M-real Corporation Stock Exchange Release 6.2.2008 According to IFRS standards Map Merchant Group has been treated as discontinued operations. In the income statement Map has been shown on the line Result from discontinued operations. Comparable figures from continuing operations have been announced in the release of 17 December 2007. Result for 2007 Sales were EUR 4,440 million (2006: 4,604). Sales declined by 3.6 per cent compared to the previous year due to capacity closures and sales of the carton plants. * Operating profit excluding non-recurring items was EUR 49 million (18). Operating profit including non-recurring items was EUR -120 million (-229). * Result before taxes from continuing operations, excluding non-recurring items, was EUR -104 million (-104). Result before taxes from continuing operations, including non-recurring items, was EUR -273 million (-351). Result for the fourth quarter of 2007 * Sales were EUR 1,085 million (Q3/07: 1,102). Sales declined 2 per cent compared to the previous quarter. * Operating profit excluding non-recurring items was EUR -6 million (36). Operating profit including non-recurring items was EUR -245 million (43). * Result before taxes from continuing operations, excluding non-recurring items, EUR -49 million (-3). Result before taxes from continuing operations, including non-recurring items, was EUR -288 million (4). Events during the fourth quarter * The wood supply situation remained difficult due to a second consecutive exceptionally mild winter. Nevertheless, so far it has been possible to ensure the supply of wood to mills without significant disruptions. If the situation does not improve, production stoppages cannot be avoided and risk for increases in the price of pulpwood will grow. * The new programme to improve profits and reduce complexity was announced in November. M-real aims to achieve an improvement of EUR 100 million in total annual profits by the end of 2009. Events after the period * M-real agreed in the beginning of February to sell its New Thames office paper mill located in Kemsley, UK, to DS Smith Plc. The debt free sales price was about EUR 80 million. * Including the sale of the New Thames mill M-real targets over the next 12 months period asset sales of a minimum EUR 200 million."In the future, M-real is a smaller-sized company but it will be more profitable with even a stronger packaging business and a more focused paper business than today. By simplifying business concepts and ways of working we will reduce costs and release employed capital." Mikko Helander, CEO, M-real Corporation Key figures 2007 2006 Q4/07 Q3/07 Q2/07 Q1/07 2005 Sales, MEUR 4,440 4,604 1,085 1,102 1,096 1,157 4,239 EBITDA, MEUR 444 272 70 116 66 193 413 excl. non-recurring items, MEUR 366 378 78 111 77 101 358 Operating profit, MEUR -120 -229 -245 43 -15 97 18 excl. non-recurring items, MEUR 49 18 -6 36 -2 21 -18 Result before taxes from continuing operations, MEUR -273 -351 -288 4 -44 55 -114 from excl. non-recurring items, MEUR -104 -104 -49 -3 -31 -21 -146 Result for the period from continuing operations, MEUR -250 -340 -249 -5 -48 52 -81 from discontinued operations, MEUR 55 -59 57 -3 -1 2 1 Result for the period -195 -399 -192 -8 -49 54 -80 Result per share .. from continuing operations, EUR -0.76 -1.03 -0.75 -0.02 -0.15 0.16 -0.25 .. from discontinued operations, EUR 0.17 -0.18 0.17 0.00 0.00 0.00 0.00 Result per share, total -0.59 -1.21 -0.58 -0.02 -0.15 0.16 -0.25 Return on equity, % -14.0 -16.8 -53.0 -2.3 -11.2 9.9 -4.2 excl. non-recurring items, % -5.9 -5.3 -0.4 -0.9 -2.4 -7.3 -5.7 Return on capital employed, % -2.6 -4.7 -24.4 4.4 -1.1 9.7 0.9 excl. non-recurring items, % 1.4 0.9 -0.3 3.7 0.2 2.5 0.2 Equity ratio at end of period, % 32.1 30.9 32.1 32.7 32.8 32.9 36.6 Gearing ratio at end of period, % 112 126 112 117 117 114 95 Interest-bearing net liabilities 1,867 2,403 1,867 2,187 2,192 2,189 2,205 Gross investments, MEUR 259 428 81 66 62 50 452 Paper deliveries, 1,000 tonnes 3,949 4,192 980 975 965 1,029 4,046 Paperboard deliveries, 1,000 tonnes 1,203 1,161 291 297 313 285 1,006 Personnel at end of period 9,508 14,125 9,508 12,449 13,302 14,509 15,154 Dividend proposed by the Board of Directors EUR/share 0.06 0.06 0.12 EBITDA = Earnings before interest, taxes, depreciation and amortization Result for 2007 compared to 2006 M-real's sales in 2007 totalled EUR 4,440 million (2006: 4,604). Comparable sales decreased by 0.5 per cent. The operating result excluding non-recurring items was EUR 49 million (18). The operating result including non-recurring items was EUR -120 million (-229). The result before taxes from continuing operations excluding non-recurring items amounted to EUR -104 million (-104). The result before taxes from continuing operations including non-recurring items was EUR -273 million (-351). The operating result was EUR -120 million (-229). The net non-recurring items in the 2007 operating result totalled EUR -169 million (-247) and the most significant items are: * Net impairment loss of EUR 182 million during the fourth quarter. The sum consists of an impairment loss of EUR 185 million from the goodwill of the Office Papers business area, and a EUR 3 million reversal of an impairment loss from the fixed assets of the Kyro paper mill in the Consumer Packaging business area in the fourth quarter * Capital gain of EUR 135 million on the sale of Metsä-Botnia's shares in the first quarter * Cost provision and write-downs of fixed assets of EUR 49 million in the Graphic Papers business area connected to the profit improvement programme announced on 13 November 2007 in the fourth quarter * EUR 30 million cost provision in the Office Papers business area for the completion of the closure of the Wifsta mill in the first quarter * Impairment loss of EUR 16 million due to the valuation of assets held for sale at the expected selling price in compliance with IFRS 5 in the first quarter * EUR 14 million cost provision in the Graphic Papers business area for the completion of the closure of the Sittingbourne mill during the first quarter and the reduction of this cost reserve by EUR 7 million in the third quarter * EUR 13 million reduction in cost provision for the closure of the Wifsta mill in Office Paper's business area in the fourth quarter * Cost provision and write-downs of fixed assets of EUR 12 million in the Consumer Packaging business area connected to the profit improvement programme announced on 13 November 2007 in the fourth quarter * Cost provisions and write-down of fixed assets of EUR 11 million connected to the profit improvement programme for domestic operations in the second quarter * Cost provision of EUR 8 million in the Office Papers business area connected to the profit improvement programme announced on 13 November 2007 in the fourth quarter In addition to the items recognised in the operating profit, in the fourth quarter an estimated capital gain of EUR 77 million was recognised in the result from discontinued operations related to the sale of Map Merchant Group. The exact sales price