2012-10-23 12:00:01 CEST
2012-10-23 12:00:21 CEST
REGULATED INFORMATION
Stora Enso Oyj - Interim report (Q1 and Q3)
Stora Enso Interim Review January–September 2012
Stable performance in weak Europe, preparing for the future
Helsinki, Finland, 2012-10-23 12:00 CEST (GLOBE NEWSWIRE) -- STORA ENSO OYJ
INTERIM REVIEW 23 October 2012 at 13.00 EET
-- Operational EBIT EUR 34 million higher than in Q2 2012 at EUR 175 (EUR 141)
million mainly due to lower costs, EUR 50 million lower year-on-year.
-- Cash flow from operations EUR 312 (EUR 362) million and liquidity EUR 1 700
(EUR 1 181) million.
-- Ratio of net debt to the last twelve months' operational EBITDA 2.8 (2.7 in
Q2 2012).
-- New packaging joint-venture to be established in Pakistan.
-- New profitability improvement actions planned across all Business Areas,
estimated annual cost savings EUR 36 million and 520 employees affected.
-- Q4 2012 sales expected to be at roughly similar level and operational EBIT
in line with or slightly lower than Q3 2012.
Summary of Third Quarter Results
Q3/12 Q2/12 Q3/11
-------------------------------------------------------------------
Sales EUR million 2 694.1 2 720.4 2 739.3
Operational EBITDA EUR million 299.6 248.1 339.2
Operational EBIT* EUR million 174.7 141.2 224.4
Operating profit (IFRS) EUR million 161.3 152.7 178.6
Profit before tax excl. NRI EUR million 102.2 31.8 113.4
Profit/loss before tax EUR million 102.2 85.9 -14.8
Net profit excl. NRI EUR million 81.3 13.5 78.3
Net profit/loss EUR million 81.3 69.5 -49.9
EPS excl. NRI EUR 0.10 0.02 0.10
EPS EUR 0.10 0.09 -0.06
CEPS excl. NRI EUR 0.29 0.20 0.27
Operational ROCE % 8.0 6.5 10.3
--------------------------
*The Group has adopted operational EBIT as a key operative non-IFRS measure
starting from the fourth quarter of 2011.
Operational EBIT comprises the operating profit excluding NRI and fair
valuations of the segments and Stora Enso's share of the operating profit
excluding NRI and fair valuations of its equity accounted investments (EAI).
Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights and valuations of biological
assets related to forest assets in EAI.
Stora Enso Deliveries and Production
Q3/12 Q2/12 Q3/11 2011 Q1-Q3/ Q1-Q3/ Change Change Change
12 11 % % %
Q3/12- Q3/12- Q1-Q3/
Q3/11 Q2/12 12-Q1-
Q3/11
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paper and 2 576 2 574 2 609 10 330 7 699 7 724 -1.3 0.1 -0.3
board
deliveries
(1 000
tonnes)
Paper and 2 610 2 610 2 586 10 346 7 796 7 834 0.9 - -0.5
board
production
(1 000
tonnes)
Wood 1 129 1 292 1 234 5 072 3 575 3 895 -8.5 -12.6 -8.2
products
deliveries
(1 000 m3)
Market pulp 267 246 281 1 130 774 841 -5.0 8.5 -8.0
deliveries
(1 000
tonnes)*
Corrugated 275 282 256 1 018 818 745 7.4 -2.5 9.8
packaging
deliveries
(million
m2)
--------------------------------------------------------------------
*Stora Enso's net market pulp position will be about 1 million tonnes for 2012.
Breakdown of Sales Change Q3/2011 to Q3/2012
Sales
-------------------------------------------
Q3/11, EUR million 2 739.3
-------------------------------------------
Price and mix, % -3
Currency, % 2
Volume, % -3
Other sales*, % 1
-------------------------------------------
Total before structural changes, % -3
Structural change**, % 1
Total, % -2
-------------------------------------------
Q3/12, EUR million 2 694.1
===========================================
* Wood, energy, RCP, by-products etc.
