2012-07-20 12:00:00 CEST
2012-07-20 12:00:15 CEST
REGULATED INFORMATION
Stora Enso Oyj - Interim report (Q1 and Q3)
Stora Enso Interim Review January–June 2012
Quarterly performance as anticipated, European paper and wood products markets
continue to weaken
Helsinki, Finland, 2012-07-20 12:00 CEST (GLOBE NEWSWIRE) -- STORA ENSO OYJ
INTERIM REVIEW 20 July 2012 at 13.00 EET
-- Operational EBIT at similar level to Q1 2012, lower year-on-year at EUR 141
(EUR 239) million mainly due to lower sales prices.
-- Cash flow from operations EUR 246 (EUR 207) million and liquidity EUR 1 240
(EUR 996) million, both stronger year-on-year.
-- NRI with a positive net impact of EUR 56 million on net profit and EUR 0.07
impact on EPS.
-- Printing and Reading and Building and Living plan additional cost
reductions and temporary production curtailments in the second half of
2012.
-- Strategic investments to transform the Group progressing.
-- Q3 2012 sales are expected to be at roughly similar level and operational
EBIT at similar level or somewhat higher than in Q2 2012.
Summary of Second Quarter Results
Q2/12 Q1/12 Q2/11
-------------------------------------------------------------------
Sales EUR million 2 720.4 2 673.3 2 817.1
Operational EBITDA EUR million 248.1 262.1 357.6
Operational EBIT* EUR million 141.2 147.4 239.1
Operating profit (IFRS) EUR million 152.7 123.9 180.5
Profit before tax excl. NRI EUR million 31.8 101.0 177.6
Profit before tax EUR million 85.9 89.9 145.9
Net profit excl. NRI EUR million 13.5 80.2 164.1
Net profit EUR million 69.5 74.1 136.0
EPS excl. NRI EUR 0.02 0.10 0.21
EPS EUR 0.09 0.09 0.17
CEPS excl. NRI EUR 0.20 0.28 0.39
Operational ROCE % 6.5 6.8 10.9
*The Group has adopted operational EBIT as a key operative non-IFRS measure
starting from the fourth quarter of 2011.
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
Q2/12 Q1/12 Q2/11 2011 Q1-Q2/ Q1-Q2/ Change Change Change
12 11 % % %
Q2/12- Q2/12- Q1-Q2/
Q2/11 Q1/12 12-Q1-
Q2/11
--------------------------------------------------------------------------------
------------
Paper and 2 574 2 549 2 609 10 330 5 123 5 115 -1.3 1.0 0.2
board
deliveries
(1 000
tonnes)
Paper and 2 610 2 576 2 630 10 346 5 186 5 248 -0.8 1.3 -1.2
board
production
(1 000
tonnes)
Wood 1 292 1 154 1 423 5 072 2 446 2 661 -9.2 12.0 -8.1
products
deliveries
(1 000 m3)
Market pulp 246 261 247 1 130 507 560 -0.4 -5.7 -9.5
deliveries
(1 000
tonnes)*
Corrugated 282 261 242 1 018 543 489 16.5 8.0 11.0
packaging
deliveries
(million
m2)
--------------------------------------------------------------------
*Stora Enso's net market pulp position will be about 1 million tonnes for 2012.
Breakdown of Sales Change Q2/2011 to Q2/2012
Q2/11, EUR million 2 817.1
-------------------------------------------
--------
Price and mix, % -3
Currency, % 1
Volume, % -2
Other sales*, % -
--------
Total before structural changes, % -4
Structural change**, % 1
Total, % -3
Q2/12, EUR million 2 720.4
========
* Wood, energy, RCP, by-products etc.
** Asset closures, major investments, divestments and acquisitions
Key Figures
EUR Q2/12 Q1/12 Q2/11 Q1-Q2/1 Q1-Q2/1 2011 Change Change
Change
milli 2 1 % %
%
on Q2/12- Q2/12-
Q1-Q2/
Q2/11 Q1/12
12-Q1-
Q2/11
--------------------------------------------------------------------------------
-----
Sales 2 720.4 2 673.3 2 817.1 5 393.7 5 544.0 10 964.9 -3.4 1.8
-2.7
Operat 248.1 262.1 357.6 510.2 725.9 1 308.0 -30.6 -5.3
-29.7
ional
EBITD
A
Operat 141.2 147.4 239.1 288.6 497.4 866.7 -40.9 -4.2
-42.0
ional
EBIT
Operat 5.2 5.5 8.5 5.4 9.0 7.9 -38.8 -5.5
-40.0
ional
EBIT
margi
n, %
Operat 152.7 123.9 180.5 276.6 411.2 759.3 -15.4 23.2
-32.7
ing
profi
t
(IFRS
)
Operat 5.6 4.6 6.4 5.1 7.4 6.9 -12.5 21.7
-31.1
ing
margi
n
(IFRS
), %
Profit 31.8 101.0 177.6 132.8 384.3 639.1 -82.1 -68.5
-65.4
befor
e tax
excl.
NRI
Profit 85.9 89.9 145.9 175.8 325.4 420.9 -41.1 -4.4
-46.0
befor
e tax
Net 13.5 80.2 164.1 93.7 339.4 498.2 -91.8 -83.2
-72.4
profi
t for
the
perio
d
excl.
NRI
Net 69.5 74.1 136.0 143.6 291.9 342.2 -48.9 -6.2
-50.8
profi
t for
the
perio
d
Capita 154.2 62.2 85.4 216.4 142.7 453.3 80.6 147.9
51.6
l
expen
diture
Deprec 140.9 142.7 140.1 283.6 275.5 554.9 0.6 -1.3
2.9
iation
and
impai
rment
charg
es
excl.
NRI
Operat 6.5 6.8 10.9 6.7 11.4 10.0 -40.4 -4.4
-41.2
ional
ROCE,
%
Earnin 0.02 0.10 0.21 0.12 0.43 0.63 -90.5 -80.0
-72.1
gs per
share
(EPS)
excl.
NRI,
EUR
EPS 0.09 0.09 0.17 0.18 0.37 0.43 -47.1 -
-51.4
(basi
c),
EUR
Cash 0.20 0.28 0.39 0.48 0.78 1.33 -48.7 -28.6
-38.5
earni
ngs
per
share
(CEPS
)
excl.
