omniture

Stora Enso Interim Review January–June 2007

2007-07-26 17:05 779


Year-on-year Improvement Maintained Under Difficult Operating Conditions; Challenges Will Continue Through 2007

HELSINKI, Finland, July 26 /Xinhua-PRNewswire/ --

Summary of Second Quarter Results (compared with Q2/2006)

-- Sales were EUR 3 805.2 (EUR 3 616.3) million.

-- Operating profit was EUR 216.7 (EUR 118.2) million excluding

non-recurring items and EUR 229.5 (EUR 124.9) million including

non-recurring items, both including EUR 21.3 (EUR -44.7) million net

impact of non-operational nature.

-- Profit before tax was EUR 164.2 (EUR 53.2) million excluding

non-recurring items, and EUR 177.0 (EUR 59.9) million including

non-recurring items.

-- Net profit was EUR 125.1 (EUR 38.8) million excluding non-recurring

items and EUR 143.9 (EUR 40.9) million including non-recurring items.

-- Earnings per share were EUR 0.16 (EUR 0.05) excluding non-recurring

items and EUR 0.18 (EUR 0.05) including non-recurring items. Cash

earnings per share were EUR 0.48 (EUR 0.39) excluding non-recurring

items.

-- ROCE excluding non-recurring items was 7.5% (4.1%).

Message from CEO Jouko Karvinen:

“The Stora Enso Group continued its year-on-year improvement trend in the second quarter of 2007, under very challenging conditions. As anticipated, the shortage of birch pulpwood caused by the unusually short winter harvesting season resulted in higher wood costs and necessitated pulp production curtailments in stand-alone pulp mills in Finland. In addition, our profitability faces negative pressure from both direct and indirect effects of a continually weakening US dollar. Concerted efforts were made to meet these challenges and I am pleased with our ability to continue to serve our customers. Wood flows were continually optimised and high levels of maintenance stoppages were taken during the period. Despite these actions, the profitability of the paper and board divisions was lower than in the previous quarter, partly due to seasonal effects. Year-on-year, taking into account the Celbi Pulp Mill divestment, Fine Paper achieved double-digit year-on-year earnings improvement, as did Wood Products. Packaging Board suffered from a shortage of wood requiring production curtailments at Enocell Pulp Mill in Finland. Conditions for our magazine paper business remained difficult, resulting in clearly unsatisfactory profitability, which is being addressed as a top priority. Wood Products continued to perform well for another quarter.

“Looking ahead for the rest of this year we anticipate further fibre cost increases. Rising wood costs cause us to revise our estimate of input cost inflation from 2.0-2.5% to about 3.5% for the full year 2007. Timely resolution of the roundwood export duty issue between Russia and the EU, specifically for birch pulpwood, is critical, not only to avoid further standstills at our mills; shortage of wood has increased the wood costs to such a level that the Finnish wood market’s competitiveness is at a serious risk.

“Our ongoing portfolio review is progressing as planned. The decisions will be announced when appropriate.”

Near-term market outlook

In Europe the positive economic outlook is expected to support market demand for publication paper, which is also anticipated to benefit from the usual seasonal upswing in the autumn. Newsprint demand and prices are expected to remain mainly stable. Magazine paper prices, which have been trending downwards, are expected to stabilise. The outlook for fine paper demand and prices remains healthy, and steady growth in demand is anticipated, except for the seasonal slowdown due to summer holidays. The demand for packaging board is forecast to remain rather good with prices generally stable, and a slight improvement in some business segments is predicted. Market conditions for wood products are expected to moderate somewhat after an exceptionally strong first half of 2007.

In North America further weakening in demand for newsprint is anticipated, and prospects for magazine paper and coated fine paper are uncertain. Announced reductions in domestic supply and trade policy initiatives are expected to improve the supply and demand balance in the coated paper market.

In Latin America demand for coated magazine paper should remain healthy and prices are forecast to rise. In China healthy demand for coated fine paper is predicted, keeping prices stable.

Key Figures

EUR million 2005 2006 Q1–Q2/06

Sales 13 187.5 14 593.9 7 224.0

EBITDA excluding non-recurring items 1 501.1 1 872.8 903.5

Operating profit excluding non-

recurring items 371.2 782.1 365.2

Non-recurring items (operational) -417.3 -133.7 -16.5

Operating margin excluding non-

recurring items, % 2.8 5.4 5.1

Operating profit -46.1 648.4 348.7

Net financial items1) -165.3 -104.0 -22.9

Profit before tax and minority

interests excluding non-recurring

items 273.1 602.5 264.1

Profit before tax and minority

interests -144.2 631.8 377.6

Net profit for the period excluding

non-recurring items 230.3 439.4 197.0

Net profit for the period -107.4 589.2 267.3

EPS excluding non-recurring items,

Basic, EUR 0.28 0.55 0.25

EPS, Basic, EUR -0.14 0.74 0.33

CEPS excluding non-recurring items,

EUR 1.70 1.94 0.93

ROCE excluding non-recurring items, % 3.4 6.8 6.3

1) Includes capital gains of EUR 130.0 million (sale of Sampo shares) in

Q1/2006, EUR 33.0 million (sale of Finnlines shares) in Q4/2006

totalling to EUR 163.0 million in 2006.

