M-real Corporation Stock Exchange Release 26.7.2007 Result for the second quarter of 2007 * Sales were EUR 1,360 million (Q1/07: 1,432). Sales decreased following the divestments and capacity closures * Operating result excluding non-recurring items was EUR 4 million (Q1/07: 31). Operating result including non-recurring items was EUR -9 million (Q1/07: 104) * Result before taxes, excluding non-recurring items, was EUR -29 million (Q1/07: -15). Result before taxes, including non-recurring items, was EUR -42 million (Q1/07: 58). The result was negatively affected by scheduled maintenance shutdowns as well as limited availability and high price of wood Result for the first six months of 2007 * Sales were EUR 2,792 million (Q1-Q2/06: 2,819) * Operating result excluding non-recurring items was EUR 35 million (Q1-Q2/06: 14) Operating result including non-recurring items was EUR 95 million (Q1-Q2/06: -40) * Result before taxes excluding non-recurring items was EUR -44 million (Q1-Q2/06: -41) Events in the second quarter * The folding carton plants in Finland and Hungary were divested at the turn of May and June. The debt-free value of the divestments was approximately EUR 35 million. A loss of approximately EUR 2 million from the transactions was booked in the second-quarter result. * A decision was made to close down paperboard machine line No. 2 at the Tako board mill in Tampere by the end of July. Production will be transferred to M-real's other board machines in Finland. * Pulp production was curtailed due to large scheduled maintenance shutdowns and limited availability of wood."Our restructuring programme, including the additional measures taken, is progressing well but its results have been diluted by the exceptionally difficult wood supply situation. While positive development has been seen in the market prices of office paper and paperboard, the situation in other grades remains unsatisfactory. Our strategic choice to withdraw from the paper merchanting business by selling Map Merchant Group will further enhance our cooperation with select paper merchants and also support our objective to reduce debt." Mikko Helander, CEO, M-real Corporation KEY FIGURES Q2/07 Q1/07 Q2/06 Q1-Q2/07 Q1-Q2/06 2006 Sales, MEUR 1,360 1,432 1,378 2,792 2,819 5,624 EBITDA, MEUR 73 201 17 274 145 299 excl. non-recurring items, MEUR 84 112 71 196 199 411 Operating result, MEUR -9 104 -75 95 -40 -271 excl. non-recurring items, MEUR 4 31 -21 35 14 45 Result before taxes, MEUR -42 58 -111 16 -95 -408 excl. non-recurring items, MEUR -29 -15 -57 -44 -41 -92 Result for the period, MEUR -49 54 -103 5 -100 -399 Earnings per share, EUR -0.15 0.16 -0.31 0.01 -0.30 -1.21 Return on equity, % -10.4 11.2 -18.3 0.5 -8.9 -18.9 excl. non-recurring items, % -8.8 -5.4 -9.1 -7.2 -4.3 -4.4 Return on capital employed, % -0.5 9.6 -5.6 4.6 -1.1 -5.2 excl. non-recurring items, % 0.7 3.2 -1.2 2.0 1.1 1.4 Equity ratio at end of period, % 32.8 32.9 35.0 32.8 35.0 30.9 Gearing ratio at end of period, % 117 114 108 117 108 126 Interest-bearing net liabilities at end of period, MEUR 2,192 2,189 2,381 2,192 2,381 2,403 Gross investments, MEUR 62 50 101 112 204 428 Paper deliveries, 1,000 tonnes 965 1,029 1,040 1,994 2,120 4,192 Paperboard deliveries, 1,000 tonnes 313 302 284 615 588 1,161 Personnel at end of period 13,302 13,538 15,277 13,302 15,277 14,125 EBITDA = Earnings before interest, taxes, depreciation and amortization Market situation Deliveries made by Western European coated fine paper producers in January-June were on last year's level. Coated magazine paper and uncoated fine paper deliveries decreased marginally. In Europe, the market price of coated magazine paper has slightly decreased, while market price of coated fine paper has not changed significantly. The price of uncoated fine paper has continued to increase. Folding boxboard deliveries by Western European producers increased from last year's level. Result for April-June compared to the previous quarter Sales totalled to EUR 1,360 million (Q1/07: 1,432). Comparable sales decreased by 4.8 per cent. Operating result totalled EUR -9 million (Q1/07: 104). It includes, as non-recurring costs, EUR 9 million in cost provisions and EUR 2 million in asset write-downs related to the profitability improvement programme in Finland. These figures include the closedown expenses incurred from paperboard machine line No. 2 at the Tako board mill. The operating result also includes a loss on sale of EUR 2 million from the divestment of the carton plants in Finland and Hungary. The first-quarter operating result included a non-recurring income of EUR 135 million from the sale of Metsä-Botnia's shares to Metsäliitto Cooperative. The operating result included a total of EUR 62 million in non-recurring costs, the most significant items being: * a cost provision of EUR 14 million for completing the closedown of the Sittingbourne mill * a cost provision of EUR 29 million for completing the closedown of the Wifsta mill * an impairment loss of EUR 16 million from the valuation of assets held for sale at the expected selling price in compliance with IFRS 5. Net non-recurring items in the second quarter of 2007 totalled EUR -13 million (Q1/07: 73). Operating result excluding non-recurring items totalled EUR 4 million (31). It was negatively affected by scheduled maintenance shutdowns, Easter and Midsummer shutdowns, limited availability of wood, further increases in wood prices and the drop in the average selling price of coated magazine paper from the previous quarter. The result benefited from the approximately 3 per cent increase in the price of uncoated fine paper. In April-June the volume of paper deliveries totalled 965,000 tonnes (Q1/07: 1,029,000). Production was curtailed by 50,000 tonnes (41,000) in line with demand. Paperboard deliveries totalled 313,000 tonnes (302,000) and production curtailments 31,000 tonnes (17,000). Financial income and expenses totalled EUR -32 million (-46). Exchange differences from trade receivables, trade payables, financial items and the valuation of currency hedging were EUR 2 million (-5). Net interest and other financial expenses amounted to EUR -34 million (-41). Other financial expenses include a profit of EUR 7 million (-1) from unwinding and valuation of interest