2014-02-05 12:00:00 CET
2014-02-05 12:00:13 CET
REGULATED INFORMATION
Stora Enso Oyj - Financial Statement Release
Stora Enso Fourth Quarter and Full Year Results 2013
Cash flow remained strong, proposed dividend unchanged at EUR 0.30
Helsinki, Finland, 2014-02-05 12:00 CET (GLOBE NEWSWIRE) -- STORA ENSO OYJ
ANNUAL FINANCIAL STATEMENT RELEASE 5 February 2014 at 13.00 EET
Q4/2013 (compared with Q4/2012)
-- Operational EBIT EUR 152 (EUR 158) million including EUR 19 million impact
of
lower depreciation due to impairment charges, a margin of 5.8% (5.8%).
-- Negative NRI of approximately EUR 392 million, mainly due to fixed asset
impairments (EUR 556 million) and Guangxi plantations fair valuation gain
(EUR 179 million).
-- Renewable Packaging profitability improved by lower variable costs and
production from Ostrołęka Mill's new containerboard machine, which reached
its target 20% EBITDA margin by the end of the year.
-- Strong cash flow from operations at EUR 470 (EUR 473) million, cash flow
after investing activities EUR 310 (EUR 273) million.
Full year 2013 (compared with 2012)
-- Operational EBIT EUR 578 (EUR 630) million, a margin of 5.5% (5.8%).
-- EPS excluding NRI EUR 0.40 (EUR 0.33).
-- Strong cash flow from operations at EUR 1 246 (EUR 1 254) million, cash
flow after investing activities improved to EUR 756 (EUR 578) million.
-- Net debt to operational EBITDA ratio improved to 2.3 (2.5), net debt
decreased to EUR 2 434 million.
Transformation and divestment of non-core assets
-- Montes del Plata Pulp Mill currently finalising construction works, mill
commissioning and final permit process. Start-up expected to commence
during the first months of 2014.
-- Consumer board machine investment in Guangxi, China proceeding as planned.
Machine expected to be operational in early 2016, as previously announced.
-- As announced today, Stora Enso is divesting its 40% shareholding in the US
processed kaolin clay producer Thiele Kaolin Company for USD 76 (EUR 56)
million. A capital gain of EUR 37 million will be recorded in Q1/2014.
Restructuring
-- EUR 200 million streamlining and structure simplification programme
announced on 23 April 2013 proceeding as planned.
-- Plan to permanently shut down a coated magazine paper machine at
Veitsiluoto Mill in Finland announced in January 2014.
Outlook
-- In Q1/2014 sales are expected to be similar to the EUR 2 604 million and
operational EBIT similar or somewhat higher compared with the EUR 152
million in Q4/2013.
Average prices are forecast to improve and
fixed costs to decrease from Q4/2013. Renewable Packaging will be impacted
by Guangxi project costs and lost production due to Skoghall Mill recovery
boiler incident.
Key Figures*
EUR million Q4/13 Q3/13 Q4/12 2013 2012 Change Change Change
% % %
Q4/13-Q Q4/13-Q 2013-
4/12 3/13 2012
--------------------------------------------------------------------------------
Sales 2 604 2 556 2 727 10 544 10 815 -4.5 1.9 -2.5
Operational 246 311 276 1 044 1 094 -10.9 -20.9 -4.6
EBITDA
Operational 9.4 12.2 10.1 9.9 10.1 -6.9 -23.0 -2.0
EBITDA
margin, %
Operational 152 184 158 578 630 -3.8 -17.4 -8.3
EBIT
Operational 5.8 7.2 5.8 5.5 5.8 - -19.4 -5.2
EBIT margin,
%
Operating -218 158 254 34 701 -185.8 -238.0 -95.1
loss/profit
(IFRS)
Operating -8.4 6.2 9.3 0.3 6.5 -190.3 -235.5 -95.4
margin
(IFRS), %
Profit before 110 125 83 350 317 32.5 -12.0 10.4
tax excl. NRI
Loss/profit -282 102 204 -189 481 -238.2 n/m -139.3
before tax
Net profit for 118 104 89 323 263 32.6 13.5 22.8
the period
excl. NRI
Net -160 84 266 -71 490 -160.2 -290.5 -114.5
loss/profit
for the
period
Capital 176 102 209 425 556 -15.8 72.5 -23.6
expenditure
Depreciation 128 145 150 564 583 -14.7 -11.7 -3.3
and
impairment
charges excl.
NRI
Operational 7.6 9.0 7.3 7.1 7.3 4.1 -15.6 -2.7
ROCE, %
Earnings per 0.15 0.13 0.11 0.40 0.33 36.4 15.4 21.2
share (EPS)
excl. NRI,
EUR
EPS (basic), -0.18 0.11 0.33 -0.07 0.61 -154.5 -263.6 -111.5
EUR
Cash earnings 0.31 0.32 0.30 1.12 1.07 3.3 -3.1 4.7
per share
(CEPS) excl.
NRI, EUR
CEPS, EUR 0.46 0.29 0.45 1.16 1.28 2.2 58.6 -9.4
Return on -11.9 6.2 18.2 -1.3 8.3 -165.4 -291.9 -115.7
equity (ROE),
%
Debt/equity 0.47 0.51 0.48 0.47 0.48 -2.1 -7.8 -2.1
ratio
Net debt/last 2.3 2.5 2.5 2.3 2.5 -8.0 -8.0 -8.0
twelve
months'
operational
EBITDA
Equity per 6.61 6.82 7.32 6.61 7.32 -9.7 -3.1 -9.7
share, EUR
Equity ratio, 41.3 41.1 42.8 41.3 42.8 -3.5 0.5 -3.5
%
Average number 27 748 28 297 28 331 28 231 28 777 -2.1 -1.9 -1.9
of employees
Average number
of shares
(million)
periodic 788.6 788.6 788.6 788.6 788.6
cumulative 788.6 788.6 788.6 788.6 788.6
cumulative, 788.6 788.6 788.6 788.6 788.6
diluted
--------------------------------------------------------------------------------
* Data for the comparative periods have been restated following adoption of the
revised IAS 19 Employee Benefits standard. Data for the comparative periods
have been restated in all tables affected by IAS 19. For further details,
please see Basis of Preparation on page 14.
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.
NRI = Non-recurring items. These are exceptional transactions that are not
related to normal business operations. The most common non-recurring items are
capital gains, additional write-downs or reversals of write-downs, provisions
for planned restructuring and penalties. Non-recurring items are normally
disclosed individually if they exceed one cent per share.
Stora Enso Deliveries and Production
Q4/13 Q3/13 Q4/12 2013 2012 Change Change Change
% % %
Q4/13- Q4/13- 2013-2
Q4/12 Q3/13 012
-----------------------------------------------------------
---------------------
Paper and board 2 438 2 456 2 569 9 898 10 268 -5.1 -0.7 -3.6
deliveries
(1 000 tonnes)
Paper and board 2 427 2 469 2 561 9 911 10 357 -5.2 -1.7 -4.3
production
(1 000 tonnes)
Wood products 1 247 1 191 1 175 4 930 4 750 6.1 4.7 3.8
deliveries
(1 000 m3)
Market pulp 335 254 284 1 180 1 058 18.0 31.9 11.5
deliveries
(1 000 tonnes)*
Corrugated packaging 277 278 279 1 086 1 097 -0.7 -0.4 -1.0
deliveries (million
m2)
--------------------------------------------------------------------------------
* Stora Enso's net market pulp position was 1.1 million tonnes for 2013.
Reconciliation of Operational Profitability
EUR million Q4/13 Q3/13 Q4/12 2013 2012 Change Change Change
% % %
Q4/13- Q4/13- 2013-
Q4/12 Q3/13 2012
--------------------------------------------------------------------------------
Operational EBITDA 246 311 276 1 044 1 094 -10.9 -20.9 -4.6
Equity accounted 34 18 32 98 119 6.3 88.9 -17.6
investments (EAI),
operational*
Depreciation and -128 -145 -150 -564 -583 14.7 11.7 3.3
impairment excl. NRI
Operational EBIT 152 184 158 578 630 -3.8 -17.4 -8.3
Fair valuations and 22 -3 -14 -5 -59 257.1 n/m 91.5
non-operational
items**
Non-recurring items -392 -23 110 -539 130 n/m n/m n/m
----------------------------------------------------------
Operating Loss/Profit -218 158 254 34 701 -185.8 -238.0 -95.1
(IFRS)
----------------------------------------------------------
* Group's share of operational EBIT of equity accounted investments (EAI).
