2013-07-19 12:00:00 CEST
2013-07-19 12:00:10 CEST
REGULATED INFORMATION
Stora Enso Oyj - Interim report (Q1 and Q3)
Stora Enso Interim Review January–June 2013
Solid cash flow, further transformation steps launched
Helsinki, Finland, 2013-07-19 12:00 CEST (GLOBE NEWSWIRE) -- STORA ENSO OYJ
INTERIM REVIEW 19 July 2013 at 13.00 EET
Q2/2013 (compared with Q2/2012)
-- Operational EBIT EUR 124 (EUR 144) million. Improvement in Building and
Living and in Renewable Packaging. Printing and Reading loss-making due to
weak paper market.
-- Solid cash flow from operations at EUR 344 (EUR 246) million due to
reduction in working capital, especially in paper business. Cash flow after
investing activities EUR 227 (EUR 74) million.
Q2/2013 (compared with Q1/2013)
-- Operational EBIT EUR 124 (EUR 118) million.
-- Ratio of net debt to the last twelve months' operational EBITDA 2.7 (2.7).
-- Cash flow from operations EUR 344 (EUR 101) million. Strong liquidity at
EUR 1.8 (EUR 1.7) billion.
Q1-Q2/2013 (compared with Q1-Q2/2012)
-- Operational EBIT at EUR 242 (EUR 294) million.
-- Solid cash flow from operations at EUR 445 (EUR 469) million.
Transformation
-- To accelerate access to the growing Chinese market, Stora Enso will launch
its integrated mill project in Guangxi, China in two phases, starting with
building a consumer board machine. First phase capital expenditure expected
to be EUR 760 million.
-- Montes del Plata Pulp Mill estimated to begin mill start-up process at the
end of Q3/2013.
-- Stora Enso to invest EUR 32 million in a world-class biorefinery at Sunila
Mill in Finland.
Streamlining and structure simplification
-- Streamlining and structure simplification plans to achieve annual net fixed
cost savings of EUR 200 million proceeding on schedule.
Outlook
-- Q3/2013 sales expected to be slightly lower and operational EBIT in line
with or slightly higher than Q2/2013
.
Summary of Second Quarter Results*
Q2/13 Q1/13 Q2/12
-------------------------------------------------------------
Sales EUR million 2 717 2 667 2 721
Operational EBITDA EUR million 247 240 251
Operational EBIT** EUR million 124 118 144
Operating profit (IFRS) EUR million 74 20 155
Profit before tax excl. NRI EUR million 60 55 31
Profit/loss before tax EUR million 27 -36 85
Net profit excl. NRI EUR million 45 56 13
Net profit/loss EUR million 21 -16 69
EPS excl. NRI EUR 0.05 0.07 0.02
EPS EUR 0.02 -0.02 0.08
CEPS excl. NRI EUR 0.24 0.25 0.20
Operational ROCE % 5.8 5.4 6.6
---------------------------------
* Data for the comparative periods have been restated following adoption of the
amended IAS 19 Employee Benefits standard. Data for the comparative periods
have been restated in all tables affected by IAS 19. For further details,
please see Basis of Preparation on page 14.
** Operational EBIT comprises the operating profit excluding NRI and fair
valuations of the segments and Stora Enso's share of the operating profit
excluding NRI and fair valuations of its equity accounted investments (EAI).
Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights and valuations of biological
assets related to forest assets in EAI.
Stora Enso Deliveries and Production
Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change Change Change
13 12 % % %
Q2/13-Q Q2/13- Q1-Q2/
2/12 Q1/13 13-
Q1-Q2/
12
--------------------------------------------------------------------------------
-----------
Paper and 2 508 2 496 2 574 5 004 5 123 10 268 -2.6 0.5 -2.3
board
deliverie
s
(1 000
tonnes)
Paper and 2 496 2 519 2 610 5 015 5 186 10 357 -4.4 -0.9 -3.3
board
productio
n
(1 000
tonnes)
Wood 1 345 1 147 1 292 2 492 2 446 4 750 4.1 17.3 1.9
products
deliverie
s
(1 000 m3)
Market 303 288 246 591 507 1 058 23.2 5.2 16.6
pulp
deliverie
s
(1 000
tonnes)*
Corrugated 271 260 282 531 543 1 097 -3.9 4.2 -2.2
packaging
deliverie
s
(million
m2)
---------------------------------------------------------------------
* Stora Enso's net market pulp position is expected to be about 1.2 million
tonnes for 2013.
Key Figures
EUR Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change Change Change
million 13 12 % % %
Q2/13- Q2/13- Q1-Q2/
Q2/12 Q1/13 13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Sales 2 717 2 667 2 721 5 384 5 394 10 815 -0.1 1.9 -0.2
Operatio 247 240 251 487 516 1 094 -1.6 2.9 -5.6
nal
EBITDA
Operatio 9.1 9.0 9.2 9.0 9.6 10.1 -1.1 1.1 -6.3
nal
EBITDA
margin,
%
Operatio 124 118 144 242 294 630 -13.9 5.1 -17.7
nal EBIT
Operatio 4.6 4.4 5.3 4.5 5.5 5.8 -13.2 4.5 -18.2
nal EBIT
margin,
%
Operatin 74 20 155 94 282 701 -52.3 270.0 -66.7
g profit
(IFRS)
Operatin 2.7 0.7 5.7 1.7 5.2 6.5 -52.6 285.7 -67.3
g margin
(IFRS),
%
Profit 60 55 31 115 132 317 93.5 9.1 -12.9
before
tax
excl.
NRI
Profit/l 27 -36 85 -9 175 481 -68.2 175.0 -105.1
oss
before
tax
Net 45 56 13 101 93 263 246.2 -19.6 8.6
profit
for the
period
excl.
NRI
Net 21 -16 69 5 143 490 -69.6 231.3 -96.5
profit/
loss for
the
period
Capital 86 61 154 147 216 556 -44.2 41.0 -31.9
expendi
ture
Deprecia 145 146 141 291 284 583 2.8 -0.7 2.5
tion and
impairm
ent
charges
excl.
NRI
Operatio 5.8 5.4 6.6 5.7 6.8 7.3 -12.1 7.4 -16.2
nal
ROCE, %
Earnings 0.05 0.07 0.02 0.12 0.12 0.33 150.0 -28.6 -
per
share
(EPS)
excl.
NRI,
EUR
EPS 0.02 -0.02 0.08 0.00 0.17 0.61 -75.0 200.0 -100.0
(basic)
, EUR
Cash 0.24 0.25 0.20 0.49 0.48 1.07 20.0 -4.0 2.1
earning
s per
share
(CEPS)
excl.
NRI,
EUR
CEPS, 0.20 0.21 0.26 0.41 0.54 1.28 -23.1 -4.8 -24.1
EUR
Return 1.5 -1.1 4.7 0.2 4.9 8.3 -68.1 236.4 -95.9
on
equity
(ROE),
%
Debt/equ 0.55 0.50 0.54 0.55 0.54 0.48 1.9 10.0 1.9
ity
ratio
Net 2.7 2.7 2.7 2.7 2.7 2.5 - - -
debt/la
st
twelve
months'
operati
onal
EBITDA
Equity 6.67 7.32 7.04 6.67 7.04 7.32 -5.3 -8.9 -5.3
per
share,
EUR
Equity 40.7 42.4 43.2 40.7 43.2 42.8 -5.8 -4.0 -5.8
ratio,
%
Average 28 661 28 220 29 226 28 330 28 817 28 777 -1.9 1.6 -1.7
number
of
employe
es
Average
number
of
shares
(millio
n)
periodic 788.6 788.6 788.6 788.6 788.6 788.6
cumulati 788.6 788.6 788.6 788.6 788.6 788.6
ve
cumulati 788.6 788.6 788.6 788.6 788.6 788.6
ve,
diluted
-----------------------------------------------------------------------
Operational EBIT comprises the operating profit excluding NRI and fair
valuations of the segments and Stora Enso's share of the operating profit
excluding NRI and fair valuations of its equity accounted investments (EAI).
Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights and valuations of biological
assets related to forest assets in EAI.
NRI = Non-recurring items. These are exceptional transactions that are not
related to normal business operations. The most common non-recurring items are
capital gains, additional write-downs or reversals of write-downs, provisions
for planned restructuring and penalties. Non-recurring items are normally
specified individually if they exceed one cent per share.
