Stora Enso Interim Review January-September 2008

Favourable Exchange Rates, Reduced Overhead Costs and Pricing Improvements
Compensated for Deteriorating Market Conditions Since the Second Quarter 2008
HELSINKI, October 23 /PRNewswire-FirstCall/ --
Summary of Third Quarter Results

Continuing Operations: Q3/07 Q2/08 Q3/08

Sales EUR million 2 876.7 2 871.8 2 722.7
Operating Profit excl. NRI and Fair EUR million 199.2 94.4 125.5
Valuations
Operating profit (IFRS) EUR million -305.3 71.3 -138.7
Profit before tax excl. NRI EUR million 220.2 31.7 117.8
Profit before tax EUR million -329.2 30.4 -161.7
Net profit excl. NRI EUR million 168.2 29.9 116.5
Net profit EUR million -274.5 28.6 -119.1
EPS excl. NRI EUR 0.21 0.04 0.14
EPS EUR -0.36 0.04 -0.16
CEPS excl. NRI EUR 0.46 0.26 0.37
ROCE excl. NRI % 9.6 2.8 5.4
ROCE excl. NRI and fair valuations % 7.8 3.6 4.9

Message from CEO Jouko Karvinen:
"The storm we have faced for the past 18 months has changed.
Strengthening of the US dollar and, even more important for us, weakening of
the Swedish krona have already clearly helped. We can also see a downward
trend in fuel-based energy costs, which will start supporting us in early
2009 following the tremendous increases of recent quarters. However, we now
also face accelerating softening in market demand in most grades. This
reality makes the actions we have taken in the past year and a half, from
cost and capacity cuts, focus on pricing quality, increasing Finnish wood
sourcing and strengthening our balance sheet through divestments, critically
important. Our third quarter results, although still poor, were somewhat
better than expected owing in part to our own early actions. The fact that we
have since mid 2007 successfully improved our liquidity and reduced our
reliance on short-term borrowings with a significantly extended debt maturity
profile also supports us now when we enter the next phase of the storm.
"Our focus on pricing quality has worked well in all magazine paper
grades, coated fine paper, consumer board and some of the industrial
packaging grades. We have achieved meaningful - and necessary - price
increases in local currencies compared to the prior year period. We will
continue to defend our margins by adjusting volumes across our product mix
towards more profitable grades and safeguard our price levels and earnings
capability when necessary through production curtailments. In some segments,
such as newsprint and magazine paper, we have informed our customers that we
intend to increase prices in early 2009, despite the softening macroeconomic
outlook.
"Another key priority is to improve our weak operating cash flow. We
reduced our capital investments in the third quarter by some more than 20%
compared to a year earlier. We are now reviewing our entire capital
investment programme for the next one to two years, with the aim of reducing
the overall level while ensuring that we progress in strategically critical
projects. For these projects, we will focus on safeguarding the quality and
progress of the investments, but we will consider rescheduling them if
needed. We also have the aim of reducing working capital and will curtail
production to realistic delivery volumes already in the fourth quarter to
ensure that we start 2009 with inventory levels appropriate for the
challenging year to come. These production curtailments will have a clearly
unfavourable impact on our fourth quarter earnings. We are convinced this is
the right preparation for the reality we face in 2009. As before, we believe
it is right to plan for the worst, and then adjust our plans upwards if and
when the opportunity comes."
Near-term Outlook
In Europe market demand is forecast to be weaker in the fourth quarter
than a year earlier for newsprint, magazine paper and fine paper. Despite
weakening demand, markets for most paper products, especially newsprint, are
expected to remain balanced due to substantial reductions in production
capacity.
Consumer board and industrial packaging markets are also forecast to be
weaker than a year earlier. Demand for consumer board is currently negatively
impacted by food safety problems in China, and industrial packaging will be
affected by weaker demand in consumer goods markets and construction
industries. The outlook for wood products remains poor, further undermined by
low consumer confidence, and demand is likely to be weaker in the fourth
quarter than a year earlier.
Prices in Europe are expected to remain stable during the fourth quarter
for newsprint, magazine paper and uncoated fine paper. Some improvement in
coated fine paper and consumer board prices is anticipated as already
announced price increases are gradually implemented. Prices for industrial
packaging products are forecast to decrease slightly. Persistent oversupply
of wood products is likely to keep prices under pressure in many markets.
Stora Enso intends to increase prices for newsprint, magazine paper and
coated fine paper in Europe in early 2009.
In China demand and prices are vulnerable to weakness in coated magazine
paper market, which is also having an affect on the uncoated magazine paper
market. The outlook for fine paper demand in China remains stable, but prices
are exposed to some pressure due to elevated mill inventories.
In Latin America demand for magazine paper is forecast to stabilise, but
prices for non-contractual business are predicted to improve further. In
other overseas markets some improvement during the quarter is anticipated in
magazine paper prices, whereas newsprint prices are expected to remain
unchanged after significant increases in the third quarter.
The full-length version of the Stora Enso interim review is available on
the Stora Enso website at http://www.storaenso.com/investors
Stora Enso's full year 2008 results will be published on 5 February 2009.
SOURCE Stora Enso

For further information, please contact: Jouko Karvinen, CEO, tel:
+358-2046-21410, Markus Rauramo, CFO, tel: +358-2046-21121; Kari Vainio, EVP,
Corporate Communications, tel: +44-7799-348-197; Keith B Russell, SVP,
Investor Relations, tel: +44-7775-788-659; Ulla Paajanen-Sainio, VP, Investor
Relations and Financial Communications, tel. +358-40-763-8767