** Fair valuations and non-operational items include equity incentive schemes,
synthetic options net of realised and open hedges, CO2 emission rights and
valuations of biological assets and Group's share of tax and net financial
items of EAI.
Q4/2013 Results (compared with Q4/2012)
Breakdown of Sales Change Q4/2012 to Q4/2013
Sales
-----------------------------------------
Q4/12, EUR million 2 727
-----------------------------------------
Price and mix, % -1
Currency, % -2
Volume, % -
Other sales*, % -
-----------------------------------------
Total before structural changes, % -3
Structural change**, % -2
Total, % -5
-----------------------------------------
Q4/13, EUR million 2 604
-----------------------------------------
* Wood, energy, paper for recycling, by-products etc.
** Asset closures, major investments, divestments and acquisitions
Sales at EUR 2 604 million were EUR 123 million lower than a year ago as sales
of paper products declined, partly due to the previously announced permanent
shutdowns of paper machines at Kvarnsveden and Hylte mills in Sweden.
Operational EBIT was EUR 152 (EUR 158) million, an operational EBIT margin of
5.8% (5.8%).
Clearly lower sales volumes, especially for newsprint due to permanent paper
machine shutdowns, and slightly lower sales prices in local currencies for all
paper products decreased operational EBIT by EUR 48 million. This was partly
offset by slightly lower wood costs across divisions and lower pulp costs,
which increased operational EBIT by EUR 23 million. Depreciation was EUR 22
million lower, mainly due to fixed asset impairments. Fixed costs remained
stable. Paper and board production was curtailed by 11% (9%) and sawnwood
production by 2% (5%) to manage supply.
The average number of employees in the fourth quarter of 2013 was 580 lower
than a year earlier at 27 750. The number of employees decreased most in Sweden
due to permanent shutdowns of paper machines and restructurings, whereas
decreases in Finland were offset by the acquisition of ABB's 49% shareholding
in Efora Oy, which employs around 1 000 people. The average number of employees
in China increased by 520 in the fourth quarter.
The Group recorded non-recurring items (NRI) with a negative net impact of
approximately EUR 392 million on operating profit and a positive impact of
approximately EUR 114 million on income tax in its fourth quarter 2013 results.
The NRI are fixed asset impairments of EUR 556 million mainly in Printing and
Reading, a fair valuation gain of EUR 179 million and related provision release
of EUR 7 million on Group plantation assets in China, a production disruption
cost of EUR 12 million in Renewable Packaging, EUR 12 million costs related to
joint-venture establishment in China, the EUR 8 million settlement cost of a
legal case with a supplier at the Group's equity accounted investment Veracel
and a gain of EUR 10 million relating to the Group's share of the effect of the
new tax rate on the equity accounted investment Tornator.
Net financial expenses at EUR 64 million were EUR 14 million higher than a year
ago. The net interest expenses and the fair valuation of interest rate
derivatives were similar to the previous year. The net foreign exchange impact
in the fourth quarter of 2013 in respect of cash, interest-bearing assets and
liabilities and related hedges was a gain of EUR 9 (a loss of EUR 1) million.
During the quarter, prepayment of loans from Finnish pension institutions and
bonds resulted in a charge of EUR 11 million. A one-time EUR 11 million gain
from the settlement of the NewPage lease guarantee was recorded in the fourth
quarter of 2012.
Breakdown of Capital Employed Change Q4/2012 to Q4/2013
Capital Employed
------------------------------------------------------------------------------
Q4/12, EUR million 8 619
------------------------------------------------------------------------------
Capital expenditure less depreciation -179
Impairments and reversal of impairments -592
Valuation of biological assets 179
Available-for-sale: operative (mainly PVO) -89
Equity accounted investments 142
Net liabilities in defined benefit plans 98
Operative working capital and other interest-free items, net -332
Net tax liabilities 136
Translation difference -258
Other changes -17
------------------------------------------------------------------------------
Q4/13, EUR million 7 707
------------------------------------------------------------------------------
The operational return on capital employed was 7.6% (7.3%). Excluding the
ongoing strategic investments in Biomaterials and Renewable Packaging the
operational return on capital employed would have been 9.1% (8.4%).
January-December 2013 Results (compared with January-December 2012)
Breakdown of Sales Change 2012 to 2013
Sales
------------------------------------------
2012, EUR million 10 815
------------------------------------------
Price and mix, % -1
Currency, % -1
Volume, % -
Other sales*, % -
------------------------------------------
Total before structural changes, % -2
Structural change**, % -1
Total, % -3
------------------------------------------
2013, EUR million 10 544
------------------------------------------
* Wood, energy, paper for recycling, by-products etc.
** Asset closures, major investments, divestments and acquisitions
Sales at EUR 10 544 million were EUR 271 million lower than in the previous
year due to permanent machine shutdowns and deteriorating demand and prices in
Printing and Reading. Operational EBIT was EUR 52 million lower at EUR 578
million. The operational EBIT margin was 5.5% (5.8%).
Significantly lower sales prices in local currencies for paper were partly
offset by the improved product mix and sales prices in Building and Living.
Lower sales volumes in Printing and Reading were partly offset by increased
deliveries in Renewable Packaging due to Ostrołęka Mill's new PM 5. Variable
costs were clearly lower as wood and pulp costs decreased, and fixed costs were
also lower than a year ago. Full year 2013 depreciation was EUR 19 million
lower year-on-year due to fixed asset impairments.
Net financial expenses at EUR 223 million were EUR 3 million higher than a year
earlier. Net interest expenses increased by EUR 30 million mainly as a result
of higher average gross debt during the year, lower capitalised interest and
lower interest income from loans to equity accounted investments. The net
foreign exchange losses in respect of cash, interest-bearing assets and
liabilities and related hedges were EUR 1 (EUR 12) million. The fair valuation
of interest rate derivatives had a EUR 40 million positive impact compared with
2012 due to higher long-term interest rates. A gain of EUR 12 million from the
sale of EUR 99 million of subordinated debt of the equity accounted investments
Bergvik Skog and Tornator was recorded in 2013, whereas a EUR 34 million gain
was recorded on the reversal of NewPage lease guarantee provisions and
settlement in 2012.
Q4/2013 Results (compared with Q3/2013)
Sales increased by EUR 48 million to EUR 2 604 million. Operational EBIT was
EUR 32 million lower than in the previous quarter at EUR 152 million. The
fourth quarter results include the impact of EUR 19 million lower depreciation
due to fixed asset impairments. Fixed costs were higher due to seasonality and
increased maintenance activity, but variable costs were lower. Renewable
Packaging volumes were lower than in the previous quarter, partly due to annual
maintenance stoppages at Skoghall and Fors mills.
Capital Structure
EUR million 31 Dec 30 Sep 30 Jun 31 Mar 31 Dec
13 13 13 13 12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operative fixed assets* 5 234 5 613 5 571 5 904 6 022
Equity accounted investments 1 961 1 972 1 999 2 058 1 965
Operative working capital, net 1 085 1 363 1 418 1 570 1 460
Non-current interest-free -499 -575 -580 -601 -611
items, net
------------------------------------------------
------------------------------------------------
Operating Capital Total 7 781 8 373 8 408 8 931 8 836
Net tax liabilities -74 -181 -174 -196 -217
------------------------------------------------
Capital Employed 7 707 8 192 8 234 8 735 8 619
------------------------------------------------
------------------------------------------------
Equity attributable to owners 5 213 5 381 5 261 5 772 5 770
of the Parent
Non-controlling interests 60 86 88 89 92
Net interest-bearing 2 434 2 725 2 885 2 874 2 757
liabilities
--------------------------------------------------------------------------------
Financing Total 7 707 8 192 8 234 8 735 8 619
--------------------------------------------------------------------------------
* Operative fixed assets include property, plant and equipment, goodwill,
biological assets, emission rights, available-for-sale operative shares and
other intangible assets.
Financing Q4/2013 (compared with Q3/2013)
Total unutilised committed credit facilities were unchanged at EUR 700 million,
and cash and cash equivalents net of overdrafts remained strong at EUR 2 053
million, which is EUR 43 million less than for the previous quarter. In
addition, Stora Enso has access to various long-term sources of funding up to
EUR 800 million.