rate hedges. The result before taxes for the review period was EUR -42 million (58). The result before taxes, excluding non-recurring items, totalled EUR -29 million (-15). The negative impact of income taxes, including the change in deferred tax liabilities, was EUR 7 million (4). Earnings per share were EUR -0.15 (0.16). Excluding non-recurring items, earnings per share were EUR -0.13 (-0.08). Return on equity was -10.4 per cent (11.2), and -8.8 per cent (-5.4) excluding non-recurring items. The return on capital employed was -0.5 per cent (9.6), and 0.7 per cent (3.2) excluding non-recurring items. Result for January-June compared with the corresponding period last year Sales totalled EUR 2,792 million (Q1-Q2/06: 2,819). Comparable sales were up 1.7 per cent. Operating result was EUR 95 million (-40). The operating result excluding non-recurring items amounted to EUR 35 million (14). Net non-recurring items in January-June 2007 totalled EUR 60 million, the most significant being: * sales gain of EUR 135 million from Metsä-Botnia shares * a cost provision of EUR 14 million for completing the closedown of the Sittingbourne mill * a cost provision of EUR 29 million for completing the closedown of the Wifsta mill * an impairment loss of EUR 16 million from the valuation of assets held for sale at the expected selling price in compliance with IFRS 5 * a total of EUR 11 million consisting of a cost provision and asset write-downs related to the programme to improve profitability of operations in Finland. Non-recurring items in January-June 2006 totalled EUR 54 million, the most significant being: * a sales loss of EUR 35 million for the Pont Sainte Maxence paper mill * a cost provision totalling EUR 19 million related to the efficiency improvement programmes at the Alizay, Stockstadt and Hallein mills. The profitability of Consumer Packaging, fine papers and merchant operations improved due to positive price development and profitability improvement measures. Despite the profitability improvement measures taken, the profitability of the Publishing business area dropped due to a weak US dollar and negative price development. Operating result excluding non-recurring items improved year on year, helped by the approximately 9 per cent price increase of uncoated fine paper and the profitability improvement measures taken. Factors with a negative effect on the operating result included the average drop of 8 per cent in the value of the US dollar, the increase in the price of pulpwood, production losses at pulp mills due to the weak availability of wood, as well as extensive maintenance shutdowns in Alizay and Husum pulp mills. Performance in January-June 2006 suffered from the maintenance and investment shutdown in Alizay and the investment shutdown at the Simpele paperboard mill. The volume of paper deliveries in January-June totalled 1,994,000 tonnes (2,120,000). Production was curtailed by 91,000 tonnes in line with demand (99,000). Paperboard deliveries amounted to 615,000 tonnes (588,000) and production curtailments to 48,000 tonnes (31,000). Financial income and expenses totalled EUR -78 million (-54). Exchange differences from trade receivables, trade payables, financial items and the valuation of currency hedging were EUR -3 million (5). Net interest and other financial expenses amounted to EUR -75 million (-59). Other financial expenses include profit of EUR 6 million (7) from unwinding and valuation of interest rate hedges. The result before taxes was EUR 16 million (-95). The result before taxes, excluding non-recurring items, totalled EUR -44 million (-41). Income taxes, including the change in deferred tax liabilities, were EUR -11 million (-5). Earnings per share were EUR 0.01 (-0.30). Excluding non-recurring items, earnings per share were EUR -0.21 (-0.15). Return on equity was 0.5 per cent (-8.9), and -7.2 per cent (-4.3) excluding non-recurring items. The return on capital employed was 4.6 per cent (-1.1), and 2.0 per cent (1.1) excluding non-recurring items. Personnel On 30 June 2007 the company had 13,302 employees (31 December 2006: 14,125), of which 4,243 (4,220) worked in Finland. Divestments accounted for a reduction of 678 employees in 2007. The company had approximately 400 summer employees at the end of June. In January-June M-real employed an average of 13,610 people (Q1-Q2/06: 15,207). In 2007 the figures include 30 per cent of Metsä-Botnia's personnel compared to 39 per cent in 2006. Investments Gross capital expenditure in January-June totalled EUR 112 million (Q1-Q2/06: 204). This includes a EUR 72 million share of Metsä-Botnia's capital expenditure (90), based on M-real's ownership, which in 2007 amounted to 30 per cent and in 2006 to 39 per cent. Metsä-Botnia's pulp mill investment in Uruguay is progressing as planned, and the mill will be ready for start-up in September. As the new mill will start up, M-real will gain self-sufficiency in pulp, in line with its strategy. The Uruguay mill will be one of the world's most cost-efficient chemical pulp mills. Divestments and restructuring On 30 January 2007 M-real sold 9 per cent of Metsä-Botnia's shares to Metsäliitto Cooperative for EUR 240 million posting a gain of EUR 135 million. In the turn of May and June M-real sold all the shares in its subsidiaries Tako Carton Plant Ltd. to Pyroll Oy and M-real Petöfi Nyomda Kft to the German STI Group. The total debt-free value of the divestment of these carton plants located in Finland and Hungary was approximately EUR 35 million. A loss of approximately EUR 2 million from the transactions was booked in the second-quarter result. Excluding non-recurring items, the transactions will have a slightly negative impact on the operating result in 2007 and will lead to a decrease of approximately EUR 55 million in annual sales. The divestments were part of M-real's restructuring programme announced in October 2006. Financing At the end of June the equity ratio was 32.8 per cent (31 December 2006: 30.9) and the gearing ratio 117 per cent (126). Some of M-real's loan agreements set a 120 per cent limit on the company's gearing ratio and a 30 per cent limit on the equity ratio. Calculated as defined in the loan agreements, the gearing ratio at the end of June was approximately 102 per cent (111) and the equity ratio approximately 36 per cent (34). Net interest-bearing liabilities totalled EUR 2,192 million at the end of June (2,403). 