will be defined later. Depending on the final adjustment calculation the sales price may be lowered, at maximum, by EUR 30 million. Lowering of the sales price, if realised, would have a negative effect on the result for the discontinued operations in 2008. Finalising the transaction will, however, have a positive effect on M-real's cash flow in 2008. In 2006, the net non-recurring items stood at EUR -247 million. Non-recurring income was EUR 3 million and non-recurring costs were EUR 250 million. The most significant non-recurring costs were: * Impairment loss of EUR 113 million in the fourth quarter * Write-down of fixed assets and cost provision of EUR 60 million for the closing of the Sittingbourne mill in the fourth quarter. * Write-down of EUR 15 million on the Wifsta mill's fixed assets in the fourth quarter * Loss of EUR 37 million from the disposal of the Pont Sainte Maxence mill, of which EUR 35 million was booked in the second quarter and EUR 2 million in the third quarter * EUR 24 million for reduction in personnel at the Stockstadt, Hallein and Alizay mills, of which EUR 19 million was booked in the second quarter and EUR 5 million in the fourth quarter Compared with the previous year, the operating result excluding non-recurring items was improved by cost saving measures and the 9 per cent increase in the price of uncoated fine paper. In addition, the Consumer Packaging business area clearly improved its profitability mainly due to higher delivery volumes. Operating profit was reduced by the weaker U.S. dollar, which was 9 per cent lower on average, the sharply increased price of pulpwood and the lower average selling price of coated magazine paper. The volume of paper deliveries in 2007 totalled 3,949,000 tonnes (2006: 4,192,000). Production was curtailed by 201,000 tonnes in linewith demand (238,000). Paperboard deliveries amounted to 1,201,000 tonnes (1,161,000) and production curtailments to 66,000 tonnes (60,000). Financing income and expenses totalled EUR -150 million (-122). Foreign exchange gains and losses from accounts receivable, accounts payable, financial income and expenses and the valuation of currency hedging were EUR -3 million (-1). Net interest and other financing expenses stood at EUR -147 million (-121). Other financing expenses include EUR 6 million (6) in gains from the unwinding of interest rate hedging and gains from the valuation of interest rate hedging. The result from continuing operations before taxes was EUR -273 million (-351). The result from continuing operations before taxes, excluding non-recurring items, totalled EUR -104 million (-104). The positive effect of income taxes, including the change in deferred tax liabilities, was EUR 23 million (11). Earnings per share were EUR -0.59 (-1.21). Excluding non-recurring items, earnings per share from continuing operations were EUR -0.32 (-0.29). Return on equity was -14.0 per cent (-16.8), and -5.9 per cent (-5.3) excluding non-recurring items. The return on capital employed was -2.6 per cent (-4.7), and 1.4 per cent (0.9) excluding non-recurring items. Result for October-December compared with the previous quarter Sales in the fourth quarter were EUR 1,085 million (Q3/07: 1,102). Sales decreased by 1 per cent compared with the previous quarter. The operating profit was EUR -245 million (43). Operating profit excluding non-recurring items was EUR -6 million (36). Result from continuing operations before taxes was EUR -49 million (-3). Result before taxes including non-recurring items was EUR -288 million (4). Net non-recurring items recognised in operating profit during October-December stood at EUR -239 million and the most significant items were: * A net impairment loss of EUR 182 million comprising an impairment loss of EUR 185 million from the goodwill of the Office Papers business area, and a EUR 3 million reversal of an impairment loss on the fixed assets of the Kyro paper mill in the Consumer Packaging business area * A capital gain of EUR 13 million from the sale of assets taken out of use in the Office Papers business area * Cost reserves and write-downs of fixed assets of EUR 49 million in the Graphic Papers business area connected to the profit improvement programme announced on 13 November 2007 * Cost reserves and write-downs of fixed assets of EUR 12 million in the Consumer Packaging business area connected to the profit improvement programme announced on 13 November 2007 * Cost reserves of EUR 8 million in the Office Papers business area connected to the profit improvement programme announced on 13 November 2007. In addition to the items recognised in the operating profit, in the fourth quarter an estimated capital gain of EUR 77 million was recognised as a non-recurring item from discontinued operations from the sale of Map Merchant. A EUR 7 million reduction in the cost reserve made for the closing costs of the Sittingbourne mill was included as a positive non-recurring item in operating profit for the previous quarter. The operating result excluding non-recurring items was weaker compared to the previous quarter due to Christmas stoppages, a further increase in the price of wood, temporary disturbances of pulp production, and the weaker U.S. dollar and the British pound. The volume of paper deliveries in October-December totalled 980,000 tonnes (975,000). Production was curtailed by 50,000 tonnes in line with demand (60,000). Paperboard deliveries amounted to 289,000 tonnes (297,000) and production curtailments to 18,000 tonnes (0). Financing income and expenses in the review period totalled EUR -40 million (-41). Increase in the net interest and other financing expenses resulted from a raised market interest rate and the downgrading of credit rating and, in addition, the positive exchange rate differences compared to the review period. Foreign exchange gains and losses from accounts receivable, accounts payable, financial income and expenses and the valuation of currency hedging were EUR 2 million (-2). Net interest and other financing expenses stood at EUR -42 million (-39). Other financing expenses include gains from the unwinding of interest rate hedging and loss from the valuation of interest rate EUR -3 million (6). The result from continuing operations before taxes was EUR -288 million (4). The result from continuing operations before taxes, excluding non-recurring items, totalled EUR -49 million (-3). Income taxes, including the change in deferred tax liabilities, were EUR 39 million (-9). Earnings per share were EUR -0.58 (-0.02). Excluding non-recurring items, earnings per share from continuing operations were EUR -0.07 (-0.04). Return on equity was -53.0 per cent (-2.3), and -0.4 per cent (-0.9) excluding non-recurring items. The return on capital employed was -24.4 per cent (4.4), and -0.3 per cent (3.7) excluding non-recurring items. Personnel On 31 December, 2007 the company had 9,508 employees (31 December 2006: 14,125), of which 3,390 (4,220) worked in Finland. Divestments accounted for a reduction of 3,364 employees, of which Map Merchant