2011-04-20 12:00:00 CEST
2011-04-20 12:00:12 CEST
REGULATED INFORMATION
Stora Enso Oyj - Interim report (Q1 and Q3)
Stora Enso Interim Review January-March 2011
Strong quarter - every business improved
Helsinki, Finland, 2011-04-20 12:00 CEST (GLOBE NEWSWIRE) -- STORA ENSO OYJ
INTERIM REVIEW 20 April 2011 at 13.00 EET
-- EUR 248 million quarterly operating profit excluding NRI and fair
valuations, up by EUR 129 million (108)% year-on-year, EBITDA excluding NRI
and fair valuations up by 59%.
-- ROCE excluding NRI and fair valuations 11% (6)%.
-- Improved year-on-year pricing and continued productivity improvement in all
segments.
-- Strong growth in market pulp.
-- Increase in cost inflation estimate to approximately 4% for the full year
2011, actions to improve costs, productivity, product and customer mix
continue to be even more important.
-- Cost inflation and maintenance stoppages will limit Q2 2011 earnings
improvement year-on-year.
-- Investments announced in strategic high-return growth areas: Montes del
Plata Pulp Mill, Uruguay and containerboard machine at Ostrołęka, Poland.
Summary of First Quarter Results
Q1/11 Q4/10 Q1/10
--------------------------------------------------------------------------------
Sales EUR 2 726.9 2 685.2 2 295.9
million
EBITDA excl. NRI and fair valuations EUR 368.3 288.8 232.1
million
Operating Profit excl. NRI and Fair EUR 248.0 166.8 119.4
Valuations million
Operating profit (IFRS) EUR 237.2 410.9 123.4
million
Profit before tax excl. NRI EUR 213.2 187.0 136.8
million
Profit before tax EUR 186.0 389.2 117.9
million
Net profit excl. NRI EUR 175.3 148.7 121.0
million
Net profit EUR 155.9 313.0 102.1
million
EPS excl. NRI EUR 0.22 0.19 0.15
EPS EUR 0.20 0.39 0.13
CEPS excl. NRI EUR 0.39 0.37 0.31
ROCE excl. NRI % 12.1 9.9 7.2
ROCE excl. NRI and fair valuations % 11.4 7.9 6.0
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 equity accounted investments.
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.
Markets
Compared with Q1/2010
Product Market Demand Price
------------------------------------------------------------------------
Consumer board Europe slightly stronger higher
Industrial packaging Europe stable significantly higher
Newsprint Europe slightly weaker significantly higher
Coated magazine paper Europe stable higher
Uncoated magazine paper Europe slightly weaker higher
Coated fine paper Europe slightly weaker higher
Uncoated fine paper Europe slightly weaker significantly higher
Wood products Europe slightly stronger higher
Industry inventories were higher for magazine paper, fine paper and wood
products, and significantly lower for newsprint.
Compared with Q4/2010
Product Market Demand Price
-----------------------------------------------------------------------------
Consumer board Europe stable slightly higher
Industrial packaging Europe slightly weaker slightly higher
Newsprint Europe significantly weaker significantly higher
Coated magazine paper Europe significantly weaker higher
Uncoated magazine paper Europe significantly weaker higher
Coated fine paper Europe stronger slightly lower
Uncoated fine paper Europe significantly stronger stable
Wood products Europe slightly weaker slightly lower
Industry inventories were higher for newsprint, magazine paper, fine paper and
wood products.
Stora Enso Deliveries and Production
Q1/11 Q4/10 Q1/10 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Paper and board deliveries 2 506 2 724 2 519 -0.5 -8.0
(1 000 tonnes)
Paper and board production 2 618 2 665 2 675 -2.1 -1.8
(1 000 tonnes)
Wood products deliveries (1 1 238 1 259 1 149 7.7 -1.7
000 m3)
Market pulp deliveries (1 313 245 244 28.3 27.8
000 tonnes)*
Corrugated packaging 247 271 250 -1.2 -8.9
deliveries (million m2)
--------------------------------------------------------------------------------
*Stora Enso's net market pulp position will be about 1 million tonnes for 2011.
Q1/2011 Results (compared with Q1/2010)
Breakdown of Sales Change Q1/2010 to Q1/2011
Sales
-------------------------------------------
Q1/2010, EUR million 2 295.9
-------------------------------------------
Price and mix, % 11
Currency, % 2
Volume, % 7
Other sales*, % 3
-------------------------------------------
Total before structural changes, % 23
Structural change**, % -4
Total, % 19
Q1/2011, EUR million 2 726.9
-------------------------------------------
*Wood, energy, RCP, by-products etc.
**Asset closures, major investments, divestments and acquisitions
Key Figures
EUR million Q1/2011 Q4/2010 Q1/2010 2010 Change % Change %
Q1/11-Q1/ Q1/11-Q4/
10 10
--------------------------------------------------------------------------------
Sales 2 726.9 2 685.2 2 295.9 10 296.9 18.8 1.6
EBITDA excl. NRI and 368.3 288.8 232.1 1 216.5 58.7 27.5
fair valuations
Operating profit 248.0 166.8 119.4 754.1 107.7 48.7
excl. NRI and fair
valuations
Operating margin 9.1 6.2 6.2 7.3 46.8 46.8
excl. NRI and fair
valuations, %
Operating profit 237.2 410.9 123.4 1 026.8 92.2 -42.3
(IFRS)
Operating profit, % 8.7 15.3 5.4 10.0 61.1 -43.1
of sales
Profit before tax 213.2 187.0 136.8 745.7 55.8 14.0
excl. NRI
Profit before tax 186.0 389.2 117.9 925.9 57.8 -52.2
Net profit for the 175.3 148.7 121.0 627.0 44.9 17.9
period excl. NRI
Net profit for the 155.9 313.0 102.1 769.3 52.7 -50.2
period
Capital expenditure 57.3 138.8 112.8 400.4 -49.2 -58.7
Depreciation and 135.4 142.5 126.8 529.4 6.8 -5.0
impairment charges
excl. NRI
ROCE excl. NRI and 11.4 7.9 6.0 9.2 90.0 44.3
fair valuations, %
ROCE excl. NRI, % 12.1 9.9 7.2 10.3 68.1 22.2
Earnings per share 0.22 0.19 0.15 0.79 46.7 15.8
(EPS) excl. NRI, EUR
EPS (basic), EUR 0.20 0.39 0.13 0.97 53.8 -48.7
Cash earnings per 0.39 0.37 0.31 1.46 25.8 5.4
share (CEPS) excl.
NRI, EUR
CEPS, EUR 0.39 0.27 0.30 1.33 30.0 44.4
Return on equity 9.9 20.8 7.8 13.5 26.9 -52.4
(ROE), %
Debt/equity ratio 0.38 0.39 0.54 0.39 -29.6 -2.6
Equity per share, EUR 8.01 7.87 6.60 7.87 21.4 1.8
Equity ratio, % 48.1 48.0 43.6 48.0 10.3 0.2
Average number of 26 323 26 535 27 245 27 383 -3.4 -0.8
employees
Average number of
shares (million)
periodic 788.6 788.6 788.6 788.6 0.0 0.0
cumulative 788.6 788.6 788.6 788.6 0.0 0.0
cumulative, diluted 788.6 788.6 788.6 788.6 0.0 0.0
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.
