Stora Enso Interim Review January ? June
STORA ENSO OYJ Stock Exchange Release 24 July 2003 at 13.00
Stora Enso Interim Review January June 2003
Profitability reduced; cash earnings and balance sheet continue to
be strong
Second Quarter Results
Stora Ensos earnings per share were EUR 0.07 (EUR 0.10). Operating
profit was EUR 106.7 (EUR 211.1) million, which is 49.5% less than
in the previous quarter and 3.5% of sales. Profit before taxes and
minority interests amounted to EUR 86.9 (EUR 129.3) million. There
were no non-recurring items in the second quarter.
Sales of EUR 3 057.0 million were similar to the previous quarters
EUR 3 099.1 million. Cash flow from ongoing operations was EUR 383.3
(EUR 469.7) million and cash flow after investing activities EUR
40.2 (EUR 255.9) million. Cash earnings per share were EUR 0.41 (EUR
0.43). Net financial items were EUR -11.3 (EUR -81.3) million.
Market-related production curtailments totalled 200 000 tonnes
(202 000 tonnes).
EUR million 2002 Q2/02 H1/02 H1/03 Q1/03 Q2/03
Sales 12 782.6 3 233.0 6 461.9 6 156.1 3 099.1 3 057.0
EBITDA1)2) 2 172.0 517.9 1 120.8 900.3 500.6 399.7
Operating
profit2) 926.5 190.2 464.2 317.8 211.1 106.7
Net non
recurring items -1 078.1 51.6 51.6 - - -
Operating
margin2), % 7.2 5.9 7.2 5.2 6.8 3.5
Operating profit -151.6 241.8 515.8 317.8 211.1 106.7
Profit before
tax and minority
interests2) 734.9 154.6 395.1 216.2 129.3 86.9
Profit before
tax and minority
interests -343.2 206.2 446.7 216.2 129.3 86.9
Net profit for
the period -222.2 138.0 299.0 141.6 85.3 56.3
EPS2), Basic, EUR 0.57 0.12 0.30 0.16 0.10 0.07
EPS, Basic, EUR -0.25 0.15 0.33 0.16 0.10 0.07
CEPS2), EUR 1.97 0.48 1.03 0.84 0.43 0.41
ROCE2), % 7.1 5.6 6.9 5.3 7.1 3.6
1) EBITDA = Earnings before Interest, Taxes, Depreciation and
Amortisation
2) Excluding net non-recurring items
Outlook
Commenting on the market outlook, Stora Ensos CEO Jukka Härmälä
said, öGlobal economic activity remains muted. There has yet to be a
sustained increase in advertising spending in Europe and it is
difficult to predict when this will occur, but in North America
there are signs that advertising spending is beginning to recover
from the impact of the Iraq War. However, rising imports are
affecting the supply and demand balance. In Asia SARS temporarily
depressed the paper and board markets, but consumer confidence is
now recovering.ö
Prices for coated and uncoated fine papers and for coated magazine
grades are continuing to decline gradually in Europe. In coated
grades systemic overcapacity is the main cause of price weakness.
The uncoated fine paper market is affected by seasonal weakness and
increasing imports from Asia and South America attracted by the
strong euro. Recovered-fibre-based packaging board grades are under
price pressure in Europe, but timber product prices are expected to
remain stable.
The prospect of continuing challenging market conditions is being
addressed by intensifying existing cost-reduction programmes and
exploring additional measures to improve competitiveness.
Furthermore, the Groups capital expenditure plans are being
adjusted so as not to exceed the level of depreciation over the
2003/04 period, in order to maintain a healthy level of free cash
flow while pursuing attractive investment opportunities.
For further information, please contact:
Jukka Härmälä, Chief Executive Officer, tel. +358 2046 21404
Björn Hägglund, Deputy Chief Executive Officer, tel. +46 70 528 2785
Esko Mäkeläinen, CFO, tel. +44 20 7016 3115
Kari Vainio, EVP, Corporate Communications, tel. +44 7799 348 197
Keith B Russell, SVP, Investor Relations, tel. +44 7775 788 659
The full-length version of the Stora Enso interim review is
available on the Stora Enso website at
www.storaenso.com/investors
An image bank of pictures that may be freely used to illustrate
articles about Stora Enso is available at www.storaenso.com/images
Stora Ensos third quarter results will be published on 23 October
2003.
Stora Enso Interim Review January June 2003
Summary of Second Quarter Results*
* Earnings per share were EUR 0.07; previous quarter EUR 0.10.
* Operating profit was EUR 106.7 million; previous quarter EUR 211.1
million.
* Profit before tax and minority items was EUR 86.9 million;
previous quarter EUR 129.3 million.
* Sales were EUR 3 057.0 million; previous quarter EUR 3 099.1
million.
* Cash earnings per share were 0.41; previous quarter EUR
0.43.
*) There were no non-recurring items in the first and second
quarters of 2003.
Global markets for forest industry products were depressed by
subdued economic activity and geopolitical factors, which
particularly affected demand for advertising-driven paper grades.
The direct and indirect effects of the decline in the US dollar also
made the financial results for the second quarter of 2003 weaker
than anticipated.
In Europe continuing overcapacity in some product areas aggravated
the effects of economic weakness, so order levels were moderate and
some prices declined. The lower value of the US dollar, particularly
relative to the euro, depressed margins, both directly on overseas
exports and indirectly by increasing competition. Costs associated
with the annual Midsummer holiday shutdowns at the Groups Nordic
mills also reduced profitability, especially in Finland.
The trend of improving market conditions in North America was halted
during the quarter, mainly because of the effects of the Iraq War on
advertising spending and hence paper demand. At the same time,
imports from Asia and Europe increased. The resulting adverse supply
and demand balance depressed capacity utilisation rates and made it
difficult to implement fully the previously announced product price
increases.
Production was curtailed by adjustments to market demand, in
addition to seasonal downtime. Market-related production
curtailments totalled 200 000 tonnes, 42 000 tonnes in North America
and 158 000 tonnes in Europe. This compares with the previous
quarters total of 202 000 tonnes, comprising 7 000 tonnes in North
America and 195 000 tonnes in Europe.
Paper and board deliveries totalled 3 354 000 tonnes, which is 59
000 tonnes more than the previous quarters 3 295 000 tonnes.
Production volumes totalled 3 315 000 tonnes (3 421 000 tonnes).
