Stora Enso Interim Review January?September 2006
STORA ENSO OYJ Stock Exchange Release 26 October 2006 at 13.00
Stora Enso Interim Review JanuarySeptember 2006
Cash flow stronger and operating profit excluding non-recurring items
maintained compared with second quarter.
Sales in the third quarter were similar to the second quarter. Increases
in operating profit in Packaging Boards and Wood Products, excluding non-
recurring items, more than offset the decrease in Fine Paper. However,
the results were negatively impacted by net nonrecurring items of EUR
-177.2 million primarily related to closure and divestment decisions, as
already announced.
Summary of Third Quarter Results (compared with Q2/2006)
* Sales were EUR 3 638.1 (EUR 3 616.3) million.
* Operating profit was EUR 195.2 (EUR 182.2) million excluding non
recurring items. Operating profit was EUR 18.0 (EUR 188.9) million
including non-recurring items.
* Profit before tax was EUR 197.0 (EUR 53.2) million excluding non
recurring items; the difference is due mainly to unrealised fair
valuation items (non-cash) in net financial items (positive EUR 50.1
million in the third quarter vs. negative EUR 71.9 million in the
second quarter).
* Earnings per share were EUR 0.18 (EUR 0.05) excluding non-
recurring items. Cash earnings per share were EUR 0.52 (EUR 0.39)
excluding non-recurring items. Earnings per share including non-recurring
items were EUR 0.07 (EUR 0.05)
* Cash flow after investing activities increased to EUR 473.8 (EUR
299.6) million.
Markets
In Europe market demand overall for the Group's products was slightly
higher than a year ago and the previous quarter, driven by sustained
economic growth and rising advertising and direct marketing
expenditure.
In Europe market demand for newsprint grew moderately and was slightly
better than a year ago. Demand for uncoated magazine paper was
considerably stronger than a year ago, whereas demand for coated magazine
paper was slightly weaker. Market demand was better than in
the previous quarter in all magazine paper grades for seasonal reasons.
Publication paper prices were higher than a year ago and similar to the
previous quarter, except for a slight decline from the previous quarter
in coated magazine paper.
Demand in the European coated fine paper market was stronger than in the
previous quarter and weaker than a year ago. Demand for uncoated fine
paper was slightly weaker than in the previous quarter, but stronger than
a year ago. Prices increased slightly from the previous quarter in
uncoated fine paper and were stable in coated fine paper. Market demand
for packaging boards was good and better than in the previous quarter and
a year ago. Prices remained stable.
Market demand for wood products in Europe and most export markets was
better than in the previous quarter and a year ago, allowing some price
increases. In North America the weakening housing market caused prices to
fall.
In North America market demand for newsprint and magazine paper was
weaker than a year ago, and newsprint demand was also weaker than in the
previous quarter. However, the magazine paper market was seasonally
stronger than in the previous quarter. Newsprint and uncoated magazine
paper prices were higher than a year ago and the previous quarter. Coated
magazine paper prices were lower than a year ago and the previous
quarter. Market demand for coated fine paper was stronger than a year ago
and the previous quarter; prices rose during
the quarter.
In Latin America demand for coated magazine paper was better than in the
previous quarter and a year ago. Prices have been mostly stable.
In Asia demand for coated fine paper was better than in the second
quarter and a year ago, and prices were stable.
Stora Enso Deliveries and Inventories
Paper and board deliveries totalled 3 686 000 tonnes, which is 108 000
tonnes more than the previous quarter's 3 578 000 tonnes. Production
increased by 56 000 tonnes from the previous quarter's 3 576 000 tonnes
to 3 632 000 tonnes. Inventories decreased by 54 000 tonnes.
Deliveries of wood products totalled 1 593 000 m3, which was 153 000 m3
less than the previous quarter's 1 746 000 m3. Wood product inventories
remained unchanged. Market-related production curtailments in the
third quarter totalled 93 000 tonnes, mostly in coated magazine paper.
Key Figures
EUR Q1Q3 Q1Q3
million 2004 2005 /05 5) /06 Q3/05 Q1/06 Q2/06 Q3/06
Sales 12 395.8 13 187.5 9 551.4 10 862.1 3 219.2 3 607.7 3 616.3 3 638.1
EBITDA
1)2) 1 508.4 1 487.4 1 075.8 1 377.3 388.6 463.3 451.2 462.8
Operating profit
2)4) 426.7 357.5 236.6 571.5 106.2 194.1 182.2 195.2
Non recurring items(opera-
tional) 369.7 -451.4 -12.0 -193.7 - -23.2 6.7 -177.2
Operating margin
2)4), % 3.4 2.7 2.5 5.3 3.3 5.4 5.0 5.4
Operating
profit 4) 796.4 -93.9 224.6 377.8 106.2 170.9 188.9 18.0
Net financial
items 6) -106.0 -151.6 -102.7 -42.4 -25.0 115.2 -149.2 -8.4
Profit before tax and minority interests
2)4) 359.6 273.1 176.7 461.1 93.0 210.9 53.2 197.0
Profit before tax and minority interests
4) 729.3 -178.3 164.7 397.4 93.0 317.7 59.9 19.8
Net profit for the period
4) 747.8 -126.3 117.9 324.4 66.5 226.4 40.9 57.1
EPS2), Basic,
EUR 0.25 0.28 0.15 0.43 0.08 0.20 0.05 0.18
EPS, Basic,
EUR 0.89 -0.16 0.14 0.41 0.08 0.29 0.05 0.07
CEPS 2)3),
EUR 1.67 1.70 1.20 1.45 0.44 0.54 0.39 0.52
ROCE2), % 3.0 3.1 2.8 6.5 3.7 6.5 6.1 6.7
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
4) The comparative figures exclude goodwill amortisation of EUR 90.3
million for 2004
5) The impact of the 7-week labour dispute in Finland in 2005 distorts
comparison of the year-on-year figures
6) See separate table Net Financial Items below
JanuarySeptember 2006 Results (compared with the same period in 2005)
The impact of the 7-week labour dispute in Finland in 2005 distorts
comparison of the year-on-year figures.
Sales at EUR 10 862.1 million were 13.7% higher than in the same period
in 2005, mainly due to the impact of the Schneidersöhne acquisition,
increased prices, especially in newsprint, and increased deliveries in
Fine Paper and Packaging Boards, partly offset by the divestment of
Pankakoski, Celbi and Wolfsheck mills and the closure of two paper
machines at Corbehem Mill.
Operating profit excluding non-recurring items increased by EUR 334.9
million to EUR 571.5 million and was higher in all segments, although the
impact of the labour dispute in Finland in 2005 distorts the comparison.