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 equity accounted investments.
Reconciliation of Operating Profit
EUR million Q1/11 Q4/10 Q1/10 2010 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Profit from 232.9 146.4 105.2 687.1 121.4 59.1
operations, excl. NRI
Equity accounted 15.1 20.4 14.2 67.0 6.3 -26.0
investments,
operational,
excl. fair valuations
---------------------------------------------------------
Operating Profit excl. 248.0 166.8 119.4 754.1 107.7 48.7
NRI and
Fair Valuations
Fair valuations 16.4 41.9 22.9 92.5 -28.4 -60.9
Operating Profit, 264.4 208.7 142.3 846.6 85.8 26.7
excl. NRI
NRI -27.2 202.2 -18.9 180.2 -43.9 -113.5
Operating Profit 237.2 410.9 123.4 1 026.8 92.2 -42.3
(IFRS)
---------------------------------------------------------
Q1/2011 Results (compared with Q1/2010)
(continued)
Operating profit at EUR 248 million excluding non-recurring items and fair
valuations was EUR 129 million higher than a year ago. This represents an
operating margin of 9.1%.
Price increases in local currencies and a favourable product mix increased
operating profit by EUR 257 million. Higher volumes increased operating profit
by EUR 26 million. Paper and board production was curtailed by 7% (12%) and
sawnwood production by 2% (6%) of capacity.
The costs of RCP, chemicals, corrugated raw materials, sawlogs, pulpwood and
pulp were higher than a year ago, but productivity improvements and cost
savings partly compensated for the cost increases. The net impact of the
increase in variable costs and fixed costs in local currencies was a negative
EUR 130 million. Market pulp had a positive net impact of EUR 9 million, mainly
in Magazine Paper, as profit improvement through external pulp sales more than
offset the higher cost of externally purchased pulp.
The favourable impact of exchange rates on sales was more than offset by the
unfavourable impact of exchange rates on costs, especially due to the Swedish
krona, the net impact being some EUR 13 million negative, after hedges.
Depreciation increased by EUR 10 million, partly due to the reversal of
previous impairments in 2010.
The share of the operational results of equity accounted investments amounted
to EUR 15 (EUR 14) million, with the largest contributions from Tornator and
Bergvik Skog.
The Group recorded a net negative EUR 27 million of non-recurring items at
operating profit level in the first quarter of 2011. The NRI relate materially
to the planned closure of Kopparfors Sawmill. The other NRI relate to other
restructuring actions and updates of existing provisions.
Net financial items were EUR -51 (EUR -6) million. Net interest expenses
increased from EUR 17 million to EUR 23 million. Net foreign exchange losses
amounted to EUR 12 (gain EUR 11) million and the net loss from other financial
items totalled EUR 16 (EUR 0) million, mainly relating to the fair valuation of
non-hedge accounted interest rate derivatives due to the increased market
rates.
Group capital employed was EUR 8 768 million on 31 March 2011, a net increase
of EUR 706 million due to the increased working capital, impairment reversal,
strengthening of the Swedish krona and PVO valuation.
Q1/2011 Results (compared with Q4/2010)
Sales were slightly up by EUR 42 million on the previous quarter. Operating
profit excluding non-recurring items and fair valuations was EUR 81 million
higher than in the previous quarter at EUR 248 million. Higher sales prices in
local currencies and a favourable product mix more than compensated for higher
corrugated raw material, energy and RCP costs. The net impact of exchange rates
was unfavourable.
Capital Structure
EUR million 31 Mar 11 31 Dec 10 31 Mar 10
Operative fixed assets 6 394.2 6 445.2 6 084.6
Equity accounted investments 1 725.4 1 744.0 1 572.0
Operative working capital 1 530.3 1 399.3 1 256.2
Non-current interest-free items, net -473.2 -493.9 -499.6
--------------------------------
Operating Capital Total 9 176.7 9 094.6 8 413.2
Net tax liabilities -408.6 -429.9 -350.9
Capital Employed 8 768.1 8 664.7 8 062.3
--------------------------------
Equity attributable to Company shareholders 6 318.1 6 202.9 5 206.6
Non-controlling interests 49.0 51.8 58.8
Net interest-bearing liabilities 2 401.0 2 410.0 2 811.9
Held for sale - - -15.0
Financing Total 8 768.1 8 664.7 8 062.3
--------------------------------
Financing Q1/2011 (compared with Q4/2010)
Cash flow from operations remained healthy at EUR 163 (EUR 265) million despite
the increase in working capital. The increase was mainly due to higher business
volumes but also to increase supply reliability. Cash flow after investing
activities was EUR 106 (EUR 126) million as capital expenditure in the first
quarter of 2011 was below the annual run rate. At the end of the period,
interest-bearing net liabilities of the Group were unchanged at EUR 2 401
million.
Total unutilised committed credit facilities changed from EUR 1 400 million to
EUR 700 million. In December 2010 Stora Enso signed a new EUR 700 million
committed credit facility agreement with a syndicate of 16 banks effective in
January 2011. The new facility matures in January 2014. Cash and cash
equivalents net of overdrafts remained strong at EUR 1 108 million, which is
EUR 5 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 debt/equity ratio at 31 March 2011 was 0.38 (0.39). The currency effect on
owners' equity was negative EUR 50 million net of the hedging of equity
translation risks.
Cash Flow
EUR million Q1/11 Q4/10 Q1/10 2010 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Operating profit 237.2 410.9 123.4 1 026.8 92.2 -42.3
Depreciation and 104.6 -130.3 101.2 172.4 3.4 180.3
other non-cash
items
Change in working -178.9 -16.1 -105.4 -207.1 -69.7 n/m
capital
-----------------------------------------------------------
Cash Flow from 162.9 264.5 119.2 992.1 36.7 -38.4
Operations
Capital expenditure -57.3 -138.8 -112.8 -400.4 49.2 58.7
-----------------------------------------------------------
Cash Flow after 105.6 125.7 6.4 591.7 n/m -16.0
Investing
Activities
Capital Expenditure for January-March 2011
Capital expenditure for the first quarter of 2011 totalled EUR 57 million,
which is 42% of depreciation in the same period. Capital expenditure for the
Group for the full year 2011 will be approximately EUR 550 million. Annual
depreciation in 2011 will be about EUR 570 million. The equity injection into
Montes del Plata, a joint venture in Uruguay, will be approximately EUR 120
million. Close to 80% of capital expenditure including equity injections is
allocated for the strategic high-return growth areas in 2011.
The main projects during the first quarter of 2011 were power plants and
energy-related projects at existing mills (EUR 20 million) and development of
existing production (EUR 13 million).
Near-term Outlook
Demand is expected to be slightly stronger than a year ago for consumer board
and stronger for industrial packaging, similar for newsprint and coated
magazine paper in Europe, and slightly stronger than a year ago for uncoated
magazine paper.
Demand for fine paper is forecast to be similar to a year ago. Demand for wood
products is anticipated to be slightly stronger than a year ago.
