21.1.2004: Meldung: Stora Enso expects lower operating profit in fourth quarter
- an increased proportion of lower margin overseas sales;
- impact of the declining US dollar;
- holiday season shut-downs in the Nordic mills, especially in Finland;
- the paper workers" union strike in Finland in December 2003;
- the cost of certain redundancy measures implemented at mills and included in the
operating result, and
- delays in the start-ups of some investments.
Non-recurring items in fourth quarter 2003
Stora Enso"s non-recurring items for the fourth quarter totalled approximately EUR -68.5 million. This amount includes a write-down of USD 16.4 (EUR 14.5) million for expected capital loss on the sale of forestland in Ontario, Canada and USD 61.1 (EUR 54.0) million due to the provision for expected losses from termination of the US cross-border leasing contracts. The provision will be entered in "other financial items".
US cross-border leases
Stora Enso is in the process of terminating the portfolio of financing leases that its North American subsidiary currently has in place with a group of UK banks. The leasing contracts were entered in 1996 and would expire without an early termination in 2011. As a consequence of the changing interpretation of tax rules regarding leasing in the UK, termination of the leases has been determined to be desirable. The financing leases involve paper machine 16 at Wisconsin Rapids, Wisconsin and paper machine 26 at Biron, Wisconsin.
The transaction is expected to be closed by the end of the first quarter of 2004. At termination, restricted cash deposits of USD 560 (EUR 443.6) million relating to the leases will be utilised to satisfy the final lease obligations. A provision of USD 61.1 (EUR 54.0) million for additional pre-tax leasing costs arising from the early termination of the financing leases will be included in "other financial items" in the Q4 2003 accounts. The impact after taxes is USD 36.7 (EUR 32.4) million.
The EUR/USD exchange rates used in this press release are 1.1320 (average rate) and 1.2630 (closing rate).
Further comments on the Group"s performance and outlook will be provided when the fourth quarter and full year financial results are released on Wednesday 4 February at 13.00 Finnish time (11.00 GMT).
For further information, contact:
Esko Mäkeläinen, CFO
tel. +44 20 7016 3115
Kari Vainio, Executive Vice President, Corporate Communications
tel. +44 7799 348 197
Keith B Russell, Senior Vice President, Investor Relations
tel. +44 20 7016 3146
Ulla Paajanen-Sainio, Vice President, Investor Relations and Financial Communications
tel. +358 2046 21242
Source: Stora Enso