Operating profit including non-recurring items totalled EUR 377.8 (EUR
224.6) million. Non-recurring items for the nine months totalled EUR
-193.7 (EUR -12.0) million.
Publication Paper operating profit improved mainly because higher sales
prices, lower fixed costs and product mix changes more than offset
increased energy costs and market-related production curtailments in
coated magazine paper totalling 237 000 tonnes. The standstill at Port
Hawkesbury Mill in Canada burdened operating profit by approximately EUR
45 million. The mill is gradually restarting production during the fourth
quarter. Fine Paper operating profit was positively impacted by higher sales
volume, and Merchant operating profit improved. Packaging Boards operating
profit improved as higher sales volume and higher sales prices more than
offset higher energy costs. Wood Products operating profit also improved as
higher sales prices and improved cost efficiency more than offset higher
raw material costs. Profit before taxes and minority interests excluding
non-recurring items increased by EUR 284.4 million to EUR 461.1 million,
and earnings per share excluding non-recurring items increased by EUR
0.28 to EUR 0.43. Earnings per share including non-recurring items were EUR
0.41 (EUR 0.14).
Third Quarter Results (compared with Q2/2006)
Sales at EUR 3 638.1 million were similar to the previous quarter's EUR
3 616.3 million. Deliveries of paper and board products increased, but
deliveries of wood products decreased by 8.8% for seasonal reasons. The
divestment of Pankakoski, Celbi and Wolfsheck mills reduced sales by
approximately EUR 60 million. The acquisition of Arapoti Mill in Brazil,
effective from 1 September 2006, increased the Group's sales by EUR 13.0
million. These assets were formerly owned by Inpacel - Indústria de Papel
Arapoti Ltda. and Inpacel Agroflorestal Ltda., subsidiaries of
International Paper.
Operating profit excluding non-recurring items increased by 7.1% to EUR
195.2 (EUR 182.2) million, which is 5.4% of sales. Operating profit
increased in Packaging Boards and Wood Products, remained unchanged in
Publication Paper and decreased in Fine Paper. Publication Paper
operating profit remained unchanged mainly due to the problematic
situation at Corbehem Mill in France as a consequence of machine closures
and the standstill at Port Hawkesbury Mill in Canada, which continued to
burden the operating profit by approximately EUR 15 million. Fine Paper
operating profit decreased partly due to the divestment of Celbi Pulp
Mill and higher maintenance costs. Packaging Boards operating profit rose
as the sales volume increased and fixed costs decreased. Wood Products
operating profit was increased by cost savings and higher sales prices,
partly offset by higher raw material costs.
Operating profit includes a negative non-cash effect of EUR 4.6 million
comprising the fair valuation of share-based compensation (EUR -12.1
million) and the released government grant related to CO2 emission rights
(EUR 7.5 million). Both these non-cash items are reported under other
operations.
There were several non-recurring items with a net impact of EUR -177.2
million on operating profit:
- a capital gain of EUR 186.0 million, including an additional
dividend, on the divestment of Celbi Pulp Mill in Portugal, which
was finalised on 8 August;
- impairment and restructuring provisions of EUR 47.0 million on
the divestment of Wolfsheck Mill in Germany, which was finalised
on 1 September;
- an additional restructuring provision of EUR 7.0 million related
to the social plans at Corbehem Mill in France and previously
announced machine closures;
- impairments of EUR 21.0 million and restructuring provisions of
EUR 3.0 million related to Stora Enso Timber's fixed asset
impairments in Germany and Estonia, and to restructuring of Stora Enso
Timber's sales network;
- a provision of CAD 20.0 million (EUR 14.2 million) related to
post-employment benefits at Port Hawkesbury Mill in Canada as a result of
the new labour agreement and decision to restart the mill;
- provisions and write-downs of EUR 271.0 million related to the
planned closures of Berghuizer and Reisholz mills.
The total cash impact of the above items is EUR -4.5 million; the cash
impact will be realised as the actions occur.
The share of associated company results amounted to EUR 10.2 (EUR 20.2)
million; the main contribution was from Bergvik Skog AB.
Net Financial Items
EUR million Q3/2005 Q2/2006 Q3/2006
Interest income, deposits 6.1 5.0 5.2
Interest expenses, borrowings -68.4 -70.1 -70.4
Interest rate swaps (incl. TRS
interest) 16.1 5.4 4.0
Capitalised interest 2.4 - 0.8
Net Interest Expense -43.8 -59.7 -60.4
Foreign Exchange Gains and Losses -3.7 -11.1 4.0
Other Financial Items, of which 22.5 -78.4 48.0
Capital gains, listed shares -3.8 - -2.1
Unrealised fair valuation of option
hedges (TRS) 29.5 -61.2 36.0
Unrealised fair valuation of other
financial items -1.9 -10.7 15.7
Other items -1.3 -6.5 -1.6
Net Financial Items Total -25.0 -149.2 -8.4
Stora Enso utilises Total Return Swaps (TRS) to partially hedge the
exposure to changes in the share price of synthetic options granted under
the option programmes for Management, which are settled with cash
payments. While these TRS instruments allow the Group to partially
stabilise the future cash flows related to the settlement of outstanding
synthetic options, they expose the Group to certain market risks. The TRS
instruments do not qualify for hedge accounting; therefore periodic
changes to their fair value are recorded in the income statement.
Net financial items were EUR -8.4 (EUR -149.2) million, the difference
being mainly due to the fair valuation of the hedges for the employee
option programmes (Total Return Swaps, "TRS"). Net interest was EUR 60.4
(EUR -59.7) million and net foreign exchange gains on borrowings,
currency derivatives and bank accounts were EUR 4.0 (EUR -11.1) million.
Other financial items rose to EUR 48.0 million from EUR -78.4 million due
to EUR 51.7 (EUR -71.9) million of unrealised changes in fair values of
financial instruments, including TRS. This unrealised fair value change
is a non-cash item.
Profit before tax amounted to EUR 197.0 (EUR 53.2) million excluding non-
recurring items.
Net taxes totalled a positive EUR 37.3 (EUR -19.0) million due to a tax-
free gain from the Celbi Mill divestment, leaving a net profit for the
quarter of EUR 57.1 (EUR 40.9) million. The cumulative tax rate for the
first nine months was 26.7% excluding non-recurring items.
The profit attributable to minority shareholders was EUR 1.3 (EUR 2.3)
million, leaving a profit of EUR 58.4 million attributable to Company
shareholders.
