Stora Enso Oyj Financial Statement Release 2023: Focus on profit improvement, competitiveness, and cash flow
Q4/2023 (year-on-year)
- Sales decreased by 24% to
EUR 2,174 (2,864) million. - Operational EBIT decreased to
EUR 51 (355) million. - Operational EBIT margin decreased to 2.3% (12.4%).
- Operating profit (IFRS) decreased to
EUR -326 (705) million. - EPS was
EUR -0.36 (0.74) and EPS excl. fair valuations (FV) wasEUR -0.64 (0.32). - Cash flow from operations amounted to
EUR 323 (429) million. Cash flow after investing activities wasEUR -9 (202) million.
Full year 2023 (year-on-year)
- Sales were
EUR 9,396 (11,680) million. - Operational EBIT was
EUR 342 (1,891) million. - Operating result (IFRS) was
EUR -322 (2,009) million. - Earnings per share (EPS) were
EUR -0.45 (1.97) and EPS excl. fair valuations (FV) wasEUR -0.73 (1.55). - Net debt increased by
EUR 1,314 million toEUR 3,167 (1,853) million, due to the acquisition ofDe Jong Packaging Group , due to the acquisition ofDe Jong Packaging Group , the board investment at the Oulu site, and dividend payment in 2023. - The net debt to operational EBITDA ratio (last 12 months) was 3.2 (0.7). The target is to keep the ratio below 2.0.
- Operational ROCE (last 12 months) excluding the Forest division decreased to 1.0% (20.4%), the target being above 13%.
Key highlights
-
Stora Enso finalised the restructuring actions to improve long-term competitiveness and profitability announced inJune 2023 . The Group closed production units and reduced the number of employees within Group functions. The restructuring actions improveStora Enso's operational EBIT by approximatelyEUR 110 million annually. The headcount reduction impact from this restructuring programme was 1,150. -
Stora Enso has initiated a new profit improvement programme targeting annualisedEUR 80 million improvement of the operational EBIT. This could lead to a potential reduction of approximately 1,000 employees. No site closures are planned as part of this programme. - An all-time low level of operating working capital was achieved at year-end, a reduction of
EUR 264 million from the end of the third quarter of 2023. This has resulted in a steady net debt level, with a modest increase ofEUR 47 million recorded during the fourth quarter of 2023. - The consumer board investment at the Oulu site in
Finland is moving ahead according to schedule. Production is expected to start during 2025. - The plan to divest the Beihai site in
China is proceeding according to plan and the assets have been classified as held-for-sale. -
Stora Enso committed to reaching net-zero carbon emissions by 2040 and became a signatory of The Climate Pledge.
Proposed dividend
The Board of Directors will propose a dividend of
Guidance
Outlook
The first quarter is not expected to show a significant market improvement following a historical low fourth quarter in 2023 and a slow recovery. All variable costs continued to ease in the fourth quarter, except for wood, which are expected to follow similar trends also in the first quarter this year. The potential risk of logistical challenges from the
The Packaging Materials and Wood Products divisions continue to suffer from low demand, prices and volume. Although demand for Wood Products remains stable, it is weak due to the ongoing continued slowdown in the construction industry. While there has been a slight improvement in demand for Wood Products from
In Biomaterials, the pulp market is showing signs of stabilising and inventory levels are normalising. And while new capacity is ramping up in
Packaging Solutions expects a stronger sequential demand in the first half of the year due to the greenhouse season. However, low demand leads to high price and margin pressure due to containerboard price reductions, inflation-driven fixed costs, and overcapacity. The Forest division expects no major changes in outlook from the previous quarter, with wood demand expected to start rising gradually.
During the second half of 2023,
Building on last year's cost-saving initiative,
Key figures
EUR million |
Q4/23 |
Q4/22 |
Change % Q4/23–Q4/22 |
2023 |
2022 |
Change % 2023–2022 |
Sales |
2,174 |
2,864 |
-24.1 % |
9,396 |
11,680 |
-19.6 % |
Operational EBITDA |
212 |
515 |
-58.8 % |
989 |
2,529 |
-60.9 % |
Operational EBIT |
51 |
355 |
-85.8 % |
342 |
1,891 |
-81.9 % |
Operational EBIT margin |
2.3 % |
12.4 % |
|
3.6 % |
16.2 % |
|
Operating result (IFRS) |
-326 |
705 |
-146.2 % |
-322 |
2,009 |
-116.0 % |
Result before tax (IFRS) |
-378 |
666 |
-156.8 % |
-495 |
1,858 |
-126.7 % |
Net result for the period (IFRS) |
-325 |
584 |
-155.7 % |
-431 |
1,536 |
-128.0 % |
Forest assets 1 |
8,731 |
8,338 |
4.7 % |
8,731 |
8,338 |
4.7 % |
Operational return on capital employed (ROCE), LTM 2 |
2.4 % |
13.7 % |
|
2.4 % |
13.7 % |
|
Operational ROCE excl. Forest division, LTM 2 |
1.0 % |
20.4 % |
|
1.0 % |
20.4 % |
|
Earnings per share (EPS) excl. FV, EUR |
-0.64 |
0.32 |
n/m |
-0.73 |
1.55 |
-147.0 % |
EPS (basic), EUR |
-0.36 |
0.74 |
-148.9 % |
-0.45 |
1.97 |
-123.0 % |
Net debt to LTM 2 operational EBITDA ratio |
3.2 |
0.7 |
|
3.2 |
0.7 |
|
Average number of employees (FTE) |
20,047 |
21,004 |
-4.6 % |
20,822 |
21,790 |
-4.4 % |
1 Total forest assets value, including leased land and
2 LTM=Last 12 months
In a world being rapidly reshaped, we must adapt, streamline, and develop our business to meet the evolving needs of our customers. We have faced unprecedented market conditions and focus our efforts on what we can control to improve our competitiveness and prepare for an uncertain future.
Our Board is proposing a dividend distribution of
Despite the challenging markets in 2023, I am proud that our teams have taken significant steps to drive competitiveness and improve our current unsatisfactory profitability. We have successfully completed a series of restructuring actions aimed at strengthening our positions in the market, which is expected to increase our operational EBIT by about
We have focused on the cash flow generation by reducing operating working capital and reviewing our capital expenditure priorities. A significant reduction was achieved towards the end of last year, reducing operating working capital by
To remain competitive and drive growth,
The long-term value growth of our forest assets and the potential to further monetise our land by developing renewable energy, underpins our future growth potential. Our recent agreement with OX2 on one joint wind power development project on our forest land in
Despite ongoing market volatility, we see some signs of normalisation and expect a higher operational EBIT in 2024 than in 2023, supported by our cost reduction and growth initiatives.
We continue our determined work to build a stronger, more competitive, better, and more valuable
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