Stora Enso Interim Report January-September 2024: Continued growth and earnings improvement
Q3/2024 (year-on-year)
- Sales increased by 6% to
EUR 2,261 (2,127) million. - Adjusted EBIT increased to
EUR 175 (21) million*. - Adjusted EBIT margin increased to 7.8% (1.0%).
- Operating result (IFRS) was
EUR 139 (-1) million*. - Earnings per share (EPS) were
EUR 0.11 (-0.04) and EPS excl. fair valuations (FV) wasEUR 0.10 (-0.05). - The value of the forest assets increased to
EUR 8.8 (8.3) billion, equivalent toEUR 11.11 per share. - Cash flow from operations amounted to
EUR 271 (231) million. Cash flow after investing activities wasEUR 4 (38) million. - Net debt increased by
EUR 409 million toEUR 3,528 (3,120) million, mainly due to the board investment at the Oulu site. - The net debt to adjusted EBITDA (LTM) ratio was 3.1 (2.4). The target to keep the ratio below 2.0 remains.
Q1–Q3/2024 (year-on-year)
- Sales were
EUR 6,727 (7,222) million. - Adjusted EBIT was
EUR 478 (292) million. - Operating result (IFRS) was
EUR 372 (4) million. - Earnings per share (EPS) were
EUR 0.26 (-0.09) and EPS excl. fair valuations (FV) wasEUR 0.25 (-0.09). - Cash flow from operations amounted to
EUR 863 (631) million. Cash flow after investing activities wasEUR -15 (-31) million. - Adjusted ROCE excluding the Forest division (LTM1) decreased to 2.7% (4.7%), the target being above 13%.
* The classification of the Beihai site as assets held for sale has been ceased. The previously published adjusted EBIT and IFRS operating result for January–June 2024 decreased by
Key highlights
- The value creation programmes, centred on sourcing, operational and commercial efficiencies, are making good progress across all divisions.
- The profit improvement programme, initiated in Q1/2024 with a target of
EUR 120 million in fixed cost savings, has progressed well, full impact is expected from 2025. - In October,
Stora Enso announced that it is preparing to sell approximately 12% of its total forest assets of 1.4 million hectares inSweden , valued atEUR 6.3 billion . A sale would reduce debt, confirming the financial value of the Company's forest holdings. -
Stora Enso decided in October to discontinue the divestment process for its Beihai packaging board production site and forestry business.Stora Enso is of the view that the value in own use of the assets exceeds the achievable transaction value, and has therefore chosen to retain these operations within the Group. As a result of the reversal of classification as held for sale, Adjusted EBIT and IFRS operating result for Q1 to Q3/24 decreased byEUR 7.5 million per each quarter,EUR 30 million for the full year 2024, due to the inclusion of previously suspended depreciation into the restated results. - The consumer board investment at the Oulu site in
Finland is progressing on schedule. Production is expected to start in the second quarter of 2025, with full capacity estimated to be reached during 2027.
Guidance
Outlook
Market and business outlook
Packaging Materials
The seasonally low fourth quarter is expected to encounter challenges, including decreased volumes due to weaker demand and annual maintenance shutdowns. The average price level across the division is expected to be lower in the fourth quarter, despite price increases in both consumer board and containerboard. This is due to product mix adjustments with a higher portion of lower-priced containerboard compared to higher-priced consumer board products. The planned annual shutdowns are at five of its production sites, of which four in consumer board including two major integrated sites, which will also elevate fixed costs. The persistent high cost of wood remains a primary concern. Weak order inflow during third quarter makes the fourth-quarter outlook uncertain. Demand for cartonboard, kraftliner, and testliner is expected to drop slightly, influenced by seasonal lows, while paper demand is forecasted to grow sequentially due to favourable seasonal effects.
Packaging Solutions
Market demand remains unpredictable and volatile, influenced by weekly fluctuations and pervasive overcapacity. Volumes in
Biomaterials
Demand will vary across segments, but the division's average is expected to remain unchanged quarter-on-quarter. In
Wood Products
Demand for classic sawn products and pellets, particularly for heating, is expected to rise sequentially in the fourth quarter due to seasonal factors. Demand for building solutions, such as construction beams and cross-laminated timber, is anticipated to drive higher volumes. Raw material costs in the fourth quarter are expected to align with third-quarter levels on average, although fixed costs may increase with volume growth. Elevated wood costs are projected to continue, with a year-on-year increase.