Earnings per share were EUR 0.18 (EUR 0.05) excluding non-recurring
items. Earnings per share including non-recurring items were EUR 0.07
(EUR 0.05). Cash earnings per share were EUR 0.52 (EUR 0.39) excluding
non-recurring items.
The return on capital employed was 6.7% (6.1%) excluding non-recurring
items. Capital employed was EUR 11 360.1 million on 30 September 2006,
a net decrease of EUR 426.4 million. Operative working capital was EUR
238.9 million less than for the previous quarter as inventories decreased
and short-term interest-free liabilities increased.
Capital Structure
EUR million 31 Dec 05 30 Sep 05 30 Jun 06 30 Sep 06
Fixed assets 11 616.8 11 621.1 11 200.6 10 956.2
Operative working capital 2 333.0 2 328.4 2 537.0 2 298.1
Non-current interest-free
items, net -571.9 -693.2 -657.0 -716.9
Operating Capital Total 13 377.9 13 256.3 13 080.6 12 537.4
Net tax liabilities -1 274.8 -1 516.5 -1 294.1 -1 177.3
Capital Employed 12 103.1 11 739.8 11 786.5 11 360.1
Associated companies 719.9 687.9 762.2 782.1
Total 12 823.0 12 427.7 12 548.7 12 142.2
Equity attributable to
Company shareholders 7 645.3 7 631.3 7 529.6 7 587.5
Minority interests 93.6 97.6 91.6 91.8
Net interest-bearing
liabilities 5 084.1 4 698.8 4 927.5 4 462.9
Financing Total 12 823.0 12 427.7 12 548.7 12 142.2
Financing
Cash flow from operations was EUR 602.5 (EUR 406.9) million and cash flow
after investing activities EUR 473.8 (EUR 299.6) million.
At the end of the period, interest-bearing net liabilities were EUR
4 462.8 million, a decrease of EUR 464.7 million mainly because improved
cash flow and the divestment of Celbi Pulp Mill more than offset the
acquisition of Arapoti Mill in Brazil. Unutilised credit facilities and
cash and cash-equivalent reserves totalled EUR 1.9 billion.
Shareholders' equity amounted to EUR 7 587.5 million or EUR 9.62 (EUR
9.55) per share, compared with the market capitalisation on the Helsinki
Stock Exchange on 30 September 2006 of EUR 9.4 billion.
The debt/equity ratio at 30 September 2006 was 0.59 (0.65). The currency
effect on equity was EUR -6.5 million net of the hedging of equity
translation risks.
Cash Flow
EUR million 2005 Q3/05 Q2/06 Q3/06
Operating profit -93.9 106.2 188.9 18.0
Adjustments *) 1 439.4 299.1 249.6 223.2
Change in working capital -288.5 -55.4 -31.6 361.3
Cash Flow from Operations 1 057.0 349.9 406.9 602.5
Capital expenditure -1 145.3 -267.2 -107.3 -128.7
Cash Flow after Investing
Activities -88.3 82.7 299.6 473.8
*) Adjustments include depreciations, other non-cash income and expenses
and capital gains and losses which are included in proceeds from the sale
of fixed assets and shares.
Capital Expenditure for JanuarySeptember 2006
Capital expenditure for the first nine months of 2006 totalled EUR 403.7
million. The Group expects its capital expenditure for 2006 to be well
below the previously communicated target of EUR 800 million, which is
less than the scheduled depreciation for the year that is estimated at
approximately EUR 1.1 billion.
The main projects during the first nine months were the Skoghall Energy
2005 project (EUR 25.8 million), the plantation project at Guangxi, China
(EUR 25.1 million), the new boiler at Hylte Mill (EUR 23.1 million), the
completion of the new paper machine 12 at Kvarnsveden Mill (EUR 17.0
million) and land acquisitions in Latin America (EUR 14.7 million).
Third Quarter Events
July
Stora Enso sold its Pankakoski Mill in Finland to an international group
of investors led by Dr Dermot Smurfit and including Lansdowne Capital
Limited. The debt-free sales price was EUR 20 million. The transaction
was finalised on 31 July.
August
Stora Enso finalised the divestment of Celbi Pulp Mill in Portugal to the
Portuguese company Altri. The sales price of Celbi's equity was
approximately EUR 430 million and the company has no debt. The
transaction was finalised on 8 August.
Stora Enso received the full payment for the sale of its Advance Agro
shares. The ownership of the shares was transferred to private investors
based in Hong Kong. The transaction value was USD 80 (EUR 65) million.
Stora Enso reached an agreement to acquire 100% of the shares in Vinson
Indústria de Papel Arapoti Ltda. and Vinson Empreendimentos Agricolas
Ltda. from International Paper, which have been combined as Stora Enso
Arapoti. These assets were formerly owned by Inpacel - Indústria de Papel
Arapoti Ltda. and Inpacel Agroflorestal Ltda., subsidiaries of International
Paper. The deal comprised a paper mill producing coated mechanical paper,
a sawmill and about 50 000 hectares of land, including about 30 000 hectares
of productive plantations; the enterprise value was approximately USD 420
million (EUR 333 million) and the transaction was closed on 1 September.
Stora Enso announced that it will invest EUR 31.5 million in its Nebolchi
Sawmill and EUR 12.5 million in its Impilahti Sawmill in Russia. These
investments will enhance the competitiveness of Stora Enso's sawmilling
business and wood procurement in Russia.
Stora Enso divested its Wolfsheck Mill to Rohner AG of Switzerland, a
subsidiary of the German finance investment company ARQUES Industries AG.
The transaction was an asset deal and the purchase price was one euro.
The transaction was closed on 1 September.
September
Stora Enso announced its decision to restart operations at the Port
Hawkesbury Mill in Nova Scotia, Canada, following a ten-month shutdown
due to profitability challenges. The SC paper machine (PM2) started
operations in the beginning of October and the start-up of the newsprint
machine (PM1) is scheduled for later this year.
Stora Enso signed a contract with Beihai city in Guangxi province, China,
to secure further fibre resources. Under the contract, in the period
20062008 Beihai city will provide Stora Enso with a total of 30 813
hectares of plantation and land through purchasing existing plantations
and establishing new plantations on forestland.
Events after the Period
On 4 October Stora Enso announced its intention to close down Reisholz
Mill in Germany and Berghuizer Mill in the Netherlands. The planned
closures are subject to local consultation. Summa Mill in Finland and
Uetersen Mill in Germany will remain in operation while further improving
their financial performance. These four mills had been under scrutiny
since the announcement of Stora Enso's Asset Performance Review (APR) in
October 2005.
