The Finnish paper manufacturer said that reduced pricing levels for its main products, coupled with the weakening of Sterling and the Dollar had all taken its toll.

President and chief executive Jouko Jaakkola said although he thought next year would still be tough, it was his belief that there were signs that the bottom had been reached.

Paper consumption has increased, and I would expect the overall economic recovery would commence sometime next year, he said.

M-real is expecting to report a total of between 42m-50m (EUR60m-70m) in non-recurring items as part of its fourth quarter results.

The group suffered a dramatic fall of 70% in its third quarter operating profits for 2003 to 20m, due to the weak economic conditions (PrintWeek 30 October 2003).

Although Jaakkola said the latest results would be bad, he said they were by no means fatal.

Our liquidity is in good shape, he said.
The non-recurring items include costs relating to the restructuring of its loan portfolio, larger than normal credit losses, environmental liabilities and fund for reductions in staffing levels.

An additional 10.5m-14m in costs relating to the closure of operations will also be booked under extraordinary items.

Jaakkola said he was confident that the business would not incur any further restructuring costs in the same vein.

Standard & Poors rating services has also lowered the long-term unsecured debt ratings of M-real to BB+ from BB-.

The downgrade has no impact on the groups financing costs.

The latest downgrade on M-reals bond status follows a downgrade by US investor service Moodys in October this year to almost junk-bond status.

by Andy Scott