M-REAL POSTS AN IMPROVED OPERATING RESULT IN THE FIRST QUARTER

M-real Corporation Stock Exchange Bulletin 28.4.2005 at 1.00 p.m.
1(25)

M-REAL POSTS AN IMPROVED OPERATING RESULT IN THE FIRST QUARTER

In the first quarter of the year M-real Group’s operating result net
of non-recurring items rose to EUR 30 million from EUR 19 million in
the previous quarter. Compared with the previous quarter, the
operating result was improved mainly by lower fixed costs as well as
a rise in the average price of coated magazine paper. Fourth-quarter
profitability was burdened by the costs of annual maintenance
shutdowns in Finland.

The operating result included net non-recurring income of EUR 85
million (net expenses of EUR 34 million in the previous quarter), the
main item being a capital gain of EUR 80 million booked on the sale
of an 8 per cent holding in Metsä-Botnia. The operating result was a
profit of EUR 115 million (a loss of 14 million).

Key figures for the first quarter:
- Sales: EUR 1,344 million (1,365 million in the previous quarter)
- Operating result, excluding non-recurring items: EUR 30 million
(EUR 19 million)
- Operating result: profit of EUR 115 million (a loss of 14 million)
- The result before taxes, excluding non-recurring items: a loss of
EUR 8 million (a loss of 3 million)
- Result before taxes: profit of EUR 77 million (a loss of 36
million)
- Result for the report period: profit of EUR 76 million (a loss of
46 million).
- Earnings per share excluding non-recurring items: EUR 0.03 negative
(0.15 negative)
- Earnings per share: EUR 0.23 (0.23 negative)
- Return on capital employed excluding non-recurring items: 3.0 per
cent (1.7)
- Return on capital employed: 9.9 per cent (-1.1)
- Equity ratio: 38.6 per cent (37.5)
- Gearing ratio: 81 per cent (89)
- Comparable volume of paperboard delivered: 281,000 (282,000);
volume of paper delivered: 1,019,000 (1,038,000)

Of the business areas, Publishing, Commercial Printing and Office
Papers improved their profitability.

Demand for paper declined somewhat and demand for paperboard
increased on the previous quarter. M-real’s paper deliveries were
down 2 per cent, with comparable paperboard deliveries remaining at
the level of the previous quarter.

Selling prices of folding boxboard and coated magazine paper rose.

The operating result net of non-recurring items improved also on the
same period of last year thanks to the increased volume of paper and
paperboard delivered as well as lower fixed costs.

Commenting on the market situation for M-real’s main products,
President & CEO Hannu Anttila said: “We’ve succeeded in increasing
the prices of folding boxboard and magazine paper in the first part
of the year. Price increases for coated fine papers in the first
quarter were proceeded more slowly than planned, but we believe that
the increases will go through later this spring. The market situation
within office papers remains challenging.”

“Firming up of the company’s capital structure is on track – in just
over a year, we’ve succeeded in reducing interest-bearing net debt by
nearly 1.3 billion euros. Henceforth, we can focus even more on
measures improving the efficiency of our operations and lowering
costs,” observes Anttila.

The second-quarter result is estimated to fall somewhat short of the
first quarter due to seasonal factors and weaker-than-forecast price
development for fine papers.

An imminent paperworkers’ strike in Finland would, if it
materializes, have a negative impact on M-real’s second-quarter
earnings.

M-REAL CORPORATION

Corporate Communications

For further information, contact Hannu Anttila, President and CEO,
tel. +358 10 469 4343 or Juhani Pöhö, Senior Vice President and CFO,
tel. +358 10 469 5283.


M-REAL CORPORATION

INTERIM REPORT 1 JANUARY - 31 MARCH 2005

ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

M-real made the transition from Finnish Accounting Standards (FAS) to
International Financial Reporting Standards (IFRS) from the beginning
of 2005.

The transition was made on 1 January 2004, and an opening balance
sheet in accordance with IFRS accounting principles was prepared at
that date. Certain exemptions permitted to first-time adopters of
IFRS have been applied in preparing the opening balance sheet. More
detailed information and specifications of the effects of the
transition on the company’s balance sheet and income statement as
well as the changes in accounting principles have been given in the
stock exchange release of 19 April 2005.

The first financial statements according to International Financial
Reporting Standards will be published for the period 1 January – 31
December 2005. This Interim Report has been prepared according to the
accounting and valuation principles of IFRS.

JANUARY-MARCH EARNINGS COMPARED WITH THE PREVIOUS QUARTER

In the first quarter M-real’s consolidated sales was EUR 1,344
million (Sep.-Dec. 2004: EUR 1,365 million). Comparable sales fell by
0.6 per cent.

The Group reported an operating profit of EUR 115 million (a loss of
EUR 14 million). The operating result includes a capital gain of EUR
81 million on the sale of an 8 per cent holding in Metsä-Botnia as
well as an EUR 4 million insurance compensation payment for the
Alizay pulp mill. The operating result for the previous quarter
included EUR 34 million of net non-recurring charges.

The operating result, excluding non-recurring items, was a profit of
EUR 30 million (19). Compared with the previous quarter, the
operating result was improved mainly by lower fixed costs and the
higher average price of coated magazine paper. Fourth-quarter
profitability was furthermore burdened by the costs of annual
maintenance shutdowns in Finland.

Of the business areas, Publishing, Commercial Printing and Office
Papers improved their profitability.

Deliveries of paperboard to customers totalled 281,000 tonnes
(340,000). The Savon Sellu pulp mill is included in the previous
quarter’s delivery volume. The delivery volume of Kemiart Liners is
accounted for to the full extent in both quarters. The comparable
delivery volume in the previous quarter was 282,000. Production was
curtailed by 17,000 tonnes in line with demand (23,000).