** Asset closures, major investments, divestments and acquisitions
Key Figures
EUR Q3/12 Q2/12 Q3/11 Q1-Q3/1 Q1-Q3/1 2011 Change Change
Change
milli 2 1 % %
%
on Q3/12- Q3/12-
Q1-Q3/
Q3/11 Q2/12
12-Q1-
Q3/11
--------------------------------------------------------------------------------
-----
Sales 2 694.1 2 720.4 2 739.3 8 087.8 8 283.3 10 964.9 -1.7 -1.0
-2.4
Operat 299.6 248.1 339.2 809.8 1 065.1 1 308.0 -11.7 20.8
-24.0
ional
EBITD
A
Operat 174.7 141.2 224.4 463.3 721.8 866.7 -22.1 23.7
-35.8
ional
EBIT
Operat 6.5 5.2 8.2 5.7 8.7 7.9 -20.7 25.0
-34.5
ional
EBIT
margi
n, %
Operat 161.3 152.7 178.6 437.9 589.8 759.3 -9.7 5.6
-25.8
ing
profi
t
(IFRS
)
Operat 6.0 5.6 6.5 5.4 7.1 6.9 -7.7 7.1
-23.9
ing
margi
n
(IFRS
), %
Profit 102.2 31.8 113.4 235.0 497.7 639.1 -9.9 221.4
-52.8
befor
e tax
excl.
NRI
Profit 102.2 85.9 -14.8 278.0 310.6 420.9 n/m 19.0
-10.5
/loss
befor
e tax
Net 81.3 13.5 78.3 175.0 417.7 498.2 3.8 n/m
-58.1
profi
t for
the
perio
d
excl.
NRI
Net 81.3 69.5 -49.9 224.9 242.0 342.2 262.9 17.0
-7.1
profi
t/loss
for
the
perio
d
Capita 130.5 154.2 79.9 346.9 222.6 453.3 63.3 -15.4
55.8
l
expen
diture
Deprec 149.3 140.9 138.4 432.9 413.9 554.9 7.9 6.0
4.6
iation
and
impai
rment
charg
es
excl.
NRI
Operat 8.0 6.5 10.3 7.0 11.1 10.0 -22.3 23.1
-36.9
ional
ROCE,
%
Earnin 0.10 0.02 0.10 0.22 0.53 0.63 - n/m
-58.5
gs per
share
(EPS)
excl.
NRI,
EUR
EPS 0.10 0.09 -0.06 0.28 0.31 0.43 266.7 11.1
-9.7
(basi
c),
EUR
Cash 0.29 0.20 0.27 0.77 1.05 1.33 7.4 45.0
-26.7
earni
ngs
per
share
(CEPS
)
excl.
NRI,
EUR
CEPS, 0.29 0.26 0.12 0.83 0.86 1.16 141.7 11.5
-3.5
EUR
Return 5.7 4.8 -3.2 5.1 5.3 5.6 278.1 18.8
-3.8
on
equit
y
(ROE)
, %
Debt/e 0.52 0.54 0.45 0.52 0.45 0.47 15.6 -3.7
15.6
quity
ratio
Net 2.8 2.7 2.0 2.8 2.0 2.1 40.0 3.7
40.0
debt/
last
twelv
e
month
s'
opera
tional
EBITD
A
Equity 7.27 7.05 7.53 7.27 7.53 7.45 -3.5 3.1
-3.5
per
share
, EUR
Equity 42.7 43.3 46.5 42.7 46.5 45.8 -8.2 -1.4
-8.2
ratio
, %
Averag 29 167 29 226 28 771 28 915 27 458 27 958 1.4 -0.2
5.3
e
numbe
r of
emplo
yees
Averag
e
numbe
r of
share
s
(mill
ion)
period 788.6 788.6 788.6 788.6 788.6 788.6
ic
cumula 788.6 788.6 788.6 788.6 788.6 788.6
tive
cumula 788.6 788.6 788.6 788.6 788.6 788.6
tive,
dilut
ed
------------------------------------------------------------------------------
Operational EBIT comprises the operating profit excluding NRI and fair
valuations of the segments and Stora Enso's share of the operating profit
excluding NRI and fair valuations of its equity accounted investments (EAI).
Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights and valuations of biological
assets related to forest assets in EAI.
NRI = Non-recurring items. These are exceptional transactions that are not
related to normal business operations. The most common non-recurring items are
capital gains, additional write-downs or reversals of write-downs, provisions
for planned restructuring and penalties. Non-recurring items are normally
specified individually if they exceed one cent per share.
Reconciliation of Operating Profit
EUR million Q3/12 Q2/12 Q3/11 2011 Q1-Q3/ Q1-Q3/ Change Change Change
12 11 % % %
Q3/12-Q Q3/12- Q1-Q3/
3/11 Q2/12 12-Q1-
Q3/11
--------------------------------------------------------------------------------
Operational 174.7 141.2 224.4 866.7 463.3 721.8 -22.1 23.7 -35.8
EBIT
Fair -13.4 -33.1 -45.8 -27.5 -45.3 -73.1 70.7 59.5 38.0
valuations
and
non-operat
ional
items*
Non-recurri - 44.6 - -79.9 19.9 -58.9 - -100.0 133.8
ng items
--------------------------------------------------------------------
Operating 161.3 152.7 178.6 759.3 437.9 589.8 -9.7 5.6 -25.8
Profit
(IFRS)
--------------------------------------------------------------------
*Fair valuations and non-operational items include equity incentive schemes,
synthetic options net of realised and open hedges, CO2 emission rights,
valuations of biological assets related to forest assets in equity accounted
investments (EAI) and Group's share of tax and net financial items of EAI.
Q3/2012 Results (compared with Q3/2011)
Sales at EUR 2 694 million were EUR 45 million lower than a year ago.
Operational EBIT at EUR 175 million was EUR 50 million lower than a year ago.
This represents an operational EBIT margin of 6.5% (8.2%).
Clearly lower sales prices in local currencies, especially for paper and pulp
products, had a negative impact of EUR 95 million on operational EBIT. Lower
deliveries of paper and sawn goods, partly offset by higher deliveries and
production of packaging, decreased operational EBIT by EUR 15 million. Paper
and board production was curtailed by 8% (9%) and sawnwood production by 10%
(8%) to manage inventories.
The overall net impact of variable costs in local currencies was a positive EUR
67 million, mainly due to lower corrugated raw material, recycled paper and
pulp prices. Only sawlog prices were higher than last year, mainly due to
limited log availability in Central Europe. Fixed costs were similar to the
corresponding period a year ago.
The average number of employees in the third quarter of 2012 was 400 higher
than a year earlier at 29 200 as the number of employees increased by 1 000 in
Asia, but decreased by 600 in other areas.
Fair valuations and non-operational items were EUR -13 (EUR -46) million.
Net financial items were EUR -59 (EUR -193) million. Net interest expenses
increased from EUR 36 million to EUR 44 million. Net foreign exchange losses
amounted to EUR 0 (EUR 11) million. The net loss from other financial items
totalled EUR 15 (EUR 146) million and was mainly related to the fair valuations
of interest rate derivatives. A provision of EUR 128 million due to the NewPage
lease guarantee was recorded in the third quarter of 2011.
Group capital employed was EUR 8 824 million on 30 September 2012, a net
increase of EUR 160 million on a year earlier. Group capital employed was
increased by a EUR 210 million increase in the value of equity accounted
investments resulting mainly from an equity injection into the Montes del Plata
pulp mill project and profits from the equity accounted investments. In
addition, changes in the impact of foreign exchange rates increased capital
employed by EUR 260 million, mainly due to strengthening of the Swedish krona.
Group capital employed was decreased by a EUR 330 million reduction in the
valuation of PVO mainly due to lower anticipated future electricity prices.
Working capital remained unchanged excluding changes in foreign exchange rates.
The operational return on capital employed was 8.0% (10.3%) impacted by the
ongoing strategic investments in Biomaterials and Renewable Packaging.
