Stora Enso Full Year Results 2004
STORA ENSO OYJ Stock Exchange Release 3 February 2005 at 13.00
Stora Enso Full Year Results 2004
Operating profit weak despite improving demand; proposed dividend
unchanged at EUR 0.45
Fourth Quarter Results
Stora Enso's earnings per share excluding non-recurring items were
EUR 0.03 (EUR 0.10). Operating profit excluding non-recurring items was
EUR 42.9 (EUR 131.6) million, which is 1.3% of sales. Profit before taxes
and minority interests, excluding non-recurring items, amounted to
EUR 24.7 (EUR 114.8) million. Non-recurring items in the operating profit
totalled EUR 179.9 million due to changes in the disability pension
schemes under the Finnish Statutory Employment Pension Scheme ("TEL")
as approved by the Finnish Ministry of Social Affairs and Health.
Sales at EUR 3 241.9 million were 6.9% higher than the previous
quarter's EUR 3 033.1 million. Cash flow from ongoing operations was
EUR 406.0 (EUR 448.1) million and cash flow after investing activities
EUR 86.7 (EUR 127.1) million. Cash earnings per share excluding
non-recurring items were EUR 0.38 (EUR 0.45). Net financial items were
EUR -32.5 (EUR -27.0) million. Market-related production curtailments
totalled 80 000 (61 000) tonnes.
EUR million 2003 2004 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04
Sales 12 172.3 12 395.8 3 028.8 3 017.9 3 102.9 3 033.1 3 241.9
EBITDA 1) 2) 1 710.6 1 508.4 376.3 394.0 363.3 418.4 332.7
Operating
profit 2) 525.8 336.4 77.4 103.4 58.5 131.6 42.9
Non-recurring
items -54.4 369.7 -14.5 115.7 - 74.1 179.9
Operating
margin 2), % 4.3 2.7 2.6 3.4 1.9 4.3 1.3
Operating
profit 471.4 706.1 62.9 219.1 58.5 205.7 222.8
Profit before
tax and minority
interests 2) 319.2 269.3 4.8 80.8 49.0 114.8 24.7
Profit before tax
and minority
interests 210.7 639.0 -63.7 196.5 49.0 188.9 204.6
Net profit for
the period 137.9 739.7 -44.4 406.9 51.9 130.9 150.0
EPS 2), Basic, EUR 0.24 0.25 0.00 0.06 0.06 0.10 0.03
EPS, Basic, EUR 0.16 0.89 -0.05 0.49 0.06 0.16 0.18
CEPS 2) 3), EUR 1.63 1.67 0.35 0.41 0.43 0.45 0.38
ROCE 2), % 4.5 3.0 2.6 3.7 2.2 4.9 1.6
1) EBITDA = Earnings before Interest, Taxes, Depreciation and Amortisation
2) Excluding net non-recurring items. Exceptional transactions that 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. Non-recurring items are
normally specified individually if they exceed one cent per share.
3) CEPS = (Net profit for the period + depreciation and amortisation)/average
number of shares
Full Year Results
Full year sales increased by EUR 223.5 million to EUR 12 395.8 million,
an increase of 1.8%. Operating profit excluding non-recurring items
decreased by EUR 189.4 million to EUR 336.4 million. Earnings per share
excluding non-recurring items were EUR 0.25 (EUR 0.24). Earnings per
share excluding non-recurring items increased by EUR 0.01 and were
EUR 0.25. Cash earnings per share excluding non-recurring items were
EUR 1.67 (EUR 1.63).
Cash flow from operations totalled EUR 1 176.6 (EUR 1 808.3) million, with
cash flow after investing activities amounting to EUR -16.8 (EUR 615.0)
million.
Outlook
Commenting on the outlook, Stora Enso's CEO Jukka Härmälä said, "In
Europe demand for advertising-driven paper grades is expected to remain
healthy. Newsprint and magazine paper prices are expected to rise as a
result of the ongoing negotiations. Demand for fine paper is expected to
be good, with coated fine paper prices stable, but uncoated fine paper
prices are under pressure, partly due to increased competition and the
weak US dollar. Demand for packaging board should remain stable, and
some price increases are being implemented in consumer boards and
coreboards. Demand for construction and joinery wood products is
relatively stable globally, but the business suffers from overcapacity
and weak currencies in main export markets."
In North America print advertising expenditure remains robust. However,
strong paper demand and improved selling prices are attracting
additional imports mainly from Asia, especially in fine paper sheets.
Stora Enso's previously announced autumn price increase for magazine
paper grades will be implemented for contract customers in the first
quarter of 2005. Market conditions are expected to remain favourable and
operating rates high. The Profit Enhancement Programme will continue to
improve performance, although the financial results for the first half
of 2005 will be affected by downtime due to rebuilding paper machine 26
at Biron Mill. The shutdown will take about three weeks and 10 000
tonnes of production will be lost.
Asian markets have stabilised and are expected to pick up in February,
following the Chinese New Year.
Although demand outlook is generally positive, Group profits are
expected to be influenced in the first quarter of 2005 by the US dollar
and costs related to rebuilds in the publication paper mills at
Langerbrugge (40 000 tonnes of production lost), Summa (15 000 tonnes of
production lost), Corbehem (31 000 tonnes of production lost) and Biron
(10 000 tonnes of production lost). The shutdowns will take from three
to six weeks at each mill. Furthermore, the Group's financial
performance will continue to be adversely affected by rising energy-
related and chemical costs.
The economic consequences of the recent storms in Northern Europe cannot
yet be accurately estimated.
Despite the near-term challenges to Group profitability, the financial
results for the full year 2005 are expected to show an improvement on
2004.
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
Stora Enso Full Year Results 2004
Operating profit weak despite improving demand; proposed dividend
unchanged at EUR 0.45
Summary of Fourth Quarter Results (compared with previous quarter)
* Sales were EUR 3 241.9 million (EUR 3 033.1 million).
* Operating profit excluding non-recurring items was EUR 42.9 million
(EUR 131.6 million).
* Profit before tax and minority items excluding non-recurring items was
EUR 24.7 million (EUR 114.8 million).
* Earnings per share excluding non-recurring items were EUR 0.03
(EUR 0.10).
* Cash earnings per share excluding non-recurring items were EUR 0.38
(EUR 0.45).
* Non-recurring items increased operating profit by EUR 179.9 million or
EUR 0.15 per share.
Demand for Group products continued to improve during the fourth quarter
and deliveries increased in all product grades, especially advertising-
driven paper grades. In Europe product prices were generally stable, but
the earlier announced fine paper price increases have not materialised.
Previously announced price increases were largely implemented in the
USA. The Group's profitability declined significantly, however, owing to
the impact of seasonal shutdowns, the direct and indirect effects of the
weak US dollar and higher input costs, including wood harvesting costs
due to the wet autumn in Northern Europe.
European deliveries of publication paper increased substantially as
demand in Western Europe recovered; fine paper demand followed the
normal seasonal pattern and deliveries were similar to the previous
quarter. Euro-denominated prices for most paper grades were stable,
although revenue from the Group's European export volumes was depressed
by the weaker US dollar. Packaging board deliveries increased slightly,
with good demand for all products, and some price increases were
implemented in consumer boards and coreboards during the period. Demand
for wood products remained strong, but the redwood market was still
oversupplied. Wood product prices were relatively stable, although
deliveries from Europe suffered from the fall in the US dollar against
the euro during the quarter. Wood costs rose in the Baltic area and
Russia, and poor weather increased harvesting costs for the Group's Wood
Supply Europe division.
In North America demand for magazine and fine paper remained strong and
deliveries increased. The previously announced autumn price increase for
fine paper grades was largely implemented in the fourth quarter. The
corresponding increase for publication paper prices will be effected as
contracts renew in the first quarter of 2005.