Paper deliveries from the mills totalled 1,019,000 tonnes
(1,038,000). Production curtailments amounted to 64,000 tonnes
(46,000).

Financial income and expenses were EUR 39 million negative (EUR 21
million negative). These items included net interest and other
financial expenses of EUR 28 million (42) as well as foreign exchange
differences on accounts receivable, accounts payable, foreign
exchange hedges and financial items amounting to EUR 11 million
negative (EUR 21 million positive).

At the end of March, the exchange rate of the United States dollar
against the euro was 4.8 per cent and the rate of the British pound
against the euro 2.3 per cent higher than at the end of 2004. On
average, the dollar weakened by 1.1 per cent and sterling appreciated
by 2.3 per cent compared with the previous quarter.

The result before taxes was a profit of EUR 77 million (a loss of 36
million). The result, excluding the above-mentioned non-recurring
items, was a loss of EUR 8 million (a loss of 3 million).

Net profit for the report period was EUR 76 million (a net loss of 46
million). Income taxes, including the change in the deferred tax
liability, were EUR 0 million (8).

Earnings per share were EUR 0.23 (0.23 negative). Excluding non-
recurring items, earnings per share were 0.03 negative (0.15
negative).

The return on equity was 12.5 per cent (7.9 negative); excluding non-
recurring items, 1.3 per cent negative (3.6 negative). The return on
capital employed was 9.9 per cent (-1.1); excluding non-recurring
items, 3.0 per cent (1.7).

EARNINGS IN JANUARY-MARCH COMPARED WITH THE SAME PERIOD OF 2004

M-real’s consolidated sales was EUR 1,344 million (Jan.–Mar. 2004:
EUR 1,412 million). Comparable sales fell by 2.1 per cent.

The operating result was a profit of EUR 115 million (24). The
operating result includes the above-mentioned 85 million of non-
recurring income. Last year’s first-quarter result did not include
non-recurring items.

The operating result, excluding non-recurring items, was a profit of
EUR 30 million (24). Profitability was improved above all by the
growth in the volume of paper and paperboard delivered and the
decrease in fixed costs in the paper business areas. M-real succeeded
in improving profitability despite a stronger euro, the fall in the
average price of uncoated fine paper and the rise in costs of oil-
based raw materials.

Of the business areas, Consumer Packaging and Publishing improved
their profitability. The operating result of Commercial Printing and
Map Merchants, excluding non-recurring items, was on a par with the
comparison period.

Deliveries of paperboard to customers totalled 281,000 tonnes
(341,000). The Savon Sellu pulp mill is included in the comparison
period’s delivery volume. The delivery volume of Kemiart Liners is
accounted for to the full extent in both quarters. On a like-for-like
basis, the delivery volume in the comparison period was 290,000
tonnes. Production was curtailed by 17,000 tonnes in line with demand
(40,000).

The total volume of paper deliveries was 1,019,000 tonnes (982,000).
Production curtailments amounted to 64,000 tonnes (107,000).

Financial income and expenses were EUR 39 million negative (EUR 66
million negative). These items include net interest and other
financial expenses of EUR 28 million (48) as well as foreign exchange
differences on accounts receivable, accounts payable, foreign
exchange hedges and financial items amounting to EUR 11 million
negative (EUR 18 million negative).

At the end of March, the exchange rate of the United States dollar
against the euro was 6.1 per cent lower and the rate of the British
pound against the euro 3.4 per cent lower than at the end of March
2004. On average, the dollar weakened by 4.8 per cent and sterling by
2.0 per cent compared with the same period of last year.

The result before taxes was a profit of EUR 77 million (a loss of 42
million). The result, excluding the above-mentioned non-recurring
items, was a loss of EUR 8 million (a loss of 42 million).

Net profit for the report period was EUR 76 million (141). The result
for the comparison period includes a capital gain of EUR 176 million
on the divestment of Metsä Tissue. Income taxes, including the change
in the deferred tax liability, were EUR 0 million (7).

Earnings per share were EUR 0.23 (0.66). Excluding non-recurring
items, earnings per share were 0.03 negative (0.66).

The return on equity was 12.5 per cent (7.1 negative); excluding non-
recurring items, 1.3 per cent negative (7.1 negative). The return on
capital employed was 9.9 per cent (2.0); excluding non-recurring
items, 3.0 per cent (2.0).

PERSONNEL

The payroll at the end of March was 15,453 employees (15,960 at 31
December 2004), of whom 4,490 worked in Finland (4,912). The net
reduction in personnel was 507 employees. The net effect of
acquisitions and divestments on the reduced headcount was 374
employees.

The Group’s personnel includes 39 per cent of Metsä-Botnia’s
employees. At the end of 2004 the Group’s payroll included 47 per
cent of Metsä-Botnia’s staff.

CAPITAL EXPENDITURES

Capital expenditures on fixed assets totalled EUR 93 million in
January-March (Jan.–Mar. 2004: 22).

The capital expenditure project for building a new BCTMP mill in
Kaskinen is proceeding according to plan. The main equipment
installations will be completed in June and the mill will come on
stream in August.

An investment of about EUR 60 million at the Simpele mill was
announced. The mill’s board machine will be modernized, the slitter-
winder and reel and sheet packaging equipment will be rebuilt and the
sheeting capacity will be increased. When the investment is
completed, paperboard production capacity will rise to 215,000 tonnes
a year. The investment project will be completed stage by stage by
spring 2006.