During the fourth quarter of 2013, loans from Finnish pension institutions with
a nominal value of EUR 125 million were repaid early by Stora Enso. In
addition, Stora Enso repurchased EUR 77 million of the 5.125% bond notes due in
June 2014. Following the repurchase, the aggregate nominal amount of the
outstanding notes is EUR 270 million.
In November 2013 Stora Enso signed a new EUR 700 million committed credit
facility agreement with a syndicate of 14 banks to refinance its existing EUR
700 million facility. The new facility matures in January 2017 and will be used
as a backup for general corporate purposes. The loan has no financial
covenants.
The ratio of net debt to the last twelve months' operational EBITDA was 2.3
(2.5).
The debt/equity ratio at 31 December 2013 was 0.47 (0.51). The decrease is
primarily due to the EUR 291 million decrease in net debt due to solid cash
flow generation in the fourth quarter of 2013.
Cash Flow
EUR million Q4/13 Q3/13 Q4/12 2013 2012 Change % Change % Change
Q4/13-Q4 Q4/13-Q3 %
/12 /13 2013-
2012
--------------------------------------------------------------------------------
Operational 246 311 276 1 044 1 094 -10.9 -20.9 -4.6
EBITDA
NRI on 162 -23 -13 34 18 n/m n/m 88.9
Operational
EBITDA
Dividends 18 2 93 38 102 -80.6 n/m -62.7
received from
equity accounted
investments
Other adjustments -172 -3 -24 -171 -34 n/m n/m n/m
Change in working 216 44 141 301 74 53.2 n/m n/m
capital
--------------------------------------------------------------
Cash Flow from 470 331 473 1 246 1 254 -0.6 42.0 -0.6
Operations
Cash spent on -149 -107 -184 -424 -561 19.0 -39.3 24.4
fixed and
biological
assets
Acquisitions of -11 -8 -16 -66 -115 31.3 -37.5 42.6
equity accounted
investments
--------------------------------------------------------------
Cash Flow after 310 216 273 756 578 13.6 43.5 30.8
Investing
Activities
--------------------------------------------------------------
Q4/2013 cash flow
Fourth quarter 2013 cash flow from operations remained solid at EUR 470
million. Inventories and receivables decreased by EUR 70 million and EUR 75
million, respectively. Payables increased by EUR 60 million. Payments from the
previously announced restructuring provisions were EUR 20 million.
Capital Expenditure for January-December 2013
Additions to fixed and biological assets in 2013 totalled EUR 425 million,
which is 75% of depreciation in the same period. Investments in fixed assets
and biological assets had a cash outflow impact of EUR 424 million in 2013.
The EUR 36 million equity injection into Montes del Plata, a joint venture in
Uruguay, and EUR 30 million cost of acquiring a 35% shareholding in Bulleh
Shah, a joint venture in Pakistan, totalled EUR 66 million in 2013.
The main projects ongoing during 2013 were Montes del Plata Pulp Mill and the
Ostrołęka containerboard machine.
Capital Expenditure, Equity Injections and Depreciation Forecast 2014*
EUR million Forecast 2014
----------------------------------
Capital expenditure 820-900
Equity injections 30
--------------
--------------
Total 850-930
Depreciation 550-580
--------------
* Capital expenditure includes approximately EUR 300 million for the project in
Guangxi, China and approximately EUR 150 million for Montes del Plata Pulp Mill
in Uruguay. As of 2014 Stora Enso will consolidate Veracel and Montes del Plata
line-by-line in accordance with IFRS 11. For further details, please see Basis
for Preparation on page 14.
Streamlining and structure simplification programme to cut EUR 200 million from
fixed costs
The streamlining and structure simplification programme, which is intended to
achieve annual net fixed cost savings of EUR 200 million after compensating for
inflation in addition to cost takeout in the second quarter of 2014 versus
actual 2012 is proceeding according to plan. The full impact of the net cost
savings is expected from the second quarter of 2014 onwards. This programme
does not include capacity reductions.
About 70% of the cost reduction actions specific to this programme were
completed by the end of the fourth quarter of 2013. Most of the non-recurring
one-time costs totalling EUR 88 million related to the programme were already
announced by the end of the third quarter of 2013. Due to the programme, about
1 300 employees exited by the end of the year.
Near-term Outlook
In the first quarter of 2014 sales are expected to be similar to the EUR 2 604
million and operational EBIT similar or somewhat higher compared with the EUR
152 million in the fourth quarter of 2013. Average prices are forecast to
improve and fixed costs to decrease compared with the fourth quarter of 2013.
Renewable Packaging will be affected by Guangxi project costs and lost
production due to the Skoghall Mill recovery boiler incident.
Segments Q4/13 compared with Q4/12
Printing and Reading
Printing and Reading, part of the Printing and Living Division, is a
world-class responsible supplier of paper from renewable sources for print
media and office use. Its wide offering serves publishers, retailers, printing
houses, merchants, converters and office suppliers, among others. Printing and
Reading produces newsprint, book paper, SC paper, coated paper and office
paper.
EUR million Q4/13 Q3/13 Q4/12 2013 2012 Change % Change % Change Q4/13-Q4/12 Q4/13-Q3/1 %
3 2013-
2012
--------------------------------------------------------------------------------
Sales 1 054 1 041 1 194 4 319 4 839 -11.7 1.2 -10.7
Operational 86 81 129 290 493 -33.3 6.2 -41.2
EBITDA
Operational 36 13 59 34 223 -39.0 176.9 -84.8
EBIT
% of sales 3.4 1.2 4.9 0.8 4.6 -30.6 183.3 -82.6
Operational 6.1 1.9 7.9 1.4 7.4 -22.8 221.1 -81.1
ROOC, %*
Paper 1 607 1 582 1 791 6 525 7 130 -10.3 1.6 -8.5
deliveries,
1 000 t
Paper 1 577 1 600 1 809 6 501 7 210 -12.8 -1.4 -9.8
production,
1 000 t
-------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Lower sales volumes due to declining demand and related capacity
reductions, and slightly lower sales prices in local currencies decreased
operational EBIT. This was partly offset by lower variable costs resulting
from operational improvements and lower fixed costs.
-- Depreciation was EUR 19 million lower mainly due to fixed asset impairments
recorded in the fourth quarter of 2013.
-- As announced in January 2014, the permanent shutdown of a coated mechanical
paper machine at Veitsiluoto Mill in Finland is planned.
Markets
Produc Market Demand Q4/13 Demand Q4/13 Price Q4/13 Price Q4/13
t compared with compared with compared with compared with
Q4/12 Q3/13 Q4/12 Q3/13
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paper Europe Weaker Slightly Slightly lower Stable
stronger
Biomaterials
Biomaterials offers a variety of pulp grades to meet the demands of paper,
board and tissue producers. Pulp made from renewable resources in a sustainable
manner is an excellent raw material with many different end uses. Biomaterials
comprises mainly plantations, the Group's joint-venture Veracel and Montes del
Plata pulp mills, Nordic stand-alone pulp mills, the Pulp Competence Centre and
Biorefinery.
EUR million Q4/13 Q3/13 Q4/12 2013 2012 Change % Change % Change
Q4/13-Q4/12 Q4/13-Q3/1 %
3 2013-
2012
--------------------------------------------------------------------------------
Sales 258 242 256 1 014 1 012 0.8 6.6 0.2
Operational 28 29 33 107 99 -15.2 -3.4 8.1
EBITDA
Operational 24 17 28 77 82 -14.3 41.2 -6.1
EBIT
% of sales 9.3 7.0 10.9 7.6 8.1 -14.7 32.9 -6.2
Operational 7.2 4.9 7.8 5.6 5.7 -7.7 46.9 -1.8
ROOC, %*
Pulp 484 444 471 1 864 1 836 2.8 9.0 1.5
deliveries,
1 000 t
-------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Lower variable costs, mainly for wood, were more than offset by Biorefinery
Business Unit costs, and higher costs for Montes del Plata Pulp Mill. Fixed
costs were similar to a year ago.
-- Montes del Plata Pulp Mill is currently finalising the construction works,
mill commissioning and the final permit process. The start-up process is
expected to commence during the first months of 2014.
Markets
--------------------------------------------------------------------------------
Produc Market Demand Q4/13 Demand Q4/13 Price Q4/13 Price Q4/13
t compared with compared with compared with compared with
Q4/12 Q3/13 Q4/12 Q3/13
Softwo Europe Stable Slightly weaker Significantly Slightly
od higher higher
pulp
Hardwo Europe Slightly weaker Stronger Stable Slightly lower
od
pulp
Building and Living
Building and Living, part of the Printing and Living Division, provides
wood-based innovations and solutions for everyday living and housing needs. The
product range covers all areas of urban construction, from supporting
structures to interior design and environmental construction. Further-processed
products include massive wood elements and housing modules, wood components and
pellets, in addition to a variety of sawn timber goods.