Market-related production curtailments totalled 73 000 tonnes in Europe
and 7 000 tonnes in North America (in speciality paper), compared with
the previous quarter's total of 61 000 tonnes, which was all in Europe.
Paper and board deliveries totalled 3 783 000 tonnes, which is
197 000 tonnes more than the previous quarter's 3 586 000 tonnes. Production
totalled 3 655 000 tonnes (3 725 000 tonnes). Deliveries of wood
products totalled 1 695 000 cubic metres, compared with the previous
quarter's 1 595 000 cubic metres.
EUR million 2003 2004 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04
Sales 12 172.3 12 395.8 3 028.8 3 017.9 3 102.9 3 033.1 3 241.9
EBITDA 1) 2) 1 710.6 1 508.4 376.3 394.0 363.3 418.4 332.7
Operating
profit 2) 525.8 336.4 77.4 103.4 58.5 131.6 42.9
Non-recurring
items -54.4 369.7 -14.5 115.7 - 74.1 179.9
Operating
margin 2), % 4.3 2.7 2.6 3.4 1.9 4.3 1.3
Operating
profit 471.4 706.1 62.9 219.1 58.5 205.7 222.8
Profit before
tax and minority
interests 2) 319.2 269.3 4.8 80.8 49.0 114.8 24.7
Profit before
tax and minority
interests 210.7 639.0 -63.7 196.5 49.0 188.9 204.6
Net profit for
the period 137.9 739.7 -44.4 406.9 51.9 130.9 150.0
EPS2), Basic, EUR 0.24 0.25 0.00 0.06 0.06 0.10 0.03
EPS, Basic, EUR 0.16 0.89 -0.05 0.49 0.06 0.16 0.18
CEPS 2) 3), EUR 1.63 1.67 0.35 0.41 0.43 0.45 0.38
ROCE2), % 4.5 3.0 2.6 3.7 2.2 4.9 1.6
1) EBITDA = Earnings before Interest, Taxes, Depreciation and Amortisation
2) Excluding net non-recurring items. Exceptional transactions that 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. Non-recurring items are normally
specified individually if they exceed one cent per share.
3) CEPS = (Net profit for the period + depreciation and amortisation)/average
number of shares
Fourth Quarter Results (compared with previous quarter)
Sales at EUR 3 241.9 million were 6.9% higher than the previous
quarter's EUR 3 033.1 million as higher deliveries were partially offset
by lower revenues due to depreciation of the US dollar. Sales improved
in all product segments except Wood Products.
Operating profit excluding non-recurring items was EUR 42.9 (EUR 131.6)
million, which is 1.3% of sales. Operating profit dropped in all
segments except Merchants, and declined into a loss in Wood Products and
Wood Supply Europe. Operating profit was EUR 222.8 (EUR 205.7) million.
Operating profit excluding non-recurring items decreased due to increased
fixed costs mainly related to seasonal shutdowns (about EUR 40 million),
the impact of higher wood costs (about EUR 15 million) and increased
energy-related costs (about EUR 10 million). The weakened US dollar had
a negative operating effect of about EUR 20 million, partly offset by a
positive effect of released cash flow hedging contracts,especially for
the US dollar and British pound, of EUR 5.0 (EUR 2.1) million.
Non-recurring items in the operating profit totalled EUR 179.9 million
due to changes in the disability pension schemes under the Finnish
Statutory Employment Pension Scheme ("TEL") as approved by the Finnish
Ministry of Social Affairs and Health.
Profit before taxes and minority interests, excluding non-recurring
items, amounted to EUR 24.7 (EUR 114.8) million.
Net financial items were EUR -32.5 (EUR -27.0) million. Net interest
expenses amounted to EUR -32.6 (EUR -31.8) million and net foreign
exchange losses were EUR 2.8 (EUR 1.5) million. Other financial items
totalled a positive EUR 2.9 (EUR 6.3) million, mainly related to
unrealised changes in fair values of financial instruments.
The share of associated company results amounted to EUR 14.3 (EUR 10.2)
million, including EUR 11.3 million for Bergvik Skog.
Net taxes totalled EUR -54.1 (EUR -56.6) million, and the minority
interest in profits was EUR -0.4 (EUR -1.4) million and the net profit
for the quarter was EUR 150.0 (EUR 130.9) million.
Earnings per share excluding non-recurring items were EUR 0.03 (EUR 0.10).
Basic earnings per share were EUR 0.18 (EUR 0.16).
The return on capital employed excluding non-recurring items was 1.6% (4.9%).
Capital employed was EUR 10 670.5 million on 31 December 2004, a net decrease
of EUR 174.5 million, including a decrease of EUR 209.0 million related to
currency effects.
Capital Structure
EUR million 31 Dec 2003 30 Sept 2004 31 Dec 2004
Fixed assets 12 676.1 11 056.6 10 848.2
Working capital 872.1 1 220.7 1 322.1
Operating Capital 13 548.2 12 277.3 12 170.3
Net tax liabilities -1 935.1 -1 432.3 -1 499.8
Capital Employed 11 613.1 10 845.0 10 670.5
Associated companies 319.0 558.5 568.1
Total 11 932.1 11 403.5 11 238.6
Shareholders equity 7 952.9 7 993.9 8 051.1
Minority interests 60.3 67.0 136.1
Interest-bearing net liabilities 3 918.9 3 342.6 3 051.4
Financing Total 11 932.1 11 403.5 11 238.6
Financing
Cash flow from ongoing operations was EUR 406.0 (EUR 448.1) million and
cash flow after investing activities EUR 86.7 (EUR 127.1) million. Cash
earnings per share excluding non-recurring items were EUR 0.38 (EUR 0.45).
At the end of the period, interest-bearing net liabilities were
EUR 3 051.4 million, a decrease of EUR 291.2 million. Unutilised credit
facilities and cash and cash-equivalent reserves totalled EUR 3.0 billion.
Shareholders' equity amounted to EUR 8.1 billion or EUR 9.81 (EUR 9.72)
per share, compared with the market capitalisation on the Helsinki Stock
Exchange on 31 December 2004 of EUR 9.5 billion.
The debt/equity ratio at 31 December 2004 was 0.38 (0.41). The currency
effect on equity was EUR -40.0 million net of the hedging of equity
translation risks. Share buy-backs decreased equity by EUR 23.3 million
in the fourth quarter.
Quarterly Change in Interest-bearing Net Liabilities
EUR million Cash Flow, Structural Translation Balance
Ongoing Changes Difference Sheet
Operations and OCI* Impact
Operating profit 222.8 222.8
Adjustments 289.8 289.8
Change in working capital -106.6 5.2 -101.4
Cash Flow from Operations 406.0 0.0 5.2 411.2
Capital expenditure -214.3 -214.3
Acquisitions -147.4 -147.4
Other changes in fixed assets 42.4 228.6 271.0
Operating cash flow 86.7 0.0 233.8 320.5
Net financing items (incl.
Associated companies) -18.1 -6.1 5.8 -18.2
Taxes paid 38.4 -0.4 -24.8 13.2
Repurchase of own shares -23.3 -23.3
Other change in shareholders
equity and minority interests 59.8 -20.6 -40.0 0.8
Change in Interest-bearing
Net Liabilities 143.5 -27.1 174.8 291.2
*OCI = Other Comprehensive Income
Capital Expenditure for the Fourth Quarter and Full Year 2004
Capital expenditure for the fourth quarter totalled EUR 214.3 million,
giving a total for the year of EUR 979.6 million, which is about 90% of
the depreciation charge. No new major capital expenditure projects were
approved during the quarter.
The main ongoing projects during the year were rebuilding paper machine
6 at Maxau Mill (EUR 115.0 million), the new paper machine 12 at
Kvarnsveden Mill (EUR 86.6 million), the Skoghall Energy 2005 project
(EUR 54.7 million), rebuilding paper machine 3 and a new cut-size line
at Veitsiluoto Mill (EUR 27.5 million) and folding boxboard asset
improvements at Baienfurt Mill (EUR 28.1 million).
