Stora Enso posts lower sales in the first quarter

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SE/IHB
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1901
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In the first quarter of 2014, Stora Enso's  sales of Euro 2 568 million were Euro 104 million lower than a year ago as paper product sales continued to decline, partly due to the strengthening euro and the previously announced permanent shutdowns of paper machines at Kvarnsveden and Hylte mills in Sweden. Operational EBIT was Euro 182 million, an increase of Euro 64 million. Operational EBIT margin was 7.1%.

Clearly lower variable costs, especially for wood, chemicals and pulp, improved operational EBIT by Euro 39 million. Sales prices in local currencies were slightly higher than a year ago. Lower volumes, mainly in Printing and Reading, which decreased operational EBIT by Euro 11 million, were offset by Euro 27 million lower fixed costs due to cost improvement and other restructuring actions. The comparative period last year included a Euro 10 million capital gain from land sales in Uruguay and Thailand. Depreciation was Euro 20 million lower, mainly due to fixed asset impairments recorded in the fourth quarter of 2013. Paper and board production was curtailed by 7% and sawnwood production by 2% to manage supply. 

The Group recorded non-recurring items (NRI) with a positive net impact of approximately Euro 24 million on operating profit and a positive impact of approximately Euro 6 million on income tax in its 1Q 2014 results. The NRI are a Euro 44 million capital gain in the segment Other due to disposal of the Group’s 40.24% shareholding in the US-based processed kaolin clay producer Thiele Kaolin Company to Thiele Kaolin Company, a Euro 13 million cost in Building and Living due to the planned permanent closure of Sollenau Sawmill in Austria and a Euro 7 million cost in Printing and Reading due to the permanent shutdown of Veitsiluoto Mill paper machine 1 in Finland. 

Stora Enso CEO Jouko Karvinen commented on 1Q 2014 results: 'Our 1Q results are a testimony to our commitment to continuous improvement. Not only did our Group essentially complete the promised Euro 200 million fixed cost improvements compared with 2012 (excluding capacity reduction impacts) three months ahead of schedule, but we also saw an improvement in almost all of our businesses. This, combined with an improvement in cash flow from operations year-on-year albeit in a seasonally weak quarter, continues to be the foundation of our transformation strategy.'

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