12 per cent of the long-term loans were denominated in foreign currencies. 77 per cent of the loans were floating-rate and the rest fixed-rate. At the end of June the average interest rate on loans was 6.8 per cent and the average maturity of long-term loans 3.8 years. The interest rate maturity of loans was 7.2 months at the end of June. During the period it varied from 7 to 8 months. Cash flow from operations in January-June amounted to EUR 132 million (Q1-Q2/06: 106). Working capital was up by EUR 18 million (57). At the end of June, an average of 6 months of net foreign exchange exposure was hedged. The degree of hedging varied between 6 and 7 months during the period. At the end of June, approximately 97 per cent of foreign-currency-denominated shareholders' equity was hedged. Liquidity is good. At the end of June liquidity was EUR 1,329 million, of which EUR 1,155 million consisted of binding long-term credit agreements and EUR 174 million of liquid assets and investments. To meet its short-term financing needs, M-real also had non-binding domestic and foreign commercial paper programmes and credit facilities amounting to nearly EUR 600 million. Shares In January-June, the highest price of M-real's B share on the OMX Helsinki Stock Exchange was EUR 5.94, the lowest EUR 4.43 and the average price EUR 5.18. At the end of June the price of the B share was EUR 4.85. The average price in 2006 was EUR 4.41. The closing price for 2006 was EUR 4.79. The trading volume of B shares was EUR 1,327 million, or 88 per cent of the share capital. The market value of the A and B shares totalled EUR 1,590 million at the end of June. Metsäliitto Cooperative owned 38.6 per cent of the shares at the end of June and held 60.5 per cent of the voting rights conferred by these shares. International investors owned 41.3 per cent of the shares. On 13 March 2007 the Annual General Meeting authorised the Board of Directors to decide on increasing the share capital through one or more share issues and/or one or more issues of convertible bonds in compliance with Chapter 10 of the Companies Act so that in either case a maximum of 58,365,212 of M-real Corporation's B shares with a nominal value of EUR 1.70 can be subscribed for and the company's share capital can be increased by a maximum of EUR 99,220,860.40. The authorisation, valid until further notice, entitles a deviation from the shareholders' pre-emptive right to subscribe for new shares and/or issues of convertible bonds and to decide on the subscription prices and other terms and conditions. The shareholders' pre-emptive subscription rights can be deviated from provided that there is a significant financial reason for the company to do so, such as strengthening the balance sheet, enabling business restructuring or developing the company's business in other ways. Antitrust class actions In connection with the investigations of the EU Commission regarding fine and magazine paper, which were closed in 2006, purchasers of magazine paper filed several class action lawsuits in the United States naming M-real as a defendant along with other paper producers. In May 2007 the plaintiffs of the last pending class action filed a notice dismissing the lawsuit against M-real without prejudice. Strategic review and related measures The restructuring programme launched in October 2006 and extended in 2007 proceeds as planned. Measures to achieve cost savings by EUR 100 million and reduce working capital by EUR 100 million have been defined and their implementation is ongoing. In January 2007 M-real sold a 9 per cent holding in Metsä-Botnia to Metsäliitto Cooperative for EUR 240 million, posting a gain of EUR 135 million. M-real also sold the Tako and Petöfi carton plants for a total of EUR 35 million at the turn of May and June. The sales process of the Meulemans carton plant continues. The divestment of the Map Merchant Group for EUR 382 million was announced in early July. The deal is subject to approval by the competition authorities. After the transaction has been finalised, M-real will have sold asset items worth over EUR 650 million, exceeding its original target of EUR 500 million. The Sittingbourne fine paper mill in the UK was closed down at the end of January, and fine paper machines 6 and 7 at Gohrsmühle, Germany, in late February. The Wifsta fine paper mill in Sweden was closed down in July. Around one-third of the production of the machines now closed has been transferred to M-real's other machines. Related to the closures, EUR 76 million was recognised as an expense in the 2006 financial statements and a cost provision of EUR 43 million was booked in the first quarter of 2007 for the completion of closures. The closures' impact on cash flow is approximately EUR -80 million, slightly over half of which will be realised in 2007 and the rest in 2008-2015. The statutory negotiations related to the programme to improve profitability of operations in Finland have been concluded. The programme's overall impact on staff is approximately 500 person work years. The talks also agreed on changes in vacancies and on other enhancement measures, which will decrease the need for temporary employees and holiday replacements by approximately 100 person work years. Previous measures and those now agreed on will result in annual cost savings of approximately EUR 40 million in Finnish operations. They will have full effect from the beginning of 2009. The non-recurring expenses resulting from the programme, totalling approximately EUR 11 million, were recognised in the second quarter. The amount includes an asset write-down of approximately EUR 2 million. Paperboard machine line 2 at the Tako board mill, with an annual capacity of 70,000 tonnes, will be closed down by 31 July 2007, as previously announced. Production will primarily be transferred to other machines in the Consumer Packaging business. Events after the period As part of the strategic review M-real made an essential decision concerning the distribution of its own products. On 6 July 2007, as part of its new distribution strategy, M-real announced its plans to sell Map Merchant