Arctic Paper S.A., the second-largest European producer of bulky book paper and one of Europe’s leading producers of high-quality graphic paper, generated revenues in the 3rd quarter of 2011 of over PLN 641.4 million, 2.3% higher than in the same period of 2010, and EBITDA of over PLN 43 million, 69.3% higher than achieved in the 3rd quarter of 2010. In the 3rd quarter of 2011 the company earned a net profit of almost PLN 34.1 million. This means that the company has made up a significant part of the loss generated in the 1st half of this year.

Despite continuing lower demand for graphic fine paper in Europe, the company increased its sales volume in the 3rd quarter of 2011 compared to the 2nd quarter of 2011 by 6.1%. Nonetheless, it was 1.4% below the volume recorded in the 3rd quarter of 2010.

Thanks to the increase in sales volume, use of the company’s production capacity returned to the high level of 95%.

Due to significantly better operating results in the 3rd quarter of 2011, the Arctic Paper Group made up a significant part of the loss generated in the 1st half of 2011. In the 3rd quarter alone, the group earned a net profit of almost PLN 34.1 million, which means that the net loss decreased from PLN 50.1 million in the 1st half of 2011 to PLN 16 million through the first 9 months of 2011. The high net result was influenced by increased sales revenue and positive development in exchange rates, mainly emanating from valuation of the intra-group loan by Arctic Paper S.A. to Arctic Paper Investment AB.

Sales revenue of the AP Group in the 3rd quarter was over PLN 641.4 million, representing a growth of 2.3% compared to the 3rd quarter of 2010 and a growth of 11.1% compared to the 2nd quarter of 2011. Year-to-date revenue through 9 months of 2011 was over PLN 1,853 million, an increase of 9.7% compared to the same period of 2010

Revenue per metric tonne of paper sold, expressed in PLN, was PLN 3,320 in the 3rd quarter of 2011, representing an increase of 4.7% compared to the result achieved in the 2nd quarter of 2011 and an increase of 3.7% compared to the 3rd quarter of 2010.

Sales volume in the 3rd quarter of 2011 was 193,000 metric tonnes, representing an increase of about 6.1% compared to the 2nd quarter of 2011. However, the total market demand for graphic fine papers in Europe continued to decline and demand of coated and uncoated wood free paper for the first 9 months remained below the levels observed prior to the economic crisis in 2008–2009.

In the first 9 months of 2011, sales volume was 574,000 metric tonnes, 3.2% higher than the volume achieved in the same period of the previous year.

Michał Jarczyński, CEO of Arctic Paper S.A., commented: “In the 3rd quarter of 2011 there was a visible break in the negative trend for Arctic Paper in terms of currency exchange rates and variable costs which we observed to have an impact on the financial results of the Arctic Paper Group in the 1st half of this year. Despite the summer holidays and the low demand for paper in Europe continuing from the beginning of the year, we achieved high sales volumes of over 193,000 tonnes, and the use of production capacity at our paper mills returned to a high level of almost 95%. In the 3rd quarter we generated substantially better operating results, thanks to which we made up a major part of the loss generated in the 1st half of this year.”

ARCTIC PAPER S.A. is the second-largest European producer of bulky book paper in terms of production volume, and one of Europe’s leading producers of high-quality graphic paper. The Group produces uncoated and coated wood-free paper and uncoated wood-containing paper for printers, book publishers, magazine publishers, the advertising sector and paper distributors. The Group’s product line includes such well-known brands as Amber, Arctic, G-Print, Munken, Pamo and L-Print.

The Group has four paper mills, in Kostrzyn, Poland; Munkedal and Grycksbo, Sweden; and Mochenwangen, Germany. The total production capacity of the four paper mills in the Group is over 800,000 metric tonnes of paper per year.

• Arctic Paper Kostrzyn has a production capacity of about 278,000 tonnes annually and produces chiefly uncoated wood-free paper for general printing uses, such as printing of books, brochures, forms, and envelopes.

• Arctic Paper Munkedal has a production capacity of about 160,000 tonnes per year and produces mainly high-quality uncoated wood-free paper chiefly used for printing books and advertising brochures.

• Arctic Paper Mochenwangen has a production capacity of about 115,000 tonnes per year and produces mainly uncoated wood-containing paper used primarily for printing books and flyers.

• Arctic Paper Grycksbo has a production capacity of about 265,000 tonnes per year and produces high-quality coated paper, used for printing maps, books, magazines, posters and direct mail materials.