter EUR 2 987.4 million.
-        Operating profit excluding non-recurring items was EUR 80.5 million;
previous quarter EUR 139.8 million.
-        Profit before tax and minority items excluding non-recurring items was
EUR 7.8 million; previous quarter EUR 107.4 million.
-        Earnings per share excluding non-recurring items were EUR 0.00;
previous quarter EUR 0.09.
-        Cash earnings per share excluding non-recurring items were EUR 0.36;
previous quarter EUR 0.44.
-        Non-recurring items totalled EUR -68.5 million of which EUR -54.0
million were entered in financial items.

Most economic indicators improved during the fourth quarter of 2003 and sales
volumes increased moderately. The decline in the value of the US dollar,
however, negatively impacted the Group's margins on overseas sales and in
Europe, where competition increased and euro prices came under pressure.
Operating rates improved for the industry.

In Western Europe deliveries of fine paper and publication paper increased,
mainly due to overseas exports and sales to Eastern Europe, while demand in the
Western European markets remained largely unchanged. Uncoated magazine paper
prices were stable, but coated magazine and fine paper prices decreased. Demand
for the Group's packaging boards was depressed by seasonal factors, and prices
in euros declined somewhat owing largely to the indirect effects of the
weakening US dollar. There was stable demand for wood products and prices
remained at low levels.

In North America there were increasing signs of economic recovery during the
quarter. Advertising revenues were increasing, but the number of advertisement
pages did not react accordingly. Magazine paper prices were stable, but fine
paper prices were still depressed by imports from Asia and Europe. Announced
price increases faced resistance.

Production was curtailed by a total of 210 000 tonnes to adjust to market
demand. In Europe the curtailments were 205 000 tonnes and in North America
5 000 tonnes. This compares with the previous quarter's total of 170 000 tonnes,
comprising 145 000 tonnes in Europe and 25 000 tonnes in North America.

Paper and board deliveries totalled 3 490 000 tonnes, which is 78 000 tonnes
more than the previous quarter's 3 412 000 tonnes. Production volumes at
3 448 000 tonnes were 1.5% less than in the previous quarter. Deliveries of wood
products totalled 1 558 000 cubic metres, compared with the previous quarter's
1 337 000 cubic metres.

EUR            2002    2003    Q4/02    Q1/03    Q2/03   Q3/03     Q4/03
million
Sales            12      12  3 212.1  3 099.1  3 057.0 2 987.4   3 028.8
              782.6   172.3
EBITDA1)2)  2 172.0 1 722.9    473.7    500.6    399.7   443.2     379.4
Operating     926.5   538.1    206.9    211.1    106.7   139.8      80.5
profit2)
Non-             -1  -108.4     99.8        -        -   -39.9     -68.5 (3
recurring     078.1
items
Operating       7.2     4.4      6.4      6.8      3.5     4.7       2.7

margin2),
%
Operating    -151.6   483.7    306.7    211.1    106.7    99.9      66.0
profit
Profit        734.9   331.4    143.0    129.3     86.9   107.4       7.8
before tax
and
minority
interests2
)
Profit       -343.2   223.0    242.8    129.3     86.9    67.5     -60.7
before tax
and
minority
interests
Net profit   -222.2   146.6    477.5     85.3     56.3    47.2     -42.2
for the
period
                                                                        
EPS2),         0.57    0.25     0.12     0.10     0.07    0.09      0.00
Basic, EUR
EPS,          -0.25    0.17     0.54     0.10     0.07    0.06     -0.05
Basic, EUR
CEPS2)4),      1.97    1.64     0.44     0.43     0.41    0.44      0.36
EUR
ROCE2), %       7.1     4.6      7.1      7.1      3.6     4.6       2.7

1)       EBITDA = Earnings before Interest, Taxes, Depreciation and
Amortisation
2)       Excluding net non-recurring items. Exceptional transactions, which are
not related to normal business operations, are accounted for as non-recurring
items. The most common non-recurring items are capital gains, additional write-
downs, restructuring provisions and penalties. The amount of each individual non-
recurring item normally exceeds one cent per share.
3)       EUR -54.0 million included in net financial items
4)       CEPS = (Net profit for the period + depreciation and amortisation)/
average number of shares

Fourth Quarter Financial Results (compared with previous quarter)
Sales of EUR 3 028.8 million were 1.4% higher than the previous quarter's EUR
2 987.4 million due to higher volumes, partially offset by lower prices.

Operating profit excluding non-recurring items was EUR 80.5 (EUR 139.8) million,
which is 42.4% less than in the previous quarter and 2.7% of sales. Operating
profits increased in publication paper, wood products and forest operations but
decreased in fine paper and packaging boards. Operating profit was EUR 66.0 (EUR
99.9) million.

Operating profit decreased owing to lower-margin overseas sales, the impact of
the declining US dollar, holiday season shutdowns in the Group's Nordic mills,
especially in Finland, the paper workers' union strike in Finland (approximately
EUR 6 million), redundancy measures (EUR 6 million), certain investment start-up
delays (EUR 6 million), and additional pension costs (EUR 13 million).

Operating profit includes gains on cash flow currency hedge contracts, mainly
for the US dollar and British pound, amounting to EUR 22.2 million. At present
currency exchange rates, this impact is expected to decrease considerably in the
coming quarters.

Non-recurring items in the operating profit totalled EUR -14.5 million due to
the write-down for the expected capital loss on the sale of forestland in
Ontario, Canada. Non-recurring items in net financial items totalled USD -61.1
(EUR -54.0) million due to the provision for the expected losses from the
termination of the US cross-border leasing contracts. The impact after taxes is
USD 36.7 (EUR 32.4) million.

Profit before taxes and minority interests excluding non-recurring items
amounted to EUR 7.8 (EUR 107.4) million.

Net financial items were EUR -67.7 (EUR -23.4) million excluding the non-
recurring provision of EUR 54.0 million from the termination of the cross-border
leases. Net interest expenses amounted to EUR -50.1 (EUR -49.9) million and net
foreign exchange losses were EUR 10.5 (gain of EUR 12.2) million. Other
financial items excluding non-recurring items totalled EUR -7.1 (EUR 14.3)
million, mainly related to unrealised changes in fair values of financial
instruments.

The share of associated company results amounted to EUR -5.0 (EUR -9.0) million.
Net tax income totalled EUR 20.5 (net tax expense of EUR -22.0) million,
resulting in a tax rate of 31.7% for the whole year. Minority interest in
profits was EUR -2.0 (EUR +1.7) million, and the net loss for the quarter EUR
42.2 (profit of EUR 47.2) million.

Earnings per share excluding non-recurring items were EUR 0.00 (EUR 0.09). Basic
earnings per share were EUR -0.05. Cash earnings per share excluding non-
recurring items were EUR 0.36 (EUR 0.44).

The return on capital employed excluding non-recurring items was 2.7% (4.6%).
Capital employed was EUR 11 744.0 million on 31 December 2003, a net decrease of
EUR 413.3 million including a decrease of EUR 270.2 million related to currency
effects.

The results for the fourth quarter include the effects of biological
transformation (growth and price) amounting to EUR 23.5 (EUR 30.5) million and
biological produce (harvesting) amounting to EUR -26.5 (EUR -25.6) million,
resulting in a net loss of EUR 3.0 (net gain of EUR 4.9) million, as a result of
following the IAS 41 standard.