Deliveries of wood products totalled 1 644 000 cubic metres,
compared with the previous quarters 1 283 000 cubic metres,
reflecting the consolidation of Stora Enso Timber AS (Sylvester AS)
in Estonia.
EUR million 2002 Q2/02 H1/02 H1/03 Q1/03 Q2/03
Sales 12 782.6 3 233.0 6 461.9 6 156.1 3 099.1 3 057.0
EBITDA1)2) 2 172.0 517.9 1 120.8 900.3 500.6 399.7
Operating
profit2) 926.5 190.2 464.2 317.8 211.1 106.7
Net non
recurring items -1 078.1 51.6 51.6 - - -
Operating
margin2), % 7.2 5.9 7.2 5.2 6.8 3.5
Operating
profit -151.6 241.8 515.8 317.8 211.1 106.7
Profit before
tax and
minority
interests2) 734.9 154.6 395.1 216.2 129.3 86.9
Profit before
tax and minority
interests -343.2 206.2 446.7 216.2 129.3 86.9
Net profit for
the period -222.2 138.0 299.0 141.6 85.3 56.3
EPS2), Basic, EUR 0.57 0.12 0.30 0.16 0.10 0.07
EPS, Basic, EUR -0.25 0.15 0.33 0.16 0.10 0.07
CEPS2), EUR 1.97 0.48 1.03 0.84 0.43 0.41
ROCE2), % 7.1 5.6 6.9 5.3 7.1 3.6
1) EBITDA = Earnings before Interest, Taxes, Depreciation and
Amortisation
2) Excluding net non-recurring items
Second Quarter Results (compared with previous quarter)
Earnings per share were EUR 0.07 (EUR 0.10). The main impacts on EPS
were EUR -0.05 due to lower sales prices, EUR -0.05 due to increased
fixed costs and EUR +0.05 due to decreased financing costs.
Operating profit was EUR 106.7 (EUR 211.1) million, which is 49.5%
less than in the previous quarter and 3.5% of sales. Operating
profits declined in all paper and board product areas and in
Merchants, but improved slightly in Timber Products, because of the
consolidation of Stora Enso Timber AS (Sylvester AS); Forest
Operations remained unchanged.
Operating profit was lower largely because sales prices and
production volumes decreased and costs increased, mainly due to
Midsummer shutdowns. Released hedging contracts, especially in the
US dollar and British pound, had a positive impact of EUR 34.8
million on operating profit.
Profit before taxes and minority interests amounted to EUR 86.9
(EUR 129.3) million.
Sales of EUR 3 057.0 million were similar to the previous quarters
EUR 3 099.1 million.
Net financial items were EUR -11.3 (EUR -81.3) million. Net interest
expenses amounted to EUR -51.5 (EUR -34.6) million and net foreign
exchange gains came to EUR 7.9 (EUR 2.9) million. Other financial
items totalled EUR 32.3 (EUR -49.6) million, mostly due to non-cash
valuations of synthetic option hedging instruments and other
derivatives.
The share of associated company results amounted to EUR -8.5 (EUR
-0.5) million. Net taxes totalled EUR -28.3 (EUR -40.8) million,
equivalent to a tax rate of 32.6% (31.6%). The minority interest in
profits was EUR -2.3 (EUR -3.2) million, leaving a net profit for
the period of EUR 56.3 (EUR 85.3) million.
The return on capital employed was 3.6% (7.1%). Capital employed was
EUR 12 046.2 million at the end of the period, a net increase of EUR
50.7 million. The currency effect on capital employed was EUR -111.7
million.
The results for the second quarter include the effects of biological
transformation (growth and price) amounting to EUR 30.8 million and
biological produce (harvesting) amounting to EUR -28.3 million,
resulting in a net impact of EUR 2.5 million.
Capital Structure
IAS 41
EUR Adjustm
million 31.12.2002 ent 1.1.2003 30.6.2002 31.3.2003 30.6.2003
Fixed
assets 12 089.4 866.2 12 955.6 13 992.1 12 906.5 12 866.7
Working
capital 1 182.2 1 182.2 1 172.3 1 231.0 1 244.5
Operating
Capital 13 271.6 866.2 14 137.8 15 164.4 14 137.5 14 111.2
Net tax
liabilities -2 029.2 -243.3 -2 272.5 -2 174.6 -2 142.0 -2 065.0
Capital
Employed 11 242.4 622.9 11 865.3 12 989.8 11 995.5 12 046.2
Shareholders
equity 8 156.9 622.9 8 779.8 8 827.1 8 187.0 8 135.4
Minority
interests 30.4 30.4 50.0 45.1 48.9
Interest
-bearing net
liabilities 3 055.1 3 055.1 4 112.7 3 763.4 3 861.9
Financing
Total 11 242.4 622.9 11 865.3 12 989.8 11 995.5 12 046.2
Financing
Cash flow from ongoing operations was EUR 383.3 (EUR 469.7) million
and cash flow after investing activities EUR 40.2 (EUR 255.9)
million. Cash earnings per share were EUR 0.41 (EUR 0.43).
At the end of the period, interest-bearing net liabilities were EUR
3 861.9, up EUR 98.5 million on the end of the previous quarter.
Currency effects decreased interest-bearing net liabilities by EUR 125.6
million. Unutilised credit facilities and cash and cash-equivalent
reserves totalled EUR 2.8 billion.
The debt/equity ratio at 30 June 2003 was 0.47 (0.46) and equity per
share EUR 9.63 (EUR 9.53). The currency effect on equity was EUR -
31.2 million, net of the hedging of equity translation risks. Share
buybacks decreased equity by EUR 131.3 million in the second
quarter. During the current share buy-back authorisation, effective
since 20 March 2003, 16 706 100 R shares were purchased at an
average price of EUR 9.24 and 3 300 A shares at an average price of
EUR 9.14. This represents just under 50% of the current
authorisation as regards R shares.
