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M-real announces profitability improvement programs in Zanders and Map Merchants UK (21 December, 2004)

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


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 


M-real Corporation is a European paper and paperboard company with nearly
16,500 employees. M-real provides fibre-based solutions for consumer packaging,
communications and advertising end-uses. Through its worldwide sales network,
M-real serves its customers consisting mostly of publishers, printers, paper
merchants, offices and well-known consumer product companies. The turnover of
M-real in 2003 amounted to 6 billion euros. The company is headquartered in
Finland, and it is listed in the Helsinki Stock Exchange. 

www.m-real.com

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