Capital Structure
                                                                
EUR million       31.12.2002      IAS 41             30.9.2003  31.12.2003
                              Adjustment   1.1.2003
                                                                          

Fixed assets        12 089.4       855.8   12 945.2   12 957.9    12 676.1
Working capital      1 182.2                1 182.2    1 270.4     1 056.5
Operating           13 271.6       855.8   14 127.4   14 228.3    13 732.6
Capital
Net tax             -2 029.2      -240.4   -2 269.6   -2 071.0    -1 988.6
liabilities
Capital Employed    11 242.4       615.4   11 857.8   12 157.3    11 744.0
Associated             211.7        44.0      255.7      239.9       319.0
companies
Total               11 454.1       659.4   12 113.5   12 397.2    12 063.0
                                                                          
Shareholders'        8 156.9       659.4    8 816.3    8 215.6     8 083.7
equity
Minority                30.4                   30.4       77.2        60.3
interests
Interest-bearing     3 266.8                3 266.8    4 104.4     3 919.0
net liabilities
Financing Total     11 454.1       659.4   12 113.5   12 397.2    12 063.0

Financing
Cash flow from ongoing operations was EUR 579.7 (EUR 373.8) million and cash
flow after investing activities EUR 190.5 (EUR 87.4) million.

At the end of the period, interest-bearing net liabilities were EUR 3 919.0
million, a decrease of EUR 185.4 million. Unutilised credit facilities and cash
and cash-equivalent reserves totalled EUR 2.7 billion.

The debt/equity ratio at 31 December 2003 was 0.48 (0.49) and equity per share
EUR 9.65 (EUR 9.75). The calculation of the debt/equity ratio has been changed
so that from the fourth quarter of 2003 onwards, associated companies are no
longer treated as interest-bearing assets. The change reflects the increased
amount invested in associated companies, mainly Bergvik Skog and Veracel, which
are intended to be seen as long-term investments. The previous quarters'
debt/equity ratios have been adjusted accordingly. At the end of the year, the
debt/equity ratio was 0.44 calculated with the old definition, a difference of
0.04 compared with the new definition. The currency effect on equity was EUR -
47.2 million net of the hedging of equity translation risks. Share buy-backs
decreased equity by EUR 51.3 million in the fourth quarter.

Quarterly Change in Interest-bearing Net Liabilities
EUR million                        Cash Flow  Translation  Balance Sheet
                                               Difference         Impact
Operating profit                        66.0                        66.0
Adjustments                            310.0                       310.0
Change in working capital              203.7         10.3          214.0
Cash Flow from Operations              579.7         10.3          590.0
Capital expenditure                   -385.2                      -385.2
Acquisitions                           -47.5                       -47.5
Disposals                               48.8                        48.8
Other changes in fixed assets           -5.3        325.8          320.5
Operating cash flow                    190.5        336.1          526.6
Net financing items (incl.            -126.7                      -126.7
associated companies)
Taxes paid                             -26.1        -35.8          -61.9
Share issue                              2.3                         2.3
Repurchase of own shares               -51.3                       -51.3
Other change in shareholders'          -56.8        -46.8         -103.6
equity and minority interests
Change in Interest-bearing Net         -68.1        253.5          185.4
Liabilities


Capital Expenditure for the Fourth Quarter and Full Year 2003
Capital expenditure for the fourth quarter totalled EUR 385.2 million, giving a
total for the year of EUR 1 248.2 million, including EUR 21.5 million of non-
cash capitalisation of financial leases. The capital expenditure in 2003 was EUR
163.8 million more than depreciation, due to investment expenditures delayed
from the previous year.

The main project in 2003 was the new paper machine 4 at Langerbrugge in Belgium
(EUR 201.1 million). Other major projects were the rebuilding of paper machine 3
at Veitsiluoto in Finland (EUR 82.4 million) and paper machine 6 at Maxau in
Germany (EUR 52.9 million), the new boiler at Kvarnsveden in Sweden (EUR 23.6
million), phase 1 of rebuilding paper machine 26 at Biron in the USA (EUR 18.9
million) and folding boxboard asset improvements at Baienfurt in Germany (EUR
29.8 million).

In October Stora Enso announced the upgrading and modernisation of paper machine
2 at its publication paper mill at Summa, Finland. The machine manufactures
magazine and improved newsprint papers. The capital expenditure of EUR 53
million will be incurred equally in years 2004 and 2005. The project is
scheduled to be completed in April 2005.

In December Stora Enso approved the construction of a new paper machine at
Kvarnsveden Mill in Sweden to improve its competitiveness in uncoated magazine
paper production as part of the Asset Restructuring Programme. The total
investment is estimated at approximately EUR 450 million and the annual
production capacity of the machine will be about 420 000 tonnes of high-quality
super-calendered (SC) papers. The machine is expected to start up at the end of
2005. Paper machine 9 at Kvarnsveden Mill, which has an annual capacity of
130 000 tonnes of improved newsprint, will be shut down when the new SC machine
starts up.

The Asset Restructuring Programme also includes other investments in uncoated
magazine paper. Paper machine 6 at Maxau Mill in Germany will be rebuilt to
enhance its productivity and competitiveness. That machine produces SC-B paper
made from recovered fibre.

When the new paper machine at Kvarnsveden has started up, paper machine 3 at
Langerbrugge Mill, which has an annual capacity of 165 000 tonnes, will change
from making mainly high-quality SC to exclusively SC-B paper. This will allow
Langerbrugge Mill to maximise the usage of recycled fibre.

In addition, the Group will cease non-competitive production of SC paper on
paper machine 5 at Wolfsheck Mill in Germany when the new machine at Kvarnsveden
starts-up. The Group is investigating options for paper machine 5 at Wolfsheck
Mill, but it will not continue in production within the Publication Paper
division. The mill currently has two paper machines producing some 150 000
tonnes of high-quality SC paper and wallpaper base annually.

In December Stora Enso also approved a EUR 211 million investment in Skoghall
Mill's Energy 2005 project, which aims to secure the future base for board
production and strengthen the mill's energy supply. The new evaporation plant
and recovery boiler will start up in autumn 2005 and the biofuel boiler in
summer 2006.

Events in associated companies
Construction of the Veracel pulp mill in Brazil proceeded according to plan.
Debt financing arrangements for Veracel were finalised in the fourth quarter of
2003.


Fourth Quarter Events

Restructuring of forestland
In December Stora Enso announced its intention of restructuring ownership of the
Group's forestlands in Sweden. Stora Enso's partner in the transaction is
Korsnäs. The Swedish forests of Stora Enso and Korsnäs will be transferred to a
new company named Bergvik Skog AB. Stora Enso and Korsnäs will retain minority
shareholdings of 44.9% and 5% respectively in the new company. The rest of the
company's shares will be placed with institutional investors. Bergvik Skog will
also be financed with a syndicated bank loan.

The cash proceeds, after Stora Enso equity injection to Bergvik Skog, will be
about EUR 1.2 billion and the equity in Stora Enso will increase by about 0.3
billion. The proceeds will be used to develop the Group's core business areas
mainly outside of Europe and North America. Bergvik Skog AB will be accounted as
an associated company in the Group's accounts. The intention is to close the
transaction in the first quarter of 2004.

At the same time, Stora Enso announced plans to sell its 146 000 hectares of
forestland in Ontario, Canada.

Terminal facility at Tilbury, UK
In November Forth Ports PLC and Stora Enso announced that they had entered into
a new long-term agreement for provision of a new paper terminal facility at the
Port of Tilbury, just outside London. The fifteen-year agreement enables Stora
Enso to use the Port of Tilbury as its southern entry port in the United Kingdom
handling newsprint and other paper products from Sweden and Finland.


Stora Enso North America

Half-Year Performance
The strong growth reported in the North American economies in the second half of
2003 had hardly any effect on advertising-driven paper demand and prices.
Volumes were slightly better than in the first half of the year, with prices
generally unchanged.