Consumer board prices are predicted to be similar but industrial packaging
prices slightly higher than in the previous quarter. Newsprint and coated
magazine paper prices are expected to be stable and uncoated magazine paper
prices slightly higher than in the previous quarter.
Fine paper and wood product prices are forecast to be slightly higher than in
the previous quarter.
Increased cost inflation and maintenance stoppages will limit the year-on-year
earnings improvement in the second quarter of 2011.
The Group has increased its forecast of cost inflation excluding internal
actions from 3% to 4% for the full year 2011. Actions on costs, productivity,
and product and customer mix continue to be even more important.
Segments Q1/11 compared with Q1/10
Consumer Board
Consumer Board manufactures all major types of consumer board, such as liquid
packaging board, food service board, graphical board and cartonboard for
packaging food, cigarettes, pharmaceuticals, cosmetics and luxury products.
EUR million Q1/11 Q4/10 Q1/10 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Sales 647.0 611.5 523.1 23.7 5.8
EBITDA* 134.1 90.1 101.6 32.0 48.8
Operating profit* 95.8 52.1 70.5 35.9 83.9
% of sales 14.8 8.5 13.5 9.6 74.1
ROOC, %** 25.7 14.9 23.8 8.0 72.5
Paper and board 594 591 551 7.8 0.5
deliveries, 1 000 t***
Paper and board 645 596 602 7.1 8.2
production, 1 000 t***
Market pulp deliveries, 1 120 105 89 34.8 14.3
000 t
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital *** Excluding pulp
-- Stora Enso launched Pharma DDSi remote access functionality that
facilitates real-time adherence control in the healthcare sector.
-- Stora Enso will invest EUR 12 million in an environmental and safety
improvement project at Enocell Pulp Mill in Finland in 2011-2013.
-- There will be an annual maintenance stoppage at Enocell Mill and a
maintenance stoppage at Imatra Mills in Finland during the second quarter
of 2011.
Consumer board sales were EUR 647 million, up 24% on the first quarter of 2010.
Operating profit was EUR 96 million, up EUR 25 million on the first quarter of
2010. Supported by practically full capacity utilisation, productivity and
efficiency were exceptionally good. Increased sales prices and volumes more
than compensated for higher raw material and energy costs.
Markets
Product Market Demand Q1/11 Demand Q1/11 Price Q1/11 Price Q1/11
compared with compared with compared with compared with
Q1/10 Q4/10 Q1/10 Q4/10
--------------------------------------------------------------------------------
Consume Europe slightly stable higher slightly
r board stronger higher
--------------------------------------------------------------------------------
Industrial Packaging
Industrial Packaging manufactures corrugated packaging and containerboard,
cores and coreboard, and also paper sacks, and sack and kraft paper.
EUR million Q1/11 Q4/10 Q1/10 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Sales 243.4 241.7 223.2 9.1 0.7
EBITDA* 32.2 34.3 20.0 61.0 -6.1
Operating profit* 19.4 22.0 7.7 151.9 -11.8
% of sales 8.0 9.1 3.4 135.3 -12.1
ROOC, %** 12.0 14.2 5.2 130.8 -15.5
Paper and board deliveries, 205 195 226 -9.3 5.1
1 000 t
Paper and board production, 206 194 241 -14.5 6.2
1 000 t
Corrugated packaging 247 271 250 -1.2 -8.9
deliveries, million m2
Corrugated packaging 249 272 250 -0.4 -8.5
production, million m2
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
-- In January 2011 Stora Enso announced that EUR 285 million would be invested
in a new containerboard machine at Ostrołęka in Poland.
-- Power plant investment was completed at Ostrołęka in Poland.
-- Regulatory approval process on Inpac International acquisition is ongoing
and the acquisition is expected to be finalised in the second quarter of
2011.
Industrial packaging sales were EUR 243 million, up 9% on the first quarter of
2010. Operating profit was EUR 19 million, up EUR 12 million on the previous
year as higher sales prices and volumes for containerboard and higher sales
prices for corrugated packaging compensated for higher variable costs,
especially for corrugated raw material. The laminating paper business was
divested in summer 2010.
Markets
Product Market Demand Q1/11 Demand Q1/11 Price Q1/11 Price Q1/11
compared with compared with compared compared with
Q1/10 Q4/10 with Q1/10 Q4/10
--------------------------------------------------------------------------------
Industria Europe stable slightly significantly slightly
l weaker higher higher
packagin
g
--------------------------------------------------------------------------------
Newsprint and Book Paper
Newsprint and Book Paper manufactures a wide range of standard and improved
newsprint, and book and directory paper grades.
EUR million Q1/11 Q4/10 Q1/10 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Sales 314.5 326.2 287.4 9.4 -3.6
EBITDA* 45.4 20.6 20.3 123.6 120.4
Operating 26.0 -2.7 -1.6 n/m n/m
profit/loss*
% of sales 8.3 -0.8 -0.6 n/m n/m
ROOC, %** 10.9 -1.2 -0.6 n/m n/m
Paper deliveries, 1 554 658 593 -6.6 -15.8
000 t
Paper production, 1 558 619 634 -12.0 -9.9
000 t
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
-- Industry inventories were significantly lower than in the first quarter of
2010, but higher than in the previous quarter.
-- Newsprint prices in euros increased to levels similar to 2009.
Newsprint and book paper sales were EUR 315 million, up 9% on the first quarter
of 2010. Operating profit was EUR 26 million, up EUR 28 million on a year ago
as higher sales prices more than compensated for higher variable costs. Volumes
were slightly lower than a year earlier as the permanent shutdown of the
newsprint machines at Varkaus Mill in Finland at the end of the third quarter
of 2010 and the newsprint machine at Maxau Mill in Germany at the end of
November 2010 reduced production volumes.
Markets
Produc Market Demand Q1/11 Demand Q1/11 Price Q1/11 Price Q1/11
t compared with compared with compared with compared with
Q1/10 Q4/10 Q1/10 Q4/10
--------------------------------------------------------------------------------
Newspr Europe slightly weaker significantly significantly significantly
int weaker higher higher
--------------------------------------------------------------------------------
Newspr Overse slightly weaker weaker significantly stable
int as higher
--------------------------------------------------------------------------------
Magazine Paper
Magazine Paper manufactures uncoated magazine paper mainly for periodicals and
advertising, and coated matt, silk and glossy magazine paper for specialist and
general interest magazines, supplements, home shopping catalogues and magazine
covers.
EUR million Q1/11 Q4/10 Q1/10 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Sales 482.0 547.5 435.5 10.7 -12.0
EBITDA* 54.3 47.5 27.3 98.9 14.3
Operating profit* 28.2 19.5 3.9 n/m 44.6
% of sales 5.9 3.6 0.9 n/m 63.9
ROOC, %** 8.4 5.7 1.3 n/m 47.4
Paper deliveries, 1 000 503 659 526 -4.4 -23.7
t***
Paper production, 1 000 558 618 550 1.5 -9.7
t***
Market pulp deliveries, 151 113 127 18.9 33.6
1 000 t
-------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital *** Excluding pulp
-- Industry inventories for magazine paper were higher than in the first
quarter of 2010 and the previous quarter.
