Stora Enso Oyj Half-Year Report 2024: Improved Profits and Debt Management
Financial Performance
Second Quarter of 2024 (Q2/2024)
- Sales: Sales dropped by 3% to EUR 2,301 million compared to last year. However, sales from ongoing operations grew by 1%.
- Adjusted EBIT (Earnings Before Interest and Taxes): Increased to EUR 161 million from EUR 37 million last year.
- Adjusted EBIT Margin: Improved to 7.0% from 1.6%.
- Operating Result (IFRS): Bettered to EUR 99 million from a loss of EUR 253 million.
- Earnings Per Share (EPS): Increased to EUR 0.06 from a loss of EUR 0.29.
- Forest Assets: Valued at EUR 8.7 billion, or EUR 11.06 per share.
- Cash Flow from Operations: Increased to EUR 323 million from EUR 146 million.
- Net Debt: Increased by EUR 466 million to EUR 3,497 million due to investments at the Oulu site.
- Net Debt to Adjusted EBITDA Ratio: Increased to 3.5 from 1.7. The target is to keep it below 2.0.
First Half of 2024 (H1/2024)
- Sales: EUR 4,466 million, down from EUR 5,095 million last year.
- Adjusted EBIT: EUR 317 million, up from EUR 271 million.
- Operating Result (IFRS): EUR 247 million, up from EUR 5 million.
- Earnings Per Share (EPS): Increased to EUR 0.16 from a loss of EUR 0.05.
- Cash Flow from Operations: EUR 592 million, up from EUR 400 million.
- Adjusted ROCE (Return on Capital Employed): Decreased to 1.3% from 10.7%, with a target of above 13%.
Key Highlights
- Cost-Saving Programs: Stora Enso’s cost-saving programs are making good progress. They focus on improving efficiency in sourcing, operations, and sales.
- Profit Improvement Program: Aiming to save EUR 120 million in fixed costs. The program is progressing well and helping improve earnings and cash flow.
- Working Capital: Operating working capital decreased by EUR 576 million year-on-year, reaching an all-time low.
- Long-Term Loan: Secured a EUR 435 million loan from the European Investment Bank for the Oulu mill investment. This loan extends until 2036, improving the debt maturity profile.
- Oulu Site Investment: On schedule, with production expected to start in the first half of 2025 and full capacity by 2027.
- Beihai Site: Plan to sell the Beihai site in China is ongoing.
Market and Business Outlook
- Market Recovery: Stora Enso expects a gradual market recovery in 2024. The company’s initiatives to improve profitability are showing positive results.
- Packaging Materials: Slightly positive outlook for the third quarter, supported by strong order books and an improving price outlook. Price increases in Q2 are expected to benefit results in the second half of the year. However, high fiber costs and seasonal shutdowns will impact the second half.
- Packaging Solutions: Demand is expected to remain stable with some seasonal fluctuations.
- Biomaterials: Stable pulp demand in Europe and China. The European softwood pulp market is balanced, and China’s demand remains stable.
- Wood Products: Seasonal decrease in sales and volumes expected in Q3 due to the holiday season. High wood costs remain a challenge.
- Forest: Strong wood market activity expected in Finland, Sweden, and the Baltics due to increasing demand for industrial wood.
Long-term Growth Opportunities
- Sustainability Trends: Stora Enso is well-positioned to benefit from long-term growth in sustainable packaging, wood construction, and innovative biomaterials. These areas are expected to grow due to increasing demand for sustainable solutions and supportive regulations.
CEO Comments
Hans Sohlström, President and CEO, expressed satisfaction with the second quarter results, noting that they met expectations and reinforced the upgraded 2024 guidance. Improvements in profitability and cash flow, driven by cost-saving and efficiency initiatives, have set a strong foundation for future success.
Webcast Information
Join the webcast on 24 July 2024 at 11:00 am EEST for more details. The results will be presented by CEO Hans Sohlström and CFO Seppo Parvi. The webcast can be accessed live via the link below, and a recording will be available shortly after the event.