Reconciliation of Operational Profitability
EUR million Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change Change Change
13 12 % % %
Q2/13- Q2/13- Q1-Q2/
Q2/12 Q1/13 13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Operational 247 240 251 487 516 1 094 -1.6 2.9 -5.6
EBITDA
Equity 22 24 34 46 62 119 -35.3 -8.3 -25.8
accounted
investments
(EAI),
operational
*
Depreciation -145 -146 -141 -291 -284 -583 -2.8 0.7 -2.5
and
impairment
excl. NRI
Operational 124 118 144 242 294 630 -13.9 5.1 -17.7
EBIT
Fair -17 -7 -34 -24 -32 -59 50.0 -142.9 25.0
valuations
and
non-operati
onal items**
Non-recurrin -33 -91 45 -124 20 130 -173.3 63.7 n/m
g items -------------------------------------------------------------------
Operating 74 20 155 94 282 701 -52.3 270.0 -66.7
Profit
(IFRS)
-------------------------------------------------------------------
* Group's share of operational EBIT of equity accounted investments (EAI).
** Fair valuations and non-operational items include equity incentive schemes,
synthetic options net of realised and open hedges, CO2 emission rights and
valuations of biological assets related to forest assets in equity accounted
investments (EAI) and Group's share of tax and net financial items of EAI.
Q2/2013 Results (compared with Q2/2012)
Breakdown of Sales Change Q2/2012 to Q2/2013
Sales
-----------------------------------------
-----------------------------------
Q2/12, EUR million 2 721
------
Price and mix, % -1
Currency, % -
Volume, % 1
Other sales*, % -
------
Total before structural changes, % -
Structural change**, % -
Total, % -
------
Q2/13, EUR million 2 717
------
* Wood, energy, paper for recycling, by-products etc.
** Asset closures, major investments, divestments and acquisitions
Sales at Group level at EUR 2 717 million were similar to a year ago.
Operational EBIT at EUR 124 million was EUR 20 million lower than a year ago.
This represents an operational EBIT margin of 4.6% (5.3%).
Clearly lower sales prices in local currencies and lower volumes mainly in
paper grades decreased operational EBIT by EUR 40 million and EUR 8 million,
respectively. Paper and board production was curtailed by 9% (8%) and sawnwood
production by 7% (7%) to manage inventories.
Fibre costs were clearly lower, driven by prices for wood and paper for
recycling. Variable costs in local currencies were EUR 25 million lower than a
year earlier despite higher energy costs due to decreased allocation of green
certificates in Sweden.
The average number of employees at 28 660 was 570 lower than a year ago. The
number of employees decreased mainly in Sweden and Finland due to planned
closures and restructurings. The number of employees increased by 340 in China.
The Group recorded non-recurring items (NRI) with a negative net impact of
approximately EUR 33 million on operating profit and a positive impact of
approximately EUR 9 million on income tax in its second quarter 2013 results.
Net financial items were EUR 23 million less negative than a year ago. The net
interest expense increased by EUR 9 million due to the higher gross debt level
and lower interest income. The fair valuation of interest rate derivatives had
a positive impact of EUR 23 million. A gain of EUR 12 million from the sale of
EUR 99 million of subordinated debt of the equity accounted investments Bergvik
Skog and Tornator was recorded in the second quarter of 2013. The foreign
exchange loss in the second quarter was EUR 6 million less than a year earlier.
A non-recurring EUR 10 million positive impact due to the NewPage lease
guarantee provision reversal was recorded in the second quarter of 2012.
Breakdown of Capital Employed Change Q2/2012 to Q2/2013
Capital Employed
------------------------------------------------------------------------------
-------------------------------------------------------------
Q2/12, EUR million 8 641
-----------------
Capital expenditure less depreciation -115
Available-for-sale: operative (mainly Pohjolan Voima (PVO)) -156
Equity accounted investments 139
Net liabilities in defined benefit plans -134
Operative working capital and other interest-free items, net -149
Net tax liabilities 140
Translation difference -109
Other changes -23
-----------------
Q2/13, EUR million 8 234
-----------------
The operational return on capital employed was 5.8% (6.6%). Excluding the
ongoing strategic investments in Biomaterials and Renewable Packaging the
operational return on capital employed would have been 7.3% (7.9%).
January-June 2013 Results (compared with January-June 2012)
Sales decreased by EUR 10 million year-on-year. Operational EBIT decreased by
EUR 52 million due to notably lower prices in local currencies and lower
volumes in paper grades. Fixed costs were lower and fibre costs clearly lower.
Q2/2013 Results (compared with Q1/2013)
Sales were EUR 50 million higher at EUR 2 717 million and operational EBIT was
EUR 6 million higher at EUR 124 million, as anticipated. Sales prices in local
currencies were higher for pulp and sawn goods, and fibre costs were lower.
Fixed costs were higher mainly due to scheduled maintenance in the second
quarter at several European mills. The average number of employees at 28 660
was 440 higher due to temporary summer employees.
Capital Structure
EUR million 30 Jun 13 31 Mar 13 31 Dec 12 30 Jun 12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------Operative fixed assets* 5 571 5 904 6 022 5 879
Equity accounted investments 1 999 2 058 1 965 1 948
Operative working capital, net 1 418 1 570 1 460 1 588
Non-current interest-free items, net -580 -601 -611 -462
-------------------------------------------
Operating Capital Total 8 408 8 931 8 836 8 953
Net tax liabilities -174 -196 -217 -312
-------------------------------------------
Capital Employed 8 234 8 735 8 619 8 641
-------------------------------------------
-------------------------------------------
Equity attributable to owners of the 5 261 5 772 5 770 5 554
Parent
Non-controlling interests 88 89 92 92
Net interest-bearing liabilities 2 885 2 874 2 757 2 995
-------------------------------------------
Financing Total 8 234 8 735 8 619 8 641
-------------------------------------------
* Operative fixed assets include property, plant and equipment, goodwill,
biological assets, emission rights, available-for-sale operative shares and
other intangible assets.
Financing Q2/2013 (compared with Q1/2013)
Total unutilised committed credit facilities were unchanged at EUR 700 million,
and cash and cash equivalents net of overdrafts remained strong at EUR 1 807
million, which is EUR 65 million more than for the previous quarter. In
addition, Stora Enso has access to various long-term sources of funding up to
EUR 600 million.
The ratio of net debt to the last twelve months' operational EBITDA was 2.7
(2.7).
The debt/equity ratio at 30 June 2013 was 0.55 (0.50). The increase is
primarily due to equity decrease following the EUR 237 million dividend payment
made during the second quarter of 2013, EUR 128 million reduction in the value
of PVO due to lower electricity prices and EUR 153 million negative currency
effect on owners' equity net of the hedging of equity translation risks, mainly
due to the weaker Brazilian real and Swedish krona.
Cash Flow
EUR million Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change Change Change
13 12 % % %
Q2/13- Q2/13- Q1-Q2/
Q2/12 Q1/13 13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Operational 247 240 251 487 516 1 094 -1.6 2.9 -5.6
EBITDA
NRI on -54 -51 54 -105 31 18 -200.0 -5.9 n/m
operational
EBITDA
Dividends 7 11 7 18 8 102 - -36.4 125.0
received
from equity
accounted
investments
Other 18 -14 -7 4 -15 -34 n/m 228.6 126.7
adjustments
Change in 126 -85 -59 41 -71 74 n/m 248.2 157.7
working
capital
-------------------------------------------------------------------
Cash Flow 344 101 246 445 469 1 254 39.8 240.6 -5.1
from
Operations
Cash spent -80 -88 -128 -168 -222 -561 37.5 9.1 24.3
on fixed
and
biological
assets
Acquisitions -37 -10 -44 -47 -62 -115 15.9 -270.0 24.2
of equity
accounted
investments
Cash Flow 227 3 74 230 185 578 206.8 n/m 24.3
after
Investing
Activities
-------------------------------------------------------------------
Q2/2013 cash flow
Second quarter 2013 cash flow from operations was solid at EUR 344 million,
mainly because working capital decreased by EUR 126 million during the quarter.
Inventories decreased by EUR 60 million and receivables decreased by EUR 40
million.
Capital Expenditure for January-June 2013
Additions to fixed and biological assets in the first half of 2013 totalled EUR
147 million, which is 51% of depreciation in the same period.
The EUR 17 million equity injection into Montes del Plata, a joint venture in
Uruguay, and EUR 30 million cost of acquiring a 35% shareholding in Bulleh
Shah, a joint venture in Pakistan, totalled EUR 47 million in the first half of
2013.