-- CEPS = (Net profit for the period + depreciation and

amortisation)/average number of shares

-- Non-recurring items are exceptional transactions that are not related

to normal business operations. The most common non-recurring items are

capital gains, additional write-downs, restructuring provisions and

penalties. Non-recurring items are normally specified individually if

they exceed one cent per share.

Key Figures

EUR million Q1–Q2/07 Q2/06 Q1/07

Sales 7 660.6 3 616.3 3 855.4

EBITDA excluding non-recurring items 1 041.4 387.3 568.9

Operating profit excluding non-

recurring items 524.0 118.2 307.3

Non-recurring items (operational) 44.8 6.7 32.0

Operating margin excluding non-

recurring items, % 6.8 3.3 8.0

Operating profit 568.8 124.9 339.3

Net financial items1) -129.0 -85.2 -56.7

Profit before tax and minority

interests excluding non-recurring

items 439.0 53.2 274.8

Profit before tax and minority

interests 483.8 59.9 306.8

Net profit for the period excluding

non-recurring items 332.3 38.8 207.2

Net profit for the period 366.4 40.9 222.5

EPS excluding non-recurring items,

Basic, EUR 0.41 0.05 0.26

EPS, Basic, EUR 0.46 0.05 0.28

CEPS excluding non-recurring items,

EUR 1.07 0.39 0.59

ROCE excluding non-recurring items, % 9.1 4.1 10.8

1) Includes capital gains of EUR 130.0 million (sale of Sampo shares) in

Q1/2006, EUR 33.0 million (sale of Finnlines shares) in Q4/2006

totalling to EUR 163.0 million in 2006.

-- CEPS = (Net profit for the period + depreciation and

amortisation)/average number of shares

-- Non-recurring items are exceptional transactions that are not related

to normal business operations. The most common non-recurring items are

capital gains, additional write-downs, restructuring provisions and

penalties. Non-recurring items are normally specified individually if

they exceed one cent per share.

Key Figures

Change% Change% Change%

EUR million Q2/07- Q2/07- Q1–Q2/07- Q2/07 Q2/06 Q1/07 Q1–Q2/06

Sales 3 805.2 5.2 -1.3 6.0

EBITDA excluding non-recurring items 472.5 22.0 -16.9 15.3

Operating profit excluding non-

recurring items 216.7 83.3 -29.5 43.5

Non-recurring items (operational) 12.8 91.0 -60.0 n/a

Operating margin excluding non-

recurring items, % 5.7 72.7 -28.8 33.3

Operating profit 229.5 83.7 -32.4 63.1

Net financial items1) -72.3 15.1 -27.5 n/m

Profit before tax and minority

interests excluding non-recurring

items 164.2 208.6 -40.2 66.2

Profit before tax and minority

interests 177.0 195.5 -42.3 28.1

Net profit for the period excluding

non-recurring items 125.1 222.4 -39.6 68.7

Net profit for the period 143.9 251.8 -35.3 37.1

EPS excluding non-recurring items,

Basic, EUR 0.16 220.0 -38.5 64.0

EPS, Basic, EUR 0.18 260.0 -35.7 39.4

CEPS excluding non-recurring items,

EUR 0.48 23.1 -18.6 15.1

ROCE excluding non-recurring items, % 7.5 82.9 -30.6 44.4

1) Includes capital gains of EUR 130.0 million (sale of Sampo shares) in

Q1/2006, EUR 33.0 million (sale of Finnlines shares) in Q4/2006

totalling to EUR 163.0 million in 2006.

-- CEPS = (Net profit for the period + depreciation and

amortisation)/average number of shares

-- Non-recurring items are exceptional transactions that are not related

to normal business operations. The most common non-recurring items are

capital gains, additional write-downs, restructuring provisions and

penalties. Non-recurring items are normally specified individually if

they exceed one cent per share.

Stora Enso is an integrated paper, packaging and forest products company producing publication and fine paper, packaging board and wood products – all areas in which the Group is a global market leader. Stora Enso’s sales totalled EUR 14.6 billion in 2006. The Group has some 44 000 employees in more than 40 countries on five continents. Stora Enso has an annual production capacity of 16.5 million tonnes of paper and board and 7.4 million cubic metres of sawn wood products, including 3.2 million cubic metres of value-added products. Stora Enso’s shares are listed in Helsinki, Stockholm and New York.

Source: Stora Enso Group
Keywords: Machinery
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