Events in Associated Companies
During the fourth quarter Stora Enso invested a further EUR 7.9 million
in equity in Veracel, bringing the total amount invested in 2004 to
EUR 80.4 million.
Fourth Quarter Events
In October Stora Enso announced the divestment of its majority
shareholding in PT Finnantara Intiga, which owns the Finnantara
plantation in West Kalimantan, Indonesia, to Global Forest Ltd., which
is part of the Sinar Mas Group. The transaction resulted in a minor gain
over the USD 26 (EUR 21) million book value of the plantation.
Also in October Stora Enso announced that the press section of newsprint
machine 4 at Langerbrugge Mill in Belgium would be modified. Metso, the
supplier responsible for the machine, is undertaking the modification
during the first quarter of 2005. About 40 000 tonnes of production will
be lost during the shutdown.
In December Stora Enso acquired 66% of the shares in the Polish
packaging producer Intercell S.A. from private shareholders and the
International Finance Corporation.
Also in December, Stora Enso launched a SEK 4.3 billion 5-year bond
offer in Swedish krona (SEK benchmark) issued under its domestic MTN
programme in order to prolong the maturity profile and take advantage of
the prevailing market conditions. The deal pays a fixed coupon of 3.875%
and had an issue/reoffer price of 99.599 to give a spread of 38 bps over
the mid 5-year SEK swap rate.
Stora Enso North America (July - December 2004)
The USD figures are translated at the EUR/USD exchange rate of 1.3621.
The North American economies continued to grow during the second half of
2004, fuelling advertising in print and improved demand for printing and
writing papers. Selling prices and volumes were both higher than in the
first six months.
Stora Enso's performance in North America was significantly better than
in the previous six months. Operating loss before goodwill amortisation
and non-recurring items was USD 10 (EUR 7) million in the second half of
the year, compared with a USD 130 (EUR 95) million loss in the first
half of 2004 and a USD 86 (EUR 63) million loss in the second half of
2003. Growth in revenue was partially offset by increasing costs,
especially for fuel, fibre and chemicals. The strengthening of the
Canadian dollar against the US dollar decreased the profits for Port
Hawkesbury Mill in Canada by about USD 10 million. Capital expenditure
in the six-month period totalled USD 84 (EUR 62) million, compared with
USD 120 (EUR 88) million in the first half of 2004 and USD 108 (EUR 79)
million in the second half of 2003.
Operating cash flow after investing activities was a positive USD 39
(EUR 29) million, compared with a negative USD 100 (EUR 73) million in
the first half of the year and a negative USD 50 (EUR 37) million during
the second half of 2003.
Of the USD 250 million total amount allocated to the Profit Enhancement
Programme, USD 227 (EUR 167) million had been recorded by the end of
2004. The previously announced annual earnings improvement of
USD 145 (EUR 106) million is on target to be achieved from mid 2005 onwards.
Since the programme was announced, the workforce has been reduced by 16%
(1 000 employees), three uncompetitive paper machines have been
permanently shut down and four paper machines have been modified to
improve productivity and quality. By mid 2005 the workforce is expected
to have been further reduced to some 5 000 employees, compared with
7 500 in 1999. As announced earlier, modifications to healthcare
benefits were made to improve profitability.
The rebuild of paper machine 26 at Biron Mill, the division's largest
lightweight-coated magazine paper machine, will be completed in early
February 2005. The rebuild of lightweight-coated magazine paper machine
64 at Whiting Mill has been postponed until early 2006.
Stora Enso Full Year Results 2004
Financial Results 2004 (compared with previous year)
Sales increased by EUR 223.5 million to EUR 12 395.8 million, an increase
of 1.8%. Higher production volumes were partially offset by the negative
impact of declining prices, especially during the first half of the year.
Operating profit excluding non-recurring items decreased by
EUR 189.4 million to EUR 336.4 million. Profits were lower in all segments
except Merchants and Wood Products. The main reasons for the decrease in
profits were the decline in prices, partly offset by increased volumes,
two major rebuilds in North America and the weak US dollar
(EUR 124 million). In addition the structural change of the sale of the
Swedish forests to Bergvik Skog AB had a negative effect of EUR 80 million
for the 10 months. The operating profit for the year totalled EUR 706.1
(EUR 471.4) million. Released cash flow hedging contracts, especially for
the US dollar and British pound, had an impact of EUR 16.4 (EUR 105.1)
million on operating profit.
There were four non-recurring items with a total positive effect of
EUR 369.7 (EUR -54.1) million on operating profit, comprising the gain on
restructuring ownership of the Swedish forestlands, the reversal of
expenses already taken in respect of various US retiree healthcare
programmes, the provision for the future reduction of maintenance
personnel in the USA and the income relating to the change in the
Finnish disability pension scheme.
The share of results in associated companies amounted to EUR 38.9
(EUR -23.0) million, of which Veracel accounted for EUR 3.3 million, Bergvik
Skog EUR 24.2 million, Tornator EUR -1.7 million and Sunila EUR 5.3 million.
Net interest costs for the year totalled EUR -141.3 million, which is
3.7% of interest-bearing net liabilities and EUR 44.8 million less than
for the previous year, mainly due to lower interest rates and decreased
average indebtedness. Foreign exchange losses in financial items were
EUR 1.1 (gain of EUR 12.5) million. Other financial items totalled
EUR 36.4 (EUR -64.1) million, mostly due to unrealised changes in fair
values of financial instruments.
Profit before taxes and minority interests, excluding non-recurring
items, amounted to EUR 269.3 (EUR 319.2) million.
Net taxes totalled a positive EUR 108.8 (EUR -67.0) million, the gain
resulting from the release of EUR 240.5 million in deferred tax
liabilities on the fair valuation of biological assets relating to the
restructuring of forestland ownership in Sweden and a change in deferred
taxes of EUR 20.0 million due to changes in Finnish tax laws. The tax
charge excluding these two non-recurring items was EUR 151.7 million, a
rate of 28.9% (31.7%).
Minority interests were EUR -8.1 (EUR -5.8) million, leaving a net
profit for the period of EUR 739.7 (EUR 137.9) million.
Earnings per share excluding non-recurring items increased by
EUR 0.01 and were EUR 0.25. Basic earnings per share were
EUR 0.89 (EUR 0.16).
The return on capital employed was 3.0% (4.5%) before non-recurring
items. Capital employed was EUR 10 670.5 million at the end of the
period, a net decrease of EUR 942.6 million mainly due to the
restructuring of forestland ownership in Sweden. The currency effect
decreased the capital employed by EUR 170.3 million.
Financing
Cash flow from operations totalled EUR 1 176.6 (EUR 1 808.3) million, with
cash flow after investing activities amounting to EUR -16.8
(EUR 615.0) million. Cash earnings per share excluding non-recurring items
were EUR 1.67 (EUR 1.63).
At the end of the year, interest-bearing net liabilities were
EUR 3 051.4 million, down EUR 867.5 million.
Research and Development
In 2004 Stora Enso spent EUR 82.2 (EUR 88.8) million on research and
development, equivalent to 0.7% of sales.
Inspections by Competition Authorities
In May 2004 Stora Enso was the subject of inspections carried out by the
European Commission and the Finnish Competition Authority at locations
in Europe and received subpoenas issued by the US Department of Justice
as part of preliminary anti-trust investigations into the paper industry
in Europe and the USA. The investigations by the authorities in both
Europe and the USA are at a fact-finding stage only and no formal
allegations have been made against the Group or any of its employees.
Coincident with these investigations, Stora Enso has been named in a
number of class action lawsuits filed in the USA. No provision has been
made.