-- The annual maintenance and upgrade preparation stoppage at Skutskär Pulp
Mill in Sweden is scheduled during the second quarter of 2011.
Magazine Paper segment's sales were EUR 482 million, up 11% on the first
quarter of 2010. Operating profit was EUR 28 million, up EUR 24 million on a
year ago as higher prices more than compensated for higher wood, RCP and other
variable costs.
Markets
Product Market Demand Q1/11 Demand Q1/11 Price Q1/11 Price Q1/11
compared with compared with compared compared
Q1/10 Q4/10 with Q1/10 with Q4/10
--------------------------------------------------------------------------------
Coated Europe stable significantly higher higher
magazine weaker
paper
--------------------------------------------------------------------------------
Coated Latin significantly significantly significantly stable
magazine Ameri stronger weaker higher
paper ca
Uncoated Europe slightly significantly higher higher
magazine weaker weaker
paper
Uncoated China significantly weaker higher slightly
magazine stronger higher
paper
--------------------------------------------------------------------------------
Fine Paper
Fine Paper manufactures high quality graphic and office paper for printers and
publishers, merchants, envelope converters, office equipment manufacturers and
office suppliers.
EUR million Q1/11 Q4/10 Q1/10 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Sales 563.3 533.5 474.5 18.7 5.6
EBITDA* 102.4 90.6 62.1 64.9 13.0
Operating profit* 79.9 67.6 41.5 92.5 18.2
% of sales 14.2 12.7 8.7 63.2 11.8
ROOC, %** 33.3 29.1 17.7 88.1 14.4
Paper deliveries, 1 000 650 621 623 4.3 4.7
t ***
Paper production, 1 000 651 638 648 0.5 2.0
t ***
Market pulp deliveries, 42 27 28 50.0 55.6
1 000 t
-------------------------------------------------------
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital *** Excluding pulp
-- In the first quarter of 2011 Fine Paper launched Mediaset, Cosmoset and
Lumiflex speciality papers from Uetersen Mill for labels and cans.
-- Industry inventories for fine paper were higher than in the first quarter
of 2010 and the previous quarter.
-- The annual maintenance stoppages at Nymolla Mill in Sweden and Uetersen
Mill in Germany will be during the second quarter of 2011.
Fine paper sales were EUR 563 million, up 19% on the first quarter of 2010.
Operating profit was EUR 80 million, up EUR 38 million on the previous year as
higher sales prices, the improved product mix due to restructuring and higher
volumes more than offset higher pulp and chemical costs. Paper machine (PM) 8
at Imatra Mills was permanently shut down in early March 2010.
Markets
Product Market Demand Q1/11 Demand Q1/11 Price Q1/11 Price Q1/11
compared with compared with compared compared with
Q1/10 Q4/10 with Q1/10 Q4/10
--------------------------------------------------------------------------------
Coated Europe slightly stronger higher slightly lower
fine weaker
paper
--------------------------------------------------------------------------------
Coated China stronger stronger lower stable
fine
paper
Uncoated Europe slightly significantly significantly stable
fine weaker stronger higher
paper
--------------------------------------------------------------------------------
Wood Products
Wood Products manufactures wood-based products for construction and interior
decoration, and solid biofuels for the energy sector. Its recyclable products
are made from high quality renewable European pine or spruce.
EUR million Q1/11 Q4/10 Q1/10 Change % Change %
Q1/11-Q1/10 Q1/11-Q4/10
--------------------------------------------------------------------------------
Sales 409.7 410.3 331.6 23.6 -0.1
EBITDA* 22.6 21.1 14.9 51.7 7.1
Operating profit* 11.8 10.2 5.4 118.5 15.7
% of sales 2.9 2.5 1.6 81.3 16.0
ROOC, %** 8.0 6.8 3.8 110.5 17.6
Deliveries, 1 000 1 199 1 223 1 119 7.1 -2.0
m3
* Excluding non-recurring items ** ROOC = 100% x Operating profit/Operating
capital
-- Bridport House in London is the first multi-storey building constructed
from Stora Enso's pre-manufactured construction elements.
-- In January 2011 Stora Enso announced further expansion in Building
Solutions through investment in a new EUR 23 million pre-manufactured
construction elements unit at Ybbs Sawmill in Austria.
-- In March 2011 Stora Enso announced the planned permanent closure of
Kopparfors Sawmill and integrated pellet mill in Sweden by the end of 2011
due to several years of losses and no feasible options for improvement.
-- Industry inventories were higher than in the first quarter of 2010 and the
previous quarter.
Wood product sales were EUR 410 million, up 24% on the first quarter of 2010.
Operating profit was EUR 12 million, up EUR 6 million on a year earlier. Higher
sales prices were partly offset by increased wood costs.
Markets
Produc Market Demand Q1/11 Demand Q1/11 Price Q1/11 Price Q1/11
t compared compared compared compared
with Q1/10 with Q4/10 with Q1/10 with Q4/10
--------------------------------------------------------------------------------
Wood Europe slightly slightly higher slightly
produ stronger weaker lower
cts
--------------------------------------------------------------------------------
Wood Asia, Middle slightly slightly significantl slightly
produ East and stronger weaker y higher lower
cts North Africa
--------------------------------------------------------------------------------
Short-term Risks and Uncertainties
The main short-term risks and uncertainties are related to further increasing
inflation in raw material costs and the limited ability to pass on cost
increases in sales prices, and the threat of a white-collar strike in Finland.
The political turmoil in North Africa and recent Japanese earthquake continue
to cause uncertainties.
Energy sensitivity analysis for 2011: the direct effect on 2011 operating
profit of a 10% increase in electricity, oil and other fossil fuel market
prices would be about negative EUR 17 million annual impact, after the effect
of hedges.
Wood sensitivity analysis for 2011: the direct effect on 2011 operating profit
of a 10% increase in wood prices would be about negative EUR 236 million annual
impact.
Pulp sensitivity analysis for 2011: the direct effect on 2011 operating profit
of a 10% increase in yearly average pulp prices would be about positive EUR 55
million annual impact.
A decrease of energy, wood or pulp prices would have the opposite impact.
Foreign exchange rates sensitivity analysis for the next twelve months: the
direct effect on operating profit of a 10% strengthening in the value of the US
dollar, Swedish krona and British pound against the euro would be about
positive EUR 108 million, negative EUR 110 million and positive EUR 58 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.
First Quarter Events
In January 2011 Stora Enso announced that Montes del Plata, its joint venture
with Arauco, would invest USD 1.9 billion in building a state-of-the-art 1.3
million tonnes per year pulp mill at Punta Pereira in Uruguay. Each of the
joint-venture shareholders has a 50% stake in the mill's equity and will be
entitled to half of its output. Stora Enso's share of the equity investment is
about EUR 280 million.
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 9 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 as an interim
measure. 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
was 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. On 14 December 2010 a US federal court granted a motion
for summary judgement that Stora Enso had filed seeking dismissal of the direct
purchaser class action claims. The ruling, which the plaintiffs have appealed,
means that the court has ruled in favour of Stora Enso and found the direct
purchaser class action claims to be without legal foundation. Further, most of
the indirect purchaser actions have been dismissed by a consent judgement,
subject, however, to being reinstated if the plaintiffs' appeal in the direct
cases is successful. The ruling, if it stands on appeal, will also provide a
strong legal basis for final dismissal of all remaining civil cases. No
provisions have been made in Stora Enso's accounts for these lawsuits.
