HELSINKI, Finland, April 23, 2002 (PRIMEZONE) -- Stora Enso's (NYSE:SEO) operating profit for the first quarter was EUR 274.0 million (EUR 286.8 million in the previous quarter), equal to 8.5% of sales. Earnings per share were EUR 0.18 (EUR 0.22), and cash earnings per share EUR 0.55 (EUR 0.58). There were no non-recurring items in the first quarter of 2002.
Sales were EUR 3 228.9 million (EUR 3 282.9 million), and earnings before interest, taxes, depreciation and amortisation (EBITDA) totalled EUR 602.9 million (EUR 609.4 million). Market-related production curtailments amounted to 335 000 tonnes (485 000). Profit before taxes and minority interests amounted to EUR 240.5 million (EUR 265.9 million).
EUR million 2001 I/2001 IV/2001 I/2002 Sales 13 508.8 3 637.0 3 282.9 3 228.9 Magazine 3 449.0 910.2 859.5 767.3 Newsprint 1 933.9 501.7 469.6 412.8 Fine paper 3 617.5 1 021.3 853.5 827.1 Packaging boards 2 724.0 701.9 645.1 766.2 Timber 1 180.5 307.3 295.2 286.1 Other activities and 603.9 194.6 160.0 169.4 eliminations Operating profit* 1 486.9 523.0 270.1 274.0 Magazine 346.9 113.6 77.1 31.6 Newsprint 508.8 134.1 120.4 72.8 Fine paper 394.5 167.6 74.4 93.1 Packaging boards 346.2 115.1 43.4 100.6 Timber 12.6 5.6 -3.4 11.2 Other activities and -122.1 -13.0 -41.8 -35.3 eliminations Profit before tax and 1 223.0 429.5 249.2 240.5 minority interests Net profit for the 926.3 283.3 274.5 161.0 period EPS, Basic, EUR 1.03 0.31 0.31 0.18 EPS, excl. non-rec. 0.94 0.31 0.22 0.18 items, EUR ROCE, excl. non-rec. 10.8 15.2 8.4 7.8 items, % Debt/equity ratio 0.53 0.59 0.53 0.59 *Operating profit includes non-recurring items of EUR -8.3 million in 2001 and EUR -16.7 million in IV/2001.
Commenting on the outlook for 2002, Stora Enso's CEO Jukka Harmala said, "Forecasts are generally expecting a pickup of activity in Western economies over the course of 2002, but for the time being, advertisement volumes remain weak and there are no signs of a sustained improvement in the market for graphic papers. However, prospects are brighter in grades with consumption more directly related to changes in GDP, such as office papers and consumer boards. With the added pressure of imported coated papers, the situation is more challenging in the USA than in Europe. Although markets are showing the first signs of more favourable conditions, a clearer upturn will be needed before the financial results of the Group improve."
Stora Enso Interim Review January - March 2002
Summary of first quarter results:
-- Operating profit was EUR 274.0 million; previous quarter
EUR 286.8 million
-- Profit before tax and minority interests was EUR 240.5 million;
previous quarter EUR 265.9 million
-- Sales were EUR 3 228.9 million; previous quarter EUR 3 282.9
million
-- Earnings per share were EUR 0.18; previous quarter EUR 0.22
-- Cash earnings per share were EUR 0.55; previous quarter
EUR 0.58
There were no non-recurring items in the first quarter of 2002. Comparative figures from the previous quarter are excluding non-recurring items.
The markets for the Group's products were mixed during the quarter. Price declines averaging 7% were experienced in coated fine paper, coated magazine paper and SC paper. In newsprint, prices decreased by slightly less than 10%. On the other hand, office papers benefited from stronger markets, resulting in price increases averaging 5% implemented at the end of the quarter. Packaging board prices were generally unchanged. In our activities the market situation in North America was clearly worse than in Europe.
The paper grades most affected by printed advertisement volume suffered from sluggish demand and oversupply. However, grades with consumption more directly related to changes in GDP, such as office papers and consumer boards, experienced generally stronger order volumes.
The weaker demand, especially in graphic papers, resulted in production curtailments totalling 86 000 tonnes in North America, whilst the European mills curtailed production by some 249 000 tonnes. This compares with the previous quarter's figures of 110 000 tonnes in North America and 376 000 tonnes in Europe.
Paper and board deliveries totalled 3 250 000 tonnes, which is 50 000 tonnes more than in the previous quarter. Deliveries of timber products totalled 1 203 000 m3, compared with the previous quarter's 1 260 000 m3.