NRI,
EUR
CEPS, 0.26 0.28 0.35 0.54 0.74 1.16 -25.7 -7.1
-27.0
EUR
Return 4.8 5.0 8.6 4.9 9.3 5.6 -44.2 -4.0
-47.3
on
equit
y
(ROE)
, %
Debt/e 0.54 0.46 0.41 0.54 0.41 0.47 31.7 17.4
31.7
quity
ratio
Equity 7.05 7.49 7.90 7.05 7.90 7.45 -10.8 -5.9
-10.8
per
share
, EUR
Equity 43.3 45.6 48.5 43.3 48.5 45.8 -10.7 -5.0
-10.7
ratio
, %
Averag 29 226 29 041 27 019 28 817 26 623 27 958 8.2 0.6
8.2
e
numbe
r of
emplo
yees
Averag
e
numbe
r of
share
s
(mill
ion)
period 788.6 788.6 788.6 788.6 788.6 788.6
ic
cumula 788.6 788.6 788.6 788.6 788.6 788.6
tive
cumula 788.6 788.6 788.6 788.6 788.6 788.6
tive,
dilut
ed
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 Operating Profit
EUR million Q2/12 Q1/12 Q2/11 2011 Q1-Q2/ Q1-Q2/ Change Change Change
12 11 % % %
Q2/12-Q Q2/12- Q1-Q2/
2/11 Q1/12 12-Q1-
Q2/11
--------------------------------------------------------------------------------
Operational 141.2 147.4 239.1 866.7 288.6 497.4 -40.9 -4.2 -42.0
EBIT
Fair -33.1 1.2 -26.9 -27.5 -31.9 -27.3 -23.0 n/m -16.8
valuations
and
non-operat
ional
items*
Non-recurri 44.6 -24.7 -31.7 -79.9 19.9 -58.9 240.7 280.6 133.8
ng items
--------------------------------------------------------------------
Operating 152.7 123.9 180.5 759.3 276.6 411.2 -15.4 23.2 -32.7
Profit
(IFRS)
--------------------------------------------------------------------
*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 equity accounted
investments (EAI) and Group's share of tax and net financial items of EAI.
Q2/2012 Results (compared with Q2/2011)
Sales at EUR 2 720 million were EUR 97 million lower than a year ago.
Operational EBIT at EUR 141 million was EUR 98 million lower than a year ago.
This represents an operational EBIT margin of 5.2% (8.5%).
Clearly lower sales prices in local currencies, mainly in paper and pulp
grades, decreased operational EBIT by EUR 83 million and slightly lower
deliveries and production decreased operational EBIT by EUR 14 million. Paper
and board production was curtailed by 7% (6%) and sawnwood production by 6%
(3%) to manage inventories.
Lower pulp and recycled paper costs were partly offset by slightly higher
sawlog and chemical prices. The overall net impact of variable costs in local
currencies was a positive EUR 14 million. Fixed costs were unchanged, with
costs in Europe lower due to cost saving measures including permanent closure
of Kopparfors Sawmill and the Fine Paper restructuring programme launched in
the first half of 2011. Fixed costs were higher mainly in Asia due to the Inpac
acquisition and the board and pulp mill project in China.
The average number of employees at 29 200 was 2 200 higher than a year ago. The
number of employees increased by 2 800 mainly in Asia due to the Inpac
acquisition and decreased by 600 in Europe.
Exchange rates had a negative net impact on operational EBIT totalling EUR 16
million, after hedges. The second quarter 2011 results included the material
favourable impact of Swedish krona hedges.
Fair valuations and non-operational items were EUR -33 (EUR -27) million. The
Group recorded as non-recurring items (NRI) a positive EUR 45 million at
operating profit level comprising EUR 41 million positive impact due to a
tax-free dividend from Pohjolan Voima (PVO), EUR 21 million positive impact due
to a release of valuation allowance on value added tax for Arapoti Mill in
Brazil, EUR 9 million negative impact due to an adjustment related to an equity
accounted investment and EUR 8 million negative impact on operating profit due
to restructuring plans in the Printing and Reading Business Area. Additionally
the Group recorded as a non-recurring item in financial items EUR 10 million
positive impact due to reversal of a provision relating to the NewPage Stevens
Point Mill.
Net financial items were EUR -67 (EUR -35) million. Net interest expenses
increased from EUR 28 million to EUR 42 million. Net foreign exchange loss
amounted to EUR 18 (EUR 1) million. The net loss from other financial items
totalled EUR 7 (EUR 6) million, including a NRI with EUR 10 million positive
impact due to the NewPage lease guarantee provision reversal. The remaining
loss of EUR 17 million was mainly related to the fair valuations of interest
rate derivatives and financial fees.
Group capital employed was EUR 8 647 million on 30 June 2012, a net decrease of
EUR 190 million on a year earlier. Group capital employed decreased primarily
due to a EUR 480 million reduction in the valuation of PVO mainly resulting
from lower anticipated future electricity prices, EUR 60 million from capital
expenditure being lower than depreciation and a EUR 60 million decrease in
working capital. Increases were primarily due to EUR 70 million from the Inpac
acquisition and a EUR 230 million increase in the value of equity accounted
investments resulting mainly from an equity injection into the Montes del Plata
pulp mill project and profits from the equity accounted investments. In
addition, changes in the impact of foreign exchange rates increased capital
employed by EUR 100 million, mainly due to strengthening of the Swedish krona,
Chinese Renminbi and US dollar, partly offset by weakening of the Brazilian
Real.
The operational return on capital employed was 6.5% (10.9%).
January-June 2012 Results (compared with January-June 2011)
Sales decreased by EUR 150 million year-on-year. Operational EBIT decreased by
EUR 209 million due to lower prices in local currencies and lower delivery
volumes. Exchange rates had a negative net impact on operational EBIT, after
hedges. Fixed and variable costs remained unchanged.
Q2/2012 Results (compared with Q1/2012)
Sales were slightly higher than in the previous quarter at EUR 2 720 million.
Operational EBIT was EUR 6 million lower than in the previous quarter at EUR
141 million. Delivery volumes and pulp sales prices in local currencies were
slightly higher and paper sales prices in local currencies slightly lower than
in the previous quarter. Exchange rates had a positive net impact on
operational EBIT, after hedges. Fixed costs increased due to higher personnel
costs and scheduled maintenance at several European mills.
Capital Structure
EUR million 30 Jun 12 31 Mar 12 31 Dec 11 30 Jun 11
--------------------------------------------------------------------------------
Operative fixed assets 5 879.3 6 032.0 6 120.4 6 289.1
Equity accounted investments 1 947.9 1 925.9 1 913.1 1 716.0
Operative working capital, net 1 587.3 1 529.6 1 504.6 1 653.0
Non-current interest-free items, net -453.8 -467.6 -486.1 -450.9
-------------------------------------------
Operating Capital Total 8 960.7 9 019.9 9 052.0 9 207.2
Net tax liabilities -313.7 -315.0 -346.4 -368.2
-------------------------------------------
Capital Employed 8 647.0 8 704.9 8 705.6 8 839.0
===========================================
Equity attributable to Company 5 560.9 5 906.7 5 872.7 6 229.2
shareholders
Non-controlling interests 91.5 86.5 87.1 49.1
Net interest-bearing liabilities 2 994.6 2 711.7 2 745.8 2 560.7
-------------------------------------------
Financing Total 8 647.0 8 704.9 8 705.6 8 839.0
===========================================
Financing Q2/2012 (compared with Q1/2012)
Cash flow from operations was EUR 246 (EUR 224) million. Cash flow after
investing activities was EUR 75 (EUR 111) million. Interest-bearing net
liabilities of the Group increased by EUR 283 million to EUR 2 995 million
mainly due to payment of the 2012 dividend during the second quarter.
Total unutilised committed credit facilities were unchanged at EUR 700 million,
and cash and cash equivalents net of overdrafts remained strong at EUR 1 240
million, which is EUR 11 million less than for the previous quarter. In
addition, Stora Enso has access to various long-term sources of funding up to
EUR 600 million.