ACQUISITIONS, DIVESTMENTS AND RESTRUCTURING

The sale of forestland to Forestia Holding Oy was seen to completion
in January. The total purchase price was EUR 172 million, of which M-
real's share was EUR 163 million. The transaction does not have a
material impact on earnings.

In March, Metsä-Botnia, the resource company that is jointly owned by
M-real, UPM-Kymmene and Metsäliitto, announced its decision to invest
in a new pulp mill in Uruguay. The total cost of the investment will
be about 1.1 billion dollars. The mill will produce eucalyptus pulp
and it is estimated to start up during the third quarter of 2007.
Concurrently, M-real announced it was selling its 8% holding in Metsä-
Botnia to Metsäliitto Osuuskunta for EUR 164 million. A capital gain
of EUR 81 million was booked on the deal. Following the transaction,
the shareholdings in Metsä-Botnia are M-real 39%, Metsäliitto 14% and
UMP-Kymmene 47%. The transaction was completed on 31 March.

FINANCING

Interest-bearing net liabilities amounted to EUR 1,988 million at the
end of March (Dec. 2004: 2,183).

The equity ratio at the end of the period was 38.6 per cent (Dec.
2004: 37.5) and the gearing ratio was 81 per cent (Dec. 2004: 89).

Liquidity is good. Liquidity at the end of March was EUR 1,706
million, of which EUR 1,564 million consisted of binding long-term
credit commitments and EUR 142 million represented liquid funds and
investments. In addition, to meet its short-term financing needs, the
Group had at its disposal non-binding domestic and foreign commercial
paper programmes and credit facilities amounting to about EUR 550
million.

At the end the report period an average of 5 months of net foreign
currency exposure was hedged. The degree of hedging during the report
period has varied between 4 and 5 months. At the end of the report
period, about 94 per cent of the shareholders’ equity not in euros
was hedged. At the end of the period the average interest rate
maturity of Group’s interest bearing liabilities was 27 months.
During the report period the interest rate maturity has varied from
22 to 27 months.

In March, Standard & Poors Rating Services lowered the rating on M-
real’s long-term loans from BB+ to BB- and changed the outlook for
the rating from negative to stable. Moody’s Investors Services’
credit rating for M-real is Ba2, with a stable outlook.

SHARES

The highest price of M-real’s Series B share on the Helsinki Stock
Exchange during the January-March period was EUR 4.93, the low EUR
4.10 and the average price EUR 4.47. In 2004 the average price was
EUR 5.59. The price of the Series B share was EUR 4.56 at the end of
the report period on 31 March 2005.

Turnover of the Series B share was EUR 356 million, or 27 per cent of
the shares outstanding. The market value of the Series A and B shares
at 31 March 2005 totalled EUR 1,495 million.

At 31 March 2005 Metsäliitto Osuuskunta owned 38.6 per cent of M-real
Corporation’s shares and held 60.5 per cent of the voting rights
conferred by these shares. International investors owned 36.7 per
cent of the shares.

On 14 March the Annual General Meeting approved the Board of
Directors’ proposal for amending the Articles of Association. An
Article 16 concerning the conversion of shares will be added to the
Articles of Association, its principal content being that an M-real
Series A share can be converted into a Series B share upon the
written demand of a shareholder or authorized agent for nominee-
registered shares. No cash consideration is payable for carrying out
a conversion. The change in the Articles of Association was entered
in the Trade Register on 18 April 2005.

In March, application was made to the Helsinki Stock Exchange for
permission to reduce the company’s round lot for traded shares from
500 to 200 shares. The change entered into effect on 14 March.

The Board of Directors does not have current authorizations to carry
out share issues or issues of convertible bonds or bonds with
warrants.

DIVIDEND

The Annual General Meeting resolved on 14 March, in accordance with
the Board of Directors’ proposal, to pay a dividend of EUR 0.12 per
share for the financial year ended 31 December 2004, for a total of
EUR 39,379,873.44. The dividend was paid out on 24 March 2005.


BOARD OF DIRECTORS AND AUDITORS

The Annual General Meeting elected the following persons to seats on
M-real’s Board of Directors for a term extending up to the next
Annual General Meeting: Heikki Asunmaa, Kim Gran, Kari Jordan, Asmo
Kalpala, Erkki Karmila, Runar Lillandt, Antti Tanskanen and Arimo
Uusitalo.

At its organization meeting, the Board of Directors elected Kari
Jordan chairman and Arimo Uusitalo vice chairman.

The Annual General Meeting elected as M-real’s auditors Göran
Lindell, Authorized Public Accountant, and the firm of independent
public accountants PriceWaterhouseCoopers Oy, with Jouko Malinen,
Authorized Public Accountant, acting as Principal Auditor and Björn
Renlund, Authorized Public Accountant, and Markku Marjomaa,
Authorized Public Accountant, acting as deputy auditors.

The term of office of the auditors and deputy auditors lasts until
the end of the next Annual General Meeting.

NEAR-TERM OUTLOOK

Economic growth in Europe has remained weak and estimates of overall
growth for 2005 have been lowered during the first part of the year.
Economic growth is generally forecast to be slower in Europe, North
America and Asia than it was in 2004. The amount of money spent on
printed advertising, which moves fairly much in tandem with economic
growth is nevertheless estimated to increase in western Europe at
last year’s rate. The weakening in the United States dollar will have
a negative impact on the competitiveness of the forest industry in
western Europe.

