M-real - Company Announcement

M-real s new programme targets EUR 100 million profit improvement

M-real Corporation Stock Exchange Release 13.11.2007

M-real starts up a new programme to improve profits and reduce
complexity

Both the extensive restructuring programme that Metsäliitto Group
subsidiary M-real announced in October 2006 and the further extension
that was announced in February this year are in their final stages,
and their targets will be exceeded. M-real is now immediately
launching, after the sale of Map Merchant, the fourth step of its
strategic review process to improve profitability and reduce
complexity. The new programme includes the planned closures of BCTMP
mill at Lielahti and coated magazine paper machine No. 2 at Kangas,
as well as the reorganisation of the company's business area
structure, simplification of the coated magazine paper business, and
streamlining the sales and marketing organisations. As part of the
programme, M-real is prepared to carry out other measures, including,
for example, further capacity reductions if so required by changes in
the operational environment. M-real aims to achieve an improvement of
EUR 100 million in total annual profits by the end of 2009.

- "We more than met the objectives for the previous steps that we
took in M-real's strategic review, and the results from asset sales
have also been better than targeted. The new programme combined with
the earlier profit improvement steps constitute the next step in
M-real's strategic review and will improve M-real's position for
participating in various phases of consolidation in the European
paper industry", says Kari Jordan, Chairman of M-real's Board of
Directors and President and CEO of Metsäliitto Group.

- "Thanks to our success in restructuring we are now fully
compensating for the effect of cost inflation 2007. With the measures
announced today, we intend to deal with cost inflation in 2008-2009
as well, and to create a favourable basis for M-real to improve its
profitability", adds Mikko Helander, CEO of M-real.

- "Kangas mill is unprofitable and losing money. The measures that
have been taken up to now to improve the situation have proved out to
be inadequate due to rising wood costs and the unsatisfactory trend
in magazine paper prices. However, the efforts made by the mill's
employees and management have been encouraging, so we are confident
that by launching a new product and service concept on the remaining
machine we can successfully turn the Kangas mill around", says Mikko
Helander.

The annual capacity of paper machine No. 2 at Kangas is 100,000
tonnes of coated magazine paper.

- "With regard to the Lielahti mill, it is our oldest and smallest
BCTMP mill, and the current and future requirement for BCTMP is
significantly less than our total capacity. Rising wood costs and the
situation regarding wood availability have made it impossible for us
to sell the surplus fibre in a profitable manner from the company's
point of view", Mikko Helander points out.

Lielahti mill's capacity is 105,000 tonnes of bleached
chemithermomechanical pulp (BCTMP).

Improving the profitability of coated magazine paper grades by
simplifying the business concept

M-real plans to change the business concept regarding the coated
magazine paper grades. The key elements are targeted at improving
customer service by increasing efficiency in manufacturing and supply
chain operations.

The number of different product variants will be reduced and the
coated magazine paper grades optimised. Production overlaps between
the paper mills will be reduced; paper machines will be optimised toimprove quality consistency and faster production cycles will enable
us to improve the supply service to increase availability and
reliability.

- "We are aiming at reducing complexity and simplifying the division
of production between our coated magazine paper mills. We have
created an operational concept, which on top of achieved savings will
also improve customer satisfaction, which is one of the key aspects
of all the changes," Mikko Helander notes.
Reducing business area complexity

Two of M-real's present business areas, 'Publishing', which focuses
on magazine paper, and 'Commercial Printing', which specialises in
coated fine paper, will be merged into a single new 'Graphic Papers'
business area managed by Gregory Gettinger, the current head of
Publishing business area. The current head of the Commercial Printing
business area, Jarmo Salonen, is appointed Executive Vice President,
Resources, and will be in charge of resources including wood, pulp
and energy, purchasing, research and development, logistics and
environmental affairs. Both will also continue as members of M-real
Corporation Management Team. These changes become effective
immediately.

- "The aim of integrating the two business areas is to reduce
complexity. In practice we will be able to significantly rationalise
management and production costs, and reduce working capital. The new
programme's target for total profit improvement within the new
business area, including closures and other measures to reduce
complexity, is approximately EUR 60 million", says Mikko Helander.