Investments in fixed assets and biological assets had a cash outflow impact of
EUR 168 million in the first half of 2013.
The main projects ongoing during the first half of 2013 were Montes del Plata
and the Ostrołęka containerboard machine.
Capital Expenditure, Equity Injections and Depreciation Forecast 2013
EUR million Forecast 2013
------------------------------------
Capital expenditure * 440-490
Equity injections 100-120
--------------
--------------
Total 540-610
Depreciation 590-610
--------------
* Capital expenditure includes approximately EUR 90 million for project in
Guangxi, China
Streamlining and structure simplification programme to cut EUR 200 million from
fixed costs
The streamlining and structure simplification programme, which is intended to
achieve annual net fixed cost savings of EUR 200 million, i.e. compensating for
inflation in addition to cost takeout in the second quarter of 2014 versus
actual 2012, is proceeding according to plan. The full impact of net cost
savings is expected from the second quarter of 2014 onwards. The new divisional
organisations have been announced.
The net fixed costs were EUR 7 million lower in the second quarter of 2013 than
the second quarter of 2012 due to this programme. Annualised this represents
roughly 14% of the targeted EUR 200 million annual net cost savings. The
non-recurring costs related to the programme in the first half of 2013 totalled
EUR 43 million, including EUR 37 million in the second quarter of 2013. Most of
the remaining non-recurring costs are expected to be announced in the third
quarter of 2013. The number of employees had been reduced by 360.
Near-term Outlook
In the third quarter of 2013 Group sales are expected to be slightly lower and
operational EBIT in line with or slightly higher than the second quarter of
2013.
Segments Q2/13 compared with Q2/12
Printing and Reading
Printing and Reading is a world-class responsible supplier of paper from
renewable sources for print media and office use. Its wide offering serves
publishers, retailers, printing houses, merchants, converters and office
suppliers, among others. Printing and Reading produces newsprint, book paper,
SC paper, coated paper and office paper.
EUR Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change % Change % Change
million 13 12 Q2/13-Q2 Q2/13-Q1 %
/12 /13 Q1-Q2/
13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Sales 1 101 1 123 1 191 2 224 2 418 4 839 -7.6 -2.0 -8.0
Operatio 51 72 108 123 243 493 -52.8 -29.2 -49.4
nal
EBITDA
Operatio -17 2 43 -15 111 223 -139.5 n/m -113.5
nal EBIT
% of -1.5 0.2 3.6 -0.7 4.6 4.6 -141.7 n/m -115.2
sales
Operatio -2.4 0.3 5.7 -1.1 7.3 7.4 -142.1 n/m -115.1
nal
ROOC,
%*
Paper 1 652 1 684 1 762 3 336 3 545 7 130 -6.2 -1.9 -5.9
deliver
ies,
1 000 t
Paper 1 641 1 683 1 803 3 324 3 612 7 210 -9.0 -2.5 -8.0
product
ion,
1 000 t
-----------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Sales prices in local currencies were lower and deliveries and production
lower than a year ago as demand weakened. Lower prices for paper for
recycling reduced variable costs slightly and fixed costs remained stable.
-- As is now evident, the continuing deterioration in demand for paper
products required the further streamlining and structure simplification
actions announced on 23 April 2013 to adjust to the new supply and demand
balance.
-- Hylte Mill PM 2 and Kvarnsveden Mill PM 11 in Sweden were permanently shut
down in May.
Markets
Produc Market Demand Q2/13 Demand Q2/13 Price Q2/13 Price Q2/13
t compared with compared with compared with compared with
Q2/12 Q1/13 Q2/12 Q1/13
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paper Europe Weaker Slightly weaker Slightly lower Slightly lower
Biomaterials
Biomaterials offers a variety of pulp grades to meet the demands of paper,
board and tissue producers. Pulp made from renewable resources in a sustainable
manner is an excellent raw material with many different end uses. Biomaterials
comprises mainly tree plantations, the Group's joint-venture Veracel and Montes
del Plata pulp mills, and Nordic stand-alone pulp mills.
EUR Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change % Change % Change
million 13 12 Q2/13-Q2 Q2/13-Q1 %
/12 /13 Q1-Q2/
13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Sales 257 257 246 514 488 1 012 4.5 - 5.3
Operatio 22 28 13 50 28 99 69.2 -21.4 78.6
nal
EBITDA
Operatio 14 22 15 36 22 82 -6.7 -36.4 63.6
nal EBIT
% of 5.4 8.6 6.1 7.0 4.5 8.1 -11.5 -37.2 55.6
sales
Operatio 3.8 6.0 4.2 5.1 3.0 5.7 -9.5 -36.7 70.0
nal
ROOC,
%*
Pulp 461 475 439 936 898 1 836 5.0 -2.9 4.2
deliver
ies,
1 000 t
-----------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Slightly lower sales prices
in local currency were offset by higher sales volumes
year-on-year
, mainly due to Enocell.
-- Fixed costs were negatively impacted by the biorefinery and in addition,
operational EBIT by the strategic investment in Montes del Plata.
-- Montes del Plata Pulp Mill is estimated to begin the mill start-up process
at the end of third quarter of 2013.
Montes del Plata Pulp Mill is expected to have limited impact on the
Group's sales and slightly negative impact on operational EBIT in 2013. In
2014 the Group's sales are expected to be affected by 650 000 tonnes of
Montes del Plata pulp with full positive EBITDA impact in the latter part
of the year 2014 provided that the current market conditions prevail.
-- Stora Enso is investing EUR 32 million in a world-class biorefinery at
Sunila Mill in Finland.
-- There will be an annual maintenance stoppage at Enocell Mill in Finland
during the third quarter of 2013.
Markets
Produc Market Demand Q2/13 Demand Q2/13 Price Q2/13 Price Q2/13
t compared with compared with compared with compared with
Q2/12 Q1/13 Q2/12 Q1/13
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Softwo Europe Slightly Slightly weaker Stable Slightly
od stronger higher
pulp
Building and Living
Building and Living provides wood-based innovations and solutions for everyday
living and housing needs. The product range covers all areas of urban
construction, from supporting structures to interior design and environmental
construction. Further-processed products include massive wood elements and
housing modules, wood components and pellets, in addition to a variety of sawn
timber goods.
EUR Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change % Change % Change
million 13 12 Q2/13-Q2 Q2/13-Q1 %
/12 /13 Q1-Q2/
13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Sales 500 441 444 941 825 1 684 12.6 13.4 14.1
Operatio 39 13 21 52 32 59 85.7 200.0 62.5
nal
EBITDA
Operatio 28 4 11 32 21 29 154.5 n/m 52.4
nal EBIT
% of 5.6 0.9 2.5 3.4 2.5 1.7 124.0 n/m 36.0
sales
Operatio 20.0 2.8 7.5 11.5 7.3 5.2 166.7 n/m 57.5
nal
ROOC,
%*
Deliveri 1 303 1 113 1 254 2 416 2 363 4 592 3.9 17.1 2.2
es,
1 000 m3
-----------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Sales prices in local currencies were higher than a year ago, especially in
overseas markets.
-- The performance improvement was mainly due to exceptionally strong seasonal
market conditions and improved cost performance resulting from the early
start of the streamlining programme.
-- Stora Enso has agreed to supply modular CLT-based elements for residential
buildings of five to seven storeys in Helsinki constructed in co-operation
with SRV Yhtiöt Oyj.
Markets
Produc Market Demand Q2/13 Demand Q2/13 Price Q2/13 Price Q2/13
t compared with compared with compared with compared with
Q2/12 Q1/13 Q2/12 Q1/13
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Wood Europe Slightly Significantly Slightly Slightly
produ stronger stronger higher higher
cts
Renewable Packaging
Renewable Packaging offers fibre-based packaging materials and innovative
packaging solutions for consumer goods and industrial applications. Renewable
Packaging operates throughout the value chain, from pulp production to
production of materials and packaging, and recycling. It comprises three
business units: Consumer Board, Packaging Solutions and Packaging Asia.