Quarterly Change in Interest-bearing Net Liabilities
Cash Acquis
Flow, itions Struc Trans Balance
Ongoing and tural lation Sheet
Opera Disposa Chan Diffe Impa
EUR million tions ls ges rence ct
Operating profit 104.2 2.5 106.7
Adjustments 288.0 288.0
Change in working capital -8.9 -6.5 1.9 -13.5
Cash Flow from Operations 383.3 -6.5 2.5 1.9 381.2
Capital expenditure -324.1 -324.1
Acquisitions 0.0 -34.5 -34.5
Disposals 2.0 2.0
Other change in fixed assets -21.0 -2.5 131.9 108.4
Cash Flow after Investing
Activities 40.2 -41.0 0.0 133.8 133.0
Net financing items (incl.
associated companies) -19.8 -19.8
Taxes paid -81.9 -1.3 -22.1 -105.3
Repurchase of own shares -131.3 -131.3
Other change in shareholders
equity and minority interests 11.6 -0.6 13.9 24.9
Change in Interest-bearing Net
Liabilities -181.2 -42.9 0.0 125.6 -98.5
Capital Expenditure for the second quarter and for January June
Capital expenditure for the second quarter totalled EUR 324.1
million, giving a total for the first six months of EUR 559.9
million, which was EUR 37.5 million more than depreciation. This was
partly a result of some capital expenditure carry over from 2002.
The main project in January June was the new paper machine 4 at
Langerbrugge in Belgium (EUR 125.2 million), which started
production in May; the project was completed at the end of June.
Other major projects were rebuilding paper machine 6 at Maxau in
Germany (EUR 22.9 million) and paper machine 3 at Veitsiluoto in
Finland (EUR 20.5 million), phase 1 of rebuilding paper machine 26
at Biron in the USA (EUR 13.3 million), rebuilding of paper machine
2 at Kotka in Finland (EUR 12.2 million) and folding boxboard
improvements at Baienfurt in Germany (EUR 12.1 million).
January June Results (compared with the same period in 2002)
Sales decreased by EUR 305.8 million to EUR 6 156.1 million, a
decline of 4.7% mainly due to reduced prices and volumes, especially
in paper products.
Operating profit excluding non-recurring items decreased by EUR
146.4 million, or 31.5%. Profits were lower than in the first six
months last year in all business segments except Forest Operations,
which was affected by the adoption of IAS 41.
Released hedging contracts, especially in the US dollar and British
pound, had a positive impact of EUR 61.5 million on operating
profit.
Profit before taxes and minority interests excluding non-recurring
items decreased by EUR 178.9 million to EUR 216.2 million.
Excluding non-recurring items, earnings per share were EUR 0.16 (EUR
0.30) and the return on capital employed was 5.3% (6.9%). There were
no non-recurring items in the first six months this year as compared
with EUR 51.6 million in the same period last year.
Stora Enso North America (January June)
Following a relatively good start to the year, print media
advertising weakened in the second quarter, mainly because of the
economic effects of the Iraq War, so demand for printing paper in
North America was lower than at the end of 2002. Downtime in
magazine paper increased as demand weakened and imports increased.
Energy prices rose. The decline in the US dollar also adversely
affected the profitability of the Canadian operations. Previously
announced price increases were only partially implemented.
Consequently, the Divisions business results were below
expectation and unsatisfactory.
Operating loss for the period was USD 98 (EUR 87) million, compared
with a loss of USD 50 (EUR 52.9) million during the second half of
2002 and USD 105 (EUR 117) million during the first half of last
year, all before goodwill amortisation, impairment charges and non-
recurring items. Operating cash flow after investing activities was
a negative USD 71 (EUR 64) million, compared with positive cash
flows of USD 113 (EUR 119.5) million during the second half of 2002
and USD 25 (EUR 26.5) million during the first half of 2002, all
before non-recurring items. Capital expenditure for the period was
USD 74 (EUR 67) million.
Market-related downtime totalled 49 000 tonnes during the period,
primarily in magazine and speciality papers, compared with 39 000
tonnes during the second half of last year and 194 000 tonnes during
the first half of 2002.
Stora Enso North Americas Profit Enhancement Programme, first
announced in August 2002, is proceeding as forecast. Rebuilding of
paper machines 96 at Kimberly and 26 at Biron ended successfully on
schedule during the second quarter of 2003. Additionally paper
machine 12 at Wisconsin Rapids was closed in 2002 and 24 at Biron
will be closed by the end of 2003. The Profit Enhancement Programme
is on schedule for completion by 2005 and is expected to have a
positive impact of EUR 0.05 on the Groups EPS, once the full effect
is realised (from 2005 onwards).
The Division has implemented major cost cutting initiatives during
the past three years, including a reduction of 20% in the workforce
and the permanent closure of unprofitable machines and related
operations, but its fixed costs are still too high. A detailed
review of the Divisions entire fixed cost structure is under way,
the intention being to expand the current Profit Enhancement
Programme to include additional costcutting steps. Details of these
measures will be announced before the end of the third quarter 2003.
Changes in the Management Group
In May Elisabet Salander Björklund became Executive Vice President
and head of Wood Supply Europe, and joined Stora Ensos Management
Group.
Second Quarter Events 2003
In May the associated company Veracel, a joint venture of Stora Enso
and Aracruz Celulose, decided to invest USD 870 million in the
construction of a 900 000 tonnes per year eucalyptus pulp mill at
Eunápolis in the state of Bahia, Brazil. Stora Enso has a 50% stake
in the project, is responsible for 50% of the financing, and will be
entitled to half of the mills output. The pulp mill is expected to
be completed in mid 2005.
Share Capital and Ownership
The Annual General Meeting (AGM) of the Company on 20 March 2003
decided to allow shareholders to request at any time that the
Company convert their A shares into R shares.
During the period a total of 16 118 A shares were converted into R
shares. The shares were recorded in the Finnish Trade Register on 16
June and trading in the new shares started on 17 June. Following
this conversion, the Company has 182 206 767 A shares and 681 980
732 R shares in issue.
An additional 864 000 new R shares are subscribable against warrants
outstanding.
On 30 June 2003 Stora Enso had a total of 864 187 499 shares in
issue, of which the Company held 3 300 A shares and 19 421 920 R
shares with a nominal value of EUR 33.0 million; these represented
2.2% of the share capital and 0.8% of the voting rights. On 30 June
2003 the registered share capital of the Company was EUR 1 469.1
million.
Shareholders equity amounted to EUR 8.1 billion, compared with a
market capitalisation on the Helsinki Exchanges on 30 June 2003 of
EUR 8.4 billion.