Paper demand held up fairly well in the first quarter of 2005. Demand
was at the level of the same quarter a year earlier. Production
capacity was still underused, especially for fine paper grades. M-
real’s deliveries of paperboard remained at a good level. Demand for
paper and paperboard is expected to hold up well, but seasonal
variation is likely to lower second-quarter delivery volumes compared
with the first quarter. M-real has succeeded in increasing prices of
folding boxboard and magazine paper slightly during the first part of
the year. Price increases for coated fine paper proceeded more slowly
than planned during the first quarter. Measures aiming to increase
prices will continue. The market situation within office papers is
still challenging.

Because of the high market price of crude oil, prices of the oil-
based raw materials as well as transport costs have risen.

Second-quarter earnings are estimated to come in somewhat lower than
the first quarter due to seasonal factors and the weaker-than-
forecast price trend for fine paper grades.

An imminent paperworkers’ strike in Finland would, if it
materializes, have a negative impact on M-real’s second-quarter
earnings.

Espoo, 28 April 2005


BOARD OF DIRECTORS


BUSINESS AREAS AND MARKET TRENDS

Consumer Packaging

                       I 05    IV   III    II  I 04  2004  IV 04-I
                               04    04    04                   05
                                                            change
Sales                   238   256   264   267   258  1,04    -7.0%
                                                        5
EBITDA 1)                49    45    49    42    44   180    +8.8%
     EBITDA %          20.6  17.6  18.6  15.7  17.0  17.2         
Operating result         27    30    25    18    20    93   -10.0%
     Operating         11.3  11.7   9.4   6.7   7.8   8.9         
result, %
Non-recurring items       0    +3     0     0     0    +3         
Return on capital      11.1  11.9   9.7   7.2   8.0   9.5         
employed, %
Return on capital      11.1  10.7   9.7   7.2   8.0   9.2         
employed
excl. non-recurring
items, %
Deliveries, 1,000 t     281   340   345   349   341  1,37   -17.3%
                                                        4
Paperboard              293   326   355   319   331  1,33   -10.1%
production, 1,000 t                                     0
1) EBITDA = operating result before depreciation and impairment
charges

The Consumer Packaging business area reported operating profit of EUR
27 million (Oct.-Dec. 2004: 30). Operating profit included non-
recurring net income of EUR 3 million in the previous quarter.

The operating result, excluding non-recurring items, was a profit of
EUR 27 million (27). Fourth-quarter profitability was burdened by the
costs of annual maintenance shutdowns. The Savon Sellu pulp mill is
included in the figures for 2004. Kemiart Liners is included in its
entirety from the beginning of 2004.

Deliveries by west European folding boxboard producers were up 8 per
cent on the previous quarter. M-real’s folding boxboard deliveries
were at the previous quarter’s level. The selling price of folding
boxboard rose in most of the main market areas.

Deliveries of linerboard increased markedly. Selling prices remained
at the previous quarter’s level.

Compared with the same period of last year, the operating result
increased by EUR 7 million. The operating result was improved mainly
by the growth in the volume of folding boxboard deliveries. The
appreciation of the euro kept the average prices of the business
area’s product groups nearly unchanged.

Deliveries by west European folding boxboard producers were up 6 per
cent compared with the same period of last year. Deliveries by
producers to western Europe were unchanged. M-real’s deliveries
likewise grew by 6 per cent. Deliveries to eastern Europe and North
America showed the best growth.

Publishing

                       I 05    IV   III    II I 04  2004  IV 04-I
                               04    04    04                  05
                                                           change
Sales                   208   225   202   188  187   802    -7.6%
EBITDA 1)                29    26    31    17   26   101   +11.5%
     EBITDA %          13.9  11.6  15.3   9.0 13.9  12.6         
Operating result          8     4     9    -5    4    12         
     Operating          3.8   1.8   4.5  -2.7  2.1   1.5         
result, %
Non-recurring items       0    +1     0     0    0    +1         
Return on capital       2.7   1.5   3.0  -1.5  1.5   1.1         
employed, %
Return on capital       2.7   1.2   3.0  -1.5  1.5   1.0         
employed
excl. non-recurring
items, %
Deliveries, 1,000 t     307   336   301   283  273  1,19    -8.6%
                                                       2
Production, 1,000 t     308   314   309   257  268  1,14    -1.9%
                                                       8
1) EBITDA = operating result before depreciation and impairment
charges

The Publishing business area’s operating profit was EUR 8 million
(4). The result in the previous quarter included non-recurring net
income of EUR 1 million.

The operating result, excluding non-recurring items, was a profit of
EUR 8 million (3). Profitability was improved mainly by the rise in
the average selling price coupled with an increase in product stocks.
Fourth-quarter profitability was furthermore burdened by the costs of
annual maintenance shutdowns.

Deliveries by west European producers of magazine paper fell by 13
per cent. The Publishing business area’s delivery volume fell by 9
per cent.

Compared with the same period of last year, the operating result rose
by EUR 4 million. The operating result was improved by the growth in
delivery volumes, the fall in fixed costs and a higher level of
product stocks.

Deliveries of coated magazine paper by west European producers were
up 8 per cent on the corresponding period a year ago. The Publishing
business area’s delivery volume rose by 12 per cent thanks to the
growth in deliveries outside western Europe.

The average price was at the level of the same period of last year.
The strengthening of the euro depressed the euro-denominated selling
price of exports.

