Stora Enso Interim Review January–September 2012

STORA ENSO OYJ INTERIM REVIEW 23 October 2012 at 13.00 EET
 

• Operational EBIT EUR 34 million higher than in Q2 2012 at EUR 175 (EUR 141) million mainly due to lower costs, EUR 50 million lower year-on-year.
• Cash flow from operations EUR 312 (EUR 362) million and liquidity EUR 1 700 (EUR 1 181) million.
• Ratio of net debt to the last twelve months’ operational EBITDA 2.8 (2.7 in Q2 2012).
• New packaging joint-venture to be established in Pakistan.
• New profitability improvement actions planned across all Business Areas, estimated annual cost savings EUR 36 million and 520 employees affected.
• Q4 2012 sales expected to be at roughly similar level and operational EBIT in line with or slightly lower than Q3 2012. 

Summary of Third Quarter Results

*The Group has adopted operational EBIT as a key operative non-IFRS measure starting from the fourth quarter of 2011.

Operational EBIT comprises the operating profit excluding NRI and fair valuations of the segments and Stora Enso’s share of the operating profit excluding NRI and fair valuations of its equity accounted investments (EAI). Fair valuations include equity incentive schemes, synthetic options net of realised and open hedges, CO2 emission rights and valuations of biological assets related to forest assets in EAI.

Stora Enso Deliveries and Production

*Stora Enso’s net market pulp position will be about 1 million tonnes for 2012.

Breakdown of Sales Change Q3/2011 to Q3/2012

* Wood, energy, RCP, by-products etc.
** Asset closures, major investments, divestments and acquisitions

Key Figures

Operational EBIT comprises the operating profit excluding NRI and fair valuations of the segments and Stora Enso’s share of the operating profit excluding NRI and fair valuations of its equity accounted investments (EAI). Fair valuations include equity incentive schemes, synthetic options net of realised and open hedges, CO2 emission rights and valuations of biological assets related to forest assets in EAI.

NRI = Non-recurring items. These are exceptional transactions that are not related to normal business operations. The most common non-recurring items are capital gains, additional write-downs or reversals of write-downs, provisions for planned restructuring and penalties. Non-recurring items are normally specified individually if they exceed one cent per share.

Reconciliation of Operating Profit

*Fair valuations and non-operational items include equity incentive schemes, synthetic options net of realised and open hedges, CO2 emission rights, valuations of biological assets related to forest assets in equity accounted investments (EAI) and Group’s share of tax and net financial items of EAI.

Q3/2012 Results (compared with Q3/2011)
Sales at EUR 2 694 million were EUR 45 million lower than a year ago. Operational EBIT at EUR 175 million was EUR 50 million lower than a year ago. This represents an operational EBIT margin of 6.5% (8.2%).

Clearly lower sales prices in local currencies, especially for paper and pulp products, had a negative impact of EUR 95 million on operational EBIT. Lower deliveries of paper and sawn goods, partly offset by higher deliveries and production of packaging, decreased operational EBIT by EUR 15 million. Paper and board production was curtailed by 8% (9%) and sawnwood production by 10% (8%) to manage inventories.

The overall net impact of variable costs in local currencies was a positive EUR 67 million, mainly due to lower corrugated raw material, recycled paper and pulp prices. Only sawlog prices were higher than last year, mainly due to limited log availability in Central Europe. Fixed costs were similar to the corresponding period a year ago.
 
The average number of employees in the third quarter of 2012 was 400 higher than a year earlier at 29 200 as the number of employees increased by 1 000 in Asia, but decreased by 600 in other areas.

Fair valuations and non-operational items were EUR -13 (EUR -46) million.

Net financial items were EUR -59 (EUR -193) million. Net interest expenses increased from EUR 36 million to EUR 44 million. Net foreign exchange losses amounted to EUR 0 (EUR 11) million. The net loss from other financial items totalled EUR 15 (EUR 146) million and was mainly related to the fair valuations of interest rate derivatives. A provision of EUR 128 million due to the NewPage lease guarantee was recorded in the third quarter of 2011.

