Stora Enso Oyj - Half Year financial report

Stora Enso half-year report January–June 2017: Positive contribution from transformation projects accelerates

STORA ENSO OYJ, Helsinki, Finland
HALF-YEAR REPORT 26 June 2017 at 9.31 EEST
Q2/2017 (year-on-year)

  · Sales of EUR 2 528 (EUR 2 526) million increased marginally despite the
divestment of paper mills.
  · Sales excluding the paper business increased 7.1%.
  · Operational EBIT decreased from EUR 226 million to EUR 219 million. This was
mainly due to the impact of higher maintenance costs of EUR 15 million compared
to a year ago. The operational EBIT margin was 8.7% (8.9%).
  · Balance sheet strengthened further; net debt to operational EBITDA was 2.0
(2.2) despite a dividend payment.
  · The ramp-up of Beihai Mill continues to proceed ahead of plan, and it is
expected to reach operational EBITDA break-even in Q4/2017, one quarter earlier
than previously forecast.
  · Varkaus kraftliner mill is expected to reach full production during the
second half of 2017. A positive quarterly operational EBIT was achieved in
Q2/2017.
  · Stora Enso signed today an agreement to divest its holding in the equity
accounted investment Bulleh Shah Packaging Ltd. to the main owner Packages Ltd.

Q1–Q2/2017 (year-on-year)

  · Sales of EUR 5 025 million increased 1.1%. Sales excluding the paper
business increased 8.3%.
  · Operational EBIT of EUR 434 million decreased 8.4%, mainly due to increased
maintenance costs.

Key figures

EUR million  Q2/17  Q2/16  Change   Q1/17  Change   Q1–Q2/  Q1–Q2/  Change
2016
                           %               %                        %
                             Q2/17           Q2/17                  Q1–Q2/1
                                                                    7–
                                                    17      16      Q1–Q2
                                                                    /16
                           –               –
                             Q2/16           Q1/17

Sales        2 528  2 526  0.1%     2 497  1.2%     5 025   4 971   1.1%     9
802
Operational  341    355    -3.9%    352    -3.1%    693     718     -3.5%    1
371
EBITDA
Operational  219    226    -3.1%    215    1.9%     434     474     -8.4%    884
EBIT
Operational  8.7%   8.9%            8.6%            8.6%    9.5%
9.0%
EBIT margin
Operating    205    248    -17.3%   193    6.2%     398     442     -10.0%   783
profit
(IFRS)
Profit       153    112    36.6%    191    -19.9%   344     295     16.6%    575
before tax
excl.
IAC
Profit       145    149    -2.7%    164    -11.6%   309     304     1.6%     541
before tax
Net profit   143    118    21.2%    107    33.6%    250     232     7.8%     407
for the
period
Net          2 724  3 178  -14.3%   2 711  0.5%     2 724   3 178   -14.3%   2
726
interest
-bearing
liabilities
Operational  10.3%  10.3%           10.0%           10.2%   10.8%
10.2%
ROCE
Earnings     0.19   0.12            0.17            0.36    0.31
0.65
per
share (EPS)
excl. IAC,
EUR
EPS          0.19   0.16            0.14            0.33    0.31
0.59
(basic),
EUR
Net          2.0    2.2             2.0             2.0     2.2              2.0
debt/last
12
months’
operational
EBITDA
ratio
Average      26     26     1.9%     25     3.9%     25      25      0.3%     26

number of    581    088             591             999     911              269
employees

Stora Enso's CEO Karl-Henrik Sundström comments on the second quarter 2017
results:

“Our transformation towards a renewable materials growth company accelerates,
and I am confident in our progress. Sales increased marginally, and excluding
the paper business sales increased 7.1%. This is primarily due to the ramp-up of
strategic investments – the Beihai, Murów and Varkaus mills – and higher pulp
and containerboard prices.

Operational EBIT decreased from EUR 226 million to EUR 219 million. This is
mainly related to extensive maintenance and a change of maintenance calendar
compared to last year, amounting to EUR 15 million. The balance sheet continued
to strengthen further, net debt to operational EBITDA has gone from 3.2 to 2.0
during the last four years.