Stora Enso North America continues to be affected by high personnel costs
related to pensions and health care, increased energy costs and historically low
selling prices for paper. The decline in the US dollar decreased the
profitability of the Canadian operations. Stora Enso North America's results
were only moderately better in the second half of 2003 than the first half. The
operating loss for the period July to December was USD 86 (EUR 76) million
before goodwill amortisation and non-recurring items; this compares with a USD
98 (EUR 87) million loss in the first half of 2003 and a USD 50 (EUR 53) million
loss in the second half of 2002.

Operating cash flow after investing activities was a negative USD 50 (EUR 44)
million excluding non-recurring items, compared with a negative USD 71 (EUR 64)
million in the first half of 2003 and a positive USD 113 (EUR 120) million in
the second half of 2002. Capital expenditure in the second half of 2003 totalled
USD 109 (EUR 88) million, primarily associated with the division's previously
announced profit enhancement initiative.

Operating rates improved during the second half of the year. Market-related
downtime totalled 30 000 tonnes, compared with 49 000 tonnes in the first half
of 2003 and 39 000 tonnes in the second half of 2002. Mill inventories of coated
fine paper were reduced during the second half of the year, but they remained
above optimum levels. All other inventory levels were seasonally normal.

Profit Enhancement Programme
A Profit Enhancement Programme was announced in August 2002 to improve the
operational and financial performance of the North America Division. The
initiative was expanded in August 2003 to include further workforce reductions
and additional permanent machine shutdowns. During the past three years the
North American workforce has been reduced by 25%, and the implementation of the
earlier announced further reduction of 12%, or 700 employees, is under way along
with a modification of the terms of labour agreements as the industry is
generally doing in North America. Implementation of the Profit Enhancement
Programme is proceeding according to plan. By the end of 2003, three older,
under-performing machines with a total annual capacity of 185 000 tonnes had
been permanently shut down, and two other machines had been modified to improve
their productivity.



Stora Enso Full Year Results 2003

Financial Results 2003 (compared with the previous year)
Sales decreased by EUR 610.3 million to EUR 12 172.3 million, a decline of 4.8%
mainly due to lower prices, especially in paper products, and the depreciation
of the US dollar. Sales volumes increased in all product areas.

Operating profit excluding non-recurring items decreased by EUR 388.4 million,
or 41.9% to EUR 538.1 million. Profits were lower in all business segments
except Wood Supply Europe. The operating profit for the year totalled EUR 483.7
(EUR -151.6) million after non-recurring items of EUR -54.4 million.

Operating profit includes gains on cash flow currency hedge contracts, mainly
for the US dollar and British pound, amounting to EUR 105.1 million. With the
current exchange rates, this impact is expected to decrease considerably in the
coming quarters.

Average interest expense was 4.3% (4.6%).

Profit before taxes and minority interests excluding non-recurring items
decreased by EUR 403.5 million to EUR 331.4 million.

Net tax expense was EUR 70.6 (tax income of EUR 120.9) million, or EUR -0.08 per
share representing an average tax rate of 31.7% (31.4% in previous year
excluding non-recurring tax benefits).

Minority interests were EUR -5.8 (EUR 0.1) million, leaving a net profit for the
period of EUR 146.6 (loss of EUR 222.2) million.

Non-recurring items in operating profit totalling EUR -54.4 (EUR -1 078.1)
million, or EUR -0.04 (-0.82) per share, included USD -27.4 (EUR -24.6) million
of restructuring charges related to the cost reduction programme in North
America, a provision of EUR -15.3 million for restructuring costs at Corbehem
Mill in France and USD -16.4 (EUR -14.5) million due to the expected capital
loss on the sale of forestland in Ontario, Canada. Non-recurring items in net
financial items were USD -61.1 (EUR -54.0) million due to the provision for
expected losses from the termination of US cross-border leasing contracts.

The share of results in associated companies amounted to EUR -23.0 (EUR 14.6)
million of which Veracel accounted EUR -15.0 million due to expenses not
qualified to be capitalised.

Earnings per share were EUR 0.25 (EUR 0.57) and cash earnings per share EUR 1.64
(EUR 1.97), both excluding non-recurring items. The main impacts on EPS were EUR
0.22 due to increased sales volumes offsetting EUR -0.02 due to the increased
fixed costs and EUR -0.50 due to lower sales prices. Earnings per share (basic)
were EUR 0.17 (EUR -0.25) and cash earnings per share EUR 1.58 (EUR 2.49).

The return on capital employed was 4.6% (7.1%) excluding non-recurring items.
Capital employed was EUR 11 744.0 million at the end of the year, a net decrease
of EUR 113.8 million since the beginning of the year excluding the IAS 41
adjustments.

Financing
Cash flow from operations totalled EUR 1 808.3 (EUR 2 083.8) million, with cash
flow after investing activities amounting to EUR 615.0 (EUR 1 247.7) million.

At the end of the year, interest-bearing net liabilities were EUR 3 919.0
million, up EUR 652.2 million on the previous year. Unutilised credit
facilities, and cash and cash-equivalent reserves totalled EUR 2.7 billion.

The debt/equity ratio at 31 December was 0.48 (0.37) and equity per share EUR
9.65 (EUR 9.36).

Research and Development
In 2003 Stora Enso spent EUR 88.8 (EUR 91.6) million on research and
development, equivalent to 0.7% of sales.

Changes in Group Composition
In February Stora Enso and the owners of AS Sylvester, Estonia's largest
sawmilling and wood procurement company, closed the previously announced
acquisition. Stora Enso gained 66% ownership of Sylvester's sawmilling
operations and 100% ownership of Sylvester's wood procurement operations in the
Baltic States.

In March Stora Enso announced a change in organisational structure to reflect
its strategic principle of being operated and managed as one industrial group.
The new structure, which took effect on 1 May 2003, is streamlined around Stora
Enso's three core product areas: Paper, Packaging Boards and Forest Products.

Personnel
The number of employees increased by 353 during the year to 42 814 on 31
December 2003, mainly due to the acquisition of Sylvester in the Baltic States
(1 242) and new sawmills in Russia (254), partly offset by reductions in Finland
(-249) and North America (-656). The average number of employees was 44 264, up
411 on the previous year.

Changes in Management Group
New members of the Management Group during the year were:
-        Niilo Pöyhönen, appointed Executive Vice President, Stora Enso
Consumer Boards, in March;
-        Peter Kickinger, appointed Executive Vice President, Stora Enso
Timber, in April;
-        Elisabet Salander Björklund, appointed Executive Vice President, Stora
Enso Wood Supply Europe, in April;
-        Mats Nordlander, appointed Executive Vice President, Merchants in
September 2003 replacing Sven Rosman, who retired;
-        Markku Pentikäinen, appointed Executive Vice President, Stora Enso
Asia Pacific effective from 1 January 2004, replacing Seppo Hietanen, who
retired.

Changes in Share Capital
During the calendar year 2003 a total of 16 500 A shares and 33 471 600 R shares
were repurchased by the Company, representing 3.9% of the shares and 1.3% of the
voting rights, and with a nominal value of EUR 56.9 million. The average price
paid for A shares was EUR 9.60 and for R shares EUR 9.54.

The Annual General Meeting (AGM) on 20 March 2003 decided to lower the Company's
share capital by EUR 60.5 million through the cancellation of 93 800 A shares
and 35 500 000 R shares. These shares had been repurchased under the
authorisation of the AGM in 2002.