Group capital employed was EUR 8 824 million on 30 September 2012, a net increase of EUR 160 million on a year earlier. Group capital employed was increased by a EUR 210 million increase in the value of equity accounted investments resulting mainly from an equity injection into the Montes del Plata pulp mill project and profits from the equity accounted investments. In addition, changes in the impact of foreign exchange rates increased capital employed by EUR 260 million, mainly due to strengthening of the Swedish krona. Group capital employed was decreased by a EUR 330 million reduction in the valuation of PVO mainly due to lower anticipated future electricity prices. Working capital remained unchanged excluding changes in foreign exchange rates.

The operational return on capital employed was 8.0% (10.3%) impacted by the ongoing strategic investments in Biomaterials and Renewable Packaging.

January–September 2012 Results (compared with January–September 2011)
Sales decreased by EUR 196 million year-on-year. Operational EBIT decreased by EUR 259 million, mainly due to lower prices in local currencies and lower volumes. Exchange rates had a negative net impact on operational EBIT, after hedges. Fixed costs remained unchanged, but variable costs, mainly for corrugated raw material, recycled paper and pulp, were clearly lower.

Q3/2012 Results (compared with Q2/2012)
Sales were similar to the previous quarter at EUR 2 694 million. Operational EBIT was EUR 34 million higher than in the previous quarter at EUR 175 million. As expected, fixed and variable costs, especially for fibre, were lower. Delivery volumes in packaging products and sawn goods, and paper sales prices in local currencies were slightly lower than in the previous quarter.

Capital Structure

Financing Q3/2012 (compared with Q2/2012)
Cash flow from operations was EUR 312 (EUR 246) million. Cash flow after investing activities was EUR 120 (EUR 75) million. Interest-bearing net liabilities of the Group remained unchanged at EUR 3 000 million.

Total unutilised committed credit facilities were unchanged at EUR 700 million, and cash and cash equivalents net of overdrafts remained strong at EUR 1 700 million, which is EUR 460 million more than for the previous quarter. In addition, Stora Enso has access to various long-term sources of funding up to EUR 600 million. With current cash and cash equivalents the Group can cover all debt maturities till the end of 2014.

In August 2012 Stora Enso tapped two five-year bonds with a total of SEK 1 000 million (EUR 119 million) under its EMTN (Euro Medium Term Note) programme. There are no financial or change of control covenants in the new debt.

In September 2012 Stora Enso issued a EUR 500 million 5.5-year bond under its EMTN programme. The new notes were issued with a 5.096% yield and were priced at 99.580. There are no financial or change of control covenants in the new debt.

The operational EBITDA margin for the last twelve months was 9.8% (10.1%). The ratio of net debt to the last twelve months’ operational EBITDA was 2.8 (2.7). The debt/equity ratio at 30 September 2012 was 0.52 (0.54). The decrease is primarily due to the EUR 80 million net profit attributable to owners of the parent company for the third quarter of 2012 and EUR 69 million increase in the value of PVO.

Cash Flow

Capital Expenditure for January–September 2012
Additions to fixed and biological assets in the first three quarters of 2012 totalled EUR 347 million, which is 80% of depreciation in the same period. The equity injection into Montes del Plata, a joint venture in Uruguay, was EUR 99 million in the first three quarters of 2012.

Investments in fixed assets and biological assets had a cash outflow impact of EUR 377 million in the first three quarters of 2012.

The full year 2012 capital expenditure forecast for the Group has been decreased to approximately EUR 550–600 million. In addition, the equity injection into Montes del Plata, a joint venture in Uruguay, will be approximately EUR 130 million in 2012. Annual depreciation will be approximately EUR 580 million in 2012.

The main projects ongoing during the first three quarters of 2012 were Montes del Plata, the Ostrołęka containerboard machine and the Skoghall woodyard investment.

Near-term Outlook
In the fourth quarter of 2012 Group sales are expected to be at roughly similar level and the operational EBIT in line with or slightly lower than the third quarter of 2012. Mill maintenance will have a negative impact on Renewable Packaging and Biomaterials during the quarter.

Segments Q3/12 compared with Q3/11


Printing and Reading
Printing and Reading’s wide offering serves publishers, advertisers, printing houses, merchants, office equipment manufacturers and office suppliers, among others. Printing and Reading produces newsprint, SC paper, coated paper grades and office paper.