Holdings BV and its subsidiaries to the French Antalis Intenational SAS. The goal is to enhance cooperation with select European paper merchants. The total value of the transaction, including possible debt and pension liabilities, is EUR 382 million. M-real expects to recognise a gain of approximately EUR 80 million in the figures for the quarter in which the sale is closed. The deal will not affect M-real's result before taxes, except for the non-recurring profit impact of the closed sale. Gearing is estimated to decrease as a result of the divestment by 21 percentage points. The transaction is subject to authority approval and is expected to be finalised in the third quarter of 2007. In May M-real announced that it would exercise its purchase option for the Kyröskoski gas combi power plant and the land on which the Kyröskoski mills are located. The transaction, worth approximately EUR 13 million, was carried out on 1 July 2007 in compliance with the terms and conditions of the purchase option agreement. Wood supply The exceptionally mild winter in Northern Europe has caused temporary difficulties in wood supply. The winter season was nearly one-third shorter than normal, leading to challenges in wood procurement at the Finnish and Swedish mills due to harvesting problems. Stocks were at a clearly lower level than usual. The price of wood is expected to remain high. In central Europe, however, the high prices resulting from more and more wood being used for energy production have seen a slight downward trend recently. Storm damage and the decrease in energy wood purchases caused by the mild winter contribute to this price development. Wood procurement was also complicated in Russia by the exceptionally mild winter. Furthermore, the Russian government's decision to increase export duties on timber indirectly raises wood prices. Approximately 10 per cent of M-real's wood supply comes from Russia and can be replaced by wood from other sources if necessary. Outlook The demand for office paper and packaging paperboard, as well as their price development, is expected to remain good in the third quarter of 2007. The weak US dollar and the consequent repatriation of volumes by European producers make it very difficult to forecast the price development of coated fine paper and coated magazine paper. M-real has announced price increases for coated and uncoated fine paper in the autumn. The price of folding boxboard for new orders was successfully raised in the second quarter and further increases will be made if the market situation allows. The decline in prices for coated magazine paper seems to have levelled off in Europe. Once the market balance improves as a result of capacity closures, the company will make the most of the opportunities to raise prices during the rest of the year. No relief in production input costs is in sight. Under current conditions, the full-year cost increases in 2007 are expected to slightly exceed the positive impact of profitability improvement programmes. The third-quarter operating result excluding non-recurring items is expected to improve from the second quarter. Risks and uncertainties Since the forward-looking statements in this interim report are based on current plans, estimates, and projections, they involve risks and uncertainties that may cause actual results to differ from those expressed in such forward-looking statements. For further information regarding the risk factors, please see page 25 of M-real's Annual Report for 2006. Further information: Seppo Parvi, CFO, tel. +358 10 469 4321 Anne-Mari Achrén, Communications, tel. +358 10 469 4541 BUSINESS AREAS AND MARKET DEVELOPMENT Consumer Packaging Q1-Q2 Q1-Q2 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 2007 2006 2006 Sales, MEUR 243 235 241 236 237 478 494 971 EBITDA, MEUR 28 39 25 38 24 67 68 131 excl. non-recurring items, MEUR 33 39 25 38 24 72 68 131 Operating result, MEUR 8 21 0 17 2 29 26 43 excl. non-recurring items,MEUR 15 21 4 17 2 36 26 47 Return on capital employed, % 4.1 10.9 0.3 7.5 1.3 7.6 6.1 5.1 excl. non-recurring items, % 7.9 10.9 2.1 7.5 1.3 9.4 6.1 5.6 Deliveries, 1,000 t 313 302 288 285 284 615 588 1,161 Board deliveries, 1,000 t 302 311 279 273 270 613 569 1,121 EBITDA = Earnings before interest, taxes, depreciation and amortization Second quarter compared with the previous quarter The operating result of the Consumer Packaging business area, excluding non-recurring items, decreased from the previous quarter, amounting to EUR 15 million (Q1/07: 21). Operating result including non-recurring items totalled EUR 8 million (21). The operating result includes, as non-recurring costs, EUR 5 million in cost provisions and EUR 2 million in fixed asset write-downs related to the programme to improve profitability of operations in Finland. These figures include the closedown expenses incurred from paperboard machine line 2 at the Tako board mill. The result suffered from higher fixed costs, mainly due to seasonal variation caused by Easter and Midsummer shutdowns, a decrease in product stocks and the weakening of the US dollar. Deliveries by Western European folding boxboard producers remained at the same level with the previous quarter. M-real's deliveries of folding boxboard were up 4 per cent. The selling price of folding boxboard in euro fell slightly from the previous quarter due to the continued weakening of the US dollar. Linerboard deliveries increased by 3 per cent from the first quarter. The average selling price remained nearly unchanged. January-June compared with the corresponding period in 2006 The business area's operating result in January-June totalled EUR 36 million (Q1-Q2/06: 26). Compared to the previous year, profitability improved mainly due to higher delivery volumes and improved efficiency. The January-June result in 2006 was negatively affected by the investment shutdown at the Simpele mill and the strike of Finnish paper workers. The deliveries of folding boxboard manufacturers in Western Europe increased by 5 per cent year on year. M-real's deliveries were also 5 per cent higher. The selling price of folding boxboard in euros was lower than the previous year due to the weaker US dollar. Linerboard deliveries increased considerably from the previous year. The