In June 2012 Stora Enso issued two five-year bonds totalling SEK 1 700 million
(EUR 193 million) under its EMTN (Euro Medium Term Note) programme. There are
no financial or change of control covenants in the new debt.
The debt/equity ratio at 30 June 2012 was 0.54 (0.46). The increase is
primarily due to the EUR 237 million dividend payment made during the second
quarter of 2012 and EUR 138 million reduction in the value of PVO. The currency
effect on owners' equity net of the hedging of equity translation risks was
negative EUR 19 million.
Cash Flow
EUR Q2/12 Q1/12 Q2/11 2011 Q1-Q2/ Q1-Q2/ Change Change Change
million 12 11 % % %
Q2/12- Q2/12- Q1-Q2/
Q2/11 Q1/12 12-Q1-
Q2/11
--------------------------------------------------------------------------------
Operatin 152.7 123.9 180.5 759.3 276.6 411.2 -15.4 23.2 -32.7
g profit
Deprecia 152.1 111.6 186.7 492.0 263.7 297.8 -18.5 36.3 -11.5
tion and
other
non-cas
h items
Change -59.2 -11.8 -160.0 -217.0 -71.0 -338.9 63.0 n/m 79.0
in
working
capital
-----------------------------------------------------------------------
Cash 245.6 223.7 207.2 1 034.3 469.3 370.1 18.5 9.8 26.8
Flow
from
Operati
ons
Cash -127.6 -94.3 -85.4 -409.6 -221.9 -142.7 -49.4 -35.3 -55.5
spent
on
fixed
and
biologi
cal
assets
Acquisit -43.5 -18.0 -11.0 -128.6 -61.5 -24.9 -295.5 -141.7 -147.0
ions of
equity
account
ed
investm
ents
-----------------------------------------------------------------------
Cash 74.5 111.4 110.8 496.1 185.9 202.5 -32.8 -33.1 -8.2
Flow
after
Investi
ng
Activit
ies
-----------------------------------------------------------------------
Capital Expenditure for January-June 2012
Additions to fixed and biological assets in the first half of 2012 totalled EUR
216 million, which is 76% of depreciation in the same period.
The equity injection into Montes del Plata, a joint venture in Uruguay, was EUR
62 million in the first half of 2012. The Montes del Plata Pulp Mill is
currently 60% completed and now expected to start up approximately mid-year
2013, instead of by the end of the first quarter of 2013 as originally
scheduled.
Investments in fixed assets and biological assets had a cash outflow impact of
EUR 222 million in the first half of 2012.
The full year 2012 capital expenditure forecast for the Group remains unchanged
at approximately EUR 700-750 million. Annual depreciation in 2012 will be
approximately EUR 580 million. In addition, the equity injection into Montes
del Plata, a joint venture in Uruguay, will be approximately EUR 150 million in
2012.
The main projects ongoing during the first half of 2012 were Montes del Plata,
the Ostrołęka containerboard machine and the Skoghall woodyard investment.
Near-term Outlook
In the third quarter of 2012 Group sales are expected to be at roughly similar
level and operational EBIT at similar level or somewhat higher than in the
second quarter of 2012 due to improvement in variable and fixed costs.
Segments Q2/12 compared with Q2/11
Printing and Reading
Printing and Reading's wide offering serves publishers, advertisers, printing
houses, merchants, office equipment manufacturers and office suppliers, among
others. Printing and Reading produces newsprint, SC paper, coated paper grades
and office paper.
EUR Q2/12 Q1/12 Q2/11 2011 Q1-Q2/1 Q1-Q2/1 Change Change
Change
milli 2 1 % %
%
on Q2/12- Q2/12-
Q1-Q2/
Q2/11 Q1/12
12-Q1-
Q2/11
--------------------------------------------------------------------------------
----
Sales 1 190.8 1 227.2 1 242.6 5 022.0 2 418.0 2 455.1 -4.2 -3.0
-1.5
Operat 107.5 133.4 138.1 547.6 240.9 285.9 -22.2 -19.4
-15.7
ional
EBITD
A
Operat 41.7 67.3 72.2 285.3 109.0 157.4 -42.2 -38.0
-30.7
ional
EBIT
% of 3.5 5.5 5.8 5.7 4.5 6.4 -39.7 -36.4
-29.7
sales
Operat 5.5 8.9 9.2 9.2 7.1 10.0 -40.2 -38.2
-29.0
ional
ROOC,
%*
Paper 1 762 1 783 1 788 7 219 3 545 3 495 -1.5 -1.2
1.4
deliv
eries,
1 000
t
Paper 1 803 1 809 1 832 7 228 3 612 3 599 -1.6 -0.3
0.4
produ
ction,
1 000
t
-----------------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Lower sales prices in local currencies and slightly
lower paper deliveries than a year ago were not fully offset by lower
variable costs. Exchange rates had a negative net impact on sales and costs
after hedges.
-- The Business Area is planning f
urther cost reductions and temporary production curtailments in the second
half of 2012.
Markets
Produc Market Demand Q2/12 Demand Q2/12 Price Q2/12 Price Q2/12
t compared with compared with compared with compared with
Q2/11 Q1/12 Q2/11 Q1/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paper Europe Weaker Slightly weaker Slightly lower Stable
Biomaterials
Biomaterials offers a variety of pulp grades to meet the demands of paper,
board and tissue producers. Pulp is an excellent raw material: it is made from
renewable resources in a sustainable manner, and has many different uses.
EUR Q2/12 Q1/12 Q2/11 2011 Q1-Q2/ Q1-Q2/ Change Change Change
millio 12 11 % % %
n Q2/12-Q Q2/12-Q Q1-Q2/1
2/11 1/12 2-Q1-Q2
/11
--------------------------------------------------------------------------------
Sales 246.5 241.7 268.6 1 092.0 488.2 560.2 -8.2 2.0 -12.9
Operati 13.3 14.9 49.0 200.4 28.2 112.6 -72.9 -10.7 -75.0
onal
EBITDA
Operati 14.7 7.2 31.2 169.2 21.9 84.7 -52.9 104.2 -74.1
onal
EBIT
% of 6.0 3.0 11.6 15.5 4.5 15.1 -48.3 100.0 -70.2
sales
Operati 4.1 2.0 9.5 12.0 3.0 12.7 -56.8 105.0 -76.4
onal
ROOC,
%*
Pulp 439 459 447 1 851 898 925 -1.8 -4.4 -2.9
delive
ries,
1 000
t**
------------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
** Historical pulp deliveries in 2010 and 2011 are published at
www.storaenso.com/investors.
-- Market pulp prices significantly lower than a year ago were partly offset
by beneficial exchange rates, which also improved the results of equity
accounted investments.
-- Pulp production volumes were lower due to annual maintenance shutdowns at
Enocell Mill in Finland and Skutskär Mill in Sweden.
-- Dissolving pulp production continued successfully at Enocell Mill.
-- The Montes del Plata pulp mill project is progressing and currently 60% of
the construction work has been completed. The mill is expected to start up
approximately mid-year 2013.