The AGM on 20 March 2003 further authorised the Board of Directors to repurchase
and dispose of not more than 9 100 000 A shares and not more than 34 000 000 R
shares in the Company. Repurchases started on 27 March 2003 and by 31 December
2003 the Group had repurchased 8 100 A shares at an average price of EUR 10.11
and 23 504 400 R shares at an average price of EUR 9.70. This represents 0.09%
of the current authorisation for A shares and 69.1% for R shares.

By 31 December 2003 the Company had allocated 47 752 of the repurchased R shares
under the terms of the Stora Enso North America Option Plan, leaving the Company
holding 8 100 A shares and 26 181 379 R shares.

During the year a total of 1 011 805 A shares were converted into R shares. The
latest conversion was recorded in the Finnish Trade Register on 12 December
2003.

A total of 300 000 new R shares were issued under the terms of the 1997
warrants, of which 222 000 were registered in the Finnish Trade Register on 8
and 15 January 2004. A total of 567 000 new R shares are subscribable against
warrants outstanding.

Share Capital
At the year end Stora Enso had 181 211 080 A shares and 683 051 419 R shares in
issue, of which the Company held 8 100 A shares and 26 181 379 R shares with a
nominal value of EUR 44.5 million. The holding represents 3.0% of the Company's
share capital and 1.1% of the voting rights. Shareholders' equity amounted to
EUR 8 083.7 million. The nominal value of the issued share capital was EUR
1 469.2 million. Market capitalisation on the Helsinki Exchanges on 31 December
2003 was EUR 9.3 billion.

Corporate Governance Issues
In 2003 Stora Enso updated its Corporate Governance in response to
reorganisation of the Group, public interest in governance issues, new rules and
recommendations of the Helsinki, Stockholm and New York Stock Exchanges and the
Sarbanes Oxley Act.

In August the Board of Directors established a Nomination Committee for Stora
Enso Oyj. The main task of the Committee is to give guidance concerning the
composition of the Board and the remuneration of its members. It is also
responsible for preparing proposals on the composition of the other Board
committees. The Nomination Committee comprises three or four non-executive Board
members nominated annually by the Board.

Events after the Period
In January 2004 Stora Enso approved implementation of the first phase of the
North European Transport Supply System (NETSS), which will enhance cost
efficiency and improve services. It will also serve as a platform for further
development of Stora Enso's transport and distribution services in Europe. The
current shipping services from southern Finland to the UK and Belgium will be
replaced by a next-generation system based on the "hub and spoke" principle.
Cargo flows from southern Finland will be concentrated through the port of
Kotka. The port of Gothenburg, which currently handles Stora Enso's cargo from
Sweden, will expand its operations to include cargo from Finland. It is expected
that the first phase of NETSS will result in cost savings of at least 10% from
the current level of approximately EUR 80 million annually once the system is
implemented.

In February Stora Enso announced that it will upgrade and modernise the paper
machine and increase sheeting capacity at its fine paper mill in Suzhou, China.
The investments, which total EUR 38 million, will improve productivity and
safeguard market presence in the fast-growing Chinese market. The project will
be completed in September 2005. The aim of the investment is to maintain Stora
Enso's position as a quality leader by extending the product range of the mill
and increasing its annual capacity by 75 000 tonnes to 240 000 tonnes.

Outlook
In Europe growing confidence in the economic recovery is expected to increase
demand for advertising-driven paper. Pressure on prices still persists in
magazine paper grades, and newsprint prices will at best maintain last year's
levels. Prices for packaging boards are rather stable, while fine paper prices
seem to be stabilising at low levels. Demand for wood products is fairly good,
but prices are under pressure. The weak US dollar and increasing competition
will continue to have an adverse effect on the Group's European operations.

In North America the economy is recovering, but that has only marginally
increased the demand for paper. There are some signs now that demand is
increasing, and this is expected gradually to affect paper prices during the
second half of 2004. In coated fine paper oversupply persists in the form of
imports, mainly from Asia. Stora Enso North America's results for the first
quarter of 2004 will be negatively impacted by the major rebuilding of fine
paper machine 16 at Wisconsin Rapids.

In China the economy is growing rapidly and boosting the demand for fine paper
and packaging boards.

The Group's intensified savings measures that started in 2003 are proceeding
according to plan.

The objective remains to keep the capital expenditure in the 2003-04 period in
line with the Group's depreciation charges.

Annual General Meeting
The Annual General Meeting will be held at 16.00 (Finnish time) on Thursday 18
March 2004 at the Finlandia Hall, Mannerheimintie 13 e, Helsinki, Finland.

Proposals to the Annual General Meeting
The Board of Directors will propose to the Annual General Meeting cancellation
of the shares in treasury and a new repurchase programme.

Distribution of Dividend
The Board of Directors will propose to the forthcoming Annual General Meeting of
Shareholders that a dividend of EUR 0.45 per share be paid for the financial
year ending 31 December 2003. If the proposal is approved, the dividend payment
will be issued on 2 April 2004 to shareholders entered on the dividend record
date of 23 March 2004 in the register of shareholders maintained by the Finnish
Central Securities Depository, Swedish VPC and Deutsche Bank Trust Company
Americas.

New Board member
Shareholders representing more than 50 per cent of the votes in Stora Enso Oyj
have confirmed that they will propose to the Annual General Meeting that Lee A.
Chaden be elected as a new member of the Board of Directors. George W. Mead, a
member of Stora Enso's Board since 2000, is not seeking re-election.

This report is unaudited.

Helsinki, 4 February 2004
Stora Enso Oyj
Board of Directors

Segments (compared with the previous quarter)


PAPER

Publication Paper
                                                                  Change
EUR million    2002     2003    Q1/03    Q2/03   Q3/03   Q4/03   Q4/Q3 %
Sales       4 715.6  4 295.7  1 058.3  1 042.8 1 086.3       1       2.0
                                                         108.3
Operating     320.1    114.1     36.4     -5.2    39.9    43.0       7.8
profit
% of sales      6.8      2.7      3.4     -0.5     3.7     3.9          
ROOC, %*        7.5      2.9      3.7     -0.5     4.0     4.3          
Deliveries,   6 807    6 954    1 654    1 678   1 763   1 859       5.4
1 000 t
Production    6 796    7 011    1 739    1 663   1 812   1 797      -0.8
volumes, 1
000 t
* ROOC = 100% x Operating profit/Operating capital

Publication paper sales were EUR 1 108.3 million, 2.0% up on the previous
quarter due to higher deliveries. Operating profit was EUR 43.0 million, up 7.8%
on the previous quarter, mainly due to lower variable costs and improved
production efficiency. The benefit from increased shipments was almost offset by
production curtailments and decreases in stocks. Market-related production
curtailments totalled 123 000 tonnes (95 000 tonnes) in Europe and 2 000 tonnes
(11 000 tonnes) in North America.

In Europe demand for newsprint during the year was fairly stable at the previous
year's level, but there was some growth in demand for uncoated and coated
magazine paper. Volumes in the fourth quarter for all three business areas were
good. Overseas deliveries increased. Uncoated magazine paper prices remained
almost unchanged throughout the year, whereas coated magazine paper prices
declined slightly. Revenues were depressed by the depreciation of the US dollar
and British pound. Producers' inventories have fallen to low levels, reflecting
the normal seasonal pattern, but customers' inventories were not reported to
have changed significantly.

In North America coated magazine (LWC) and super-calendered (SC) paper demand
were somewhat weaker than in the third quarter of 2003 and the fourth quarter of
2002. Super-calendered paper prices were low but stable, and newsprint and
coated magazine paper prices somewhat higher. GDP growth in North America has
not yet stimulated paper demand or orders. Magazine advertisement page counts,
an indicator of paper demand, were lower than in the fourth quarter of 2002.
Order books for the first two months of 2004 were seasonally good. Coated
magazine and super-calendered paper inventories were reported to be normal at
producers and customers.