average price in euro corresponded to that of 2006. The selling price of wallpaper base has risen significantly. The carton plants sold in Finland and Hungary and the Meulemans carton plant in Belgium currently for sale have been reported under"Other operations" since the beginning of 2007. Publishing Q1-Q2 Q1-Q2 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 2007 2006 2006 Sales, MEUR 208 212 220 226 216 420 441 887 EBITDA, MEUR 12 21 23 36 23 33 55 114 excl. non-recurring items, MEUR 15 21 23 36 23 36 55 114 Operating result, MEUR -7 3 3 14 2 -4 13 30 excl. non-recurring items, MEUR -4 3 3 14 2 -1 13 30 Return on capital employed, % -2.5 1.3 1.4 5.3 0.9 -0.6 25 3.0 - excl. non-recurring items, % -1.3 1.3 1.4 5.3 0.9 0.0 2.5 3.0 Deliveries, 1,000 t 302 303 313 320 307 605 624 1,258 Production, 1,000 t 287 282 283 307 270 569 577 1,167 EBITDA = Earnings before interest, taxes, depreciation and amortization Second quarter compared with the previous quarter The second-quarter operating result of the Publishing business area, excluding non-recurring items, was EUR -4 million (Q1/07: 3). A cost provision of EUR 3 million was recognised as a non-recurring item related to the programme to improve profitability of operations in Finland. The operating result including non-recurring items was EUR -7 million (3). The operating result was mainly weakened by the decrease in the average selling price, higher fixed costs due to Easter, Midsummer and annual shutdowns, as well as higher fibre costs. Deliveries by Western European producers of coated magazine paper were down 4 per cent. Delivery volumes remained nearly unchanged in the Publishing business area. January-June compared with the corresponding period in 2006 The operating result of Publishing business area, excluding non-recurring items, was EUR -1 million (Q1-Q2/06: 13). The decrease was mainly caused by higher fibre costs, a decline in the average selling price and lower delivery volumes. Cost-savings measures had a positive impact on the operating result. Deliveries by Western European producers of coated magazine paper were down 1 per cent. Volumes in Publishing business area decreased by 3 per cent. Commercial Printing Q4/06 Q1-Q2 Q1-Q2 Q2/07 Q1/07 Q3/06 Q2/06 2007 2006 2006 Sales, MEUR 339 366 369 361 380 705 774 1, 504 EBITDA, MEUR 19 6 -33 14 -26 25 -2 -21 excl. non-recurring items, MEUR 18 20 19 16 15 38 39 74 Operating result, MEUR -5 -17 -179 -10 -51 -22 -53 -242 excl. non-recurring items, MEUR -6 -3 -6 -8 -10 -9 -12 -26 Return on capital employed, % -1.6 -6.3 -63.3 -3.2 -16.2 -4.0 -8.6 -21.7 excl. non-recurring items, % -2.0 -0.8 -1.9 -2.6 -3.2 -1.4 -1.9 -2.2 Deliveries, 1,000 t 422 454 464 453 481 876 978 1,895 Production, 1,000 t 448 457 464 456 494 905 1,003 1,923 EBITDA = Earnings before interest, taxes, depreciation and amortization Second quarter compared with the previous quarter The second-quarter operating result of the Commercial Printing business area, excluding non-recurring items, totalled EUR -6 million (Q1/07: -3). Operating result including non-recurring items was EUR -5 million (Q1/07: -17). Net non-recurring items amounted to EUR 1 million (Q1/07: -14). The business area's overall delivery volume was down approximately 7 per cent from the previous quarter. The comparable delivery volume decreased by 3 per cent, taking into account the closedown of the Sittingbourne mill and Gohrsmühle machines No. 6 and 7. As for raw material costs, the price of pulp has remained high and the price of wood has continued to rise. As a result of high prices and weak availability of wood, pulp production has been curtailed to a certain degree. The deliveries of Western European coated fine paper manufacturers decreased by 5 per cent. M-real's overall deliveries of coated fine paper were 7 per cent lower than in the previous quarter. The comparable delivery volume of coated fine paper decreased by 3 per cent. The average selling price in euro was up 1 per cent. The demand for coated fine paper fell in the second quarter, as did the operating rates. The selling price in euro of uncoated fine paper increased by 3 per cent. The prices of speciality papers continued their slight upward trend. January-June compared with the corresponding period in 2006 The business area's operating result excluding non-recurring items in January-June totalled EUR -9 million (Q1-Q2/06: -12). Overall deliveries were approximately 10 per cent lower year on year due to the closedown of the Sittingbourne mill and the Gohrsmühle machines, as well as to the divestment of the Pont Sainte Maxence mill. The comparable delivery volume corresponded to that of the comparison period. Profitability was particularly hurt by fibre expenses, which increased considerably from the previous year. The business area's comparable average selling price in euro was at the previous year's level despite foreign currencies weakening against the euro. Profitability benefited from the cost savings achieved through the savings programme and from the disposals and closures of unprofitable units. Deliveries by coated fine paper producers in Western Europe remained at last year's level. M-real's overall deliveries of coated fine paper decreased nearly 9 per cent. The comparable delivery volume remained unchanged. Office Papers Q4/06 Q1-Q2 Q1-Q2 Q2/07 Q1/07 Q3/06 Q2/06 2007 2006 2006 Sales, MEUR 183 202 189 181 174 385 357 727 EBITDA, MEUR 15 -8 26 15 -2 7 18 59 excl. non-recurring items, MEUR 15 22 26 15 8 37 28 69 Operating result, MEUR 1 -22 -4 -1 -17 -21 -13 -18 excl. non-recurring items, MEUR 1 8 11 -1 -7 9 -3 7 Return on capital employed, MEUR 0.6 -12.0 -1.9 -0.2 -9.0 -5.7 -3.4 -2.3 excl. non-recurring items, % 0.6 5.0 6.0 -0.2 -3.7 2.7 -0.7 1.1 Deliveries, 1,000 t 241 272 264 258 251 513 517 1,039 Production, 1,000 t 257 280 253 259 252 537 516 1,028 EBITDA = Earnings before interest, taxes, depreciation and amortization Second quarter compared with the previous quarter The second-quarter operating result of the Office Papers business area, excluding non-recurring items, totalled EUR 1 million (Q1/07: 8). A cost provision of EUR 29 million to finalise the closedown of the Wifsta mill was reported as a non-recurring item in the previous quarter. No non-recurring items were recognised