Markets
Produc Market Demand Q2/12 Demand Q2/12 Price Q2/12 Price Q2/12
t compared with compared with compared with compared with
Q2/11 Q1/12 Q2/11 Q1/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Softwo Europe Stronger Stable Significantly Slightly
od lower higher
pulp
Building and Living
Building and Living provides wood-based products and innovations for
construction and interior decoration, as well as solid biofuels for the energy
sector. Building and Living products address building, living and packaging
needs. The products are recyclable, and made from high quality renewable
European pine or spruce.
EUR Q2/12 Q1/12 Q2/11 2011 Q1-Q2/ Q1-Q2/ Change Change Change
millio 12 11 % % %
n Q2/12-Q Q2/12-Q Q1-Q2/1
2/11 1/12 2-Q1-Q2
/11
--------------------------------------------------------------------------------
Sales 443.7 381.2 465.4 1 671.1 824.9 875.1 -4.7 16.4 -5.7
Operati 20.1 11.3 44.7 102.3 31.4 67.3 -55.0 77.9 -53.3
onal
EBITDA
Operati 11.5 9.8 35.2 62.8 21.3 47.0 -67.3 17.3 -54.7
onal
EBIT
% of 2.6 2.6 7.6 3.8 2.6 5.4 -65.8 0.0 -51.9
sales
Operati 7.8 6.8 23.9 10.9 7.4 15.8 -67.4 14.7 -53.2
onal
ROOC,
%*
Deliver 1 254 1 109 1 379 4 920 2 363 2 578 -9.1 13.1 -8.3
ies, 1
000 m3
------------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Volumes and sales prices in local currencies were lower, whereas raw
material prices remained high relative to end-product prices, especially in
Central Europe.
-- Sales volumes were reallocated from poorly performing European markets to
other markets.
-- In addition to ongoing actions, temporary capacity and cost cuts are being
planned throughout the Business Area. Co-determination negotiations will
start in the countries affected.
-- The Building Solutions business has strengthened its position as a pioneer
in industrialised wood-based construction by acquiring a module production
unit at Hartola in Finland in July 2012.
Markets
Produc Market Demand Q2/12 Demand Q2/12 Price Q2/12 Price Q2/12
t compared with compared with compared with compared with
Q2/11 Q1/12 Q2/11 Q1/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Wood Europe Weaker Stronger Slightly lower Slightly
produ higher
cts
Renewable Packaging
Renewable Packaging produces fibre-based packaging materials and innovative
packaging solutions for all major consumer goods and industrial packaging
applications. Renewable Packaging operates in every stage of the value chain,
from pulp production, material and package production to recycling. The
Business Area comprises three business units: Consumer Board, Packaging
Solutions and Packaging Asia.
EUR Q2/12 Q1/12 Q2/11 2011 Q1-Q2/1 Q1-Q2/1 Change Change Change
million 2 1 % % %
Q2/12- Q2/12- Q1-Q2/
Q2/11 Q1/12 12-
Q1-Q2/
11
--------------------------------------------------------------------------------
Sales 826.8 779.3 829.6 3 194.6 1 606.1 1 637.4 -0.3 6.1 -1.9
Operatio 122.1 113.0 142.6 495.8 235.1 291.1 -14.4 8.1 -19.2
nal
EBITDA
Operatio 72.5 61.7 93.9 301.3 134.2 194.9 -22.8 17.5 -31.1
nal EBIT
% of 8.8 7.9 11.3 9.4 8.4 11.9 -22.1 11.4 -29.4
sales
Operatio 13.0 11.4 17.5 14.2 12.1 18.4 -25.7 14.0 -34.2
nal
ROOC,
%*
Paper 812 766 821 3 111 1 578 1 620 -1.1 6.0 -2.6
and
board
deliver
ies, 1
000 t
Paper 807 767 798 3 118 1 574 1 649 1.1 5.2 -4.5
and
board
product
ion, 1
000 t
Corrugat 282 261 242 1 018 543 489 16.5 8.0 11.0
ed
packagi
ng
deliver
ies,
million
m2
Corrugat 275 257 242 1 006 532 491 13.6 7.0 8.4
ed
packagi
ng
product
ion,
million
m2
-----------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- On average lower sales prices in local currencies and lower board
deliveries were not fully offset by higher corrugated packaging volumes
supported by the Inpac acquisition in the third quarter of 2011. Exchange
rates had a negative net impact on sales and costs after hedges.
-- Fixed costs were higher mainly in Asia due to the Inpac acquisition and the
board and pulp mill project in China.
-- Integrated plantation-based board (450 000 tonnes per year) and pulp (total
capacity 900 000 tonnes per year) mills at Beihai city in Guangxi, southern
China are progressing according to plan. Construction work will start after
the necessary permits and approvals are obtained. Projects at
Ostrołęka and Skoghall are proceeding according to plan.
-- Previously announced plans at Skoghall, Fors, Páty and Barcelona to
mitigate cost increases and adjust capacity to lower demand are proceeding
according to plan and are expected to reduce employment by approximately
200 persons and annual costs by EUR 12 million gradually from late 2012
onwards.
Markets
Product Market Demand Q2/12 Demand Q2/12 Price Q2/12 Price Q2/12
compared with compared with compared compared with
Q2/11 Q1/12 with Q2/11 Q1/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consumer Europe Slightly Stable Stable Stable
board weaker
Corrugate Europe Slightly Slightly Lower Stable
d stronger stronger
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 Q2/12 Q1/12 Q2/11 2011 Q1-Q2/1 Q1-Q2/1 Change Change Change
millio 2 1 % % %
n Q2/12-Q Q2/12- Q1-Q2/
2/11 Q1/12 12-Q1-
Q2/11
--------------------------------------------------------------------------------
Sales 662.2 703.4 700.1 2 700.5 1 365.6 1 419.2 -5.4 -5.9 -3.8
Operati -14.9 -10.5 -16.8 -38.1 -25.4 -31.0 11.3 -41.9 18.1
onal
EBITDA
Operati 0.8 1.4 6.6 48.1 2.2 13.4 -87.9 -42.9 -83.6
onal
EBIT
% of 0.1 0.2 0.9 1.8 0.2 0.9 -88.9 -50.0 -77.8
sales
------------------------------------------------------------------------
-- Lower volumes in Bergvik Skog and Tornator.
-- Lower costs in Group shared services and administration.
-- Planning in progress to redefine the internal service offering.
Short-term Risks and Uncertainties
The main short-term risks and uncertainties relate to the economic situation in
Europe and the ability of certain countries to refinance excessive debts 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 28 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 204 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 51
million on operational EBIT for the next twelve months.
A decrease of 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 120 million, negative EUR 92 million and positive EUR 60 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 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. 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 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 159 million and the secondary claim
against Stora Enso to approximately EUR 87 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 72 million and the secondary claims and claims
solely against Stora Enso to approximately EUR 26 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.
Share Capital
During the quarter no A shares were converted into R shares.
On 30 June 2012 Stora Enso had 177 147 772 A shares and 612 390 727 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.
Changes in shareholdings
Norges Bank (The Central Bank of Norway) lent out Stora Enso shares and as a
result the number of shares in Stora Enso Oyj held by Norges Bank was
temporarily for two periods in April and May 2012 less than 5% of the paid-up
share capital and the number of shares in Stora Enso Oyj as Norges Bank
conducted two successive similar lending operations, the second of which ended
with the return of the shares lent and the acquisition of additional shares.