Outlook
Global economic activity remains muted. There has yet to be a
sustained increase in advertising spending in Europe and it is
difficult to predict when this will occur, but in North America
there are signs that advertising spending is beginning to recover
from the impact of the Iraq War. However, rising imports are
affecting the supply and demand balance. In Asia SARS temporarily
depressed the paper and board markets, but consumer confidence is
now recovering.
Prices for coated and uncoated fine papers and for coated magazine
grades are continuing to decline gradually in Europe. In coated
grades systemic overcapacity is the main cause of price weakness.
The uncoated fine paper market is affected by seasonal weakness and
increasing imports from Asia and South America attracted by the
strong euro. Recovered-fibre-based packaging board grades are under
price pressure in Europe, but timber product prices are expected to
remain stable.
The prospect of continuing challenging market conditions is being
addressed by intensifying existing cost-reduction programmes and
exploring additional measures to improve competitiveness.
Furthermore, the Groups capital expenditure plans are being
adjusted so as not to exceed the level of depreciation over the
2003/04 period in order to maintain a healthy level of free cash
flow while pursuing attractive investment opportunities.
This report is unaudited.
Helsinki, 24 July 2003
Stora Enso Oyj
Board of Directors
Segments (compared with the previous quarter)
The financial figures reflect the organisational change that came
into effect on 1 May 2003.
Publication Paper
EUR million 2002 Q1/02 Q2/02 Q3/02 Q4/02
Sales 4 715.6 1 189.4 1 143.4 1 159.7 1 223.1
Operating
profit 320.1 104.4 63.4 84.1 68.2
% of
sales 6.8 8.8 5.5 7.3 5.6
ROOC, %* 7.5 9.2 5.7 7.9 7.0
Deliveries
,1000 t 6 807 1 638 1 636 1 703 1 830
Production
volumes,
1000 t 6 796 1 686 1 651 1 745 1 714
Change
EUR million Q1/03 Q2/03 Q2/Q1 %
Sales 1 058.3 1 042.8 -1.5
Operating
profit 36.4 -5.2 -114.3
% of
sales 3.4 -0.5
ROOC, %* 3.7 -0.5
Deliveries
,1000 t 1 654 1 678 1.5
Production
volumes,
1000 t 1 739 1 663 -4.4
* ROOC = 100% x Operating profit/Operating capital
Publication paper sales were EUR 1 042.8, down 1.5% on the previous
quarter mainly due to diversion of output to lower-margin overseas
sales. There was an operating loss of EUR 5.2 million, a decline of
EUR 41.6 million compared with the previous quarter as the annual
Midsummer holiday shutdowns reduced production volumes, sales prices
decreased and exchange rates were unfavourable. Market-related
production curtailments totalled 114 000 tonnes (116 000 tonnes) in
Europe and 29 000 tonnes (7 000 tonnes) in North America.
In Europe demand for newsprint and uncoated magazine paper remained
at the previous years levels. Demand for coated magazine paper was
somewhat higher than last year. Direct and indirect effects of the
stronger euro depressed revenues. Producer inventories are still
high, particularly in magazine paper, but customer inventories are
normal. Demand for uncoated magazine paper is expected to be much
the same as in the second quarter and uncoated magazine paper prices
should remain stable at low levels. Pressure on prices will persist
in coated grades due to overcapacity.
In North America demand for magazine paper was weak in the second
quarter, but there were signs of an improvement toward the end of
the quarter due to an upturn in print media advertising. Deliveries
of coated magazine paper were lower than in the first quarter of
2003 and the second quarter of 2002. There was some improvement in
light-weight coated paper (LWC) prices. In super-calendered (SC)
papers demand and prices were stable. The price increases announced
for magazine paper were only partially implemented during the second
quarter, because imports continued to flow into the USA from
overseas. The decline in the US dollar also adversely affected the
profitability of the Canadian operations. Producer inventories were
slightly higher than a year ago, but customer inventories were low.
Fine Paper
Change
Q2/Q
EUR million 2002 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 1 %
Sales 3 427.4 909.2 873.6 832.4 812.2 852.3 793.9 -6.9
Operating
profit 303.7 95.1 78.1 75.6 54.9 81.3 40.9 -49.7
% of sales 8.9 10.5 8.9 9.1 6.8 9.5 5.2
ROOC, %* 7.7 9.1 7.8 7.9 6.0 8.8 4.5
Deliveries,
1 000 t 3 432 874 866 859 833 885 895 1.1
Production
volumes,
1000 t 3 477 888 866 876 847 894 889 -0.6
* ROOC = 100% x Operating profit/Operating capital
Fine paper sales were EUR 793.9 million, 6.9% down on the previous
quarter due to lower prices. Operating profit was EUR 40.9 million,
down 49.7% on the previous quarter for the same reason. Market-
related production curtailments totalled 19 000 tonnes (64 000
tonnes) in Europe and 13 000 tonnes (0 tonnes) in North America.
In Europe orders for coated fine paper were higher than in the
previous quarter due to lower-margin overseas deliveries.
Distributor stocks have increased slightly to normal levels, but as
price pressure persists, producer stocks will remain high until
market balance is restored.
Demand for uncoated fine paper declined during the quarter following
the normal seasonal pattern and economic weakness. Order books have
remained good, partly owing to increased overseas exports, but the
cutsize sector in Europe has weakened, putting pressure on prices.
Stock levels are normal at producers and distributors.
In North America coated fine paper demand was unchanged. No
significant downtime was taken during the quarter and prices
remained stable, although the previously announced price increases
were not implemented. Producer inventories continued to increase to
levels higher than a year ago, especially in sheets, while customer
inventories were reported to be moderate. Forecasts for fine paper
demand remain optimistic for the seasonally strong third quarter.
Globally, the demand for speciality papers has been stable. Prices
in Europe have been steady, but competitive pressure in North
America has depressed prices and production volumes, necessitating
downtime.
