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Stora Enso Second Quarter Results Reasonable in View of Market Conditions

Friday, July 27, 2001

Press release from the issuing company

HELSINKI, Finland, July 26 Stora Enso Oyj, today announced results for the second quarter ended June 30, 2001. Sales for the quarter at EUR 3 388.4 million were about 7% less than the previous quarter's EUR 3 637.0 million. The operating profit excluding non-recurring items was EUR 346.4 million, which is 33.8% less than the previous quarter's EUR 523.0 million and 10.2% of sales. The reduction was attributable to decreased sales volumes owing to production curtailments of 558 000 tonnes, of which 342 000 tonnes were market related (205 000 tonnes in the first quarter). The profit before tax and minority interests excluding non-recurring items was EUR 248.3 million (EUR 429.5 million in previous quarter). Foreign exchange losses decreased the second quarter profit by EUR 44 million. EUR million Full year Jan.-Jun. Jan.-Jun. Jan.-Mar. Apr.-Jun. 2000 2000 2001 2001 2001 Sales 13 017.0 6 085.6 7 025.4 3 637.0 3 388.4 Magazine 2 818.8 1 152.5 1 757.8 910.2 847.6 Newsprint 1 766.7 833.0 992.4 501.7 490.7 Fine paper 3 473.2 1 526.6 1 925.4 1 021.3 904.1 Packaging boards 2 975.0 1 466.1 1 406.1 701.9 704.2 Timber 1 242.1 632.9 619.1 307.3 311.8 Other divisions and eliminations 741.2 474.5 324.6 194.6 130.0 Operating profit* 2 371.3 1 503.5 859.8 523.0 336.8 Magazine 399.4 183.0 185.9 113.6 72.3 Newsprint 268.3 105.8 259.7 134.1 125.6 Fine paper 688.8 297.0 249.5 167.6 81.9 Packaging boards 441.3 206.9 205.3 115.1 90.2 Timber 73.3 45.5 13.5 5.6 7.9 Other divisions and eliminations 500.2 665.3 (54.1) (13.0) (41.1) Profit before tax and minority interests 2 099.0 1 348.4 668.2 429.5 238.7 Profit for the period 1 435.0 924.6 438.1 283.3 154.8 EPS, Basic, EUR 1.77 1.22 0.48 0.31 0.17 EPS, Diluted, EUR 1.76 1.22 0.48 0.31 0.17 ROCE, % 16.8 16.9 12.2 15.2 9.7 Debt/equity ratio 0.59 0.40 0.62 0.59 0.62 EUR 1=USD 0.8480 (closing), EUR 1=USD 0.8984 (average) * Operating profit includes non-recurring items of EUR 445.7 million in 2000, EUR 578.9 million in Jan. -- Jun. 2000 and EUR (9.6) million in Apr. -- Jun. 2001 and Jan. -- Jun. 2001. Commenting on the results, Stora Enso's CEO Jukka Harmala said, "Markets were demanding, as anticipated when announcing the first quarter results. In addition to seasonal curtailments, such as the midsummer standstill that is compulsory in Finland, production was curtailed to adjust to the market demand. Demand in June was also lower for normal seasonal reasons. The impact of the curtailments is apparent in the second quarter figures. Paper and board prices have held up fairly well. Profitability should recover fairly quickly, if prices can be maintained.'' Jukka Harmala is confident about the recent acquisition of Consolidated Papers in North America. "The USD 40 million of synergies are a good achievement in the challenging economic environment, especially since the product range includes primarily coated paper, which has suffered most from the market situation. The USD 90 million synergy target will be difficult to achieve in 2001 unless demand significantly improves in North America during the second half of this year.'' Markets will remain demanding and further capacity control is needed. Stora Enso will continue to adjust capacity utilisation as appropriate. The full year financial results will depend very much on the company's ability to maintain prices, internal efficiency and cost awareness.

 

 

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