EUR million Q4/13 Q3/13 Q4/12 2013 2012 Change % Change % Change
Q4/13-Q4/12 Q4/13-Q3/13 %
2013-
2012
--------------------------------------------------------------------------------
Sales 466 460 456 1 867 1 684 2.2 1.3 10.9
Operational 30 33 17 115 59 76.5 -9.1 94.9
EBITDA
Operational 19 24 7 75 29 171.4 -20.8 158.6
EBIT
% of sales 4.1 5.2 1.5 4.0 1.7 173.3 -21.2 135.3
Operational 14.4 17.7 4.8 13.9 5.2 200.0 -18.6 167.3
ROOC, %*
Deliveries, 1 203 1 157 1 132 4 776 4 592 6.3 4.0 4.0
1 000 m3
--------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Slightly lower sales prices in overseas markets were more than offset by
lower log prices in the Nordic countries, clearly higher by-product income
in Central Europe, lower fixed costs and higher volumes in all businesses.
Markets
Produc Market Demand Q4/13 Demand Q4/13 Price Q4/13 Price Q4/13
t compared with compared with compared with compared with
Q4/12 Q3/13 Q4/12 Q3/13
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Wood Europe Significantly Slightly higher Stable Stable
produ stronger
cts
Renewable Packaging
Renewable Packaging offers fibre-based packaging materials and innovative
packaging solutions for consumer goods and industrial applications. Renewable
Packaging operates throughout the value chain, from pulp production to
production of materials and packaging, and recycling. It comprises three
business units: Consumer Board, Packaging Solutions and Packaging Asia.
EUR million Q4/13 Q3/13 Q4/12 2013 2012 Change % Change % Change
Q4/13-Q4/ Q4/13-Q3 %
12 /13 2013-
2012
--------------------------------------------------------------------------------
Sales 788 829 798 3 272 3 216 -1.3 -4.9 1.7
Operational 122 152 106 522 476 15.1 -19.7 9.7
EBITDA
Operational EBIT 73 100 55 318 273 32.7 -27.0 16.5
% of sales 9.3 12.1 6.9 9.7 8.5 34.8 -23.1 14.1
Operational 12.2 16.9 9.3 13.3 12.1 31.2 -27.8 9.9
ROOC, %*
Paper and board 831 874 778 3 373 3 138 6.8 -4.9 7.5
deliveries, 1
000 t
Paper and board 850 869 752 3 410 3 147 13.0 -2.2 8.4
production, 1
000 t
Corrugated 277 278 279 1 086 1 097 -0.7 -0.4 -1.0
packaging
deliveries,
million m2
Corrugated 266 266 275 1 057 1 076 -3.3 - -1.8
packaging
production,
million m2
---------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Containerboard sales volumes were higher due to Ostrołęka Mill's new PM 5
and stronger consumer board deliveries at the end of the year. Increased
production despite annual maintenance stoppages at Skoghall and Fors mills
improved operational EBIT. Variable costs were lower. Average sales prices
in local currencies remained stable.
-- The consumer board machine project in Guangxi, China is proceeding as
planned. Approvals from MOFCOM (Ministry of Commerce of People's Republic
of China) were received in November. The machine is forecast to be
operational in the beginning of 2016, as previously announced.
Markets
Product Market Demand Q4/13 Demand Q4/13 Price Q4/13 Price Q4/13
compared with compared with compared compared with
Q4/12 Q3/13 with Q4/12 Q3/13
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consumer Europe Slightly Slightly Slightly Stable
board stronger weaker lower
Corrugate Europe Weaker Stable Slightly Stable
d higher
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 million Q4/13 Q3/13 Q4/12 2013 2012 Change % Change % Change
Q4/13-Q4/12 Q4/13-Q3/13 %
2013-
2012
--------------------------------------------------------------------------------
Sales 672 612 673 2 690 2 684 -0.1 9.8 0.2
Operational -20 16 -9 10 -33 -122.2 -225.0 130.3
EBITDA
Operational - 30 9 74 23 -100.0 -100.0 221.7
EBIT
% of sales - 4.9 1.3 2.8 0.9 -100.0 -100.0 211.1
--------------------------------------------------------------------
-- Fixed costs increased due to acquisition of ABB's 49% shareholding in Efora
Oy.
-- Operational EBIT was EUR 51 million higher than a year earlier mainly due
to inventory adjustment in Nordic wood sourcing operations in 2012 and
lower expenditure in Group Functions and Group Services.
-- Stora Enso divests its 40% shareholding in the US based processed kaolin
clay producer Thiele Kaolin Company for USD 76 (EUR 56) million. A capital
gain of EUR 37 million will be recorded in Q1/2014.
Short-term Risks and Uncertainties
The main short-term risks and uncertainties relate to the economic situation in
Europe, and the persistent 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 13 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 190 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 69
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 95 million, negative EUR 78 million and positive EUR 53 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.
Fourth Quarter Events
In October Stora Enso announced the appointments to its Nomination Board.
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 7 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.
During construction of Veracel Pulp Mill, a supplier won the international
tendering to supply part of the mill. The proposal included an element to make
the plant eligible for a Drawback Suspension Tax Benefit which would provide
exemptions on imports. One of the conditions of the drawback was that funds
used to pay the supplier be raised outside Brazil. At the same time, part of
the mill construction was financed locally. Following a tax inspection at the
supplier, Federal Tax Authorities issued a tax infraction note against the
supplier intended to cancel the drawback benefits. The supplier presented its
defence and the appeal is still pending a decision from the Administrative Tax
Entity Court. In parallel, the supplier filed an arbitration proceeding against
Veracel in order to determine which company shall be responsible for eventual
damages if the supplier is found guilty. In September 2013 the International
Chamber of Commerce Arbitration Court decided that Veracel and the supplier
shall share liability for any potential damages in the ratio Veracel 75% and
the supplier 25%, which decision has been challenged by Veracel. In spite of
this, the supplier and Veracel entered into a settlement agreement in December
2013, agreeing that the supplier should make certain tax payments of which
Veracel paid to the supplier, and expensed, BRL 45 million (EUR 16 million), of
which Stora Enso's share amounts to BRL 22.5 million (EUR 8 million). The
settlement is subject to formal acceptance of the payment by the Brazilian
authorities and the final decision of the Chamber of Commerce Arbitration
Court.
Class Action Lawsuits in USA
In the context of magazine paper sales in the USA in 2002 and 2003, Stora Enso
Oyj (SEO) and Stora Enso North America (SENA) were 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. In December
2010 a US federal district court granted a motion for summary judgement
dismissing the direct purchaser class action claims on SEO and SENA. Following
appeal, a federal court of appeals on 6 August 2012 upheld the district court's
ruling as to SEO, but reversed the district court's ruling as to SENA and
referred that part of the case back to the district court for a jury trial to
determine whether SENA's conduct did violate the federal antitrust laws. The
trial of the case against SENA was scheduled to begin in August 2013. Because
Stora Enso disposed of SENA in 2007, Stora Enso's liability, if any, would have
been determined by the provisions in the SENA Sales and Purchasing Agreement.
On 17 July 2013, Stora Enso reached an agreement (which is subject to approval
by the US federal district court) to settle the cases filed by the direct
magazine paper purchasers without any admission of liability by SENA or SEO.
Stora Enso has paid into escrow USD 8 million (EUR 6 million) to cover the cost
of settling those claims, which cost has been recorded in the third quarter
2013 accounts. The only remaining cases of any substance, filed on behalf of
indirect purchasers of publication paper in the California (CA) and Connecticut
(CT) state courts, are about to be settled as well - without any admission of
liability by SENA or SEO - via payments of USD 0.1 million (EUR 0.1 million)
plus proportionate cost (CA) and USD 0.1 million (EUR 0.1 million) (CT). These
settlements have to be approved by the responsible courts. In previous periods
the cases were disclosed as a contingent liability.
Legal Proceedings in Finland
In 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. In 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 160 million and the secondary claim against Stora Enso to
approximately EUR 85 million. In addition, Finnish municipalities and private
forest owners initiated similar legal proceedings. The total amount claimed
from all the defendants amounts to approximately EUR 45 million and the
secondary claims solely against Stora Enso to approximately EUR 10 million.