Legal Proceeding 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 amounting altogether to EUR
283 million.
Stora Enso denies that Metsähallitus suffered any damages whatsoever and will
forcefully defend itself. No provisions have been made in Stora Enso's accounts
for this lawsuit.
Changes in Group Management
Juan Carlos Bueno, 42, was appointed to head the Group's operations in Latin
America and as a member of the Group Executive Team as of 1 April 2011.
Share Capital
No conversions were recorded during the quarter.
On 31 March 2011 Stora Enso had 177 149 784 A shares and 612 388 715 R shares
in issue of which the Company held no A shares and 918 512 R shares with a
nominal value of EUR 1.6 million. The holding represents 0.12% of the Company's
share capital and 0.04% of the voting rights.
Events after the Period
On 4 April 2011 Stora Enso announced that it had signed a loan facility
agreement with the International Finance Corporation (IFC) to extend the
maturity of USD 128 million in syndicated loans under its existing facility
with IFC.
On 18 April 2011 Stora Enso announced that due to a share lending transaction,
where Norges Bank is the lender, the number of shares in the Company held by
Norges Bank (The Central Bank of Norway) has decreased below 5% of the paid-up
share capital and the number of shares in Stora Enso Oyj on 15 April 2011.
PVO, in which Stora Enso has a 15% shareholding, announced on 19 April 2011
that it had sold its shareholding in Fingrid. The transaction value is EUR 325
million and PVO is recording a capital gain of approximately EUR 200 million.
The impact of the transaction is not expected to be material in Stora Enso's
accounts.
On 20 April 2011 Stora Enso announced that it will invest approximately EUR 90
million in Skoghall consumer board mill in Sweden.
This report is unaudited.
Helsinki, 20 April 2011
Stora Enso Oyj
Board of Directors
Financials
Basis of Preparation
Except as described below, 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 2010.
The following amendments to standards and interpretations were adopted from 1
January 2011 but had no impact on the Group financial statements:
-- IAS 24 Related Party Disclosure - Revised definition of related parties
-- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
requires the extinguishment of a financial liability by the issue of equity
instruments to be measured at fair value with the difference between the
fair value of the instrument issued and the carrying value of the liability
extinguished being recognised in profit or loss.
-- Amendments to IFRS - Through the annual improvements process, the minor and
non-urgent changes are collected into one ensemble and implemented at the
beginning of the year. In addition, the IASB has published a few other
small amendments which have also been implemented at the beginning of the
year. These changes and amendments effective from 1 January 2011 relate to
nine standards and interpretations. They did not have a significant effect
on the Group financial statements.
Condensed Consolidated Income Statement
EUR million Q1/11 Q4/10 Q1/10 2010 Change % Change %
Q1/11-Q1/ Q1/11-Q4/
10 10
--------------------------------------------------------------------------------
Sales 2 726.9 2 685.2 2 295.9 10 296.9 18.8 1.6
Other operating 57.0 54.3 34.3 159.1 66.2 5.0
income
Materials and -1 668.2 -1 747.8 -1 428.1 -6 391.4 -16.8 4.6
services
Freight and sales -257.1 -253.7 -225.2 -1 010.1 -14.2 -1.3
commissions
Personnel expenses -343.2 -374.8 -329.0 -1 375.3 -4.3 8.4
Other operating -143.3 -102.1 -112.0 -482.2 -27.9 -40.4
expenses
Share of results 20.0 54.1 19.1 112.5 4.7 -63.0
of equity
accounted
investments
Depreciation and -154.9 95.7 -131.6 -282.7 -17.7 -261.9
impairment
-------------------------------------------------------------
Operating Profit 237.2 410.9 123.4 1 026.8 92.2 -42.3
Net financial -51.2 -21.7 -5.5 -100.9 n/m -135.9
items
-------------------------------------------------------------
Profit before Tax 186.0 389.2 117.9 925.9 57.8 -52.2
Income tax -30.1 -76.2 -15.8 -156.6 -90.5 60.5
-------------------------------------------------------------
Net Profit for the 155.9 313.0 102.1 769.3 52.7 -50.2
Period
Attributable to:
Owners of the 155.6 312.2 101.5 766.0 53.3 -50.2
Parent
Non-controlling 0.3 0.8 0.6 3.3 -50.0 -62.5
interests
-------------------------------------------------------------
155.9 313.0 102.1 769.3 52.7 -50.2
Earnings per Share
Basic earnings per 0.20 0.39 0.13 0.97 53.8 -48.7
share, EUR
Diluted earnings 0.20 0.39 0.13 0.97 53.8 -48.7
per share, EUR
Consolidated Statement of Comprehensive Income
EUR million Q1/11 Q4/10 Q1/10 2010
--------------------------------------------------------------------------------
Net profit for the period 155.9 313.0 102.1 769.3
Other Comprehensive Income
Actuarial losses on defined benefit plans - -30.1 - -32.5
Available for sale financial assets 8.1 94.8 -16.6 95.9
Currency and commodity hedges -3.1 4.6 23.9 107.7
Share of other comprehensive income of equity 3.0 8.8 -0.3 9.2
accounted investments
Currency translation movements on equity net -52.2 71.4 144.3 305.6
investments (CTA)
Currency translation movements on non-controlling -1.9 1.6 1.1 5.1
interests
Net investment hedges 3.5 -2.0 -8.1 -9.8
Income tax relating to components of other 0.3 11.1 -4.7 -13.4
comprehensive income
Other Comprehensive Income, net of tax -42.3 160.2 139.6 467.8
-----------------------------
Total Comprehensive Income 113.6 473.2 241.7 1 237.1
-----------------------------
Total Comprehensive Income Attributable to:
Owners of the Parent 115.2 470.7 240.1 1 228.7
Non-controlling interests -1.6 2.5 1.6 8.4
113.6 473.2 241.7 1 237.1
-----------------------------
Condensed Consolidated Statement of Cash Flows
EUR million Q1/11 Q1/10
Cash Flow from Operating Activities
Operating profit 237.2 123.4
Hedging result from OCI -5.0 15.0
Adjustments for non-cash items 104.6 101.2
Change in net working capital -205.9 -123.0
Cash Flow Generated by Operations 130.9 116.6
----------------
Net financials items paid -71.4 -5.7
Income taxes paid, net -47.3 -5.5
Net Cash Provided by Operating Activities 12.2 105.4
----------------
Cash Flow from Investing Activities
Acquisitions of subsidiaries - -0.8
Acquisitions of equity accounted investments -13.9 -7.1
Proceeds from sale of fixed assets and shares 9.4 10.8
Capital expenditure -57.3 -112.8
Proceeds of the non-current receivables, net 3.1 3.6