Commercial Printing

                       I 05    IV   III    II  I 04 2004  IV 04-I
                               04    04    04                  05
                                                           change
Sales                   363   372   368   362   372 1,47    -2.4%
                                                       4
EBITDA 1)                22    -8    20    23    22   56         
     EBITDA %           6.1  -2.2   5.4   6.4   5.9  3.8         
Operating result         -4   -35    -7    -4    -4  -49         
     Operating         -1.1  -9.4  -1.9  -1.1  -1.1 -3.3         
result, %
Non-recurring items       1   -27     0     0     0  -27         
Return on capital      -1.0     -  -1.8  -0.8  -1.2 -3.5         
employed, %                  10.1
Return on capital      -1.3  -2.1  -1.8  -0.8  -1.2 -1.5         
employed
excl. non-recurring
items, %
Deliveries, 1,000 t     453   469   464   450   459 1,84    -3.4%
                                                       2
Production, 1,000 t     470   472   471   470   472 1,88    -0.4%
                                                       5
1) EBITDA = operating result before depreciation and impairment
charges

The Commercial Printing business area’s operating result was a loss
of EUR 4 million (a loss of 35 million). The result includes non-
recurring income from Commercial Printing’s share of the insurance
compensation for the Alizay pulp mill in France, amounting to about
one million euros. The result in the previous quarter included non-
recurring net expenses of EUR 27 million.

The operating result, excluding non-recurring items, was a loss of
EUR 5 million (a loss of 8 million). Profitability was improved
mainly by the fall in fixed costs and the increase in product stocks.

Deliveries by west European producers of coated fine paper fell by 4
per cent. M-real’s volume of coated fine paper deliveries declined by
6 per cent.

The average selling price of coated fine paper was at the previous
quarter’s level.

Compared with the same period a year ago, the operating result was
unchanged.

Deliveries of coated fine paper by west European producers fell by
one per cent compared with the same period of last year. M-real’s
volume of coated fine paper deliveries likewise fell by one per cent.
The biggest decline in deliveries was in western Europe.

The price of fine paper was at the level of the same period a year
ago. The strengthening in the euro depressed the average euro-
denominated selling price of exported products.

Office Papers

                       I 05    IV   III    II  I 04  2004  IV 04-
                               04    04    04                I 05
                                                           change
Sales                   176   162   168   159   178   667   +8.6%
EBITDA 1)                20    16    20    15    21    71  +25.0%
     EBITDA %          11.4   9.9  11.9   9.4  11.8  10.6        
Operating result          5     0     4    -1     6    10        
     Operating result,  2.8     0   2.4  -0.6   3.4   1.5        
%
Non-recurring items       3     0     0     0     0     0        
Return on capital       2.4   0.1   1.9  -0.2   3.0   1.2        
employed, %
Return on capital       0.9   0.1   1.9  -0.2   3.0   1.2        
employed
excl. non-recurring
items, %
Deliveries, 1,000 t     259   233   246   228   254   961  +11.2%
Production, 1,000 t     248   244   241   243   247   975   +1.6%
1) EBITDA = operating result before depreciation and impairment
charges

The Office Papers business area generated operating profit of EUR 5
million (0). The result includes non-recurring income from Office
Papers’ share of the insurance compensation for the Alizay pulp mill,
amounting to about 3 million euros.

The operating result, excluding non-recurring items, was a profit of
EUR 2 million (0). The growth in delivery volume lifted
profitability, though it was weakened by the fall in the average
selling price and decrease in product stocks.

Deliveries by west European producers of uncoated fine paper rose by
4 per cent. The delivery volume of the Office Papers business area’s
products rose by 12 per cent.

Compared with the same period of last year, the operating result,
excluding non-recurring items, decreased by EUR 4 million.
Profitability was weakened by the 4 per cent drop in the average
selling price.

Deliveries of uncoated fine paper by west European producers declined
by one per cent compared with the corresponding period a year ago.
The volume of deliveries by the Office Papers business area rose by 2
per cent.

Map Merchant Group

                       I 05    IV   III    II  I 04 2004  IV 04-I
                               04    04    04                  05
                                                           change
Sales                   341   343   332   339   354 1,36    -0.6%
                                                       8
EBITDA 1)                 8     2     6     8     8   24         
     EBITDA %           2.3   0.6   1.8   2.4   2.3  1.8         
Operating result          6     0     4     7     6   17         
     Operating          1.8     0   1.2   2.1   1.7  1.2         
result, %
Non-recurring items       0    -8     0     0     0   -8         
Return on capital       7.7   0.5   4.7   8.0   8.2  5.1         
employed, %
Return on capital       7.7   9.3   4.7   8.0   8.2  7.6         
employed
excl. non-recurring
items, %
Deliveries, 1,000 t     325   330   321   319   338 1,30    -1.5%
                                                       8
1) EBITDA = operating result before depreciation and impairment
charges

The operating result of the Map paper merchanting business was a
profit of EUR 6 million (0). The result in the previous quarter
included net non-recurring expenses of EUR 8 million.

The operating result, excluding non-recurring items, was a profit of
EUR 6 million (8). Profitability was weakened by seasonal factors.

Compared with the same period a year ago, the operating result was
unchanged.


M-REAL GROUP (all figures unaudited)

CONDENSED CONSOLIDATED INCOME STATEMENT

EUR million                1-3/05  1-3/04   Change 1-12/04     10-
                                                             12/04
Sales                       1 344   1 412      -68   5 529   1 365
Other operating income        114      17       97      89      21
Operating expenses         -1 245  -1 306       61  -5 199  -1 309
Depreciation and              -98     -99        1    -392     -91
impairment losses
Operating profit              115      24       91      27     -14
% of sales                    8.6     1.7              0.5    -1.0
Share of result in              1       0        1       0      -1
associated companies
Net exchange gains and        -11     -18        7       4      21
losses
Other financial income        -28     -48       20    -140     -42
and
expenses, net
Profit on continuing           77     -42      119    -109     -36
operations before tax
% of sales                    5.7    -3.0             -2.0    -2.6
Income tax                      0       7       -7     -18      -8
Profit on continuing           77     -35      112    -127     -44
operations
% of sales                    5.7    -2.5             -2.3    -3.2
Profit on discontinued          0     176     -176     175      -1
operations
Profit of the period           77     141      -64      48     -45
% of sales                    5.7    10.0              0.9    -3.3
Minority interest              -1       0       -1      -3      -1
Profit/loss attributable       76     141      -65      45     -46
to                                                                
shareholders of parent
company
 % of sales                   5.7    10.0              0.8    -3.4