EUR million Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change Change Change
13 12 % % %
Q2/13- Q2/13- Q1-Q2/
Q2/12 Q1/13 13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Sales 835 820 827 1 655 1 606 3 216 1.0 1.8 3.1
Operational 129 119 123 248 236 476 4.9 8.4 5.1
EBITDA
Operational 77 68 73 145 135 273 5.5 13.2 7.4
EBIT
% of sales 9.2 8.3 8.8 8.8 8.4 8.5 4.5 10.8 4.8
Operational 12.7 11.4 13.1 12.2 12.2 12.1 -3.1 11.4 -
ROOC, %*
Paper and 856 812 812 1 668 1 578 3 138 5.4 5.4 5.7
board
deliveries,
1 000 t
Paper and 855 836 807 1 691 1 574 3 147 5.9 2.3 7.4
board
production,
1 000 t
Corrugated 271 260 282 531 543 1 097 -3.9 4.2 -2.2
packaging
deliveries,
million m2
Corrugated 267 258 275 525 532 1 076 -2.9 3.5 -1.3
packaging
production,
million m2
-------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Sales volumes were higher, driven by consumer board and the new
Ostrołęka Mill
PM 5, but average sales prices in local currencies were slightly lower.
Lower fixed and variable costs more than offset slightly higher
depreciation due to
Ostrołęka Mill
PM 5. Exchange rates had a positive net impact on sales and costs after
hedges.
-- Stora Enso and Packages Ltd. completed the process of establishing a joint
venture called Bulleh Shah Packaging (Private) Limited in Pakistan in May.
-- To accelerate access to the growing Chinese market, Stora Enso will launch
its integrated mill project in Guangxi, China in two phases, starting with
building a consumer board machine. The first-phase capital expenditure is
expected to be EUR 760 million.
-- The new Ostrołęka Mill PM 5 production is proceeding according to plan and
the EBITDA margin is expected to be approximately 20% during the latter
part of 2013.
-- In June Stora Enso announced that it is investing approximately EUR 32
million in Skoghall Mill in Sweden. The investment primarily pertains to
rebuilding of a fibre line in the sulphate pulp mill and its chemical
recovery operations, thereby increasing the mill's pulp production capacity
by 45 000 tonnes per year.
-- In June Stora Enso decided to commence a feasibility study with the aim of
converting the Varkaus Mill fine paper machine in Finland to produce
virgin-fibre-based containerboard.
-- There will be an annual maintenance stoppage at Imatra Mills in Finland
during the third quarter of 2013.
Markets
Product Market Demand Q2/13 Demand Q2/13 Price Q2/13 Price Q2/13
compared with compared with compared compared with
Q2/12 Q1/13 with Q2/12 Q1/13
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consumer Europe Slightly Slightly Slightly Stable
board stronger stronger lower
Corrugate Europe Slightly Slightly Slightly Stable
d weaker stronger higher
packagin
g
Other
The segment Other includes the Nordic forest equity accounted investments,
Stora Enso's shareholding in Pohjolan Voima, operations supplying wood to the
Nordic mills and Group shared services and administration.
EUR Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change % Change % Change
million 13 12 Q2/13-Q2 Q2/13-Q1 %
/12 /13 Q1-Q2/
13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Sales 685 721 663 1 406 1 366 2 684 3.3 -5.0 2.9
Operatio 6 8 -14 14 -23 -33 142.9 -25.0 160.9
nal
EBITDA
Operatio 22 22 2 44 5 23 n/m - n/m
nal EBIT
% of 3.2 3.1 0.3 3.1 0.4 0.9 n/m 3.2 n/m
sales
-----------------------------------------------------------------------
-- Operational EBIT in Nordic wood sourcing operations continued to benefit
from good harvesting conditions in the beginning of the quarter, but
returned to normal towards the end of the quarter.
-- Costs were lower in Group functions and services.
Short-term Risks and Uncertainties
The main short-term risks and uncertainties relate to the economic situation in
Europe and further increasing imbalance in the European paper market.
Energy sensitivity analysis: the direct effect of a 10% increase in
electricity, heat, oil and other fossil fuel market prices would have a
negative impact of approximately EUR 15 million on operational EBIT for the
next twelve months, after the effect of hedges.
Wood sensitivity analysis: the direct effect of a 10% increase in wood prices
would have a negative impact of approximately EUR 200 million on operational
EBIT for the next twelve months.
Chemicals and fillers sensitivity: the direct effect of a 10% increase in
chemical and filler prices would have a negative impact of approximately EUR 63
million on operational EBIT for the next twelve months.
A decrease in energy, wood or chemical and filler prices would have the
opposite impact.
Foreign exchange rates sensitivity analysis for the next twelve months: the
direct effect on operational EBIT of a 10% strengthening in the value of the US
dollar, Swedish krona and British pound against the euro would be about
positive EUR 104 million, negative EUR 81 million and positive EUR 51 million
annual impact, respectively. Weakening of the currencies would have the
opposite impact. These numbers are before the effect of hedges and assuming no
changes occur other than a single currency exchange rate movement.
Veracel
On 11 July 2008 Stora Enso announced that a federal judge in Brazil had issued
a decision claiming that the permits issued by the State of Bahia for the
operations of Stora Enso's equity accounted investment Veracel were not valid.
The judge also ordered Veracel to take certain actions, including reforestation
with native trees on part of Veracel's plantations and a possible BRL 20
million (EUR 7 million) fine. Veracel disputes the decision and has filed an
appeal against it. Veracel operates in full compliance with all Brazilian laws
and has obtained all the necessary environmental and operating licences for its
industrial and forestry activities from the competent authorities. In November
2008 a Federal Court suspended the effects of the decision. Veracel has not
recorded any provision for the reforestation or the possible fine.
On 30 September 2009 a judge in the State of Bahia issued an interim decision
ordering the State Government of Bahia not to grant Veracel further plantation
licences in the municipality of Eunápolis in response to claims by a state
prosecutor that Veracel's plantations exceeded the legal limits, which Veracel
disputes. Veracel's position is supported by documentation issued by the State
environmental authority.
Class Action Lawsuits in USA
In the context of magazine paper sales in the USA in 2002 and 2003, Stora Enso
Oyj (SEO) and Stora Enso North America (SENA) were sued in a number of class
action (and other civil) lawsuits filed in the USA by various magazine paper
purchasers that claimed damages for alleged antitrust violations. In December
2010 a US federal district court granted a motion for summary judgement
dismissing the direct purchaser class action claims on SEO and SENA. Following
appeal, a federal court of appeals on 6 August 2012 upheld the district court's
ruling as to SEO, but reversed the district court's ruling as to SENA and
referred that part of the case back to the district court for a jury trial to
determine whether SENA's conduct did violate the federal antitrust laws. The
trial of the case against SENA was scheduled to begin in August 2013. Because
Stora Enso disposed of SENA in 2007, Stora Enso's liability, if any, would have
been determined by the provisions in the SENA Sales and Purchasing Agreement.
On 17 July 2013, Stora Enso reached an agreement (which is subject to approval
by the US federal district court) to settle the cases filed by the direct
magazine paper purchasers without any admission of liability by SENA or SEO.
Stora Enso has set aside USD 8 million to cover the cost of settling those
claims, which cost will be recorded in the third quarter 2013 accounts. The
case has been disclosed as a contingent liability. There are no provisions
related to the case in Stora Enso's balance sheet per 30 June 2013.
Furthermore, most of the indirect purchaser actions have been dismissed by a
consent judgement, subject, however, to being reinstated if the plaintiffs in
the direct cases would have been ultimately successful in obtaining a final
judgement that SENA violated antitrust laws.
Legal Proceedings in Finland
On 3 December 2009 the Finnish Market Court fined Stora Enso for competition
law infringements in the market for roundwood in Finland from 1997 to 2004.
Stora Enso did not appeal against the ruling.
On 31 March 2011 Metsähallitus of Finland initiated legal proceedings against
Stora Enso, UPM and Metsäliitto claiming compensation for damages allegedly
suffered due to the competition law infringements. The total claim against all
the defendants amounts to approximately EUR 160 million and the secondary claim
against Stora Enso to approximately EUR 85 million.
In addition, Finnish municipalities and private forest owners have initiated
similar legal proceedings. The total amount claimed from all the defendants
amounts to approximately EUR 75 million and the secondary claims and claims
solely against Stora Enso to approximately EUR 25 million.
Stora Enso denies that Metsähallitus and other plaintiffs have suffered any
damages whatsoever and will forcefully defend itself. No provisions have been
made in Stora Enso's accounts for these lawsuits.