On 26 October Stora Enso announced that it is initiating exclusive
discussions with the aim of joint venture ownership regarding certain
assets of Stora Enso Arapoti in Brazil with Arauco, a Chilean forest
products company. Stora Enso Arapoti comprises a paper mill producing
coated mechanical paper (205 000 tonnes annual capacity), a sawmill
(150 000 m3 sawn timber annual capacity) and approximately 50 000 hectares
of land including approximately 30 000 hectares of productive plantations.
The potential joint ownership with Arauco is focused primarily on the
sawmill and forestland operations. The non-binding joint ownership
discussions are expected to be finalised prior to the end of January
2007.
On 26 October Stora Enso announced three separate investments in Finland
and Austria. In Finland, the Group is investing EUR 32.4 million in
rebuilding the finishing department at its Anjala Mill and EUR 25.3
million in a new sheeting line at its Oulu Mill. In Austria, Stora Enso
is investing EUR 16.8 million in a cross-laminated element plant at Bad
St. Leonhard Sawmill.
Changes in the Group Management
On 17 October Stora Enso announced that the Board of Directors had
appointed Jouko Karvinen, M.Sc. (Eng.), as the new CEO of Stora Enso. He
will join the company on 1 January 2007 and will take up the position of
CEO following the Annual General Meeting (AGM) on 29 March 2007. Mr
Karvinen is currently Chief Executive Officer of Philips Medical Systems
Division and a member of the Board of Management of Royal Philips
Electronics.
Jukka Härmälä will leave the position of CEO following the AGM on
29 March 2007. He will continue to undertake special assignments specified
by the Board of Directors of Stora Enso until the end of August 2007.
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. Coincident with these investigations, Stora Enso has
been named in a number of class action lawsuits filed in the USA.
Following the 2004 inspections, on 5 April 2006 Stora Enso received from
the Finnish Competition Authority a request for a response concerning
alleged price collaboration and exchange of information between forest
companies in connection with the purchasing of timber in Finland from
1997 to 2004. Stora Enso has investigated the matter and gave its
response by 22 June 2006 as requested.
On 9 August 2006 Stora Enso was notified that the European Commission had
closed its investigation in respect of the fine paper sector.
Investigations related to publication paper are still ongoing.
No provision has been made in Stora Enso's accounts for the above
mentioned investigations and lawsuits.
Share Capital
The Annual General Meeting (AGM) of Stora Enso Oyj on 21 March 2006
authorised the Board to repurchase and dispose of not more than
17 700 000 A shares and 60 100 000 R shares in the Company. There were no
repurchases during the third quarter.
During the quarter a total of 1 000 A shares were converted into R shares.
The latest conversion was recorded in the Finnish Trade Register on
15 August 2006.
During the quarter the Company allocated 1 769 repurchased R shares under
the terms of the Stora Enso North America Option Plan.
On 30 September 2006 Stora Enso had 178 104 067 A shares and
611 434 432 R shares in issue, of which the Company held no A shares and
954 829 R shares with a nominal value of EUR 1.6 million. The holding
represents 0.12% of the Company's share capital and 0.04% of the voting
rights.
Profit 2007 and Asset Performance Review (APR) Programmes
Stora Enso's Profit 2007 profit improvement programme is proceeding ahead
of schedule. The target of an improvement of EUR 300 million in annual
pre-tax profit from mid 2007 onwards is expected to be clearly exceeded.
More details will be given with the full year 2006 results on 7 February
2007. The APR programme, as it was announced in October 2005, is now
completed, except for the planned closures of Reisholz and Berghuizer
mills.
Near-term Outlook
In Europe economic recovery is expected to support newsprint and uncoated
magazine paper markets in the seasonally strong fourth quarter by
boosting advertising expenditure; newsprint and uncoated magazine paper
prices are forecast to remain unchanged until the year end. However, the
coated magazine paper business is expected to remain competitive, with
market-related production curtailments continuing in the fourth quarter
of 2006. The prospects for fine paper demand in the fourth quarter are
healthy with stable prices in coated fine paper, and it is anticipated
that price increases in uncoated fine paper will be finalised during the
fourth quarter. The market for packaging boards is expected to be seasonally
weaker than in the third quarter with stable prices. The outlook for wood
products for the rest of the year is favourable in Europe.
In North America demand for newsprint is predicted to decline further. In
coated magazine paper seasonal demand should improve the market in the
latter part of the year. Demand for uncoated magazine paper remains
stable. The coated fine paper market should stay healthy with stable
prices. No material changes in publication paper and coated fine paper
prices are anticipated in the fourth quarter.
This report is unaudited.
Helsinki, 26 October 2006
Stora Enso Oyj
Board of Directors
Segments
Publication Paper
EUR Change %
million 2005 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q3/Q2
Sales 4675.9 1104.4 1125.3 1166.0 1280.2 1171.0 1145.2 1226.7 7.1
Operating
profit * 193.3 21.6 31.5 67.9 72.3 70.3 55.3 57.0 3.1
% of sales 4.1 2.0 2.8 5.8 5.6 6.0 4.8 4.6
ROOC, %** 4.4 2.0 2.8 5.9 6.4 6.3 5.1 5.3
Deliveries,
1000 t 7008 1685 1708 1734 1881 1666 1662 1741 4.8
Production,
1000 t 7087 1759 1587 1849 1892 1717 1674 1721 2.8
* Excluding non-recurring items and goodwill amortisation
** ROOC = 100% x Operating profit/Operating capital
Publication paper sales were EUR 1 226.7 million, up 7.1% on the previous
quarter mainly due to seasonal factors. Operating profit at EUR 57.0
million was broadly unchanged despite higher energy costs and the
difficult situation at Corbehem Mill following the shutdown of two paper
machines. As before, profitability was considerably weakened by the
standstill at Port Hawkesbury Mill. There was a small positive contribution
from the newly acquired Arapoti Mill in Brazil. There were market-related
production curtailments in coated magazine paper; however, there were also
changes in the segment's product mix.
In Europe demand for newsprint grew moderately and was slightly better
than a year ago. Demand for uncoated magazine paper was considerably
stronger than a year ago, whereas demand for coated magazine paper was
slightly weaker. Demand was stronger than in the previous quarter in all
business areas. Producer inventories increased, but customer inventories
were reported to be low. Prices were higher than a year ago, especially
in newsprint, and virtually unchanged on the previous quarter except for
a slight decline in coated magazine paper.
In North America market demand for newsprint and magazine paper was
weaker than a year ago, and newsprint demand was also weaker than in the
previous quarter. However, the magazine paper market was seasonally
stronger than in the previous quarter. Newsprint and uncoated magazine
paper prices were higher than a year ago and the previous quarter. Coated
magazine paper prices were lower than a year ago and lower than the
previous quarter. Inventories increased.