The order book for the division as a whole increased towards the end of the
year. The strengthening US economy and growing confidence in a European recovery
are expected gradually to increase demand for advertising-driven paper grades.
This expected improvement is not yet apparent in product prices.

Fine Paper
                                    Q1/03                         Change
EUR million          2002    2003           Q2/03  Q3/03   Q4/03   Q4/Q3
                                                                       %
Sales             3 427.4       3   852.3   793.9  788.5   763.0    -3.2
                            197.7
Operating           303.7   156.0    81.3    40.9   23.7    10.1   -57.4
profit
  % of sales          8.9     4.9     9.5     5.2    3.0     1.3        
ROOC, %*              7.7     4.4     8.8     4.5    2.7     1.2        
Deliveries, 1       3 432   3 591     885     895    894     917     2.6
000 t
Production          3 477   3 624     894     889    922     919    -0.3
volumes, 1 000
t
* ROOC = 100% x Operating profit/Operating capital

Fine paper sales were EUR 763.0 million, down 3.2% on the previous quarter.
Operating profit was EUR 10.1 million, down 57.4% on the previous quarter,
mainly due to the impact of the weak US dollar, redundancy costs at Nymölla,
Sweden (EUR 6 million) and problems with the start-up of rebuilt paper machine 3
at Veitsiluoto, Finland (EUR 6 million). Market-related production curtailments
totalled 40 000 tonnes (23 000 tonnes) in Europe and 3 000 tonnes (14 000
tonnes) in North America.

European deliveries of coated and uncoated fine papers were seasonally quite
strong compared with the previous quarter and the same period of 2002 as exports
increased.

Uncoated and coated fine paper sales prices in euros decreased, mainly because
competition from Eastern European producers intensified in uncoated fine papers
and overseas sales of coated fine papers denominated in US dollars were
significant.

Uncoated fine paper stock levels were normal at producers and distributors.
Distributors' stocks of coated fine paper were normal but producers' stocks
remained high. Order books were similar to the previous quarter.

In North America demand was weaker in the seasonally soft fourth quarter than
the third quarter of 2003 or the fourth quarter of 2002. Fine paper prices were
under pressure during the quarter. Order books were stable. Producers' and
merchants' fine paper inventories declined but remain high.

Asian fine paper markets were seasonally strong.

In Western Europe fine paper demand seems to have been recovering during the
fourth quarter. Current economic trends suggest modest volume recovery is likely
to continue, especially in the short term because the first quarter is
seasonally strong in Western Europe. Overseas exports are expected to stabilise
or even decline owing to the strong euro. Import pressure will persist,
especially in uncoated fine paper. The outlook for fine paper prices remains
challenging and seems to stabilise at low levels.

In North America competitive imports of coated fine paper continue to influence
the North America market, but the weakness of the US dollar seems to have slowed
their growth. The outlook is rather stable in volumes and prices. However,
prices stay at low levels.

Merchants
Sales were EUR 156.6 million, 12.3% up on the previous quarter mainly due to
increased volumes at constant prices. The operating loss increased from EUR 1.5
million in the previous quarter to EUR 5.4 million due to the EUR 4.5 million
net cost of the restructuring measures, including 125 redundancies, which are
expected to result in lower costs in 2004.

Demand has been weak and volumes and prices lower than in the previous year,
although the fall has gradually slowed. The fourth quarter was, as usual,
seasonally stronger than the previous quarter.

Volumes and prices should remain stable in early 2004, but modest growth in
volumes is expected for the full year.


PACKAGING BOARDS
                                  Q1/03                           Change
EUR million         2002   2003           Q2/03  Q3/03   Q4/03   Q4/Q3 %
Sales                  2      2   699.0   711.4  691.1   660.1      -4.5
                   720.2  761.6
Operating profit   354.7  296.9    90.5    66.6   88.5    51.3     -42.0
  % of sales        13.0   10.8    12.9     9.4   12.8     7.8          
ROOC, %*            13.5   11.5    13.9    10.2   13.5     7.9          
Deliveries, 1      2 909  3 006     756     781    755     714      -5.4
000 t
Production         2 973  3 050     788     763    767     732      -4.6
volumes, 1 000 t
* ROOC = 100% x Operating profit/Operating capital

Packaging board sales were EUR 660.1 million, 4.5% down on the previous quarter
mainly due to seasonal fluctuations and the impact of US dollar depreciation on
prices and sales volumes. Operating profit was EUR 51.3 million, 42% down on the
previous quarter due to the same reasons and additionally the normal holiday
season maintenance stoppages. Market-related production curtailments totalled 42
000 tonnes (27 000 tonnes).

Demand and prices were quite stable for most board and paper grades, as well as
for corrugated products. Prices for bleached boards (SBS) and laminating papers
declined marginally.

Demand and prices are generally expected to remain stable in the near future.
Some market-related downtime is anticipated because of European producers'
weaker competitiveness in overseas markets.

FOREST PRODUCTS

Wood Products
                                                                 Change
EUR million       2002     2003  Q1/03   Q2/03  Q3/03  Q4/03     Q4/Q3%
Sales          1 235.2  1 400.0  316.5   385.6  335.5  362.4        8.0
Operating         46.8     27.6    7.3    15.2   -4.4    9.5         NM
profit
% of sales         3.8      2.0    2.3     3.9   -1.3    2.6           
ROOC, %*          11.1      5.1    6.1    10.9   -2.7    5.6           
Deliveries, 1    5 112    5 822  1 283   1 644  1 337  1 558       16.5
000 m3
Production       5 157    6 168  1 406   1 648  1 440  1 674       16.3
volume, 1 000
m3
* ROOC = 100% x Operating profit/Operating capital

Wood product sales were EUR 362.4 million, 8.0% up on the previous quarter
mainly due to higher production and sales volumes. Operating profit was EUR 9.5
million, an improvement of EUR 13.9 million compared with the previous quarter
due to higher volumes.

Despite stable demand, the market balance has been undermined by record high
production volumes in Europe and increasing supplies from Russia.

Key factors influencing competitiveness and market balance in Europe in the near
future will be output in the Nordic countries, Continental Europe and Russia,
and the weak US dollar. As a result, the market outlook, especially for Nordic
whitewood and redwood, is uncertain. Demand for wood products is expected to
remain relatively stable, supported by steady housing markets in the USA and
Japan, and repair and maintenance activity in all market areas.

Wood Supply Europe
Sales were EUR 538.4 million, 13.3% up on the previous quarter mainly due to
seasonal reasons. Operating profit was EUR 25.2 million.

Deliveries in Finland, Sweden, the Baltic States, Russia and Continental Europe
totalled 11.2 million cubic metres (solid wood under bark), 9% up on the
previous quarter. Deliveries to the Group's mills in Europe totalled 10.1
million cubic metres, 6% up on the previous quarter.

Supplies in wood markets are expected to recover in Finland during the first
quarter of 2004, and to remain strong and stable in Russia and good in
Continental Europe with no major price changes expected in either region in the
first half of 2004.