Changes in Organisational Structure and Group Management
On 31 May 2013 Stora Enso announced that from 1 July 2013 onwards the Stora
Enso Group Leadership Team would comprise the following persons and roles:
Jouko Karvinen, Chief Executive Officer
Juan Bueno, Head of Biomaterials Division
Lars Häggström, Head of Global People and Organisation
Per Lyrvall, Head of Global Ethics and Compliance, General Counsel, Country
Senior Executive, Sweden
Mats Nordlander, Head of Renewable Packaging Division
Lauri Peltola, Head of Global Identity, Country Senior Executive, Finland
Karl-Henrik Sundström, Head of Printing and Living Division, Deputy CEO
Jyrki Tammivuori, acting Chief Financial Officer
Juha Vanhainen, Project Director for the recently announced EUR 200 million
streamlining and structure simplification programme.
Share Capital
During the quarter 400 A shares were converted into R shares. The shares were
recorded in the Finnish trade register on 15 May 2013.
Share cancellation
On 15 May 2013, 918 512 treasury R shares (approximately 0.12% of the issued
shares) were cancelled in accordance with a decision of Stora Enso's Annual
General Meeting on 23 April 2013.
On 30 June 2013, Stora Enso had 177 146 372 A shares and 611 473 615 R shares
in issue of which the Company held no A shares or R shares.
Changes in shareholdings
In April-June the number of shares in Stora Enso Oyj held by Norges Bank (The
Central Bank of Norway) was twice temporarily less than 5% of the paid-up share
capital and the number of shares in Stora Enso Oyj due to share lending
transactions.
Decisions of Annual General Meeting on 23 April 2013
The AGM approved the proposal by the Board of Directors that the Company
distributes a dividend of EUR 0.30 per share for the year 2012.
The AGM approved a proposal that the Board of Directors shall have ten members
and that of the current members of the Board of Directors, Gunnar Brock, Hock
Goh, Birgitta Kantola, Mikael Mäkinen, Juha Rantanen, Hans Stråberg, Matti
Vuoria and Marcus Wallenberg shall be re-elected members of the Board of
Directors until the end of the following AGM and that Elisabeth Fleuriot and
Anne Brunila be elected new members of the Board of Directors for the same term
of office.
The AGM approved a proposal that the current auditor Authorised Public
Accountants Deloitte & Touche Oy shall be re-elected auditor of the Company
until the end of the following AGM. The AGM approved a proposal that
remuneration for the auditor shall be paid according to invoice approved by the
Financial and Audit Committee.
The AGM approved a proposal that a Nomination Board be appointed to prepare
proposals concerning (a) the number of members of the Board of Directors, (b)
the members of the Board of Directors, (c) the remuneration for the Chairman,
Vice Chairman and members of the Board of Directors and (d) the remuneration
for the Chairman and members of the committees of the Board of Directors.
The AGM approved a proposal by the Board of Directors that 918 512 treasury R
shares be cancelled.
Decisions by Board of Directors
At its meeting held after the AGM, the Stora Enso Board of Directors re-elected
from among its members Gunnar Brock as its Chairman and Juha Rantanen as Vice
Chairman.
Birgitta Kantola (chairwoman), Gunnar Brock and Juha Rantanen were re-elected
and Mikael Mäkinen elected as members of the Financial and Audit Committee.
Gunnar Brock (chairman), Hans Stråberg and Matti Vuoria were re-elected as
members of the Remuneration Committee.
Anne Brunila (chairwoman) and Birgitta Kantola were elected as members of the
new Global Responsibility and Ethics Committee that focuses on responsibility
and ethics matters.
This report is unaudited.
Helsinki, 19 July 2013
Stora Enso Oyj
Board of Directors
Financials
Basis of Preparation
This unaudited interim financial report has been prepared in accordance with
the accounting policies set out in International Accounting Standard 34 on
Interim Financial Reporting and in the Group's Annual Report for 2012.
The Group has applied the following amendment effective from 1 January 2013
that requires restatement of previous financial statements:
-- IAS 19 Employee Benefits (amendment) eliminates the ‘corridor method',
streamlines the presentation of changes in assets and liabilities arising
from defined benefit plans and enhances the disclosure requirements arising
from the standard. The Group has not applied the ‘corridor method'. The
effects of this amendment on the Group financial statements are not
material. The effects on the Condensed Consolidated Income Statement and
Statement of Financial Position are the following:
Effects of Changes to IAS 19 Employee Benefits
EUR million As published 2012 Adjustment Restated
2012 2012
---------------------------------------------------------------------------
Operational EBIT 618 12 630
Operating profit (IFRS) 689 12 701
Net financial items -207 -13 -220
Profit before tax 482 -1 481
Income tax 9 - 9
Net profit for the period 491 -1 490
Attributable to:
Owners of the Parent 481 -1 480
Non-controlling interests 10 - 10
----------------------------------------
491 -1 490
Total equity 5 876 -14 5 862
Post-employment benefit provisions 462 18 480
Deferred tax liabilities 344 -4 340
----------------------------------------
The following standards have also been applicable effective from 1 January 2013:
-- IAS 1 Presentation of Financial Statements (amendment) introduces changes
to the presentation of items of other comprehensive income. Items that
could be reclassified to profit or loss at a future point in time now have
to be presented separately from items that will never be reclassified. The
amendment affected presentation only and had no impact on the Group's
financial position or performance.
-- IFRS 7 Financial Instruments: Enhanced disclosure requirements related to
offsetting of financial assets and financial liabilities. The amendment
might have some effect on presentation in the financial statements but had
no impact on the Group's financial position or performance.
-- IFRS 13 Fair Value Measurement establishes the definition of fair value and
introduces a single IFRS framework for measuring fair value while seeking
to increase consistency and comparability by requiring disclosures about
fair value measurements applied in the financial statements of an entity.
The application of IFRS 13 has not materially affected the fair value
measurements carried out by the Group. The new standard also requires
specific disclosures on fair values, some of which replace existing
disclosure requirements in other standards. Some of these disclosures are
specifically required for financial instruments, thereby affecting the
interim financial statement. The additional disclosures are included in
this Interim Review.
-- IAS 12 Income Taxes (amendment) provides additional regulation on deferred
tax in the case of recovery of underlying assets. The amendment is not
relevant to the Group.
-- IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
introduces accounting treatment for stripping costs arising in the mining
industry. The interpretation is not relevant to the Group.
All figures in this Interim Review have been rounded to the nearest million,
unless otherwise stated.
