July 21, 2023
(press release)
–
STORA ENSO OYJ HALF-YEAR FINANCIAL REPORT
** Sales decreased by 22% to
** Operational EBIT decreased by 93% to
** Operational EBIT margin decreased to 1.6% (16.5%). ** Operating profit (IFRS) decreased to
** EPS was
** Cash flow from operations amounted to
** The net debt to operational EBITDA ratio (last 12 months) was 1.7 (1.0). The target is to keep the ratio below 2.0. ** Operational ROCE excluding the Forest division (last 12 months) decreased to 10.7% (21.7%), the target being above 13%. ** Sales were
** Operational EBIT was
** Operating result (IFRS) was
**
**
** The above-mentioned planned restructuring actions are expected to improve operational EBIT by approximately
** One of the two paper machines at the Anjala site in
** A new, high-tech corrugated packaging unit started operations at
** The consumer board investment at the Oulu site in
**
**
EUR million Q2/23 Q2/22 Change % Q2/23-Q2/22 Q1/23 Change % Q2/23-Q1/23 Q1-Q2/23 Q1-Q2/22 Change % Q1-Q2/23-Q1-Q2/22 2022 Sales 2,374 3,054 -22.3 % 2,721 -12.8 % 5,095 5,852 -12.9 % 11,680 Operational EBITDA 198 663 -70.1 % 399 -50.3 % 597 1,325 -54.9 % 2,529 Operational EBIT 37 505 -92.7 % 234 -84.3 % 271 1,008 -73.1 % 1,891 Operational EBIT margin 1.6 % 16.5 % 8.6 % 5.3 % 17.2 % 16.2 % Operating result (IFRS) -253 399 -163.3 % 258 -198.2 % 5 793 -99.4 % 2,009 Result before tax (IFRS) -304 370 -182.2 % 228 -233.4 % -76 745 -110.2 % 1,858 Net result for the period (IFRS) -257 299 -186.0 % 185 -238.7 % -72 586 -112.2 % 1,536 Forest assets1 8,065 8,161 -1.2 % 8,269 -2.5 % 8,065 8,161 -1.2 % 8,338 Operational return on capital employed (ROCE), LTM2 8.1% 14.3% 11.5% 8.1% 14.3% 13.7% Operational ROCE excl. Forest division, LTM2 10.7% 21.7% 16.5% 10.7% 21.7% 20.4% Earnings per share (EPS) excl. FV, EUR -0.27 0.42 -164.5 % 0.23 -219.2 % -0.04 0.77 -105.7 % 1.55 EPS (basic), EUR -0.29 0.38 -174.8 % 0.24 -219.5 % -0.05 0.75 -106.3 % 1.97 Net debt to LTM2 operational EBITDA ratio 1.7 1.0 1.3 1.7 1.0 0.7 Average number of employees (FTE) 21,171 22,327 -5.2 % 21,144 0.1 % 21,182 22,248 -4.8 % 21,790 1 Total forest assets value, including leased land and
Webcast Media enquiries: https://mb.cision.com/Main/13589/3808149/2198844.pdf https://news.cision.com/stora-enso-oyj/i/q223-listimage,c3201237
Q2/2023 (year-on-year)
Q1-Q2/2023 (year-on-year)
Key highlights
Guidance
Outlook for the full year 2023
On 20 April this year,
The headwinds in the first quarter of weak demand across most of the Group's segments and customer destocking, continue. Based on the current macroeconomic and market specific challenges,
Packaging Materials: Weak market conditions and destocking in the value chain continues. The containerboard market has stabilised at a low level, but the demand for consumer board market is weakening. For Paper, the pace of the decline in demand is estimated to be slower as destocking is coming to an end.
Packaging Solutions: The demand for corrugated packaging is expected to have bottomed out. The potential slight improvement is not expected to reach the normal seasonal peak during the latter part of the year; the market remains unpredictable.
Wood Products: The activity in the construction sector has not improved and the expectation is that it will continue to remain challenging with a low number of issued building permits and new housing starts. This is expected to impact the demand for both sawn wood and building solutions.
