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 their toll.

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

Paper consumption has risen, 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 (e60m-e70m) 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 weak market 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 a 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.

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

Story by Andy Scott