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Stora Enso Announces Full Year Results for 2003; Profit Down 42%

Press release from the issuing company

HELSINKI, Finland, February 4 -- Stora Enso today announced that Stora Enso's earnings per share excluding non-recurring items were EUR 0.00 (EUR 0.09). Operating profit excluding non-recurring items was EUR 80.5 (EUR 139.8) million, which is 42.4% less than in the previous quarter and 2.7% of sales. Profit before taxes and minority interests excluding non-recurring items amounted to EUR 7.8 (EUR 107.4) million. Non-recurring items in the operating profit totalled EUR -14.5 million due to the write-down for the expected capital loss on the sale of forestland in Ontario, Canada. Non-recurring items in net financial items totalled USD -61.1 (EUR -54.0) million due to the provision for the expected losses from the termination of the US cross-border leasing contracts. Sales of EUR 3 028.8 million were 1.4% higher than the previous quarter's EUR 2 987.4 million. Cash flow from ongoing operations was EUR 579.7 (EUR 373.8) million and cash flow after investing activities EUR 190.5 (EUR 87.4) million. Cash earnings per share excluding non-recurring items were EUR 0.36 (EUR 0.44). Net financial items were EUR -67.7 (EUR -23.4) million. Market-related production curtailments totalled 210 000 tonnes (170 000 tonnes). Full Year Results Full year sales decreased by EUR 610.3 million to EUR 12 172.3 million, a decline of 4.8%. Operating profit excluding non-recurring items decreased by EUR 388.4 million, or 41.9% to EUR 538.1 million. Earnings per share were EUR 0.25 (EUR 0.57) and cash earnings per share EUR 1.64 (EUR 1.97), both excluding non-recurring items. Cash flow from operations totalled EUR 1 808.3 (EUR 2 083.8) million, with cash flow after investing activities amounting to EUR 615.0 (EUR 1 247.7) million. Outlook Commenting on the outlook, Stora Enso's CEO Jukka Harmala said, "In Europe growing confidence in the economic recovery is expected to increase demand for advertising-driven paper. Pressure on prices still persists in magazine paper grades, and newsprint prices will at best maintain last year's levels. Prices for packaging boards are rather stable, while fine paper prices seem to be stabilizing at low levels. Demand for wood products is fairly good, but prices are under pressure. The weak US dollar and increasing competition will continue to have an adverse effect on the Group's European operations." In North America the economy is recovering, but that has only marginally increased the demand for paper. There are some signs now that demand is increasing, and this is expected gradually to affect paper prices during the second half of 2004. In coated fine paper oversupply persists in the form of imports, mainly from Asia. Stora Enso North America's results for the first quarter of 2004 will be negatively impacted by the major rebuilding of fine paper machine 16 at Wisconsin Rapids. In China the economy is growing rapidly and boosting the demand for fine paper and packaging boards. The Group's intensified savings measures that started in 2003 are proceeding according to plan. The objective remains to keep the capital expenditure in the 2003-04 period in line with the Group's depreciation charges.