Changes in Group Composition
In March Stora Enso finalised the restructuring of forestland ownership
in Sweden and the divestment of forestland in Canada. The Group's
Swedish forests were transferred to Bergvik Skog AB with the majority of
its shares sold to institutional investors, Stora Enso retaining a
43.3% stake. Stora Enso also finalised the divestment of its
146 000 hectares of forestland in Ontario, Canada.
In September Stora Enso finalised the acquisition of the Dutch paper
merchant Scaldia Papier B.V. from International Paper. The Group
acquired Scaldia Papier to strengthen its presence in the rapidly
changing European paper merchant market and to achieve synergies with
its Papyrus merchant operations.
In October Stora Enso sold its majority shareholding in PT Finnantara
Intiga, which owns the Finnantara plantation in West Kalimantan,
Indonesia, to Global Forest Ltd., which is part of the Sinar Mas Group.
In December Stora Enso acquired 66% of the Polish packaging producer
Intercell S.A. from private shareholders and the International Finance
Corporation.
Personnel
The average number of employees decreased by 485 persons during the year
to 43 779. The largest decreases were in Finland, the USA and Sweden and
the largest increase in Russia. On 31 December 2004 there were
45 307 employees, 2 493 more than at the end of 2003, mainly due to the
acquisition of Intercell at the end of the year and new forestry
companies in Russia.
Share Capital
During the calendar year 2004 a total of 12 300 A shares and
18 461 600 R shares, with a combined nominal value of EUR 31.4 million,
were repurchased by the Company, representing 2.2% of the shares and
0.8% of the voting rights. The average price paid for A shares was
EUR 10.66 and for R shares EUR 10.77.
The Annual General Meeting (AGM) on 18 March 2004 decided to lower the
Company's share capital by EUR 47.3 million through the cancellation of
8 100 A shares and 27 800 000 R shares. These shares had been
repurchased under the authorisation of the AGM in 2003.
The AGM on 18 March 2004 further authorised the Board of Directors to
repurchase and dispose of not more than 9 000 000 A shares and not more
than 32 700 000 R shares in the Company. Repurchases started on 31 March
2004 and by 31 December 2004 the Company had repurchased 12 300 A shares
at an average price of EUR 10.65 and 14 889 400 R shares at an average
price of EUR 10.78. This represents 0.1% of the current authorisation
for A shares and 45.5% for R shares.
By 31 December 2004 the Company had allocated 34 897 of the repurchased
R shares under the terms of the Stora Enso North America Option Plan,
leaving the Company holding 12 300 A shares and 16 794 931 R shares.
During the year a total of 2 154 457 A shares were converted
into R shares. The latest conversion was recorded in the Finnish
Trade Register on 15 December 2004.
At the year end Stora Enso had 179 048 523 A shares and
658 194 876 R shares in issue, of which the Company held 12 300 A shares
and 16 794 931 R shares with a nominal value of EUR 28.6 million. The
holding represents 2.0% of the Company's share capital and 0.7% of the
voting rights.
Events after the Period
On 18 January Stora Enso announced its plans to acquire a leading French
paper merchant, Papeteries de France (PdF), from International Paper.
PdF, which has annual net sales of about EUR 160 million from a sales
volume of some 160 000 tonnes of paper, would become part of the Stora
Enso Merchants division, Papyrus.
On 25 January Stora Enso signed a new EUR 1.75 billion syndicated credit
facility agreement with a group of 23 banks. The facility, which has a
maturity of five years, is for general corporate purposes and replaces
an existing EUR 2.5 billion syndicated facility.
On 3 February Stora Enso announced its plans to rebuild boiler 2 at
Hylte Mill. The project will start immediately and is scheduled to be
completed in February 2006. Capital expenditure on the project will
amount to EUR 40 million.
Outlook
In Europe demand for advertising-driven paper grades is expected to
remain healthy. Newsprint and magazine paper prices are expected to rise
as a result of the ongoing negotiations. Demand for fine paper is
expected to be good, with coated fine paper prices stable, but uncoated
fine paper prices are under pressure, partly due to increased
competition and the weak US dollar. Demand for packaging board should
remain stable, and some price increases are being implemented in
consumer boards and coreboards. Demand for construction and joinery wood
products is relatively stable globally, but the business suffers from
overcapacity and weak currencies in main export markets.
In North America print advertising expenditure remains robust. However,
strong paper demand and improved selling prices are attracting
additional imports mainly from Asia, especially in fine paper sheets.
Stora Enso's previously announced autumn price increase for magazine
paper grades will be implemented for contract customers in the first
quarter of 2005. Market conditions are expected to remain favourable and
operating rates high. The Profit Enhancement Programme will continue to
improve performance, although the financial results for the first half
of 2005 will be affected by downtime due to rebuilding paper machine
26 at Biron Mill. The shutdown will take about three weeks and
10 000 tonnes of production will be lost.
Asian markets have stabilised and are expected to pick up in February,
following the Chinese New Year.
Although demand outlook is generally positive, Group profits are
expected to be influenced in the first quarter of 2005 by the US dollar
and costs related to rebuilds in the publication paper mills at
Langerbrugge (40 000 tonnes of production lost), Summa (15 000 tonnes of
production lost), Corbehem (31 000 tonnes of production lost) and Biron
(10 000 tonnes of production lost). The shutdowns will take from three
to six weeks at each mill. Furthermore, the Group's financial
performance will continue to be adversely affected by rising
energy-related and chemical costs.
The economic consequences of the recent storms in Northern Europe cannot
yet be accurately estimated.
Despite the near-term challenges to Group profitability, the financial
results for the full year 2005 are expected to show an improvement on 2004.
Annual General Meeting
The Annual General Meeting will be held at 16.00 (Finnish time) on
Tuesday 22 March 2005 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.
Appointment of Nomination Committee
Shareholders representing more than 50 per cent of the votes in the
Company have proposed that the Annual General Meeting appoint a
Nomination Committee to prepare proposals concerning (a) the number of
members of the Board of Directors, (b) the members of the Board of
Directors, (c) the remuneration for the Chairman, Vice Chairman and
members of the Board of Directors and (d) the remuneration for the
Chairman and members of the committees of the Board of Directors. The
Nomination Committee would consist of four members:
the Chairman of the Board of Directors
the Vice Chairman of the Board of Directors
two members appointed by the two largest shareholders (one each)
according to the register of shareholders on 1 October 2005.
The Chairman of the Board of Directors would convene the Nomination
Committee and before 31 January 2006 the Nomination Committee would
present its proposals for the Annual General Meeting to be held in 2006.
Auditor
The above-mentioned shareholders have confirmed that they will propose
to the AGM that Authorised Public Accountants PricewaterhouseCoopers Oy
be elected to act as auditor of the Company until the end of the
following AGM.
Distribution of Dividend
The Board of Directors will propose to the Annual General Meeting that a
dividend of EUR 0.45 per share be paid for the financial year ending
31 December 2004. If the proposal is approved, the dividend payment will be
issued on 8 April 2005 to shareholders entered on the dividend record
date of 29 March 2005 in the register of shareholders maintained by the
Finnish Central Securities Depository, Swedish VPC and Deutsche Bank
Trust Company Americas.
New Board members
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 Gunnar Brock, Birgitta Kantola and Matti Vuoria be elected
as new members of the Board of Directors. Krister Ahlström, Björn
Hägglund, Barbara Kux and Paavo Pitkänen are not seeking re-election.
This report is unaudited.