Forest
Wood markets in the Baltic Rim are forecasted to remain constrained due to a shortage of wood, driven by heightened demand for industrial wood (pulpwood and sawlogs). A robust and sustainable financial performance is expected to continue from the first three quarters into the fourth quarter. General cost inflation, particularly affecting logistics and harvesting costs from the third quarter, is also expected to impact the fourth quarter.
Long-term growth opportunities
Key figures
EUR million |
Q3/24 |
Q3/23 |
Change % Q3/24–Q3/23 |
Q2/24 |
Change % Q3/24–Q2/24 |
Q1-Q3/24 |
Q1-Q3/23 |
Change % Q1-Q3/24–Q1-Q3/23 |
2023 |
Sales |
2,261 |
2,127 |
6.3 % |
2,301 |
-1.7 % |
6,727 |
7,222 |
-6.9 % |
9,396 |
Adjusted EBITDA |
328 |
180 |
82.3 % |
312 |
5.1 % |
938 |
777 |
20.7 % |
989 |
Adjusted EBIT3 |
175 |
21 |
n/m |
153 |
14.4 % |
478 |
292 |
63.8 % |
342 |
Adjusted EBIT margin3 |
7.8 % |
1.0 % |
|
6.7 % |
|
7.1 % |
4.0 % |
|
3.6 % |
Operating result (IFRS)3 |
139 |
-1 |
n/m |
92 |
52.4 % |
372 |
4 |
n/m |
-322 |
Result before tax (IFRS)3 |
98 |
-41 |
n/m |
43 |
129.9 % |
235 |
-117 |
n/m |
-495 |
Net result for the period (IFRS)3 |
84 |
-34 |
n/m |
35 |
142.3 % |
195 |
-106 |
284.4 % |
-431 |
Forest assets1,3 |
8,758 |
8,256 |
6.1 % |
8,723 |
0.4 % |
8,758 |
8,256 |
6.1 % |
8,731 |
Adjusted return on capital employed (ROCE), LTM2,3 |
3.7 % |
4.5 % |
|
2.6 % |
|
3.7 % |
4.5 % |
|
2.4 % |
Adjusted ROCE excl. Forest division, LTM2,3 |
2.7 % |
4.7 % |
|
1.1 % |
|
2.7 % |
4.7 % |
|
1.0 % |
Earnings per share (EPS) excl. FV, EUR3 |
0.10 |
-0.05 |
n/m |
0.06 |
66.7 % |
0.25 |
-0.09 |
n/m |
-0.73 |
EPS (basic), EUR3 |
0.11 |
-0.04 |
n/m |
0.05 |
131.6 % |
0.26 |
-0.09 |
n/m |
-0.45 |
Net debt to LTM2 adjusted EBITDA ratio |
3.1 |
2.4 |
|
3.5 |
|
3.1 |
2.4 |
|
3.2 |
Average number of employees (FTE) |
19,364 |
21,132 |
-8.4 % |
19,469 |
-0.5 % |
19,405 |
21,097 |
-8.0 % |
20,822 |
1 Total forest assets value, including leased land and |
"I am pleased to report that our value creation and profit improvement programmes are progressing well across all divisions. These initiatives, designed to optimise our processes and enhance our competitive edge, remain on track. Improvements in profitability, along with more favourable market conditions in some segments during the third quarter, continued to support a positive earnings trend. Our team is diligently managing operations, sales, sourcing, working capital, and refining processes to ensure operational efficiency, cost competitiveness and financial strength. And our profit improvement programme, initiated earlier this year with a goal of
We have seen a strong increase in our Group financial performance this quarter compared to last year, driven by higher prices and volumes, particularly in Packaging Materials. The Biomaterials division demonstrated strong performance, though demand weakened during the quarter with rapidly decreasing pulp prices. Our Forest division delivered a record high third quarter result, driven by increased wood prices. This resulted in a Group sales increase to
On 23 October, we announced that after a thorough review and negotiations, we decided to stop the divestment process and instead retain our Beihai packaging production site and forestry business, recognising that the value in own use of these assets exceeds achievable sale proceeds. This decision supports our strategic aim to strengthen our leadership in the fiber-based packaging market and by optimising the product mix, this site will continue to enhance our position as a leading global supplier, especially in the
In our continuous pursuit of financial stability, we are preparing for the sale of approximately 12% of our forest assets in
In our ongoing commitment to prioritise financial stability through strategic decisions such as the divestment of forest assets in
Looking ahead, we are intensifying our focus on capital allocation and asset strategy in growing market segments, laying the foundation for enhanced competitiveness and profitable growth across the Group. Our focused profitability improvement initiatives over the past year have strengthened
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tel. +46 70 210 7691
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