In future, M-real will have three business areas: Graphic Papers,
Consumer Packaging and Office Papers.

Profit improvement in Consumer Packaging and Office Papers

Consumer Packaging will be targeting cost savings, and the Lielahti
mill closure will further enable this business area to optimise fibre
sourcing. The business area will carry out other optimisation
projects including for example optimisation of Joutseno BCTMP to
board grades and sheeting concept development. The business area has
a target of an estimated EUR 15 million annual profit improvement.

In the Office Papers business area, the new programme includes a
profit improvement of approximately EUR 15 million through the
planned streamlining of mill processes, and costs will also be
reduced through the sales network streamlining.

An additional EUR 10 million in profit improvements are to be
achieved from corporate function areas, such as purchasing, logistics
and IT. M-real sales and marketing organisations will also contribute
significantly to the new programme.

- "With our previous profit improvement steps we have shown that we
can deliver what we promise or even more. We are going ahead with the
new programme based on the same principle. And the continuation of
our strategic review will certainly bring new elements and
independently implemented measures for improving M-real's
profitability and performance", promises CEO Mikko Helander

Possible reductions in personnel

Possible reductions in the numbers of employees as a result of the
planned closures and cost-saving measures will depend on the outcome
of statutory negotiations with the personnel which will be opened
immediately. According to preliminary estimations, the total number
of M-real's personnel could be reduced by 500, of whom 200 are
employed in Finland and 300 outside Finland.

Financials of the new profit improvement programme

The total non-recurring costs from the new programme are estimated at
EUR 73 million, of which approximately EUR 50 million are asset
write-offs and approximately EUR 23 million costs with cash flow
effect. The estimated amounts per business area are:

- Graphic Papers business area: EUR 40 million write-offs and EUR 11
million costs with cash flow effect
- Consumer Packaging business area: EUR 10 million write-offs and EUR
3 million costs with cash flow effect
- Office Papers business area: EUR 6 million costs with cash flow
effect
- Other operations: EUR 3 million costs with cash flow effect.

The majority of the write-offs and cost provisions will be included
in the results of 4Q/2007 and 1Q/2008. The cash flow will largely
materialise by the end of 2009.

The planned capacity closures will have no material effect on
M-real's annual sales.

Impairment testing according to IAS 36

Mainly due to wood price and interest rate development M-real
estimates to include net impairment charges of EUR 181 million in its
fourth quarter results, consisting of:

- An impairment charge of EUR 185 million from the goodwill of Office
Papers business area
- A reversal of the EUR 4 million impairment charge made from the
fixed assets of the Kyro Paper mill in Consumer Packaging business
area in previous year's testing.

The impairment charges will have no material effect on M-real's
depreciation or taxes.

M-real will publish its restated historical data based on the new
business area structure by 17 December 2007.

Press conference

M-real's new programme will be presented in a press conference today
at 13.30 Finnish time at Restaurant Bank second floor Meeting Point,
Unioninkatu 20, Helsinki. Present in the press conference are M-real
Chairman of the Board of Directors, Metsäliitto Group President and
CEO Kari Jordan, M-real CEO Mikko Helander and M-real CFO Seppo
Parvi.

Audiocast for analysts

An audiocast for analysts will be held at 15.30 Finnish time/13.30
GMT. The audiocast will be sent via M-real web site www.m-real.com as
the presentation material is available under "Investor Relations".
Participants should dial the following numbers for the audiocast:
UK: +44 (0)20 7162 0125
US: +1 334 420 4951
Germany: +49 (0)695 8999 0509
Finland: +358 (0)9 2313 9202
France: +33 (0)1 7099 3212
Sweden: +46 (0)8 5052 0114

Further information for media:

Lauri Peltola, Group Communications, tel. +358 50 570 5606
Anne-Mari Achren, Group Communications, tel. +358 50 598 8864

Further information for investors and analysts:

Seppo Parvi, CFO, tel. +358 10 469 4321
Juha Laine, Investor Relations, tel. +358 10 469 4335