accounted for 2,400 employees. In 2007, the personnel figures include 30 per cent of Metsä-Botnia's personnel and 2006, 39 per cent. Investment Gross capital expenditure in 2007 totalled EUR 259 million (2006: 428). This includes a EUR 122 million share of Metsä-Botnia's capital expenditure (222), 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 in Uruguay has started up successfully in November 2007. The mill is one of the world's most cost-efficient chemical pulp mills. Structural change As part of the restructuring programme that was concluded in November, M-real sold assets worth about EUR 700 million, and the EUR 500 million target set in the programme was clearly exceeded. In January 2007, M-real sold nine per cent of Metsä-Botnia's shares to Metsäliitto Cooperative for EUR 240 million, posting a gain of EUR 135 million. The Sittingbourne fine paper mill in Britain was closed at the end of January and fine paper machines 6 and 7 in Gohrsmühle were shut down at the end of February. The Wifsta fine paper mill in Sweden was closed down in July. A total of about one-third of the production of the closed down machines has been transferred to M real's other machines. EUR 76 million relating to these closures was recognised as an expense in the 2006 financial statements, and a net cost provision of EUR 20 million was booked in 2007 to complete the closures. The impact of the closures on cash flow is about EUR -55 million, of which EUR -40 million is realised in 2008-2015. The cash flow effect of the sale of the New Thames mill announced on 1 February, 2008 has not been taken into account, and that will decrease the future cash costs resulting from the closure of the Sittingbourne mill by about EUR 35 million. The statutory negotiations related to the restructuring programme for operations in Finland were completed during the summer. 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 some 100 person work years. The actions decided on and already implemented will achieve annual cost improvements of about EUR 40 million in the Finnish operations with full effect from the beginning of 2009. Non-recurring costs of about EUR 11 million resulting from the programme were recognised during the second quarter. The sum includes a write-down of about EUR 2 million on the fixed assets. Tako board mill's board machine line 2, with an annual capacity of 70,000 tonnes, was closed in July. Most of the production has been transferred to other machines in the Consumer Packaging business area. At the turn of May and June, respectively, M-real sold Tako Carton Plant Ltd to the Finnish Pyroll Oy and M-real Petöfi Nyomda Kft to the German STI Group, and in December M-real sold M-real Meulemans S.A.'s carton plant to the French Autajon Group. The transactions have a slight negative impact on operating profit excluding non-recurring items during the current year. As a result of these divestments, annual net sales decreased by about EUR 80 million, and the number of personnel fell by about 820. In July, M-real agreed on the sale of paper merchant Map Merchant Holdings BV and its subsidiaries to the French Antalis International SAS. Approval from the competition authorities was obtained in October, and the transaction was carried out and entered into force on 31 October 2007. The total value of the transaction including debt and pension liabilities is EUR 382 million. In July, M-real exercised its contractual purchase option and bought the Kyröskoski gas combi power plant and the land on which the Kyröskoski mills are located for about EUR 13 million. In October, M-real announced agreement on the sale of its Zanders Reflex mill manufacturing fine paper located in Düren, Germany, to the French Arjowiggins Group. M-real will book a loss of approximately EUR 20 million from the transaction. The transaction will not have any material impact on M-real's operating profit excluding non-recurring items. The transaction is expected to be completed during the first half of 2008. The transaction is subject to approval by the competition authorities. On 13 November 2007, M-real announced the launch of a new profit improvement and business concept simplification programme. The new programme includes planned closures of the BCTMP mill at Lielahti and paper machine 2 at Kangas manufacturing coated magazine paper, the combination of the Publishing and Consumer Printing business areas into the new Graphic Papers business area, and the streamlining of the coated magazine paper operations and the sales and marketing organisation. As part of the programme, M-real announced it is also prepared to take other measures, such as capacity cuts, if they are required by changes in the business environment. The aggregate annual profit improvement target of the programme is EUR 100 million by the end of 2009. Financing At the end of 2007, the equity ratio stood at 32.1 per cent (30.9 on 31 December 2006), and gearing at 112 per cent (126). In some of M-real's financing arrangements, a limit of 120 per cent has been set for gearing and a limit of 30 per cent for the equity ratio. At the end of the year, gearing calculated in the manner defined in the financing agreements was approximately 95 per cent (111) and the equity ratio about 37 per cent (36). Interest-bearing net debt stood at EUR 1,867 million at the end of the year (2,403). Foreign-currency-denominated loans accounted for 11 per cent of long-term loans. Of these, 88 per cent were variable rate loans, and the rest were fixed-rate loans. At the end of 2007, the average interest rate on loans was 7.4 per cent and the average maturity of long-term loans was 3.4 years. At the end of the year, the interest rate maturity of the loans was 5.8 months. During the year, the interest rate maturity has varied between five and eight months. Cash flows from operating activities amounted to EUR 325 million (367). Working capital decreased by EUR 42 million (EUR 57 million). At the end of the year under review, an average of five months of net foreign exchange exposure was hedged. The level of hedging has varied between five and seven months during the period. Approximately 99 per cent of non-euro-denominated equity was hedged at the end of the period under review. Liquidity is at a good level. At the end of the period under review, liquidity was EUR 1,233 million, of which EUR 853 million consisted of binding long-term credit commitments and EUR 380 million of liquid assets and investments. To meet its short-term financing needs, the company also had at its disposal non-binding domestic and foreign commercial paper programmes and credit facilities amounting to about EUR 575 million. In March, Moody's Investors Service downgraded M-real's credit rating from B2 to B3. Moody's revised M-real's rating outlook to stable from negative. Standard & Poor's downgraded M-real's credit rating from B+ to B, and maintained the negative rating outlook. In October, Standard & Poor's downgraded M-real's credit rating from B to B-. Standard and Poor's revised M-real's rating outlook to