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Stora Enso Q4 Operational EBIT Down; To Close Paper Machine 6 At Imatra Mills

Stora Enso Oyj (SEOAY.PK), a Finnish pulp and paper manufacturer, reported that its operational EBIT decreased slightly to 271 million euros from 280 million euros in the prior year.

Earnings per share increased 75.0% to 0.39 euros from 0.22 euros last year. Earnings per share excluding IAC was 0.33 euros, up from 0.26 euros in the previous year.

Sales increased 5.8% to 2.657 billion euros from 2.511 billion euros last year.

Stora Enso introduces new way of giving annual outlook and quarterly guidance. The Group starts to guide absolute range for quarterly operational EBIT, instead of comparing quarterly sales and operational EBIT to the previous quarter qualitatively.

Stora Enso's year 2019 is expected to be largely in line with 2018, provided that the current trading conditions do not significantly change. Demand growth is expected to continue for Stora Enso's other businesses except for European Paper, for which demand is forecast to continue to decline in 2019.

Group's sales are expected to be higher and costs are forecast to increase in 2019 compared to 2018. Stora Enso will implement measures to mitigate these cost increases and the increased uncertainties with a new profit protection programme.

For the first-quarter of 2019 operational EBIT is expected to be in the range of 260 million euros - 350 million euros. The Group's annual maintenance schedule has been changed from last year. During Q1/2019 there will be annual maintenance shutdowns at Veracel pulp mill and Ostroleka container board mill. The total negative impact of maintenance is estimated to be 20 million euros more compared to last year. In the prior year, there were no annual maintenance shutdowns.

Stora Enso said it is implementing a profit protection programme intended to achieve an annual cost reduction of EUR 120 million as well as reduction of capital expenditure by about EUR 50 million compared to the earlier announced forecast. The programme includes plans to reduce costs at the Ala and Imavere sawmills and a plan to close paper machine 6 at Imatra Mills.

The programme will include all divisions and corporate functions. The Group estimates that some effects will be visible already during 2019 with full impact by the end of 2020.

Stora Enso said it is planning to close paper machine 6 at Imatra Mills in Finland and to start co-determination negotiations at the mill related to this plan. With annual production capacity of 90 000 tonnes, PM6 is a small machine that has reached its end-of-life. The planned closure would result in a reduction of maximum 80 FTEs (full-time equivalents) and reorganisation of some tasks.

The plan is to continue production until the maintenance break during third-quarter or until the end of 2019, with an ability to deliver the committed volumes. The planned closure would cost approximately EUR 4 million related to asset write-off and costs of the co-determination process. The amount would be recorded as an item affecting comparability (IAC).

Stora Enso is also planning to take performance improvement measures at the Ala sawmill in Sweden and the Imavere sawmill in Estonia. The plan includes actions to increase productivity and reduce costs. The planned actions would result in a reduction of maximum 35 FTEs and required co-determination negotiations related to this plan have been initiated.

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