* Operational ROOC = 100% x Operational EBIT/Average operating capital

• Lower sales prices in local currencies and slightly lower paper deliveries were not fully offset by lower variable costs, especially for recycled paper.
• There are production curtailments to manage pricing quality and inventories.
• It is planned to shut down Hylte Mill PM 1 permanently by the end of 2012.
• Stora Enso will examine the possibility of selling Corbehem Mill in France.

Markets

Biomaterials
Biomaterials offers a variety of pulp grades to meet the demands of paper, board and tissue producers. Pulp is an excellent raw material: it is made from renewable resources in a sustainable manner, and has many different uses.

* Operational ROOC = 100% x Operational EBIT/Average operating capital

• Market pulp prices significantly lower than a year ago were partly offset by improved product mix.
• The annual maintenance stoppage at Sunila Pulp Mill was completed in early October 2012 according to plan.
• Actions are planned to improve efficiency at Skutskär Pulp Mill in Sweden to reduce costs and improve the mill’s competitiveness in response to the challenging market environment.
• The Montes del Plata pulp mill project is progressing and currently more than 70% of the construction work has been completed. The schedule is unchanged and the mill is expected to start up approximately mid-year 2013.

Markets

Building and Living
Building and Living provides wood-based products and innovations for construction and interior decoration, as well as solid biofuels for the energy sector. Building and Living products address building, living and packaging needs. The products are recyclable, and made from high quality renewable European pine or spruce.

* Operational ROOC = 100% x Operational EBIT/Average operating capital

• Although demand weakened, sales prices in local currencies remained stable year-on-year, whereas volumes decreased slightly.
• Higher raw material prices and declining by-product income reduced profits significantly, with Austrian and Czech raw material markets reaching their highest-ever levels.
• Actions are planned to improve flexibility and reduce costs at the Ala and Gruvön sawmills in Sweden and Varkaus Sawmill in Finland from the first quarter of 2013.
• Co-determination negotiations concerning possible temporary capacity reductions and lay-offs in Finland in November–March have concluded, enabling rapid and flexible action.
• Building and Living acquired the remaining 50% shareholding in the sawn timber trading company RETS Timber Oy Ltd with effect from 1 September 2012.
   

Markets

Renewable Packaging
Renewable Packaging produces fibre-based packaging materials and innovative packaging solutions for all major consumer goods and industrial packaging applications. Renewable Packaging operates in every stage of the value chain, from pulp production, material and package production to recycling. The Business Area comprises three business units: Consumer Board, Packaging Solutions and Packaging Asia.

* Operational ROOC = 100% x Operational EBIT/Average operating capital

• Lower average sales prices in local currencies were offset by lower variable costs, especially for corrugated raw material and recycled fibre. Higher volumes offset higher fixed costs mainly due to growth initiatives.
• Stora Enso signed an agreement to establish a joint venture called Bulleh Shah Packaging (Private) Limited with Packages Ltd. of Pakistan in September. The joint-venture transaction is expected to be completed during the first quarter of 2013.
• There will be an annual maintenance stoppage similar to a year ago at Skoghall Mill in Sweden during the fourth quarter of 2012.
• In the integrated plantation-based board and pulp mills project at Beihai city in Guangxi in China, the preparations are proceeding according to plan. The project schedule will be confirmed when the final approvals are given and detailed plans are in place.
• The new containerboard machine project at Ostrołęka Mill in Poland is proceeding according to plan. As announced on 11 January 2011, Stora Enso plans to shut down board machine (BM) 2 at Ostrołęka Mill permanently.
• The corrugated packaging plant at Ruovesi in Finland is planned to be permanently closed down in the second quarter of 2013.
• The woodyard investment at Skoghall Mill in Sweden will be completed according to plan in the fourth quarter of 2012.
• Converting operations at Páty Mill in Hungary were permanently closed down according to plan in the third quarter of 2012.

Markets

Other
The segment Other includes the Nordic forest equity accounted investments, Stora Enso’s shareholding in Pohjolan Voima, operations supplying wood to the Nordic mills and Group shared services and administration.

