2011-07-21 12:00:00 CEST
2011-07-21 12:00:23 CEST
REGULATED INFORMATION
Stora Enso Oyj - Interim report (Q1 and Q3)
Stora Enso Interim Review January-June 2011
Continued solid performance year-on-year, uncertainty in European markets
increasing
Helsinki, Finland, 2011-07-21 12:00 CEST (GLOBE NEWSWIRE) -- STORA ENSO OYJ
INTERIM REVIEW 21 July 2011 at 13.00 EET
-- EUR 228 million quarterly operating profit excluding NRI and fair
valuations, up by 7% year-on-year due to significantly higher sales prices,
offset by cost inflation and unfavourable exchange rates.
-- Continued efficiency improvement path with announced plans in Fine Paper
and Logistics - Q2 NRI total negative EUR 32 million.
-- Quarterly ROCE excluding NRI and fair valuations 10%.
-- Balance sheet with debt/equity at 0.41 and liquidity at EUR 996 million
remained strong.
-- Full year 2011 cost inflation forecast unchanged at approximately 4%,
continuing actions to mitigate cost inflation.
-- Increasing uncertainty in European economy - operating profit excluding NRI
and fair valuations in the third quarter is expected to be in approximately
the same range as Q2 2011.
Summary of Second Quarter Results
Q2/11 Q1/11 Q2/10
--------------------------------------------------------------------------------
Sales EUR 2 817.1 2 726.9 2 692.2
million
EBITDA excl. NRI and fair valuations EUR 357.6 368.3 329.8 million
Operating Profit excl. NRI and Fair EUR 228.3 248.0 212.9
Valuations million
Operating profit (IFRS) EUR 184.7 237.2 215.6
million
Profit before tax excl. NRI EUR 181.8 213.2 201.5
million
Profit before tax EUR 150.1 186.0 193.0
million
Net profit excl. NRI EUR 164.1 175.3 168.4
million
Net profit EUR 136.0 155.9 159.9
million
EPS excl. NRI EUR 0.21 0.22 0.22
EPS EUR 0.17 0.20 0.20
CEPS excl. NRI EUR 0.39 0.39 0.38
ROCE excl. NRI and fair valuations % 10.4 11.4 10.5
Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights and valuations of biological
assets related to forest assets in equity accounted investments.
NRI = Non-recurring items. These are exceptional transactions that are not
related to normal business operations. The most common non-recurring items are
capital gains, additional write-downs, or reversals of write-downs, provisions
for planned restructuring and penalties. Non-recurring items are normally
specified individually if they exceed one cent per share.
Markets
Compared with Q2/2010
Product Market Demand Price
---------------------------------------------------------------------------
Consumer board Europe slightly stronger higher
Industrial packaging Europe slightly stronger significantly higher
Newsprint Europe slightly stronger significantly higher
Coated magazine paper Europe slightly stronger significantly higher
Uncoated magazine paper Europe slightly weaker significantly higher
Coated fine paper Europe significantly weaker slightly higher
Uncoated fine paper Europe weaker significantly higher
Wood products Europe slightly stronger slightly higher
Industry inventories were higher for fine paper, slightly higher for magazine
paper and wood products, and lower for newsprint.
Compared with Q1/2011
Product Market Demand Price
------------------------------------------------------------------------
Consumer board Europe stable stable
Industrial packaging Europe stable slightly higher
Newsprint Europe significantly stronger stable
Coated magazine paper Europe slightly stronger stable
Uncoated magazine paper Europe slightly stronger stable
Coated fine paper Europe significantly weaker stable
Uncoated fine paper Europe weaker stable
Wood products Europe significantly stronger slightly higher
Industry inventories were significantly higher for uncoated magazine paper,
higher for coated magazine paper and uncoated fine paper, slightly higher for
wood products, and lower for newsprint and coated fine paper.
Stora Enso Deliveries and Production
Q2/11 Q1/11 Q2/10 2010 Q1-Q2/ Q1-Q2/ Change Change Change
11 10 % % %
Q2/11- Q2/11- Q1-Q2/
Q2/10 Q1/11 11-Q1-
Q2/10
--------------------------------------------------------------------------------
Paper and 2 609 2 506 2 798 10 758 5 115 5 317 -6.8 4.1 -3.8
board
deliveries
(1 000
tonnes)
Paper and 2 630 2 618 2 786 10 812 5 248 5 461 -5.6 0.5 -3.9
board
production
(1 000
tonnes)
Wood 1 423 1 238 1 457 5 198 2 661 2 606 -2.3 14.9 2.1
products
deliveries
(1 000 m3)
Market pulp 247 313 278 1 009 560 522 -11.2 -21.1 7.3
deliveries
(1 000
tonnes)*
Corrugated 242 247 256 1 027 489 506 -5.5 -2.0 -3.4
packaging
deliveries
(million
m2)
--------------------------------------------------------------------
*Stora Enso's net market pulp position will be about 1 million tonnes for 2011.
Breakdown of Sales Change Q2/2010 to Q2/2011
Sales
-------------------------------------------
Q2/10, EUR million 2 692.2
-------------------------------------------
Price and mix, % 9
Currency, % -1
Volume, % -1
Other sales*, % 2
-------------------------------------------
Total before structural changes, % 9
Structural change**, % -4
Total, % 5
Q2/11, EUR million 2 817.1
===========================================
*Wood, energy, RCP, by-products etc.
**Asset closures, major investments, divestments and acquisitions
Key Figures
--------------------------------------------------------------------------------
-----
EUR Q2/11 Q1/11 Q2/10 Q1-Q2/1 Q1-Q2/1 2010 Change Change
Change
milli 1 0 % %
%
on Q2/11- Q2/11-
Q1-Q2/
Q2/10 Q1/11
11-Q1-
Q2/10
Sales 2 817.1 2 726.9 2 692.2 5 544.0 4 988.1 10 296.9 4.6 3.3
11.1
EBITDA 357.6 368.3 329.8 725.9 561.9 1 216.5 8.4 -2.9
29.2
excl.
NRI
and
fair
valua
tions
Operat 228.3 248.0 212.9 476.3 332.3 754.1 7.2 -7.9
43.3
ing
profi
t
excl.
NRI
and
fair
valua
tions
Operat 8.1 9.1 7.9 8.6 6.7 7.3 2.5 -11.0
28.4
ing
margi
n
excl.
NRI
and
fair
valua
tions,
%
Operat 184.7 237.2 215.6 421.9 339.0 1 026.8 -14.3 -22.1
24.5
ing
profi
t
(IFRS
)
Operat 6.6 8.7 8.0 7.6 6.8 10.0 -17.5 -24.1
11.8
ing
margi
n
(IFRS
), %
Profit 181.8 213.2 201.5 395.0 338.3 745.7 -9.8 -14.7
16.8
befor
e tax
excl.
NRI
Profit 150.1 186.0 193.0 336.1 310.9 925.9 -22.2 -19.3
8.1
befor
e tax
Net 164.1 175.3 168.4 339.4 289.4 627.0 -2.6 -6.4
17.3
profi
t for
the
perio
d
excl.
NRI
Net 136.0 155.9 159.9 291.9 262.0 769.3 -14.9 -12.8
11.4
profi
t for
the
perio
d
Capita 85.4 57.3 75.3 142.7 188.1 400.4 13.4 49.0
-24.1
l
expen
diture
Deprec 140.1 135.4 127.4 275.5 254.2 529.4 10.0 3.5
8.4
iation
and
impai
rment
charg
es
excl.
NRI
ROCE 10.4 11.4 10.5 11.0 8.3 9.2 -1.0 -8.8
32.5
excl.
NRI
and
fair
valua
tions,
%
ROCE 9.8 12.1 11.0 11.1 9.2 10.3 -10.9 -19.0
20.7
excl.
NRI,
%
Earnin 0.21 0.22 0.22 0.43 0.37 0.79 -4.5 -4.5
16.2
gs per
share
(EPS)
excl.
NRI,
EUR
EPS 0.17 0.20 0.20 0.37 0.33 0.97 -15.0 -15.0
12.1
(basi
c),
EUR
Cash 0.39 0.39 0.38 0.78 0.69 1.46 2.6 0.0
13.0
earni
ngs
per
share
(CEPS
)
excl.
