Stora Enso Oyj - Interim report (Q1 and Q3)

Stora Enso Interim Report January–March 2016

Another quarter of progress

Helsinki, Finland, 2016-04-28 12:00 CEST (GLOBE NEWSWIRE) -- STORA ENSO OYJ
INTERIM REPORT 28 April 2016 at 13.00 EET 

Q1/2016 (compared with Q1/2015)

  -- Sales EUR 
2 445
 (EUR 2 491) million decreased 1.8%. Sales excluding the structurally
     declining paper business and divested Barcelona Mill increased 2.4%,
     primarily due to increasing volumes from Montes del Plata Mill and the
     ramp-up of Varkaus kraftliner mill.
  -- Operational EBIT increased 12.7% to EUR 248 (EUR 220) million, and the
     margin was record high at 10.1%.
  -- EPS EUR 0.15 (EUR 0.16)
  -- Cash flow from operations amounted to EUR 
289 
(EUR 171) million, due to 
increased profitability and continued 
good working capital management; cash flow after investing activities was
     EUR 96 (EUR 29) million.
  -- Continued improvement of the balance sheet; net debt to operational EBITDA
     2.3 (2.6), liquidity reduced to EUR 604 (EUR 1 320) million, as planned.
  -- Operational ROCE 11.3% (10.1%), operational ROCE excluding the Beihai Mill
     investment 13.7% (11.3%).

Q1/2016 (compared with Q4/2015)

  -- Sales declined by 1.7%. Sales excluding the structurally declining paper
     business decreased 0.7%, mainly due to lower sales in Biomaterials and Wood
     Products divisions.
  -- Operational EBIT increased 2.5%, mainly due to lower maintenance costs.

Transformation

  -- Varkaus Mill kraftliner ramp-up proceeding despite some operational
     challenges, full production expected in early 2017, as earlier announced.
     The new production line for wooden building elements (LVL) is scheduled to
     start up in June 2016.
  -- Beihai consumer board mill in China is expected to start up in May 2016. It
     is forecast to take approximately 18 to 24 months for the mill to reach
     full production.
  -- The divestment of Arapoti Mill in Brazil was completed in March.
  -- On 8 April, Stora Enso announced plans to divest its 33.33% ownership in
     the Swedish recycled materials company IL Recycling AB.

Outlook for Q2/2016

Sales are estimated to be slightly higher than the amount of EUR 2 445 million
recorded in Q1/2016. Operational EBIT is expected to be in line with or
somewhat lower than the EUR 248 million recorded in Q1/2016. These estimates
include the negative impact of the scheduled annual maintenance shutdowns at
Montes del Plata pulp mill, Ostrołęka containerboard mill and Langerbrugge
paper mill during Q2/2016. The negative impact from maintenance is expected to
be approximately EUR 25 million higher than in Q1/2016. 



Stora Enso's CEO Karl-Henrik Sundström comments on the first quarter 2016
results: 

“In the first quarter of 2016, sales excluding the structurally declining paper
business and divested Consumer Board Barcelona Mill increased 2.4%. This was
primarily due to increasing volumes at Montes del Plata pulp mill and ramp-up
of Varkaus kraftliner mill. 

Cash flow year-on-year continued to be strong, due to increased profitability
and improved working capital. Furthermore, we had a record high operational
EBIT margin of 10.1%. 

We continue to make progress in transforming into a renewable materials growth
company. The Beihai consumer board mill in China is expected to be operational
next month, i.e. in May 2016, ahead of schedule. The mill will be inaugurated
in June. We expect full production in 18 to 24 months from the start up. The
Varkaus Mill kraftliner ramp-up is proceeding and the market acceptance for
brown kraftliner and its quality have been good from the beginning. Full
production is expected in early 2017. The work on a new production line for
wooden building elements (LVL) at Varkaus Mill is proceeding according to plan
and production is scheduled to begin in June. 

We invest in China and Sweden to further improve competitiveness in strategic
growth areas. The investment in a new polyethylene coating line in the new
consumer board mill in Beihai will enable us to be more responsive to our
customers’ demands in high quality food safety. The investments in a new
chemical plant at the consumer board mill in Skoghall, and at Skutskär Mill to
reduce its sulphur emissions, shows our orientation towards minimizing
environmental impact. 

We progress with our set action plans based on the group-wide Human Rights
assessment consolidated by the Danish Institute for Human Rights. At the end of
the quarter, 79% (69% by the end of 2015) of the preventive and remediation
actions were completed. 