Decisions of the Annual General Meeting on 24 April 2012
The AGM approved a proposal by the Board of Directors that the Company
distribute a dividend of EUR 0.30 per share for the year 2011.
The AGM approved a proposal that the Board of Directors shall have eight
members and that of the current members of the Board of Directors, Gunnar
Brock, Birgitta Kantola, Mikael Mäkinen, Juha Rantanen, Hans Stråberg, Matti
Vuoria and Marcus Wallenberg be re-elected members of the Board of Directors
until the end of the following AGM and that Hock Goh be elected a new member 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 be re-elected auditor of the Company until the
end of the following AGM. The AGM approved a proposal that remuneration for the
auditor be paid according to invoice approved by 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.
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
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.
Events after the Period
According to Stora Enso's Corporate Governance, the CFO also acts as deputy to
the CEO as defined by the Finnish Companies Act. The deputy to the CEO with
effect from 1 August 2012 will therefore be Karl-Henrik Sundström.
This report is unaudited.
Helsinki, 20 July 2012
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 2011.
There were no new EU-endorsed standards or interpretations effective from 1
January 2012. IASB has published one amendment effective from 1 January 2012.
It does not affect the Group's financial statements.
New Business Area Structure
In the first quarter of 2012 Stora Enso reorganised its Business Area and
Reporting Segment structure based on the different markets and customers the
Business Areas serve. The new reporting segments are Printing and Reading,
Biomaterials, Building and Living, Renewable Packaging and Other.
The Printing and Reading Business Area comprises the former Newsprint and Book
Paper, Magazine Paper and Fine Paper reporting segments. The Biomaterials
Business Area mainly comprises tree plantations, the Group's joint-venture
Veracel and Montes del Plata pulp mills and Nordic stand-alone pulp mills. The
Wood Products Business Area was renamed the Building and Living Business Area.
The Renewable Packaging Business Area comprises the former Consumer Board and
Industrial Packaging reporting segments, and includes the plantations in
Guangxi in China. The segment Other includes the Nordic forest equity accounted
investments, Stora Enso's shareholding in Pohjolan Voima, the operations
supplying wood to the Nordic mills and Group administration. The comparative
data have been reclassified accordingly.
Equity Accounted Investment Reclassification
Stora Enso changed the presentation of its equity accounted investments and all
comparative data with effect from the fourth quarter of 2011. Stora Enso's
share of the net profit of its equity accounted investments is presented on one
line in Stora Enso's operating profit. The share of taxes of equity accounted
investments has been eliminated from tax expense. Comparative data have been
reclassified accordingly.
Operational EBIT as New Key Operative Measure
The Group adopted operational EBIT as a key operative non-IFRS measure with
effect from the fourth quarter of 2011 instead of operating profit excluding
NRI and fair valuations, which had previously been used. 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. Comparative data have been
reclassified accordingly.
Inpac Acquisition
Stora Enso acquired 51% of Inpac International on 28 July 2011. Inpac is a
Chinese packaging company with production operations in China and India, and
service operations in Korea. The company specialises in manufacturing consumer
packaging, especially for global manufacturers of consumer electronics and
other consumer goods.
The preliminary consideration amounted to EUR 45 million. The initial
acquisition accounting of the integration of the company has been only
provisionally determined at the end of the second quarter of 2012. The
necessary fair valuations and other calculations have not been finalised and
they are based on management's best estimate. For more information, see Annual
Report 2011, Note 4, Acquisitions and Disposals.
Condensed Consolidated Income Statement
EUR Q2/12 Q1/12 Q2/11 Q1-Q2/12 Q1-Q2/11 2011 Change
Change Change
milli %
% %
on Q2/12-
Q2/12- Q1-Q2/
Q2/11
Q1/12 12-Q1-
Q2/11
--------------------------------------------------------------------------------
----------
Sales 2 720.4 2 673.3 2 817.1 5 393.7 5 544.0 10 964.9 -3.4
1.8 -2.7
Other 80.0 43.5 57.1 123.5 114.1 208.9 40.1
83.9 8.2
opera
ting
incom
e
Materi -1 737.5 -1 729.8 -1 757.2 -3 467.3 -3 425.4 -6 971.9 1.1
-0.4 -1.2
als
and
servi
ces
Freigh -250.3 -242.0 -262.5 -492.3 -519.6 -1 018.9 4.6
-3.4 5.3
t and
sales
commi
ssions
Person -373.0 -342.1 -370.5 -715.1 -713.7 -1 393.9 -0.7
-9.0 -0.2
nel
expen
ses
Other -139.9 -148.9 -165.6 -288.8 -308.9 -575.2 15.5
6.0 6.5
opera
ting
expen
ses
Share -6.1 14.7 2.2 8.6 15.7 118.0 n/m
-141.5 -45.2
of
resul
ts of
equit
y
accou
nted
inves
tments
Deprec -140.9 -144.8 -140.1 -285.7 -295.0 -572.6 -0.6
2.7 3.2
iation
and
impai
rment
--------------------------------------------------------------------------------
---
Operat 152.7 123.9 180.5 276.6 411.2 759.3 -15.4
23.2 -32.7
ing
Profi
t
Net -66.8 -34.0 -34.6 -100.8 -85.8 -338.4 -93.1
-96.5 -17.5
finan
cial
items
--------------------------------------------------------------------------------
---
Profit 85.9 89.9 145.9 175.8 325.4 420.9 -41.1
-4.4 -46.0
/Loss
befor
e Tax
Income -16.4 -15.8 -9.9 -32.2 -33.5 -78.7 -65.7
-3.8 3.9
tax
--------------------------------------------------------------------------------
---
Net 69.5 74.1 136.0 143.6 291.9 342.2 -48.9
-6.2 -50.8
Profi
t/Loss
for
the
Perio
d
Attrib
utable
to:
Owners 65.8 72.9 135.7 138.7 291.3 339.7 -51.5
-9.7 -52.4
of
the
Paren
t
Non-co 3.7 1.2 0.3 4.9 0.6 2.5 n/m
208.3 n/m
ntroll
ing
inter
ests
--------------------------------------------------------------------------------
---
69.5 74.1 136.0 143.6 291.9 342.2 -48.9
-6.2 -50.8
================================================================================
