Stora Enso's fourth quarter 2008 operating profit clearly negatively impacted by extensive production curtailments, as anticipated in October, and by wood inventory writedowns; significant production curtailments will continue during first half of 2009
The Group will take an impairment charge of about EUR 670 million in fourth quarter 2008
STORA ENSO OYJ STOCK EXCHANGE RELEASE 19 January 2009 at 07.00 GMT
Stora Enso aggressively curtailed production to match weaker demand and reduce inventories in the fourth quarter of 2008, as envisaged in the third quarter Interim Review, to ensure the Group started 2009 with inventory levels appropriate for the challenging year to come. The production curtailments and wood inventory writedowns had a clearly unfavourable impact on Stora Enso's fourth quarter earnings. Significant paper and board production curtailments as well as curtailments in pulp and sawmill operations will be continued during the first half of 2009, in addition to the curtailments in Wood Products announced on 30 October 2008, owing to the weakened demand of the Group's products.
In the fourth quarter of 2008, the Group curtailed paper and board production by about 490 000 tonnes, which is a reduction equivalent to about 15% of the Group's paper and board production capacity, pulp production by about 240 000 tonnes (20% of capacity) and sawnwood production by 300 000 m3 (30% of capacity).
Impairment charge and other non-recurring items
Goodwill and fixed asset impairment testing undertaken in the fourth quarter of 2008 will have a negative impact of about EUR 670 million on the fourth quarter operating profit. Provisions recorded for the fourth quarter of 2008 mainly related to already announced restructurings will total approximately EUR 98 million, of which about half will have a cash impact in 2009. The impairment charge is mainly due to the weaker outlook for many of the Group's products.
Details of the impairment charge and other non-recurring items, including the allocation between the Business Areas, will be announced in the connection with the fourth quarter and full year 2008 results on 5 February 2009.
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