• Lower sales prices and higher harvesting costs affected Bergvik Skog’s results.
• The write-down of capitalised project costs and unlisted shares in the third quarter of 2012 was partly offset by lower costs in Group shared services and administration.
• Redefinition of the internal service offering has been finalised and efficiency gains are expected from 2013 onwards.

Short-term Risks and Uncertainties
The main short-term risks and uncertainties continue to relate to the economic situation in Europe and its potential impact on the Group’s products.

Energy sensitivity analysis: the direct effect of a 10% increase in electricity, heat, oil and other fossil fuel market prices would have a negative impact of approximately EUR 21 million on operational EBIT for the next twelve months, after the effect of hedges.

Wood sensitivity analysis: the direct effect of a 10% increase in wood prices would have a negative impact of approximately EUR 202 million on operational EBIT for the next twelve months.

Chemicals and fillers sensitivity: the direct effect of a 10% increase in chemical and filler prices would have a negative impact of approximately EUR 65 million on operational EBIT for the next twelve months.

A decrease of energy, wood or chemical and filler prices would have the opposite impact.

Foreign exchange rates sensitivity analysis for the next twelve months: the direct effect on operational EBIT of a 10% strengthening in the value of the US dollar, Swedish krona and British pound against the euro would be about positive EUR 115 million, negative EUR 95 million and positive EUR 62 million annual impact, respectively. Weakening of the currencies would have the opposite impact. These numbers are before the effect of hedges and assuming no changes occur other than a single currency exchange rate movement.

Veracel
On 11 July 2008 Stora Enso announced that a federal judge in Brazil had issued a decision claiming that the permits issued by the State of Bahia for the operations of Stora Enso’s equity accounted investment Veracel were not valid. The judge also ordered Veracel to take certain actions, including reforestation with native trees on part of Veracel’s plantations and a possible BRL 20 million (EUR 9 million) fine. Veracel disputes the decision and has filed an appeal against it. Veracel operates in full compliance with all Brazilian laws and has obtained all the necessary environmental and operating licences for its industrial and forestry activities from the competent authorities. In November 2008 a Federal Court suspended the effects of the decision. Veracel has not recorded any provision for the reforestation or the possible fine.

On 30 September 2009 a judge in the State of Bahia issued an interim decision ordering the State Government of Bahia not to grant Veracel further plantation licences in the municipality of Eunápolis in response to claims by a state prosecutor that Veracel’s plantations exceeded the legal limits, which Veracel disputes. Veracel’s position is supported by documentation issued by the State environmental authority.

Class Action Lawsuits in USA
In the context of magazine paper sales in the USA in 2002 and 2003, Stora Enso Oyj (SEO) and Stora Enso North America (SENA) were sued in a number of class action (and other civil) lawsuits filed in the USA by various magazine paper purchasers that claimed damages for alleged antitrust violations. On 14 December 2010 a US federal district court granted a motion for summary judgement that Stora Enso had filed on behalf of both SEO and SENA seeking dismissal of the direct purchaser class action claims. Following appeal, a federal court of appeals on 6 August 2012 upheld the district court’s ruling as to SEO, which means that the direct purchaser class action claims against SEO have been found to be without legal foundation, but reversed the district court’s ruling as to SENA and referred that part of the case back to the district court for a jury trial to determine whether SENA’s conduct did violate the federal antitrust laws. The appeal court’s decision is procedural and does not constitute a legal finding that SENA has violated antitrust laws. SENA intends to request the US Supreme Court to review and reverse the federal court of appeals decision vacating the district court’s ruling as to SENA. Furthermore, most of the indirect purchaser actions have been dismissed by a consent judgement, subject, however, to being reinstated if the plaintiffs in the direct cases are ultimately successful in obtaining a final judgement that SENA violated antitrust laws. Since Stora Enso disposed of SENA in 2007, Stora Enso’s liability, if any, will be determined by the provisions in the SENA Sales and Purchasing Agreement. No provisions have been made in Stora Enso’s accounts for these lawsuits.

Legal Proceedings in Finland
On 3 December 2009 the Finnish Market Court fined Stora Enso for competition law infringements in the market for roundwood in Finland from 1997 to 2004. Stora Enso did not appeal against the ruling.

