Stora Enso Oyj - Interim report (Q1 and Q3)

Stora Enso interim report January–September 2017

Solid performance: A step change in our transformation
STORA ENSO OYJ, Helsinki, Finland
INTERIM REPORT 25 October 2017 at 9.30 EEST
Q3/2017 (year-on-year)

  · Sales of EUR 2 509 (EUR 2 393) million increased 4.8%: the third consecutive
quarter of sales growth.
  · Sales excluding the paper business increased 11.1%.
  · Operational EBIT increased 32.4% to EUR 290 (EUR 219) million. This was
mainly due to favourable sales prices and increased volumes from the recent
strategic investments, and good cost management.
  · Balance sheet continued strengthening; net debt to operational EBITDA was
1.8 (2.1).
  · The ramp-up of Beihai Mill continues to proceed ahead of plan, and it is
expected to reach full production during the first half of 2018, and operational
EBITDA break-even in Q4/2017.
  · Stora Enso announced today investments of EUR 94 million to grow in
renewable materials and to increase competitiveness in consumer board and
biomaterials.

Q1–Q3/2017 (year-on-year)

  · Sales at EUR 7 534 (EUR 7 364) million increased 2.3%. Sales excluding the
paper business increased 9.2%.
  · Operational EBIT at EUR 724 (EUR 693) million increased 4.5%, mainly due to
higher volumes.

Key figures

EUR million  Q3/17  Q3/16  Change   Q2/17  Change   Q1–Q3/  Q1–Q3/  Change
2016
                           %               %                        % Q1
                             Q3/17           Q3/17                  -Q3/17–
                                                                    Q1
                                                    17      16      -Q3/16

                           –               –
                             Q3/16           Q2/17

Sales        2      2      4.8%     2      -0.8%    7       7       2.3%     9
             509    393             528             534     364              802
Operational  410    343    19.5%    341    20.2%    1       1       4.0%     1
EBITDA                                              103     061              371
Operational  290    219    32.4%    219    32.4%    724     693     4.5%     884
EBIT
Operational  11.6%  9.2%            8.7%            9.6%    9.4%
9.0%
EBIT margin
Operating    270    196    37.8%    205    31.7%    668     638     4.7%     783
profit
(IFRS)
Profit       244    170    43.5%    153    59.5%    588     465     26.5%    575
before tax
excl.
IAC
Profit       224    161    39.1%    145    54.5%    533     465     14.6%    541
before tax
Net profit   191    119    60.5%    143    33.6%    441     351     25.6%    407
for the
period
Net          2      2      -14.6%   2      -9.1%    2       2       -14.6%   2
interest     476    899             724             476     899              726
-bearing
liabilities
Operational  13.9%  10.1%           10.3%           11.4%   10.6%
10.2%
ROCE
Earnings     0.27   0.17            0.19            0.63    0.48
0.65
per
share (EPS)
excl. IAC,
EUR
EPS          0.24   0.16            0.19            0.57    0.47
0.59
(basic),
EUR
Net          1.8    2.1             2.0             1.8     2.1              2.0
debt/last
12
months’
operational
EBITDA
ratio
Average      27     26     0.7%     26     1.6%     26      26      0.0%     26

number of    001    819             581             371     372              269
employees