EUR million 2001 I/2001 IV/2001
I/2002
Sales 13 508.8 3 637.0 3 282.9 3 228.9
EBITDA(1)(2) 2 762.8 825.8 609.4 602.9
Operating profit(2) 1 495.2 523.0 286.8 274.0
Operating margin(2), % 11.1 14.4 8.7 8.5
Operating profit 1 486.9 523.0 270.1 274.0
Profit before tax and minority 1 231.3 429.5 265.9 240.5
Interests(2)
Profit before tax and minority 1 223.0 429.5 249.2 240.5
interests
Net Profit for the period 926.3 283.3 274.5 161.0
EPS 2), Basic, EUR 0.94 0.31 0.22 0.18
EPS, Basic, EUR 1.03 0.31 0.31 0.18
CEPS 2), EUR 2.34 0.65 0.58 0.55
ROCE2), % 10.8 15.2 8.4 7.8
(1) EBITDA = Earnings before Interest, Taxes, Depreciation and
Amortisation
(2) Excluding non-recurring items of EUR -8.3 million in 2001 and
EUR -16.7 million in IV/2001.
First quarter results (compared with previous quarter)
Sales for the quarter at EUR 3 228.9 million were EUR 54.0 million less than the previous quarter's EUR 3 282.9 million. The sales decrease was attributable to lower sales volumes and prices in magazine paper and in newsprint, partly offset by higher volumes in packaging boards. Foreign exchange movements had a negligible effect on the results for the period. Production volumes were slightly higher than in the previous quarter. There were no non-recurring items in the first quarter of 2002.
Earnings per share were EUR 0.18, compared with the previous quarter's EUR 0.22. Declining product prices had an overall impact of EUR -0.04 on EPS. The other main impacts on EPS were energy EUR -0.01, financial items EUR -0.01 and taxes EUR -0.03, offset by higher sales volumes EUR +0.02 and lower production costs EUR +0.03.
The share of results of associated companies amounted to EUR 11.7 million (EUR 11.7 million), of which EUR 3.7 million was from Sunila Oy and EUR 8.1 million from Billerud AB. The results contributed EUR 0.01 to earnings per share.
Net financial items were EUR 45.2 million. Net interest expenses for the quarter were EUR 72.5 million (EUR 78.0 million), which was 5.3% of net interest-bearing liabilities. The net foreign exchange gain was EUR 20.4 million.
Profit before taxes and minority interests amounted to EUR 240.5 million (EUR 249.2 million). Taxes totalled EUR 79.4 million (in previous quarter EUR -64.1 million excluding a one-time adjustment of EUR +86.6 million resulting from the corporate restructuring in Germany), equivalent to a tax rate of 33.0% (25.7%). Taxes reduced earnings per share by EUR 0.09. The minority interest in profits was EUR -0.1 million (EUR 2.8 million), and the profit for the period was EUR 161.0 million (EUR 274.5 million).
The return on capital employed was 7.8% (8.4%). Capital employed was EUR 14 109.5 million at the end of the period, a net increase of EUR 250.4 million since the beginning of the year.
First quarter results (compared with the same period in 2001)
Sales decreased by EUR 408.1 million or 11.2% compared with the first quarter of 2001, owing to lower prices and volumes, especially in magazine paper, newsprint and fine paper.
The operating profit excluding non-recurring items decreased by EUR 249.0 million or 47.6%. Most of the paper and board product areas reported lower profits, with the largest decline in newsprint. The operating profit increased in Timber, and was almost unchanged in Merchants and Forest.
Profit before taxes and minority interests excluding non-recurring items decreased by EUR 189.0 million or 44.0%.
Financing
Capital Structure
At December 31 At March 31 At March 31
EUR million 2001 2001 2002
Fixed assets 14 882.2 15 061.9 14 892.3
Working capital 1 224.2 1 092.1 1 426.8
Operating Capital 16 106.4 16 154.0 16 319.1
Net tax liabilities -2 247.3 -2 542.9 -2 209.6
Capital Employed 13 859.1 13 611.1 14 109.5
Shareholders' equity 8 989.0 8 430.5 8 795.8
Minority interests 50.2 140.3 50.6
Interest-bearing net 4 819.9 5 040.3 5 263.1
liabilities
Financing Total 13 859.1 13 611.1 14 109.5
The cash flow from operations was EUR 403.1 million (EUR 829.3 million in the previous quarter). The operating cash flow (cash flow from operations minus investing activities) amounted to EUR 211.5 million, which is EUR 235.7 million less than in the previous quarter due to an increase in working capital. At the end of the first quarter interest- bearing net liabilities were EUR 5 263.1 million, up EUR 443.2 million compared with the end of 2001. The dividend for outstanding shares of EUR 403.6 million relating to 2001 was deducted from the equity and entered into current interest-bearing liabilities. The date of the payment was April 5, 2002.
Cash reserves and unutilized credit facilities totaled EUR 2.8 billion at the end of the first quarter.
The debt/equity ratio at the end of period was 0.59, (0.53). Equity per share was EUR 9.81 (EUR 10.03). The dividend paid had an impact on both figures for the first quarter.