CONDENSED CONSOLIDATED BALANCE SHEET

EUR million          31.3.05       % 31.3.04       % 31.12.0       %
                                                           4
ASSETS                                                              
Non-current assets                                                  
Intangible assets        645    10.1     643     9.7     644     9.8
Tangible assets        3 160    49.8   3 338    50.7   3 262    50.3
Biological assets         28     0.4     192     2.9     189     2.9
Shares in associated     125     2.0     144     2.2     126     2.0
and other companies
Interest bearing          42     0.7      56     0.8      43     0.7
receivables
Deferred tax              39     0.6      31     0.5      39     0.6
receivables
Other non-interest        25     0.4      10     0.2      10     2.2
bearing receivables
                       4 064    64.0   4 414    67.0   4 313    66.5
Current assets                                                      
Inventories              726    11.4     732    11.1     726    11.2
Receivables                                                         
  Interest bearing       218     3.4      89     1.4      38     0.6
  receivables
  Non-interest         1 199    18.9   1 208    18.3   1 167    18.0
bearing
  receivables
Cash and cash            142     2.2     146     2.2     242     3.7
equivalents
                       2 285    36.0   2 175    33.0   2 173    33.5
Total assets           6 349   100.0   6 589   100.0   6 486   100.0

SHAREHOLDERS EQUITY 31.3.05        % 31.3.04       % 31.12.0       %
AND LIABILITIES                                            4
Shareholder´s                                                       
equity
  Equity              2 431     38.3   2 038    30.9   2 393    36.9
attributable to
  shareholders of
parent
  company
  Minority interest      30      0.5      29     0.5      37     0.6
Total equity          2 461     38.8   2 067    31.4   2 430    37.5
Non-current                                                         
liabilities
  Deferred tax          373      5.9     412     6.3     421     6.5
receivables
  Post employment       216      3.4     244     3.7     216     3.4
benefit
  obligations
  Provisions             36      0.6      25     0.3      36     0.5
  Other non-             71      1.1      71     1.1      15     0.2
interest bearing
  liabilities
  Interest bearing    1 502     23.6   1 862    28.3   1 640    25.3
  liabilities
                      2 198     34.6   2 614    39.6   2 328    35.9
Current liabilities                                                 
 Non-interest           802     12.6     860    13.1     862    13.3
bearing
  liabilities
  Interest bearing      888     14.0   1 048    15.9     866    13.3
  liabilities
                       1690     26.6   1 908    29.0   1 728    26.6
Total liabilities     3 888     61.2   4 522    68.6   4 056    62.5
Total shareholder´s   6 349    100.0   6 589   100.0   6 486   100.0
equity and
liabilities


CONDENSED CONSOLIDATED CASH FLOW STATEMENT

EUR million                1-3/     1-3/   1-12/
                             05       04      04
Cash flow from                                  
Operating
Activities
Profit for the period        76      141      45
  Adjustments to the         79      -45     316
profit, total
  Change in working        -111       38      52
capital
Cash flow arising from       44      134     413
Operations
Finance costs, net          -21      -79    -162
Income taxes paid           -10        3     -34
Net cash arising from        13       58     217
Operating Activities
Investments in              -93      -22    -245
intangible and
tangible assets
Asset sales and other       311      426     462
investing
cash flow
Net cash flow arising       218      404     217
from
Investing Activities
Share issue                                  448
Changes in loans and in    -292     -447    -771
other financial items
Dividends paid              -39      -54     -54
Net cash flow arising      -331     -501    -377
from
Financial Activities
Changes in Cash and        -100      -39      57
Cash
Equivalents
Cash and Cash               242      185     185
Equivalents
at beginning of period
Translation adjustments       0        0       0
Changes in Cash and        -100      -39      57
Cash
Equivalents
Cash and Cash               142      146     242
Equivalents
at end of period


STATEMENT OF CHANGES    Share   Share   Other  Retaine Minorit   Total
IN SHAREHOLDER´S      capital premium   funds        d       y
EQUITY                           fund          earning interes
EUR million                                          s       t
Shareholder´s equity      304     473     106     1362      19    2264
according to FAS, Dec
31, 2003
Effects of adopting                               -285      10    -275
IFRS
Shareholder´s equity,     304     473     106     1077      29    1989
Dec 31, 2003
                                                                      
Dividend paid                                      -54             -54
Share issue               254     194              -12             436
Translation                                          6               6
differences
Change in minority                                           8       8
interest
during the period
Profit for the period                               45              45
Shareholder´s equity,     558     667     106     1062      37    2430
Dec 31, 2004
                                                                      
Dividend paid                                      -39             -39
Translation                                          1               1
differences
Change in minority                                          -7      -7
interest
during the period
Profit for the period                               76              76
Shareholder´s equity,     558     667     106     1100      30    2461
Mar 31, 2005