Packaging Boards
Change
Q2/Q
EUR million 2002 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 1 %
Sales 2 720.2 681.3 696.4 675.9 666.6 699.0 711.4 1.8
Operating
profit 354.7 98.6 65.7 110.8 79.6 90.5 66.6 -26.4
% of sales 13.0 14.5 9.4 16.4 11.9 12.9 9.4
ROOC, %* 13.5 14.7 10.0 17.0 12.2 13.9 10.2
Deliveries,
1 000 t 2 909 711 749 734 715 756 781 3.3
Production
volumes,
1000 t 2 973 751 742 740 741 788 763 -3.1
* ROOC = 100% x Operating profit/Operating capital
Packaging board sales were EUR 711.4 million, up 1.8% on the
previous quarter. Seasonally higher deliveries were offset by the
strengthening of the euro. Operating profit was EUR 66.6 million,
down 26.4% on the previous quarter because of direct and indirect
currency effects on prices, lower production mainly due to seasonal
stoppages, and higher maintenance and other costs related to the
shutdowns. Market-related production curtailments totalled 25 000
tonnes (15 000 tonnes), the largest increases being in products with
the greatest Asian exposure.
Demand was stable for most packaging boards, but prices declined in
some grades. Markets for recovered-fibre-based grades such as
coreboard, paper cores and white lined chipboard (WLC) are sluggish
and there is price pressure also in containerboards. Prices for
cartonboard and laminating paper in the Americas and Asia declined
in euro terms.
Demand and prices are generally expected to remain stable in the
near future but with a seasonal weakening in the last quarter in
certain areas. Some market-related downtime is expected due to the
weak US dollar, which decreases the competitiveness of European
suppliers relative to US suppliers in the Americas and Asia.
Timber Products
Change
Q2/Q
EUR million 2002 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 1 %
Sales 1 235.2 286.1 320.8 314.1 314.2 316.5 385.6 21.8
Operating
profit 46.8 11.2 14.1 9.7 11.8 7.3 15.2 108.2
% of sales 3.8 3.9 4.4 3.1 3.8 2.3 3.9
ROOC, %* 11.1 10.2 13.4 9.2 11.2 6.1 10.9
Deliveries,
1 000 m3 5 112 1 203 1 344 1 252 1 313 1 283 1 644 28.2
Production
volume,
1000 m3 5 157 1 235 1 288 1 277 1 357 1 406 1 648
* ROOC = 100% x Operating profit/Operating capital
Timber sales were EUR 385.6 million, up 21.8% on the previous
quarter. Operating profit was EUR 15.2 million, an increase of EUR
7.9 million mainly reflecting the first full quarter of
consolidation of Stora Enso Timber AS (Sylvester AS) in Estonia. The
results were affected by unfavourable trends in prices and exchange
rates, especially relative to the US dollar and Japanese yen.
Softwood consumption is still strong in all the main markets, but
increased supply and marginally decreased consumption in Western
Europe have affected the market balance, putting heavy pressure on
the whitewood market and leading to production curtailments. Market
confidence has improved slightly in Japan and North Africa. In the
USA capacity curtailments have resulted in small price increases.
Profitability is not expected to improve in whitewood in the second
half of the year, but prices should bottom out. Supply restrictions
should keep the redwood business at current levels for the rest of
the year.
Merchants
Sales were EUR 155.4 million, 11.8% down on the previous quarter
mainly due to low demand and fierce competition in merchant markets.
There was an operating loss of EUR 1.2 million, compared with a
profit of EUR 1.5 million in the previous quarter.
Prices remain under pressure and demand from the printing industry
is low.
Forest
Forest sales were EUR 526.7 million and operating profit was EUR
34.0 million. The IAS accounting changes in the net value of forest
assets had a positive impact of EUR 2.7 million on operating profit.
Deliveries in Finland, Sweden and Germany totalled 10.9 million
cubic metres (solid wood under bark), 1% down on the previous
quarter.
Imports were 27% up on the previous quarter with the ending of the
ice problem in the Baltic Sea.
Financials
Key Ratios Q1/02 Q2/02 Q3/02 Q4/02 2002 Q1/03 Q2/03
Earnings per
share (basic),
EUR 0.18 0.15 -1.12 0.54 -0.25 0.10 0.07
Earnings per
share excl.
non-recurring
items, EUR 0.18 0.12 0.15 0.12 0.57 0.10 0.07
Cash earnings
per share
(CEPS), EUR 0.55 0.52 0.50 0.81 2.49 0.43 0.41
CEPS excl.
non-recurring
items, EUR 0.55 0.48 0.51 0.44 1.97 0.43 0.41
Return on capital
employed
(ROCE), % 7.8 7.1 -30.0 10.6 -1.6 7.1 3.6
ROCE excl.
non-recurring
items, % 7.8 5.6 7.9 7.1 7.1 7.1 3.6
Return on
equity (ROE),% 7.2 6.2 -45.2 23.7 -3.3 4.2 2.9
Debt/equity
ratio 0.59 0.46 0.53 0.37 0.37 0.46 0.47
Equity per
share, EUR 9.81 9.87 8.69 9.36 9.36 9.53 9.63
Equity ratio,% 42.7 45.2 42.6 45.0 45.0 43.9 44.5
Operating profit,
% of sales 8.5 7.5 -31.3 9.5 -1.2 6.8 3.5
Operating
profit excl.
non-recurring
items, % of
sales 8.5 5.9 8.2 6.4 7.2 6.8 3.5
Capital
expenditure,
EUR million 155.0 183.0 208.1 331.4 877.6 235.8 324.1
Capital
expenditure,
% of sales 4.9 5.7 6.7 10.3 6.9 7.6 10.6
Capital
employed, EUR
million 14 110 12 990 11 816 11 242 11 242 11 996 12 046
Interest
bearing net
liabilities,
EUR million 5 263 4 113 4 115 3 055 3 055 3 763 3 862
Average
number of
employees 42 572 43 568 43 757 43 853 43 853 43 386 44 506
Average number of
shares (million)
- periodic 896.9 896.5 888.5 876.8 889.6 866.2 852.9
- cumulative 896.9 895.8 894.0 889.6 889.6 866.2 859.5
- cumulative,
diluted 897.8 896.8 894.9 890.4 890.4 866.4 860.5
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
31 Dec 2002 30 Jun 2003 31 Dec 2002 30 Jun 2003
SEK 9.1528 9.2488 9.1551 9.1611
USD 1.0487 1.1427 0.9455 1.1055
GBP 0.6505 0.6932 0.6285 0.6859
CAD 1.6550 1.5506 1.4836 1.6040
Condensed Consolidated Income Statement
EUR million 2002 H1/2002 H1/2003
Sales 12 782.6 6 461.9 6 156.1
Expenses less other operating
income -8 210.3 -4 123.6 -4 117.6
Personnel expenses -2 282.0 -1 165.9 -1 138.2
Depreciation, amortisation and
impairment charges -2 441.9 -656.6 -582.5
Operating Profit -151.6 515.8 317.8 *
Share of results of associated
companies 14.6 20.1 -9.0
Net financial items -206.2 -89.2 -92.6
Profit before Tax and Minority
Interests -343.2 446.7 216.2
Income tax expense 120.9 -147.7 -69.1
Profit after Tax -222.3 299.0 147.1
Minority interests 0.1 0.0 -5.5
Net Profit for the Period -222.2 299.0 141.6
Key Ratios
Basic earnings per share, EUR -0.25 0.33 0.16
Diluted earnings per share, EUR -0.25 0.33 0.16
* The results for the first half of 2003 include the effects of
biological transformation (growth and price) amounting to EUR 61.5
million and biological produce (harvesting) amounting to EUR -52.5
million, resulting in a net effect of EUR 9.0 million.