Helsinki, 3 February 2005
Stora Enso Oyj
Board of Directors
Segments (compared with the previous quarter)
PAPER
Publication Paper
Change
EUR million 2003 2004 Q1/04 Q2/04 Q3/04 Q4/04 Q4/Q3%
Sales 4 295.7 4 343.3 1 019.2 1 069.6 1 090.6 1 163.9 6.7
Operating profit* 111.1 91.3 8.7 -3.8 48.2 38.2 -20.7
% of sales 2.6 2.1 0.9 -0.4 4.4 3.3
ROOC, %** 2.8 2.3 0.9 -0.4 4.6 3.6
Deliveries, 1000 t 6 954 7 398 1 732 1 819 1 846 2 001 8.4
Production, 1000 t 7 011 7 396 1 830 1 782 1 886 1 899 0.7
* Excluding non-recurring items and goodwill amortisation
** ROOC = 100% x Operating profit/Operating capital
Publication paper sales were EUR 1 163.9 million, up 6.7% on the
previous quarter due to the usual seasonal strength in deliveries and
some price increases in North America. Operating profit was
EUR 38.2 million, down 20.7% on the previous quarter because of higher costs and
the impact of the weak US dollar. Market-related production curtailments
totalled 52 000 (21 000) tonnes in Europe and none (none) in North America.
In Europe demand was substantially better than in the previous year in
all publication paper grades. Demand outside Europe remained strong. All
mills ran at high operating rates. Prices were stable throughout the
period, and in markets outside Europe price increases were implemented.
Producer inventories in Europe were lower at the year-end following
seasonal patterns and similar to levels a year ago.
In North America demand for magazine paper was good and prices for non-
contract customers rose. The volume of imports increased. In newsprint
demand was stable. Publication paper producer inventories were unchanged.
The weak US dollar depressed revenue for Port Hawkesbury Mill in Canada by
about USD 5 million during the quarter.
There is evidence of a general recovery in the advertising-driven paper
business in Europe. Growing demand will enable price increases following
the contract negotiations for 2005. In North America demand for magazine
paper should stay strong and further price increases are expected. Newsprint
demand will remain stable and some price increases are anticipated.
Fine Paper
Change
EUR million 2003 2004 Q1/04 Q2/04 Q3/04 Q4/04 Q4/Q3%
Sales 3 197.7 3 173.1 788.9 786.3 791.8 806.1 1.8
Operating profit* 153.5 64.3 18.1 4.6 27.9 13.7 -50.9
% of sales 4.8 2.0 2.3 0.6 3.5 1.7
ROOC, %** 4.4 1.9 2.2 0.5 3.2 1.6
Deliveries, 1000 t 3 591 3 893 959 964 974 995 2.2
Production, 1000 t 3 624 4 033 984 999 1 041 1 010 -3.0
* Excluding non-recurring items and goodwill amortisation
** ROOC = 100% x Operating profit/Operating capital
Fine paper sales were EUR 806.1 million, up 1.8% on the previous quarter
mainly due to higher deliveries. Operating profit was EUR 13.7 million,
down 50.9% on the previous quarter due to annual maintenance shutdowns,
higher costs and the weaker US dollar. Market-related production
curtailments totalled 13 000 (3 000) tonnes in Europe and 7 000 (none)
tonnes in North America (all in speciality papers).
In Europe demand for uncoated fine paper has followed the normal
seasonal pattern and is recovering. Industry inventories were normal and
prices remained similar to the previous quarter. The expected price
increases for the fourth quarter of 2004 did not materialise due to the
effects of the weak US dollar.
Demand for coated fine paper in Europe remained good and followed the
normal seasonal pattern. Moderate price increases were implemented in
some grades during the quarter, but average sales prices decreased due
to mix changes. Industry inventories were higher than in the previous
quarter, but merchant stocks remained low throughout the quarter.
In North America demand for coated fine paper increased substantially
during the fourth quarter. The previously announced autumn price
increases were largely implemented. Imports into North America
increased, particularly from Asia. Demand for speciality paper was
rather stable in North America during the fourth quarter. Price
increases were implemented in certain grades.
In Asia demand for coated fine paper weakened during the fourth quarter
following the normal seasonal pattern. Prices stabilised towards the end
of the quarter.
Demand for fine paper is expected to remain good in Europe throughout the
first quarter. The indirect effect of the weak US dollar may disturb the
supply and demand balance. Coated fine paper prices should stay stable
during the first quarter of 2005, but prices for some uncoated grades are
still under pressure. In North America demand is expected to remain strong
and further price increases are anticipated. In Asia consumption should
improve after the Chinese New Year in February.
Merchants
Sales were EUR 183.4 million, up 25.9% on the previous quarter mainly
due to the acquisition of Scaldia and strong seasonal demand. Operating
profit was EUR 3.9 million, up EUR 2.3 million on the previous quarter
due to the volume increase, slightly higher average prices and lower
costs.
The first quarter of the year is usually seasonally strong, with volume
growth expected in both coated and uncoated fine paper.
PACKAGING BOARDS
Change
EUR million 2003 2004 Q1/04 Q2/04 Q3/04 Q4/04 Q4/Q3%
Sales 2 761.6 2 771.5 692.0 704.4 674.6 700.5 3.8
Operating profit* 292.4 277.6 82.1 67.7 84.8 43.0 -49.3
% of sales 10.6 10.0 11.9 9.6 12.6 6.1
ROOC, %** 11.6 10.6 13.1 10.7 13.4 6.5
Deliveries, 1000 t 3 006 3 119 776 790 766 787 2.7
Production, 1000 t 3 050 3 090 771 775 798 747 -6.4
* Excluding non-recurring items and goodwill amortisation
**ROOC = 100% x Operating profit/Operating capital
Packaging boards sales were EUR 700.5 million, up 3.8% on the previous
quarter as deliveries rose. Operating profit was EUR 43.0 million,
49.3% lower than in the previous quarter, due to holiday season shutdowns with
increased maintenance costs, the weaker US dollar and lower production.
Market-related production curtailments totalled 8 000 (37 000) tonnes.
Demand was good in all businesses and there were some price increases
during the autumn.
Demand is generally expected to remain stable in all businesses.
Moderate price increases are anticipated, but their impact may be offset
by the weak US dollar.
FOREST PRODUCTS
Wood Products
Change
EUR million 2003 2004 Q1/04 Q2/04 Q3/04 Q4/04 Q4/Q3%
Sales 1 400.0 1 566.8 373.1 419.2 388.5 386.0 -0.6
Operating profit* 26.5 34.7 11.4 21.3 10.9 -8.9 N/A
% of sales 1.9 2.2 3.1 5.1 2.8 -2.3
ROOC, %** 5.1 5.2 7.0 12.5 6.3 -5.2
Deliveries, 1000 m3 5 822 6 664 1 597 1 777 1 595 1 695 6.3
* Excluding non-recurring items and goodwill amortisation
**ROOC = 100% x Operating profit/Operating capital
Wood product sales were EUR 386.0 million, down 0.6% on the previous
quarter mainly due to lower sales prices, depressed by US sales price
reductions. As a result, there was an operating loss of EUR 8.9 million,
a decline of EUR 19.8 million on the previous quarter, as a result of
lower sales prices and increased raw material costs in Northern Europe.
Globally the wood products market is still stable but European suppliers
are suffering from oversupply as well as currency fluctuations and rises
in maritime freight rates. Also in the North American and Japanese
markets oversupply puts pressure on prices.
The European construction market is polarised. The outlook is weak in
the UK, the Netherlands and Germany but good in the rest of Europe.
Increased wood supply resulting from the recent storm in Northern Europe
will put pressure on sawn product prices. In the USA the construction
market is strong but anticipated mortgage rate increases will affect
demand later this year. Japanese construction activity should remain
largely unchanged on 2004, except for occasional disturbances due to
exchange rate effects. However, the further weakening of the US dollar
has caused some repatriation of volumes and decreased profits.
In the joinery and retail businesses, volumes and prices are quite
stable in Europe and overseas markets.
Demand for redwood in North Africa and the Middle East improved towards
the end of 2004.