===
Earnin
gs per
Share
Basic 0.09 0.09 0.17 0.18 0.37 0.43 -47.1
- -51.4
earni
ngs
per
share
, EUR
Dilute 0.09 0.09 0.17 0.18 0.37 0.43 -47.1
- -51.4
d
earni
ngs
per
share
, EUR
Consolidated Statement of Comprehensive Income
EUR million Q2/12 Q1/12 Q2/11 Q1-Q2/ Q1-Q2/ 2011
12 11
--------------------------------------------------------------------------------
Net profit for the period 69.5 74.1 136.0 143.6 291.9 342.2
Other Comprehensive Income
Actuarial losses on defined - - - - - -55.8
benefit pension plans
Available for sale financial -131.2 -68.5 29.5 -199.7 37.6 -240.5
assets
Currency and commodity hedges -18.3 24.0 -60.1 5.7 -63.2 -128.4
Share of other comprehensive -9.8 -1.9 - -11.7 3.0 -19.4
income of equity accounted
investments
Currency translation movements on -17.8 17.7 -21.0 -0.1 -73.2 -76.2
equity net investments (CTA)
Currency translation movements on 1.3 -1.8 0.3 -0.5 -1.6 -
non-controlling interests
Net investment hedges -1.2 -6.3 11.2 -7.5 14.7 6.0
Income tax relating to components 3.3 -3.9 13.0 -0.6 13.3 40.8
of other comprehensive income
---------------------------------------------
Other Comprehensive Income, net of -173.7 -40.7 -27.1 -214.4 -69.4 -473.5
tax
---------------------------------------------
---------------------------------------------
Total Comprehensive Income -104.2 33.4 108.9 -70.8 222.5 -131.3
---------------------------------------------
Total Comprehensive Income
Attributable to:
Owners of the Parent -109.2 34.0 108.3 -75.2 223.5 -133.8
Non-controlling interests 5.0 -0.6 0.6 4.4 -1.0 2.5
---------------------------------------------
-104.2 33.4 108.9 -70.8 222.5 -131.3
=============================================
Condensed Consolidated Statement of Cash Flows
EUR million Q1-Q2/12 Q1-Q2/11
--------------------------------------------------------------------------------
Cash Flow from Operating Activities
Operating profit 276.6 411.2
Hedging result from OCI 5.5 -63.1
Adjustments for non-cash items 263.7 297.8
Change in net working capital -47.6 -334.0
-------------------
Cash Flow Generated by Operations 498.2 311.9
Net financial items paid -96.8 -74.7
Income taxes paid, net -72.9 -73.4
-------------------
Net Cash Provided by Operating Activities 328.5 163.8
-------------------
Cash Flow from Investing Activities
Acquisitions of subsidiaries, net of acquired cash -3.3 0.1
Acquisitions of equity accounted investments -61.5 -24.9
Proceeds from sale of fixed assets and shares, net of 2.5 17.3
disposed cash
Capital expenditure -221.9 -142.7
Payments/proceeds of non-current receivables, net -31.3 -19.3
-------------------
Net Cash Used in Investing Activities -315.5 -169.5
-------------------
Cash Flow from Financing Activities
Proceeds from issue of new long-term debt 853.0 18.7
Long-term debt, payments -436.8 -52.4
Change in short-term borrowings -81.5 132.2
Dividends paid -236.6 -197.2
Dividend to non-controlling interests -0.2 -1.7
-------------------
Net Cash Provided by/Used in Financing Activities 97.9 -100.4
-------------------
Net Increase/Decrease in Cash and Cash Equivalents 110.9 -106.1
Translation adjustment -5.5 -1.3
Net cash and cash equivalents at the beginning of period 1 134.3 1 103.1
-------------------
Net Cash and Cash Equivalents at Period End 1 239.7 995.7
-------------------
Cash and Cash Equivalents at Period End 1 248.6 1 025.3
Bank Overdrafts at Period End -8.9 -29.6
-------------------
Net Cash and Cash Equivalents at Period End 1 239.7 995.7
-------------------
Acquisitions of Subsidiary Companies
Cash and cash equivalents, net of bank overdraft 1.1 -
Fixed assets 0.4 -
Working capital -1.2 -
Tax assets and liabilities 0.1 -
-------------------
Fair value of Net Assets Acquired 0.4 -
Non-controlling interest (as proportionate share) -0.2 -
Goodwill (provisional for 2012) 0.1 -0.1
-------------------
Total Purchase Consideration 0.3 -0.1
Less cash and cash equivalents in acquired companies -1.1 -
-------------------
Net Purchase Consideration -0.8 -0.1
-------------------
Acquisition of subsidiaries 3.3 -0.1
Payment concerning unfinished 2011 acquisition -4.1 -
-------------------
Net Purchase Consideration -0.8 -0.1
-------------------
Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million Q1-Q2/12 2011 Q1-Q2/11
------------------------------------------------------------------
Carrying value at 1 January 5 480.2 5 565.8 5 565.8
Acquisition of subsidiary companies 0.5 63.3 -0.1
Additions in fixed assets 208.8 436.1 134.4
Additions in biological assets 7.6 17.2 8.3
Change in emission rights -3.7 2.0 24.6
Disposals -1.8 -13.4 -11.1
Depreciation and impairment -285.7 -572.6 -295.0
Translation difference and other 38.6 -18.2 -56.3
----------------------------
Statement of Financial Position Total 5 444.5 5 480.2 5 370.6
============================
Borrowings
EUR million 30 June 12 31 Dec 11 30 June 11
------------------------------------------------------------------------
Non-current borrowings 3 838.3 3 339.4 3 282.5
Current borrowings 892.8 1 034.0 803.1
----------------------------------
4 731.1 4 373.4 4 085.6
==================================
----------------------------------
Q1-Q2/12 2011 Q1-Q2/11
----------------------------------
Carrying value at 1 January 4 373.4 4 011.2 4 011.2
Debt acquired with new subsidiaries - 5.4 -
Proceeds of borrowings (net) 330.1 331.6 113.5
Translation difference and other 27.6 25.2 -39.1
----------------------------------
Statement of Financial Position Total 4 731.1 4 373.4 4 085.6
==================================
Condensed Consolidated Statement of Financial Position
EUR million 30 June 12 31 Dec 11 30 June 11
--------------------------------------------------------------------------------
Assets
Fixed Assets and Other Non-current
Investments
Fixed assets O 5 186.7 5 224.6 5 116.8
Biological assets O 218.6 212.6 188.3
Emission rights O 39.2 43.0 65.5
Equity accounted investments O 1 947.9 1 913.1 1 716.0
Available-for-sale: Interest-bearing I 92.8 82.0 80.3
Available-for-sale: Operative O 434.8 640.2 918.5
Non-current loan receivables I 209.8 125.3 145.1
Deferred tax assets T 133.1 121.9 96.9