Biomaterials: The market is expected to remain weak; demand is expected to decrease further due to high inventory levels which will take time to normalise. Customer destocking and new capacity entering the market during the year will add to the market imbalance.
Forest: The wood market in the Baltics and Nordics is expected to remain tight despite increasing market curtailments in the pulp and sawmill sector that have temporarily reduced demand for wood. During the autumn, the tight wood market will be mainly driven by demand from the energy sector.
To protect margins and cash flow, restructuring actions such as closures of sites and production lines, divestments, and a more de-centralised operating model with empowered divisions, and leaner Group functions are being implemented. These initiatives are expected to improve competitiveness, reduce costs, and support focused capital allocation into strategic growth markets. The bulk of them are expected to be concluded during the second half of 2023 and would support 2024 financial performance.
On the back of these initiatives,
Key figures
2 Last 12 months
"The weak market demand further worsened in the second quarter. Our businesses are directly impacted by inflation and the consumers' cost-of-living crisis, the drop in construction activity and customers continuing to reduce their inventories. Unfortunately, we see no imminent signs of improved market demand and we expect destocking to persist for most of our segments also in the second half of 2023. In this turbulent market we must adapt. We continue to focus on what we can impact and control: investing and restructuring to improve our future business profitability, cost-competitiveness and asset footprint, controlling our costs, and curtailing production to manage our own and customer inventories.
Weak financial performance in difficult market conditions
The demand slowdown continued for all our businesses except for Packaging Solutions and Forest division. For our largest divisions Packaging Materials, Biomaterials and Wood Products, we continue to experience destocking in the supply chain and weakening demand, in combination with margin pressure due to high input costs.
Some raw material costs have come down from their peak, however most of them, such as wood and chemicals, were still elevated compared to historic levels. For our Biomaterials division especially, we faced the fastest ever decline in global market pulp prices. A significant amount of new capacity is entering the market at a time when demand is low and the global market pulp inventories are on very high levels.
This has resulted in a very weak financial performance for the quarter and naturally we are disappointed. Group sales were
Strategic initiatives to improve resilience, competitiveness and profitability
We stay committed to continue strengthening and building resilience into
Our focus short term, is on delivering on our committed investment projects and improving our profitability: our cost leading consumer board production line at our site in Oulu, the integration of our
We are also taking the next step in simplifying our organisation and increasingly empowering our divisions. The recently announced restructuring actions will strengthen the Group's long-term competitiveness, reduce complexity and deliver tailor-made services for the benefit of our customers. We will be reducing costs, improving efficiency, and focusing capital allocation in strategic growth markets. These are my key priorities. The planned actions would result in an annual profitability improvement of approximately
Restructuring and closing or divesting production is never an easy decision, especially considering the impact it has on our people. But, it is necessary to optimise our asset base to protect margins, now and for the future and I am very grateful for the commitment of our teams in these challenging times.
Advancing our leading position in sustainability
Sustainability is a natural part of everything we do and integrated also in our funding and financing activities. Recently,
Our values enable adaptation
Market dynamics have changed dramatically in the last year, with enduring uncertainties. This means that we also need to continue adapting to be better equipped to support the long-term growing demand for
The renewable future grows in the forest."
Analysts, investors, and media are invited to participate in the webcast with a teleconference today at
The results will be presented by President and CEO
During the webcast presentation, analysts and investors will also have the possibility to ask questions. To participate in the teleconference, please choose the "Teleconference" option on the homepage of the webcast.
Media representatives who wish to ask questions after the publication of the Half-year Report may contact
The webcast link will be also available on
A recording of the presentation will be available at https://stora-enso-s-q2-july-2023-results.open-exchange.net/ and on storaenso.com/en/investors/reports-and-presentations.
This release is a summary of
Media enquiries:
Press officer
tel. +46 72 241 0349
Investor enquiries:
Anna-Lena Åström
SVP Investor Relations
tel. +46 70 210 7691
Part of the global bioeconomy,
Press officer
tel. +46 72 241 0349
Investor enquiries:
Anna-Lena Åström
SVP Investor Relations
tel. +46 70 210 7691
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