Condensed Consolidated Income Statement
EUR Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012 Change Change Change
million 13 12 % % %
Q2/13- Q2/13- Q1-Q2/
Q2/12 Q1/13 13-
Q1-Q2/
12
--------------------------------------------------------------------------------
Sales 2 717 2 667 2 721 5 384 5 394 10 815 -0.1 1.9 -0.2
Other 25 33 80 58 124 219 -68.8 -24.2 -53.2
operati
ng
income
Material -1 776 -1 724 -1 737 -3 500 -3 467 -6 974 -2.2 -3.0 -1.0
s and
service
s
Freight -249 -258 -250 -507 -492 -1 008 0.4 3.5 -3.0
and
sales
commiss
ions
Personne -362 -353 -370 -715 -709 -1 349 2.2 -2.5 -0.8
l
expense
s
Other -160 -185 -142 -345 -291 -578 -12.7 13.5 -18.6
operati
ng
expense
s
Share of 14 26 -6 40 9 108 n/m -46.2 n/m
results
of
equity
account
ed
investm
ents
Deprecia -135 -186 -141 -321 -286 -532 4.3 27.4 -12.2
tion and
impairm
ent
-----------------------------------------------------------------------
Operatin 74 20 155 94 282 701 -52.3 270.0 -66.7
g Profit
Net -47 -56 -70 -103 -107 -220 32.9 16.1 3.7
financi
al items
-----------------------------------------------------------------------
Profit/L 27 -36 85 -9 175 481 -68.2 175.0 -105.1
oss
before
Tax
Income -6 20 -16 14 -32 9 62.5 -130.0 143.8
tax
-----------------------------------------------------------------------
Net 21 -16 69 5 143 490 -69.6 231.3 -96.5
Profit/
Loss for
the
Period
Attribut
able to:
Owners 19 -17 65 2 138 480 -70.8 211.8 -98.6
of the
Parent
Non-cont 2 1 4 3 5 10 -50.0 100.0 -40.0
rolling
interes
ts
-----------------------------------------------------------------------
21 -16 69 5 143 490 -69.6 231.3 -96.5
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Earnings
per
Share
Basic 0.02 -0.02 0.08 0.00 0.17 0.61 -75.0 200.0 -100.0
earning
s per
share,
EUR
Diluted 0.02 -0.02 0.08 0.00 0.17 0.61 -75.0 200.0 -100.0
earning
s per
share,
EUR
-----------------------------------------------------------------------
Consolidated Statement of Comprehensive Income
EUR million Q2/13 Q1/13 Q2/12 Q1-Q2/ Q1-Q2/ 2012
13 12
--------------------------------------------------------------------------------
Net profit for the period 21 -16 69 5 143 490
Other Comprehensive Income
Items that will Not be Reclassified
to Profit and Loss
Actuarial losses on defined benefit - - -4 - -8 -184
plans
Share of other comprehensive income - -1 - -1 -5 -5
of equity accounted investments that
will not be reclassified
Income tax relating to items that - - 2 - 3 35
will not be reclassified
------------------------------------------
- -1 -2 -1 -10 -154
Items that may be Reclassified
Subsequently to Profit and Loss
Share of other comprehensive income 10 3 -10 13 -7 1
of equity accounted investments that
be reclassified
Currency translation movements on -174 77 -17 -97 - -29
equity net investments (CTA)
Currency translation movements on -4 3 1 -1 - -3
non-controlling interests
Net investment hedges 27 -13 -2 14 -8 -17
Currency and commodity hedges -19 -11 -18 -30 6 34
Available-for-sale financial assets -135 -41 -131 -176 -200 -178
Income tax relating to items that may -2 4 3 2 -1 -3
be reclassified
------------------------------------------
------------------------------------------
-297 22 -174 -275 -210 -195
------------------------------------------
Total Comprehensive Income -276 5 -107 -271 -77 141
------------------------------------------
------------------------------------------
Total Comprehensive Income
Attributable to:
Owners of the Parent -274 1 -112 -273 -82 134
Non-controlling interests -2 4 5 2 5 7
------------------------------------------
-276 5 -107 -271 -77 141
------------------------------------------
Condensed Consolidated Statement of Cash Flows
EUR million Q1-Q2/13 Q1-Q2/12
--------------------------------------------------------------------------------
Cash Flow from Operating Activities
Operating profit 94 282
Hedging result from OCI -29 6
Adjustments for non-cash items 310 258
Change in net working capital 33 -47
-------------------
Cash Flow Generated by Operations 408 499
Net financial items paid -65 -97
Income taxes paid, net -20 -73
-------------------
Net Cash Provided by Operating Activities 323 329
-------------------
-------------------
Cash Flow from Investing Activities
Acquisitions of subsidiaries, net of acquired cash - -3
Acquisitions of equity accounted investments -47 -62
Acquisitions of available-for-sale investments -9 -
Proceeds from sale of fixed assets and shares, net of 11 3
disposed cash
Capital expenditure -168 -222
Proceeds from/payments of non-current receivables, net 95 -31
-------------------
Net Cash Used in Investing Activities -118 -315
-------------------
-------------------
Cash Flow from Financing Activities
Proceeds from issue of new long-term debt 12 853
Long-term debt, payments -29 -437
Change in short-term borrowings 38 -81
Dividends paid -237 -237
Dividend to non-controlling interests -6 -
-------------------
Net Cash Used in/Provided by Financing Activities -222 98
-------------------
-------------------
Net Decrease/Increase in Cash and Cash Equivalents -17 112
Translation adjustment -21 -6
Net cash and cash equivalents at the beginning of period 1 845 1 134
-------------------
Net Cash and Cash Equivalents at Period End 1 807 1 240
-------------------
Cash and Cash Equivalents at Period End 1 809 1 249
Bank Overdrafts at Period End -2 -9
-------------------
Net Cash and Cash Equivalents at Period End 1 807 1 240
-------------------
Acquisitions
Cash and cash equivalents, net of bank overdraft - 1
Fixed assets, working capital and net tax assets - -1
-------------------
Total Purchase Consideration - -
Less cash and cash equivalents in acquired companies - -1
-------------------
Net Purchase Consideration - -1
-------------------
Cash part of the consideration, net of acquired cash - 3
Payment concerning unfinished 2011 acquisition - -4
-------------------
Net Purchase Consideration - -1
-------------------
Property, Plant and Equipment, Intangible Assets, Goodwill and Biological Assets
EUR million Q1-Q2/13 2012 Q1-Q2/12
----------------------------------------------------------------------
Carrying value at 1 January 5 541 5 437 5 437
Acquisition of subsidiary companies - 6 1
Additions in tangible and intangible assets 139 536 209
Additions in biological assets 8 20 7
Disposals -16 -2 -2
Depreciation and impairment -321 -532 -286
Translation difference and other -74 76 39
--------------------------
Statement of Financial Position Total 5 277 5 541 5 405
--------------------------
Borrowings
EUR million 30 Jun 13 31 Dec 12 30 Jun 12
----------------------------------------------------------------------
Non-current borrowings 3 769 4 341 3 838
Current borrowings 1 306 793 893
--------------------------------
5 075 5 134 4 731
--------------------------------
--------------------------------
Q2/13 2012 Q2/12
--------------------------------
Carrying value at 1 January 5 134 4 373 4 373
Proceeds of borrowings (net) 21 712 330
Translation difference and other -80 49 28
--------------------------------
Statement of Financial Position Total 5 075 5 134 4 731
--------------------------------
Condensed Consolidated Statement of Financial Position
EUR million 30 Jun 13 31 Dec 12 30 Jun 12
------------------------------------------------------------------------------
Assets
Non-current Assets
PPE*, goodwill and other intangible assets O 5 048 5 319 5 187
Biological assets O 229 222 218
Emission rights O 15 30 39
Equity accounted investments O 1 999 1 965 1 948
Available-for-sale: Interest-bearing I 105 96 93
Available-for-sale: Operative O 279 451 435
Non-current loan receivables I 37 134 209
Deferred tax assets T 162 143 133
Other non-current assets O 19 23 46
--------------------------------
7 893 8 383 8 308
--------------------------------
--------------------------------
Current Assets
Inventories O 1 455 1 458 1 550
Tax receivables T 15 19 20
Operative receivables O 1 739 1 687 1 748
Interest-bearing receivables I 239 297 185
Cash and cash equivalents I 1 809 1 850 1 249
--------------------------------
--------------------------------
5 257 5 311 4 752
--------------------------------
Total Assets 13 150 13 694 13 060
--------------------------------
--------------------------------
Equity and Liabilities
Owners of the Parent 5 261 5 770 5 554
Non-controlling Interests 88 92 92
--------------------------------
Total Equity 5 349 5 862 5 646
--------------------------------
--------------------------------
Non-current Liabilities
Post-employment benefit provisions O 461 480 341
Other provisions O 130 142 141
Deferred tax liabilities T 322 340 419
Non-current debt I 3 769 4 341 3 838
Other non-current operative liabilities O 8 12 26
--------------------------------
4 690 5 315 4 765
--------------------------------
--------------------------------
Current Liabilities
Current portion of non-current debt I 697 181 214
Interest-bearing liabilities I 609 612 679
Operative liabilities O 1 776 1 685 1 710
Tax liabilities T 29 39 46
----------------------
----------
3 111 2 517 2 649
--------------------------------
Total Liabilities 7 801 7 832 7 414
--------------------------------
--------------------------------
Total Equity and Liabilities 13 150 13 694 13 060
--------------------------------
* PPE = Property, Plant and Equipment
Items designated with “O” comprise Operating Capital
Items designated with “I” comprise Interest-bearing Net Liabilities
Items designated with “T” comprise Net Tax Liabilities
Statement of Changes in Equity
EUR Share Share Invest Trea-s Step Availa Curren OCI of CTA
Retain Attrib Non-co Total
milli Capita Premiu ed ury Acquis ble cy and Equity and
