Aug 01, 2005. /Lesprom Network/. Stora Enso's second quarter earnings per share were Euro 0.00 compared to Euro 0.07 excluding non-recurring items in previous quarter. Operating profit excluding non-recurring items was Euro 17.7, down from Euro 112.7 million in the first quarter. Profit before tax amounted to Euro 0.1 after Euro 83.6 million excluding non-recurring items. There was a non-recurring item of Euro -12.0 million due to impairment of fixed assets at Veitsiluoto sawmill in Finland.

Sales at Euro 3 187.3 million were 1.3% higher than the previous quarter's Euro 3 144.9 million. Cash flow from ongoing operations was Euro 387.9 million compared to Euro 159.4 million and cash flow after investing activities Euro130.6 million after Euro 198.1 million in previous quarter. Cash earnings per share were Euro 0.35 excluding non-recurring items, down from Euro 0.41. Net financial items were Euro -34.6 million after Euro -43.1.

 Euro million

 

Q2/04

Q1/05

Q2/05

H1/04

H1/05

Sales

3 102.9

3 144.9

3 187.3

6 120.8

6 332.2

EBITDA1)2)

361.2

388.8

298.4

753.9

687.2

Operating profit2)

56.3

112.7

17.7

158.4

130.4

Non-recurring items

-

-

-12.0

115.7

-12.0

Operating margin2), %

1.8

3.6

0.6

2.6

2.1

Operating profit

56.3

112.7

5.7

274.1

118.4

Profit before tax and minority interests2)

46.8

83.6

0.1

126.3

83.7

Profit before tax and minority interests

46.8

83.6

-11.9

242.0

71.7

Net profit for the period

50.3

58.6

-10.1

455.6

48.5

 

 

 

 

 

 

EPS2), Basic, EUR

0.06

0.07

0.00

0.12

0.07

EPS, Basic, EUR

0.06

0.07

-0.01

0.55

0.06

CEPS2)3), EUR

0.43

0.41

0.35

0.83

0.76

ROCE2), %

2.1

4.1

0.6

2.8

2.4

1) EBITDA = earnings before Interest, taxes, depreciation and amortisation

2) Excluding net non-recurring items. Exceptional transactions that are not related to normal business operations are accounted for as non-recurring items. 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.

3) CEPS = (Net profit for the period + depreciation and amortisation)/average number of shares

Commenting on the outlook, Stora Enso's CEO Jukka Härmälä said, "The Finnish labour dispute ended on 1 July 2005. The new labour agreement, with its significant changes in labour practices such as production continuing during the Midsummer and Christmas holidays and increased flexibility in outsourcing, will contribute to the long-term competitiveness of the Finnish forest products industry.

The estimated effects of the labour dispute in the third quarter of 2005, with production restarting in early July, will be about Euro -40 million on operating profit and some 100000 tonnes of lost paper and board production."

In Europe demand for advertising-driven paper grades is expected to remain rather good. Firm demand for publication papers is forecast, because the Finnish labour dispute has decreased inventories in the value chain and demand normally picks up in the catalogue season. Fine paper demand is expected to improve and prices should be rather stable. Packaging board demand and prices are anticipated to be stable. The market balance in wood products is expected to remain good, thus improving the price outlook.

In North America seasonal factors will improve demand for magazine paper. The tighter supply of magazine paper caused by the Finnish and Canadian labour disputes should improve the supply and demand balance, and prices are forecast to rise mainly for non-contractual business. Newsprint demand continues to decline, but prices are expected to rise because of the favourable supply and demand balance. There should be a seasonal pick-up in demand for coated fine paper and prices should remain stable.

In Asia fine paper demand has been growing steadily, but prices are under some pressure due to new capacity.

Stora Enso is an integrated paper, packaging and forest products company producing publication and fine papers, packaging boards and wood products, areas in which the group is a global market leader.