Net Cash Used in Investing Activities -58.7 -106.3
----------------
Cash Flow from Financing Activities
Proceeds from issue of new long-term debt 19.0 71.6
Long-term debt, payments -15.4 -172.3
Change in short-term borrowings 52.3 79.3
Dividend to non-controlling interests -1.2 -0.2
Net Cash Provided by/Used in Financing Activities 54.7 -21.6
----------------
Net Increase/Decrease in Cash and Cash Equivalents 8.2 -22.5
Translation adjustment -3.7 9.8
Net cash and cash equivalents at the beginning of period 1 103.1 877.0
----------------
Net Cash and Cash Equivalents at Period End 1 107.6 864.3
Cash and Cash Equivalents at Period End 1 115.0 865.1
Bank Overdrafts at Period End -7.4 -0.8
----------------
Net Cash and Cash Equivalents at Period End 1 107.6 864.3
Acquisitions of Subsidiary Companies
Non-controlling interests - 0.8
----------------
Fair Value of Net Assets - 0.8
Goodwill - -
----------------
Total Purchase Consideration - 0.8
Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million Q1/11 Q1/10 2010
----------------------------------------------------------------
Carrying value at 1 January 5 565.8 5 157.7 5 157.7
Acquisition of subsidiary companies - - 7.8
Capital expenditure 54.6 107.2 377.0
Additions in biological assets 2.7 5.6 23.4
Change in emission rights 59.9 50.0 15.7
Disposals -8.2 -7.6 -25.1
Disposals of subsidiary companies - - -0.8
Depreciation and impairment -154.9 -131.6 -282.7
Translation difference and other -14.3 143.6 292.8
Statement of Financial Position Total 5 505.6 5 324.9 5 565.8
--------------------------
Borrowings
EUR million 31 Mar 11 31 Dec 10 31 Mar 10
----------------------------------------------------------------------
Non-current borrowings 3 320.7 3 259.2 3 042.4
Current borrowings 748.4 752.0 1 133.8
4 069.1 4 011.2 4 176.2
--------------------------------
--------------------------------
Q1/11 2010 Q1/10
--------------------------------
Carrying value at 1 January 4 011.2 3 936.7 3 936.7
Debt acquired with new subsidiaries - 0.8 -
Debt disposed with sold subsidiaries - -5.6 -
Proceeds/payments of borrowings (net) 67.8 -111.2 147.3
Translation difference and other -9.9 190.5 92.2
--------------------------------
Statement of Financial Position Total 4 069.1 4 011.2 4 176.2
--------------------------------
Condensed Consolidated Statement of Financial Position
EUR million 31 Mar 31 Dec 31 Mar
11 10 10
--------------------------------------------------------------------------------
Assets
Fixed Assets and Other Non-current Investments
Fixed assets O 5 221.1 5 334.3 5 082.3
Biological assets O 183.6 190.5 167.3
Emission rights O 100.9 41.0 75.3
Equity accounted investments O 1 725.4 1 744.0 1 572.0
Available-for-sale: Interest-bearing I 79.0 78.7 75.7
Available-for-sale: Operative O 888.6 879.4 759.7
Non-current loan receivables I 125.0 126.5 160.4
Deferred tax assets T 100.3 111.0 195.7
Other non-current assets O 30.6 37.2 34.1
-----------------------------
8 454.5 8 542.6 8 122.5
-----------------------------
Current Assets
Inventories O 1 596.7 1 474.6 1 332.7
Tax receivables T 6.7 1.7 2.5
Operative receivables O 1 713.5 1 621.8 1 433.6
Interest-bearing receivables I 349.1 285.1 263.1
Cash and cash equivalents I 1 115.0 1 110.9 865.1
-----------------------------
4 781.0 4 494.1 3 897.0
Assets of disposal group classified as held for - - 49.9
sale
-----------------------------
4 781.0 4 494.1 3 946.9
Total Assets 13 235.5 13 036.7 12 069.4
-----------------------------
Equity and Liabilities
Owners of the Parent 6 318.1 6 202.9 5 206.6
Non-controlling Interests 49.0 51.8 58.8
-----------------------------
Total Equity 6 367.1 6 254.7 5 265.4
-----------------------------
Non-current Liabilities
Post-employment benefit provisions O 319.0 320.5 330.3
Other provisions O 150.3 148.6 186.8
Deferred tax liabilities T 415.9 422.6 421.7
Non-current debt I 3 320.7 3 259.2 3 042.4
Other non-current operative liabilities O 34.5 62.0 16.6
4 240.4 4 212.9 3 997.8
-----------------------------
Current Liabilities
Current portion of non-current debt I 228.3 303.5 696.4
Interest-bearing liabilities I 520.1 448.5 437.4
Operative liabilities O 1 779.9 1 697.1 1 510.1
Tax liabilities T 99.7 120.0 127.4
-----------------------------
2 628.0 2 569.1 2 771.3
Liability directly associated with the assets - - 34.9
classified as held for sale
-----------------------------
2 628.0 2 569.1 2 806.2
-----------------------------
Total Liabilities 6 868.4 6 782.0 6 804.0
-----------------------------
Total Equity and Liabilities 13 235.5 13 036.7 12 069.4
-----------------------------
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 Invested Treasu Step Availa Curren Curren CTA
Retaine Attribu Non-co Total
milli Capital Premiu Non-Rest ry Acquis ble cy and cy and and
d table ntroll
on m and ricted Shares ition for Commod Commod Net
Earning to ing
Reserv Equity Revalu Sale ity ity
Invest s Owners Intere
e fund Fund ation Financ Hedges Hedges
ment of the sts
Surplu ial of
Hedges Parent
s Assets Equity
Accoun
ted
Invest
ments
--------------------------------------------------------------------------------
------------------------------------
Balanc 1 342.2 76.6 2 042.1 -10.2 3.9 684.2 -0.8 -19.0
-194.6 1 199.9 5 124.3 58.2 5 182.5
e at
31
Decem
ber
2009
--------------------------------------------------------------------------------
------------------------------------
Profit - - - - - - - -
- 101.5 101.5 0.6 102.1
for
the
perio
d
OCI - - - - - -16.6 23.9 -0.3
136.2 - 143.2 1.1 144.3
befor
e tax
Income - - - - - -0.6 -6.2 -
2.1 - -4.7 - -4.7
tax
relat
ing to
compo
nents
of
OCI
Total - - - - - -17.2 17.7 -0.3
138.3 101.5 240.0 1.7 241.7
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
-----------------------------
Distri - - - - - - - -
- - - -0.2 -0.2
bution
relat
ing to
2009
Acquis - - - - - - - -
- - - -0.9 -0.9
itions
and
dispo
sals
Return - - -157.7 - - - - -
- - -157.7 - -157.7
of
capit
al
(EUR
0.20
per
share
)
Transf - - -1 251.3 - - - - -
- 1 251.3 - - -
er to
retai
ned
earni
ngs
Balanc 1 342.2 76.6 633.1 -10.2 3.9 667.0 16.9 -19.3
-56.3 2 552.7 5 206.6 58.8 5 265.4
e at
31
March
2010
--------------------------------------------------------------------------------
-----------------------------
Profit - - - - - - - -
- 664.5 664.5 2.7 667.2
for
the
perio
d
OCI - - - - - 112.5 83.8 9.5
159.6 -32.5 332.9 4.0 336.9
befor
e tax
Income - - - - - 0.5 -22.8 -
0.4 13.2 -8.7 - -8.7
tax
relat
ing to
compo
nents
of
OCI