Other non-current assets O 45.3 26.6 47.6
----------------------------------
8 308.2 8 389.3 8 375.0
----------------------------------
Current Assets
Inventories O 1 550.0 1 528.7 1 609.8
Tax receivables T 19.9 6.2 6.9
Operative receivables O 1 748.3 1 654.6 1 677.8
Interest-bearing receivables I 185.3 281.5 274.2
Cash and cash equivalents I 1 248.6 1 138.8 1 025.3
----------------------------------
----------------------------------
4 752.1 4 609.8 4 594.0
----------------------------------
----------------------------------
Total Assets 13 060.3 12 999.1 12 969.0
==================================
Equity and Liabilities
Owners of the Parent 5 560.9 5 872.7 6 229.2
Non-controlling Interests 91.5 87.1 49.1
----------------------------------
Total Equity 5 652.4 5 959.8 6 278.3
==================================
Non-current Liabilities
Post-employment benefit provisions O 331.7 333.1 316.3
Other provisions O 140.6 147.7 145.3
Deferred tax liabilities T 421.2 401.0 380.3
Non-current debt I 3 838.3 3 339.4 3 282.5
Other non-current operative liabilities O 26.8 31.9 36.9
----------------------------------
4 758.6 4 253.1 4 161.3
----------------------------------
Current Liabilities
Current portion of non-current debt I 213.5 250.0 192.2
Interest-bearing liabilities I 679.3 784.0 610.9
Operative liabilities O 1 711.0 1 678.7 1 634.6
Tax liabilities T 45.5 73.5 91.7
----------------------------------
2 649.3 2 786.2 2 529.4
----------------------------------
Total Liabilities 7 407.9 7 039.3 6 690.7
==================================
Total Equity and Liabilities 13 060.3 12 999.1 12 969.0
==================================
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 Treasu Step Availa Curren OCI of CTA
Retaine Attribu Non-co Total
milli Capital Premiu ed ry Acquis ble cy and Equity and
d table ntroll
on m and Non-Re Shares ition for Commod Accoun Net
Earning to ing
Reserv strict Revalu Sale ity ted Invest
s Owners Intere
e fund ed ation Financ Hedges Invest ment
of the sts
Equity Surplu ial ments Hedges
Parent
Fund s Assets
--------------------------------------------------------------------------------
----------------------------------
-------
Balanc 1 342.2 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
Dec
2010
--------------------------------------------------------------------------------
---------------------------
Profit - - - - - - - - -
291.3 291.3 0.6 291.9
for
the
perio
d
OCI - - - - - 37.6 -63.2 3.0 -58.5
- -81.1 -1.6 -82.7
befor
e tax
Income - - - - - 0.4 16.7 - -3.8
- 13.3 - 13.3
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - 38.0 -46.5 3.0 -62.3
291.3 223.5 -1.0 222.5
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
-197.2 -197.2 -1.7 -198.9
nd
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 818.0 31.4 -6.8 41.4
3 299.6 6 229.2 49.1 6 278.3
e at
30
June
2011
--------------------------------------------------------------------------------
---------------------------
Profit - - - - - - - - -
48.4 48.4 1.9 50.3
for
the
perio
d
OCI - - - - - -278.1 -65.2 -22.4 -11.7
-55.8 -433.2 1.6 -431.6
befor
e tax
Income - - - - - 0.7 16.6 - 2.3
7.9 27.5 - 27.5
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - -277.4 -48.6 -22.4 -9.4
0.5 -357.3 3.5 -353.8
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
- - -1.9 -1.9
nd
Acquis - - - - - - - - -
- - 37.2 37.2
itions
and
dispo
sals
Gain - - - - - - - - -
0.8 0.8 -0.8 -
on
buy-o
ut of
non-c
ontrol
ling
inter
est
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 540.6 -17.2 -29.2 32.0
3 300.9 5 872.7 87.1 5 959.8
e at
31
Dec
2011
--------------------------------------------------------------------------------
---------------------------
Profit - - - - - - - - -
138.7 138.7 4.9 143.6
for
the
perio
d
OCI - - - - - -199.7 5.7 -11.7 -7.6
- -213.3 -0.5 -213.8
befor
e tax
Income - - - - - -1.5 -1.0 - 1.9
- -0.6 - -0.6
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - -201.2 4.7 -11.7 -5.7
138.7 -75.2 4.4 -70.8
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
-236.6 -236.6 -0.2 -236.8
nd
Acquis - - - - - - - - -
- - 0.2 0.2
itions
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 339.4 -12.5 -40.9 26.3
3 203.0 5 560.9 91.5 5 652.4
e at
30
June
2012
--------------------------------------------------------------------------------
---------------------------
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
EUR million 30 June 12 31 Dec 11 30 June 11
----------------------------------------------------------------------------
On Own Behalf
Pledges 1.0 1.3 -
Mortgages 9.6 9.7 7.7
On Behalf of Equity Accounted Investments
Guarantees 500.2 390.2 316.1
On Behalf of Others
Guarantees 5.0 5.0 100.3
Other Commitments, Own
Operating leases, in next 12 months 62.7 66.1 48.6*
Operating leases, after next 12 months 526.2 525.8 488.0*
Pension liabilities 0.4 0.4 0.4
Other commitments 5.2 5.1 55.0*
----------------------------------
Total 1 110.3 1 003.6 1 016.1*
==================================
Pledges 1.0 1.3 -
Mortgages 9.6 9.7 7.7
Guarantees 505.2 395.2 416.4
Operating leases 588.9 591.9 536.6*
Pension liabilities 0.4 0.4 0.4
Other commitments 5.2 5.1 55.0*
----------------------------------
Total 1 110.3 1 003.6 1 016.1* ==================================
* Starting from the fourth quarter of 2011, Stora Enso has ceased the reporting
of the Group's purchase agreement commitments for consumables and services. As
a result, commitments as at 30 June 2011 have been reclassified to comply with
the changes in reporting.
Capital commitments
The Group's direct capital expenditure contracts, excluding acquisitions,
amounted to EUR 200 million at 30 June 2012 (compared with EUR 218 million at
30 June 2011 and EUR 214 million at 31 December 2011).
The Group's share of capital expenditure contracts in equity accounted
investments, excluding acquisitions, amounted to EUR 322 million at 30 June
2012 (compared with EUR 436 million at 30 June 2011 and EUR 436 million at 31
December 2011) of which Stora Enso has guaranteed EUR 189 million (compared
with EUR 189 million at 30 June 2011 and EUR 189 million at 31 December 2011).