Stora Enso denies that Metsähallitus and other plaintiffs suffered any damages
whatsoever and will forcefully defend itself. No provisions have been made in
Stora Enso's accounts for these lawsuits.
Kemijärvi Pulp Mill in Finland was permanently closed down in 2008. In December
2011 the Vaasa Administrative Court gave its decision concerning the
environmental permit for the closure of the mill. The judgement included an
obligation to remove the majority of the sludge from the bottom of the water
treatment lagoon. Following an appeal by Stora Enso, the Supreme Administrative
Court in August 2013 gave its decision concerning the water treatment lagoon in
the environmental permit related to the closure of Kemijärvi Pulp Mill. The
Court ordered Stora Enso to remove the majority of the sludge, and returned the
case to the Regional State Administrative Agency with an order to Stora Enso to
deliver a new action plan by the end of 2014 for removal of the majority of the
sludge from the basin at the Kemijärvi site. The Agency was also ordered to
consider and evaluate the costs to Stora Enso against the environmental
benefits achievable if the Agency ordered Stora Enso to remove the sludge. No
provisions have been made in Stora Enso's accounts for this case.
Changes in Organisational Structure and Group Management
On 23 April 2013 Stora Enso announced that it planned to change from four
Business Areas to three Divisions by integrating the Building and Living
Business Area with the Printing and Reading Business Area in a new Printing and
Living Division. The segment reporting has remained as before.
On 31 May 2013 Stora Enso announced that from 1 July 2013 onwards the Stora
Enso Group Leadership Team would comprise the following persons and roles:
Jouko Karvinen, Chief Executive Officer
Juan Bueno, Head of Biomaterials Division
Lars Häggström, Head of Global People and Organisation
Per Lyrvall, Head of Global Ethics and Compliance, General Counsel, Country
Senior Executive, Sweden
Mats Nordlander, Head of Renewable Packaging Division
Lauri Peltola, Head of Global Identity, Country Senior Executive, Finland
Karl-Henrik Sundström, Head of Printing and Living Division
Jyrki Tammivuori, acting Chief Financial Officer (until 31 January 2014)
Juha Vanhainen, Executive Vice President, EUR 200 million Streamlining and
Structure Simplification Programme, Wood Supply Operations in Finland and
Sweden, Energy, Logistics and Business Information Services
Personnel
On 31 December 2013 there were 27 985 employees in the Group, 218 less than at
the end of 2012. The average number of employees in 2013 was 28 231, which was
546 lower than the average number in 2012. The number of employees decreased
most in Sweden due to permanent shutdowns of paper machines and restructurings,
whereas decreases in Finland were offset by the acquisition of ABB's 49%
shareholding in Efora Oy, which employs around 1 000 people. Excluding the
effects of the acquisition of Efora Oy, the number of employees in Europe
decreased by approximately 1 650 during 2013.
Share Capital
During the quarter the conversions of a total of 50 168 A shares into R shares
were recorded in the Finnish trade register on15 October and 16 December 2013.
On 31 December 2013 Stora Enso had 177 096 204 A shares and 611 523 783 R
shares in issue of which the Company held no A shares or R shares.
Events after the Period
The conversion of 25 000 A shares into R shares was recorded in the Finnish
trade register on 15 January 2014.
Seppo Parvi started as new Chief Financial Officer on 1 February 2014.
According to Stora Enso's Corporate Governance, the CFO also acts as deputy to
the CEO as defined by the Finnish Companies Act. On 5 February 2014 Stora
Enso's Board of Directors appointed Seppo Parvi as deputy to the CEO.
Annual General Meeting
The Annual General Meeting (AGM) will be held at 16.00 (Finnish time) on
Wednesday 23 April 2014 at Marina Congress Center, Katajanokanlaituri 6,
Helsinki, Finland.
The agenda of the AGM and proposals on the agenda of the AGM, as well as the
AGM notice, will be available on Stora Enso Oyj's website at
www.storaenso.com/agm. Stora Enso's annual accounts, the Report of the Board of
Directors and the auditor's report for 2013 will be published on Stora Enso
Oyj's website www.storaenso.com/investors during the week commencing on Monday
17 February 2014. The proposals for decisions and the other above-mentioned
documents will also be available at the AGM. Copies of these documents and of
this notice will be sent to shareholders upon request. The minutes of the AGM
will be available on Stora Enso Oyj's website www.storaenso.com/agm from 7 May
2014.
The Board of Directors' Proposal for the Payment of Dividend
The Board of Directors proposes to the AGM that a dividend of EUR 0.30 per
share be distributed for the year 2013.
The dividend would be paid to shareholders who on the record date of the
dividend payment, 28 April 2014, are recorded in the shareholders' register
maintained by Euroclear Finland Oy or in the separate register of shareholders
maintained by Euroclear Sweden AB for Euroclear Sweden registered shares.
Dividends payable for Euroclear Sweden registered shares will be forwarded by
Euroclear Sweden AB and paid in Swedish krona. Dividends payable to ADR holders
will be forwarded by Deutsche Bank Trust Company Americas and paid in US
dollars.
The Board of Directors proposes to the AGM that the dividend be paid on 15 May
2014.
This report has been prepared in Finnish, English and Swedish. In case of
variations in the content between the versions, the English version shall
govern. This report is unaudited.
Helsinki, 5 February 2014
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 2012.
The Group has applied the following amendment effective from 1 January 2013
that requires restatement of previous financial statements:
-- IAS 19 Employee Benefits (revised) eliminates the ‘corridor method',
streamlines the presentation of changes in assets and liabilities arising
from defined benefit plans and enhances the disclosure requirements arising
from the standard. The Group has not applied the ‘corridor method'. The
effects of this amendment on the Group financial statements are not
material. The effects on the Condensed Consolidated Income Statement and
the Condensed Consolidated Statement of Financial Position are the
following:
Effects of Changes to IAS 19 Employee Benefits
EUR million As published 2012 Adjustment Restated
2012 2012
---------------------------------------------------------------------------
Operational EBIT 618 12 630
Operating profit (IFRS) 689 12 701
Net financial items -207 -13 -220
Profit before tax 482 -1 481
Income tax 9 - 9
Net profit for the period 491 -1 490
Attributable to:
Owners of the Parent 481 -1 480
Non-controlling interests 10 - 10
----------------------------------------
491 -1 490
Total equity 5 876 -14 5 862
Post-employment benefit provisions 462 18 480
Deferred tax liabilities 344 -4 340
----------------------------------------
The following standards have also been applicable for the first time effective
from 1 January 2013:
-- IAS 1 Presentation of Financial Statements (amendment) introduces changes
to the presentation of items of other comprehensive income. Items that
could be reclassified to profit or loss at a future point in time now have
to be presented separately from items that will never be reclassified. The
amendment affected presentation only and had no impact on the Group's
financial position or performance.
-- IFRS 7 Financial Instruments: Enhanced disclosure requirements related to
offsetting of financial assets and financial liabilities. The amendment
might have some effect on presentation in the financial statements but had
no impact on the Group's financial position or performance.
-- IFRS 13 Fair Value Measurement establishes the definition of fair value and
introduces a single IFRS framework for measuring fair value while seeking
to increase consistency and comparability by requiring disclosures about
fair value measurements applied in the financial statements of an entity.
The application of IFRS 13 has not materially affected the fair value
measurements carried out by the Group. The new standard also requires
specific disclosures on fair values, some of which replace existing
disclosure requirements in other standards. Some of these disclosures are
specifically required for financial instruments, thereby affecting the
financial statement. The additional disclosures are included in this
Interim Review.
-- IAS 12 Income Taxes (amendment) provides additional regulation on deferred
tax in the case of recovery of underlying assets. The amendment is not
relevant to the Group.
-- IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
introduces accounting treatment for stripping costs arising in the mining
industry. The interpretation is not relevant to the Group.
Stora Enso will apply the new IFRS 10 Consolidated Financial Statements, 11
Joint Arrangements and 12 Disclosure of Interests in Other Entities as of 1
January 2014. The change will affect Montes del Plata and Veracel, which will
then be treated as joint operations and thus consolidated with the line-by-line
method.
All figures in this Interim Review have been rounded to the nearest million,
unless otherwise stated.
