Stora Enso Fourth Quarter and Full Year Results 2007 

 

Stora Enso Oyj Stock Exchange Release 13 February 2008 at 07.00 GMT

 

<>

Continuing Operations:		Q4 / 2007	Q4 / 2006	2007	2006
Sales	EUR million	3 372.7	3 319.9	13 373.6	12 957.2
Operating Profit excl. non-recurring items (NRI)	EUR million	340.1	217.8	1 171.7	884.4
Operating Profit excl. NRI, non-operational items and forest revaluation gains from associated companies	EUR million	156.3	223.8	906.0	871.8
Operating Profit	EUR million	-48.4	254.4	246.2	741.5
Profit Before Tax excl. NRI	EUR million	292.9	165.2	1 002.8	691.1
Profit Before Tax	EUR million	-95.6	234.8	77.3	711.2
Net Profit excl. NRI	EUR million	229.0	153.2	780.0	550.7
Net Profit	EUR million	-50.8	302.3	71.5	700.4
EPS excl. NRI	EUR	0.29	0.19	0.99	0.69
EPS	EUR	-0.06	0.38	0.09	0.88
CEPS excl. NRI	EUR	0.52	0.49	2.01	1.84
ROCE excl. NRI	%	12.8	8.8	11.3	8.7
ROCE excl. NRI, non-operational items and forest revaluation gains from associated companies	%	5.9	9.0	8.7	8.6

 

 

"The year 2007, especially its fourth quarter, was one of the most challenging in the recent history of Stora Enso. Although we made progress in improving operational performance in many areas, the operating profit for the fourth quarter excluding non-recurring items and upward revaluations of forest assets of associated companies was clearly less than for the fourth quarter of 2006. The fourth quarter's profit deterioration, which was mainly due to Wood Products and certain one-time functional costs, meant we could not stay on our path of year-on-year improvement. Whilst Fine Paper and Industrial Packaging did improve their profit compared with the previous year, we cannot be satisfied with the results for the last quarter. Newsprint and Book Paper, Magazine Paper and Consumer Board enjoyed stronger demand in the fourth quarter than a year ago, but raw material cost increases and adverse exchange rate changes reduced their profitability.

 

"We made clear progress during 2007 in several areas. The divestment of our operations in North America at fair market value not only released significant capital, but also allows us to focus and further invest in Stora Enso's future. The deal with New Page also created a strong entity with good prospects in the North American market.

 

"Another area where we were able to respond to both short-term and long-term threats was the issue of wood imported from Russia. In 2007 we managed to reduce the amount of wood imported by nearly three million cubic metres by changing some of our pulping lines from birch to pine and by increasing consumption of domestically sourced Finnish wood. That not only kept our integrated paper and board mills running and several thousand employees working; crucially, it also enabled us to maintain supplies to our paper and board customers throughout the year.

 

"Despite tremendous efforts we still had to import more than four million cubic metres of wood at prices already dramatically higher due to the mild winter in 2007, and under the threat of increasing Russian duties. Our plans to close down the pulp mills at Kemijärvi and Norrsundet are based on the clear objective of reducing the need to buy excessively expensive imported wood, thereby safeguarding the future of the larger entities and Stora Enso as a whole. The closures of Summa Mill and part of Anjala Mill in Finland are due to long-term profitability issues that we were unable to solve despite the tremendous efforts of our employees and earlier investments. We remain convinced that our responsibility to all our stakeholders is to secure the profitability of Stora Enso operations and to do our utmost to support new business creation and re-employment of the people affected by our restructuring programmes.

 

"A real threat to the future of the whole forest products industry in Finland is the impending increases in duties on wood exported from Russia. We are preparing for a number of scenarios that include capacity reductions and some investments in order to minimise the effects of the duties, especially on our financial performance and thereby employment too. The fact is we will have to launch some of these actions in the next few months to be able to cope with the steep increases in duties. As we have said before, the time to act is now, not at the end of 2008.

 

"The economic outlook is uncertain in Europe and globally. We expect to face average unit cost inflation of 2.5 to 3.0% this year. However, our business units have concrete plans to reduce costs and improve margins and productivity that should largely offset cost inflation for the year as a whole. We still see big opportunities to improve our productivity and efficiency, and in balancing and prioritising our investments in existing businesses and selected new projects. We remain committed to our goal of improving long-term returns even with these realities and external challenges."

 

In Europe demand for newsprint should remain steady; contract negotiations are still ongoing in Europe. Overseas prices for newsprint have increased in the first quarter. The magazine paper market has strengthened and prices for coated and SC magazine paper are rising. Fine paper demand is expected to strengthen for seasonal reasons in the next few months, but no price changes are foreseen.

 

Normal seasonal strengthening in demand for consumer board is anticipated, although slightly less than a year ago. Markets outside Europe are very competitive due to unfavourable exchange rates, but a slight rise in prices in local currencies is predicted. Demand for industrial packaging products is forecast to remain firm, leading to some price increases.

 

Despite the on-going recovery in demand in Japan, the general outlook for wood products demand remains depressed, and prices are likely to decline further. Judging by the current outlook, the already announced production curtailments will continue at least into the second quarter of 2008.

 

In Latin America demand for coated magazine paper is expected to remain firm with prices rising further. In China the outlook for fine paper demand and prices remains positive.

 

 

Jouko Karvinen, CEO, tel. +358 2046 21410

Hannu Ryöppönen, Deputy CEO & 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

 

 

Press conference in Helsinki

Time:                11.00 local time

Location:           Marina Congress Center, conference room Nautica

Address:           Katajanokanlaituri 6

Hosts:               Jouko Karvinen, CEO

                        Hannu Ryöppönen, Deputy CEO & CFO

                        Kari Vainio, Executive Vice President, Corporate Communications

 

Press conference in Stockholm

The audio feed from the Helsinki conference can be heard and the presentation slides followed in a conference in Stockholm.

Time:                10.00 local time

Location:           Ingerjörshuset/Citykonferensen, conference room Polhem

Address:           Malmskillnadsgatan 46

Hosts:               Christer Ågren, Executive Vice President, Head of HR & IT, Country Manager Sweden

                        Keith B Russell, Senior Vice President, Investor Relations

                        Bo Eriksson, Vice President, Risk Management

 

The conferences will be held in English. Questions can be put live to Jouko Karvinen and Hannu Ryöppönen from both of these press conferences after the presentation.

 

A live webcast (audio with synchronised slide presentation) of the press conference may be accessed on http://www.storaenso.com/. The presentation material will be available on www.storaenso.com/investors at 11.00 Finnish time (10.00 CET).

 

CEO Jouko Karvinen and Deputy CEO & CFO Hannu Ryöppönen will be hosting a combined conference call and webcast today at 16.00 Finnish time (15.00 CET, 14.00 UK time, 9.00 US Eastern time).

 

+44 (0)20 8609 1270      Continental Europe and the UK                
+358 (0)800 913 153      Finland

+46 (0)200 884 632        Sweden
+1 866 388 1926            USA

 

 

 

 

 

 

STORA ENSO OYJ

 

 

pp.        Jussi Siitonen                             Jukka Marttila