stable from negative. Shares In 2007, the highest price of M-real's B share on the OMX Nordic Stock Exchange Helsinki was EUR 5.94, the lowest price was EUR 2.96, and the average price was EUR 4.56. At the end of the year, the price of the B share was EUR 3.25. The average price in 2006 was EUR 4.41. The closing price for 2006 was EUR 4.79. During the year under review, the trading volume of the B share was EUR 2,349 million, or 175 per cent of the share capital. The market value of the A and B shares totalled EUR 1,070 million at the end of the year. At the end of 2007, Metsäliitto Cooperative owned 38.6 per cent of the shares, and the voting rights conferred by these shares was 60.5 per cent. Foreign shareholders owned about 41 per cent of the shares. On 13 March 2007, the Annual General Meeting authorised the Board of Directors, for an undefined term, to decide on one or more equity issues and/or one or more issues of convertible bonds, pursuant to chapter 10 of the Limited Liability Companies Act, in such a way that in the equity issue or issue of convertible bonds, a maximum of 58,365,212 new M-real Corporation 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 includes the right to deviate from the shareholders' pre-emptive right to subscribe for new shares and/or convertible bonds and to decide on subscription prices and other terms and conditions. It is possible to deviate from the shareholders' pre-emptive subscription rights providing that there is a significant financial reason for the company to do so, such as strengthening the company's balance sheet, enabling business restructuring or developing the company's operations in another way. Consideration of the result for the financial year and dividend The distributable funds of the parent company as at 31 December 2007 were EUR 251.100.872,07 of which the result for the financial year is EUR -49.279.052,47. The Board of Directors has in its meeting on 6 February 2008 decided to propose to the Annual General Meeting, to be held on 13 March 2008, that a dividend of EUR 0.06 per share, EUR 19,7 million total be paid for the financial year 2007. The dividend will be paid to shareholders who on the record date, 18 March 2008, have been entered in the company's Shareholders Register kept by the Finnish Central Securities Depository Ltd. The Board of Directors proposes to the Annual General Meeting that the dividend be paid on 27 March 2008. For 2006, paid divided per share was EUR 0.06, in total EUR 19,7 million. Board of Directors and Auditors The Annual General Meeting in 2007 elected the following persons to M-real's Board of Directors: Mr Heikki Asunmaa,Counsellor of Forest Economy; Mr Kim Gran, President of Nokian Tyres plc; Mr Kari Jordan, President and CEO of Metsäliitto Group; Mr Erkki Karmila, LL.M.; Mr Runar Lillandt, Counsellor of Agriculture; Mr Juha Niemelä, Honorary Counsellor; Mr Antti Tanskanen, Minister; and Mr Arimo Uusitalo, Counsellor of Agriculture. The term of office of Board members continues until the end of the next Annual General Meeting. At its organising meeting, the Board of Directors elected Mr Kari Jordan as Chairman and Mr Arimo Uusitalo as Vice Chairman. Mr Göran Lindell, APA, and PricewaterhouseCoopers Oy, a firm of authorised public accountants, were elected as M-real's auditors, with Mr Johan Kronberg, APA, as principal auditor and Mr Jouko Malinen, APA, and Mr Markku Marjomaa, APA, as deputy auditors. The term of office of auditors and deputy auditors continues until the end of the next Annual General Meeting. Events after the review period On 6 February 2008 M-real announced an additional divestment target of about EUR 200, which will be pursued during next 12 months. The target includes the sale of the New Thames mill announced in the beginning of February 2008. In February, 2008 M-real made an agreement to sell its New Thames office paper mill located in Kemsley, UK, to DS Smith Plc. The debt free sales price was GBP 60 million (about EUR 80 million). Taking the uncovered pension liabilities of M-real's UK mill operations into consideration, it is estimated that the transaction will have a positive impact of about EUR 60 million on cash flow, of which about EUR 40 million will arise when the transaction is completed and about EUR 20 million in the following 12 months. In addition, M-real will be freed from about EUR 35 million pension liabilities and other closure costs previously provided for the period 2008-2015 related to the closure of the Sittingbourne mill. No significant capital gain or loss is expected to arise from the transaction. The impact of the pension liabilities and the final result and cash-flow effect of the transaction will be clear by the end of the first half of 2008. The transaction has no significant impact on M-real's operating profit excluding non-recurring items. The sale will be booked in the result for the first quarter of 2008. The transaction is subject to approval by the competition authorities. Wood supply Russian export duties and the EU's new targets for the use of bioenergy will have a crucial impact on the development of the wood market. During the last quarter, wood supply remained tight due to the second consecutive unusually mild winter. Nevertheless, so far it has been possible to ensure the supply of wood to mills without significant disruptions. If the situation does not improve, production stoppages cannot be avoided and risk for increases in the price of pulpwood will grow. Near-term outlook During the first quarter of 2008, seasonal demand for M-real's main products is expected to improve somewhat. At the beginning of the year, average operating rates are very high. Measures are under way to increase prices of coated magazine paper and folding boxboard. Increases in fine paper prices are also being sought actively. The market balance will improve due to the capacity closures already carried out and additional closures to be implemented in 2008. There is a great need to boost the product prices of all paper grades. M-real's target is to cover most of the cost increases by own profit improvement actions. Costs will remain high or even continue to increase. The largest increases are expected in the costs of wood and energy. In addition to the profit improvement measures already announced, new measures will be started to cover the increasing number of rising cost items. M-real's share of the production of Metsä-Botnia''s pulp mill in Uruguay will be used in M-real's own fine paper mills in Central Europe. The first paper production runs using pulp imported from Uruguay were carried out in January. The use of pulp from Uruguay instead of externally purchased pulp will improve M-real's profitability significantly. The implementation of the profit improvement and business concept simplification programme announced in November 2007, the fourth stage in M-real's strategy review, is progressing according to plan. The strategy review continues. The operating result excluding non-recurring items in the first quarter of 2008 is expected