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M-REAL ANNOUNCES PROFITABILITY IMPROVEMENT PROGRAMS IN ZANDERS AND MAP MERCHANTS UK

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M-real Corporation Stock Exchange Bulletin 21.12.2004 at 3.00 p.m.


M-REAL ANNOUNCES PROFITABILITY IMPROVEMENT PROGRAMS IN ZANDERS AND
MAP MERCHANTS UK
                  
M-real initiates two profitability improvement programs in Germany
and in the UK. They are part of M-real´s EUR 200 million savings and
efficiency improvement program which was launched in early 2004. The
program proceeds as planned. As estimated in August, positive impact
on profitability will be EUR 30 million in 2004.

In Germany, as part of M-real Zanders´ profitability improvement
program the number of employees will be reduced by 330 from 1800 by
the end of 2006 at Gohrsmuehle and Reflex mills. Furthermore, it has
been agreed with the Labor Unions that the weekly working hours will
be increased to 40 without additional compensation and there will be
no increase in wages and salaries in 2005. The total annual personnel
cost reduction is estimated to be about EUR 20 million at the end of
2006.

In UK at Map Merchants, M-real is planning to restructure the
operations of MoDo Merchants Ltd and James McNaughton Paper Group
Ltd. As a result of the planned restructuring, the number of
employees will decrease by 55 and the overall efficiency of the
operations will improve. From 2006 onwards, the estimated annual
profitability improvement will exceed the one-time cost.

The estimated non-recurring costs of the programs

Related to M-real Zanders´ profitability improvement program, the
estimated one-time cost to be recorded for 2004 is EUR 24 million.
This consists mainly of provisions for future redundancy costs as
well as write-offs of certain assets and stock items relating to
changes in product strategy.

The planned restructuring of Map Merchants´ UK operations will result
in estimated one-time cost of EUR 6 million in 2004.

In addition, totally about EUR 10 million will be recorded as one-
time costs for 2004 related to certain other minor restructuring
programs. Out of the total one-time cost of EUR 40 million, about EUR
32 million will have a cash-flow impact.

M-real´s Q4 will be also affected by additional financial costs of
about EUR 20 million related to completed rights offering as well as
signed revolving credit facility agreement of EUR 500 million.

M-REAL CORPORATION

Corporate Communications


For additional information contact Chief Financial Officer Juhani
Pöhö, tel. +358 10 469 5283

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