NRI,
EUR
CEPS, 0.35 0.39 0.33 0.74 0.63 1.33 6.1 -10.3
17.5
EUR
Return 8.6 9.9 11.9 9.3 9.8 13.5 -27.7 -13.1
-5.1
on
equit
y
(ROE)
, %
Debt/e 0.41 0.38 0.49 0.41 0.49 0.39 -16.3 7.9
-16.3
quity
ratio
Equity 7.90 8.01 6.92 7.90 6.92 7.87 14.2 -1.4
14.2
per
share
, EUR
Equity 48.5 48.1 44.8 48.5 44.8 48.0 8.3 0.8
8.3
ratio
, %
Averag 27 019 26 323 28 040 26 623 27 670 27 383 -3.6 2.6
-3.8
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 0.0 0.0
0.0
ic
cumula 788.6 788.6 788.6 788.6 788.6 788.6 0.0 0.0
0.0
tive
cumula 788.6 788.6 788.6 788.6 788.6 788.6 0.0 0.0
0.0
tive,
dilut
ed
NRI = Non-recurring items. These are exceptional transactions that are not
related to normal business operations. The most common non-recurring items are
capital gains, additional write-downs or reversals of write-downs, provisions
for planned restructuring and penalties. Non-recurring items are normally
specified individually if they exceed one cent per share.
Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights, and valuations of biological
assets related to forest assets in equity accounted investments.
Reconciliation of Operating Profit
EUR Q2/11 Q1/11 Q2/10 2010 Q1-Q2/ Q1-Q2/ Change Change Change
million 11 10 % % %
Q2/11- Q2/11- Q1-Q2/
Q2/10 Q1/11 11-Q1-
Q2//10
--------------------------------------------------------------------------------
Profit 217.5 232.9 202.4 687.1 450.4 307.6 7.5 -6.6 46.4
from
operation
s, excl.
NRI and
fair
valuation
s
Equity 10.8 15.1 10.5 67.0 25.9 24.7 2.9 -28.5 4.9
accounted
investmen
ts,
operation
al,
excl. fair
valuation
s
---------------------------------------------------------------------
Operating 228.3 248.0 212.9 754.1 476.3 332.3 7.2 -7.9 43.3
Profit
excl. NRI
and
Fair
Valuation
s
Fair -11.9 16.4 11.2 92.5 4.5 34.1 -206.3 -172.6 -86.8
valuation
s
Operating 216.4 264.4 224.1 846.6 480.8 366.4 -3.4 -18.2 31.2
Profit,
excl. NRI
NRI -31.7 -27.2 -8.5 180.2 -58.9 -27.4 -272.9 -16.5 -115.0
---------------------------------------------------------------------
Operating 184.7 237.2 215.6 1 026.8 421.9 339.0 -14.3 -22.1 24.5
Profit
(IFRS)
--------------------------------------------------------------------------------
Q2/2011 Results (compared with Q2/2010)
Operating profit at EUR 228 million excluding non-recurring items and fair
valuations was EUR 15 million higher than a year ago. This represents an
operating margin of 8.1% (7.9%).
Price increases in local currencies and a favourable product mix increased
operating profit by EUR 239 million. Paper and board production was curtailed
by 6% (8%) and sawnwood production by 3% (5%) of capacity.
The costs of pulpwood, chemicals, RCP, pulp and sawlogs were higher than a year
ago, but productivity improvements and cost savings partly compensated for the
cost increases. The overall net impact of the increase in variable costs in
local currencies was a negative EUR 128 million.
Exchange rates had negative impacts on sales and on costs totalling EUR 48
million, after hedges.
Decreased volumes had a negative impact on operating profit of EUR 32 million
mainly due to the deteriorated pulp balance and maintenance.
The share of the operational results of equity accounted investments amounted
to EUR 11 (EUR 11) million, with the largest contributions from Tornator and
Bergvik Skog.
The Group recorded a net negative EUR 32 million of non-recurring items at
operating profit level in the second quarter of 2011 due to continued
restructuring and efficiency improvement plans as announced on 12 July 2011.
Net financial items were EUR -35 (EUR -23) million. Net interest expenses
increased from EUR 24 million to EUR 28 million. Net foreign exchange losses
amounted to EUR 1 (gain EUR 6) million and the net loss from other financial
items totalled EUR 6 (EUR 5) million.
Group capital employed was EUR 8 839 million on 30 June 2011, a net increase of
EUR 636 million mainly due to an increase of EUR 330 million in working capital
primarily to optimise wood costs and secure short-term wood availability, EUR
240 million of impairment reversal in the fourth quarter of 2010 and an
increase of EUR 180 million in the PVO valuation. The increase was partly
offset by EUR 220 million due to low capital expenditure compared with
depreciation.
January-June 2011 Results (compared with January-June 2010)
Sales increased by EUR 556 million year-on-year. Operating profit excluding
non-recurring items and fair valuations increased by EUR 144 million or 43%.
Significantly higher sales prices in local currencies and a favourable product
mix more than compensated for higher variable costs.
Q2/2011 Results (compared with Q1/2011)
Sales were up by 3% or EUR 90 million on the previous quarter. Operating profit
excluding non-recurring items and fair valuations was EUR 20 million lower than
in the previous quarter at EUR 228 million. The overall negative impact of
maintenance was EUR 37 million greater than in the previous quarter. Higher
sales prices and volumes were offset by higher variable costs. Fixed costs
excluding maintenance stoppages remained favourable.
Capital Structure
EUR million 30 June 31 Mar 31 Dec 30 June
11 11 10 10
--------------------------------------------------------------------------------
Operative fixed assets 6 289.1 6 394.2 6 445.2 6 068.4
Equity accounted investments 1 716.0 1 725.4 1 744.0 1 687.1
Operative working capital 1 653.0 1 530.3 1 399.3 1 323.2
Non-current interest-free items, net -450.9 -473.2 -493.9 -519.2
-----------------------------------------
Operating Capital Total 9 207.2 9 176.7 9 094.6 8 559.5
Net tax liabilities -368.2 -408.6 -429.9 -356.4
Capital Employed 8 839.0 8 768.1 8 664.7 8 203.1
=========================================
Equity attributable to Company 6 229.2 6 318.1 6 202.9 5 457.1
shareholders
Non-controlling interests 49.1 49.0 51.8 52.7
Net interest-bearing liabilities 2 560.7 2 401.0 2 410.0 2 698.0
Held for sale - - - -4.7
Financing Total 8 839.0 8 768.1 8 664.7 8 203.1
=========================================
Financing Q2/2011 (compared with Q1/2011)
Cash flow from operations remained healthy at EUR 207 (EUR 163) million despite
the increase in working capital mainly due to a decrease in accounts payable.
Cash flow after investing activities was EUR 122 (EUR 106) million.
Interest-bearing net liabilities of the Group increased by EUR 160 million to
EUR 2 561 million due to dividend payment.
Total unutilised committed credit facilities remained unchanged at EUR 700
million, and cash and cash equivalents net of overdrafts remained strong at EUR
996 million, which is EUR 112 million less than at the end of the previous
quarter. In addition, Stora Enso has access to various long-term sources of
funding up to EUR 600 million.
The debt/equity ratio at 30 June 2011 was 0.41 (0.38) due to dividend payment.
On 4 April 2011 Stora Enso announced that it had signed a loan facility
agreement with the International Finance Corporation (IFC) to extend the
maturity of USD 128 million in syndicated loans under its existing facility
with IFC. The extension prolongs the maturity by three years to June 2014.
Cash Flow
EUR Q2/11 Q1/11 Q2/10 2010 Q1-Q2/ Q1-Q2/ Change Change Change
million 11 10 % % %
Q2/11- Q2/11- Q1-Q2/
Q2/10 Q1/11 11
-Q1-Q2
/10
--------------------------------------------------------------------------------
Operatin 184.7 237.2 215.6 1 026.8 421.9 339.0 -14.3 -22.1 24.5
g profit
Deprecia 182.5 104.6 101.3 172.4 287.1 202.5 80.2 74.5 41.8
tion and
other
non-cas
h items
Change -160.0 -178.9 -12.4 -207.1 -338.9 -117.8 n/m 10.6 -187.7
in
working
capital
-----------------------------------------------------------------------
Cash 207.2 162.9 304.5 992.1 370.1 423.7 -32.0 27.2 -12.7
Flow
from
Operati
ons
Capital -85.4 -57.3 -75.3 -400.4 -142.7 -188.1 -13.4 -49.0 24.1
expendi
ture
-----------------------------------------------------------------------
Cash 121.8 105.6 229.2 591.7 227.4 235.6 -46.9 15.3 -3.5
Flow
after
Investi
ng
Activit
ies
-----------------------------------------------------------------------
Capital Expenditure for January-June 2011
Capital expenditure for the first half of 2011 totalled EUR 143 million, which
is 52% of depreciation in the same period. The capital expenditure forecast for
the Group for the full year 2011 has changed from the earlier estimate of EUR
550 million to approximately EUR 500 million with no impact on strategic
project timings. Annual depreciation in 2011 will be about EUR 570 million. The
equity injection into Montes del Plata, a joint venture in Uruguay, will be
approximately EUR 120 million. Close to 80% of capital expenditure including
equity injections is allocated for the strategic high-return growth areas in
2011.