Condensed Consolidated Cash Flow Statement
EUR million 2002 H1/2002 H1/2003
Cash Flow from Operating Activities
Operating profit -151.6 515.8 317.8
Adjustments 2 256.2 572.2 563.6
Change in net working capital -52.1 25.2 -33.3
Change in short-term interest
bearing receivables -495.1 -2.4 645.9
Cash Flow Generated by Operations 1 557.4 1 110.8 1 494.0
Net financial items -69.1 -118.8 -75.6
Income taxes paid -62.1 -171.9 -177.3
Net Cash Provided by Operating
Activities 1 426.2 820.1 1 241.1
Acquisitions -56.3 -32.8 -159.2
Proceeds from sale of fixed assets
and shares 751.0 189.8 8.7
Capital expenditure -877.6 -338.1 -559.9
Proceeds from the long-term
receivables, net -74.4 -20.5 0.4
Net Cash Used in Investing
Activities -257.3 -201.6 -710.0
Cash Flow from Financing Activities
Change in long-term liabilities -487.6 -540.6 -542.5
Change in short-term borrowings -56.3 207.2 775.2
Dividends paid -403.6 -403.6 -387.7
Purchase of own shares -286.9 -39.2 -245.9
Net Cash Used in Financing
Activities -1 234.4 -776.2 -400.9
Net Increase in Cash and Cash
Equivalents -65.5 -157.7 130.2
Cash and bank in acquired companies - - 4.2
Translation differences on cash
holdings -13.0 -7.1 -4.3
Cash and bank at the beginning of
period 247.0 247.0 168.5
Cash and Cash Equivalents at Period
End 168.5 82.2 298.6
Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million 2002 H1/2002 H1/2003
Carrying value at 1 January 14 701.2 14 701.2 12 807.1 *
Acquisition of subsidiary
companies 150.4 32.8 202.8
Additions 877.6 338.1 559.9
Disposals -571.1 - -3.6
Depreciation/amortisation,
impairment and other movements -3 217.2 -1 260.9 -847.8
Balance Sheet Total 11 940.9 13 811.2 12 718.4
Acquisitions of Subsidiary
Companies
Property, plant and equipment 150.4 6.3 104.7
Borrowings -71.1 - -94.9
Other assets, less liabilities -23.0 - 22.3
Fair value of net assets 56.3 6.3 32.1
Goodwill - 26.5 98.1
Total Purchase Consideration 56.3 32.8 130.2
* Includes the initial IAS 41 valuation of forest of EUR 866.2
million
Borrowings
EUR million 2002 H1/2002 H1/2003
Non-current borrowings 4 525.2 4 662.2 4 168.9
Current borrowings 650.4 1 068.8 1 240.2
5 175.6 5 731.0 5 409.1
Carrying value at 1 January 6 409.5 6 409.5 5 175.6
Debt acquired with new subsidiaries 71.1 - 94.9
Proceeds from / -payments of
borrowings (net) -662.4 -171.9 354.6
Translation difference and other -642.6 -506.6 -215.9
Total Borrowings 5 175.6 5 731.0 5 409.1
Condensed Consolidated Balance Sheet
Assets
IAS 41
31 Dec Adjustm 1 Jan 30 Jun 30 Jun
EUR million 2002 ent 2003 2002 2003
Fixed Assets and
Other Long-term
Investments
Property, plant &
equipment,
intangibles and
goodwill O 11 940.9 866.2 12 807.1 13 811.2 12 718.4
Unlisted shares O 148.5 148.5 180.9 148.3
Investment in
associated
companies I 211.7 211.7 194.1 209.4
Listed securities I 169.2 169.2 196.2 162.9
Non-current loan
receivables I 480.6 480.6 475.0 485.7
Deferred tax
assets T 52.7 52.7 30.0 52.9
Other non-current
assets O 241.1 241.1 228.0 202.0
13 244.7 866.2 14 110.9 15 115.4 13 979.6
Current Assets
Inventories O 1 565.0 1 565.0 1 571.2 1 658.6
Tax receivables T 243.1 243.1 292.3 254.6
Short-term
receivables O 1 902.4 1 902.4 1 919.3 1 821.4
Current portion
of loan receivables I 1 090.5 1 090.5 670.8 390.6
Cash and cash
equivalents I 168.5 168.5 82.2 298.6
4 969.5 - 4 969.5 4 535.8 4 423.8
Total assets 18 214.2 866.2 19 080.4 19 651.2 18 403.4
Shareholders Equity and Liabilities
IAS 41
31 Dec Adjustm 1 Jan 30 Jun 30 Jun
EUR million 2002 ent 2003 2002 2003
Shareholders
Equity 8 156.9 622.9 8 779.8 8 827.1 8 135.4
Minority Interests 30.4 30.4 50.0 48.9
Long-term
Liabilities
Pension provisions O 747.0 747.0 750.7 736.9
Deferred tax
liabilities T 1 787.3 243.3 2 030.6 1 918.1 1 859.2
Other provisions O 194.5 194.5 158.6 174.7
Long-term debt I 4 525.2 4 525.2 4 662.2 4 168.9
Other long-term
liabilities O 36.9 36.9 30.6 26.7
7 290.9 243.3 7 534.2 7 520.2 6 966.4
Current Liabilities
Interest-bearing
liabilities I 650.4 650.4 1 068.8 1 240.2
Tax liabilities T 537.7 537.7 578.8 513.3
Other current
liabilities O 1 547.9 1 547.9 1 606.3 1 499.2
2 736.0 - 2 736.0 3 253.9 3 252.7
Total Liabilities 10 026.9 243.3 10 270.2 10 774.1 10 219.1
Total Shareholders Equity
and Liabilities 18 214.2 866.2 19 080.4 19 651.2 18 403.4
Items designated with Oö are included in operating capital.