Condensed Consolidated Income Statement
EUR million Q4/13 Q3/13 Q4/12 2013 2012 Change Change Change
% % %
Q4/13- Q4/13- 2013-2
Q4/12 Q3/13 012
--------------------------------------------------------------------------------
Sales 2 604 2 556 2 727 10 544 10 815 -4.5 1.9 -2.5
Other operating 35 29 48 122 219 -27.1 20.7 -44.3
income
Materials and -1 523 -1 612 -1 782 -6 635 -6 974 14.5 5.5 4.9
services
Freight and -234 -236 -260 -977 -1 008 10.0 0.8 3.1
sales
commissions
Personnel -344 -309 -311 -1 368 -1 349 -10.6 -11.3 -1.4
expenses
Other operating -123 -134 -162 -602 -578 24.1 8.2 -4.2
expenses
Share of results 51 9 91 100 108 -44.0 n/m -7.4
of equity
accounted
investments
Depreciation and -684 -145 -97 -1 150 -532 n/m n/m -116.2
impairment
---------------------------------------------------------------
Operating -218 158 254 34 701 -185.8 -238.0 -95.1
Loss/Profit
Net financial -64 -56 -50 -223 -220 -28.0 -14.3 -1.4
items
---------------------------------------------------------------
Loss/Profit -282 102 204 -189 481 -238.2 n/m -139.3
before Tax
Income tax 122 -18 62 118 9 96.8 n/m n/m
---------------------------------------------------------------
Net Loss/Profit -160 84 266 -71 490 -160.2 -290.5 -114.5
for the Period
Attributable to:
Owners of the -137 82 262 -53 480 -152.3 -267.1 -111.0
Parent
Non-controlling -23 2 4 -18 10 n/m n/m -280.0
interests
---------------------------------------------------------------
-160 84 266 -71 490 -160.2 -290.5 -114.5
---------------------------------------------------------------
---------------------------------------------------------------
Earnings per
Share
Basic earnings -0.18 0.11 0.33 -0.07 0.61 -154.5 -263.6 -111.5
per share, EUR
Diluted earnings -0.18 0.11 0.33 -0.07 0.61 -154.5 -263.6 -111.5
per share, EUR
Consolidated Statement of Comprehensive Income
EUR million 2013 2012
--------------------------------------------------------------------------------
Net loss/profit for the period -71 490
Other Comprehensive Income
Items that will Not be Reclassified to Profit and Loss
Actuarial gains/losses on defined benefit plans 74 -184
Share of other comprehensive income of equity accounted investments -1 -5
that will not be reclassified
Income tax relating to items that will not be reclassified -27 35
-----------
46 -154
Items that may be Reclassified Subsequently to Profit and Loss
Share of other comprehensive income of equity accounted investments 15 1
that may be reclassified
Currency translation movements on equity net investments (CTA) -227 -29
Currency translation movements on non-controlling interests -6 -3
Net investment hedges 23 -17
Currency and commodity hedges -28 34
Available-for-sale financial assets -101 -178
Income tax relating to items that may be reclassified 2 -3 -----------
-----------
-322 -195
-----------
Total Comprehensive Income -347 141
-----------
-----------
Total Comprehensive Income Attributable to:
Owners of the Parent -323 134
Non-controlling interests -24 7
-----------
-347 141
-----------
Condensed Consolidated Statement of Cash Flows
EUR million 2013 2012
--------------------------------------------------------------------------------
Cash Flow from Operating Activities
Operating profit 34 701
Hedging result from OCI -23 34
Adjustments for non-cash items 911 479
Change in net working capital 285 56
-------------
Cash Flow Generated by Operations 1 207 1 270
Net financial items paid -176 -230
Income taxes paid, net -43 -104
-------------
Net Cash Provided by Operating Activities 988 936
-------------
-------------
Cash Flow from Investing Activities
Acquisitions of subsidiaries and business operations, net of 25 -11
acquired cash
Acquisitions of equity accounted investments -66 -115
Acquisitions of available-for-sale investments -9 -
Proceeds from sale of fixed assets and shares, net of disposed 23 8
cash
Proceeds from disposal of available-for-sale investments 42 -
Capital expenditure -424 -561
Proceeds from/payments of non-current receivables, net 96 -5
-------------
Net Cash Used in Investing Activities -313 -684
-------------
-------------
Cash Flow from Financing Activities
Proceeds from issue of new long-term debt 151 1 472
Long-term debt, payments -371 -571
Change in short-term borrowings 20 -179
Dividends paid -237 -237
Dividend to non-controlling interests -7 -3
-------------
Net Cash Used in/Provided by Financing Activities -444 482
-------------
-------------
Net Increase in Cash and Cash Equivalents 231 734
Translation adjustment -23 -23
Net cash and cash equivalents at the beginning of period 1 845 1 134
-------------
Net Cash and Cash Equivalents at Period End 2 053 1 845
-------------
Cash and Cash Equivalents at Period End 2 065 1 850
Bank Overdrafts at Period End -12 -5
-------------
Net Cash and Cash Equivalents at Period End 2 053 1 845
-------------
-------------
Acquisitions
Cash and cash equivalents, net of bank overdraft 32 2
Intangible assets and property, plant and equipment 1 6
Working capital -22 8
Tax assets and liabilities - 1
Interest-bearing liabilities and receivables - -5
-------------
Fair Value of Net Assets Acquired 11 12
Value of previously held equity interests -4 -3
-------------
Total Purchase Consideration 7 9
Less cash and cash equivalents in acquired companies -32 -2
-------------
Net Purchase Consideration -25 7
-------------
Cash part of the consideration, net of acquired cash -25 11
Payment concerning unfinished 2011 acquisition - -4
-------------
Net Purchase Consideration -25 7
-------------
Disposals
Cash and cash equivalents 1 -
Property, plant and equipment 2 -
Interest-bearing liabilities -2 -
Non-controlling interests -1 -
------
Net Assets in Divested Companies - -
Gain on sale - -
------
Total Net Assets Sold - -
------
Property, Plant and Equipment, Goodwill, Biological Assets and Other Intangible
Assets
EUR million 2013 2012
----------------------------------------------------------
Carrying value at 1 January 5 541 5 437
Acquisition of subsidiary companies 1 6
Additions in tangible and intangible assets 406 536
Additions in biological assets 19 20
Disposals -26 -2
Disposals of subsidiary companies -2 -
Depreciation and impairment -1 150 -532
Valuation of biological assets 179 -
Translation difference and other -116 76
--------------
Statement of Financial Position Total 4 852 5 541
--------------
Borrowings
EUR million 31 Dec 13 31 Dec 12
----------------------------------------------------------------
Bond loans 3 177 3 378
Loans from credit institutions 859 788
Financial lease liabilities 77 99
Other non-current liabilities 94 257
---------------------
---------------------
Non-current Debt including Current Portion 4 207 4 522
Short-term borrowings 391 332
Interest payable 87 84
Derivative financial liabilities 141 191
Bank overdrafts 12 5
---------------------
Total Interest-bearing Liabilities 4 838 5 134
---------------------
EUR million 2013 2012
------------------------------------------------------------------
------------------------------------------------------------------
Carrying Value at 1 January 5 134 4 373
Proceeds of new long-term debt 151 1 472
Repayment of long-term debt -371 -571
Change in short-term borrowings and interest payable 62 -200
Change in derivative financial liabilities -50 28
Translation differences and other -88 32
-------------
Total Interest-bearing Liabilities 4 838 5 134
-------------
Condensed Consolidated Statement of Financial Position
EUR million 31 Dec 13 31 Dec 12
-------------------------------------------------------------------
Assets
Non-current Assets
PPE*, goodwill and other intangible assets O 4 453 5 319
Biological assets O 399 222
Emission rights O 21 30
Equity accounted investments O 1 961 1 965
Available-for-sale: Interest-bearing I 10 96
Available-for-sale: Operative O 361 451
Non-current loan receivables I 80 134
Deferred tax assets T 229 143
Other non-current assets O 16 23
---------------------
7 530 8 383
---------------------
---------------------
Current Assets
Inventories O 1 376 1 458
Tax receivables T 13 19
Operative receivables O 1 521 1 687
Interest-bearing receivables I 249 297
Cash and cash equivalents I 2 065 1 850
---------------------
---------------------
5 224 5 311
---------------------
Total Assets 12 754 13 694
---------------------
---------------------
Equity and Liabilities
Owners of the Parent 5 213 5 770
Non-controlling Interests 60 92
---------------------