The main projects during the first half of 2011 were power plants.
Near-term Outlook
Demand (compared with Q3/2010)
Demand is forecast to be stable for consumer board, industrial packaging,
newsprint and coated magazine paper, and weaker for uncoated magazine paper and
fine paper. Demand for wood products is predicted to be slightly weaker, mainly
due to increased customer inventories. As before, production will be curtailed
if necessary in order to optimise earnings and working capital.
Prices (compared with Q2/2011)
Consumer board prices are forecast to be stable, however the product and
geographical mix is expected to decrease cartonboard average prices. Industrial
packaging prices are forecast to be stable. Newsprint prices in Europe are
anticipated to be slightly higher, and the negotiations regarding European-wide
price increases are currently ongoing. Magazine paper prices in Europe are
predicted to be slightly higher and fine paper prices stable with an
unfavourable geographical and product mix. The fine paper price increases
announced will not have a material impact during the third quarter as they are
expected to take effect only in September. Prices for wood products are
forecast to be stable.
In the third quarter of 2011, as in the second quarter, foreign exchange rates
are expected to have a negative impact on the results. The Group expects its
cost inflation excluding internal actions to remain unchanged at approximately
4% for the full year 2011. Actions continue to mitigate cost inflation.
There is increasing uncertainty in the European economy. Operating profit
excluding NRI and fair valuations in the third quarter of 2011 is forecast to
be in approximately the same range as the second quarter of 2011.
Segments Q2/11 compared with Q2/10
Consumer Board
Consumer Board manufactures all major types of consumer board, such as liquid
packaging board, food service board, graphical board and cartonboard for
packaging food, cigarettes, pharmaceuticals, cosmetics and luxury products.
EUR Q2/11 Q1/11 Q2/10 2010 Q1-Q2/1 Q1-Q2/1 Change Change Change
millio 1 0 % % %
n Q2/11- Q2/11- Q1-Q2/1
Q2/10 Q1/11 1-Q1-Q2
/10
--------------------------------------------------------------------------------
Sales 662.2 647.0 586.3 2 314.7 1 309.2 1 109.4 12.9 2.3 18.0
EBITDA* 122.8 134.1 108.9 410.4 256.9 210.5 12.8 -8.4 22.0
Operati 84.5 95.8 76.9 277.1 180.3 147.4 9.9 -11.8 22.3
ng
profit
*
% of 12.8 14.8 13.1 12.0 13.8 13.3 -2.3 -13.5 3.8
sales
ROOC, 22.6 25.7 24.7 21.1 24.3 24.5 -8.5 -12.1 -0.8
%**
Paper 627 594 590 2 326 1 221 1 141 6.3 5.6 7.0
and
board
delive
ries,
1 000
t***
Paper 603 645 591 2 367 1 248 1 193 2.0 -6.5 4.6
and
board
produc
tion,
1 000
t***
Market 98 120 108 388 218 197 -9.3 -18.3 10.7
Pulp
delive
ries, 1
000 t
------------------------------------------------------------------------
* Excluding non-recurring items and fair valuations ** ROOC = 100% x Operating
profit/Operating capital
*** Excluding pulp
· Stora Enso is taking a significant step forward in renewable
materials innovation by building a pre-commercial plant at Imatra in Finland to
produce microfibrillated cellulose. The new type of renewable material will be
used in existing and new unique fibre-based paper and board products, barrier
materials, and other potential future applications.
-- Stora Enso announced the investment of approximately EUR 90 million in
Skoghall Mill in Sweden.
-- Stora Enso and Alucha Recycling Technologies have received the European
Union's LIFE environment award for developing and investing in innovative
recycling technology in Stora Enso's Barcelona Mill.
-- There will be an annual maintenance stoppage at Imatra Mills in Finland
during the third quarter of 2011.
Consumer board sales were EUR 662 million, up 13% on the second quarter of
2010. Operating profit was EUR 85 million, up EUR 8 million on the second
quarter of 2010. Higher sales prices and somewhat higher volumes compensated
for higher chemical and fibre costs. The maintenance stoppage at Enocell Pulp
Mill reduced pulp deliveries in the second quarter of 2011.
Markets
Product Market Demand Q2/11 Demand Q2/11 Price Q2/11 Price Q2/11
compared with compared with compared with compared with
Q2/10 Q1/11 Q2/10 Q1/11
--------------------------------------------------------------------------------
Consume Europe slightly stable higher stable
r board stronger
--------------------------------------------------------------------------------
Industrial Packaging
Industrial Packaging manufactures corrugated packaging and containerboard,
cores and coreboard, and also paper sacks, and sack and kraft paper.
EUR Q2/11 Q1/11 Q2/10 2010 Q1-Q2/ Q1-Q2/ Change Change Change %
million 11 10 % % Q1-Q2/11
Q2/11- Q2/11- -Q1-Q2/1
Q2/10 Q1/11 0
--------------------------------------------------------------------------------
Sales 240.0 243.4 259.2 949.5 483.4 482.4 -7.4 -1.4 0.2
EBITDA* 33.3 32.2 29.5 114.0 65.5 49.5 12.9 3.4 32.3
Operating 19.5 19.4 17.1 65.5 38.9 24.8 14.0 0.5 56.9
profit*
% of sales 8.1 8.0 6.6 6.9 8.0 5.1 22.7 1.3 56.9
ROOC, %** 11.7 12.0 10.9 11.0 11.9 8.3 7.3 -2.5 43.4
Paper and 194 205 247 864 399 473 -21.5 -5.4 -15.6
board
deliverie
s, 1 000 t
Paper and 195 206 239 871 401 480 -18.4 -5.3 -16.5
board
productio
n, 1 000 t
Corrugated 242 247 256 1 027 489 506 -5.5 -2.0 -3.4
packaging
deliverie
s, million
m2
Corrugated 242 249 258 1 033 491 508 -6.2 -2.8 -3.3
packaging
productio
n, million
m2
---------------------------------------------------------------------
* Excluding non-recurring items and fair valuations ** ROOC = 100% x Operating
profit/Operating capital
-- The new containerboard machine for the Ostro
łę
ka project in Poland has been ordered.
-- The Inpac International acquisition is expected to be completed during the
third quarter of 2011.
Industrial packaging sales were EUR 240 million, down 7% on the second quarter
of 2010. Operating profit was EUR 20 million, up EUR 2 million on the second
quarter of 2010. Increased sales prices more than offset higher corrugated raw
material costs. The laminating paper business was divested in July 2010.
Markets
Product Market Demand Q2/11 Demand Q2/11 Price Q2/11 Price Q2/11
compared with compared with compared compared with
Q2/10 Q1/11 with Q2/10 Q1/11
--------------------------------------------------------------------------------
Industria Europe slightly stable significantly slightly
l stronger higher higher
packagin
g
--------------------------------------------------------------------------------
Newsprint and Book Paper
Newsprint and Book Paper manufactures a wide range of standard and improved
newsprint, and book and directory paper grades.
EUR Q2/11 Q1/11 Q2/10 2010 Q1-Q2/ Q1-Q2/ Change Change Change
million 11 10 % % %
Q2/11-Q Q2/11- Q1-Q2/1
2/10 Q1/11 1-Q1-Q2
/10
--------------------------------------------------------------------------------
Sales 334.6 314.5 325.1 1 261.6 649.1 612.5 2.9 6.4 6.0
EBITDA* 50.4 45.4 16.1 80.6 95.8 36.4 213.0 11.0 163.2
Operatin 27.5 26.0 -6.6 -10.8 53.5 -8.2 n/m 5.8 n/m
g
profit/
loss*
% of 8.2 8.3 -2.0 -0.9 8.2 1.3 n/m -1.2 n/m
sales
ROOC, 11.6 10.9 -2.5 -1.1 11.4 -1.6 n/m 6.4 n/m
%**
Paper 585 554 676 2 576 1 139 1 269 -13.5 5.6 -10.2
deliver
ies, 1
000 t
Paper 581 558 648 2 554 1 139 1 282 -10.3 4.1 -11.2
product
ion, 1
000 t
-----------------------------------------------------------------------
* Excluding non-recurring items and fair valuations ** ROOC = 100% x Operating
profit/Operating capital
-- The paper quality improvement investment at Sachsen Mill in Germany is
proceeding as planned and scheduled to be completed by the end of the
second quarter of 2012.