Wood Supply Europe
Sales were EUR 657.0 million, up 15.6% on the previous quarter mainly
due to seasonal reasons. There was an operating loss excluding
non-recurring items of EUR 5.4 (profit of EUR 3.1) million due to the
challenging supply and demand balance and higher than expected wood
costs in the Baltic States and Russia. Difficult weather conditions
around the Baltic Sea increased harvesting costs in all operating areas.
Deliveries to the Group's mills in Finland, Sweden, the Baltic States,
Russia and Continental Europe totalled 10.2 million cubic metres (solid
wood under bark), 3% up on the previous quarter.
The tight wood market around the Baltic at the end of 2004 is expected
to turn into a short-term oversupply of long-fibre wood due to storm
damage to forests in Sweden and the Baltic States. Most of the short-
term fall in wood costs will be offset by increased harvesting and
transport costs in the storm-affected areas.
Financials
Key Ratios
Q1/03 Q2/03 Q3/03 Q4/03 2003 Q1/04 Q2/04 Q3/04 Q4/04 2004
Earnings per share (basic), EUR
0.10 0.06 0.05 -0.05 0.16 0.49 0.06 0.16 0.18 0.89
Earnings per share excl.
non-recurring items, EUR
0.10 0.06 0.08 0.00 0.24 0.06 0.06 0.10 0.03 0.25
Cash earnings per
share (CEPS), EUR
0.43 0.41 0.41 0.32 1.57 0.55 0.43 0.51 0.54 2.01
CEPS excl. non-recurring
items, EUR
0.43 0.41 0.44 0.35 1.63 0.41 0.43 0.45 0.38 1.67
Return on capital
employed (ROCE), %
7.0 3.5 3.2 2.1 4.0 7.9 2.2 7.6 8.3 6.3
ROCE excl. non-recurring
items, %
7.0 3.5 4.6 2.6 4.5 3.7 2.2 4.9 1.6 3.0
Return on equity (ROE), %
4.1 2.8 2.1 -2.1 1.7 20.6 2.7 6.6 7.4 9.2
Debt/equity ratio
0.49 0.51 0.51 0.49 0.49 0.39 0.42 0.41 0.38 0.38
Equity per share, EUR
9.39 9.48 9.60 9.49 9.49 9.47 9.56 9.72 9.81 9.81
Equity ratio, %
43.2 43.8 44.2 44.7 44.7 47.8 48.2 48.6 49.9 49.9
Operating profit,
% of sales
6.7 3.4 3.2 2.1 3.9 7.3 1.9 6.8 6.9 5.7
Operating profit excl. non-recurring
items, % of sales
6.7 3.4 4.6 2.6 4.3 3.4 1.9 4.3 1.3 2.7
Capital expenditure, EUR million
235.8 324.1 303.1 385.2 1 248.2 216.1 281.1 268.1 214.3 979.6
Capital expenditure,
% of sales
7.6 10.6 10.1 12.7 10.3 7.2 9.0 8.8 6.6 7.9
Capital employed, EUR million
11 871 11 925 12 029 11 613 11 613 10 579 10 831 10 845 10 671 10 671
Interest-bearing net liabilities,
EUR million
3 968 4 071 4 104 3 919 3 919 3 105 3 356 3 343 3 052 3 052
Average numberof employees
43 386 44 506 44 737 44 264 44 264 42 446 43 795 44 045 43 779 43 779
Average number of shares (million)
- periodic
866.2 852.9 844.5 841.3 851.1 835.3 831.8 826.3 822.0 828.8
- cumulative
866.2 859.5 854.4 851.1 851.1 835.3 833.6 831.1 828.8 828.8
- cumulative, diluted
866.4 860.5 855.6 852.2 852.2 836.0 834.4 831.9 829.4 829.4
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
31 Dec 2003 31 Dec 2004 2003 2004
SEK 9.0800 9.0206 9.1245 9.1253
USD 1.2630 1.3621 1.1320 1.2440
GBP 0.7048 0.7051 0.6921 0.6786
CAD 1.6234 1.6416 1.5822 1.6166
Condensed Consolidated Income Statement
EUR million 2003 2004
Sales 12 172.3 12 395.8
Other operating income 41.2 153.8
Materials and services -6 129.3 -6 534.6
Freight and sales commissions -1 286.8 -1 367.8
Personnel expenses -2 297.6 -1 937.3
Other operating expenses -828.0 -831.8
Depreciation, amortisation and impairment charges -1 200.4 -1 172.0
Operating Profit 471.4 706.1
Share of results of associated companies -23.0 38.9
Net financial items -237.7 -106.0
Profit before Tax and Minority Interests 210.7 639.0
Income tax expense -67.0 108.8
Profit after Tax 143.7 747.8
Minority interests -5.8 -8.1
Net Profit for the Period 137.9 739.7
Key Ratios
Basic earnings per share, EUR 0.16 0.89
Diluted earnings per share, EUR 0.16 0.89
Condensed Consolidated Cash Flow Statement
EUR million 2003 2004
Cash Flow from Operating Activities
Operating profit 471.4 706.1
Adjustments 1 178.3 1 039.1
Change in net working capital 157.9 -545.1
Change in short-term interest-bearing receivables 313.1 444.3
Cash Flow Generated by Operations 2 120.7 1 644.4
Net financial items -198.1 -124.8
Income taxes paid -233.8 -114.2
Net Cash Provided by Operating Activities 1 688.8 1 405.4
Cash Flow from Investing Activities
Acquisitions -241.3 -426.8
Proceeds from sale of fixed assets and shares 60.2 253.9
Capital expenditure -1 226.7 -979.6
Proceeds from the long-term receivables, net 336.2 -182.5
Net Cash Used in Investing Activities -1 071.6 -1 335.0
Cash Flow from Financing Activities
Change in long-term liabilities -957.4 1 261.2
Change in short-term borrowings 1 097.0 -697.5
Dividends paid -387.7 -375.7
Minority dividends -1.9 -1.9
Options exercised -0.9 1.6
Purchase of own shares -319.1 -198.6
Net Cash Used in Financing Activities -570.0 -10.8
Net Increase in Cash and Cash Equivalents 47.2 59.6
Cash and bank in acquired companies 3.0 45.9
Cash and bank in sold companies - -29.5
Translation differences on cash holdings -17.2 -3.2
Cash and bank at the beginning of period 168.5 201.5
Cash and Cash Equivalents at Period End 201.5 274.3
Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million 2003 2004
Carrying value at 1 January 12 796.7 12 535.3
Acquisition of subsidiary companies 206.4 190.2
Additions 1 248.2 979.6
Disposals -54.0 -1 635.3
Depreciation, amortisation and impairment -1 200.4 -1 172.0
Translation difference and other -461.6 -189.4
Balance Sheet Total 12 535.3 10 715.5
Acquisitions of Subsidiary Companies
Cash and cash equivalents 3.0 45.9
Working capital 31.2 44.0
Operating fixed assets 132.6 183.3
Interest bearing assets 5.7 0.7
Tax liabilities -0.2 -19.2
Interest bearing liabilities -94.1 -11.4
Non-cash share exchange - -3.9
Minority interests -23.8 -69.9
Fair value of net assets 54.4 169.5
Goodwill 73.8 6.9
Total Purchase Consideration 128.2 176.4
Borrowings
EUR million 2003 2004
Non-current borrowings 3 404.6 3 328.1
Current borrowings 1 769.6 699.5
5 174.2 4 027.6
Carrying value at 1 January 5 175.6 5 174.2
Debt acquired with new subsidiaries 94.1 11.4
Debt disposed with sold subsidiaries - -1 518.8
Proceeds from / -payments of borrowings (net) 421.5 552.5
Translation difference and other -517.0 -191.7
Total Borrowings 5 174.2 4 027.6
Transaction Risk and Hedges in 2004
EUR million EUR USD GBP SEK CAD Other Total
Sales 6 200 3 300 900 1 100 100 800 12 400
Costs -6 200 -1 800 -200 -2 000 -200 -500 -10 900
Net operating cash flow 0 1 500 700 -900 -100 300 1 500
Transaction hedges as
at 31 Dec. 222 136 -103 -28