to be better than in the last quarter of 2007 but to fall short of the operating result in the first quarter of 2007 due to further increased wood costs. Near-term business risks If the uncertainty in the US economy continues for a longer period, it could spread worldwide and affect the operational preconditions of paper and paperboard industry. Because the forward-looking estimates and statements of this financial statements release are based on current plans and estimates, they contain risks and other uncertain factors which may lead the results to differ from the statements concerning them. In the short term, M-real's result will be influenced in particular by the price of, and demand for, finished products, the availability and price of wood, other raw material costs, the price of energy, and the exchange rate of the U.S. dollar. More information about longer-term risk factors can be found on page 25 of M-real's 2006 Annual Report. M-REAL CORPORATION Further information: Seppo Parvi, CFO, tel. +358 10 465 4321 Anne-Mari Achrén, Communications, tel. +358 10 465 4541 Consumer Packaging +-------------------------------------------------------------------+ | | 2007 | 2006 | 2007 | 2007 | 2007 | 2007 | 2006 | |----------------+-------+-------+------+------+------+------+------| | | | | Q4 | Q3 | Q2 | Q1 | Q4 | |----------------+-------+-------+------+------+------+------+------| | Sales, MEUR | 934 | 971 | 225 | 231 | 243 | 235 | 241 | |----------------+-------+-------+------+------+------+------+------| | EBITDA, MEUR | 136 | 131 | 24 | 45 | 28 | 39 | 25 | |----------------+-------+-------+------+------+------+------+------| | excl. | | | | | | | | | non-recurring | | | | | | | | | items | 142 | 131 | 25 | 45 | 33 | 39 | 25 | |----------------+-------+-------+------+------+------+------+------| | Operating | | | | | | | | | profit, MEUR | 56 | 43 | 0 | 27 | 8 | 21 | 0 | |----------------+-------+-------+------+------+------+------+------| | excl. | | | | | | | | | non-recurring | | | | | | | | | items | 71 | 47 | 8 | 27 | 15 | 21 | 4 | |----------------+-------+-------+------+------+------+------+------| | Return on | | | | | | | | | capital | | | | | | | | | employed, % | 7.5 | 5.1 | 0.1 | 15.3 | 4.1 | 10.9 | 0.3 | |----------------+-------+-------+------+------+------+------+------| | excl. | | | | | | | | | non-recurring | | | | | | | | | items, % | 9.5 | 5.6 | 4.3 | 15.3 | 7.9 | 10.9 | 2.1 | |----------------+-------+-------+------+------+------+------+------| | Deliveries, | | | | | | | | | 1,000 t | 1,203 | 1,161 | 291 | 297 | 313 | 302 | 288 | |----------------+-------+-------+------+------+------+------+------| | Board | | | | | | | | | production, | | | | | | | | | 1,000 t | 1,210 | 1,121 | 294 | 303 | 302 | 311 | 279 | |-------------------------------------------------------------------| | EBITDA = Earnings before interest, taxes, depreciation and | | amortization | +-------------------------------------------------------------------+ The year 2007 compared with the previous year In 2007, the operating profit excluding non-recurring items of the Consumer Packaging business area was EUR 71 million (2006: 47). Compared with the previous year, profitability was improved mainly by higher delivery volumes and cost saving measures and weakened by higher wood costs and the weaker U.S. dollar. The previous year's result was weakened by the investment stoppage at the Simpele mill. In addition, net non-recurring items of EUR -15 million were recognised in operating profit in 2007, of which EUR 5 million were cost provisions and EUR 13 million write-downs of fixed assets connected to profit improvement programmes, as well as a EUR 3 million reversal of an impairment loss. Deliveries by Western European folding boxboard producers increased by 5 per cent year-on-year. M-real's deliveries increased by 6 per cent compared to the previous year. The euro-denominated selling price of folding boxboard was slightly lower than in the previous year due to the weaker U.S. dollar. The delivery volume of linerboard was 6 per cent higher than in the previous year. The average euro-denominated price remained at the same level as in the previous year. Both the delivery volume and selling price of wallpaper base paper increased clearly from the previous year. Starting from the beginning of 2007, the sold carton plants in Finland, Hungary and Belgium have been reported under Other Operations. Business area's comparable delivery volume increased by 6 per cent compared to 2006. The fourth quarter compared with the previous quarter Consumer Packaging's operating profit excluding non-recurring items decreased from the previous quarter and stood at EUR 8 million (Q3/07: 27). The result was weakened by Christmas stoppages, lower delivery volumes and wood costs that continued to rise. In addition, net non-recurring items of EUR -8 million were recognised in the operating profit for the fourth quarter, consisting of EUR 11 million in write-downs of fixed assets connected to the profit improvement programme announced on 13 November 2007 and a positive item of a EUR 3 million reversal of an impairment loss. Deliveries by Western European folding boxboard producers decreased by 2 per cent compared with the previous quarter. M-real's folding boxboard deliveries decreased by 7 per cent. The delivery volume of linerboard was 3 per cent higher than in the previous quarter. The euro-denominated selling price decreased slightly due to the weaker U.S. dollar. Graphic Papers +--------------------------------------------------------------------+ | | 2007| 2006| 2007| 2007| 2007|2007| 2006| |------------------------+------+------+------+-----+-----+----+-----| | | | | Q4| Q3| Q2| Q1| Q4| |------------------------+------+------+------+-----+-----+----+-----| |Sales, MEUR | 2,268| 2,390| 569| 574| 548| 577| 588| |------------------------+------+------+------+-----+-----+----+-----| |EBITDA, MEUR | 120| 93| 10| 52| 31| 27| -10| |------------------------+------+------+------+-----+-----+----+-----| | excl. non-recurring | | | | | | | | |items | 142| 187| 20| 48| 33| 41| 41| |------------------------+------+------+------+-----+-----+----+-----| |Operating profit, MEUR | -81| -212| -71| 16| -12| -14| -176| |------------------------+------+------+------+-----+-----+----+-----| | excl. non-recurring | | | | | | | | |items | -23| 4| -22| 8| -9| 0| -3| |------------------------+------+------+------+-----+-----+----+-----| |Return on capital | | | | | | | | |employed, % | -3.9| -9.5| -14.1| 3.2| -2.1|-2.5|-31.6| |------------------------+------+------+------+-----+-----+----+-----| | excl. non-recurring | | | | | | | | |items, % | -0.9| 0.3| -4.1| 1.7| -1.6| 0.2| -0.3| |------------------------+------+------+------+-----+-----+----+-----| |Deliveries, 1,000 t | 3,002| 3,153| 761| 760| 724| 757| 778| |------------------------+------+------+------+-----+-----+----+-----| |Production, 1,000 t | 2,962| 3,090| 736| 752| 735| 739| 747| |--------------------------------------------------------------------| |EBITDA = Earnings