Total Equity 5 273 5 862
---------------------
---------------------
Non-current Liabilities
Post-employment benefit provisions O 378 480
Other provisions O 121 142
Deferred tax liabilities T 300 340
Non-current debt I 3 702 4 341
Other non-current operative liabilities O 16 12
---------------------
4 517 5 315 ---------------------
---------------------
Current Liabilities
Current portion of non-current debt I 505 181
Interest-bearing liabilities I 631 612
Operative liabilities O 1 812 1 685
Tax liabilities T 16 39
-----------
----------
2 964 2 517
---------------------
Total Liabilities 7 481 7 832
---------------------
---------------------
Total Equity and Liabilities 12 754 13 694
---------------------
* PPE = Property, Plant and Equipment
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
CTA = Cumulative Translation Adjustment OCI = Other
Comprehensive Income
NCI = Non-controlling Interests EAI =
Equity Accounted Investments
EUR Share Share Invest Treasu Step Availa Curren OCI of CTA
Retain Attrib Non-co Total
milli Capita Premiu ed ry Acquis ble-fo cy and Equity and
ed utable ntroll
on l m and Non-Re Shares ition r-Sale Commod Accoun Net
Earnin to ing
Reserv strict Revalu Financ ity ted Invest
gs Owners Intere
e fund ed ation ial Hedges Invest ment
of the sts
Equity Surplu Assets ments Hedges
Parent
Fund s
--------------------------------------------------------------------------------
-----------------------------
Balanc 1 342 77 633 -10 4 541 -17 -29 32
3 300 5 873 87 5 960
e at
31
Dec
2011
--------------------------------------------------------------------------------
----------------------
Profit - - - - - - - - -
480 480 10 490
for
the
perio
d
OCI - - - - - -178 34 -4 -46
-184 -378 -3 -381
befor
e tax
Income - - - - - -1 -6 - 4
35 32 - 32
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
----------------------
Total - - - - - -179 28 -4 -42
331 134 7 141
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
----------------------
Divide - - - - - - - - -
-237 -237 -2 -239
nd
--------------------------------------------------------------------------------
----------------------
Balanc 1 342 77 633 -10 4 362 11 -33 -10
3 394 5 770 92 5 862
e at
31
Dec
2012
--------------------------------------------------------------------------------
----------------------
--------------------------------------------------------------------------------
----------------------
Loss - - - - - - - - -
-53 -53 -18 -71
for
the
perio
d
OCI - - - - - -101 -28 14 -204
74 -245 -6 -251
befor
e tax
Income - - - - - 1 5 - -4
-27 -25 - -25
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
----------------------
Total - - - - - -100 -23 14 -208
-6 -323 -24 -347
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
----------------------
--------------------------------------------------------------------------------
----------------------
Divide - - - - - - - - -
-237 -237 -7 -244
nd
Dispos - - - - - - - - -
- - -1 -1
als
Share- - - - - - - - - -
2 2 - 2
based
payme
nts
NCI - - - - - - - - -
1 1 - 1
trans
action
in
EAI
Cancel - - - 10 - - - - -
-10 - - -
lation
of
treas
ury
share
s
--------------------------------------------------------------------------------
----------------------
Balanc 1 342 77 633 - 4 262 -12 -19 -218
3 144 5 213 60 5 273
e at
31
Dec
2013
--------------------------------------------------------------------------------
----------------------
Commitments and Contingencies
EUR million 31 Dec 13 31 Dec 12
---------------------------------------------------------------
On Own Behalf
Pledges - 1
Mortgages 18 6
On Behalf of Equity Accounted Investments
Guarantees 554 653
On Behalf of Others
Guarantees 5 5
Other Commitments, Own
Operating leases, in next 12 months 68 92
Operating leases, after next 12 months 477 497
Other commitments 5 5
---------------------
Total 1 127 1 259
---------------------
---------------------
Pledges - 1
Mortgages 18 6
Guarantees 559 658
Operating leases 545 589
Other commitments 5 5
---------------------
Total 1 127 1 259
---------------------
Capital commitments
The Group's direct capital expenditure contracts, excluding acquisitions,
amounted to EUR 69 million (compared with EUR 72 million at 31 December 2012).
The Group's share of capital expenditure contracts in equity accounted
investments, excluding acquisitions, amounted to EUR 73 million (compared with
EUR 213 million at 31 December 2012) of which Stora Enso has guaranteed EUR 44
million (compared with EUR 189 million at 31 December 2012).
Sales by Segment
EUR 2013 Q4/13 Q3/13 Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
million
--------------------------------------------------------------------------------
Printing 4 319 1 054 1 041 1 101 1 123 4 839 1 194 1 227 1 191 1 227
and
Reading
Biomater 1 014 258 242 257 257 1 012 256 268 246 242
ials
Building 1 867 466 460 500 441 1 684 456 403 444 381
and
Living
Renewabl 3 272 788 829 835 820 3 216 798 812 827 779
e
Packagi
ng
Other 2 690 672 612 685 721 2 684 673 645 663 703
Inter-se -2 618 -634 -628 -661 -695 -2 620 -650 -661 -650 -659
gment
sales
-----------------------------------------------------------------------
Total 10 544 2 604 2 556 2 717 2 667 10 815 2 727 2 694 2 721 2 673
-----------------------------------------------------------------------
Operational EBIT by Segment
EUR million 2013 Q4/13 Q3/13 Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
--------------------------------------------------------------------------------
Printing and 34 36 13 -17 2 223 59 53 43 68
Reading
Biomaterials 77 24 17 14 22 82 28 32 15 7
Building and 75 19 24 28 4 29 7 1 11 10
Living
Renewable 318 73 100 77 68 273 55 83 73 62
Packaging
Other 74 - 30 22 22 23 9 9 2 3
-------------------------------------------------------------------
Operational 578 152 184 124 118 630 158 178 144 150
EBIT
Fair -5 22 -3 -17 -7 -59 -14 -13 -34 2
valuations
and
non-operati
onal items*
Non-recurrin -539 -392 -23 -33 -91 130 110 - 45 -25
g Items
-------------------------------------------------------------------
Operating 34 -218 158 74 20 701 254 165 155 127
Profit/Loss
(IFRS)
Net -223 -64 -56 -47 -56 -220 -50 -63 -70 -37
financial
items
Loss/Profit -189 -282 102 27 -36 481 204 102 85 90
before Tax
Income tax 118 122 -18 -6 20 9 62 -21 -16 -16
expense
-------------------------------------------------------------------
Net -71 -160 84 21 -16 490 266 81 69 74
Loss/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 and Group's share of tax and net financial
items of EAI.
NRI by Segment
EUR million 2013 Q4/13 Q3/13 Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
--------------------------------------------------------------------------------
Printing and -644 -538 8 -30 -84 70 67 - 13 -10
Reading
Biomaterials 2 -8 -1 11 - -7 -7 - - -
Building and -7 - - - -7 - - - - -
Living
Renewable 120 144 -28 4 - -53 -38 - - -15
Packaging
Other -10 10 -2 -18 - 120 88 - 32 -
-------------------------------------------------------------------
NRI on -539 -392 -23 -33 -91 130 110 - 45 -25
Operating
Loss/Profit
NRI on - - - - - 34 11 - 9 14
Financial
items
NRI on tax 145 114 3 9 19 63 56 - 2 5
-------------------------------------------------------------------
NRI on Net -394 -278 -20 -24 -72 227 177 - 56 -6
Loss/Profit
-------------------------------------------------------------------
-------------------------------------------------------------------
NRI on Net
Loss/Profit
attributabl
e to
Owners of -369 -253 -20 -24 -72 221 175 - 52 -6
the Parent
Non-controll -25 -25 - - - 6 2 - 4 -
ing
interests
-------------------------------------------------------------------
-394 -278 -20 -24 -72 227 177 - 56 -6
-------------------------------------------------------------------
Fair Valuations and Non-operational Items* by Segment
EUR million 2013 Q4/13 Q3/13 Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
--------------------------------------------------------------------------------
Printing and 2 3 -1 - - -1 - - - -1
Reading
Biomaterials -11 5 -2 -11 -3 -29 6 -7 -24 -4
Building and - - - - - -3 -1 - - -2
Living
Renewable -1 - -1 - - -1 - - - -1
Packaging
Other 5 14 1 -6 -4 -25 -19 -6 -10 10
-------------------------------------------------------------------
Fair -5 22 -3 -17 -7 -59 -14 -13 -34 2
Valuations
and
Non-operati
onal Items
on
Operating
Loss/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 and Group's share of tax and net financial
items of EAI.