-- There will be a maintenance stoppage at Hylte Mill in Sweden during the
third quarter of 2011.
-- Industry inventories were lower than in the second quarter of 2010 and the
previous quarter.
Newsprint and book paper sales were EUR 335 million, up 3% on the second
quarter of 2010. Operating profit was EUR 28 million, an improvement of EUR 34
million on a year ago as higher sales prices more than compensated for higher
variable costs. Volumes were slightly lower than a year earlier as the
permanent shutdown of the newsprint machines at Varkaus Mill in Finland at the
end of the third quarter of 2010 and the newsprint machine at Maxau Mill in
Germany at the end of November 2010 reduced production volumes.
Markets
Produc Market Demand Q2/11 Demand Q2/11 Price Q2/11 Price Q2/11
t compared with compared with compared with compared with
Q2/10 Q1/11 Q2/10 Q1/11
--------------------------------------------------------------------------------
Newspr Europe slightly significantly significantly stable
int stronger stronger higher
Newspr Overse weaker slightly significantly stable
int as stronger higher
--------------------------------------------------------------------------------
Magazine Paper
Magazine Paper manufactures uncoated magazine paper mainly for periodicals and
advertising, and coated matt, silk and glossy magazine paper for specialist and
general interest magazines, supplements, home shopping catalogues and magazine
covers.
EUR Q2/11 Q1/11 Q2/10 2010 Q1-Q2/ Q1-Q2/ Change Change Change
million 11 10 % % %
Q2/11- Q2/11-Q Q1-Q2/1
Q2/10 1/11 1-Q1-Q2
/10
--------------------------------------------------------------------------------
Sales 517.2 482.0 530.2 2 054.2 999.2 965.7 -2.5 7.3 3.5
EBITDA* 58.7 54.3 46.0 191.9 113.0 73.3 27.6 8.1 54.2
Operatin 33.9 28.2 22.0 90.9 62.1 25.9 54.1 20.2 139.8
g
profit*
% of 6.6 5.9 4.1 4.4 6.2 2.7 61.0 11.9 129.6
sales
ROOC, 10.1 8.4 7.1 7.1 9.2 4.1 42.3 20.2 124.4
%**
Paper 577 503 598 2 396 1 080 1 124 -3.5 14.7 -3.9
deliver
ies, 1
000
t***
Paper 601 558 614 2 398 1 159 1 164 -2.1 7.7 -0.4
product
ion, 1
000
t***
Market 128 151 145 526 279 272 -11.7 -15.2 2.6
Pulp
deliver
ies, 1
000 t
-----------------------------------------------------------------------
* Excluding non-recurring items and fair valuations ** ROOC = 100% x Operating
profit/Operating capital
*** Excluding pulp
-- Industry inventories were slightly higher than a year ago, and higher for
coated magazine paper and significantly higher for uncoated magazine paper
than in the previous quarter.
Magazine Paper segment's sales were EUR 517 million, down 3% on the second
quarter of 2010 mainly due to lower pulp volumes. The annual maintenance
stoppage at Skutskär Pulp Mill in Sweden was completed as planned. Operating
profit was EUR 34 million, up EUR 12 million on a year ago as higher prices
more than compensated for higher variable costs.
Markets
Product Market Demand Q2/11 Demand Q2/11 Price Q2/11 Price Q2/11
compared with compared with compared compared
Q2/10 Q1/11 with Q2/10 with Q1/11
--------------------------------------------------------------------------------
Coated Europe slightly slightly significantly stable
magazine stronger stronger higher
paper
Coated Latin significantly stable significantly stable
magazine Ameri stronger higher
paper ca
Uncoated Europe slightly slightly significantly stable
magazine weaker stronger higher
paper
Uncoated China significantly stable slightly slightly
magazine stronger higher higher
paper
--------------------------------------------------------------------------------
Fine Paper
Fine Paper manufactures high quality graphic and office paper for printers and
publishers, merchants, envelope converters, office equipment manufacturers and
office suppliers.
EUR Q2/11 Q1/11 Q2/10 2010 Q1-Q2/1 Q1-Q2/1 Change Change Change
millio 1 0 % % %
n Q2/11- Q2/11- Q1-Q2/1
Q2/10 Q1/11 1-Q1-Q2
/10
--------------------------------------------------------------------------------
Sales 532.2 563.3 554.4 2 125.7 1 095.5 1 028.9 -4.0 -5.5 6.5
EBITDA* 71.5 102.4 101.0 344.5 173.9 163.1 -29.2 -30.2 6.6
Operati 48.7 79.9 79.4 259.4 128.6 120.9 -38.7 -39.0 6.4
ng
profit
*
% of 9.2 14.2 14.3 12.2 11.7 11.8 -35.7 -35.2 -0.8
sales
ROOC, 20.2 33.3 33.5 27.4 26.7 25.6 -39.7 -39.3 4.3
%**
Paper 626 650 687 2 596 1 276 1 310 -8.9 -3.7 -2.6
delive
ries, 1
000 t
***
Paper 650 651 694 2 622 1 301 1 342 -6.3 -0.2 -3.1
produc
tion, 1
000 t
***
Market 21 42 25 95 63 53 -16.0 -50.0 18.9
Pulp
delive
ries, 1
000 t
------------------------------------------------------------------------
* Excluding non-recurring items and fair valuations ** ROOC = 100% x Operating
profit/Operating capital
*** Excluding pulp
-- Stora Enso announced that the Fine Paper Business Area planned to increase
competitiveness by restructuring its operations. Co-determination
negotiations are ongoing.
-- Industry inventories for coated fine paper were higher than a year ago but
lower than in the previous quarter.
-- Industry inventories for uncoated fine paper were significantly higher than
a year ago and also higher than in the previous quarter.
-- During the third quarter of 2011 there will be annual maintenance stoppages
at Varkaus and Oulu mills in Finland and at Suzhou Mill in China.
Fine paper sales were EUR 532 million, down 4% on the second quarter of 2010.
Operating profit was EUR 49 million, down EUR 31 million on the previous year
as higher sales prices could not compensate for higher variable costs, lower
volumes and major maintenance costs. The annual maintenance stoppages at
Nymölla Mill in Sweden and Uetersen Mill in Germany were completed as planned.
Markets
Product Market Demand Q2/11 Demand Q2/11 Price Q2/11 Price Q2/11
compared with compared with compared compared with
Q2/10 Q1/11 with Q2/10 Q1/11
--------------------------------------------------------------------------------
Coated Europe significantly significantly slightly stable
fine weaker weaker higher
paper
Coated China stronger stronger slightly stable
fine lower
paper
Uncoated Europe weaker weaker significantly stable
fine higher
paper
--------------------------------------------------------------------------------
Wood Products
Wood Products manufactures wood-based products for construction and interior
decoration, and solid biofuels for the energy sector. Its recyclable products
are made from high quality renewable European pine or spruce.
EUR Q2/11 Q1/11 Q2/10 2010 Q1-Q2/ Q1-Q2/ Change % Change Change
million 11 10 Q2/11-Q2 % %
/10 Q2/11- Q1-Q2/
Q1/11 11-
Q1-Q2/
10
--------------------------------------------------------------------------------
Sales 465.4 409.7 422.7 1 588.7 875.1 754.3 10.1 13.6 16.0
EBITDA* 44.7 22.6 39.5 110.7 67.3 54.4 13.2 97.8 23.7
Operatin 35.2 11.8 30.1 70.9 47.0 35.5 16.9 198.3 32.4
g
profit*
% of 7.6 2.9 7.1 4.5 5.4 4.7 7.0 162.1 14.9
sales
ROOC, 23.9 8.0 20.5 12.3 15.8 12.3 16.6 198.8 28.5
%**
Deliveri 1 379 1 199 1 417 5 057 2 578 2 535 -2.7 15.0 1.7
es, 1
000 m3
-----------------------------------------------------------------------
* Excluding non-recurring items and fair valuations ** ROOC = 100% x Operating
profit/Operating capital
-- Following the co-determination negotiations at Kopparfors Sawmill in
Sweden, Stora Enso announced in June 2011 that Kopparfors Sawmill and the
pellet mill would be permanently closed down by the end of 2011.
-- The pre-manufactured construction element investment at Ybbs Sawmill in
Austria and Imavere pellet plant investment in Estonia are proceeding
according to plan. These projects are
expected to be completed in the third quarter of 2012 and fourth quarter of
2011, respectively.