During the quarter, Stora Enso was granted the award of Bio-based brand of the
year, based on our transformation story. The award positions us well in the
bioeconomy sphere and shows our commitment towards developing new sustainable
solutions. 

When it comes to outlook for the second quarter of 2016, sales are estimated to
be slightly higher than the amount of EUR 2 445 million recorded in the first
quarter of 2016. Operational EBIT is expected to be in line with or somewhat
lower than the EUR 248 million recorded in the first quarter of 2016. These
estimates include the negative impact of the scheduled annual maintenance
shutdowns at Montes del Plata pulp mill, Ostrołęka containerboard mill and
Langerbrugge paper mill during the second quarter of 2016. The negative impact
from maintenance is expected to be approximately EUR 25 million higher than in
the first quarter of 2016. 

I would like to thank our customers for their business, our employees for their
dedication and our investors for their trust.” 

Karl-Henrik Sundström, CEO



KEY FIGURES

EUR million                    Q1/16   Q1/15  Change %   Q4/15  Change %    2015
                                              Q1/16–Q1          Q1/16–Q4        
                                                   /15               /15        
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sales                          2 445   2 491     -1.8%   2 487     -1.7%  10 040
Operational EBITDA               356     340      4.7%     341      4.4%   1 352
Operational EBIT                 248     220     12.7%     242      2.5%     915
Operational EBIT margin        10.1%    8.8%              9.7%              9.1%
Operating profit (IFRS)          194     215     -9.8%     393    -50.6%   1 059
Profit before tax excl. NRI      183     154     18.8%     610    -70.0%   1 048
Profit before tax                155     162     -4.3%     360    -56.9%     814
Net profit for the period        114     129    -11.6%     407    -72.0%     783
Net interest-bearing           3 185   3 444     -7.5%   3 240     -1.7%   3 240
 liabilities                                                                    
Operational ROCE               11.3%   10.1%             11.3%             10.6%
Earnings per share (EPS),       0.19    0.15              0.78              1.24
 excl. NRI, EUR                                                                 
EPS (basic), EUR                0.15    0.16              0.53              1.02
Debt/equity ratio               0.58    0.65              0.60              0.60
Fixed costs to sales           24.4%   23.9%             25.7%             25.0%
Average number of employees   25 521  26 781     -4.7%  26 080     -2.1%  26 783
TRI rate                        11.3    10.1     11.9%    12.6    -10.3%    11.0
LTA rate                         3.6     4.8    -25.0%     5.6    -35.7%     4.7
--------------------------------------------------------------------------------

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 and non-operational items include equity incentive schemes and
related hedges, CO2 emission rights, valuations of biological assets, and the
group’s share of tax and net financial items of 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
disclosed individually if they exceed one cent per share. 
TRI (Total recordable incidents) rate = number of incidents per one million
hours worked. 
LTA (Lost-time accident) rate = number of lost-time accidents per one million
hours worked. 



EVENTS TODAY

1) Press conference and webcast at 13.15 EET (12.15 CET)
Stora Enso’s CEO Karl-Henrik Sundström and CFO Seppo Parvi will present the
results in a press conference which will be webcast. The event will be held in
English and take place at the Marina Congress Center, Katajanokanlaituri 6,
Helsinki at 13.15 EET (12.15 CET). The webcast may be accessed at 
http://apps.into-digital.fi/storaenso/


2) Webcast and conference call for analysts and investors at 14.30 EET (13.30
CET) 
The webcast and conference call for analysts and investors will take place at
14.30 EET (13.30 CET, 12.30 UK time, 07.30 EST). 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
http://edge.media-server.com/m/p/ohin4v2r. 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. 


Analyst and investor conference call dial-in details at 14.30 EET (13.30 CET):
UK                                          +44(0)20 3427 1904
Finland                                    +358 (0)9 6937 9543
Sweden                                   +46 (0)8 5033 6538
USA                                        +1 212 444 0896
Confirmation Code:                  7227642


The links to the webcasts are also available on the Stora Enso website:
storaenso.com/investors 

For further information, please contact:
Seppo Parvi, CFO, tel. +358 2046 21205
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 40763 8767
Ulrika Lilja, EVP, Communications, tel. +46 72 221 9228

Stora Enso’s second quarter 2016 results will be published on 21 July 2016.

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 26 000
people in more than 35 countries, and our sales in 2015 were EUR 10.0 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) on the International OTCQX over-the-counter market.
storaenso.com/investors 


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. 


STORA ENSO OYJ

Attachments:

STORAENSO_RESULTS_Q116_ENG.pdf