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Dear Shareholder,
The
year just ended was certainly very demanding for
the forest products industry and for Stora Enso.
Our forecast for 2002 issued a year ago was not
optimistic. However, the market situation in 2002
proved more difficult than could have been foreseen
then. Our production increased towards the year
end, but profits were down on 2001 mainly due
to price erosion.
In North America the business environment was
especially demanding. Weakness in advertising
had a strong impact on Stora Enso's business,
prompting an extensive two-year Profit
Enhancement Plan. The plan includes machine
modernisations and upgrades as well as permanent
asset closures. Even before that we had initiated
a cost-cutting programme, which included personnel
reductions in North America.
Our emphasis on profitable growth remains unchanged.
We will grow through mergers and acquisitions
when good opportunities arise that meet our financial
targets.
In 2002 we concentrated on improving asset quality
and profitability. Already two years ago we had
begun such a programme, mainly in Newsprint: some
older machines have been upgraded and modernised
and the least efficient closed down, and some
new machines built. The programme will be completed
when the new paper machine at Langerbrugge in
Belgium comes on stream in mid 2003.
A similar Asset
Restructuring Programme was launched in Magazine
Paper last year. The main decision was to go forward
with a plan to build a new SC
paper machine at Kvarnsveden in Sweden.
Environmental and social responsibilities have
been important to us for a number of years. In
today's world these issues are opportunities for
companies that want to be successful.
Our key resource for success is personnel. One
related issue that we are currently addressing
is benefiting fully from the diversity of our
workforce. We have a firm foundation in Finland
and Sweden, but today Stora Enso is an international
Group that is becoming increasingly global, and
one of our hidden assets is our multicultural
personnel.
During the past year we have placed even more
emphasis on being our customers' first choice
and serving them better. In addition to asset
restructuring, we have introduced a two-year project
to improve customer service that will make our
broad and comprehensive product range more easily
available to customers.
To serve the financial community better, we made
changes in 2002 in the way we provide investor
services, which we are sure will be seen as enhancements.
Our web site, financial communications, annual
report and interim reports are recognised as market
leaders, and our intention is to maintain this
position.
Stora Enso's business is heavily dependent on
the strength of the economies of its main markets.
In North America there are some signs of recovery
in advertising-related paper grades, but the coming
quarters will show whether the upturn in paper
demand will prove seasonal or longer lasting.
The initial indications are more promising than
for the past two years. However, in Europe the
demand for paper products is stable at low levels.
As regards products, prospects differ between
early-cycle and late-cycle products. In early-cycles
such as packaging boards, timber products and
office papers, there has been some improvement,
but no European upturn in demand is yet apparent
in late-cycle products such as advertising-driven
paper grades.
For our stakeholders our strengths in challenging
markets are our strong balance sheet and cash
flow, international organisation and broad product
range.
Though the past year was rather demanding, we
retain our strategic target of distributing one-third
of net profit as dividend over the business cycle.
Stora Enso Oyj's Board of Directors proposes a
dividend of EUR 0.45 for the year 2002.
We want to thank our personnel for a job well
done in 2002. Stora Enso will continue to be developed
as a sustainable forest products industry leader
that creates value for its shareholders, customers
and employees.
Helsinki, 30 January 2003
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Claes Dahlbäck
Chairman |
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Jukka Härmälä
CEO |
CEO interview
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