On 31 March 2011 Metsähallitus of Finland initiated legal proceedings against Stora Enso, UPM and Metsäliitto claiming compensation for damages allegedly suffered due to the competition law infringements. The total claim against all the defendants amounts to approximately EUR 160 million and the secondary claim against Stora Enso to approximately EUR 85 million.

In addition, Finnish municipalities and private forest owners have initiated similar legal proceedings. The total amount claimed from all the defendants amounts to approximately EUR 70 million and the secondary claims and claims solely against Stora Enso to approximately EUR 25 million.

Stora Enso denies that Metsähallitus and other plaintiffs have suffered any damages whatsoever and will forcefully defend itself. No provisions have been made in Stora Enso’s accounts for these lawsuits.

Share Capital
During the quarter no A shares were converted into R shares.

On 30 September 2012 Stora Enso had 177 147 772 A shares and 612 390 727 R shares in issue of which the Company held no A shares and 918 512 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.

This report is unaudited.

Helsinki, 23 October 2012
Stora Enso Oyj
Board of Directors

Financials


Basis of Preparation
This unaudited interim financial report has been prepared in accordance with the accounting policies set out in International Accounting Standard 34 on Interim Financial Reporting and in the Group’s Annual Report for 2011.

There were no new EU-endorsed standards or interpretations effective from 1 January 2012. IASB has published one amendment effective from 1 January 2012. It does not affect the Group’s financial statements.

New Business Area Structure
In the first quarter of 2012 Stora Enso reorganised its Business Area and Reporting Segment structure based on the different markets and customers the Business Areas serve. The new reporting segments are Printing and Reading, Biomaterials, Building and Living, Renewable Packaging and Other.

The Printing and Reading Business Area comprises the former Newsprint and Book Paper, Magazine Paper and Fine Paper reporting segments. The Biomaterials Business Area mainly comprises tree plantations, the Group’s joint-venture Veracel and Montes del Plata pulp mills and Nordic stand-alone pulp mills. The Wood Products Business Area was renamed the Building and Living Business Area. The Renewable Packaging Business Area comprises the former Consumer Board and Industrial Packaging reporting segments, and includes the plantations in Guangxi in China. The segment Other includes the Nordic forest equity accounted investments, Stora Enso’s shareholding in Pohjolan Voima, the operations supplying wood to the Nordic mills and Group administration. The comparative data have been reclassified accordingly.

Equity Accounted Investment Reclassification
Stora Enso changed the presentation of its equity accounted investments and all comparative data with effect from the fourth quarter of 2011. Stora Enso’s share of the net profit of its equity accounted investments is presented on one line in Stora Enso’s operating profit. The share of taxes of equity accounted investments has been eliminated from tax expense. Comparative data have been reclassified accordingly.

Operational EBIT as New Key Operative Measure
The Group adopted operational EBIT as a key operative non-IFRS measure with effect from the fourth quarter of 2011 instead of operating profit excluding NRI and fair valuations, which had previously been used. Operational EBIT comprises the operating profit excluding NRI and fair valuations of the segments and Stora Enso’s share of the operating profit excluding NRI and fair valuations of its equity accounted investments. Comparative data have been reclassified accordingly.

Condensed Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Cash Flows

Inpac Acquisition

Inpac acquisition
On 28 July 2011 Stora Enso completed the acquisition of 51% of the shares in the Chinese packaging company Inpac International Print & Packaging Co., Ltd., subsequently renamed Stora Enso Inpac Packaging Co. Ltd. Inpac is a packaging products company with production operations in China and India, and service operations in Korea. Inpac specialises in manufacturing consumer packaging, especially for global manufacturers of consumer electronics and other consumer goods. The acquisition gives Stora Enso access to new customers in the fast-growing Chinese, Indian and Korean markets, and will enable it to grow with global key customers in new geographic areas.

The Inpac acquisition accounting was finalised in the third quarter of 2012 and the final consideration amounted to EUR 44.5 million and goodwill to EUR 11.5 million. During 2012 there was a EUR 0.2 million adjustment to the provisional net asset amount presented in 2011 Annual Report. The acquisition was financed from the Group’s own cash assets. The goodwill is based on future earnings expectations and synergy benefits. The non-controlling interest in Inpac was valued as the proportionate share of the acquiree’s net assets.

