Profitability improved in difficult markets
Stock Exchange Release 23 October 2003 at 10.00 GMT
Long versions
Third Quarter Results
Stora Enso's earnings per share excluding non-recurring items were EUR 0.09 (EUR 0.07). Operating profit excluding non-recurring items was EUR 139.8 (EUR 106.7) million, which is 31.0% more than in the previous quarter and 4.7% of sales. Profit before taxes and minority interests excluding non-recurring items amounted to EUR 107.4 (EUR 86.9) million. Non-recurring items for the period totalling EUR -39.9 million comprised USD 27.4 (EUR 24.6) million of restructuring charges related to the cost reduction programme in North America and a further EUR 15.3 million at Corbehem Mill in France.
Sales of EUR 2 987.4 million were 2.3% lower than the previous quarter's EUR 3 057.0 million. Cash flow from ongoing operations was EUR 373.8 (EUR 383.3) million and cash flow after investing activities EUR 87.4 (EUR 40.2) million. Cash earnings per share excluding non-recurring items were EUR 0.44 (EUR 0.41). Net financial items were EUR -23.4 (EUR -11.3) million. Market-related production curtailments totalled 170 000 (200 000) tonnes.
EUR million | 2001 | 2002 | Q1-Q3/02 | Q1-Q3/03 | Q3/02 | Q2/03 | Q3/03 |
Sales | 13 508.8 | 12 782.6 | 9 570.5 | 9 143.5 | 3 108.6 | 3 057.0 | 2 987.4 |
EBITDA1)2) | 2 762.8 | 2 172.0 | 1 698.3 | 1 343.5 | 577.5 | 399.7 | 443.2 |
Operating profit2) | 1 495.2 | 926.5 | 719.6 | 457.6 | 255.4 | 106.7 | 139.8 |
Net non-recurring items | -8.3 | -1 078.1 | -1 177.9 | -39.9 | -1 229.5 | - | -39.9 |
Operating margin2), % | 11.1 | 7.2 | 7.5 | 5.0 | 8.2 | 3.5 | 4.7 |
Operating profit | 1 486.9 | -151.6 | -458.3 | 417.7 | -974.1 | 106.7 | 99.9 |
Profit before tax and minority interests2) | 1 231.3 | 734.9 | 591.9 | 323.6 | 196.8 | 86.9 | 107.4 |
Profit before tax and minority interests | 1 223.0 | -343.2 | -586.0 | 283.7 | -1 032.7 | 86.9 | 67.5 |
Net profit for the period | 926.3 | -222.2 | -699.7 | 188.8 | -998.7 | 56.3 | 47.2 |
| | | | | | | |
EPS2), Basic, EUR | 0.94 | 0.57 | 0.45 | 0.25 | 0.15 | 0.07 | 0.09 |
EPS, Basic, EUR | 1.03 | -0.25 | -0.78 | 0.22 | -1.12 | 0.07 | 0.06 |
CEPS2), EUR | 2.34 | 1.97 | 1.68 | 1.29 | 0.51 | 0.41 | 0.44 |
ROCE2), % | 10.8 | 7.1 | 7.2 | 5.1 | 7.9 | 3.6 | 4.6 |
1) EBITDA = Earnings before Interest, Taxes, Depreciation and Amortisation
2) Excluding net non-recurring items
Outlook
Commenting on the outlook, Stora Enso's CEO Jukka Härmälä said, "The long-awaited recovery in demand for forest products in Europe is still not clearly apparent. The macroeconomic environment has not provided the conditions for sustained improvement in advertising spending, so demand for advertising-driven paper grades remains moderate. Demand for the Group's packaging board products, which depends on general economic activity, remains stable. The outlook for product prices in Europe is largely stable, except in fine paper, where downward price pressure persists."
In North America the recovery in economic activity is evident, although the pace of improvement is slow and somewhat irregular in forest products. North America is expected to lead the way towards better conditions in global paper markets. This can be seen in the price increases being implemented in certain grades.
Fine paper markets in Asia have recovered from the effects of SARS but are still competitive. However, GDP in the region is growing swiftly especially in China.
These challenging market conditions have prompted the Group to strengthen its focus on implementing a number of cost-reduction initiatives. In addition to the North America programmes, these initiatives include mill-by-mill productivity improvement programmes, fixed and variable cost reduction measures and steps to decrease Group staff function and IT costs. As announced in the previous Interim Review, steps have also been taken to ensure capital expenditure in the 2003-04 period remains in line with the Group's depreciation charges.
For further information, please contact:
Jukka Härmälä, Chief Executive Officer, tel. +44 20 7016 3110
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 20 7016 3146 or +44 7775 788 659
The full-length version of the Stora Enso interim review is available on the Stora Enso website at
An image bank of pictures that may be freely used to illustrate articles about Stora Enso is available at www.storaenso.com/images
Stora Enso's results for 2003 will be published on 4 February 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 "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.