-- Following the weakening of market conditions, industry inventories were
slightly higher than in the second quarter of 2010 and the previous
quarter.
-- Annual maintenance stoppages in several sawmills in the Nordic countries
are ongoing in the third quarter of 2011.
-- On 21 July 2011 Stora Enso announced
a combined heat and power (CHP) plant investment at Zd
í
rec Mill in the Czech Republic.
Wood product sales were EUR 465 million, up 10% on the second quarter of 2010.
Operating profit was EUR 35 million, up EUR 5 million on a year earlier. Higher
sales prices were partly offset by higher wood costs.
Markets
Produc Market Demand Q2/11 Demand Q2/11 Price Q2/11 Price Q2/11
t compared compared compared compared
with Q2/10 with Q1/11 with Q2/10 with Q1/11
--------------------------------------------------------------------------------
Wood Europe slightly significantly slightly slightly
produ stronger stronger higher higher
cts
Wood Asia, Middle significantly stronger stable slightly
produ East and weaker lower
cts North Africa
--------------------------------------------------------------------------------
Short-term Risks and Uncertainties
The main short-term risks and uncertainties are related to increased economic
uncertainty.
Energy sensitivity analysis for 2011: the direct effect on 2011 operating
profit of a 10% increase in electricity, oil and other fossil fuel market
prices would be about negative EUR 26 million annual impact, after the effect
of hedges.
Wood sensitivity analysis for 2011: the direct effect on 2011 operating profit
of a 10% increase in wood prices would be about negative EUR 232 million annual
impact.
Pulp sensitivity analysis for 2011: the direct effect on 2011 operating profit
of a 10% increase in yearly average pulp prices would be about positive EUR 54
million annual impact.
A decrease of energy, wood or pulp prices would have the opposite impact.
Foreign exchange rates sensitivity analysis for the next twelve months: the
direct effect on operating profit of a 10% strengthening in the value of the US
dollar, Swedish krona and British pound against the euro would be positive EUR
107 million, negative EUR 82 million and positive EUR 54 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 Proceeding in Finland
On 3 December 2009 the Finnish Market Court fined Stora Enso for competition
law infringements in the market for roundwood in Finland from 1997 to 2004.
Stora Enso did not appeal against the ruling.
On 31 March 2011 Metsähallitus of Finland initiated legal proceedings against
Stora Enso, UPM and Metsäliitto claiming compensation for damages allegedly
suffered due to the competition law infringements amounting altogether to EUR
283 million.
Stora Enso denies that Metsähallitus suffered any damages whatsoever and will
forcefully defend itself. No provisions have been made in Stora Enso's accounts
for this lawsuit.
Share Capital
During the quarter 762 A shares were converted into R shares. The shares were
recorded in the Finnish trade register on 16 May 2011.
On 30 June 2011 Stora Enso had 177 149 022 A shares and 612 389 477 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 was lending out certain Stora Enso shares and therefore the number
of shares in Stora Enso Oyj held by Norges Bank (The Central Bank of Norway)
was temporarily less than 5% of the paid-up share capital and the number of
shares in Stora Enso Oyj in April and May 2011.
Decisions of the Annual General Meeting on 20 April 2011
The AGM approved a proposal by the Board of Directors that the Company
distribute a dividend of EUR 0.25 per share for the year 2010.
The AGM approved a proposal that the Board of Directors shall have seven
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. Carla Grasso was not seeking re-election.
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.
This report is unaudited.
Helsinki, 21 July 2011
Stora Enso Oyj
Board of Directors
Financials
Basis of Preparation
Except as described below, this unaudited interim financial report has been
prepared in accordance with the accounting policies set out in International
Accounting Standard 34 on Interim Financial Reporting and in the Group's Annual
Report for 2010.
The following amendments to standards and interpretations were adopted from 1
January 2011 but had no impact on the Group financial statements:
-- IAS 24 Related Party Disclosure - Revised definition of related parties
-- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
requires the extinguishment of a financial liability by the issue of equity
instruments to be measured at fair value with the difference between the
fair value of the instrument issued and the carrying value of the liability
extinguished being recognised in profit or loss.
-- Amendments to IFRS
- Through the annual improvements process, the minor and non-urgent
changes are collected into one ensemble and implemented at the beginning of
the year. In addition, the IASB has published a few other small amendments
which have also been implemented at the beginning of the year. These
changes and amendments effective from 1 January 2011 relate to nine
standards and interpretations. They did not have a significant effect on
the Group financial statements.
Condensed Consolidated Income Statement
EUR Q2/11 Q1/11 Q2/10 Q1-Q2/11 Q1-Q2/10 2010 Change
Change Change
milli %
% %
on Q2/11-
Q2/11- Q1-Q2/
Q2/10
Q1/11 11-Q1-
Q2/10
--------------------------------------------------------------------------------
----------
Sales 2 817.1 2 726.9 2 692.2 5 544.0 4 988.1 10 296.9 4.6
3.3 11.1
Other 57.1 57.0 31.9 114.1 66.2 159.1 79.0
0.2 72.4
opera
ting
incom
e
Materi -1 757.2 -1 668.2 -1 641.3 -3 425.4 -3 069.4 -6 391.4 -7.1
-5.3 -11.6
als
and
servi
ces
Freigh -262.5 -257.1 -263.9 -519.6 -489.1 -1 010.1 0.5
-2.1 -6.2
t and
sales
commi
ssions
Person -370.5 -343.2 -361.8 -713.7 -690.8 -1 375.3 -2.4
-8.0 -3.3
nel
expen
ses
Other -165.6 -143.3 -148.2 -308.9 -260.2 -482.2 -11.7
-15.6 -18.7
opera
ting
expen
ses
Share 6.4 20.0 14.9 26.4 34.0 112.5 -57.0
-68.0 -22.4
of
resul
ts of
equit
y
accou
nted
inves
tments
Deprec -140.1 -154.9 -108.2 -295.0 -239.8 -282.7 -29.5
9.6 -23.0
iation
and
impai
rment
--------------------------------------------------------------------------------
---
Operat 184.7 237.2 215.6 421.9 339.0 1 026.8 -14.3
-22.1 24.5
ing
Profi
t
Net -34.6 -51.2 -22.6 -85.8 -28.1 -100.9 -53.1
32.4 -205.3
finan
cial
items
--------------------------------------------------------------------------------
---
Profit 150.1 186.0 193.0 336.1 310.9 925.9 -22.2
-19.3 8.1
befor
e Tax
Income -14.1 -30.1 -33.1 -44.2 -48.9 -156.6 57.4
53.2 9.6
tax
--------------------------------------------------------------------------------
---
Net 136.0 155.9 159.9 291.9 262.0 769.3 -14.9
-12.8 11.4
Profi
t for
the
Perio
d
Attrib
utable
to:
Owners 135.7 155.6 159.1 291.3 260.6 766.0 -14.7
-12.8 11.8
of
the
Paren
t
Non-co 0.3 0.3 0.8 0.6 1.4 3.3 -62.5
0.0 -57.1
ntroll
ing
inter
ests
136.0 155.9 159.9 291.9 262.0 769.3 -14.9
-12.8 11.4
================================================================================
===
Earnin
gs per
Share
Basic 0.17 0.20 0.20 0.37 0.33 0.97 -15.0
-15.0 12.1
earni
ngs
per
share
, EUR
Dilute 0.17 0.20 0.20 0.37 0.33 0.97 -15.0
-15.0 12.1
d
earni
ngs
per
share
, EUR
Consolidated Statement of Comprehensive Income
EUR million Q2/11 Q1/11 Q2/10 Q1-Q2/ Q1-Q2/ 2010
11 10
--------------------------------------------------------------------------------
Net profit for the period 136.0 155.9 159.9 291.9 262.0 769.3
Other Comprehensive Income
Actuarial losses on defined - - - - - -32.5
benefit pension plans
Available for sale financial 29.5 8.1 -28.5 37.6 -45.1 95.9
assets
Currency and commodity hedges -60.1 -3.1 -4.8 -63.2 19.1 107.7
Share of other comprehensive - 3.0 -1.1 3.0 -1.4 9.2
income of equity accounted
investments
Currency translation movements on -21.0 -52.2 112.8 -73.2 257.1 305.6