Items designated with Iö are included in interest-bearing net
liabilities.
Items designated with Tö are included in the tax liability.
Statement of Changes in Shareholders Equity
EUR million Share Share Treasu Retained
ry Earni
Capital Premium Shares OCI CTA ngs Total
Balance at 1 January
2002 1 541.5 1 639.5 -125.5 58.6 -50.1 5 925.0 8 989.0
Repurchase
of Stora
Enso Oyj
shares - - -286.8 - - - -286.8
Cancellation
of Stora
Enso Oyj
shares -13.8 -83.6 97.4 - - - -
Dividend
(EUR 0.45
per share) - - - - - -403.6 -403.6
Share issue 1.9 -1.9 - - - - -
Net loss for
the period - - - - - -222.2 -222.2
OCI entrie - - - 174.8 - - 174.8
Translation
adjustment - - - - -94.3 - -94.3
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 - - - - - 622.9 622.9
Balance at 1
January
2003
(restated) 1 529.6 1 554.0 -314.9 233.4 -144.4 5 922.1 8 779.8
Repurchase
of Stora
Enso Oyj
shares - - -246.0 - - - -246.0
Cancellation
of Stora
Enso Oyj
shares -60.5 -371.5 376.0 - 56.0 - 0.0
Dividend
(EUR 0.45
per share) - - - - - -387.7 -387.7
Net profit for
the period - - - - - 141.6 141.6
OCI entries - - - -121.1 - - -121.1
Translation
adjustment - - - - -29.8 -1.4 -31.2
Balance at
30 June
2003 1 469.1 1 182.5 -184.9 112.3 -118.2 5 674.6 8 135.4
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
EUR million 31 Dec 30 Jun 30 Jun
2002 2002 2003
On own Behalf
Pledges given 0.8 18.7 0.8
Mortgages 111.4 264.0 105.3
On Behalf of Associated Companies
Mortgages 1.0 1.0 1.0
Guarantees 59.3 66.4 52.2
On Behalf of Others
Pledges given 0.3 0.3 2.6
Mortgages 0.0 93.3 4.8
Guarantees 16.8 16.9
Other Commitments, Own
Leasing commitments, in next 12
months 41.5 40.7 37.5
Leasing commitments, after next
12 months 237.2 250.0 213.5
Pension liabilities 2.7 2.2 3.0
Other commitments 71.5 92.7 72.0
Total 542.5 829.3 509.6
Pledges given 1.1 19.0 3.4
Mortgages 112.4 265.0 111.1
Guarantees 76.1 159.7 69.1
Leasing commitments 278.7 290.7 251.0
Pension liabilities 2.7 2.2 3.0
Other commitments 71.5 92.7 72.0
Total 542.5 829.3 509.6
Net Fair Values of Derivative Financial Instruments
31 Dec 30 Jun 30 Jun
EUR million 2002 2002 2003
Posit Negat
ive ive
Net Fair Fair Net
Fair Net Fair Valu Valu Fair
Values Values es es Values
Interest rate swaps 202.8 86.9 163.1 1.7 161.4
Interest rate options 0.0 2.2 0.0 0.0 0.0
Cross-currency swaps -21.6 -27.4 2.3 16.4 -14.1
Forward contracts 180.3 423.7 89.8 45.3 44.5
FX Options 0.0 0.0 0.9 3.7 -2.8
Commodity contracts 252.4 30.6 96.1 0.5 95.6
Equity swaps -55.5 8.2 0.0 60.7 -60.7
Total 558.4 524.2 352.2 128.3 223.9
Nominal Values of Derivative Financial Instruments
EUR million 31 Dec 2002 30 Jun 2002 30 Jun 2003
Interest Rate Derivatives
Interest rate swaps
Maturity under 1 year 109.3 109.9 49.4
Maturity 2-5 years 922.8 837.8 755.8
Maturity 6-10 years 1 088.1 1 213.6 795.5
Maturity over 10 years - 22.6 -
2 120.2 2 183.9 1 600.7
Interest rate options - 300.1 -
Total 2 120.2 2 484.0 1 600.7
Foreign Exchange Derivatives
- Cross-currency swap
agreements 216.5 223.8 166.1
- Forward contracts 3 902.4 5 542.0 3 935.2
- FX Options - 10.1 487.9
Total 4 118.9 5 775.9 4 589.2
Commodity derivatives
Commodity contracts 538.6 416.1 586.9
Total 538.6 416.1 586.9
Equity swaps
Equity swaps 216.5 214.8 311.9
Total 216.5 214.8 311.9
Sales by Product Area
EUR
million 2001 Q1/02 Q2/02 Q3/02 Q4/02
Publication
Paper 5 414.4 1 189.4 1 143.4 1 159.7 1 223.1
Fine
Paper 3 670.4 909.2 873.6 832.4 812.2
Merchants 840.3 211.7 183.4 155.8 169.7
Other -421.3 -94.7 -68.7 -62.5 -63.6
Paper
Product
Area 9 503.8 2 215.6 2 131.7 2 085.4 2 141.4
Packaging
Product
Area 2 671.1 681.3 696.4 675.9 666.6
Timber
Products 1 180.5 286.1 320.8 314.1 314.2
Forest
Operations 1 825.6 497.9 479.2 464.7 516.9
Other -476.0 -132.6 -124.6 -135.8 -138.3
Forest Products
Product
Area 2 530.1 651.4 675.4 643.0 692.8
Other -1 196.2 -319.4 -270.5 -295.7 -288.7
Total 13 508.8 3 228.9 3 233.0 3 108.6 3 212.1
EUR
million 2002 Q1/03 Q2/03
Paper 4 715.6 1 058.3 1 042.8
Fine
Paper 3 427.4 852.3 793.9
Merchants 720.6 176.1 155.4
Other -289.5 -72.0 -69.0
Product
Area 8 574.1 2 014.7 1 923.1
Packaging
Product
Area 2 720.2 699.0 711.4
Timber
Products 1 235.2 316.5 385.6
Forest
Operations 1 958.7 534.2 526.7
Other -531.3 -143.5 -149.9
Forest Products
Product
Area 2 662.6 707.2 762.4
Other -1 174.3 -321.8 -339.9
Total 12 782.6 3 099.1 3 057.0
Operating Profit by Product Area excluding Non-recurring Items and
Goodwill
EUR
million 2001 Q1/02 Q2/02 Q3/02 Q4/02 2002 Q1/03 Q2/03
Publication
Paper 855.7 104.4 63.4 84.1 68.2 320.1 36.4 -5.2
Fine Paper 396.5 95.1 78.1 75.6 54.9 303.7 81.3 40.9
Merchant -7.2 -1.0 1.9 1.2 3.4 5.5 1.5 -1.2
Paper
Product
Area 1 245.0 198.5 143.4 160.9 126.5 629.3 119.2 34.5
Packaging
Product
Area 344.2 98.6 65.7 110.8 79.6 354.7 90.5 66.6
Timber
Products 12.6 11.2 14.1 9.7 11.8 46.8 7.3 15.2
Forest
Operations 88.1 23.4 25.7 25.3 21.9 96.3 34.7 34.0
Forest Products
Product
Area 100.7 34.6 39.8 35.0 33.7 143.1 42.0 49.2
Other -43.2 -16.6 -17.5 -9.3 -8.4 -51.8 -8.5 -15.6
Amortisation
on consolidation
goodwill -151.5 -41.1 -41.2 -42.0 -24.5 -148.8 -32.1 -28.0
Operating
Profit excl.