KEY FIGURES                  1-3/    1-3/   1-12/  10-12/
                               05      04      04      04
Sales, MEUR                  1344    1412    5529    1365
Operating profit, MEUR        115      24      27     -14
Excl. non-recurring            30      24      60      19
items
Profit before taxes,           77     -42    -109     -36
MEUR
Excl. non-recurring            -8     -42     -76      -3
items
Profit for the period,         76     141      45     -46
MEUR
Earnings per share, EUR      0.23    0.66    0.20   -0.23
  Excl. non-recurring       -0.03    0.66    0.28   -0.15
items
  From continuing            0.23   -0.17   -0.52   -0.12
operations, EUR
  From discontinued                  0.83    0.72   -0.11
operations,   EUR
Return on equity, %          12.5    -7.1    -5.8    -7.9
Excl. non-recurring          -1.3    -7.1    -4.6    -3.6
items , %
Return on capital             9.9     2.0     0.9    -1.1
employed, %
  Excl. non-recurring         3.0     2.0     1.5     1.7
items, %
Equity ratio, %              38.6    31.4    37.5    37.5
Gearing ratio, %               81     127      89      89
Shareholder´s equity per     7.38    9.59    7.29    7.29
share, EUR
Interest-bearing net         1988    2619    2183    2183
liabilities, MEUR
Gross capital                  93      22     259     100
expenditure,
MEUR
Personnel at the end of     15453   16409   15960   15960
the period

Non-recurring items for the period are capital gain on sale of Metsä
Botnia shares (81) and indemnity received by M-real Alizay (4).



SECURITIES AND             3/05     3/04   12/04
GUARANTEES
EUR million
For own loans               139      190     161
For associated                1        1       1
companies
For affiliated                5        5       5
companies
For others                   11       11      11
Total                       156      206     178
                                                
OPEN DERIVATIVE            3/05     3/04   12/04
CONTRACTS
EUR million
Interest rate              9822    13620   15265
derivatives
Currency derivatives       6015     7622    6641
Other derivatives            23        0       9
Total                     15860    21242   21915

The fair value of open derivative contracts calculated at market
value at the end of the review period was -22,3 EUR million (-40,5
EUR million on 31.12.2004 and +1,6 EUR million on 31.3.2004).


RECONCILIATION OF INCOME STATEMENT

Condensed Consolidated Income Statement

EUR million                   1-3/2004
                     Reported  Effects      IFRS
                          FAS       of    1-3/04
                       1-3/04 transitio
                             n to IFRS
Sales                   1 382       30     1 412
Other operating            16        1        17
income
Operating expenses     -1 288      -18    -1 306
Share of results in        -2        2         0
associated
companies
Depreciation and         -107        8       -99
impairment losses
Operating profit            1       23        24
Share of results in         0        0         0
associated
companies
Net exchange gains          5      -23       -18
and losses
Other financial           -34      -14       -48
income and
expenses, net
Profit on                 -28      -14       -42
continuing
operations before
tax
Income taxes               -2        9         7
Profit on                 -30       -5       -35
continuing
operations
Profit on                 173        3       176
discontinued
operations
Profit for the            143       -2       141
period
Minority interests         -1        1         0
Profit/loss               142       -1       141
attributable to
shareholders of
parent company


RECONCILIATION OF BALANCE SHEET

Condensed Consolidated Balance Sheet

EUR million          Reported  Effects      IFRS
                          FAS       of          
                      31.3.04 transitio   31.3.04
                             n to IFRS
ASSETS                                          
Non-current assets                              
Intangible assets         696      -53       643
Tangible assets         3 271      -67     3 338
Biological assets         187        5       192
Shares in                 142        2       144
associated and
other companies
Interest bearing           54        2        56
receivables
Deferred tax               16       15        31
receivables
Other non-interest         10        0        10
bearing receivables
                        4 376       38     4 414
Current assets                                  
Inventories               725        7       732
Receivables                                     
  Interest bearing         89        0        89
receivables
  Non-interest          1 215       -7     1 208
bearing
  receivables
Cash and cash             145        1       146
equivalents
                        2 174        1     2 175
Total assets            6 550       39     6 589

SHAREHOLDERS´        Reported  Effects      IFRS
EQUITY AND                FAS       of   31.3.04
LIABILITIES           31.3.04 transitio
                             n to IFRS
Shareholders´                                   
equity
  Equity                2 328     -290      2038
attributable to
  shareholders of
parent
  company
  Minority interest        19       10        29
Total equity            2 347     -280      2067
Non-current                                     
liabilities
  Deferred tax            412        0       412
liabilities
  Post employment          24      220       244
benefit
  obligations
  Provisions               40      -15        25
  Other non-               24       47        71
interest bearing
  liabilities
  Interest bearing      1 841       21      1862
liabilities
                        2 341      273      2614
                                                
Current liabilities                             
  Non-interest            863       -3       860
bearing
  liabilities
  Interest bearing        999       49      1048
liabilities
                        1 862       46      1908
Total liabilities       4 203      319      4522
Total shareholder´s     6 550       39      6589
equity and
liabilities


Quarterly information

SALES BY SEGMENTS     I 05     IV   III     II  I 04   2004
EUR million                    04    04     04
Consumer Packaging     238    256   264    267   258   1045
Publishing             208    225   202    188   187    802
Commercial Printing    363    372   368    362   372   1474
Office Papers          176    162   168    159   178    667
Map Merchant Group     341    343   332    339   353   1368
Internal sales and      18      6    55     47    63    171
other
operations
GROUP TOTAl           1344   1365  1389   1363  1412   5529