Financials


Key Ratios    Q1/02  Q2/02 Q3/02  Q4/02  2002  Q1/03 Q2/03  Q3/03 Q4/03     2003
Earnings per   0.18   0.15 -1.12   0.54 -0.25   0.10  0.07   0.06 -0.05     0.17
share
(basic), EUR
Earnings per   0.18   0.12  0.15   0.12  0.57   0.10  0.07   0.09  0.00     0.25
share excl.
non-
recurring
items, EUR
Cash           0.55   0.52  0.50   0.81  2.49   0.43  0.41   0.42  0.32     1.58
earnings per
share
(CEPS), EUR
CEPS excl.     0.55   0.48  0.51   0.44  1.97   0.43  0.41   0.44  0.36     1.64
non-
recurring
items, EUR
Return on       7.8    7.1 -30.0   10.6  -1.6    7.1   3.6    3.3   2.2      4.1
capital
employed
(ROCE), %
ROCE excl.      7.8    5.6   7.9    7.1   7.1    7.1   3.6    4.6   2.7      4.6
non-
recurring
items, %
Return on       7.2    6.2 -45.2   23.7  -3.3    4.2   2.9    2.2  -2.0      1.8
equity
(ROE), %
Debt/equity    0.63   0.49  0.56   0.37  0.37   0.48  0.50   0.49  0.48     0.48
ratio
Equity per     9.81   9.87  8.69   9.36  9.36   9.53  9.63   9.75  9.65     9.65
share, EUR
Equity         42.7   45.2  42.6   45.0  45.0   43.9  44.5   44.9  45.4     45.4
ratio, %
Operating       8.5    7.5 -31.3    9.5  -1.2    6.8   3.5    3.3   2.2      4.0
profit, % of
sales
Operating       8.5    5.9   8.2    6.4   7.2    6.8   3.5    4.7   2.7      4.4
profit excl.
non-
recurring
items, % of
sales
Capital       155.0  183.0 208.1  331.4 877.6  235.8 324.1  303.1 385.2        1
expenditure,                                                               248.2
EUR million
Capital         4.9    5.7   6.7   10.3   6.9    7.6  10.6   10.1   7.0     10.1
expenditure,
% of sales
Capital          14     12    11     11    11     11    12     12    11   11 744
employed,       110    990   816    242   242    996   046    157   744
EUR million
Interest-     5 577  4 309 4 306  3 267 3 267  3 968 4 071  4 104 3 919    3 919
bearing net
liabilities,
EUR million
Average          42     43    43     43    43     43    44     44    44   44 264
number of       572    568   757    853   853    386   506    737   264
employees
Average                                                                         
number of
shares
(million)
  - periodic  896.9  896.5 888.5  876.8 889.6  866.2 852.9  844.5 841.3    851.1
  -           896.9  895.8 894.0  889.6 889.6  866.2 859.5  854.4 851.1    851.1
cumulative
  -           897.8  896.8 894.9  890.4 890.4  866.4 860.5  855.6 852.4    852.4
cumulative,
diluted


Key Exchange Rates for the Euro
One Euro is           Closing Rate                 Average Rate
               31 Dec 2002    31 Dec 2003       2002          2003
SEK               9.1528         9.0800        9.1551        9.1245
USD               1.0487         1.2630        0.9455        1.1320
GBP               0.6505         0.7048        0.6285        0.6921
CAD               1.6550         1.6234        1.4836        1.5822


Condensed Consolidated Income Statement
EUR million                                    2002         2003
                                                                
Sales                                      12 782.6     12 172.3
Other operating income                        176.1         41.2
Materials & services                       -6 342.9     -6 129.3
Freight & sales commissions                -1 240.9     -1 286.8
Personnel expenses                         -2 282.0     -2 285.3
Other operating expenses                     -802.6       -828.0
Depreciation, amortisation and             -2 441.9     -1 200.4
impairment charges
Operating Profit                             -151.6        483.7
Share of results of associated                 14.6        -23.0
companies
Net financial items                          -206.2       -237.7
Profit before Tax and Minority               -343.2        223.0
Interests
Income tax expense                            120.9        -70.6
Profit after Tax                             -222.3        152.4
Minority interests                              0.1         -5.8
Net Profit for the Period                    -222.2        146.6
                                                                
Key Ratios                                                      
Basic earnings per share, EUR                 -0.25         0.17
Diluted earnings per share, EUR               -0.25         0.17


Condensed Consolidated Cash Flow Statement
EUR million                              2002        2003
                                                         
Cash Flow from Operating                                 
Activities
  Operating profit                     -151.6       483.7
  Adjustments                         2 256.2     1 178.3
  Change in net working capital         -52.1       145.6
  Change in short-term interest-       -495.1       313.1
bearing receivables
Cash Flow Generated by Operations     1 557.4     2 120.7
  Net financial items                   -69.1      -198.1
  Income taxes paid                     -62.1      -233.8
Net Cash Provided by Operating        1 426.2     1 688.8
Activities
                                                         
  Acquisitions                          -56.3      -241.3
  Proceeds from sale of fixed           751.0        60.2
assets and shares
  Capital expenditure                  -877.6    -1 226.7
  Proceeds from the long-term           -74.4       336.2
receivables, net
Net Cash Used in Investing             -257.3    -1 071.6
Activities
                                                         
Cash Flow from Financing                                 
Activities
  Change in long-term liabilities      -487.6      -962.5
  Change in short-term borrowings       -56.3     1 097.1
  Dividends paid                       -403.6      -387.7
  Proceeds from issuance of share                     2.3
capital
  Purchase of own shares               -286.9      -319.2
Net Cash Used in Financing           -1 234.4      -570.0
Activities
                                                         
Net Increase in Cash and Cash           -65.5        47.2
Equivalents
  Cash and bank in acquired                 -         3.0
companies
  Translation differences on cash       -13.0       -17.2
holdings
  Cash and bank at the beginning        247.0       168.5
of period
Cash and Cash Equivalents at            168.5       201.5
Period End

Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million                                          2002        2003  
Carrying value at 1 January                      14 701.2    12 796.7  *
Acquisition of subsidiary companies                 150.4       206.4  
Additions                                           877.6     1 248.2  
Disposals                                          -571.1       -54.0  
Depreciation, amortisation and                   -2 441.9    -1 200.4  
impairment
Translation difference and other                   -775.3      -461.6  
Balance Sheet Total                              11 940.9    12 535.3  
                                                                       
Acquisitions of Subsidiary Companies                                   
Property, plant and equipment                       150.4       132.6  
Borrowings                                          -71.1       -94.1  
Other assets, less liabilities                      -23.0        12.9  
Fair value of net assets                             56.3        51.4  
Goodwill                                                -        73.8  
Total Purchase Consideration                         56.3       125.2  


* Includes the initial IAS 41 valuation of forest of EUR 855.8 million

Borrowings
EUR million                             2002     2003
                                                     
Non-current borrowings               4 525.2  3 404.6
Current borrowings                     650.4  1 769.6
                                     5 175.6  5 174.2
                                                     
Carrying value at 1 January          6 409.5  5 175.6
Debt acquired with new                  71.1     94.1
subsidiaries
Proceeds from / -payments of          -662.4    421.5
borrowings (net)
Translation difference and other      -642.6   -517.0
Total Borrowings                     5 175.6  5 174.2

Condensed Consolidated Balance Sheet

Assets
EUR million                     31 Dec     IAS 41  1 Jan 2003     31 Dec
                                  2002 Adjustment                   2003
                                                                        
Fixed and Other Long-                                                   
term Assets
Fixed assets            O     11 940.9      855.8    12 796.7   12 535.3
Investment in                    211.7       44.0       255.7      319.0
associated companies
Listed securities       I        169.2                  169.2      227.7
Unlisted shares         O        148.5                  148.5      140.8
Non-current loan        I        480.6                  480.6       44.3
receivables
Deferred tax assets     T         52.7                   52.7       12.1
Other non-current       O        241.1                  241.1      170.3
assets
                              13 244.7      899.8    14 144.5   13 449.5
                                                                        