Fine Paper
EUR Change %
million 2005 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q3/Q2
Sales 2690.3 708.7 618.3 625.4 737.9 776.3 738.9 722.8 -2.2
Operating
profit * 62.2 48.1 -13.6 -1.2 28.9 52.7 46.3 32.4 -30.0
% of sales 2.3 6.8 -2.2 -0.2 3.9 6.8 6.3 4.5
ROOC, % ** 2.2 6.8 -1.9 -0.2 4.2 7.6 6.7 5.0
Deliveries,
1000 t 3521 960 808 811 942 994 945 954 1.0
Production,
1000 t 3554 943 715 914 982 1029 944 941 -0.3
* Excluding non-recurring items and goodwill amortisation
** ROOC = 100% x Operating profit/Operating capital
Fine paper sales were EUR 722.8 million, down 2.2% on the previous
quarter as the increase in paper deliveries was offset by the divestment
of Celbi Pulp Mill. Operating profit was EUR 32.4 million, down 30% on
the previous quarter mainly due to the divestment of Celbi Pulp Mill and
higher maintenance costs.
In Europe coated fine paper demand was weaker than in the previous year
but stronger than in the previous quarter, whereas uncoated fine paper
demand was stronger than a year ago but weaker than in the previous
quarter. Coated fine paper prices were stable but uncoated fine paper
prices increased slightly. Inventories were normal at the end of the
quarter.
In North America demand for coated fine paper was stronger than in the
previous year and quarter. Inventories were normal. Coated fine paper
prices levelled off after rising during the third quarter.
In Asia demand for coated fine paper was stronger than in the second
quarter and a year ago, and prices were stable.
Merchants
Sales were EUR 450.1 million, unchanged from the previous quarter.
Operating profit was EUR 7.7 million, up from EUR 2.9 million in the
previous quarter due to positive restructuring items. Margins were
stable.
Packaging Boards
EUR Change %
million 2005 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q3/Q2
Sales 3190.2 794.5 768.2 788.7 838.8 869.0 881.8 909.0 3.1
Operating
profit * 220.0 72.0 11.9 73.5 62.6 99.5 70.8 93.7 32.3
% of sales 6.9 9.1 1.5 9.3 7.5 11.4 8.0 10.3
ROOC, % ** 7.3 9.3 1.5 9.6 8.3 13.4 9.6 13.0
Deliveries,
1000 t 3621 929 873 890 929 959 971 991 2.1
Production,
1000 t 3678 1002 715 1009 952 1005 958 970 1.3
* Excluding non-recurring items and goodwill amortisation
** ROOC = 100% x Operating profit/Operating capital
Packaging board sales were EUR 909.0 million, up 3.1% on the previous
quarter mainly due to higher volumes. Operating profit was EUR 93.7
million, up 32.3% on the previous quarter due to higher volumes and lower
fixed costs.
Demand generally remained good during the quarter. Deliveries were higher
than in the previous quarter and the same period last year. Inventories
decreased and prices were stable.
Wood Products
EUR Change %
million 2005 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q3/Q2
Sales 1588.3 366.9 433.7 398.0 389.7 377.1 437.8 418.5 -4.4
Operating
profit * -3.1 -4.0 9.9 -1.8 -7.2 3.8 14.9 21.4 43.6
% of sales -0.2 -1.1 2.3 -0.5 -1.8 1.0 3.4 5.1
ROOC, % ** -0.5 -2.3 5.5 -1.0 -4.2 2.3 8.8 12.6
Deliveries,
1000 m3 6741 1541 1855 1639 1706 1563 1746 1593 -8.8
* Excluding non-recurring items and goodwill amortisation
**ROOC = 100% x Operating profit/Operating capital
Wood products sales were EUR 418.5 million, down 4.4% on the previous
quarter mainly for seasonal reasons. Operating profit was EUR 21.4
million, up 43.6% on the previous quarter due to cost savings and sales
price increases, partly offset by higher raw material costs.
Demand remained good in Europe, Asia, North Africa and the Middle East.
Firm demand and low stock levels allowed producers to increase prices.
However, in the USA there was a downward correction in prices due to
weakness in the housing market and the worsening oversupply in wood
products.
Wood Supply
Deliveries to the Group's mills in Finland, Sweden, the Baltic States,
Russia and Continental Europe totalled 10.1 million m3, down 3% on the
previous quarter mainly due to seasonal factors.
The decline in pulpwood stocks bottomed out at the end of the quarter.
Market prices increased and market supply improved in the Nordic
countries. The supply of pulpwood and sawlogs in Continental Europe, and
sawlogs in Estonia remained tight.
Financials
Key Ratios
Q1/05 Q2/05 Q3/05 Q4/05 2005 Q1/06 Q2/06 Q3/06
Earnings per share
(basic), EUR 0.07 -0.01 0.08 -0.31 -0.16 0.29 0.05 0.07
Earnings per share
excl. non-recurring
items, EUR 0.07 0.00 0.08 0.13 0.28 0.20 0.05 0.18
Cash earnings per
share (CEPS), EUR 0.41 0.35 0.44 0.42 1.62 0.63 0.39 0.59
CEPS excl. non-
recurring items,
EUR 0.41 0.35 0.44 0.50 1.70 0.54 0.39 0.52
Return on capital
employed
(ROCE), % 4.1 0.2 3.7 -10.7 -0.8 5.7 6.4 0.6
ROCE excl. non-
recurring
items, % 4.1 0.6 3.7 4.1 3.1 6.5 6.1 6.7
Return on equity
(ROE), % 3.0 -0.4 3.5 -12.6 -1.6 11.8 2.1 3.0
Debt/equity ratio 0.51 0.58 0.62 0.66 0.66 0.68 0.65 0.59
Equity per share,
EUR 9.46 9.46 9.67 9.70 9.70 9.51 9.55 9.62
Equity ratio, % 45.8 45.0 43.2 42.8 42.8 42.0 43.2 44.2
Operating profit,
% of sales 3.6 0.2 3.3 -8.8 -0.7 4.7 5.2 0.5
Operating profit excl.