OPERATING RESULT      I 05     IV   III     II  I 04   2004
BY SEGMENTS                    04    04     04
EUR million
Consumer Packaging      27     30    25     18    20     93
Publishing               8      4     9     -5     4     12
Commercial Printing     -4    -35    -7     -4    -4    -49
Office Papers            5      0     4      0     6     10
Map Merchant Group       6      0     4      7     6     17
Other operations        74    -13   -27     -6    -8    -55
Operating result       115    -14     8     10    24     27
 % of sales            8.6   -1.1   0.6    0.7   1.7    0.5
Share of result in       1     -1     1      0     0      0
associated
companies
Net exchange gains     -11     21     4     -3   -18      4
and losses
Other financial        -28    -42   -36    -14   -48   -140
income and expenses,
net
Profit before           77    -36   -24     -7   -42   -109
continuing
operations before
tax
Income tax               0     -8    -7    -10     7    -18
Profit on continuing    77    -44   -31    -17   -35   -127
operations
Profit on                0     -1     0      0   176    175
discontinued
operations
Profit of the period    77    -45   -31    -17   141     48
Minority interest       -1     -1    -1     -1     0     -3
Profit/loss             76    -46   -32    -18   141     45
attributable to
shareholders of
parent company
Earnings per share    0.23      -     -      -  0.66   0.20
adjusted                     0.23  0.15   0.08
for share issue, EUR
                                                                     
NON-RECURRING ITEMS   I 05     IV   III     II  I 04   2004
                               04    04     04
Consumer Packaging       0      3     0      0     0      3
Publishing               0      1     0      0     0      1
Commercial Printing      1    -27     0      0     0    -27
Office Papers            3      0     0      0     0      0
Map Merchant Group       0     -8     0      0     0     -8
Other operations        81     -2     0      0     0     -2
Non-recurring items     85    -33     0      0     0    -33
in operations, total
Non-recurring            0      0     0      0     0      0
financial
items
Non-recurring items,    85    -33     0      0     0    -33
total
                                                           
Operating result        30     19     8     10    24     60
excl. non-recurring
items
% of sales             2.2    1.4   0.6    0.7   1.7    1.1
Result before taxes,    -9     -3   -24     -7   -42    -76
excl. non-recurring
items
% of sales            -0.7   -0.2  -1.7   -0.5  -3.0   -1.4
Earnings per share,      -      -     -      -  0.66   0.28
excl. non-recurring   0.03   0.15  0.15   0.08
items
Return on equity,     -1.3   -3.6  -6.1   -3.2  -7.1   -4.6
excl. non-recurring
items
Return on capital      3.0    1.7   1.0    1.7   2.0    1.5
employed,
excl. non-recurring
items, %

RETURN ON                                                      
CAPITAL
EMPLOYED, %
                    I 05    IV 04  III 04   II 04   I 04    2004
Consumer            11.1    11.9     9.7     7.2    8.0     9.5
Packaging
Publishing           2.7     1.5     3.0    -1.5    1.5     1.1
Commercial          -1.0   -10.1    -1.8    -0.8   -1.2    -3.5
Printing
Office Papers        2.4     0.1     1.9    -0.2    3.0     1.2
Map Merchant         7.7    -0.5     4.7     8.0    8.2     5.1
Group
GROUP TOTAL          9.9    -1.1     0.9     1.7    2.0     0.9

CAPITAL EMPLOYED                         
EUR million
                    I 05    12/04   9/04    6/04    3/04
Consumer             957     1002   1025    1074    1089
Packaging
Publishing          1186     1208   1211    1199    1227
Commercial          1356     1320   1367    1370    1430
Printing
Office Papers        823      829    863     840     833
Map Merchant         333      329    326     333     321
Group
Other assets         195      247   -185     158      76
GROUP TOTAL         4851     4935   4605    4975    4976

PERSONNEL                   I 05       
Average                            2004
Consumer Packaging         2 595  3 082
Publishing                 1 434  1 526
Commercial Printing        4 858  4 963
Office Papers              1 975  2 036
Map Merchant Group         2 518  2 528
Other operations           2 172  2 397
GROUP TOTAL               15 553 16 532


DELIVERIES                                                    
1000 tons                 I 05  IV 04 III 04  II 04   I 04   2004
Consumer Packaging         281    340    345    349    341   1374
Publishing                 306    336    301    283    273   1192
Commercial Printing        453    469    464    450    459   1842
Office Papers              259    233    246    228    254    961
Paper businesses total    1019   1037   1011    961    986   3995
Map Merchant Group         325    330    321    319    336   1308


PRODUCTION                                                    
1000 tons                 I 05  IV 04 III 04  II 04   I 04   2004
Consumer Packaging         293    326    355    319    331   1330
Publishing                 308    314    309    257    268   1148
Commercial Printing        470    472    471    469    472   1885
Office Papers              248    244    241    243    247    975
Paper businesses total    1026   1030   1021    969    987   4008
Metsä-Botnia´s pulp1)      307    283    290    279    300   1151
M-real´s pulp              317    399    384    369    381   1533


1) Equals to M-real´s ownership (47% in Metsä-Botnia).



M-REAL CORPORATION


Hannu Anttila

President and CEO




About Us

Metsä Boardwww.metsaboard.com Metsä Board is a leading European producer of premium fresh fibre paperboards and forerunner in sustainability. We produce premium lightweight folding boxboards, food service boards and white kraftliners for consumer goods packaging as well as retail-ready and food service applications. We work together with our customers on a global scale to innovate solutions for better consumer experiences with less environmental impact. The pure fresh fibres Metsä Board uses are a renewable resource, traceable to origin in sustainably managed northern forests. We aim for completely fossil-free mills and raw materials by 2030. The global sales network of Metsä Board supports customers worldwide, including brand owners, retailers, converters and merchants. In 2019, the company’s sales totalled EUR 1.9 billion, and it has approximately 2,400 employees. Metsä Board, part of Metsä Group, is listed on the Nasdaq Helsinki.

Subscribe