before interest, taxes, depreciation and | |amortization | +--------------------------------------------------------------------+ The year 2007 compared with the previous year In 2007, the operating profit excluding non-recurring items of the Graphic Papers business area was EUR -23 million (2006: 4). The decrease in the price of magazine paper had a negative effect on profitability. In addition, the weaker U.S. dollar and higher wood costs had a negative effect on the profitability of the magazine paper and fine paper businesses. Profitability was boosted by measures carried out to improve efficiency as well as disposals of loss-making operations. In addition, net non-recurring items of EUR -58 million were recognised in operating profit for 2007, comprising EUR 22 million in net cost provisions connected to the closure of the Sittingbourne mill and profit improvement programmes, and EUR 36 million in write-downs of fixed assets. Total deliveries by European producers of coated fine paper increased by 1 per cent in 2007 and total deliveries by European producers of coated magazine paper by 2 per cent compared with the previous year. The fourth quarter compared with the previous quarter Graphic Paper's operating profit excluding non-recurring items was EUR -22 million in the fourth quarter (Q3/07: 8). Operating profit was weakened by slightly lower selling prices of coated fine paper and coated magazine paper, the weaker U.S. dollar, wood costs that continued to rise, and Christmas stoppages. In addition, net non-recurring items of EUR -49 million were recognised in operating profit for the fourth quarter, comprising EUR 10 million in cost provision connected to profit improvement programmes and EUR 39 million in write-downs of fixed assets. Total deliveries by European producers of coated fine paper increased by 3 per cent from the previous quarter, and total deliveries by European producers of coated magazine paper increased by 6 per cent. Total deliveries of M-real's Graphic Papers business area were on par with the previous quarter. Office Papers +---------------------------------------------------------------------+ | | 2007| 2006| 2007| 2007| 2007| 2007| 2006| |---------------+-------+-------+--------+------+------+-------+------| | | | | Q4| Q3| Q2| Q1| Q4| |---------------+-------+-------+--------+------+------+-------+------| |Sales, MEUR | 723| 727| 171| 167| 183| 202| 189| |---------------+-------+-------+--------+------+------+-------+------| |EBITDA, MEUR | 53| 59| 25| 21| 15| -8| 26| |---------------+-------+-------+--------+------+------+-------+------| | excl. | | | | | | | | |non-recurring | | | | | | | | | items | 78| 69| 20| 21| 15| 22| 26| |---------------+-------+-------+--------+------+------+-------+------| |Operating | | | | | | | | |profit, MEUR | -187| -18| -173| 7| 1| -22| -4| |---------------+-------+-------+--------+------+------+-------+------| | excl. | | | | | | | | |non-recurring | | | | | | | | | items | 23| 7| 7| 7| 1| 8| 11| |---------------+-------+-------+--------+------+------+-------+------| |Return on | | | | | | | | |capital | | | | | | | | | employed, % | -29,6| -2,3| -114,8| 4,9| 0,6| -12,0| -1,9| |---------------+-------+-------+--------+------+------+-------+------| | excl. | | | | | | | | |non-recurring | | | | | | | | | items, % | 4,2| 1,1| 5,3| 4,9| 0,6| 5,0| 6,0| |---------------+-------+-------+--------+------+------+-------+------| |Deliveries, | | | | | | | | |1,000 t | 947| 1,039| 219| 215| 241| 272| 264| |---------------+-------+-------+--------+------+------+-------+------| |Production, | | | | | | | | |1,000 t | 973| 1,028| 213| 223| 257| 280| 253| |---------------------------------------------------------------------| |EBITDA = Earnings before interest, taxes, depreciation and | |amortization | +---------------------------------------------------------------------+ The year 2007 compared with the previous year In 2007, the operating profit excluding non-recurring items of the Office Papers business area was EUR 23 million (2006: 7). Profitability was boosted in particular by the increase in the average selling price of about 9 per cent. Increased raw material costs, especially wood costs, had a negative effect on the results. A significant part of the increase in M-real's wood costs affects the Office Papers business area. In addition, net non-recurring items of EUR -210 million were recognised in operating profit for 2007, which comprised EUR 185 million in impairment losses, a EUR 30 million cost provision for the completion of the closure of the Wifsta mill, EUR 8 million in cost provisions connected to profit improvement programmes and reduction of EUR 13 million in the provision for the closure of the Wifsta mill. Demand for uncoated fine paper was weak during the second half of the year. Total deliveries by European fine paper producers in 2007 decreased by 3 per cent year-on-year. The delivery volume of the Office Papers business area decreased by 9 per cent. The figure includes the effect of the closure of the Wifsta mill. The fourth quarter compared with the previous quarter The business area's operating profit excluding non-recurring items was EUR 7 million in the fourth quarter (Q3/07: 7). Operating profit was boosted somewhat by higher delivery volumes and weakened by wood costs which continued to rise. The average selling price was on a par with the previous quarter. In addition, net non-recurring items of EUR -180 million were recognised in operating profit for the fourth quarter, which comprised EUR 185 million in impairment losses, EUR 8 million in cost provisions connected to profit improvement programmes, and a positive item of a EUR 13 million capital gain from the sale of assets taken out of use. Total deliveries by European producers of uncoated fine paper were up 2 per cent. The delivery volume of the Office Papers business area increased by 2 per cent. The financial statements are unaudited. Condensed consolidated income statement MEUR 2007 2006 Change Q4/07 Continuing operations Sales 4,440 4,604 -164 1,085 Other operating income 239 112 127 27 Operating expenses -4,235 -4,444 209 -1,042 Depreciation and impairment losses -564 -501 -63 -315 Operating profit -120 -229 109 -245 % of sales -2,7 -5,0 -22,6 Share of results in associated companies -3 0 -3 -3 Exchange gains and losses -3 -1 -2 2 Other net financial items -147 -121 -26 -42 Result before taxes from continuing operations -273 -351 78 -288 % of sales -6.1 -7.6 -26.5 Income taxes 23 11 12 39 Result for the period from continuing operations -250 -340 90 -249 % of sales -5.6 -7.4 -22.9 Result from discontinued operations 55 -59 114 57 Result for the period -195 -399 204 -192 Attributable to Shareholders of parent company -194 -396 -192 Minority interest -1 -3 0 Earnings per share for result attributable to shareholders of parent company (EUR/share) from continuing operations -0.76 -1.03 -0.75 from discontinued operations 0.17 -0.18 0.17 Total -0.59 -1.21 -0.58 Taxes include taxes corresponding to the result for the period under