equity net investments (CTA)
Currency translation movements on 0.3 -1.9 5.0 -1.6 6.1 5.1
non-controlling interests
Net investment hedges 11.2 3.5 6.9 14.7 -1.2 -9.8
Income tax relating to components 13.0 0.3 - 13.3 -4.7 -13.4
of other comprehensive income
---------------------------------------------
Other Comprehensive Income, Net of -27.1 -42.3 90.3 -69.4 229.9 467.8
Tax
---------------------------------------------
Total Comprehensive Income 108.9 113.6 250.2 222.5 491.9 1 237.1
---------------------------------------------
Total Comprehensive Income
Attributable to:
Owners of the Parent 108.3 115.2 244.4 223.5 484.4 1 228.7
Non-controlling interests 0.6 -1.6 5.8 -1.0 7.5 8.4
108.9 113.6 250.2 222.5 491.9 1 237.1
=============================================
Condensed Consolidated Statement of Cash Flows
EUR million Q1-Q2/11 Q1-Q2/10
----------------------------------------------------------------------------
Cash Flow from Operating Activities
Operating profit 421.9 339.0
Hedging result from OCI -63.1 16.9
Adjustments for non-cash items 287.1 202.5
Change in net working capital -334.0 -181.3
-------------------
Cash Flow Generated by Operations 311.9 377.1
Net financials items paid/received -74.7 48.5
Income taxes paid, net -73.4 -21.0
-------------------
Net Cash Provided by Operating Activities 163.8 404.6
Cash Flow from Investing Activities
Acquisitions of subsidiaries 0.1 -5.6
Acquisitions of equity accounted investments -24.9 -13.2
Proceeds from sale of fixed assets and shares 17.3 13.2
Capital expenditure -142.7 -188.1
Payments/proceeds of the non-current receivables, net -19.3 5.2
-------------------
Net Cash Used in Investing Activities -169.5 -188.5
Cash Flow from Financing Activities
Proceeds from issue of new long-term debt 18.7 350.5
Long-term debt, payments -52.4 -708.2
Change in short-term borrowings 132.2 270.2
Dividends and capital repayments paid -197.2 -157.7
Dividend to non-controlling interests -1.7 -1.3
-------------------
Net Cash Used in Financing Activities -100.4 -246.5
Net Decrease in Cash and Cash Equivalents -106.1 -30.4
Cash and bank in disposed companies - -0.1
Translation adjustment -1.3 9.0
Net cash and cash equivalents at the beginning of period 1 103.1 877.0
-------------------
Net Cash and Cash Equivalents at Period End 995.7 855.5
===================
Cash and Cash Equivalents at Period End 1 025.3 857.5
Bank Overdrafts at Period End -29.6 -2.0
-------------------
Net Cash and Cash Equivalents at Period End 995.7 855.5
===================
Acquisitions of Subsidiary Companies
Non-controlling interests - 5.6
-------------------
Fair Value of Net Assets - 5.6
-------------------
Goodwill -0.1 -
-------------------
Total Purchase Consideration -0.1 5.6
-------------------
Disposal of Subsidiary Companies
Cash and cash equivalents - 0.1
Fixed assets - 0.5
Interest-bearing liabilities - -0.1
Tax liabilities - -0.1
-------------------
Net assets in Divested Companies - 0.4
Income Statement capital gain/loss - -
-------------------
Total Disposal Consideration Received in Cash and Kind - 0.4
-------------------
Property, Plant and Equipment, Intangible Assets and Goodwill
------------------------------------------------------------------
EUR million Q1-Q2/11 2010 Q1-Q2/10
Carrying value at 1 January 5 565.8 5 157.7 5 157.7
Acquisition of subsidiary companies -0.1 7.8 -
Capital expenditure 134.4 377.0 177.4
Additions in biological assets 8.3 23.4 10.7
Change in emission rights 24.6 15.7 35.3
Disposals -11.1 -25.1 -19.9
Disposals of subsidiary companies - -0.8 -0.5
Depreciation and impairment -295.0 -282.7 -239.8
Translation difference and other -56.3 292.8 210.2
Statement of Financial Position Total 5 370.6 5 565.8 5 331.1
============================
Borrowings
------------------------------------------------------------------------
EUR million 30 June 11 31 Dec 10 30 June 10
Non-current borrowings 3 282.5 3 259.2 3 042.6
Current borrowings 803.1 752.0 1 003.8 ----------------------------------
4 085.6 4 011.2 4 046.4
==================================
----------------------------------
Q1-Q2/11 2010 Q1-Q2/10
----------------------------------
Carrying value at 1 January 4 011.2 3 936.7 3 936.7
Debt acquired with new subsidiaries - 0.8 -
Debt disposed with sold subsidiaries - -5.6 -0.1
Proceeds/Payments of borrowings (net) 113.5 -111.2 -39.3
Translation difference and other -39.1 190.5 149.1
----------------------------------
Statement of Financial Position Total 4 085.6 4 011.2 4 046.4
==================================
Condensed Consolidated Statement of Financial Position
EUR million 30 June 31 Dec 30 June
11 10 10
--------------------------------------------------------------------------------
Assets
Fixed Assets and Other Non-current Investments
Fixed assets O 5 116.8 5 334.3 5 081.5
Biological assets O 188.3 190.5 189.0
Emission rights O 65.5 41.0 60.6
Equity accounted investments O 1 716.0 1 744.0 1 687.1
Available-for-sale: Interest-bearing I 80.3 78.7 72.9
Available-for-sale: Operative O 918.5 879.4 737.3
Non-current loan receivables I 145.1 126.5 160.5
Deferred tax assets T 96.9 111.0 150.1
Other non-current assets O 47.6 37.2 38.8
-----------------------------
8 375.0 8 542.6 8 177.8
Current Assets
Inventories O 1 609.8 1 474.6 1 363.3
Tax receivables T 6.9 1.7 9.2
Operative receivables O 1 677.8 1 621.8 1 597.4
Interest-bearing receivables I 274.2 285.1 257.5
Cash and cash equivalents I 1 025.3 1 110.9 857.5
-----------------------------
4 594.0 4 494.1 4 084.9
Asset of disposal group classified as held for - - 33.3
sale
-----------------------------
4 594.0 4 494.1 4 118.2
Total Assets 12 969.0 13 036.7 12 296.0
=============================
Equity and Liabilities
Owners of the Parent 6 229.2 6 202.9 5 457.1
Non-controlling Interests 49.1 51.8 52.7
-----------------------------
Total Equity 6 278.3 6 254.7 5 509.8
=============================
Non-current Liabilities
Post-employment benefit provisions O 316.3 320.5 329.5
Other provisions O 145.3 148.6 206.6
Deferred tax liabilities T 380.3 422.6 376.7
Non-current debt I 3 282.5 3 259.2 3 042.6
Other non-current operative liabilities O 36.9 62.0 21.9
-----------------------------
4 161.3 4 212.9 3 977.3
Current Liabilities
Current portion of non-current debt I 192.2 303.5 588.8
Interest-bearing liabilities I 610.9 448.5 415.0
Operative liabilities O 1 634.6 1 697.1 1 637.5
Tax liabilities T 91.7 120.0 139.0
-----------------------------
2 529.4 2 569.1 2 780.3
Liability directly associated with the assets - - 28.6
classified as held for sale
-----------------------------
2 529.4 2 569.1 2 808.9
-----------------------------
Total Liabilities 6 690.7 6 782.0 6 786.2
=============================
Total Equity and Liabilities 12 969.0 13 036.7 12 296.0
=============================
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 Invested Treasu Step Availa Curren Curren
CTA Retaine Attribu Non-co Total
milli Capital Premiu Non-Rest ry Acquis ble cy and cy and
and d table ntroll
on m and ricted Shares ition for Commod Commod
Net Earning to ing
Reserv Equity Revalu Sale ity ity
Invest s Owners Intere
e fund Fund ation Financ Hedges Hedges
ment of the sts
Surplu ial of
Hedges Parent
s Assets Equity
Accoun
ted
Invest
ments
--------------------------------------------------------------------------------
------------------------------------
Balanc 1 342.2 76.6 2 042.1 -10.2 3.9 684.2 -0.8 -19.0
-194.6 1 199.9 5 124.3 58.2 5 182.5
e at
31
Decem
ber
2009
--------------------------------------------------------------------------------
-----------------------------
Profit - - - - - - - -
- 260.6 260.6 1.4 262.0
for
the
perio
d
OCI - - - - - -45.1 19.1 -1.4
255.9 - 228.5 6.1 234.6
befor
e tax
Income - - - - - 0.6 -5.6 -
0.3 - -4.7 - -4.7
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
-----------------------------