nonrecurring
Items 1 495.2 274.0 190.2 255.4 206.9 926.5 211.1 106.7
Non-recurring
items -8.3 - 51.6 -1 229.5 99.8 -1 078.1 - -
Operating
Profit
Total
(IAS) 1 486.9 274.0 241.8 -974.1 306.7 -151.6 211.1 106.7
Net
financial
items -343.5 -45.2 -44.0 -56.2 -60.8 -206.2 -81.3 -11.3
Share of
results of
associated
companies 79.6 11.7 8.4 -2.4 -3.1 14.6 -0.5 -8.5
Profit Before
Tax and
Minority
Interests 1 223.0 240.5 206.2 -1 032.7 242.8 -343.2 129.3 86.9
Income tax
expense -299.6 -79.4 -68.3 36.6 232.0 120.9 -40.8 -28.3
Profit after
Tax 923.4 161.1 137.9 -996.1 474.8 -222.3 88.5 58.6
Minority
interests 2.9 -0.1 0.1 -2.6 2.7 0.1 -3.2 -2.3
Net Profit
for the
Period 926.3 161.0 138.0 -998.7 477.5 -222.2 85.3 56.3
Operating Profit by Product Area
EUR
million 2001 Q1/02 Q2/02 Q3/02 Q4/02 2002 Q1/03 Q2/03
Publication
Paper 785.8 85.5 45.3 -970.5 83.5 -756.2 28.5 -13.4
Fine
Paper 330.7 80.2 63.5 -117.5 47.1 73.3 70.4 30.3
Merchants -10.0 -1.7 -25.2 0.8 1.5 -24.6 0.9 -1.7
Paper
Product
Area 1 106.5 164.0 83.6 -1 087.2 132.1 -707.5 99.8 15.2
Packaging
Product
Area 333.5 96.3 58.3 108.8 78.3 341.7 84.0 65.1
Timber
Products 5.2 7.9 9.4 6.5 8.6 32.4 3.3 9.1
Forest
Operations 88.1 23.4 25.7 25.3 47.8 122.2 34.7 34.0
Forest
Products
Product
Area 93.3 31.3 35.1 31.8 56.4 154.6 38.0 43.1
Other -46.4 -17.6 64.8 -27.5 39.9 59.6 -10.7 -16.7
Operating
Profit
Total 1 486.9 274.0 241.8 -974.1 306.7 -151.6 211.1 106.7
Net
financial
items -343.5 -45.2 -44.0 -56.2 -60.8 -206.2 -81.3 -11.3
Share of
results of
associated
companies 79.6 11.7 8.4 -2.4 -3.1 14.6 -0.5 -8.5
Profit Before
Tax and
Minority
Interests 1 223.0 240.5 206.2 -1 032.7 242.8 -343.2 129.3 86.9
Income tax
expense -299.6 -79.4 -68.3 36.6 232.0 120.9 -40.8 -28.3
Profit after
Tax 923.4 161.1 137.9 -996.1 474.8 -222.3 88.5 58.6
Minority
interests 2.9 -0.1 0.1 -2.6 2.7 0.1 -3.2 -2.3
Net Profit
for the
Period 926.3 161.0 138.0 -998.7 477.5 -222.2 85.3 56.3
Stora Enso shares
Closing
price Helsinki, EUR Stockholm, SEK New York, USD
Series A Series R Series A Series R ADRs
April 10.00 9.74 89.00 89.50 10.88
May 9.10 8.85 82.50 82.00 10.68
June 9.70 9.73 90.50 88.50 11.29
Trading
volume Helsinki Stockholm New York
Series A Series R Series A Series R ADRs
April 87 430 72 374 632 843 653 28 160 078 1 103 500
May 51 547 56 307 292 453 023 27 720 622 2 300 600
June 47 306 57 455 391 302 934 24 681 750 1 031 800
Total 186 283 186 137 315 1 599 610 80 562 450 4 435 900
www.storaenso.com
www.storaenso.com/investors
Publication dates for financial information
Interim Review for January September 2003 23 October 2003
Results for 2003 4 February 2004
Interim Review for January March 2004 28 April 2004
Interim Review for January June 2004 28 July 2004 Interim
Review for January September 2004 27 October 2004
It should be noted that certain statements herein which are not
historical facts, including, without limitation those regarding
expectations for market growth and developments; expectations for
growth and profitability; and statements preceded by believesö,
expectsö, anticipatesö, foreseesö, 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 differ materially 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 Groups targeted customers, success of existing and
future collaboration arrangements, changes in business strategy or
development plans or targets, changes in the degree of protection
created by the Groups 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
Groups 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 Groups
principal geographic markets or fluctuations in exchange and
interest rates.
STORA ENSO OYJ
p.p. Jussi Siitonen Jukka Marttila