Total - - - - - 113.0 61.0 9.5
160.0 645.2 988.7 6.7 995.4
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
-----------------------------
Distri - - - - - - - -
- - - -1.0 -1.0
bution
relat
ing to
2009
Acquis - - - - - - - -
- - - -5.1 -5.1
itions
and
dispo
sals
Buy-ou - - - - - - - -
- 7.6 7.6 -7.6 -
t of
non-c
ontrol
ling
inter
est
Balanc 1 342.2 76.6 633.1 -10.2 3.9 780.0 77.9 -9.8
103.7 3 205.5 6 202.9 51.8 6 254.7
e at
31
Decem
ber
2010
--------------------------------------------------------------------------------
-----------------------------
Profit - - - - - - - -
- 155.6 155.6 0.3 155.9
for
the
perio
d
OCI - - - - - 8.1 -3.1 3.0
-48.7 - -40.7 -1.9 -42.6
befor
e tax
Income - - - - - 0.3 0.9 -
-0.9 - 0.3 - 0.3
tax
relat
ing to
compo
nents
of
OCI
Total - - - - - 8.4 -2.2 3.0
-49.6 155.6 115.2 -1.6 113.6
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
-----------------------------
Distri - - - - - - - -
- - - -1.2 -1.2
bution
relat
ing to
2010
Balanc 1 342.2 76.6 633.1 -10.2 3.9 788.4 75.7 -6.8
54.1 3 361.1 6 318.1 49.0 6 367.1
e at
31
March
2011
--------------------------------------------------------------------------------
-----------------------------
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
EUR million 31 Mar 11 31 Dec 10 31 Mar 10
--------------------------------------------------------------------------
On Own Behalf
Mortgages 5.2 5.2 25.5
On Behalf of Equity Accounted Investments
Guarantees 137.6 154.6 180.0
On Behalf of Others
Guarantees 102.1 108.3 128.4
Other Commitments, Own
Operating leases, in next 12 months 33.6 32.3 26.7
Operating leases, after next 12 months 88.4 88.3 75.2
Pension liabilities 0.4 0.4 0.1
Other commitments 96.9 94.8 36.2
Total 464.2 483.9 472.1
Mortgages 5.2 5.2 25.5
Guarantees 239.7 262.9 308.4
Operating leases 122.0 120.6 101.9
Pension liabilities 0.4 0.4 0.1
Other commitments 96.9 94.8 36.2
Total 464.2 483.9 472.1
Purchase Agreement Commitments
EUR million Scheduled Contract Payments
--------------------------------------------------------------------------------
Type of Supply Contract Q2-Q4/2 2012-2013 2014-2015 2016+
Total 011
Fibre 1 606.4 220.4 446.9 427.0 512.1
Energy 1 656.5 281.5 413.7 375.0 586.3
Logistics 394.5 47.4 96.0 75.8 175.3
Other production costs 726.6 87.4 83.5 29.6 526.1
--------------------------------------------------
Capital Expenditure 35.4 25.6 9.8 - -
Total Contractual Commitments 4 419.4 662.3 1 049.9 907.4 1 799.8
at 31 March 2011
--------------------------------------------------
Fair Values of Derivative Financial Instruments
EUR million 31 Mar 11 31 Dec 10 31 Mar 10
--------------------------------------------------------------------------------
Positive Negative Net Fair Net Net
Fair Fair Values Fair Fair
Values Values Values Values
Interest rate 157.4 -32.8 124.6 135.4 185.0
swaps
Interest rate 0.5 -27.9 -27.4 -35.3 -29.3
options
Forward contracts 66.9 -46.0 20.9 47.6 50.3
Currency options 48.0 -7.5 40.5 22.1 2.5
Commodity 28.7 -12.0 16.7 11.6 -28.9
contracts
Equity swaps 25.0 -6.3 18.7 13.8 -0.3
("TRS")
Total 326.5 -132.5 194.0 195.2 179.3
-------------------------------------------------------------
Nominal Values of Derivative Financial Instruments
EUR million 31 Mar 11 31 Dec 10 31 Mar 10
-------------------------------------------------------------
Interest Rate Derivatives
Interest rate swaps
Maturity under 1 year 781.8 827.5 543.0
Maturity 2-5 years 1 568.0 2 569.8 2 442.8
Maturity 6-10 years 768.7 804.7 920.3
--------------------------------
3 118.5 4 202.0 3 906.1
Interest rate options 547.7 601.0 508.9
--------------------------------
Total 3 666.2 4 803.0 4 415.0
--------------------------------
Foreign Exchange Derivatives
Forward contracts 2 287.0 2 333.1 2 028.6
Currency options 2 502.6 2 683.4 1 676.7
--------------------------------
Total 4 789.6 5 016.5 3 705.3
--------------------------------
Commodity Derivatives
Commodity contracts 279.6 297.6 345.7
--------------------------------
Total 279.6 297.6 345.7
--------------------------------
Total Return (Equity) Swaps
Equity swaps ("TRS") 73.3 83.1 104.7
--------------------------------
Total 73.3 83.1 104.7
--------------------------------
Sales by Segment
EUR million Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
-------------------------------------------------------------------------------
Consumer Board 647.0 2 314.7 611.5 593.8 586.3 523.1
Industrial Packaging 243.4 949.5 241.7 225.4 259.2 223.2
Newsprint and Book Paper 314.5 1 261.6 326.2 322.9 325.1 287.4
Magazine Paper 482.0 2 054.2 547.5 541.0 530.2 435.5
Fine Paper 563.3 2 125.7 533.5 563.3 554.4 474.5
Wood Products 409.7 1 588.7 410.3 424.1 422.7 331.6
Other 723.3 2 524.6 627.3 623.4 648.6 625.3
Inter-segment sales -656.3 -2 522.1 -612.8 -670.3 -634.3 -604.7
Total 2 726.9 10 296.9 2 685.2 2 623.6 2 692.2 2 295.9
------------------------------------------------------
Operating Profit/Loss by Segment excluding NRI and Fair Valuations
EUR million Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
--------------------------------------------------------------------------------
Consumer Board 95.8 277.1 52.1 77.6 76.9 70.5
Industrial Packaging 19.4 65.5 22.0 18.7 17.1 7.7
Newsprint and Book Paper 26.0 -10.8 -2.7 0.1 -6.6 -1.6
Magazine Paper 28.2 90.9 19.5 45.5 22.0 3.9
Fine Paper 79.9 259.4 67.6 70.9 79.4 41.5
Wood Products 11.8 70.9 10.2 25.2 30.1 5.4
Other -28.2 -65.9 -22.3 -4.9 -16.5 -22.2
-------------------------------------------
Operating Profit excl. NRI by 232.9 687.1 146.4 233.1 202.4 105.2
Segment
Share of results of equity accounted 15.1 67.0 20.4 21.9 10.5 14.2
investments excl. fair valuations -------------------------------------------
Operating Profit excl. NRI and Fair 248.0 754.1 166.8 255.0 212.9 119.4
Valuations*
Fair valuations* 16.4 92.5 41.9 16.5 11.2 22.9
-------------------------------------------
Operating Profit excl. NRI 264.4 846.6 208.7 271.5 224.1 142.3
NRI -27.2 180.2 202.2 5.4 -8.5 -18.9
-------------------------------------------
Operating Profit (IFRS) 237.2 1 026.8 410.9 276.9 215.6 123.4
Net financial items -51.2 -100.9 -21.7 -51.1 -22.6 -5.5
-------------------------------------------
Profit before Tax and 186.0 925.9 389.2 225.8 193.0 117.9
Non-controlling Interests
Income tax expense -30.1 -156.6 -76.2 -31.5 -33.1 -15.8
-------------------------------------------
Net Profit 155.9 769.3 313.0 194.3 159.9 102.1
* 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 equity accounted investments.