ed ut-abl ntroll
on l m and Non-Re Shares ition for Commod Accoun Net
Earnin e to ing
Reserv strict Revalu Sale ity ted Invest
gs Owners Intere
e fund ed ation Financ Hedges Invest ment
of the sts
Equity Surplu ial ments Hedges
Parent
Fund s Assets
--------------------------------------------------------------------------------
-----------------------------
Balanc 1 342 77 633 -10 4 541 -17 -29 32
3 300 5 873 87 5 960
e at
31
Dec
2011
--------------------------------------------------------------------------------
----------------------
Profit - - - - - - - - -
138 138 5 143
for
the
perio
d
OCI - - - - - -200 6 -12 -8
-8 -222 - -222
befor
e tax
Income - - - - - -2 -1 - 2
3 2 - 2
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
----------------------
Total - - - - - -202 5 -12 -6
133 -82 5 -77
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
----------------------
Divide - - - - - - - - -
-237 -237 - -237
nd
--------------------------------------------------------------------------------
----------------------
Balanc 1 342 77 633 -10 4 339 -12 -41 26
3 196 5 554 92 5 646
e at
30
Jun
2012
--------------------------------------------------------------------------------
----------------------
--------------------------------------------------------------------------------
----------------------
Profit - - - - - - - - -
342 342 5 347
for
the
perio
d
OCI - - - - - 22 28 8 -38
-176 -156 -3 -159
befor
e tax
Income - - - - - 1 -5 - 2
32 30 - 30
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
----------------------
Total - - - - - 23 23 8 -36
198 216 2 218
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
----------------------
Divide - - - - - - - - -
- - -2 -2
nd
--------------------------------------------------------------------------------
----------------------
Balanc 1 342 77 633 -10 4 362 11 -33 -10
3 394 5 770 92 5 862
e at
31
Dec
2012
--------------------------------------------------------------------------------
----------------------
--------------------------------------------------------------------------------
----------------------
Profit - - - - - - - - -
2 2 3 5
for
the
perio
d
OCI - - - - - -176 -30 12 -83
- -277 -1 -278
befor
e tax
Income - - - - - -1 6 - -3
- 2 - 2
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
----------------------
Total - - - - - -177 -24 12 -86
2 -273 2 -271
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
----------------------
--------------------------------------------------------------------------------
----------------------
Divide - - - - - - - - -
-237 -237 -6 -243
nd
Share- - - - - - - - - -
1 1 - 1
based
payme
nts
Cancel - - - 10 - - - - -
-10 - - -
lation
of
treas
ury
share
s
Balanc 1 342 77 633 - 4 185 -13 -21 -96
3 150 5 261 88 5 349
e at
30
Jun
2013
--------------------------------------------------------------------------------
----------------------
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
EUR million 30 Jun 13 31 Dec 12 30 Jun 12
--------------------------------------------------------------------------
On Own Behalf
Pledges - 1 1
Mortgages 6 6 10
On Behalf of Equity Accounted Investments
Guarantees 572 653 529
On Behalf of Others
Guarantees 5 5 5
Other Commitments, Own
Operating leases, in next 12 months 94 92 63
Operating leases, after next 12 months 510 497 555
Other commitments 5 5 5
--------------------------------
Total 1 192 1 259 1 168
-------------------------------- --------------------------------
Pledges - 1 1
Mortgages 6 6 10
Guarantees 577 658 534
Operating leases 604 589 618
Other commitments 5 5 5
--------------------------------
Total 1 192 1 259 1 168
--------------------------------
Capital commitments
The Group's direct capital expenditure contracts, excluding acquisitions,
amounted to EUR 58 million (compared with EUR 200 million at 30 June 2012 and
EUR 72 million at 31 December 2012).
The Group's share of capital expenditure contracts in equity accounted
investments, excluding acquisitions, amounted to EUR 139 million (compared with
EUR 322 million at 30 June 2012 and EUR 213 million at 31 December 2012) of
which Stora Enso has guaranteed EUR 71 million (compared with EUR 189 million
at 30 June 2012 and EUR 189 million at 31 December 2012).
Sales by Segment
EUR million Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
----------------------------------------------------------------------
Printing and Reading 1 101 1 123 4 839 1 194 1 227 1 191 1 227
Biomaterials 257 257 1 012 256 268 246 242
Building and Living 500 441 1 684 456 403 444 381
Renewable Packaging 835 820 3 216 798 812 827 779
Other 685 721 2 684 673 645 663 703
Inter-segment sales -661 -695 -2 620 -650 -661 -650 -659
-------------------------------------------------
Total 2 717 2 667 10 815 2 727 2 694 2 721 2 673 -------------------------------------------------
Operational EBIT by Segment
EUR million Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
--------------------------------------------------------------------------------
Printing and Reading -17 2 223 59 53 43 68
Biomaterials 14 22 82 28 32 15 7
Building and Living 28 4 29 7 1 11 10
Renewable Packaging 77 68 273 55 83 73 62
Other 22 22 23 9 9 2 3
-----------------------------------------------
Operational EBIT 124 118 630 158 178 144 150
Fair valuations and -17 -7 -59 -14 -13 -34 2
non-operational items*
Non-recurring Items -33 -91 130 110 - 45 -25
-----------------------------------------------
Operating Profit (IFRS) 74 20 701 254 165 155 127
Net financial items -47 -56 -220 -50 -63 -70 -37
-----------------------------------------------
-----------------------------------------------
Profit/Loss before Tax 27 -36 481 204 102 85 90
Income tax expense -6 20 9 62 -21 -16 -16
-----------------------------------------------
Net Profit/Loss 21 -16 490 266 81 69 74
-----------------------------------------------
* Fair valuations and non-operational items include equity incentive schemes,
synthetic options net of realised and open hedges, CO2 emission rights,
valuations of biological assets related to forest assets in EAI and Group's
share of tax and net financial items of EAI.
NRI by Segment
EUR million Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
--------------------------------------------------------------------------------
Printing and Reading -30 -84 70 67 - 13 -10
Biomaterials 11 - -7 -7 - - -
Building and Living - -7 - - - - -
Renewable Packaging 4 - -53 -38 - - -15
Other -18 - 120 88 - 32 -
-----------------------------------------------
NRI on Operating Profit -33 -91 130 110 - 45 -25
NRI on Financial items - - 34 11 - 9 14
NRI on tax 9 19 63 56 - 2 5
-----------------------------------------------
NRI on Net Profit -24 -72 227 177 - 56 -6
-----------------------------------------------
-----------------------------------------------
NRI on Net Profit attributable
to
Owners of the Parent -24 -72 221 175 - 52 -6
Non-controlling interests - - 6 2 - 4 -
-----------------------------------------------
-24 -72 227 177 - 56 -6
-----------------------------------------------
Fair Valuations and Non-operational Items* by Segment
EUR million Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
--------------------------------------------------------------------------------
Printing and Reading - - -1 - - - -1
Biomaterials -11 -3 -29 6 -7 -24 -4
Building and Living - - -3 -1 - - -2
Renewable Packaging - - -1 - - - -1
Other -6 -4 -25 -19 -6 -10 10
-----------------------------------------------
Fair Valuations and -17 -7 -59 -14 -13 -34 2
Non-operational Items on
Operating Profit
-----------------------------------------------
* Fair valuations and non-operational items include equity incentive schemes,
synthetic options net of realised and open hedges, CO2 emission rights,
valuations of biological assets related to forest assets in EAI and Group's
share of tax and net financial items of EAI.
Operating Profit/Loss by Segment
EUR million Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
-----------------------------------------------------------------------
Printing and Reading -47 -82 292 126 53 56 57
Biomaterials 14 19 46 27 25 -9 3
Building and Living 28 -3 26 6 1 11 8
Renewable Packaging 81 68 219 17 83 73 46
Other -2 18 118 78 3 24 13
-----------------------------------------------
Operating Profit (IFRS) 74 20 701 254 165 155 127
Net financial items -47 -56 -220 -50 -63 -70 -37
-----------------------------------------------
Profit/Loss before Tax 27 -36 481 204 102 85 90
Income tax expense -6 20 9 62 -21 -16 -16
-----------------------------------------------
Net Profit/Loss 21 -16 490 266 81 69 74
-----------------------------------------------
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
-------------------------------------------------------
30 Jun 13 31 Dec 12 30 Jun 13 31 Dec 12
-------------------------------------------
-------------------------------------------
SEK 8.7773 8.5820 8.5297 8.7067
USD 1.3080 1.3194 1.3135 1.2856
GBP 0.8572 0.8161 0.8512 0.8111
-------------------------------------------
Transaction Risk and Hedges in Main Currencies as at 30 June 2013
EUR million USD SEK GBP
------------------------------------------------------------------------------
------------------------------------------------------------
Estimated annual net operating cash flow exposure 1 040 -810 510
Transaction hedges as at 30 Jun 2013 -500 450 -250
------------------
Hedging Percentage as at 30 Jun 2013 for the Next 12 Months 48% 56% 49%
------------------
Additional USD and GBP hedges for 13-15 months increase the hedging percentages
by 1% and 3% respectively.