Operating Profit/Loss by Segment
EUR million 2013 Q4/13 Q3/13 Q2/13 Q1/13 2012 Q4/12 Q3/12 Q2/12 Q1/12
--------------------------------------------------------------------------------
Printing and -608 -499 20 -47 -82 292 126 53 56 57
Reading
Biomaterials 68 21 14 14 19 46 27 25 -9 3
Building and 68 19 24 28 -3 26 6 1 11 8
Living
Renewable 437 217 71 81 68 219 17 83 73 46
Packaging
Other 69 24 29 -2 18 118 78 3 24 13
-------------------------------------------------------------------
Operating 34 -218 158 74 20 701 254 165 155 127
Profit/Loss
(IFRS)
Net -223 -64 -56 -47 -56 -220 -50 -63 -70 -37
financial
items
-------------------------------------------------------------------
Loss/Profit -189 -282 102 27 -36 481 204 102 85 90
before Tax
Income tax 118 122 -18 -6 20 9 62 -21 -16 -16
expense
-------------------------------------------------------------------
Net -71 -160 84 21 -16 490 266 81 69 74
Loss/Profit
-------------------------------------------------------------------
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
-------------------------------------------------------
31 Dec 13 31 Dec 12 31 Dec 13 31 Dec 12
-------------------------------------------
-------------------------------------------
SEK 8.8591 8.5820 8.6505 8.7067
USD 1.3791 1.3194 1.3281 1.2856
GBP 0.8337 0.8161 0.8493 0.8111
-------------------------------------------
Transaction Risk and Hedges in Main Currencies as at 31 December 2013
EUR million EUR USD SEK GBP Other Total
--------------------------------------------------------------------------------
Sales during 2013 6 270 1 430 1 180 550 1 114 10 544
Costs during 2013 -5 580 -580 -2 220 -70 -1 010 -9 460
--------------------------------------------
Net amount 690 850 -1 040 480 104 1 084
--------------------------------------------
Estimated annual net operating cash 950 -780 530
flow exposure
Transaction hedges as at 31 Dec -450 450 -260
2013
--------------------------------------------
Hedging percentage as at 31 Dec 47% 58% 49%
2013 for the next 12 months
--------------------------------------------
Changes in Exchange Rates on Operational EBIT
Operational EBIT: Currency Strengthening of + 10% EUR million
--------------------------------------------------------------
--------------------------------------------------
USD 95
SEK -78
GBP 53
------------
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.
Fair Values of Financial Instruments
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities;
• Level 2: other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly;
• Level 3: techniques which use inputs which have a significant effect on the
recorded fair values that are not based on observable market data.
The valuation techniques are described in more detail in the Financial
Statements.
Carrying Amounts of Financial Assets and Liabilities by Measurement and Fair
Value Categories: 31 December 2013
EUR million Loans Financial Hedging Availab Carryi Fair
and Items Derivati le- ng Value
Receivab at Fair ves for-Sal Amount
les Value e s
through Financi
Income al
Statement Assets
--------------------------------------------------------------------------------
Financial Assets
Available-for-sale - - - 371 371 371
Non-current loan 80 - - - 80 82
receivables
Trade and other 1 254 2 - - 1 256 1 256
operative receivables
Interest-bearing 135 82 32 - 249 249
receivables
Current investments and 2 065 - - - 2 065 2 065
cash
--------------------------------------------------------
Carrying Amount by 3 534 84 32 371 4 021 4 023
Category
--------------------------------------------------------
---------------------------------------------------------
EUR million Financial Hedging Measured Carryi Fair
Items Derivati at ng Value
at Fair ves Amortise Amount
Value d s
through Cost
Income
Statement
--------------------------------------------------------------------------------
Financial Liabilities
Non-current debt - 4 3 698 3 702 3 870
Current portion of - - 505 505 505
non-current debt
Interest-bearing 101 39 479 619 619
liabilities
Trade and other - - 1 370 1 370 1 370
operative payables
Bank overdrafts - - 12 12 12
---------------------------------------------------------
Carrying Amount by 101 43 6 064 6 208 6 376
Category
---------------------------------------------------------
---------------------------------------------------------
EUR million Level Level 2 Level 3 Total
1
--------------------------------------------------------------------------------
Derivative Financial - 116 - 116
Assets
Available-for-sale 10 - 361 371
Financial Assets
Derivative Financial - 144 - 144
Liabilities
---------------------------------------------------------
Reconciliation of Level 3 Fair Value Measurement of Financial Assets: 31
December 2013
EUR million Unlisted Unlisted Interest-bearing Total
Shares Securities
--------------------------------------------------------------------------------
Opening balance at 1 January 2013 451 90 541
Interest capitalised - 9 9
Gains (losses) recognised in 1 2 3
income statement
Gains in OCI transferred to - -7 -7
income statement
Losses recognised in other -97 - -97
comprehensive income
Additions 9 - 9
Disposals -3 -94 -97
----------------------------------------------
Closing Balance at 31 December 361 - 361
2013
----------------------------------------------
Unlisted shares
The unlisted shares consist mainly of PVO shares for which the valuation method
is described in more detail in the Annual Report. The valuation is most
sensitive to changes in electricity prices and discount rates. The discount
rate of 5.01% used in the valuation model is determined using the weighted
average cost of capital method. A +/- 5% change in the electricity price used
in the DCF would change the valuation by +/- EUR 37 million and a +/- 1% change
in the discount rate would change the valuation by -/+ EUR 46 million.
Unlisted Interest-bearing Securities
During the third quarter of 2013, a EUR 99 million loan note issued by Papyrus
Holding AB, classified in the Statement of Financial Position as an unlisted
interest-bearing security, was derecognised as a result of the Group receiving
a cash prepayment of EUR 40 million, with the terms on the remaining portion of
the loan being changed through mutual agreement. The new loan note has been
classified in the Statement of Financial Position as a non-current loan
receivable.
Stora Enso Shares
---------------
Trading volume Helsinki Stockholm
------------------------------------------
A share R share A share R share
---------------------------------------------------------
October 128 594 77 573 305 279 783 28 709 510
November 687 350 62 914 314 309 857 17 772 810
December 81 145 44 727 753 115 924 17 297 136
------------------------------------------
Total 897 089 185 215 372 705 564 63 779 456
------------------------------------------
Closing Price Helsinki, EUR Stockholm, SEK
------------------------------------------
A share R share A share R share
---------------------------------------------------------
October 6.97 6.85 61.45 60.25
November 7.35 7.27 65.25 64.55
December 7.31 7.30 65.30 64.55
------------------------------------------
Calculation of Key Figures
Operational return on capital 100 x Operational EBIT
employed, operational ROCE (%) Capital employed1) 2)
Operational return on operating 100 x Operational EBIT
capital, operational ROOC (%) Operating capital1) 2)
Return on equity, ROE (%) 100 x Profit before tax and
non-controlling items - taxes
Total equity2)
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 3)
Fixed Fair valuation of
asset biological
deprecia
tion
CEPS Net profit/loss for the period3)
- and impairment - assets
Average number of shares
EPS Net profit/loss for the period3)
Average number of shares
Operational EBIT Operating profit/loss excluding
NRI and fair valuations of the
segments and Stora Enso's share
of operating profit/loss
excluding NRI and fair
valuations of its equity
accounted investments (EAI)
Operational EBITDA Operating profit/loss excluding
fixed asset depreciation and
impairment, share of results of
equity accounted investments,
NRI and fair valuations
Net debt to operational EBITDA ratio Interest-bearing net liabilities
Operational EBITDA
Last twelve months (LTM) Twelve months preceding the
reporting date
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:
Seppo Parvi, CFO, tel. +358 2046 21205
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 2046 21242
Hanne Karrinaho, Head of Global Communications, tel. +358 2046 21446
Stora Enso's first quarter 2014 results will be published on 23 April 2014.
Webcast and conference call for analysts and investors
CEO Jouko Karvinen, CFO Seppo Parvi and SVP Investor Relations Ulla
Paajanen-Sainio will be hosting a combined conference call and webcast today at
16.00 Finnish time (15.00 CET, 14.00 UK time, 09.00 EDT).
If you wish to participate, please dial:
Continental Europe and UK +44(0)20 3427 1919
Finland +358 (0)9 6937 9543
Sweden +46 (0)8 5033 6539
US +1 212 444 0412
Confirmation Code: 1382582
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 28 000 people worldwide, and our sales in 2013 amounted to
EUR 10.5 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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