non-recurring items,
% of sales 3.6 0.6 3.3 3.3 2.7 5.4 5.0 5.4
Capital expenditure,
EUR million 356.6 253.0 256.3 279.4 1 145.3 167.7 107.3 128.7
Capital expenditure,
% of sales 11.3 7.9 8.0 7.7 8.7 4.6 3.0 3.5
Capital employed,
EUR million 11 119 11 273 11 740 12 103 12 103 11 952 11 786 11 360
Interest-bearing
net liabilities,
EUR million 3 928 4 340 4 699 5 084 5 084 5 116 4 927 4 463
Average number of
employees 44 870 45 670 46 418 46 166 46 166 46 056 46 051 46 490
Average number of
shares (million)
periodic 816.3 800.0 790.5 788.6 798.7 788.6 788.6 788.6
cumulative 816.3 808.1 802.1 798.7 798.7 788.6 788.6 788.6
cumulative,
diluted 816.9 808.7 802.6 799.2 799.2 789.1 789.1 789.1
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
31 Dec 05 30 Sep 06 31 Dec 05 30 Sep 06
SEK 9.3885 9.2797 9.2824 9.2924
USD 1.1797 1.2660 1.2446 1.2449
GBP 0.6853 0.6777 0.6839 0.6848
CAD 1.3725 1.4136 1.5087 1.4095
Condensed Consolidated Income Statement
EUR million 2005 Q1Q3/2005 Q1Q3/2006
Sales 13 187.5 9 551.4 10 862.1
Other operating income 80.1 54.4 325.5
Materials and services -7 232.3 -5 197.1 -6 027.8
Freight and sales commissions -1 493.0 -1 087.4 -1 303.6
Personnel expenses -2 216.6 -1 639.5 -1 715.2
Other operating expenses -991.9 -606.0 -819.0
Depreciation and impairment -1 427.7 -851.2 -944.2
Operating Profit / (Loss) -93.9 224.6 377.8
Share of results of associated companies 67.2 42.8 62.0
Net financial items -151.6 -102.7 -42.4
Profit / (Loss) before Tax -178.3 164.7 397.4
Income tax 52.0 -46.8 -73.0
Net Profit / (Loss) for the Period -126.3 117.9 324.4
Attributable to:
Equity holders of the Company -130.0 114.9 322.0
Minority interests -3.7 -3.0 -2.4
-126.3 117.9 324.4
Earnings per share:
Basic earnings per share, EUR -0.16 0.14 0.41
Diluted earnings per share, EUR -0.16 0.14 0.41
Condensed Consolidated Cash Flow Statement
EUR million 2005 Q1Q3/2005 Q1Q3/2006
Cash Flow from Operating Activities
Operating profit -93.9 224.6 377.8
Adjustments 1 439.4 871.6 780.4
Change in net working capital -288.5 -208.9 139.8
Change in short-term interest-bearing
receivables 9.8 18.8 -10.8
Cash Flow Generated by Operations 1 066.8 906.1 1 287.2
Net financial items -108.2 -82.9 -165.2
Income taxes paid -209.0 -175.2 -131.6
Net Cash Provided by Operating Activities 749.6 648.0 990.4
Cash Flow from Investing Activities
Acquisitions of subsidiaries -323.9 -291.1 -335.4
Acquisitions of associated companies -55.7 -38.0 -19.4
Proceeds from sale of fixed assets and
shares 104.9 12.8 650.6
Capital expenditure -1 145.3 -876.8 -403.7
Proceeds from (payment of) the long-term
receivables, net 98.3 122.5 -17.5
Net Cash Used in Investing Activities -1 321.7 -1 070.6 -125.4
Cash Flow from Financing Activities
Change in long-term liabilities 671.3 1 064.0 4.9
Change in short-term borrowings 590.3 -4.9 -478.6
Dividends paid -365.3 -365.3 -354.9
Minority dividends -0.3 0.0 -1.1
Options exercised 0.0 0.0 -1.7
Purchase / Sale of own shares -344.6 -336.3 0.2
Net Cash Used in Financing Activities 551.4 357.5 -831.2
Net Increase (Decrease) in Cash and Cash
Equivalents -20.7 -65.1 33.8
Cash and bank in acquired companies 10.3 13.3 1.6
Cash and bank in sold companies 0.0 0.0 -19.4
Translation adjustment 12.2 7.4 -9.0
Net Cash and cash equivalents at the
beginning of period 147.7 147.7 149.5
Net Cash and Cash Equivalents at Period End 149.5 103.3 156.5
Cash and cash equivalents at Period End 351.4 305.4 301.4
Bank overdraft at Period End -201.9 -202.1 -144.9
Condensed Consolidated Balance Sheet
EUR million 31 Dec 05 30 Sep 05 30 Sep 06
Assets
Fixed Assets and Other Non-current Investments
Fixed assets O 11 092.7 11 415.2 10 299.4
Biological assets O 76.8 71.7 148.1
Emission rights O 43.7 - 105.4
Investment in associated companies A 719.9 687.9 782.1
Available-for-sale: Listed securities I 211.6 204.5 81.4
Available-for-sale: Unlisted shares O 403.6 134.2 403.3
Non-current loan receivables I 127.6 216.3 143.0
Deferred tax assets T 72.2 16.6 60.7
Other non-current assets O 269.4 246.8 269.1
13 017.5 12 993.2 12 292.5
Current Assets
Inventories O 2 150.5 2 030.4 2 053.7
Tax receivables T 108.5 104.0 156.5
Operative receivables O 2 157.9 2 121.6 2 253.3
Interest-bearing receivables I 309.2 317.7 317.2
Cash and cash equivalents I 351.4 305.4 301.4
5 077.5 4 879.1 5 082.1
Total Assets 18 095.0 17 872.3 17 374.6
Equity and Liabilities
Equity attributable to Company shareholders 7 645.3 7 631.3 7 587.5
Minority interests 93.6 97.6 91.8
Total Equity 7 738.9 7 728.9 7 679.3
Non-current Liabilities
Post-employment benefit provisions O 494.0 687.3 504.5
Other provisions O 142.6 62.1 246.7
Deferred tax liabilities T 1 076.2 1 242.4 1 058.5
Non-current debt I 4 353.9 4 359.2 4 200.8
Other non-current operative liabilities O 204.7 190.6 234.8
6 271.4 6 541.6 6 245.3