Current Assets                                                          
Inventories             O      1 565.0                1 565.0    1 623.5
Tax receivables         T        243.1                  243.1      182.5
Operative receivables   O      1 902.4                1 902.4    1 703.3
Interest-bearing        I      1 090.5                1 090.5      781.8
receivables
Cash and cash           I        168.5                  168.5      201.5
equivalents
                               4 969.5          -     4 969.5    4 492.6
                                                                        
Total assets                  18 214.2      899.8    19 114.0   17 942.1


Shareholders' Equity and Liabilities
EUR million                    31 Dec      IAS 41      1 Jan     31 Dec
                                 2002  Adjustment       2003       2003
                                                                       
Shareholders' Equity          8 156.9       659.4    8 816.3    8 083.7
Minority Interests               30.4                   30.4       60.3
                                                                       
Long-term Liabilities                                                  
Pension provisions      O       747.0                  747.0      727.6
Other provisions        O       194.5                  194.5       97.1
Deferred tax            T     1 787.3       240.4    2 027.7    1 830.8
liabilities
Long-term debt          I     4 525.2                4 525.2    3 404.6
Long-term operative     O        36.9                   36.9       77.7
liabilities
                              7 290.9       240.4    7 531.3    6 137.8
Current Liabilities                                                    
Current portion of      I       306.5                  306.5      359.5
long-term debt
Interest-bearing        I       343.9                  343.9    1 410.1
liabilities
Operative liabilities   O     1 547.9                1 547.9    1 538.3
Tax liabilities         T       537.7                  537.7      352.4
                              2 736.0           -    2 736.0    3 660.3
                                                                       
Total Liabilities            10 026.9       240.4   10 267.3    9 798.1
                                                                       
Total Shareholders'          18 214.2       899.8   19 114.0   17 942.1
Equity and Liabilities

Items designated with "O" are included in operating capital.
Items designated with "I" are included in interest-bearing net liabilities.
Items designated with "T" are included in the tax liability.

Statement of Changes in Shareholders' Equity
EUR million       Share    Share  Treasury   OCI    CTA  Retained   Total
                Capital  Premium    Shares               Earnings
                                                                         
Balance at 1     1 541.5       1    -125.5  58.6  -50.1   5 925.0       8
January 2002               639.5                                    989.0
Repurchase of          -       -    -286.8     -      -         -  -286.8
Stora Enso Oyj
shares
Cancellation       -13.8   -83.6      97.4     -      -         -       -
of Stora Enso
Oyj shares
Dividend (EUR          -       -         -     -      -    -403.6  -403.6
0.45 per
share)
Share issue          1.9    -1.9         -     -      -         -       -
Net loss for           -       -         -     -      -    -222.2  -222.2
the period
OCI entries            -       -         - 174.8      -         -   174.8
Translation            -       -         -     -  -94.3         -   -94.3
adjustment
Balance at 31    1 529.6       1    -314.9 233.4         5 299.2       8
December 2002              554.0                 -144.4             156.9
Effect of                                                                
adopting IAS
41
   subsidiary          -       -         -     -      -     615.4   615.4
companies
   associated          -       -         -     -      -      44.0    44.0
companies
Balance at 1     1 529.6  1554.0    -314.9 233.4 -144.4   5 958.6  8816.3
January 2003                                            
(restated)
Repurchase of          -       -    -319.1     -      -         -  -319.1
Stora Enso Oyj
shares
Cancellation       -60.5  -315.5     376.0     -      -         -     0.0
of Stora Enso
Oyj shares
Dividend (EUR          -       -         -     -      -    -387.7  -387.7
0.45 per
share)
                                                                         
Options              0.2    -1.1         -     -      -         -    -0.9
exercised
Net profit for         -       -         -     -      -     146.6   146.6
the period
OCI entries            -       -         -     -      -         -  -118.8
                                           118.8
Translation            -       -         -     -  -52.7         -   -52.7
adjustment
Balance at 31    1 469.3       1    -258.0 114.6      -   5 717.5       8
December 2003              237.4                  197.1             083.7

CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income


Commitments and Contingencies
EUR million                           31 Dec 2002   31 Dec 2003
                                                               
On own Behalf                                                  
  Pledges given                               0.8           3.8
  Mortgages                                 111.4         103.5
On Behalf of Associated                                        
Companies
  Mortgages                                   1.0           0.8
  Guarantees                                 59.3          48.4
On Behalf of Others                                            
  Pledges given                               0.3           2.2
  Mortgages                                   0.0          10.9
  Guarantees                                 16.8          13.1
Other Commitments, Own                                         
  Leasing commitments, in next               41.5          34.3
12 months
  Leasing commitments, after                237.2         171.2
next 12 months
  Pension liabilities                         2.7           3.0
  Other commitments                          71.5          95.9
Total                                       542.5         487.1
                                                               
  Pledges given                               1.1           6.0
  Mortgages                                 112.4         115.2
  Guarantees                                 76.1          61.5
  Leasing commitments                       278.7         205.5
  Pension liabilities                         2.7           3.0
  Other commitments                          71.5          95.9
Total                                       542.5         487.1


Net Fair Values of Derivative Financial Instruments
EUR million              31 Dec 2002          31 Dec 2003
                                 Net   Positive  Negative      Net
                                Fair       Fair      Fair     Fair
                              Values     Values    Values   Values
Interest rate swaps            202.8      129.5     -22.7    106.8
Interest rate options            0.0        0.5       0.0      0.5
Cross-currency swaps           -21.6        2.4     -13.4    -11.0
Forward contracts              180.3      179.2      -6.4    172.8
FX Options                       0.0        1.3      -0.6      0.7
Commodity contracts            252.4       72.1      -0.6     71.5
Equity swaps                   -55.5        9.3     -45.3    -36.0
Total                          558.4      394.3     -89.0    305.3


Nominal Values of Derivative Financial Instruments
EUR million                              31 Dec 2002     31 Dec 2003
Interest Rate Derivatives                                           
Interest rate swaps                                                 
  Maturity under 1 year                        109.3           113.7
  Maturity 2-5 years                           922.8         1 080.4
  Maturity 6-10 years                        1 088.1         1 439.2
  Maturity over 10 years                           -               -
                                             2 120.2         2 633.3
Interest rate options                              -            23.8
Total                                        2 120.2         2 657.1
                                                                    
Foreign Exchange Derivatives                                        
 -  Cross-currency swap agreements             216.5           129.5
 -  Forward contracts                        3 902.4         3 112.5
 -  FX Options                                     -           208.1
Total                                        4 118.9         3 450.1
                                                                    
Commodity derivatives                                               
Commodity contracts                            538.6           477.0
Total                                          538.6           477.0
                                                                    
Equity swaps                                                        
Equity swaps                                   216.5           308.4
Total                                          216.5           308.4


Sales by Product Area
EUR million Q1/02  Q2/02   Q3/02  Q4/02   2002  Q1/03 Q2/03  Q3/03 Q4/03    2003
                                                                                