in the second quarter. The operating result, excluding non-recurring items, particularly suffered from the annual shutdowns of the Alizay and Husum mills and the decrease in delivery volumes. The 3 per cent price increase in the average selling price had a positive impact on results. Overall deliveries by Western European uncoated fine paper producers were down by 7 per cent. The delivery volume of Office Papers decreased by 11 per cent. January-June compared with the corresponding period in 2006 The business area's operating result excluding non-recurring items in January-June totalled EUR 9 million (-3). In 2006 the business area reported its EUR 10 million share in the cost provision for the Alizay mill efficiency improvement programme as a non-recurring item. The operating result was improved mainly by the 9 per cent increase in the average selling price, as well as the decrease in fixed costs. It was negatively affected by higher raw material and energy costs. Overall deliveries by Western European uncoated fine paper producers were down by 1 per cent. The delivery volume of Office Papers decreased by 1 per cent. Map Merchant Group Q1-Q2 Q1-Q2 Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 2007 2006 2006 Sales, MEUR 349 379 388 342 354 728 719 1,438 EBITDA, MEUR 7 8 5 5 8 15 17 27 excl. non-recurring items, MEUR 7 11 11 5 8 18 17 33 Operating result, MEUR 6 7 -59 3 7 13 14 -42 excl. non-recurring items, MEUR 6 10 10 3 7 16 14 27 Return on capital 8.9 11.8 -82.8 4.9 8.2 10.3 8.5 -14.2 employed, % excl. non-recurring 14.0 4.9 items, % 9.2 15.9 8.2 12.4 8.5 9.4 Deliveries, 1,000 t 339 372 367 347 354 711 717 1,431 EBITDA = Earnings before interest, taxes, depreciation and amortization Second quarter compared with the previous quarter The second-quarter operating result of the Map Merchant Group, excluding non-recurring items, totalled EUR 6 million (Q1/07: 10). A non-recurring expense of EUR 3 million was reported in the first quarter. The result was weakened by the seasonally lower delivery volumes. January-June compared with the corresponding period in 2006 The operating result excluding non-recurring items totalled EUR 16 million (Q1-Q2/06: 14). The result was strengthened by the slight increase in delivery volumes and the rising prices of office papers. The interim report is unaudited. Condensed consolidated income statement Q1-Q2 Q1-Q2 MEUR 2007 2006 Change 2006 Q1/07 Q2/07 Continuing operations Sales 2,792 2,819 -27 5,624 1,432 1,360 Other operating income 183 69 114 116 155 28 Operating expenses -2,701 -2,743 42 -5,441 -1,386 -1,315 Depreciation and impairment losses -179 -185 6 -570 -97 -82 Operating result 95 -40 135 -271 104 -9 % of sales 3.4 -1.4 -4.8 7.3 -0.7 Share of results in associated companies -1 -1 0 0 0 -1 Exchange gains and losses -3 5 -8 0 -5 2 Other financial income and expenses -75 -59 -16 -137 -41 -34 Result before taxes 16 -95 111 -408 58 -42 % of sales 0.6 -3.4 -7.3 4.1 -3.1 Income taxes -11 -5 -6 9 -4 -7 Result for the period 5 -100 105 -399 54 -49 % of sales 0.2 -3.5 -7.1 3.8 -3.6 Attributable to Shareholders of parent company 5 -100 105 -396 54 -49 Minority interest 0 0 0 -3 0 0 Earnings per share for result attributable to shareholders of parent company (EUR/share) 0.01 -0.30 0.31 -1.21 0.16 -0.15 Taxes include taxes corresponding to the result for the period under review. Condensed consolidated balance sheet 30.6. 30.6. 31.12. MEUR 2007 % 2006 % 2006 % Assets Non-current assets Goodwill 376 6.6 570 9.1 376 6.1 Other intangible assets 50 0.9 95 1.5 62 1.0 Tangible assets 2,956 51.6 3,174 50.5 3,156 51.1 Biological assets 44 0.8 43 0.7 52 0.8 Shares in associated and other companies 107 1.8 115 1.8 109 1.8 Interest-bearing receivables 34 0.6 38 0.6 34 0.6 Deferred tax receivables 31 0.5 32 0.5 31 0.5 Other non-interest-bearing receivables 8 0.1 13 0.2 18 0.3 3,606 62.9 4,080 64.9 3,838 62.2 Current assets Inventories 679 11.9 737 11.7 676 11.0 Receivables Interest bearing 55 1.0 169 2.7 163 2.6 Non-interest-bearing 1,180 20.6 1,202 19.1 1 210 19.6 Cash and cash equivalents 174 3.0 99 1.6 182 2.9 2,088 36.5 2,207 35.1 2,231 36.1 Assets classified as held for sale 32 0.6 0 103 1.7 Total assets 5,726 100 6,287 100 6,172 100 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity Equity attributable to shareholders of parent company 1,823 31.9 2,142 34.1 1,843 29.9 Minority interest 52 0.9 58 0.9 63 1.0 Total shareholders' equity 1,875 32.8 2,200 35.0 1,906 30.9 Non-current liabilities Deferred tax liabilities 269 4.7 329 5.2 284 4.6 Post-employment benefit obligations 194 3.4 204 3.2 199 3.2 Provisions 81 1.4 66 1.0 79 1.3 Other non-interest-bearing liabilities 32 0.6 48 0.8 28 0.5 Interest-bearing liabilities 2,123 37.1 2,123 33.8 2,182 35.4 2,699 47.2 2,770 44.0 2,772 45.0 Current liabilities Non-interest-bearing liabilities 814 14.2 753 12.0 865 14.0 Interest-bearing liabilities 327 5.7 564 9.0 599 9.7 1,141 19.9 1,317 21.0 1,464 23.7 Liabilities relating to assets classified as held for sale 11 0.1 0 0.0 30 0.4 Total liabilities 3,851 67.2 4,087 65.0 4,266 69.1 Total shareholders' equity and liabilities 5,726 100 6,287 100 6,172 100 Condensed consolidated cash flow statement Q1-Q2 Q1-Q2 MEUR 2007 2006 2006 Q2/07 Cash flow from operating activities Result for the period 4 -100 -399 -50 Total adjustments 146 263 701 109 Change in working capital -18 -57 65 9 Cash flow arising from operations 132 106 367 68 Net finance costs -68 -51 -113 -41 Income taxes paid -21 -15 -32 -17 Net cash flow arising from operating activities 43 40 222 10 Investments in tangible and intangible assets -112 -204 -428 -62 Divestments of assets and other 275 12 28 35 Net cash flow arising from 163 -192 -400 -27 investing activities Share issue, minority interest 2 23 31 1 Changes in long-term loans and -197 157 259 50 other financial items Dividends paid -20 -39 -39 0 Net cash flow arising from -215 141 251 51 financing activities Changes in cash and -9 -11 73 34 cash equivalents Cash and cash equivalents at 182 112 112 137 beginning of period Translation difference in cash and -1 -2 -2 0 cash equivalents Changes in cash and cash equivalents -9 -11 73 34 Assets held for sale, folding carton plants 2 0 -1 3 Cash and cash equivalents 174 99 182 174 at end of period Statement of changes