Total - - - - - -44.5 13.5 -1.4
256.2 260.6 484.4 7.5 491.9
Compr
ehensi
ve
Incom
e
Distri - - - - - - - -
- - - -1.3 -1.3
bution
relat
ing to
2009
Acquis - - - - - - - -
- - - -5.6 -5.6
itions
and
dispo
sals
Buy-ou - - - - - - - -
- 6.1 6.1 -6.1 -
t of
non-c
ontrol
ling
inter
est
Return - - -157.7 - - - - -
- - -157.7 - -157.7
of
capit
al
(EUR
0.20
per
share
)
Transf - - -1 251.3 - - - - -
- 1 251.3 - - -
er to
retai
ned
earni
ngs
--------------------------------------------------------------------------------
-----------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 639.7 12.7 -20.4
61.6 2 717.9 5 457.1 52.7 5 509.8
e at
30
June
2010
Profit - - - - - - - -
- 505.4 505.4 1.9 507.3
for
the
perio
d
OCI - - - - - 141.0 88.6 10.6
39.9 -32.5 247.6 -1.0 246.6
befor
e tax
Income - - - - - -0.7 -23.4 -
2.2 13.2 -8.7 - -8.7
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
-----------------------------
Total - - - - - 140.3 65.2 10.6
42.1 486.1 744.3 0.9 745.2
Compr
ehensi
ve
Incom
e
Distri - - - - - - - -
- - - 0.1 0.1
bution
relat
ing to
2009
Acquis - - - - - - - -
- - - -0.4 -0.4
itions
and
dispo
sals
Buy-ou - - - - - - - -
- 1.5 1.5 -1.5 -
t of
non-c
ontrol
ling
inter
est
--------------------------------------------------------------------------------
-----------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 780.0 77.9 -9.8
103.7 3 205.5 6 202.9 51.8 6 254.7
e at
31
Decem
ber
2010
--------------------------------------------------------------------------------
-----------------------------
Profit - - - - - - - -
- 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 - -197.2
nd
(EUR
0.25
per
share
)
Distri - - - - - - - -
- - - -1.7 -1.7
bution
relat
ing to
2010
--------------------------------------------------------------------------------
-----------------------------
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
--------------------------------------------------------------------------------
-----------------------------
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
EUR million 30 June 11 31 Dec 10 30 June 10
----------------------------------------------------------------------------
On Own Behalf
Mortgages 7.7 5.2 11.2
On Behalf of Equity Accounted Investments
Guarantees 316.1 154.6 182.1
On Behalf of Others
Guarantees 100.3 108.3 121.4
Other Commitments, Own
Operating leases, in next 12 months 32.3 32.3 26.8
Operating leases, after next 12 months 84.0 88.3 73.3
Pension liabilities 0.4 0.4 0.1
Other commitments 94.3 94.8 32.7
----------------------------------
Total 635.1 483.9 447.6
==================================
Mortgages 7.7 5.2 11.2
Guarantees 416.4 262.9 303.5
Operating leases 116.3 120.6 100.1
Pension liabilities 0.4 0.4 0.1
Other commitments 94.3 94.8 32.7
----------------------------------
Total 635.1 483.9 447.6
==================================
Purchase Agreement Commitments
EUR million Scheduled Contract Payments
--------------------------------------------------------------------------------
Type of Supply Contract Q3-Q4/2011 2012-2013 2014-2015 2016+
Total
Fibre 1 514.1 156.3 440.4 418.2 499.2
Energy 1 953.1 196.7 496.2 405.8 854.4
Logistics 373.3 29.1 93.7 74.8 175.7
Other production 758.9 57.5 106.2 45.1 550.1
costs
--------------------------------------------------------
Capital Expenditure 218.1 71.6 143.2 3.3 -
--------------------------------------------------------
Total Contractual 4 817.5 511.2 1 279.7 947.2 2 079.4
Commitments at 30 June
2011
========================================================
Fair Values of Derivative Financial Instruments
EUR million 30 June 11 31 Dec 10 30 June
10
--------------------------------------------------------------------------------
Positive Negative Net Fair Net Net
Fair Fair Values Fair Fair
Values Values Values Values
Interest rate 103.6 -17.4 86.2 135.4 149.6
swaps
Interest rate - -33.2 -33.2 -35.3 -42.8
options
Forward contracts 36.4 -18.4 18.0 47.6 98.1
Currency options 43.3 -15.8 27.5 22.1 -30.3
Commodity 20.6 -15.1 5.5 11.6 -5.5
contracts
Equity swaps 1.3 -10.6 -9.3 13.8 -2.3
("TRS")
Total 205.2 -110.5 94.7 195.2 166.8
=============================================================
Nominal Values of Derivative Financial Instruments
EUR million 30 June 11 31 Dec 10 30 June 10
---------------------------------------------------------------
Interest Rate Derivatives
Interest rate swaps
Maturity under 1 year 81.3 827.5 866.1
Maturity 2-5 years 1 721.1 2 569.8 1 665.4
Maturity 6-10 years 200.0 804.7 1 006.1
----------------------------------
2 002.4 4 202.0 3 537.6
Interest rate options 540.9 601.0 541.7
----------------------------------
Total 2 543.3 4 803.0 4 079.3
----------------------------------
Foreign Exchange Derivatives
Forward contracts 2 050.3 2 333.1 2 557.5
Currency options 2 710.1 2 683.4 2 555.2
----------------------------------
Total 4 760.4 5 016.5 5 112.7
----------------------------------
Commodity Derivatives
Commodity contracts 248.2 297.6 310.8
----------------------------------
Total 248.2 297.6 310.8
----------------------------------
Total Return (Equity) Swaps
Equity swaps ("TRS") 88.7 83.1 112.7
----------------------------------
Total 88.7 83.1 112.7
Sales by Segment
EUR million Q2/11 Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
--------------------------------------------------------------------------------
Consumer Board 662.2 647.0 2 314.7 611.5 593.8 586.3 523.1
Industrial 240.0 243.4 949.5 241.7 225.4 259.2 223.2
Packaging
Newsprint and 334.6 314.5 1 261.6 326.2 322.9 325.1 287.4
Book Paper
Magazine Paper 517.2 482.0 2 054.2 547.5 541.0 530.2 435.5
Fine Paper 532.2 563.3 2 125.7 533.5 563.3 554.4 474.5
Wood Products 465.4 409.7 1 588.7 410.3 424.1 422.7 331.6
Other 703.6 723.3 2 524.6 627.3 623.4 648.6 625.3
Inter-segment -638.1 -656.3 -2 522.1 -612.8 -670.3 -634.3 -604.7
sales
---------------------------------------------------------------
Total 2 817.1 2 726.9 10 296.9 2 685.2 2 623.6 2 692.2 2 295.9
===============================================================
Operating Profit/Loss by Segment excluding NRI and Fair Valuations
EUR million Q2/11 Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
--------------------------------------------------------------------------------
Consumer Board 84.5 95.8 277.1 52.1 77.6 76.9 70.5
Industrial Packaging 19.5 19.4 65.5 22.0 18.7 17.1 7.7
Newsprint and Book Paper 27.5 26.0 -10.8 -2.7 0.1 -6.6 -1.6
Magazine Paper 33.9 28.2 90.9 19.5 45.5 22.0 3.9
Fine Paper 48.7 79.9 259.4 67.6 70.9 79.4 41.5
Wood Products 35.2 11.8 70.9 10.2 25.2 30.1 5.4
Other -31.8 -28.2 -65.9 -22.3 -4.9 -16.5 -22.2
--------------------------------------------------
Operating Profit excl. NRI 217.5 232.9 687.1 146.4 233.1 202.4 105.2
and fair valuations by
Segment
Share of results of equity 10.8 15.1 67.0 20.4 21.9 10.5 14.2
accounted investments excl.
fair valuations
--------------------------------------------------
Operating Profit excl. NRI 228.3 248.0 754.1 166.8 255.0 212.9 119.4
and Fair Valuations*
Fair valuations* -11.9 16.4 92.5 41.9 16.5 11.2 22.9
--------------------------------------------------
Operating Profit excl. NRI 216.4 264.4 846.6 208.7 271.5 224.1 142.3
NRI -31.7 -27.2 180.2 202.2 5.4 -8.5 -18.9
--------------------------------------------------
Operating Profit (IFRS) 184.7 237.2 1 026.8 410.9 276.9 215.6 123.4
Net financial items -34.6 -51.2 -100.9 -21.7 -51.1 -22.6 -5.5
--------------------------------------------------
Profit before Tax and 150.1 186.0 925.9 389.2 225.8 193.0 117.9
Non-controlling Interests
Income tax expense -14.1 -30.1 -156.6 -76.2 -31.5 -33.1 -15.8
--------------------------------------------------
Net Profit 136.0 155.9 769.3 313.0 194.3 159.9 102.1
==================================================
* Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights, and valuations of biological
assets related to forest assets in equity accounted investments.
