Stora Enso Oyj Interim Report January-March 2024
Continuous efforts to improve profits, competitiveness, and cash flow
Q1/2024 (year-on-year)
- Sales decreased by 20% to
EUR 2,164 (2,721) million. - Adjusted EBIT decreased to
EUR 156 (234) million. - Adjusted EBIT margin was 7.2% (8.6%).
- Operating result (IFRS) decreased to
EUR 148 (258) million. - EPS was
EUR 0.11 (0.24) and EPS excl. fair valuations (FV) wasEUR 0.09 (0.23). - Cash flow from operations amounted to
EUR 269 (254) million. Cash flow after investing activities wasEUR -104 (1) million. - Net debt increased by
EUR 601 million toEUR 3,518 (2,917) million, mainly due to the board investment at the Oulu site. - The net debt to adjusted EBITDA ratio (last 12 months) was 4.0 (1.3). The target is to keep the ratio below 2.0.
- Adjusted ROCE (last 12 months) excluding the Forest division decreased to 0.0% (16.5%), the target being above 13%.
Key highlights
- The profit improvement programme, initiated in the first quarter, has progressed well and the annual profit improvement target has been increased to
EUR 120 million , from the initialEUR 80 million , driven by additional fixed cost reductions. The programme does not include site closures and may result in the reduction of approximately 1,000 employees. - Operating working capital decreased by
EUR 551 million year-on-year, driven by our continued focus to improve working capital efficiency. - The consumer board investment at the Oulu site in
Finland is progressing on schedule. Production is expected to start in the first half of 2025, with full capacity estimated to be reached during 2027. - The plan to divest the Beihai site in
China is proceeding according to plan. The site is classified as assets held for sale from the end of 2023 onwards.
Guidance
Outlook
Market outlook:
Packaging Materials:
The Packaging Materials market has stabilised and orderbooks have improved, though the weak macroeconomy, including sluggish retail markets, is still slowing the recovery. Demand for consumer board is stable to positive, especially in liquid packaging board. Demand is expected to continue to recover in kraftliner and testliner, and announced price increases in the containerboard market are filtering through. For recycled board, demand has improved but underlying demand remains weak.
Packaging Solutions:
The Packaging Solutions division expects a stronger sequential demand in the second quarter due to seasonal effects. However, heavy overcapacity in the market, mainly in
Biomaterials:
The European demand is expected to slightly increase due to the ongoing Red Sea Crisis, which benefits board and paper producers in
Wood Products:
The Wood Products division continues to face challenges due to low demand, prices, volumes, and high wood costs. A seasonal demand improvement is expected in the classic sawn market during the second quarter of this year. The construction sector is still not improving.
Forest:
The Forest division expects a gradual rise in wood demand as markets in the second quarter remain tight in
Long-term growth opportunities:
Despite current challenges,
Key figures
EUR million |
Q1/24 |
Q1/23 |
Change % Q1/24–Q1/23 |
Q4/23 |
Change % Q1/24–Q4/23 |
2023 |
Sales |
2,164 |
2,721 |
-20.5 % |
2,174 |
-0.4 % |
9,396 |
Adjusted EBITDA |
298 |
399 |
-25.3 % |
212 |
40.3 % |
989 |
Adjusted EBIT |
156 |
234 |
-33.1 % |
51 |
209.7 % |
342 |
Adjusted EBIT margin |
7.2 % |
8.6 % |
|
2.3 % |
|
3.6 % |
Operating result (IFRS) |
148 |
258 |
-42.4 % |
-326 |
145.5 % |
-322 |
Result before tax (IFRS) |
101 |
228 |
-55.6 % |
-378 |
126.8 % |
-49 |
Net result for the period (IFRS) |
84 |
185 |
-54.5 % |
-325 |
125.9 % |
-431 |
Forest assets 1 |
8,626 |
8,269 |
4.3 % |
8,731 |
-1.2 % |
8,731 |
Adjusted return on capital employed (ROCE), LTM 2 |
1.9 % |
11.5 % |
|
2.4 % |
|
2.4 % |
Adjusted ROCE excl. Forest division, LTM 2 |
0.0 % |
16.5 % |
|
1.0 % |
|
1.0 % |
Earnings per share (EPS) excl. FV, EUR |
0.09 |
0.23 |
-60.6 % |
-0.64 |
114.2 % |
-0.73 |
EPS (basic), EUR |
0.11 |
0.24 |
-55.2 % |
-0.36 |
129.6 % |
-0.45 |
Net debt to LTM 2 adjusted EBITDA ratio |
4.0 |
1.3 |
|
3.2 |
|
3.2 |
Average number of employees (FTE) |
19,412 |
21,144 |
-8.2 % |
20,047 |
-3.2 % |
20,822 |
1 Total forest assets value, including leased land and |
"In a continuous weak market, I am encouraged by
However, our year-on-year sales decreased by 20% to
The dividend of
A strong balance sheet is crucial for the future. Our net debt to adjusted EBITDA ratio was 4.0 in the first quarter. We recognise that this is higher than our target of remaining below 2.0 and are taking steps to manage our debt levels effectively and bring our ratio back in line with our target. Despite facing weak market conditions and making strategic investments, we were able to improve our cash flow by reducing our operating working capital. In fact, we were able to reduce it by
Last year's poor performance emphasised the need for efficiency, decisiveness, and focus on essentials. We therefore launched a profit improvement programme this year, designed to strengthen our long-term competitiveness and financial sustainability. I am pleased to share that the programme is progressing well, and we have raised the potential improvement to
We have moved to a new, decentralised operating model and performance-driven organisation across the Group. We are building a culture centred around ambitious goal setting, agility, analytics, and accountability. This is linked to our expectations as an employer, and to the benefit of our customers and owners. Our commercial and operational excellence will benefit from a leaner approach where the responsibility for results is divided between divisions and business units to improve decision-making.
Our actions also focus on improving profitability through more efficient sourcing, production, and sales; freeing up capital, including working capital; strategy and execution; and ensuring we have the right people in the right jobs. The acquisition of
Looking ahead, we anticipate a gradual recovery in 2024, with increased demand and higher prices for board and pulp. However, we anticipate adverse profit impacts in the second quarter due to higher maintenance costs and strikes in
While we face short-term challenges, we remain confident in our ability to focus on long-term growth opportunities in sustainable packaging, wood construction and innovative biomaterials.
Finally, I am pleased to report that we are on track and committed to meet our full year 2024 adjusted EBIT guidance to be higher than the full year 2023 adjusted EBIT of
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tel. +46 72 241 0349
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Anna-Lena Åström
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tel. +46 70 210 7691
Part of the global bioeconomy,
CONTACT:
Media enquiries:
tel. +46 72 241 0349
Investor enquiries:
Anna-Lena Åström
SVP Investor Relations
tel. +46 70 210 7691
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