in shareholders' equity Fair MEUR value Trans- and Re- Mi- Share lation other tained nority Share pre- dif- re- earn- inter- capital mium ference serves ings est Total Shareholders' equity 31.12.2005, IFRS 558 667 6 0 1,040 45 2,316 Net expenses recognised directly in equity Translation differences -8 -8 Net investment hedge, net of tax Currency flow hedges transferred to income statement, net of tax 2 2 recognised in equity, net of tax 14 14 Interest flow hedges recognised in equity, net of tax 2 2 Change in minority interest Metsä-Botnia restructuring in Uruguay 13 13 Result for the period -100 1 -99 Total recognised income and expenses for the period -8 18 -100 14 -76 Dividends paid -39 -1 -40 Shareholders' equity 30.6.2006, IFRS 558 667 -2 18 901 58 2,200 Shareholders' equity 1.1.2007, IFRS 558 667 3 10 605 63 1,906 Net expenses recognised directly in equity Translation differences -11 -1 -12 Net investment hedge, net of tax 8 8 Currency flow hedges transferred to income statement, net of tax -11 -11recognised in equity, net of tax 3 3 Interest flow hedges transferred to income statement, net of tax -3 -3 recognised in equity, net of tax 3 3 Commodity hedges transferred to income statement, net of tax 6 6 recognised in equity, net of tax 0 0 Change in minority interest Sale of Metsä-Botnia shares (9%) -11 Metsä-Botnia restructuring in Uruguay 2 -9 -9 Result for the period 5 0 5 Total recognised income and expenses for period -3 -2 5 -10 -10 Dividends paid -20 -1 -21 Shareholders' equity 30.6.2007, IFRS 558 667 0 8 590 52 1,875 Q1-Q2 Q1-Q2 Key ratios 2007 2006 2006 Q2/07 Sales, MEUR 2,792 2,819 5,624 1,360 EBITDA, MEUR 274 145 299 73 excl. non-recurring items, MEUR 196 199 411 84 Operating result, MEUR 95 -40 -271 -9 excl. non-recurring items, MEUR 35 14 45 4 Result before taxes, MEUR 16 -95 -408 -42 excl. non-recurring items, MEUR -44 -41 -92 -29 Result for the period, MEUR 5 -100 -399 -49 Earnings per share, EUR 0.01 -0.30 -1.21 -0.15 excl. non-recurring items, EUR -0.21 -0.15 -0.27 -0.13 from continuing operations, EUR 0.01 -0.30 -1.21 -0.15 from discontinued operations, EUR 0.00 0.00 0.00 0.00 Return on equity, % 0.5 -8.9 -18.9 -10.4 excl. non-recurring items, % -7.2 -4.3 -4.4 -8.8 Return on capital employed, % 4.6 -1.1 -5.2 -0.5 excl. non-recurring items, % 2.0 1.1 1.4 0.7 Equity ratio at end of period, % 32.8 35.0 30.9 32.8 Gearing at end of period, % 117 108 126 117 Shareholders' equity per share at end of period, EUR 5.55 6.53 5.62 5.55 Net interest-bearing liabilities at end of period, MEUR 2,192 2,381 2,403 2,192 Gross capital expenditure, MEUR 112 204 428 62 Board deliveries, 1,000 t 615 588 1,161 313 Paper deliveries, 1,000 t 1,994 2,120 4,192 965 Personnel at end of period 13,302 15,277 14,125 13,302 Securities and guarantees MEUR Q2/07 Q2/06 2006 For own liabilities 56 101 77 On behalf of associated companies 1 1 1 On behalf of Group companies 5 5 5 On behalf of others 2 10 3 Total 64 117 86 Open derivative contracts MEUR Q2/07 Q2/06 2006 Interest rate derivatives 2,373 3,302 2,828 Foreign exchange derivatives 3,563 3,577 4,747 Other derivatives 183 116 152 Total 6,119 6,995 7,727 The fair value of open derivative contracts calculated at market value was EUR 5.9 million at the end of the review period (31.12.2006: EUR -8.3 million and EUR 12.0 million 30.6.2006). The gross amount of open contracts also includes closed contracts, totalling EUR 2,308.6 million (31.12.2006: EUR 3,664.0 million and EUR 3,134.7 million at 30.6.2006). Commitments related to fixed assets MEUR Q2/07 Q2/06 2006 Payments in less than a year 48 114 146 Payments later 5 37 16 Changes in property, Q1-Q2 Q1-Q2 plant and equipment, MEUR 2007 2006 2006 Carrying value at beginning of period 3,156 3,178 3,178 Capital expenditure 110 189 456 Decrease -143 -36 -82 Assets classified as held for sale 0 0 -28 Depreciation and impairment losses -155 -167 -385 Translation difference -12 10 17 Carrying value at end of period 2,956 3,174 3,156 Q1-Q2 Q1-Q2 Related-party transactions, MEUR 2007 2006 2006 Transactions with parent company and sister companies Sales 19 30 35 Other operating income 136 2 3 Purchases 255 248 491 Interest income 1 3 7 Interest expenses 4 9 13 Non-current receivables 20 23 21 Current receivables 64 187 183 Non-current liabilities 1 1 1 Current liabilities 43 56 362 Business transactions with associated companies Sales 0 0 0 Purchases 2 2 4 Non-current receivables 7 7 7 Current receivables 0 0 3 Current liabilities 3 1 3 Accounting policies The interim report was prepared in accordance with the IAS 34 standard Interim Financial Reporting and the accounting policies presented in M-real Annual Report 2006. Taxes include taxes corresponding to the result for the period under review. New and changed standards IFRS 7 Financial instruments: Disclosures and a complementary amendment to IAS 1 Presentation of Financial Statements - Capital Disclosures, effective for annual periods beginning on or after 1 January 2007. IFRS 7 introduces new disclosure to improve the information about the financial instruments in the notes to the financial statements, but have no effect on classification or valuation of the financial instruments. Calculation of key ratios Return on equity (%) = (Profit from continuing operations before tax - direct taxes) ./. (Total equity (average)) Return on capital = (Profit from continuing operations before employed (%) tax + interest expenses, net exchange gains/losses and other financial expenses) ./. (Total assets - non-interest-bearing liabilities (average)) Equity ratio (%) = (Total equity) ./. (Total assets - advance payments received) Gearing ratio (%) = (Interest-bearing liabilities - liquid funds - interest-bearing receivables) ./. (Total equity) Earnings per share = (Profit attributable to shareholders of parent company) ./. (Adjusted number of shares (average)) Shareholders' equity per = (Equity attributable to shareholders of share parent company) ./. (Adjusted number of shares at end of review period) Quarterly information Sales and result Q1-Q2 Q1-Q2 by segment, MEUR Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 2007 2006 2006 Consumer Packaging 243 235 241 236 237 478 494 971 Publishing 208 212 220 226 216 420 441 887 Commercial Printing 339 366 369 361 380 705 