The positive contribution from the transformation projects continues. I am very
pleased that we continue to be ahead of plan with the ramp-up of Beihai Mill. We
expect the consumer board machine to reach operational EBITDA break-even in the
fourth quarter 2017, which is one quarter earlier than previously forecast. We
have also made good progress in the ramp-up of the Varkaus kraftliner mill. This
quarter, we reached a positive operational EBIT.

During the period, Paper Machine 8 at Kvarnsveden Mill in Sweden was permanently
shut down. Our restructuring plan for Kvarnsveden Mill is anticipated to result
in annual cost savings of EUR 12 million.

In July, we announced exciting news: we will invest EUR 45 million in a new
cross-laminated timber production unit at Gruvön sawmill in Sweden. This
investment supports our strategy to grow in the construction industry and
increase the use of wood as a building material. We are investing to meet
growing customer demand globally, and expect this investment to generate annual
sales of approximately EUR 50 million when run at full capacity. Over time, this
investment will significantly enable the Wood Products division to exceed its
profitability target.

Today, we announce that we have signed an agreement to divest our 35% holding in
the minority investment Bulleh Shah Packaging Ltd. to the main owner Packages
Ltd. Due to the changing business environment in Pakistan, the Bulleh Shah
Packaging asset with its product mix and related future outlook is a non
-strategic fit in our consumer board roadmap. Our focus is on high quality
virgin-fibre products. We are committed to making a responsible divestment and
intend to leave a positive contribution to the society.

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

Outlook

Q3/2017 sales are estimated to be similar to the amount of EUR 2 528 million
recorded in the second quarter, and operational EBIT is expected to be somewhat
or even clearly higher than the EUR 219 million recorded in Q2/2017. The
operational EBIT estimate for Q3/2017 includes the negative EUR 17 million
impact of the ramp-up of the Beihai operations. The impact of annual maintenance
shutdowns is expected to be approximately EUR 10 million lower than in Q2/2017,
and it is included in the above guidance.

The consumer board machine in Beihai is expected to reach operational EBITDA
break-even in Q4/2017, one quarter earlier than previously forecast.

Events today:

1) Webcast for media at 11.00 Finnish time

Stora Enso’s CEO Karl-Henrik Sundström and CFO Seppo Parvi will present the
results in a live webcast hosted by EVP Communications Ulrika Lilja. The event
will be held in English. The webcast may be accessed at
http://storaenso.videosync.fi/2017-07-26-q2/register

2) Webcast and conference call for analysts and investors at 15.00 Finnish time

The webcast and conference call for analysts and investors will take place at
15.00 EEST (14.00 CEST, 13.00 UK time, 08.00 EDT). It will be hosted by CEO Karl
-Henrik Sundström, CFO Seppo Parvi, and SVP Head of Investor Relations Ulla
Paajanen-Sainio, and may be accessed at http://edge.media
-server.com/m/p/ju3o4oir

Those analysts and investors who wish to ask questions should join the
conference call (details below). All participants can follow the presentation
over the webcast.

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

Dial-in details for the analyst and investor conference call

Live event at 15.00 EEST
UK   +44(0)20 3427 1906
Finland   +358 (0)9 6937 9543
Sweden   +46 (0)8 5065 3936
USA   +1 646 254 3365
Confirmation Code: 9241862

For further information, please contact:
Seppo Parvi, CFO, tel. +358 2046 21205
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 40 763 8767
Ulrika Lilja, EVP, Communications, tel. +46 72 221 9228

This release is a summary of Stora Enso’s Interim Report January–June 2017. The
complete report is attached to this release as a pdf file. It is also available
on the company website at storaenso.com (http://www.storaenso.com)/investors.



Stora Enso is a leading provider of renewable solutions in packaging,
biomaterials, wooden constructions and paper on global markets. Our aim is to
replace fossil-based materials by innovating and developing new products and
services based on wood and other renewable materials. We employ some 25 000
people in more than 35 countries, and our sales in 2016 were EUR 9.8 billion.
Stora Enso shares are listed on Nasdaq Helsinki (STEAV, STERV) and Nasdaq
Stockholm (STE A, STE R). In addition, the shares are traded in the USA as ADRs
(SEOAY). storaenso.com (http://www.storaenso.com)

STORA ENSO OYJ

Priedai:

STORAENSO_RESULTS_Q217_ENG.pdf