Fair Values of Derivative Financial Instruments
EUR million 30 June 12 31 Dec 11 30 June
11
--------------------------------------------------------------------------------
Positive Negative Net Fair Net Fair Net
Fair Fair Values Values Fair
Values Values Values
--------------------------------------------------------------
--------------------------------------------------------------
Interest rate 115.6 -52.7 62.9 95.8 86.2
swaps
Interest rate - -55.0 -55.0 -51.0 -33.2
options
Forward contracts 15.7 -23.5 -7.8 4.8 18.0
Currency options 20.4 -27.8 -7.4 -16.1 27.5
Commodity 12.5 -19.8 -7.3 -2.1 5.5
contracts
Equity swaps - -2.2 -2.2 -22.6 -9.3
("TRS")
--------------------------------------------------------------
Total 164.2 -181.0 -16.8 8.8 94.7
==============================================================
Nominal Values of Derivative Financial Instruments
EUR million 30 June 12 31 Dec 11 30 June 11
---------------------------------------------------------------
Interest Rate Derivatives
Interest rate swaps
Maturity under 1 year 35.7 61.6 81.3
Maturity 2-5 years 2 083.3 2 073.3 1 721.1
Maturity 6-10 years 250.0 250.0 200.0
----------------------------------
2 369.0 2 384.9 2 002.4
Interest rate options 532.4 522.8 540.9
----------------------------------
Total 2 901.4 2 907.7 2 543.3
----------------------------------
Foreign Exchange Derivatives
Forward contracts 2 327.8 1 750.2 2 050.3
Currency options 2 873.5 2 669.4 2 710.1
----------------------------------
Total 5 201.3 4 419.6 4 760.4
----------------------------------
Commodity Derivatives
Commodity contracts 268.2 236.7 248.2
----------------------------------
Total 268.2 236.7 248.2
----------------------------------
Total Return (Equity) Swaps
Equity swaps (“TRS”) 55.2 73.3 88.7
----------------------------------
Total 55.2 73.3 88.7
----------------------------------
Sales by Segment
EUR million Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and 1 190.8 1 227.2 5 022.0 1 283.8 1 283.1 1 242.6 1 212.5
Reading
Biomaterials 246.5 241.7 1 092.0 255.4 276.4 268.6 291.6
Building and 443.7 381.2 1 671.1 382.0 414.0 465.4 409.7
Living
Renewable 826.8 779.3 3 194.6 756.6 800.6 829.6 807.8
Packaging
Other 662.2 703.4 2 700.5 643.9 637.4 700.1 719.1
Inter-segment -649.6 -659.5 -2 715.3 -640.1 -672.2 -689.2 -713.8
sales
---------------------------------------------------------------
Total 2 720.4 2 673.3 10 964.9 2 681.6 2 739.3 2 817.1 2 726.9
===============================================================
Operational EBIT by Segment
EUR million Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and Reading 41.7 67.3 285.3 55.6 72.3 72.2 85.2
Biomaterials 14.7 7.2 169.2 27.2 57.3 31.2 53.5
Building and Living 11.5 9.8 62.8 6.0 9.8 35.2 11.8
Renewable Packaging 72.5 61.7 301.3 32.8 73.6 93.9 101.0
Other 0.8 1.4 48.1 23.3 11.4 6.6 6.8
--------------------------------------------------
Operational EBIT 141.2 147.4 866.7 144.9 224.4 239.1 258.3
Fair valuations and -33.1 1.2 -27.5 45.6 -45.8 -26.9 -0.4
non-operational items*
Non-recurring items 44.6 -24.7 -79.9 -21.0 - -31.7 -27.2
--------------------------------------------------
Operating Profit (IFRS) 152.7 123.9 759.3 169.5 178.6 180.5 230.7
Net financial items -66.8 -34.0 -338.4 -59.2 -193.4 -34.6 -51.2
Profit/Loss before Tax 85.9 89.9 420.9 110.3 -14.8 145.9 179.5
Income tax expense -16.4 -15.8 -78.7 -10.1 -35.1 -9.9 -23.6
--------------------------------------------------
Net Profit/Loss 69.5 74.1 342.2 100.2 -49.9 136.0 155.9
==================================================
*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 Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------
Printing and Reading 12.9 -9.6 -29.1 3.7 - -27.5 -5.3
Biomaterials - - 12.6 7.5 - -1.9 7.0
Building and Living - - -33.5 -4.6 - - -28.9
Renewable Packaging - -15.1 -8.9 -6.6 - -2.3 -
Other 31.7 - -21.0 -21.0 - - -
--------------------------------------------------
NRI on Operating Profit 44.6 -24.7 -79.9 -21.0 - -31.7 -27.2
NRI on financial items 9.5 13.6 -138.3 -10.1 -128.2 - -
NRI on tax 1.9 5.0 62.2 50.8 - 3.6 7.8
--------------------------------------------------
NRI on Net Profit 56.0 -6.1 -156.0 19.7 -128.2 -28.1 -19.4
==================================================
Fair Valuations and Non-operational Items* by Segment
EUR million Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and Reading -0.4 -1.0 -7.9 2.0 -0.3 -9.2 -0.4
Biomaterials -22.8 -4.6 -18.5 2.7 -11.6 -5.4 -4.2
Building and Living -0.1 -2.2 -1.8 - - -1.8 -
Renewable Packaging - -0.7 -6.6 - - -6.6 -
Other -9.8 9.7 7.3 40.9 -33.9 -3.9 4.2
------------------------------------------------
Fair Valuations and -33.1 1.2 -27.5 45.6 -45.8 -26.9 -0.4
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 Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------
Printing and Reading 54.2 56.7 248.3 61.3 72.0 35.5 79.5
Biomaterials -8.1 2.6 163.3 37.4 45.7 23.9 56.3
Building and Living 11.4 7.6 27.5 1.4 9.8 33.4 -17.1
Renewable Packaging 72.5 45.9 285.8 26.2 73.6 85.0 101.0
Other 22.7 11.1 34.4 43.2 -22.5 2.7 11.0
--------------------------------------------------
Operating Profit (IFRS) 152.7 123.9 759.3 169.5 178.6 180.5 230.7
Net financial items -66.8 -34.0 -338.4 -59.2 -193.4 -34.6 -51.2
--------------------------------------------------
Profit/Loss before Tax 85.9 89.9 420.9 110.3 -14.8 145.9 179.5
Income tax expense -16.4 -15.8 -78.7 -10.1 -35.1 -9.9 -23.6
--------------------------------------------------
Net Profit/Loss 69.5 74.1 342.2 100.2 -49.9 136.0 155.9
==================================================
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
---------------------------------------------------------
30 June 12 31 Dec 11 30 June 12 31 Dec 11
---------------------------------------------
SEK 8.7728 8.9120 8.8815 9.0307
USD 1.2590 1.2939 1.2968 1.3922
GBP 0.8068 0.8353 0.8225 0.8678
---------------------------------------------
Transaction Risk and Hedges in Main Currencies as at 30 June 2012
EUR million USD GBP SEK
-------------------------------------------------------------------------------
-------------------------------------------------------------
Estimated annual net operating cash flow exposure 1 200 600 -920
Transaction hedges as at 30 June 2012 -600 -270 450
------------------
Hedging percentage as at 30 June 2012 for the next 12 months 50% 45% 49%
------------------
Additional USD and GBP hedges for 13-16 months increase the hedging percentages
by 4% and 7% respectively.
Changes in Exchange Rates on Operational EBIT
Operational EBIT: Currency strengthening of + 10% EUR million
--------------------------------------------------------------
--------------------------------------------------
USD 120
SEK -92
GBP 60
--------------------------------------------------------------
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.
Stora Enso Shares
Trading Volume Helsinki Stockholm
------------------------------------------
A share R share A share R share
---------------------------------------------------------
April 48 452 101 315 371 55 280 22 197 822
May 51 443 92 275 901 55 870 24 039 446
June 52 915 78 477 950 55 271 19 127 758
------------------------------------------
Total 152 810 272 069 222 166 421 65 365 026
------------------------------------------
Closing Price Helsinki, EUR Stockholm, SEK
------------------------------------------
A share R share A share R share
---------------------------------------------------------
April 6.59 5.15 56.95 46.85
May 5.86 4.39 50.35 39.31
June 5.85 4.84 52.00 42.57
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 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
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
and
Stora Enso's
share of
operating
profit/loss
excluding NRI
and
fair
valuations of
its equity
accounted
investments
(EAI)
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, SVP, Investor Relations, tel. +358 2046 21242
Lauri Peltola, EVP, Global Identity, tel. +358 2046 21380
Stora Enso's third quarter 2012 results will be published on 23 October 2012 at
13.00 EET.
ANALYST CONFERENCE CALL
CEO Jouko Karvinen 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 3140 8286
Finland +358 (0)9 6937 9543
Sweden +46 (0)8 5352 6408
USA +1 646 254 3366
Access code: 4495930
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 30 000 people worldwide, and our sales in 2011 amounted to
EUR 11.0 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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