review. Condensed consolidated balance sheet 31.12. % 31.12. % MEUR 2007 2006 Assets Non-current assets Goodwill 172 3.3 376 6.1 Other intangible assets 38 0.7 62 1.0 Tangible assets 2,820 54.3 3,156 51.1 Biological assets 47 0.9 52 0.8 Shares in associated and other companies 103 2.0 109 1.8 Interest-bearing receivables 27 0.5 34 0.6 Deferred tax receivables 4 0.1 31 0.5 Other non-interest-bearing receivables 14 0.3 18 0.3 3,225 62.1 3,838 62.2 Current assets Inventories 619 11.9 676 11.0 Interest bearing receivables 62 1.2 163 2.6 Non-interest-bearing receivables 908 17.5 1,210 19.6 Cash and cash equivalents 380 7.3 182 2.9 1,969 37.9 2,231 36.1 Assets classified as held for sale 103 1.7 Total assets 5,194 100 6,172 100 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity Equity attributable to shareholders of parent company 1,618 31.2 1,843 29.9 Minority interest 52 1.0 63 1.0 1,670 32.2 1,906 30.9 Non-current liabilities Deferred tax liabilities 215 4.1 284 4.6 Post-employment benefit obligations 159 3.1 199 3.2 Provisions 72 1.4 79 1.3 Other non-interest-bearing liabilities 38 0.7 28 0.5 Interest-bearing liabilities 1,883 36.3 2,182 35.4 2,367 45.6 2,772 45.0 Current liabilities Non-interest-bearing liabilities 704 13.5 865 14.0 Interest-bearing liabilities 453 8.7 599 9.7 1,157 22.2 1,464 23.7 Liabilities relating to assets classified as held for sale 30 0.4 Total liabilities 3,524 67.8 4,266 69.1 Total shareholders' equity and liabilities 5,194 100 6,172 100 Condensed consolidated cash flow statement MEUR 2007 2006 Q4/07 Result for the period -196 -399 -193 Total adjustments 479 709 216 Change in working capital 42 57 74 Cash flow arising from operations 325 367 97 Net financial items -160 -113 -72 Income taxes paid -38 -32 -6 Net cash flow arising from operating activities 127 222 19 Investments in tangible and intangible assets -259 -428 -81 Divestments of assets and other 628 28 396 Net cash flow arising from investing activities 369 -400 315 Share issue, minority interest 6 31 3 Changes in long-term loans and other financial items -282 259 -84 Dividends paid -20 -39 0 Net cash flow arising from financing activities -296 251 -81 Changes in cash and cash equivalents 200 73 253 Cash and cash equivalents at beginning of period 182 112 128 Translation difference in cash and cash equivalents -2 -2 -1 Changes in cash and cash equivalents 200 73 253 Assets held for sale, folding carton plants 0 -1 0 Cash and cash equivalents at end of period 380 182 380 Statement of changes in shareholders' equity Fair value Trans- and Re- Mi- Share lation other tained nority Share pre- dif- re- earn- inter- MEUR capital mium ference serves ings est Total Shareholders' equity 1.1.2006, IFRS 558 667 6 0 1 040 45 2,316 Translation differences -3 -3 Currency flow hedges, recorded in equity 16 16 transferred to income statement's sales 2 2 Interest flow hedges recorded in equity 3 3 Commodity hedges recorded in equity -8 -8 Tax on equity components -3 -3 Net expenses recognised directly in equity -3 10 7 Loss for the period -396 -3 -399 Total recognised income and expenses for the period -3 10 -396 -3 -392 Related party transactions Changes in minority interest Metsä-Botnia restructuring in Uruguay 22 22 Dividends paid -39 -1 -40 Related party transactions -39 21 -18 Shareholders' equity 31.12.2006, IFRS 558 667 3 10 605 63 1,906 Shareholders' equity 1.1.2007, IFRS 558 667 3 10 605 63 1,906 Translation differences -34 -3 -37 Net investment hedge 28 28 Currency flow hedges, recorded in equity 8 8 transferred to income statement's sales -22 -22 Interest flow hedges recorded in equity 0 0 0 transferred income statement's financial items 0 0 0 Commodity hedges recorded in equity 9 9 transferred income statement's purchases 9 9 Tax on equity components -8 -1 -9 Net expenses recognised directly in equity -14 3 -3 -14 Loss for the period -194 -1 -195 Total recognised income and expenses for the period -14 3 -194 -4 -209 Related party transactions Changes in minority interest Sale of Metsä-Botnia shares (9%) -11 Metsä-Botnia restructuring in Uruguay 5 -6 -6 Dividends paid -20 -1 -21 Related party transactions -20 -7 -27 Shareholders' equity 31.12.2007, IFRS 558 667 -11 13 391 52 1,670 Key ratios 2007 2006 Q4/07 Sales, MEUR 4,440 4,604 1,085 EBITDA, MEUR 444 272 70 excl. non-recurring items, MEUR 366 378 78 Operating profit, MEUR -120 -229 -245 excl. non-recurring items, MEUR 49 18 -6 Result from continuing operations before taxes, MEUR -273 -351 -288 excl. non-recurring items, MEUR -104 -104 -49 Result for the period from continuing operations, MEUR -250 -340 -249 Earnings per share, EUR -0.59 -1.21 -0.58 excl. non-recurring items, EUR -0.76 -1.03 -0.75 from discontinued operations, EUR 0.17 -0.18 0.17 from continuing operations excl. non-recurring items, EUR -0.32 -0.29 -0.07 Return on equity, % -14.0 -16.8 -53.0 excl. non-recurring items, % -5.9 -5.3 -0.4 Return on capital employed, % -2.6 -4.7 -24.4 excl. non-recurring items, % 1.4 0.9 -0.3 Equity ratio at end of period, % 32.1 30.9 32.1 Gearing at end of period, % 112 126 112 Shareholders' equity per share at end of period, EUR 4.93 5.62 4.93 Net interest-bearing liabilities at end of period, MEUR 1,867 2,403 1,867 Gross capital expenditure, MEUR 259 428 81 Paper deliveries, 1,000 t 3,949 4,192, 980 Board deliveries, 1,000 t 1,203 1,161 291 Personnel at end of period 9,508 14,125 9,508 EBITDA = Earnings before interest, taxes, depreciation and amortization Securities and guarantees, MEUR 2007 2006 For own liabilities 61 77 On behalf of associated companies 1 1 On behalf of Group companies 4 5 On behalf of others 3 3 Total 69 86 Open derivative contracts, MEUR 2007 2006 Interest rate derivatives 1,954 2,828 Foreign exchange derivatives 3,809 4,747 Other derivatives 133 152 Total 5,896 7,727 The fair value of open derivative contracts calculated at market value was EUR 14.7 million at the end of the review year (EUR -8.3 million 31 December 2006). The gross amount of open contracts also includes closed contracts, totalling EUR 2,713.9 million (31 December 2006: EUR 3,664.0 million). Commitments related to fixed assets, MEUR 2007 2006 Payments in less than a year 22 146 Payments later 4 16 Changes in property, plant and equipment, MEUR 2007 2006 Carrying value at beginning of period 3,156 3,178 Capital expenditure 250 456 Decrease -186 -82 Assets classified as held for sale 0 -28 Depreciation and impairment losses -346 -385 Translation difference -54 17 Carrying value at end of period 2,820 3,156 Related-party transactions, MEUR 2007 2006 Transactions with parent company and sister companies Sales 34 35 Other operating income 138 3 Purchases 549 491 Interest income 3 7 Interest expenses 8 13 Non-current receivables 19 21 Current receivables 41 183 Non-current liabilities 1 1 Current liabilities 149 362 Transactions with associated companies Sales 0 0 Purchases 4 4 Non-current receivables 0 7 Current receivables 7 3 Current liabilities 3 3 Accounting policies The financial statements release was prepared in accordance with the IAS 34 standard Interim Financial Reporting and the accounting policies presented in M-real Annual Report 2006. The figures in the financial statement release are unaudited. 