Changes in Exchange Rates on Operational EBIT
Operational EBIT: Currency Strengthening of + 10% EUR million
--------------------------------------------------------------
--------------------------------------------------
USD 104
SEK -81
GBP 51
------------
The sensitivity is based on estimated next 12 months net operating cash flow.
The calculation does not take into account currency hedges, and assumes no
changes occur other than a single currency exchange rate movement. Weakening
would have the opposite impact.
Fair Values of Financial Instruments
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities;
• Level 2: other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly;
• Level 3: techniques which use inputs which have a significant effect on the
recorded fair values that are not based on observable market data.
The valuation techniques are described in more detail in the Financial
Statements.
Carrying Amounts of Financial Assets and Liabilities by Measurement and Fair
Value Categories: 30 Jun 2013
EUR million Loans Financial Hedging Availab Carryin Fair
and Items Derivati le- g Value
Receivab at Fair ves for-Sal Amounts
les Value e by
through Financi Balance
Income al Sheet
Statement Assets Item
--------------------------------------------------------------------------------
Financial Assets
Available-for-sale - - - 384 384 384
Non-current loan 37 - - - 37 37
receivables
Trade and other 1 425 - - - 1 425 1 425
operative receivables
Interest-bearing 105 102 32 - 239 239
receivables
Current investments 1 809 - - - 1 809 1 809
and cash
Carrying Amount by 3 376 102 32 384 3 894 3 894
Category
---------------------------------------------------------
EUR million Financial Hedging Measure Carryin Fair
Items Derivati d at g Value
at Fair ves Amortis Amounts
Value ed by
through Cost Balance
Income Sheet
Statement Item
--------------------------------------------------------------------------------
Financial Liabilities
Non-current debt - 4 3 765 3 769 3 980
Current portion of - - 697 697 697
non-current debt
Interest-bearing 110 44 453 607 607
liabilities
Trade and other - - 1 309 1 309 1 309
operative payables
Bank overdrafts - - 2 2 2
Carrying Amount by 110 48 6 226 6 384 6 595
Category
---------------------------------------------------------
EUR million Level 1 Level 2 Level 3 Total
--------------------------------------------------------------------------------
Derivative Financial - 134 - 134
Assets
Available-for-sale 10 - 374 384
Financial Assets
Derivative Financial - 158 - 158
Liabilities
---------------------------------------------------------
Reconciliation of Level 3 Fair Value Measurement of Financial Assets: 30 Jun
2013
EUR million Unlisted Unlisted Interest-bearing Total
Shares Securities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Opening balance at 1 January 2013 451 90 541
Losses recognised in other -180 - -180
comprehensive income
Additions 9 - 9
Disposals -1 - -1
Interest capitalised - 5 5
----------------------------------------------
Closing Balance at 30 June 2013 279 95 374
----------------------------------------------
Unlisted shares
The unlisted shares comprise mainly PVO shares for which the valuation method
is described in more detail in the Annual Report. The valuation is most
sensitive to changes in electricity prices and discount rates. The discount
rate of 4.57% used in the valuation model is determined using the weighted
average cost of capital method. A +/- 5% change in the electricity price used
in the DCF would change the valuation by +/- EUR 76 million and a +/- 1% change
in the discount rate would change the valuation by -/+ EUR 107 million.
Stora Enso Shares
---------------
Trading volume Helsinki Stockholm
------------------------------------------
A share R share A share R share
---------------------------------------------------------
April 82 353 95 508 292 91 582 38 620 347
May 37 550 73 719 905 140 437 26 711 370
June 39 434 58 050 759 69 084 16 541 339
------------------------------------------
Total 159 337 227 278 956 301 103 81 873 056
------------------------------------------
Closing Price Helsinki, EUR Stockholm, SEK
------------------------------------------ A share R share A share R share
---------------------------------------------------------
April 6.21 5.28 54.20 45.10
May 6.12 5.64 54.45 48.77
June 5.80 5.15 51.95 45.38
------------------------------------------
Calculation of Key Figures
Operational return on capital employed, operational ROCE 100 x Operational
(%) EBIT
Capital
employed 1)
2)
Operational return on operating capital, operational 100 x Operational
ROOC (%) EBIT
Operating
capital 1) 2)
Return on equity, 100 x Profit before
ROE (%) tax and
non-controlli
ng items -
taxes
Total equity
2)
Equity ratio (%) 100 x Total equity
Total assets
Interest-bearing net liabilities Interest-beari
ng liabilities -
interest-bear
ing assets
Debt/equity ratio Interest-beari
ng net
liabilities
Equity 3)
Fixed asset
CEPS Net
profit/loss
for the
period 3) -
depreciation
and
impairment
Average number
of shares
EPS Net
profit/loss
for the
period 3)
Average number
of shares
Operational EBIT Operating
profit/loss excluding NRI
and fair
valuations of
the
segments and
Stora Enso's
share of
operating
profit/loss
excluding NRI
and fair
valuations of
its equity
accounted
investments
(EAI)
Operational EBITDA Operating
profit/loss
excluding
fixed asset
depreciation
and
impairment,
share of
results of
equity accounted
investments,
NRI and fair
valuations
Net debt to operational EBITDA ratio Interest-beari
ng net
liabilities
Operational
EBITDA
Last twelve months (LTM) Twelve months
preceding the
reporting
date
1) Capital employed = Operating capital - Net tax liabilities
2) Average for the financial period
3) Attributable to owners of the Parent
For further information, please contact:
Jouko Karvinen, CEO, tel. +358 2046 21410
Jyrki Tammivuori, CFO, tel. +358 2046 21043
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 40 763 8767
Sanna Lahti, SVP, Global Communications, tel. +358 2046 21251
Stora Enso's third quarter 2013 results will be published on 22 October 2013 at
13.00 EET.
ANALYST CONFERENCE CALL
CEO Jouko Karvinen, CFO Jyrki Tammivuori, EVP Printing and Living (CFO until 30
June 2013) Karl-Henrik Sundström and SVP Investor Relations Ulla
Paajanen-Sainio will be hosting a combined conference call and webcast today at
14.00 Finnish time (13.00 CET, 12.00 UK time, 07.00 US Eastern time).
If you wish to participate, please dial:
Continental Europe and the UK +44 (0) 20 3427 1914
Finland +358 (0) 9 6937 9543
Sweden +46 (0) 8 5065 3936
USA +1 646 254 3362
Access code: 9521270
The live webcast may be accessed at www.storaenso.com/investors
Stora Enso is the global rethinker of the paper, biomaterials, wood products
and packaging industry. We always rethink the old and expand to the new to
offer our customers innovative solutions based on renewable materials. Stora
Enso employs some 28 000 people worldwide, and our sales in 2012 amounted to
EUR 10.8 billion. Stora Enso shares are listed on NASDAQ OMX Helsinki (STEAV,
STERV) and Stockholm (STE A, STE R). In addition, the shares are traded in the
USA as ADRs (SEOAY) in the International OTCQX over-the-counter market.
It should be noted that certain statements herein which are not historical
facts, including, without limitation those regarding expectations for market
growth and developments; expectations for growth and profitability; and
statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or
similar expressions, are forward-looking statements within the meaning of the
United States Private Securities Litigation Reform Act of 1995. Since these
statements are based on current plans, estimates and projections, they involve
risks and uncertainties, which may cause actual results to materially differ
from those expressed in such forward-looking statements. Such factors include,
but are not limited to: (1) operating factors such as continued success of
manufacturing activities and the achievement of efficiencies therein, continued
success of product development, acceptance of new products or services by the
Group's targeted customers, success of the existing and future collaboration
arrangements, changes in business strategy or development plans or targets,
changes in the degree of protection created by the Group's patents and other
intellectual property rights, the availability of capital on acceptable terms;
(2) industry conditions, such as strength of product demand, intensity of
competition, prevailing and future global market prices for the Group's
products and the pricing pressures thereto, price fluctuations in raw
materials, financial condition of the customers and the competitors of the
Group, the potential introduction of competing products and technologies by
competitors; and (3) general economic conditions, such as rates of economic
growth in the Group's principal geographic markets or fluctuations in exchange
and interest rates.
www.storaenso.com
www.storaenso.com/investors
STORA ENSO OYJ
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