Hedging percentage as
at 31 Dec. 14.8% 19.4% 11.4% 28.0%
Average hedging
percentage during 2004 11.9% 30.8% 14.7% 43.3%
Condensed Consolidated Balance Sheet
Assets
EUR million 31 Dec 2003 31 Dec 2004
Fixed and Other Long-term Assets
Fixed assets O 12 535.3 10 715.5
Investment in associated companies 319.0 568.1
Listed securities I 227.7 220.1
Unlisted shares O 140.8 132.7
Non-current loan receivables I 44.3 233.1
Deferred tax assets T 12.1 11.4
Other non-current assets O 170.3 210.5
13 449.5 12 091.4
Current Assets
Inventories O 1 623.5 1 771.3
Tax receivables T 182.5 160.9
Operative receivables O 1 703.3 1 865.3
Interest-bearing receivables I 781.8 248.7
Cash and cash equivalents I 201.5 274.3
4 492.6 4 320.5
Total assets 17 942.1 16 411.9
Shareholders' Equity and Liabilities
EUR million 31 Dec 2003 31 Dec 2004
Shareholders Equity 7 952.9 8 051.1
Minority Interests 60.3 136.1
Long-term Liabilities
Pension provisions O 911.9 637.8
Other provisions O 97.1 60.9
Deferred tax liabilities T 1 777.3 1 320.6
Long-term debt I 3 404.6 3 328.1
Long-term operative liabilities O 77.7 153.2
6 268.6 5 500.6
Current Liabilities
Current portion of long-term debt I 359.5 102.1
Interest-bearing liabilities I 1 410.1 597.4
Operative liabilities O 1 538.3 1 673.1
Tax liabilities T 352.4 351.5
3 660.3 2 724.1
Total Liabilities 9 928.9 8 224.7
Total Shareholders Equity and Liabilities 17 942.1 16 411.9
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
31 December 2002 1 529.6 1 554.0 -314.9 233.4 -144.4 5 299.2 8 156.9
Effect of
adopting IAS 41
Subsidiary companies - - - - - 615.4 615.4
Associated companies - - - - - 44.0 44.0
Balance at
1 January 2003
(restated) 1 529.6 1 554.0 -314.9 233.4 -144.4 5 958.6 8 816.3
Repurchase of Stora
Enso Oyj shares - - -319.1 - - - -319.1
Cancellation of
Stora Enso Oyj shares -60.5 -315.5 376.0 - - - 0.0
Dividend
(EUR 0.45 per share) - - - - - -387.7 -387.7
Options exercised 0.2 -1.1 - - - - -0.9
Net profit for
the period - - - - - 146.6 146.6
OCI entries - - - -118.8 - - -118.8
Translation adjustment - - - - -52.7 - -52.7
Balance at
31 December 2003 1 469.3 1 237.4 -258.0 114.6 -197.1 5 717.5 8 083.7
Restatement of
opening balance
Finnish Statutory
Pension Scheme - - - - - -130.9 -130.9
Balance at
1 January 2004
(restated) 1 469.3 1 237.4 -258.0 114.6 -197.1 5 586.6 7 952.8
Repurchase of Stora
Enso Oyj shares - - -198.6 - - - -198.6
Cancellation of
Stora Enso Oyj shares -47.3 -228.5 275.8 - - - 0.0
Dividend
(EUR 0.45 per share) - - - - - -375.7 -375.7
Options exercised 1.3 0.3 - - - - 1.6
Net profit for
the period - - - - -11.7 739.7 728.0
OCI entries - - - -47.0 - - -47.0
Translation adjustment - - - - -10.0 - -10.0
Balance at
31 December 2004 1 423.3 1 009.2 -180.8 67.6 -218.8 5 950.6 8 051.1
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
EUR million 31 Dec 2003 31 Dec 2004
On own Behalf
Pledges given 3.8 0.8
Mortgages 103.5 118.8
On Behalf of Associated Companies
Mortgages 0.8 0.8
Guarantees 48.4 209.3
On Behalf of Others
Pledges given 2.2 0.0
Mortgages 10.9 0.0
Guarantees 13.1 6.8
Other Commitments, Own
Leasing commitments, in next 12 months 34.3 32.6
Leasing commitments, after next 12 months 171.2 159.2
Pension liabilities 3.0 2.2
Other commitments 95.9 59.6
Total 487.1 590.1
Pledges given 6.0 0.8
Mortgages 115.2 119.6
Guarantees 61.5 216.1
Leasing commitments 205.5 191.8
Pension liabilities 3.0 2.2
Other commitments 95.9 59.6
Total 487.1 590.1
Net Fair Values of Derivative Financial Instruments
EUR million 31 Dec 2003 31 Dec 2004
Net Positive Negative Net
Fair Values Fair Values Fair Values Fair Values
Interest rate swaps 106.8 157.1 -5.8 151.3
Interest rate options 0.5 1.4 -0.4 1.0
Cross-currency swaps -11.0 3.3 -14.9 -11.6
Forward contracts 172.8 94.7 -5.2 89.5
FX Options 0.7 3.2 -1.4 1.8
Commodity contracts 71.5 28.8 -5.2 23.6
Equity swaps -36.0 21.8 -33.2 -11.4
Total 305.3 310.3 -66.1 244.2
Nominal Values of Derivative Financial Instruments
EUR million 31 Dec 2003 31 Dec 2004
Interest Rate Derivatives
Interest rate swaps
Maturity under 1 year 113.7 66.5
Maturity 25 years 1 080.4 953.4
Maturity 610 years 1 439.2 1 469.9
Maturity over 10 years - -
2 633.3 2 489.8
Interest rate futures - -
Interest rate options 23.8 198.4
Total 2 657.1 2 688.2
Foreign Exchange Derivatives
- Cross-currency swap agreements 129.5 102.7
- Forward contracts 3 112.5 2 479.8
- FX Options 208.1 588.3
Total 3 450.1 3 170.8
Commodity derivatives
Commodity contracts 477.0 442.7
Total 477.0 442.7
Equity swaps
Equity swaps 308.4 359.5
Total 308.4 359.5
Sales by Product Area
EUR million
Q1/03 Q2/03 Q3/03 Q4/03 2003 Q1/04 Q2/04 Q3/04 Q4/04 2004
Publication Paper
1058.3 1042.8 1086.3 1108.3 4295.7 1019.2 1069.6 1090.6 1163.9 4343.3
Fine Paper
852.3 793.9 788.5 763.0 3197.7 788.9 786.3 791.8 806.1 3173.1
Merchants
176.1 155.4 139.5 156.6 627.6 160.3 148.5 145.7 183.4 637.9
Other
-72.0 -69.0 -70.4 -69.9 -281.3 -70.4 -68.6 -72.3 -76.5 -287.8
Paper
2014.7 1923.1 1943.9 1958.0 7839.7 1898.0 1935.8 1955.8 2076.9 7866.5
Packaging Boards
699.0 711.4 691.1 660.1 2761.6 692.0 704.4 674.6 700.5 2771.5
Wood Products
316.5 385.6 335.5 362.4 1400.0 373.1 419.2 388.5 386.0 1566.8
Wood Supply Europe
534.2 526.7 475.0 538.4 2074.3 634.9 621.4 568.3 657.0 2481.6
Other
-143.5 -149.9 -131.7 -165.9 -591.0 -229.8 -225.6 -207.1 -229.0 -891.5
Forest Products
707.2 762.4 678.8 734.9 2883.3 778.2 815.0 749.7 814.0 3156.9
Other
-321.8 -339.9 -326.4 -324.2 -1312.3 -350.3 -352.3 -347.0 -349.5 -1399.1
Total
3099.1 3057.0 2987.4 3028.8 12172.3 3017.9 3102.9 3033.1 3241.9 12395.8
Restated Operating Profit by Product Area excluding Non-recurring Items
and Goodwill Amortisation
EUR million
Q1/03 Q2/03 Q3/03 Q4/03 2003 Q1/04 Q2/04 Q3/04 Q4/04 2004
Publication Paper
35.6 -6.0 39.2 42.3 111.1 8.7 -3.8 48.2 38.2 91.3
Fine Paper
80.7 40.3 23.1 9.4 153.5 18.1 4.6 27.9 13.7 64.3
Merchants
1.5 -1.2 -1.5 -5.5 -6.7 3.3 2.4 1.6 3.9 11.2
Paper
117.8 33.1 60.8 46.2 257.9 30.1 3.2 77.7 55.8 166.8
Packaging Boards
89.4 65.5 87.4 50.1 292.4 82.1 67.7 84.8 43.0 277.6
Wood Products
7.0 14.9 -4.7 9.3 26.5 11.4 21.3 10.9 -8.9 34.7
Wood Supply Europe
34.5 33.8 23.0 25.2 116.5 31.3 3.3 3.1 -5.4 32.3
Forest Products
41.5 48.7 18.3 34.5 143.0 42.7 24.6 14.0 -14.3 67.0
Other Areas
-8.6 -15.7 -6.2 -21.0 -51.5 -28.8 -15.1 -23.2 -17.6 -84.7
Goodwill amortisation
-32.1 -28.0 -23.5 -32.4 -116.0 -22.7 -21.9 -21.7 -24.0 -90.3
Operating Profit excl.
