Business News
Stora Ensos first quarter 2008 profit negatively impacted by poor Wood Products results due to high wood costs
Thursday 20. March 2008 - Segment reporting changes will increase transparency and comparability
Stora Ensos operating profit in the first quarter of 2008 excluding non-recurring items is expected to be close to the level achieved in the fourth quarter of 2007 and therefore considerably lower than in the first quarter of 2007. This is due to the high costs of already purchased sawlogs, particularly relative to the weakening market in Europe as a consequence of excessive sawlog supplies due to recent storms in Central Europe. Improvements in some business areas are expected to be more than offset by poor results in Wood Products, which will report an operating loss including a negative revaluation of sawlog inventories in the first quarter. There will also be a provision in Wood Supply for weather damage to the Groups plantation in China, which will be reported segmentally under Other.
As already announced, Stora Enso is curtailing Wood Products production of sawnwood and glue-laminated posts and beams in Austria, the Baltic States and Finland. In view of the weaker market outlook, Stora Enso is planning further curtailments of sawnwood production during the rest of 2008. Owing to the likely effects of the storms, the segment Wood Products will struggle to produce an operating profit for the full year 2008.
The newsprint and book paper price negotiations have nearly concluded. The result is an average price decline, for all newsprint and book paper grades together, of between 3 and 4% in local currencies.
Segment reporting changes
Stora Enso will modify its segment reporting format for operating profit from the first quarter of 2008 onwards: the share of results of associated companies, and accounting items and fair valuations will no longer be included in business segments operating profits; they will be reported as separate items to increase the transparency of segmental reporting and facilitate comparisons between different periods.
The segment Merchants will be reported as a discontinued operation in the interim report for the first quarter of 2008.