Property, Plant and Equipment, Intangible Assets and Goodwill

Borrowings

Condensed Consolidated Statement of Financial Position

Items designated with “O” comprise Operating Capital
Items designated with “I” comprise Interest-bearing Net Liabilities
Items designated with “T” comprise Net Tax Liabilities

Statement of Changes in Equity

CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income

Commitments and Contingencies

* Starting from the fourth quarter of 2011, Stora Enso has ceased the reporting of the Group’s purchase agreement commitments for consumables and services. As a result, commitments as at 30 September 2011 have been reclassified to comply with the changes in reporting.

Capital commitments
The Group’s direct capital expenditure contracts, excluding acquisitions, amounted to EUR 120 million at 30 September 2012 (compared with EUR 238 million at 30 September 2011 and EUR 214 million at 31 December 2011).

The Group’s share of capital expenditure contracts in equity accounted investments, excluding acquisitions, amounted to EUR 272 million at 30 September 2012 (compared with EUR 431 million at 30 September 2011 and EUR 436 million at 31 December 2011) of which Stora Enso has guaranteed EUR 189 million (compared with EUR 189 million at 30 September 2011 and EUR 189 million at 31 December 2011).

Fair Values of Derivative Financial Instruments

Nominal Values of Derivative Financial Instruments

Sales by Segment

Operational EBIT by Segment

*Fair valuations and non-operational items include equity incentive schemes, synthetic options net of realised and open hedges, CO2 emission rights, valuations of biological assets related to forest assets in EAI and Group’s share of tax and net financial items of EAI.

NRI by Segment

Fair Valuations and Non-operational Items* by Segment

*Fair valuations and non-operational items include equity incentive schemes, synthetic options net of realised and open hedges, CO2 emission rights, valuations of biological assets related to forest assets in EAI and Group’s share of tax and net financial items of EAI.

Operating Profit/Loss by Segment

Key Exchange Rates for the Euro

Transaction Risk and Hedges in Main Currencies as at 30 September 2012

Additional GBP hedges for 13–16 months increase the hedging percentages by 6%.

Changes in Exchange Rates on Operational EBIT

The sensitivity is based on estimated next 12 months net operating cash flow. The calculation does not take into account currency hedges, and assumes no changes occur other than a single currency exchange rate movement. Weakening would have the opposite impact.

Stora Enso Shares

Calculation of Key Figures

1) Capital employed = Operating capital – Net tax liabilities
2) Average for the financial period
3) Attributable to owners of the Parent

For further information, please contact:
Jouko Karvinen, CEO, tel. +358 2046 21410
Karl-Henrik Sundström, CFO, tel. +46 1046 71660
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 2046 21242
Sanna Lahti, SVP, Global Communications, tel. +358 2046 21251


Stora Enso’s full year 2012 results will be published on 5 February 2013.


PRESS CONFERENCE IN STOCKHOLM

The conference will be held in English. Questions can be addressed to Jouko Karvinen and Karl-Henrik Sundström after the presentation.

ANALYST CONFERENCE CALL
CEO Jouko Karvinen, CFO Karl-Henrik Sundström and SVP Investor Relations Ulla Paajanen-Sainio will be hosting a combined conference call and webcast today at 16.00 Finnish time (15.00 CET, 14.00 UK time, 09.00 US Eastern time).

If you wish to participate, please dial:

The live webcast may be accessed at www.storaenso.com/investors



Stora Enso is the global rethinker of the paper, biomaterials, wood products and packaging industry. We always rethink the old and expand to the new to offer our customers innovative solutions based on renewable materials. Stora Enso employs some 30 000 people worldwide, and our sales in 2011 amounted to EUR 11.0 billion. Stora Enso shares are listed on NASDAQ OMX Helsinki (STEAV, STERV) and Stockholm (STE A, STE R). In addition, the shares are traded in the USA as ADRs (SEOAY) in the International OTCQX over-the-counter market.

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.

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STORA ENSO OYJ