Stora Enso Launches New Group Organisation to Improve Long-term Profitability

Stora Enso Launches New Group Organisation to Improve Long-term Profitability

September 10, 2007

Company Will Account for an Impairment Charge of About EUR
1 300 Million in Third Quarter of 2007


    HELSINKI, Finland, Sept. 10 /Xinhua-PRNewswire/ --
Stora Enso is reorganising its operations from the current
four divisions into eight separate business areas: Fine
Paper, Merchants, Consumer Board, Industrial Packaging,
Magazine Paper, Newsprint, North America and Wood Products.
 An impairment charge totalling about EUR 1 300 million will
be accounted for as a non-recurring item without cash impact
in the third quarter of 2007. 
 
    "The main objectives of the reorganisation are to
give business area leaders and their teams clear
responsibility for improving financial performance, remove
layers of management and to speed up decision-making. These
changes will also improve our external transparency through
enhanced reporting. The new structure will further focus
the portfolio analysis work and facilitate scalability for
the future, strengthening Stora Enso's position with regard
to potential industry consolidation," says Stora Enso
CEO Jouko Karvinen. 

    "Through these organisational changes, we also
seek to improve the performance of our North American
operations by reorganising them into a separate entity with
full profit and loss responsibility reporting directly to
me.  Key criteria for defining the new business structure
were identifying entities with strong synergies within the
business and to a large extent their own customer base,
while keeping customer interfaces simple and sharing
relevant Group-level synergies."
 
    The new organisational structure is effective
immediately.  Financial reporting in the third quarter
results to be published on 25 October 2007 will be based on
the new eight business areas.  Historical figures based on
the new business areas will be reported separately by 15
October 2007. 
 
    Executive Management Appointments 

    "I am delighted to be bringing several experienced
Stora Enso leaders into the Group Executive Team (GET).  As
a team, we have one objective - to strengthen the company
and improve profitability.  The new Group Executive Team
has a good balance of pulp, paper and board expertise
combined with experience from outside the industry in Hannu
Ryopponen and myself.  We need to speed up decision-making
and implementation of our cost-reduction programmes, while
continuing to provide excellent customer service.  This is
what I need from the new team, and all the teams around
them," says CEO Karvinen.
 

    The new organisation and its leadership are as follows:



    Reporting Unit        Executive Responsible
Responsibility           
                                                           
             
                                                          

    Fine Paper Business    Aulis Ansaharju      Fine Paper,
Country Manager
     Area                                        Finland   
              

    Consumer Board         Mats Nordlander      Consumer
Board, Merchants,
     Business Area,                              Market
Services
      Merchants Business
       Area                                                
               

    Industrial Packaging   Veli-Jussi Potka     Industrial
Packaging     
     Business Area                                         
              

    Magazine Paper         Hannu Alalauri       Magazine
Paper           
     Business Area                                        


    Newsprint Business     Juha Vanhainen       Newsprint  
             
     Area                                                  
             

    North America Business John Gillen*         North
American businesses
     Area                                                  
              

    Wood Products Business Elisabet Salander    Wood
Products, Wood Supply
     Area                   Bjorklund            and Pulp
Supply

    Group Function Leaders 
                           Hannu Ryopponen,     Finance and
Strategy,    
                            Deputy CEO and CFO  Purchasing 
             
                           Bernd Rettig         Technology
and R&D,      
                                                 Operations
Improvement, 
                                                 Logistics
and Investments, 
                                                 Country
Manager
                                                 Germany   
              
                           Christer Agren       HR
Services, Leadership  
                                                
Development, IT, Country
                                                  Manager
Sweden 
 
    All members other than the CEO and Deputy CEO are
Executive Vice 
    Presidents (EVP).
 
    * John Gillen will continue heading Stora Enso's North
America business 
      area through a transitional period. Details of the
North American 
      business and organisational structure will be
announced in due course. 
 

    Financial impact of the impairment charge 
 
    The impairment charge will comprise about EUR 300
million on goodwill and about EUR 1 000 million on fixed
assets.  The fixed asset impairment will have a one-time
positive tax impact of about EUR 100 million.  The
estimated distribution of the impairment between the
business areas will be announced by 15 October 2007.  The
impairment charge arises from a number of factors including
the reorganisation into eight separate business areas,
increased wood costs mainly driven by export duties on wood
from Russia, the poor outlook for magazine papers, rising
interest rates and adverse currency movements. 


    The impact of the impairment charge on the Group's
financial figures will be as follows:
 
    Annual depreciation reduction                 EUR 100
million        
    Capital employed reduction                    EUR 1 200
million      
    Earnings per share (annualised)               EUR +0.11
             
    Debt/equity ratio                             From 0.55
to 0.64      
    Return on capital employed (annualised)       +1.4%
-points          
 

    The discount rate used in the impairment calculation
varied from 8.5% to 9.7% (pre-tax) based on
business/country mix.  The Group's pre-tax weighted average
cost of capital (WACC) is 9.1%.  Currency rates prevailing
at 31 July 2007 were used in calculating the impairment
charge estimate; the actual impairment charge in euros will
be determined using rates prevailing at the closing of the
annual accounts for 2007.  