Non-recurring Items
208.0 103.6 136.8 77.4 525.8 103.4 58.5 131.6 42.9 336.4
Non-recurring items
- - -39.9 -14.5 -54.4 115.7 - 74.1 179.9 369.7
Operating Profit (IAS)
208.0 103.6 96.9 62.9 471.4 219.1 58.5 205.7 222.8 706.1
Net financial items
-81.3 -11.3 -23.4 -121.7 -237.7 -20.3 -26.2 -27.0 -32.5 -106.0
Associated companies
-0.5 -8.5 -9.0 -5.0 -23.0 -2.3 16.7 10.2 14.3 38.9
Profit before Tax and
Minority Interests
126.2 83.8 64.5 -63.8 210.7 196.5 49.0 188.9 204.6 639.0
Income tax expense
-39.9 -27.4 -21.1 21.4 -67.0 214.6 5.0 -56.6 -54.2 108.8
Profit after Tax
86.3 56.4 43.4 -42.4 143.7 411.1 54.0 132.3 150.4 747.8
Minority interests
-3.2 -2.3 1.7 -2.0 -5.8 -4.2 -2.1 -1.4 -0.4 -8.1
Net Profit
83.1 54.1 45.1 -44.4 137.9 406.9 51.9 130.9 150.0 739.7
Goodwill Amortisation by Product Area
EUR million
Q1/03 Q2/03 Q3/03 Q4/03 2003 Q1/04 Q2/04 Q3/04 Q4/04 2004
Publication Paper
-7.9 -8.2 -8.1 -10.2 -34.4 -5.7 -5.6 -5.7 -6.2 -23.2
Fine Paper
-10.9 -10.6 -10.6 -11.0 -43.1 -10.2 -9.5 -9.3 -9.8 -38.8
Merchants
-0.6 -0.5 -0.6 -0.5 -2.2 -0.4 -0.5 -0.4 -0.8 -2.1
Paper
-19.4 -19.3 -19.3 -21.7 -79.7 -16.3 -15.6 -15.4 -16.9 -64.2
Packaging Boards
-6.5 -1.5 -1.9 -2.0 -11.9 -1.2 -1.0 -1.1 -1.6 -4.9
Wood Products
-4.0 -6.1 -1.2 -8.7 -20.0 -5.2 -5.3 -5.2 -5.5 -21.2
Wood Supply Europe
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Forest Products
-4.0 -6.1 -1.2 -8.7 -20.0 -5.2 -5.3 -5.2 -5.5 -21.2
Other
-2.2 -1.1 -1.1 0.0 -4.4 0.0 0.0 0.0 0.0 0.0
Total Goodwill
-32.1 -28.0 -23.5 -32.4 -116.0 -22.7 -21.9 -21.7 -24.0 -90.3
Restated Operating Profit by Product Area
EUR million
Q1/03 Q2/03 Q3/03 Q4/03 2003 Q1/04 Q2/04 Q3/04 Q4/04 2004
Publication Paper
27.7 -14.2 1.6 32.1 47.2 3.0 -9.4 73.3 77.6 144.5
Fine Paper
69.8 29.7 2.2 -1.6 100.1 7.9 -4.9 60.1 40.9 104.0
Merchants
0.9 -1.7 -2.1 -6.0 -8.9 2.9 1.9 1.2 3.9 9.9
Paper
98.4 13.8 1.7 24.5 138.4 13.8 -12.4 134.6 122.4 258.4
Packaging Boards
82.9 64.0 85.5 48.1 280.5 80.9 66.7 83.7 108.4 339.7
Wood Products
3.0 8.8 -5.9 0.6 6.5 6.2 16.0 5.7 1.9 29.8
Wood Supply Europe
34.5 33.8 23.0 25.2 116.5 147.0 3.3 3.1 5.2 158.6
Forest Products
37.5 42.6 17.1 25.8 123.0 153.2 19.3 8.8 7.1 188.4
Other
-10.8 -16.8 -7.4 -35.5 -70.5 -28.8 -15.1 -21.4 -15.1 -80.4
Operating Profit
208.0 103.6 96.9 62.9 471.4 219.1 58.5 205.7 222.8 706.1
Net financial items
-81.3 -11.3 -23.4 -121.7 -237.7 -20.3 -26.2 -27.0 -32.5 -106.0
Associated companies
-0.5 -8.5 -9.0 -5.0 -23.0 -2.3 16.7 10.2 14.3 38.9
Profit before Tax
and Minority Interests
126.2 83.8 64.5 -63.8 210.7 196.5 49.0 188.9 204.6 639.0
Income tax expense
-39.9 -27.4 -21.1 21.4 -67.0 214.6 5.0 -56.6 -54.2 108.8
Profit after Tax
86.3 56.4 43.4 -42.4 143.7 411.1 54.0 132.3 150.4 747.8
Minority interests
-3.2 -2.3 1.7 -2.0 -5.8 -4.2 -2.1 -1.4 -0.4 -8.1
Net Profit
83.1 54.1 45.1 -44.4 137.9 406.9 51.9 130.9 150.0 739.7
Stora Enso Shares
Closing Price Helsinki, EUR Stockholm, SEK New York, USD
Series A Series R Series A Series R ADRs
October 11.25 11.19 101.50 101.50 14.21
November 12.00 12.02 108.00 107.50 15.89
December 11.55 11.27 103.00 101.50 15.21
Trading
Volume Helsinki Stockholm New York
Series A Series R Series A Series R ADRs
October 66 479 76 651 250 84 845 17 740 549 1 822 400
November 337 012 65 804 039 131 080 23 393 107 1 537 200
December 62 152 67 847 845 130 718 13 833 602 962 500
Total 465 643 210 303 134 346 643 54 967 258 4 322 100
www.storaenso.com
www.storaenso.com/investors
Publication dates for financial information
Interim Review for January - March 2005 27 April 2005
Interim Review for January - June 2005 27 July 2005
Interim Review for January - September 2005 27 October 2005
Annual General Meeting 22 March 2005
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