Change in Interest-bearing Net Liabilities
EUR million Group Translation Balance
Cash Difference Sheet
Flow Impact
Operating profit 274.0 274.0
Depreciation 324.9 324.9
Change in working capital -195.8 -6.8 -202.6
Cash Flow from Operations 403.1 -6.8 396.3
Capital expenditure -155.0 -155.0
Acquisitions -29.0 -29.0
Disposals 4.0 4.0
Other change in fixed assets -11.6 -143.4 -155.0
Operating Cash Flow 211.5 -150.2 61.3
Net financing items (incl. -33.5 -33.5
associated companies)
Taxes paid -146.1 29.7 -116.4
Dividends -403.6 -403.6
Repurchase of own shares -5.3 -5.3
Other change in shareholders' 16.6 37.7 54.3
equity and minority interests
Change in Interest-bearing Net -360.4 -82.8 -443.2
Liabilities
Capital Expenditure
Capital expenditure totalled EUR 155.0 million. The main investments during the quarter were Langerbrugge PM4 (EUR 23.9 million) and rebuilding Oulu PM6 (EUR 10.1 million). The Group's policy is that annual capital expenditure should not exceed the level of depreciation.
Changes in Group Composition
In February the Group decided to discontinue folding carton and laminated chipboard production at the Wisconsin Rapids Paperboard Mill and permanently to shut down a LWC paper machine at the Biron Mill, both in the U.S.A. At the same time, it was decided to invest approximately USD 50 million in a two-year programme to modernise certain other assets in North America: a LWC paper machine at the Biron Mill, a LWC paper machine at the Whiting Mill and a pulp-plant expansion (TMP) at the Port Hawkesbury Mill.
In March the Group decided to sell its Molndal Mill in Sweden to KLIPPAN AB, a Swedish listed specialty paper company. This divestment is part of the Fine Paper division's asset restructuring programme to concentrate investment in large, cost-efficient mills. The total value of the transaction is about EUR 25 million, comprising EUR 8 million for the shares in the company Stora Enso Molndal AB and the balance for taking on the company's debt. Including the co-ordinated sale of land close to the mill to a third party, there was no capital gain or loss on the sale, which was completed on April 2, 2002.
Management Group changes
In March Keith B Russell joined the Group as Senior Vice President of Investor Relations, reporting to the CEO.
Share Capital and Ownership
The Annual General Meeting (AGM) of the Company on March 19, 2002 decided to lower the Company's share capital by EUR 13.8 million through the cancellation of 813 200 A shares and 7 319 800 R shares. The shares had been repurchased under the authorisation of the 2001 AGM. The reduction in share capital was registered in the Finnish Trade Register on April 3, 2002.
The 2002 AGM also authorised the Board to repurchase and dispose of not more than 9 100 000 A shares and 35 500 000 R shares in the Company. By the end of March 2002 no shares had been repurchased under the new authorisation.
On April 3, 2002 Stora Enso had 183 460 385 A shares and 716 317 914 R shares in issue, of which the Company held 2 967 358 R shares with a counter value of EUR 5.0 million. The shares held by the Company represent 0.3% of the share capital and 0.1% of the voting rights. On April 3 the registered share capital of the Company was EUR 1 529.6 million. Stora Enso's subsidiary Merivienti Oy holds 5 591 R shares with a counter value of EUR 9 504.7, which represents 0.0% of the Company's share capital and voting rights.
Shareholders' equity amounted to EUR 8 795.8 million, compared with a market capitalisation on the Helsinki Stock Exchange on March 31, 2002 of EUR 13.2 billion.
During the period a total of 1 158 000 new R shares were issued under the terms of the 1997 bonds with warrants. Another 867 000 new R shares are subscribable against bonds with warrants.
On April 10, 2002 the Finnish State announced that it had sold 23 million R shares for EUR 3 235.5 million on April 4, 2002. Following the sale of the shares, the Finnish State is still the largest single shareholder in the Company, with 12.7% of the shares and 24.1% of the voting rights according to the share capital registered on April 3, 2002.
Other decisions of the AGM on March 19, 2002
The proposed dividend of EUR 0.45 per share was approved.
All the members of the Board of Directors were re-elected.
Events After the Period
In April the Group announced that it plans to close down Papyrus GB Limited, its U.K. merchant, during the second quarter of this year.
Market Outlook
Macroeconomic forecasts are generally expecting a pick-up of activity in Western economies over the course of 2002. However, for the time being advertisement volumes remain weak and there are no signs of a sustained improvement in the market for graphic papers. With the added pressure of imported coated papers, the situation is more challenging in the U.S.A than in Europe.
The market balance for office papers and packaging boards is fairly good and operating rates are close to historic averages. The sawn timber market is improving slightly, but from a low level of activity. Although markets are showing the first signs of more favourable conditions, a clearer upturn will be needed before the financial results of the Group improve.
This report is unaudited.
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