Current Liabilities
Current portion of long-term debt I 385.0 337.0 625.7
Interest-bearing liabilities I 1 345.0 1 046.5 479.4
Operative liabilities O 1 975.4 1 823.6 2 008.9
Tax liabilities T 379.3 394.7 336.0
4 084.7 3 601.8 3 450.0
Total Liabilities 10 356.1 10 143.4 9 695.3
Total Equity and Liabilities 18 095.0 17 872.3 17 374.6
Items designated with "O" comprise Operating Capital
Items designated with "I" comprise Interest-bearing Net Liabilities
Items designated with "T" comprise Net Tax Liabilities
Items designated with "A" comprise Associate Companies
Statement of Changes in Equity
Capital Treas- Retained
Share Reser- ury Earn-
EUR million Capital ves Shares OCI CTA ings Total
Balance at 1 January
2004 (restated) 1 469.3 1 237.4 -258.0 114.6 -197.1 5 586.7 7 952.9
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 - - - - -10.1 - -10.1
Balance
at 31 December 2004 1 423.3 1 009.2 -180.8 67.6 -218.9 5 950.7 8 051.1
Restatement of opening balance
Effect of adopting IFRS 2 - - - - - -14.8 -14.8
Balance at 1 January
2005 (restated) 1 423.3 1 009.2 -180.8 67.6 -218.9 5 935.9 8 036.3
Repurchase of
Stora Enso Oyj shares - - -344.7 - - - -344.7
Cancellation of
Stora Enso Oyj shares -41.2 -224.4 265.6 - - - 0.0
Dividend
(EUR 0.45 per share) - - - - - -365.3 -365.3
Buy-out of minority
interests - - - - - -43.2 -43.2
Net profit
for the period - - - - 0.2 -130.0 -129.8
OCI entries - - - 400.4 - - 400.4
Translation
adjustment - - - - 91.6 - 91.6
Balance
at 31 December 2005 1 382.1 784.8 -259.9 468.0 -127.1 5 397.4 7 645.3
Cancellation of
Stora Enso Oyj shares -39.9 -15.9 249.1 - - -193.3 0.0
Dividend
(EUR 0.45 per share) - - - - - -354.9 -354.9
Options exercised - -1.7 0.2 - - - -1.5
Net profit
for the period - - - - 3.4 322.0 325.4
OCI entries - - - -5.8 - - -5.8
Translation
adjustment - - - - -21.0 - -21.0
Balance
at 30 September 2006 1 342.2 767.2 -10.6 462.2 -144.7 5 171.2 7 587.5
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million 2005 Q1Q3/2005 Q1Q3/2006
Carrying value at 1 January 10 715.5 10 715.5 11 213.2
Acquisition of subsidiary companies 388.3 445.1 241.9
Additions 1 129.6 865.9 381.5
Additions in biological assets, IAS 41 15.7 10.9 22.2
Change in emission rights 43.7 - 61.7
Disposals -12.5 -12.1 -256.5
Depreciation, amortisation and impairment -1 427.7 -851.2 -944.2
Translation difference and other 360.6 312.8 -166.9
Balance Sheet Total 11 213.2 11 486.9 10 552.9
Acquisitions of Subsidiary Companies
Cash and cash equivalents 10.3 13.3 1.6
Working capital 171.4 94.4 92.9
Operating fixed assets 274.3 401.9 241.9
Interest-bearing assets 0.0 48.2 -3.1
Tax liabilities -59.8 -114.5 2.5
Interest-bearing liabilities -274.6 -264.7 -1.2
Non-cash share exchange -5.0 -5.0 0.0
Minority interests 93.3 74.3 0.8
Fair value of net assets 209.9 247.9 335.4
Goodwill 114.0 43.2 0.0
Total Purchase Consideration 323.9 291.1 335.4
Borrowings
EUR million 2005 Q1Q3/2005 Q1Q3/2006
Non-current borrowings 4 353.9 4 359.2 4 200.8
Current borrowings 1 730.0 1 383.5 1 105.1
6 083.9 5 742.7 5 305.9
Carrying value at 1 January 4 027.6 4 027.6 6 083.9
Debt acquired with new subsidiaries 274.6 264.7 1.2
Debt disposed with sold subsidiaries 0.0 0.0 -7.1
Proceeds from (payments of)
borrowings (net) 1 336.9 1 167.0 -473.7
Translation difference and other 444.8 283.4 -298.4
Total Borrowings 6 083.9 5 742.7 5 305.9
Commitments and Contingencies
EUR million 31 Dec 05 30 Sep 05 30 Sep 06
On Own Behalf
Pledges given 1.1 1.1 1.1
Mortgages 212.8 144.8 186.9
On Behalf of Associated Companies
Mortgages 0.8 0.8 0.9
Guarantees 359.3 349.1 348.7
On Behalf of Others
Pledges given 0.0 0.0 0.0
Mortgages 0.0 0.0 0.0
Guarantees 13.7 7.8 11.4
Other Commitments, Own
Leasing commitments, in next 12 months 34.3 34.8 34.1
Leasing commitments, after next 12 months 148.0 167.8 131.8
Pension liabilities 0.7 1.5 0.4
Other commitments 97.6 100.7 87.2
Total 868.3 808.4 802.5
Pledges given 1.1 1.1 1.1
Mortgages 213.6 145.6 187.8
Guarantees 373.0 356.9 360.1
Leasing commitments 182.3 202.6 165.9
Pension liabilities 0.7 1.5 0.4
Other commitments 97.6 100.7 87.2
Total 868.3 808.4 802.5
Net Fair Values of Derivative Financial Instruments
EUR million 31 Dec 05 30 Sep 05 30 Sep 06
Positive Negative
Net Fair Net Fair Fair Fair Net Fair
Values Values Values Values Values
Interest rate swaps 88.1 117.3 99.8 -30.1 69.7
Interest rate options -1.9 -1.7 0.2 -2.3 -2.1
Cross-currency swaps -6.5 -3.8 -3.0 -3.0
Forward contracts -30.5 -39.0 6.2 -11.1 -4.9
FX options -5.7 -7.2 3.7 -1.9 1.8
Commodity contracts 129.6 136.7 211.8 -3.2 208.6
Equity swaps -1.8 -2.6 35.1 -21.0 14.1
Total 171.3 199.7 356.8 -72.6 284.2
Nominal Values of Derivative Financial Instruments
EUR million 31 Dec 05 30 Sep 05 30 Sep 06
Interest Rate Derivatives
Interest rate swaps