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 has 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) per (Total equity (average)) Return on capital = (Profit from continuing operations before employed (%) tax + interest expenses, net exchange gains/losses and other financial expenses) per (Total assets - non-interest-bearing liabilities (average)) Equity ratio (%) = (Total equity) per (Total assets - advance payments received) Gearing ratio (%) = (Interest-bearing liabilities - liquid funds - interest-bearing receivables) per (Total equity) Earnings per share = (Profit attributable to shareholders of parent company) per (Adjusted number of shares (average)) Shareholders' equity per = (Equity attributable to shareholders of share parent company) per (Adjusted number of shares at end of review period) Quarterly information Sales and result by segment, MEUR 2007 2006 Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Consumer Packaging 934 971 225 231 243 235 241 236 Graphic Papers 2,268 2,390 569 574 548 577 588 586 Office Papers 723 727 171 167 183 202 189 181 Internal sales and other operations 515 516 120 130 122 143 163 115 Sales 4,440 4,604 1,085 1,102 1,096 1,157 1,181 1,118 Consumer Packaging 136 131 24 45 28 39 25 38 Graphic Papers 120 93 10 52 31 27 -10 50 Office Papers 53 59 25 21 15 -8 26 15 Other operations 135 -11 11 -2 -8 135 2 -2 EBITDA 444 272 70 116 66 193 45 100 % of sales 10.0 5.9 6.5 10.5 6.0 16.7 3.8 8.9 Consumer Packaging 56 43 0 27 8 21 0 17 Graphic Papers -81 -212 -71 16 -12 -14 -176 4 Office Papers -187 -18 -173 7 1 -22 -4 -1 Other operations 92 -42 -1 -7 -12 112 -7 -8 Operating profit -120 -229 -245 43 -15 97 -187 12 % of sales -2.7 -5.0 -22.6 3.9 -1.4 8.4 -15.8 1.1 Share of results in associated companies -3 0 -3 1 -1 0 0 1 Exchange gains and losses -3 -1 2 -2 2 -5 -5 -1 Other net financial items -147 -121 -42 -38 -30 -37 -36 -34 Result from continuing operations before tax -273 -351 -288 4 -44 55 -228 -22 Income taxes 23 11 39 -9 -4 -3 23 -10 Result for the period from continuing operations -250 -340 -249 -5 -48 52 -205 -32 Result for period from discontinued operations 55 -59 57 -3 -1 2 -61 -2 Result for the period -195 -399 -192 -8 -49 54 -266 -34 Minority interest 1 3 0 1 0 0 1 3 Financial result attributable to shareholders of parent company -194 -396 -192 -7 -49 54 -265 -31 Earnings per share, EUR -0.59 -1.21 -0.58 -0.02 -0.15 0.16 -0.81 -0.10 Non-recurring items, MEUR 2007 2006 Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Consumer Packaging -15 -4 -8 0 -7 0 -4 0 Graphic Papers -58 -216 -49 7 -2 -14 -173 -2 Office Papers -210 -25 -180 0 0 -30 -15 0 Other operations 114 -2 -2 0 -4 120 1 0 Non-recurring items in operating result -169 -247 -239 7 -13 76 -191 -2 Non-recurring items in financial items 0 0 0 0 0 0 0 0 Non-recurring items total -169 -247 -239 7 -13 76 -191 -2 Consumer Packaging 142 131 25 45 33 39 25 38 Graphic Papers 142 187 20 48 33 41 41 52 Office Papers 78 69 20 21 15 22 26 15 Other operations 4 -9 13 -3 -4 -1 2 -2 EBITDA, excl. non- recurring items 366 378 78 111 77 101 94 103 % of sales 8.2 8.2 7.2 10.0 7.0 8.7 8.0 9.2 Consumer Packaging 71 47 8 27 15 21 4 17 Graphic Papers -23 4 -22 8 -9 0 -3 6 Office Papers 23 7 7 7 1 8 11 -1 Other operations -22 -40 1 -6 -9 -8 -8 -8 Operating profit excl. non-recurring items 49 18 -6 36 -2 21 4 14 % of sales 1.1 0.4 -0.6 3.3 -0.2 1.8 0.3 1.3 Result before taxes, excl. non-recurring items -104 -104 -49 -3 -31 -21 -37 -20 % of sales -2.3 -1.6 -4.5 -0.2 -2.8 1.8 -3.1 -1.5 Result per share, excl. non-recurring items, EUR -0.32 -0.29 -0.07 -0.03 -0.12 -0.09 -0.05 -0.08 Return on equity, excl. non-recurring items, % -5.9 -5.3 -0.4 -0.9 -2.4 -7.3 -0.9 -1.5 Return on capital employed, excl. non- recurring items, % 1.4 0.9 -0.3 3.7 0.2 2.5 1.5 1.9 Return on capital employed, % 2007 2006 Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Consumer Packaging 7.5 5.1 0.1 15.3 4.1 10.9 0.3 7.5 Graphic Papers -3.9 -9.5 -14.1 3.2 -2.1 -2.5 -31.6 0.8 Office Papers -29.6 -2.3 -114.8 4.9 0.6 -12.0 -1.9 -0.2 Continuing operations total -2.6 -4.7 -24.4 4.4 -1.1 9.7 -16.5 1.7 Capital employed, MEUR 2007 2006 Q4/07 Q3/07 Q2/07 Q1/07 Q4/06 Q3/06 Consumer Packaging 731 809 731 742 741 777 809 914 Graphic Papers 1,907 2,109 1,907 2,046 2,042 2,077 2,109 2,303 Office Papers 518 722 518 681 665 669 722 742 Other equity 866 735 866 469 543 519 735 548 Continuing operations total 4,022 4,376 4,022 3,938 3,991 4,043 4,376 4,507 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 | 2007 | 2006 | |-------------------------------+--------+--------| | Consumer Packaging | 1,504 | 2,573 | |-------------------------------+--------+--------| | Graphic Papers | 5,135 | 5,862 | |-------------------------------+--------+--------| | Office Papers | 1,657 | 1,822 | |-------------------------------+--------+--------| | Other continuing operations | 2,372 | 2,146 | |-------------------------------+--------+--------| | Discontinued operations (Map) | 2,007 | 2,481 | |-------------------------------+--------+--------| | Total | 12,675 | 14,884 | +-------------------------------------------------+ Q4 Q3 Q2 Q1 Q4 Q3 Deliveries, 1,000 t 2007 2006 2007 2007 2007 2007 2006 2006 Consumer Packaging 1,203 1,161 291 297 313 302 288 285 Graphic Papers 3,002 3,153 761 760 724 757 778 772 Office Papers 947 1,039 219 215 241 272 264 258 Paper segments, total 3,949 4,192 980 975 965 1,029 1,041 1,031 +------------------------------------------------------------------------------+ | | | | Q4| Q3| Q2| Q1| Q4| Q3| |--------------+--------+--------+------+------+------+-------+--------+-------| |Production, | | | | | | | | | |1,000 t | 2007| 2006| 2007| 2007| 2007| 2007| 2006| 2006| |--------------+--------+--------+------+------+------+-------+--------+-------| |Consumer | | | | | | | | | |Packaging | 1,210| 1,121| 294| 303| 302| 311| 279| 273| |--------------+--------+--------+------+------+------+-------+--------+-------| |Graphic Papers| 2,962| 3,090| 736| 752| 735| 739| 747| 763| |--------------+--------+--------+------+------+------+-------+--------+-------| |Office Papers | 973| 1,028| 213| 223| 257| 280| 253| 259| |--------------+--------+--------+------+------+------+-------+--------+-------| |Paper mills, | | | | | | | | | |total | 3,935| 4,119| 949| 975| 992| 1,019| 1,000| 1,023| |--------------+--------+--------+------+------+------+-------+--------+-------| |Metsä-Botnia | | | | | | | | | |pulp 1) | 841| 983| 235| 203| 200| 203| 255| 243| |--------------+--------+--------+------+------+------+-------+--------+-------| |M-real pulp | 1,679| 1,754| 400| 455| 398| 426| 449| 443| +------------------------------------------------------------------------------+ 1) corresponds to M-real's share in Metsä-Botnia (39 % until Q4/06, 30 % as of Q1/07).
M-real's operating profit excluding non-recurring items for 2007 EUR 49 million
| Source: Metsä Board Oyj