Equity Accounted Investments in the Income Statement
EUR million Q1/11 2010 Q4/10 Q1/10
--------------------------------------------------------------------------------
Share of results in equity accounted investments 15.1 67.0 20.4 14.2
excl. fair valuations and NRI
Fair valuations in equity accounted investments 4.9 60.8 49.0 4.9
NRI related to equity accounted investments - -15.3 -15.3 -
---------------------------
Equity Accounted Investments in Operating Profit 20.0 112.5 54.1 19.1
Equity accounted investments share of taxes -6.5 -40.6 -25.1 -4.2
---------------------------
Equity Accounted Investments in Net Profit 13.5 71.9 29.0 14.9
NRI by Segment
EUR million Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
------------------------------------------------------------------
Consumer Board - 217.4 167.6 49.8 - -
Industrial Packaging - -21.5 -5.0 - -3.3 -13.2
Newsprint and Book Paper -1.7 -58.5 -1.1 -44.4 -13.0 -
Magazine Paper 3.4 2.4 -1.1 - 9.2 -5.7
Fine Paper - 68.9 60.4 - 8.5 -
Wood Products -28.9 4.0 1.9 - 0.5 1.6
Other - -32.5 -20.5 - -10.4 -1.6
-----------------------------------------
NRI on Operating Profit -27.2 180.2 202.2 5.4 -8.5 -18.9
NRI on tax 7.8 -37.9 -37.9 - - -
NRI on Net Profit -19.4 142.3 164.3 5.4 -8.5 -18.9
-----------------------------------------
Operating Profit/Loss by Segment
EUR million Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
--------------------------------------------------------------------------------
Consumer Board 95.8 494.5 219.7 127.4 76.9 70.5
Industrial Packaging 19.4 44.0 17.0 18.7 13.8 -5.5
Newsprint and Book Paper 24.3 -69.3 -3.8 -44.3 -19.6 -1.6
Magazine Paper 31.6 93.3 18.4 45.5 31.2 -1.8
Fine Paper 79.9 328.3 128.0 70.9 87.9 41.5
Wood Products -17.1 74.9 12.1 25.2 30.6 7.0
Other -16.7 -51.4 -34.6 9.1 -20.1 -5.8
Share of results of equity accounted 20.0 112.5 54.1 24.4 14.9 19.1
investments
-------------------------------------------
Operating Profit (IFRS) 237.2 1 026.8 410.9 276.9 215.6 123.4
Net financial items -51.2 -100.9 -21.7 -51.1 -22.6 -5.5
-------------------------------------------
Profit before Tax and 186.0 925.9 389.2 225.8 193.0 117.9
Non-controlling Interests
Income tax expense -30.1 -156.6 -76.2 -31.5 -33.1 -15.8
-------------------------------------------
Net Profit 155.9 769.3 313.0 194.3 159.9 102.1
-------------------------------------------
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
-----------------------------------------------------------
31 March 11 31 Dec 10 31 March 11 31 Dec 10
SEK 8.9329 8.9655 8.8661 9.5464
USD 1.4207 1.3362 1.3685 1.3272
GBP 0.8837 0.8608 0.8538 0.8583
-----------------------------------------------
Transaction Risk and Hedges in Main Currencies as at 31 March 2011
EUR million USD GBP SEK
--------------------------------------------------------------------------------
Estimated annual net operating cash flow exposure 1 080 580 -1 100
Transaction hedges as at 31 March 2011 -510 -250 590
Hedging percentage as at 31 March 2011 for the next 12 47% 43% 54%
months
--------------------
Changes in Exchange Rates on Operating Profit
Operating Profit: Currency strengthening of + 10% EUR million
--------------------------------------------------------------
USD 108
SEK -110
GBP 58
The sensitivity is based on estimated net operating cash flow in next 12
months. 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.
Stora Enso Shares
Trading volume Helsinki Stockholm
------------------------------------------
A share R share A share R share
---------------------------------------------------------
January 272 642 96 881 420 489 105 27 779 373
February 180 902 92 496 749 184 196 20 591 765
March 168 723 100 248 248 260 275 21 644 601
Total 622 267 289 626 417 933 576 70 015 739
------------------------------------------
Closing Price Helsinki, EUR Stockholm, SEK
-----------------------------------
A share R share A share R share
-------------------------------------------------
January 9.30 8.69 82.45 76.80
February 8.46 8.17 73.85 71.25
March 8.56 8.41 77.45 75.35
Calculation of Key Figures
Return on capital employed,
ROCE (%) 100 x
Operating profit
Capital employed 1) 2)
Return on operating capital, 100 x
Operating profit
ROOC (%)
Operating capital 1) 2)
Return on equity, 100 x
Profit before tax and non-controlling items - taxes
ROE (%)
Total equity 2)
Equity ratio (%) 100 x
Total equity
Total assets
Interest-bearing net liabilities
Interest-bearing liabilities - interest-bearing assets
Debt/equity ratio
Interest-bearing net liabilities
Equity
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
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
Markus Rauramo, CFO, tel. +358 2046 21121
Ulla Paajanen-Sainio, Head of Investor Relations, tel. +358 2046 21242
Lauri Peltola, Head of Communications and Global Responsibility, tel. +358 2046
21380
Stora Enso's second quarter 2011 results will be published on 21 July 2011 at
13.00 EET.
PRESS CONFERENCE IN HELSINKI
Time: 13.15 local time today
Location: Marina Congress Center, Helsinki
Address: Katajanokanlaituri 6
Hosts: Jouko Karvinen, CEO
Markus Rauramo, CFO
The conference will be held in Finnish. Questions can be addressed to Jouko
Karvinen and Markus Rauramo after the presentation.
ANALYST CONFERENCE CALL
CEO Jouko Karvinen and CFO Markus Rauramo will be hosting a combined conference
call and webcast today at 14.30 Finnish time (13.30 CET, 12.30 UK time, 07.30
US Eastern time).
If you wish to participate, please dial:
+44 (0)20 7806 1955 Continental Europe and the UK
+358 (0)9 7251 9036 Finland
+46 (0)8 5352 6407 Sweden
+1 212 444 0413 USA
Access code: 5372314#
The live webcast may be accessed at www.storaenso.com/investors
Stora Enso is the global rethinker of the packaging, paper and wood products
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 26 000 people worldwide, and our sales in 2010 amounted to EUR 10.3
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”, orsimilar 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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