Maturity under 1 year 620.1 626.3 100.0
Maturity 25 years 1 000.6 339.0 2 260.4
Maturity 610 years 1 738.3 1 968.7 2 291.8
3 359.0 2 934.0 4 652.2
Interest rate options 673.8 158.0 308.9
Total 4 032.8 3 092.0 4 961.1
Foreign Exchange Derivatives
Cross-currency swap agreements 72.3 74.4 43.6
Forward contracts 2 442.1 2 056.0 1 706.5
FX Options 1 071.3 1 178.9 985.3
Total 3 585.7 3 309.3 2 735.4
Commodity Derivatives
Commodity contracts 391.0 397.0 592.3
Total 391.0 397.0 592.3
Equity swaps
Equity swaps 408.5 408.5 370.8
Total 408.5 408.5 370.8
Sales by Segment
EUR
million Q1/05 Q2/05 Q3/05 Q4/05 2005 Q1/06 Q2/06 Q3/06
Publication
Paper 1 104.4 1 125.3 1 166.0 1 280.2 4 675.9 1 171.0 1 145.2 1 226.7
Fine Paper 708.7 618.3 625.4 737.9 2 690.3 776.3 738.9 722.8
Merchants 182.1 217.4 295.2 478.5 1 173.2 496.3 452.6 450.1
Packaging
Boards 794.5 768.2 788.7 838.8 3 190.2 869.0 881.8 909.0
Wood
Products 366.9 433.7 398.0 389.7 1 588.3 377.1 437.8 418.5
Wood Supply 674.7 563.2 612.4 651.6 2 501.9 674.8 651.3 633.9
Other -686.4 -538.8 -666.5 -740.6 -2 632.3 -756.8 -691.3 -722.9
Total
Sales 3 144.9 3 187.3 3 219.2 3 636.1 13 187.5 3 607.7 3 616.3 3 638.1
Operating Profit by Segment excluding Non-recurring items
EUR million Q1/05 Q2/05 Q3/05 Q4/05 2005 Q1/06 Q2/06 Q3/06
Publication Paper 21.6 31.5 67.9 72.3 193.3 70.3 55.3 57.0
Fine Paper 48.1 -13.6 -1.2 28.9 62.2 52.7 46.3 32.4
Merchants 2.7 1.6 0.9 -1.9 3.3 9.6 2.9 7.7
Packaging Boards 72.0 11.9 73.5 62.6 220.0 99.5 70.8 93.7
Wood Products -4.0 9.9 -1.8 -7.2 -3.1 3.8 14.9 21.4
Wood Supply 3.1 -10.9 -0.3 -3.7 -11.8 8.9 1.3 5.0
Other -30.8 -12.7 -32.8 -30.1 -106.4 -50.7 -9.3 -22.0
Operating Profit excl.
Non-recurring
Items 112.7 17.7 106.2 120.9 357.5 194.1 182.2 195.2
Non-recurring
items - -12.0 - -439.4 -451.4 -23.2 6.7 -177.2
Operating
Profit (IFRS) 112.7 5.7 106.2 -318.5 -93.9 170.9 188.9 18.0
Net financial
items -43.1 -34.6 -25.0 -48.9 -151.6 115.2 -149.2 -8.4
Associated
companies 14.0 17.0 11.8 24.4 67.2 31.6 20.2 10.2
Profit before
Tax and Minority
Interests 83.6 -11.9 93.0 -343.0 -178.3 317.7 59.9 19.8
Income tax expense -23.6 3.3 -26.5 98.8 52.0 -91.3 -19.0 37.3
Net Profit 60.0 -8.6 66.5 -244.2 -126.3 226.4 40.9 57.1
Non-recurring Items by Segment
EUR million Q1/05 Q2/05 Q3/05 Q4/05 2005 Q1/06 Q2/06 Q3/06
Publication Paper - - - -201.6 -201.6 -2.9 4.4 -225.2
Fine Paper - - - -40.8 -40.8 -22.0 3.8 72.0
Merchants - - - -7.9 -7.9 - - -
Packaging Boards - - - -144.4 -144.4 - -5.5 -
Wood Products - -12.0 - -41.2 -53.2 1.7 1.2 -24.0
Wood Supply - - - -3.5 -3.5 - 1.5 -
Other - - - - - - 1.3 -
Total Non
recurring Items - -12.0 - -439.4 -451.4 -23.2 6.7 -177.2
Operating Profit by Segment
EUR million Q1/05 Q2/05 Q3/05 Q4/05 2005 Q1/06 Q2/06 Q3/06
Publication Paper 21.6 31.5 67.9 -129.3 -8.3 67.4 59.7 -168.2
Fine Paper 48.1 -13.6 -1.2 -11.9 21.4 30.7 50.1 104.4
Merchants 2.7 1.6 0.9 -9.8 -4.6 9.6 2.9 7.7
Packaging Boards 72.0 11.9 73.5 -81.8 75.6 99.5 65.3 93.7
Wood Products -4.0 -2.1 -1.8 -48.4 -56.3 5.5 16.1 -2.6
Wood Supply 3.1 -10.9 -0.3 -7.2 -15.3 8.9 2.8 5.0
Other -30.8 -12.7 -32.8 -30.1 -106.4 -50.7 -8.0 -22.0
Operating Profit 112.7 5.7 106.2 -318.5 -93.9 170.9 188.9 18.0
Net financial
items -43.1 -34.6 -25.0 -48.9 -151.6 115.2 -149.2 -8.4
Associated
companies 14.0 17.0 11.8 24.4 67.2 31.6 20.2 10.2
Profit before
Tax and Minority
Interests 83.6 -11.9 93.0 -343.0 -178.3 317.7 59.9 19.8
Income tax expense -23.6 3.3 -26.5 98.8 52.0 -91.3 -19.0 37.3
Net Profit 60.0 -8.6 66.5 -244.2 -126.3 226.4 40.9 57.1
Stora Enso Shares
Closing Price Helsinki, EUR Stockholm, SEK New York, USD
A share R share A share R share ADRs
July 11.74 11.57 108.00 108.00 14.78
August 11.71 11.86 110.50 109.50 15.14
September 11.68 11.96 111.25 111.25 15.12
Trading Volume Helsinki Stockholm New York
A share R share A share R share ADRs
July 21 391 81 449 325 133 206 12 053 581 1 516 000
August 123 986 81 705 327 165 216 13 921 146 1 870 100
September 76 183 91 356 432 206 007 14 829 721 1 313 500
Total 221 560 254 511 084 504 429 40 804 448 4 699 600
www.storaenso.com
www.storaenso.com/investors
Publication dates for financial information
Results for 2006 7 February 2007
Interim Review for January March 2007 26 April 2007
Interim Review for January June 2007 26 July 2007
Interim Review for January September 2007 25 October 2007
Annual General Meeting 29 March 2007
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.
For further information, please contact:
Jukka Härmälä, CEO, tel. +358 2046 21404
Hannu Ryöppönen, CFO, tel. +358 2046 21450
Kari Vainio, EVP, Corporate Communications, tel. +44 7799 348 197
Keith B Russell, SVP, Investor Relations, tel. +44 7775 788 659
Ulla Paajanen-Sainio, VP, Investor Relations and Financial Communications,
tel. +358 40 763 8767
STORA ENSO OYJ
p.p. Jussi Siitonen Jukka Marttila