    APPENDIX   CVs of the new members in Group Executive
Team (GET)
 
    Photos of new GET members are available at
    
http://bmt.storaenso.com/storaensolink.jsp?imageid=070904
    Please copy the link into your web browser.
 
    Printable photos of other GET members can be found at 
    
http://www.storaenso.com/mediacentre/imagebank/executives
 
    APPENDIX
 
    New members in Group Executive Team (GET):
 
    Aulis Ansaharju
    Executive Vice President, Fine Paper
 
    Born 1951. M.Sc.(Paper tech.), MBA. Finnish citizen.
 
    Joined the company in 1975. Mill manager, Enso-Gutzeit
Oy Tervakoski Mill 1990-1992. Mill manager, Enso Oy Imatra
Mills 1993-1996. Vice President and Senior Vice President
positions in Corporate Human Resources in Enso Oy and Stora
Enso Oyj 1996-2000.  Senior Vice President, Fine Paper in
Stora Enso North America 2000-2003.  Senior Vice President,
Business Development, Stora Enso Fine Paper 2003 -2004.
Senior Vice President, Graphic Papers, Stora Enso Fine
Paper 2004-2007.
 
    Mats Nordlander
    Executive Vice President, Consumer Board, Merchants and
Market Services
 
    Born 1961. Dip.Eng. Swedish citizen.
 
    Joined the company in 1994.  General Manager Papyrus
Sweden AB (previously Pappersgruppen AB) 1994-1998, Senior
Vice President, Marketing and Supply, Papyrus AB 1998-2002,
Vice President, Marketing and Sales 2002-2003, Stora Enso
Fine Paper, London, President, Papyrus AB 2003-2007. 
Member of the Board of Directors of several subsidiaries
and associated companies.  Member of Swedish Industrial
Board of Axcel private equity fund, Member of the Boards of
Tysk Svenska Handelskammaren.
 
    Marketing and Sales Director, SCA Fine Paper 1992-1994,
Production Department Manager SCA Wifstavarf 1989-1992, Part
owner of Flexible packaging company, Nordlandemballage AB
1983-1988.
 
    Veli-Jussi Potka
    Executive Vice President, Industrial Packaging
 
    Born 1959.  M.Sc. (Econ.). Finnish citizen.
 
    Joined Enso-Gutzeit in 1983.  Corporate Controller for
Enso Group Oyj and Stora Enso Oyj 1993-2000. Managing
Director, Stora Enso Packaging Oy 2000-2004. Senior Vice
President, Business Development, Stora Enso Packaging
Boards between April 2004 and April 2005.  Senior Vice
President, Industrial Packaging Business Area 2005-2007. 
Member of the Board of Directors of several subsidiaries
and associated companies.
 
    Hannu Alalauri
    Executive Vice President, Magazine Paper
 
    Born 1959, M.Sc. (Chem.). eMBA. Finnish citizen.
 
    Joined the Chemical Division of Oulu mill site (former
Oulu Oy) in 1985. Vice President of Varkaus Fine paper mill
1996-1999, Senior Vice President Stora Enso Office Papers
1999-2000, Senior Vice President Stora Enso Graphic Papers
2000-2004, Managing Director of Stora Enso Packaging
Corrugated Business 2004-2005, Senior Vice President HR
Finland and HR Packaging Boards Division 2006-2007.  Member
of the board of several subsidiaries and associated
companies. 
 
    Member of the Business advisory board of BioFund Oy
LTD. Chairman of Supervisory board of Pohto Management
Training Institute.
 
    Juha Vanhainen
    Executive Vice President, Newsprint
 
    Born 1961. M.Sc. (Eng.). Finnish citizen.
 
    Joined Stora Enso Oulu in 1990. General Manager and
Mill Director, Stora Enso Fine Paper, Oulu Mill 1999-2003.
Senior Vice President, Stora Enso Fine Paper, Office Paper
2003-2007.


    For further information, please contact:

     Jouko Karvinen, CEO
     Tel:   [phone] or [phone]

     Hannu Ryopponen, CFO
     Tel:   [phone] or [phone]

     Kari Vainio, EVP, Corporate Communications
     Tel:   [phone]

     Keith B Russell, SVP, Investor Relations
     Tel:   [phone]

     Ulla Paajanen-Sainio, VP
     Investor Relations and Financial Communications
     Tel:   [phone] 
 
     http://www.storaenso.com
     http://www.storaenso.com/investors