Stora Enso’s CEO Karl-Henrik Sundström comments on the third quarter 2017
results:
“During the quarter, we have made a step change in our transformation towards a
renewable materials growth company. I am very pleased to announce the third
consecutive quarter of sales growth, with an increase of almost 5%. This is
mainly driven by our steady progress in the transformation projects in China,
Varkaus and Murów. Additionally, a favourable price development had a positive
impact. If we look at sales excluding the paper business, it increased over 11%.
Operational EBIT increased over 32% to EUR 290 million, primarily due to
favourable sales prices, increased volumes from strategic investments and
efficient cost control. The balance sheet continued to strengthen, as net debt
to operational EBITDA improved to 1.8 (2.1).
The transformation projects continue to deliver and contribute to solidifying
our position in the bioeconomy. The ramp-up of Beihai Mill remains ahead of plan
with a production volume of 105 000 (52 000) tonnes of consumer packaging board
during the quarter. I am also satisfied that we have reached our targeted
operational EBITDA run-rate for the Varkaus kraftliner mill. We expect full
production in the fourth quarter this year. Another positive development is the
turnaround in China Packaging, where we have seen increased deliveries coupled
with operational improvements.
Today, we are happy to announce two important investments in Finland. We
continue to invest in Finland, while expecting that the competitiveness of its
export industry is ensured and further improved globally.
We will invest EUR 52 million to increase our total dissolving pulp capacity,
from 150 000 tonnes to 430 000 tonnes annually at Enocell Mill. Our dissolving
pulp is used in the production of viscose fibres for the textile industry. It is
a renewable raw material which can replace fossil-based products, such as
polyester.
We will also invest EUR 42 million to enhance our chemi-thermomechanical pulp
(CTMP) annual production volume and drying capacity at Imatra Mills. This will
boost our competitiveness in the liquid packaging board and food service board
segments. It will also enable us to take the next steps in the commercialisation
of micro-fibrillated cellulose (MFC). MFC can be used for lighter, more durable
packaging that requires less raw material. The investments will support our
competitiveness and contribute to sustainable growth.
I am proud that we have been top ranked in a study by Mistra Center for
Sustainable Markets at the Stockholm School of Economics. The study explored how
Sweden’s largest companies communicate their sustainability aspirations,
implementation and evaluation.
As always, I would like to thank our customers for their business, our
employees for their dedication, and our investors for their trust.”
Outlook
Q4/2017 sales are estimated to be similar to or slightly higher than the amount
of EUR 2 509 million recorded in the third quarter, and operational EBIT is
expected to be somewhat lower than or even in line with the EUR 290 million
recorded in Q3/2017. The operational EBIT estimate for Q4/2017 includes the
negative EUR 7 million impact of the ramp-up of the Beihai operations.
As earlier announced, the Beihai Mill is expected to reach operational EBITDA
-breakeven during Q4/2017. The impact of annual maintenance shutdowns is
expected to be approximately EUR 10 million higher than in Q3/2017, and it is
included in the above guidance.
Events today:
1) Webcast for media at 12.00 Finnish time (11.00 CEST)
Stora Enso’s CEO Karl-Henrik Sundström and CFO Seppo Parvi will present the
results in a live webcast hosted by EVP Communications Ulrika Lilja. The event
will be held in English. The webcast may be accessed at
storaenso.videosync.fi/2017-q3-results/register
2) Webcast and conference call for analysts and investors at 15.00 Finnish time
The webcast and conference call for analysts and investors will take place at
15.00 EEST (14.00 CEST, 13.00 UK time, 08.00 EDT). It will be hosted by CEO Karl
-Henrik Sundström, CFO Seppo Parvi, and SVP Head of Investor Relations Ulla
Paajanen-Sainio, and may be accessed at edge.media-server.com/m6/p/2vnrfvqa
Those analysts and investors who wish to ask questions should join the
conference call (details below). All participants can follow the presentation
over the webcast. The links to the webcasts are also available on the Stora Enso
website: storaenso.com/investors (http://www.storaenso.com/investors)
Dial-in details for the analyst and investor conference call

Live event
at 15.00
EEST
UK            +44(0)20 3427 1904

Finland       +358 (0)9 6937 9590
Sweden        +46 (0)8 5033   6539
USA           +1 646 254 3388
Confirmation  3750266
Code:

For further information, please contact:
Seppo Parvi, CFO, tel. +358 2046 21205
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 40 763 8767
Ulrika Lilja, EVP, Communications, tel. +46 72 221 9228
This release is a summary of Stora Enso’s Interim Report January–September 2017.
The complete report is attached to this release as a pdf file. It is also
available on the company website at
storaenso.com (http://www.storaenso.com)/investors.
Stora Enso is a leading provider of renewable solutions in packaging,
biomaterials, wooden constructions and paper on global markets. Our aim is to
replace fossil-based materials by innovating and developing new products and
services based on wood and other renewable materials. We employ some 25 000
people in more than 35 countries, and our sales in 2016 were EUR 9.8 billion.
Stora Enso shares are listed on Nasdaq Helsinki (STEAV, STERV) and Nasdaq
Stockholm (STE A, STE R). In addition, the shares are traded in the USA as ADRs
(SEOAY). storaenso.com (http://www.storaenso.com)
STORA ENSO OYJ
For further information, please contact:
Seppo Parvi
CFO
tel. +358 2046 21205
Ulla Paajanen-Sainio
SVP, Investor Relations
tel. +358 40 763 8767
Ulrika Lilja
EVP, Communications
tel. +46 72 221 9228

Liitteet:

STORAENSO_RESULTS_Q317_ENG.pdf