774 1,504 Office Papers 183 202 189 181 174 385 357 727 Map Merchant Group 349 379 377 342 354 728 719 1,438 Internal sales and other operations 38 38 42 21 17 76 34 97 Sales total 1,360 1,432 1,438 1,367 1,378 2,792 2,819 5,624 Consumer Packaging 8 21 0 17 2 29 26 43 Publishing -7 3 3 14 2 -4 13 30 Commercial Printing -5 -17 -179 -10 -51 -22 -53 -242 Office Papers 1 -22 -4 -1 -17 -21 -13 -18 Map Merchant Group 6 7 -59 3 7 13 14 -42 Other operations -12 112 -7 -8 -18 100 -27 -42 Operating result -9 104 -246 15 -75 95 -40 -271 % of sales -0.7 7.3 -17.1 1.1 -5.4 3.4 -1.4 -4.8 Share of results in associated companies -1 0 0 1 0 -1 -1 0 Exchange gains and losses 2 -5 -4 -1 -3 -3 5 0 Other financial income and expenses -34 -41 -41 -37 -33 -75 -59 -137 Result from continuing operations before tax -42 58 -291 -22 -111 16 -95 -408 Income taxes -7 -4 25 -11 8 -11 -5 9 Result for the period from continuing operations -49 54 -266 -33 -103 5 -100 -399 Result for period from discontinued operations 0 0 0 0 0 0 0 0 Result for the period -49 54 -266 -33 -103 5 -100 -399 Minority interest 0 0 1 2 1 0 0 3 Financial result attributable to shareholders of parent company -49 54 -265 -31 -102 5 -100 -396 Earnings per share, EUR -0.15 0.16 -0.81 -0.10 -0.31 0.01 -0.30 -1.21 Non-recurring Q1-Q2/ Q1-Q2/ items, MEUR Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 2007 2006 2006 Consumer Packaging -7 0 -4 0 0 -7 0 -4 Publishing -3 0 0 0 0 -3 0 0 Commercial Printing 1 -14 -173 -2 -41 -13 -41 -216 Office Papers 0 -30 -15 0 -10 -30 -10 -25 Map Merchant Group 0 -3 -69 0 0 -3 0 -69 Other operations -4 120 1 0 -3 116 -3 -2 Total of non-recurring items in operating result -13 73 -260 -2 -54 60 -54 -316 Non-recurring items for financial items 0 0 0 0 0 0 0 0 Non-recurring items total -13 73 -260 -2 -54 60 -54 -316 Operating result excl. non-recurring items 4 31 14 17 -21 35 14 45 % of sales 0.3 2.2 1.0 1.2 -1.5 1.3 0.5 -0.8 Result before taxes, excl. non-recurring items -29 -15 -31 -20 -57 -44 -41 -92 % of sales -2.1 -1.0 -2.2 -1.5 -4.1 -1.6 -1.5 -1.6 Result per share, excl. non-recurring items, EUR -0.13 -0.08 -0.04 -0.08 -0.16 -0.21 -0.15 -0.27 Return on equity, excl. non-recurring items, % -8.8 -5.4 -2.6 -5.8 -9.1 -7.2 -4.3 -4.4 Return on capital employed, excl. non- recurring items, % 0.7 3.2 1.5 2.0 -1.2 2.0 1.1 1.4 Return on capital Q1-Q2 Q1-Q2 employed, % Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 2007 2006 2006 Consumer Packaging 4.1 10.9 0.3 7.5 1.3 7.6 6.1 5.1 Publishing -2.5 1.3 1.4 5.3 0.9 -0.6 2.5 3.0 Commercial Printing -1.6 -6.3 -63.3 -3.2 -16.2 -4.0 -8.6 -21.7 Office Papers 0.6 -12.0 -1.9 -0.2 -9.0 -5.7 -3.4 -2.3 Map Merchant Group 8.9 11.8 -82.8 4.9 8.2 10.3 8.5 -14.2 Total -0.5 9.6 -20.3 1.8 -5.6 4.6 -1.1 -5.2 Capital employed, MEUR Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 Q1/06 Consumer Packaging 741 777 809 914 907 917 Publishing 995 1,020 1,069 1,091 1,094 1,124 Commercial Printing 1,047 1,057 1,040 1,208 1,243 1,273 Office Papers 665 669 722 742 746 754 Map Merchant Group 276 264 257 313 318 323 Other equity 604 583 797 609 578 514 Total 4,328 4,371 4,694 4,877 4,886 4,904 The capital employed for a segment included its assets: goodwill, other intangible goods, tangible assets, biological assets, investments in associates, inventories, accounts receivables, prepayments and accrued income (excluding interest and taxes), less the segment's liabilities (accounts payable, advance payments, accruals and deferred income (excluding interest and taxes). +------------------------------------------------+ | Personnel, average | Q1-Q2 | Q1-Q2 | | | | 2007 | 2006 | 2006 | |---------------------+--------+--------+--------| | Consumer Packaging | 1,556 | 2,629 | 2,573 | |---------------------+--------+--------+--------| | Publishing | 1,343 | 1,468 | 1,437 | |---------------------+--------+--------+--------| | Commercial Printing | 3,917 | 4,620 | 4,425 | |---------------------+--------+--------+--------| | Office Papers | 1,710 | 1,847 | 1,822 | |---------------------+--------+--------+--------| | Map Merchant Group | 2,414 | 2,506 | 2,481 | |---------------------+--------+--------+--------| | Other operations | 2,670 | 2,137 | 2,146 | |---------------------+--------+--------+--------| | Total | 13,610 | 15,207 | 14,884 | +------------------------------------------------+ Q1-Q2 Q1-Q2 Deliveries, 1,000 t Q2/07 Q1/07 Q4/06 Q3/06 Q2/06 2007 2006 2006 Consumer Packaging 313 302 288 285 284 615 588 1,161 Publishing 302 303 313 320 307 605 624 1,258 Commercial Printing 422 454 464 453 481 876 978 1,895 Office Papers 241 272 264 258 251 513 517 1,039 Paper segments, total 965 1,029 1,041 1,031 1,040 1,994 2,120 4,192 Map Merchant Group 339 372 367 347 354 711 717 1,431 +------------------------------------------------------------------------------+ |Production, | | | | | | Q1-Q2| Q1-Q2| | |1,000 t |Q2/07 |Q1/07 |Q4/06 |Q3/06 |Q2/06 | 2007| 2006| 2006| |--------------+-------+-------+-------+-------+-------+-------+-------+-------| |Consumer | | | | | | | | | |Packaging | 302| 311| 279| 273| 270| 613| 569| 1,121| |--------------+-------+-------+-------+-------+-------+-------+-------+-------| |Publishing | 287| 282| 283| 307| 270| 569| 577| 1,167| |--------------+-------+-------+-------+-------+-------+-------+-------+-------| |Commercial | | | | | | | | | |Printing | 448| 457| 464| 456| 494| 905| 1,003| 1,923| |--------------+-------+-------+-------+-------+-------+-------+-------+-------| |Office Papers | 257| 280| 253| 259| 252| 537| 516| 1,028| |--------------+-------+-------+-------+-------+-------+-------+-------+-------| |Paper mills, | | | | | | | | | |total | 992| 1,019| 1,000| 1,023| 1,016| 2,011| 2,096| 4,119| |--------------+-------+-------+-------+-------+-------+-------+-------+-------| |Metsä-Botnia | | | | | | | | | |pulp 1) | 200| 203| 255| 243| 234| 403| 485| 983| |--------------+-------+-------+-------+-------+-------+-------+-------+-------| |M-real pulp | 398| 426| 449| 443| 422| 824| 862| 1,754| +------------------------------------------------------------------------------+ 1) corresponds to M-real's share in Metsä-Botnia (39 % until Q4/06, 30 % as of Q1/07).
M-real s operating result excluding non-recurring itemms in the second quarter was EUR 4 million
| Source: Metsä Board Oyj