Publication     1      1       1       1     4      1     1      1     1       4
Paper       189.4  143.4   159.7   223.1 715.6  058.3 042.8  086.3 108.3   295.7
Fine Paper  909.2  873.6   832.4   812.2     3  852.3 793.9  788.5 763.0       3
                                         427.4                             197.7
Merchants   211.7  183.4   155.8   169.7 720.6  176.1 155.4  139.5 156.6   627.6
Other       -94.7  -68.7   -62.5   -63.6     -  -72.0 -69.0  -70.4 -69.9       -
                                         289.5                             281.3
Paper           2      2       2       2     8      2     1      1     1       7
            215.6  131.7   085.4   141.4 574.1  014.7 923.1  943.9 958.0   839.7
Packaging   681.3  696.4   675.9   666.6     2  699.0 711.4  691.1 660.1       2
Boards                                   720.2                             761.6
Wood        286.1  320.8   314.1   314.2     1  316.5 385.6  335.5 362.4       1
Products                                 235.2                             400.0
Wood Supply 497.9  479.2   464.7   516.9     1  534.2 526.7  475.0 538.4       2
Europe                                   958.7                             074.3
Other           -      -  -135.8  -138.3     -      -     -      -     -       -
            132.6  124.6                 531.3  143.5 149.9  131.7 165.9   591.0
Forest      651.4  675.4   643.0   692.8     2  707.2 762.4  678.8 734.9       2
Products                                 662.6                             883.3
Other           -      -  -295.7  -288.7    -1      -     -      -     -      -1
            319.4  270.5                 174.3  321.8 339.9  326.4 324.2   312.3
Total           3      3       3       3    12      3     3      2     3      12
            228.9  233.0   108.6   212.1 782.6  099.1 057.0  987.4 028.8   172.3


Operating Profit by Product Area excluding Non-recurring Items and Goodwill
EUR million   Q1/02  Q2/02 Q3/02  Q4/02  2002  Q1/03  Q2/03 Q3/03  Q4/03  2003
                                                                              
Publication   104.4   63.4  84.1   68.2 320.1    36.4  -5.2  39.9   43.0 114.1
Paper
Fine Paper     95.1   78.1  75.6   54.9 303.7   81.3   40.9  23.7   10.1 156.0
Merchants      -1.0    1.9   1.2    3.4   5.5    1.5   -1.2  -1.5   -5.4  -6.6
Paper         198.5  143.4 160.9  126.5 629.3  119.2   34.5  62.1   47.7 263.5
Packaging      98.6   65.7 110.8   79.6 354.7   90.5   66.6  88.5   51.3 296.9
Boards
Wood           11.2   14.1   9.7   11.8  46.8    7.3   15.2  -4.4    9.5  27.6
Products
Wood Supply    23.4   25.7  25.3   21.9  96.3   34.7   34.0  23.3   25.2 117.2
Europe
Forest         34.6   39.8  35.0   33.7 143.1   42.0   49.2  18.9   34.7 144.8
Products
Other Areas   -16.6  -17.5  -9.3   -8.4 -51.8   -8.5  -15.6  -6.2  -20.8 -51.1
Goodwill      -41.1  -41.2 -42.0  -24.5     -  -32.1  -28.0 -23.5  -32.4     -
amortisation                            148.8                            116.0
Operating     274.0  190.2 255.4  206.9 926.5  211.1 106.7  139.8  80.5  538.1
Profit
excl. non-
recurring
Items
Non-              -   51.6    -1   99.8    -1      -      - -39.9  -14.5 -54.4
recurring                  229.5        078.1
items
Operating     274.0  241.8     -  306.7     -  211.1  106.7  99.9   66.0 483.7
Profit (IAS)               974.1        151.6
Net           -45.2  -44.0 -56.2  -60.8     -  -81.3  -11.3 -23.4      -     -
financial                               206.2                      121.7 237.7
items
Associated     11.7    8.4  -2.4   -3.1  14.6   -0.5   -8.5  -9.0   -5.0 -23.0
companies
Profit        240.5  206.2    -1  242.8     -                                 
Before Tax                 032.7        343.2  129.3   86.9  67.5  -60.7 223.0
and Minority
Interests
Income tax    -79.4  -68.3  36.6  232.0 120.9  -40.8  -28.3 -22.0   20.5 -70.6
expense
Profit after  161.1  137.9     -  474.8     -   88.5   58.6  45.5  -40.2 152.4
Tax                        996.1        222.3
Minority       -0.1    0.1  -2.6    2.7   0.1   -3.2   -2.3   1.7   -2.0  -5.8
interests
Net Profit    161.0  138.0     -  477.5     -   85.3   56.3  47.2  -42.2 146.6
                           998.7        222.2


Operating Profit by Product Area
EUR million    Q1/02  Q2/02 Q3/02  Q4/02  2002  Q1/03 Q2/03  Q3/03 Q4/03   2003
                                                                          
Publication     85.5   45.3     -   83.5     -   28.5 -13.4    2.3  32.8   50.2
Paper                       970.5        756.2
Fine Paper      80.2   63.5     -   47.1  73.3   70.4  30.3    2.8  -0.9  102.6
                            117.5
Merchants       -1.7  -25.2   0.8    1.5 -24.6    0.9  -1.7   -2.1  -5.9   -8.8
Paper          164.0   83.6    -1  132.1     -   99.8  15.2    3.0  26.0  144.0
                            087.2        707.5
Packaging       96.3   58.3 108.8   78.3 341.7   84.0  65.1   86.6  49.3  285.0
Boards
Wood Products    7.9    9.4   6.5    8.6  32.4    3.3   9.1   -5.6   0.8    7.6
Wood Supply     23.4   25.7  25.3   47.8 122.2   34.7  34.0   23.2  25.3  117.2
Europe
Forest          31.3   35.1  31.8   56.4 154.6   38.0  43.1   17.6  26.1  124.8
Products
Other          -17.6   64.8 -27.5   39.9  59.6  -10.7 -16.7   -7.3 -35.4  -70.1
Operating      274.0  241.8     -  306.7     -  211.1 106.7   99.9  66.0  483.7
Profit                      974.1        151.6
Net financial  -45.2  -44.0 -56.2  -60.8     -  -81.3 -11.3  -23.4     -      -
items                                    206.2                     121.7  237.7
Associated      11.7    8.4  -2.4   -3.1  14.6   -0.5  -8.5   -9.0  -5.0  -23.0
companies
Profit Before  240.5  206.2    -1  242.8     -                                 
Tax and                     032.7        343.2  129.3  86.9   67.5 -60.7  223.0
Minority
Interests
Income tax     -79.4  -68.3  36.6  232.0 120.9  -40.8 -28.3  -22.0  20.5  -70.6
expense
Profit after   161.1  137.9     -  474.8     -   88.5  58.6   45.5 -40.2  152.4
Tax                         996.1        222.3
Minority        -0.1    0.1  -2.6    2.7   0.1   -3.2  -2.3    1.7  -2.0   -5.8
interests
Net Profit     161.0  138.0     -  477.5     -   85.3  56.3   47.2 -42.2  146.6
                            998.7        222.2

Stora Enso Shares

Closing      Helsinki, EUR     Stockholm, SEK    New York,
Price                                               USD
            Series   Series   Series  Series R      ADRs
              A        R         A
October     11.68    11.70    104.50   105.50      13.40
November    11.25    11.23    101.00   101.00      13.32
December    11.00    10.68     97.50    96.50      13.56

Trading         Helsinki          Stockholm       New York
Volume
            Series  Series R  Series  Series R      ADRs
              A                  A
October     73 176   68 608     159    31 828    1 573 000
                       827      707      158
November    45 993   45 056     231    12 019    1 385 700
                       411      887      963
December    1 569    80 501     313    22 470    1 957 600
             214       736      126      251
Total       1 688    194 166    704    66 318    4 916 300
             383       974      720      372


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


Annual General Meeting                       18 March 2004
Dividend record date                         23 March 2004
Dividend payment issued                      2 April 2004


Publication dates for financial information
Interim Review for January - March 2004      28 April 2004
Interim Review for January - June 2004       28 July 2004
Interim Review for January - September 2004  27 October 2004


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.


STORA ENSO OYJ


p.p.     Jussi Siitonen             Jukka Marttila

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