NRI by Segment
EUR million Q2/11 Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
-----------------------------------------------------------------------------
Consumer Board -2.2 - 217.4 167.6 49.8 - -
Industrial Packaging -0.1 - -21.5 -5.0 - -3.3 -13.2
Newsprint and Book Paper -6.2 -1.7 -58.5 -1.1 -44.4 -13.0 -
Magazine Paper -2.8 3.4 2.4 -1.1 - 9.2 -5.7
Fine Paper -20.4 - 68.9 60.4 - 8.5 -
Wood Products - -28.9 4.0 1.9 - 0.5 1.6
Other - - -17.2 -5.2 - -10.4 -1.6
------------------------------------------------
Equity accounted investments - - -15.3 -15.3 - - -
------------------------------------------------
NRI on Operating Profit -31.7 -27.2 180.2 202.2 5.4 -8.5 -18.9
NRI on tax 3.6 7.8 -37.9 -37.9 - - -
NRI on Net Profit -28.1 -19.4 142.3 164.3 5.4 -8.5 -18.9
================================================
Fair Valuations* by Segment
EUR million Q2/11 Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
--------------------------------------------------------------------------------
Consumer Board -4.6 - - - - - -
Industrial Packaging -2.0 - - - - - -
Newsprint and Book Paper -2.9 - - - - - -
Magazine Paper -3.5 - - - - - -
Fine Paper -2.9 - - - - - -
Wood Products -1.8 - - - - - -
Other 10.2 11.5 31.7 -7.1 14.0 6.8 18.0
Equity accounted investments -4.4 4.9 60.8 49.0 2.5 4.4 4.9
-----------------------------------------------
Fair Valuations on Operating -11.9 16.4 92.5 41.9 16.5 11.2 22.9
Profit
===============================================
* Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights, and valuations of biological
assets related to forest assets in equity accounted investments.
Operating Profit/Loss by Segment
EUR million Q2/11 Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
--------------------------------------------------------------------------------
Consumer Board 77.7 95.8 494.5 219.7 127.4 76.9 70.5
Industrial Packaging 17.4 19.4 44.0 17.0 18.7 13.8 -5.5
Newsprint and Book Paper 18.4 24.3 -69.3 -3.8 -44.3 -19.6 -1.6
Magazine Paper 27.6 31.6 93.3 18.4 45.5 31.2 -1.8
Fine Paper 25.4 79.9 328.3 128.0 70.9 87.9 41.5
Wood Products 33.4 -17.1 74.9 12.1 25.2 30.6 7.0
Other -21.6 -16.7 -51.4 -34.6 9.1 -20.1 -5.8
Share of results of equity 6.4 20.0 112.5 54.1 24.4 14.9 19.1
accounted investments
--------------------------------------------------
Operating Profit (IFRS) 184.7 237.2 1 026.8 410.9 276.9 215.6 123.4
Net financial items -34.6 -51.2 -100.9 -21.7 -51.1 -22.6 -5.5
--------------------------------------------------
Profit before Tax and 150.1 186.0 925.9 389.2 225.8 193.0 117.9
Non-controlling Interests
Income tax expense -14.1 -30.1 -156.6 -76.2 -31.5 -33.1 -15.8
--------------------------------------------------
Net Profit 136.0 155.9 769.3 313.0 194.3 159.9 102.1
==================================================
Equity Accounted Investments in the Income Statement
EUR million Q2/11 Q1/11 2010 Q4/10 Q3/10 Q2/10 Q1/10
--------------------------------------------------------------------------------
Share of results in equity 10.8 15.1 67.0 20.4 21.9 10.5 14.2
accounted investments excl.
fair valuations and NRI
Fair valuations in equity -4.4 4.9 60.8 49.0 2.5 4.4 4.9
accounted investments
NRI related to equity accounted - - -15.3 -15.3 - - -
investments
------------------------------------------------
Equity Accounted Investments in 6.4 20.0 112.5 54.1 24.4 14.9 19.1
Operating Profit
Equity accounted investments -4.2 -6.5 -40.6 -25.1 -5.6 -5.7 -4.2
share of taxes
Equity Accounted Investments in 2.2 13.5 71.9 29.0 18.8 9.2 14.9
Net profit
================================================
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
---------------------------------------------------------
30 June 11 31 Dec 10 30 June 11 31 Dec 10
---------------------------------------------
SEK 9.1739 8.9655 8.9418 9.5464
USD 1.4453 1.3362 1.4042 1.3272
GBP 0.9026 0.8608 0.8682 0.8583
---------------------------------------------
Transaction Risk and Hedges in Main Currencies as at 30 June 2011
-------------------------------------------------------------------------------
EUR million USD GBP SEK
Estimated annual net operating cash flow exposure 1 070 540 -820
Transaction hedges as at 30 June 2011 -500 -250 550
------------------
Hedging percentage as at 30 June 2011 for the next 12 months 47% 46% 67%
Changes in Exchange Rates on Operating Profit
Operating Profit: Currency strengthening of + 10% EUR million
--------------------------------------------------------------
USD 107
SEK -82
GBP 54
--------------------------------------------------------------
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 occurs 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 93 103 81 929 885 187 145 20 690 330
May 74 166 92 324 265 138 212 23 451 611
June 92 669 84 707 931 106 496 12 618 947
------------------------------------------
Total 259 938 258 962 081 431 853 56 760 888
Closing Price Helsinki, EUR Stockholm, SEK
------------------------------------------
A share R share A share R share
---------------------------------------------------------
April 8.40 8.14 75.25 72.70
May 8.05 7.77 71.80 69.20
June 7.35 7.24 68.10 66.15
Calculation of Key Figures
Return on capital employed,
ROCE (%) 100 x
Operating profit
Capital employed 1) 2)
Return on operating capital, 100 x
Operating profit
ROOC (%)
Operating capital 1) 2)
Return on equity, 100 x
Profit before tax and non-controlling items - taxes
ROE (%)
Total equity 2)
Equity ratio (%) 100 x
Total equity
Total assets
Interest-bearing net liabilities
Interest-bearing liabilities - interest-bearing assets
Debt/equity ratio
Interest-bearing net liabilities
Equity
Fixed asset
CEPS
Net profit/loss for the period 3) - depreciation and impairment
Average number of shares
EPS
Net profit/loss for the period 3)
Average number of shares
1) Capital employed = Operating capital - Net tax liabilities
2) Average for the financial period
3) Attributable to owners of the Parent
For further information, please contact:
Jouko Karvinen, CEO, tel. +358 2046 21410
Markus Rauramo, CFO, tel. +358 2046 21121
Ulla Paajanen-Sainio, Head of Investor Relations, tel. +358 2046 21242
Lauri Peltola, Head of Communications and Global Responsibility, tel. +358 2046
21380
Stora Enso's third quarter 2011 results will be published on 21 October 2011 at
13.00 EET.
PRESS CONFERENCE IN HELSINKI
Time: 14.00 local time today
Location: Stora Enso Oyj
Address: Kanavaranta 1
Presentations: Jouko Karvinen, CEO
Markus Rauramo, CFO
The conference will be held in Finnish. Questions can be addressed to Jouko
Karvinen and Markus Rauramo after the presentation.
ANALYST CONFERENCE CALL
CEO Jouko Karvinen and CFO Markus Rauramo will be hosting a combined conference
call and webcast today at 16.00 Finnish time (15.00 CET, 14.00 UK time, 09.00
US Eastern time).
If you wish to participate, please dial:
Continental Europe and the UK +44 (0)20 7138 0824
Finland +358 (0)9 2319 4345
Sweden +46 (0)8 5051 3785
USA +1 212 444 0481
Access code: 8948012#
The live webcast may be accessed at www.storaenso.com/investors
Stora Enso is the global rethinker of the packaging, paper and wood products
industry. We always rethink the old and expand to the new to offer our
customers innovative solutions based on renewable materials. Stora Enso employs
some 26 000 people worldwide, and our sales in 2010 amounted to EUR 10.3
billion. Stora Enso shares are listed on NASDAQ OMX Helsinki (STEAV, STERV) and
Stockholm (STE A, STE R). In addition, the shares are traded in the USA as ADRs
(SEOAY) in the International OTCQX over-the-counter market.
It should be noted that certain statements herein which are not historical
facts, including, without limitation those regarding expectations for market
growth and developments; expectations for growth and profitability; and
statements preceded by “believes”, “expects”, “anticipates”, “foresees”, 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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