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SMALL BUSINESS
Stora Enso Interim Review January-September 2009
Early Actions Pay Off -- Strong Cash Flow, All Business Areas Profitable
-- EUR 216 million cash flow after capital expenditure: strongest
quarter since fourth quarter of 2006
-- Improved EUR 132 million operating profit excluding NRI and fair
valuations; includes EUR -28 million non-cash impact from
2003-2009 wood supply inventory error
-- EUR 655 million non-recurring items, including EUR 71 million
future cash impact, due to earlier announced impairment and
restructuring costs
-- Market outlook remains weak for fourth quarter of 2009
Summary of Third Quarter Results
---------------------------------------------------------------------
Continuing Operations Q3/09 Q2/09 Q3/08
---------------------------------------------------------------------
Sales EUR 2 231.0 2 184.8 2 722.7
million
---------------------------------------------------------------------
EBITDA excl. NRI and fair EUR 255.9 190.4 302.1
valuations million
---------------------------------------------------------------------
Operating Profit excl. NRI EUR 131.5 48.5 125.5
and Fair Valuations million
---------------------------------------------------------------------
Operating loss (IFRS) EUR -502.6 -209.4 -138.7
million
---------------------------------------------------------------------
Profit before tax excl. NRI EUR 106.4 47.2 117.8
million
---------------------------------------------------------------------
Loss before tax EUR -548.7 -370.6 -161.7
million
---------------------------------------------------------------------
Net profit excl. NRI EUR 92.5 44.9 116.5
million
---------------------------------------------------------------------
Net loss EUR -519.7 -368.3 -119.1
million
---------------------------------------------------------------------
EPS excl. NRI EUR 0.12 0.06 0.14
---------------------------------------------------------------------
EPS EUR -0.66 -0.46 -0.16
---------------------------------------------------------------------
CEPS excl. NRI EUR 0.29 0.24 0.37
---------------------------------------------------------------------
ROCE excl. NRI % 7.7 2.8 5.4
---------------------------------------------------------------------
ROCE excl. NRI and fair % 6.6 2.3 4.9
valuations
---------------------------------------------------------------------
Fair valuations include synthetic options net of realised and open
hedges, CO2 emission rights, and valuations of biological assets
mainly related to associated companies' forest assets.
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,
provisions for planned restructuring and penalties. Non-recurring
items are normally specified individually if they exceed one cent
per share.
HELSINKI, Finland, Oct. 22, 2009 (GLOBE NEWSWIRE) -- Message from CEO Jouko Karvinen:
"Our third quarter was further proof of the power of early and proactive actions in an exceptionally difficult operational environment. The clear improvement in earnings -- with all Business Areas in the black although the profits are still unsatisfactory -- was not achieved through market recovery, or only developments in external costs, it was significantly due to our own actions.
"We understand that these actions, including the plans announced during the third quarter, come with a heavy burden for our employees. This is why we believe it is important for us actively to participate with the Ministry of Employment and the Economy of Finland in proactively dealing with regional structural changes and establishing new alternatives for people affected by the ongoing change in the forest products industry. This applies also to Tolkkinen in Finland, where we already have clear interest in our property, which is a good sign of likely re-employment opportunities for our people. The speed and magnitude of the change in the forest products industry requires co-operation and looking forward -- and that is exactly what we are doing together with local and national authorities.
"Through dedicated efforts, in the third quarter we have been able to demonstrate solid cash flow, improved earnings and a strong balance sheet. This all has a purpose beyond the short term as well. It gives us a platform to build our future -- be it selectively improving our asset base in Europe, or selected strategic investments in Latin America and China when the opportunity and time are right.
"Looking forward, the markets remain generally weak and the structural overcapacity in Europe continues to put pressure on prices in several product ranges. That, combined with unclear macroeconomic and raw material cost development trends, makes visibility poor and quarter-by-quarter predictions difficult. We already know the fourth quarter will be negatively impacted by seasonally weaker demand than in the third quarter, and by maintenance and upgrade stoppages in certain segments, but we believe it is still too early, and it would not be very productive to spend time on 2010 forecasts yet. We rather continue to spend all of our energy on earnings and pricing quality -- and timely implementation of our cost-reduction and restructuring programmes. We will focus on what we can do ourselves, we will not await or speculate about market recovery or other external improvements, but rather build our own good times to come."
Near-term Outlook
The demand outlook for the Group's products remains challenging as no immediate improvement in the market environment is anticipated. Most graphic papers are under pressure, aggravated by weak advertising markets and structural changes in paper consumption.
Despite slight seasonal improvement in Europe, demand for publication paper and fine paper is predicted to be weaker in the fourth quarter than a year earlier, resulting in oversupply. Demand is forecast to be better than a year earlier for consumer board and weaker for industrial packaging and wood products.
In Europe prices for publication paper and fine paper are expected to remain under pressure in the fourth quarter compared with the third quarter as supply exceeds demand. Prices are forecast to increase for containerboard and to remain largely unchanged for other industrial packaging grades and consumer board. Prices for wood products are predicted to rise more slowly than in the last two quarters as demand for sawnwood in construction markets seasonally slows down.
In China demand for uncoated magazine paper is forecast to be stronger than in the third quarter but weaker than a year ago, leaving prices unchanged. Flat demand is anticipated for coated fine paper with prices rising slowly.
In Latin America demand for coated magazine paper is expected to increase slightly from the previous quarter but remain lower than a year earlier. Prices are foreseen to remain under pressure.
Stora Enso maintains its earlier year-on-year cost deflation forecast before own actions of approximately 4% for the full year 2009. The main contributor is lower fibre costs, which account for half of the total cost deflation.
The full-length version of the Stora Enso interim review is available on the Stora Enso website at www.storaenso.com/investors
Stora Enso's full year 2009 results will be published on 4 February 2010.
Stora Enso is the world leader in forest industry sustainability. We offer our customers solutions based on renewable raw materials. Our products provide a climate-friendly alternative to many non-renewable materials, and have a smaller carbon footprint. Stora Enso is included in the Global 100 list of the world's most sustainable companies. Stora Enso is also listed in the Dow Jones Sustainability Index, the FTSE4Good Index, and the Climate Disclosure Leadership Index. Stora Enso employs 29,000 people worldwide, and our sales in 2008 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.
STORA ENSO OYJ
Jari Suvanto
Ulla Paajanen-Sainio
CONTACT: Stora Enso Oyj
Jouko Karvinen, CEO
+358 2046 21410
Markus Rauramo, CFO
+358 2046 21121
Lauri Peltola, Head of Group Communications
+358 2046 21380
Ulla Paajanen-Sainio, Head of Investor Relations
+358 2046 21242
www.storaenso.com
www.storaenso.com/investors