January-September 2012 Results (compared with January-September 2011)
Sales decreased by EUR 196 million year-on-year. Operational EBIT decreased by
EUR 259 million, mainly due to lower prices in local currencies and lower
volumes. Exchange rates had a negative net impact on operational EBIT, after
hedges. Fixed costs remained unchanged, but variable costs, mainly for
corrugated raw material, recycled paper and pulp, were clearly lower.
Q3/2012 Results (compared with Q2/2012)
Sales were similar to the previous quarter at EUR 2 694 million. Operational
EBIT was EUR 34 million higher than in the previous quarter at EUR 175 million.
As expected, fixed and variable costs, especially for fibre, were lower.
Delivery volumes in packaging products and sawn goods, and paper sales prices
in local currencies were slightly lower than in the previous quarter.
Capital Structure
EUR million 30 Sep 12 30 Jun 12 31 Dec 11 30 Sep 11
--------------------------------------------------------------------------------
Operative fixed assets 6 001.2 5 879.3 6 120.4 6 155.1
Equity accounted investments 1 977.5 1 947.9 1 913.1 1 726.8
Operative working capital, net 1 641.5 1 587.3 1 504.6 1 586.5
Non-current interest-free items, net -461.1 -453.8 -486.1 -435.6
-------------------------------------------
Operating Capital Total 9 159.1 8 960.7 9 052.0 9 032.8
Net tax liabilities -335.0 -313.7 -346.4 -367.4
-------------------------------------------
Capital Employed 8 824.1 8 647.0 8 705.6 8 665.4
===========================================
Equity attributable to Company 5 735.0 5 560.9 5 872.7 5 934.5
shareholders
Non-controlling interests 89.3 91.5 87.1 83.4
Net interest-bearing liabilities 2 999.8 2 994.6 2 745.8 2 647.5
-------------------------------------------
Financing Total 8 824.1 8 647.0 8 705.6 8 665.4
===========================================
Financing Q3/2012 (compared with Q2/2012)
Cash flow from operations was EUR 312 (EUR 246) million. Cash flow after
investing activities was EUR 120 (EUR 75) million. Interest-bearing net
liabilities of the Group remained unchanged at EUR 3 000 million.
Total unutilised committed credit facilities were unchanged at EUR 700 million,
and cash and cash equivalents net of overdrafts remained strong at EUR 1 700million, which is EUR 460 million more than for the previous quarter. In
addition, Stora Enso has access to various long-term sources of funding up to
EUR 600 million. With current cash and cash equivalents the Group can cover all
debt maturities till the end of 2014.
In August 2012 Stora Enso tapped two five-year bonds with a total of SEK 1 000
million (EUR 119 million) under its EMTN (Euro Medium Term Note) programme.
There are no financial or change of control covenants in the new debt.
In September 2012 Stora Enso issued a EUR 500 million 5.5-year bond under its
EMTN programme. The new notes were issued with a 5.096% yield and were priced
at 99.580. There are no financial or change of control covenants in the new
debt.
The operational EBITDA margin for the last twelve months was 9.8% (10.1%). The
ratio of net debt to the last twelve months' operational EBITDA was 2.8 (2.7).
The debt/equity ratio at 30 September 2012 was 0.52 (0.54). The decrease is
primarily due to the EUR 80 million net profit attributable to owners of the
parent company for the third quarter of 2012 and EUR 69 million increase in the
value of PVO.
Cash Flow
EUR Q3/12 Q2/12 Q3/11 2011 Q1-Q3/ Q1-Q3/ Change Change Change
million 12 11 % % %
Q3/12- Q3/12- Q1-Q3/
Q3/11 Q2/12 12-Q1-
Q3/11
--------------------------------------------------------------------------------
Operatin 161.3 152.7 178.6 759.3 437.9 589.8 -9.7 5.6 -25.8
g profit
Deprecia 147.4 152.1 143.2 492.0 411.1 441.0 2.9 -3.1 -6.8
tion and
other
non-cas
h items
Change 3.7 -59.2 40.1 -217.0 -67.3 -298.8 -90.8 106.3 77.5
in
working
capital
-----------------------------------------------------------------------
Cash 312.4 245.6 361.9 1 034.3 781.7 732.0 -13.7 27.2 6.8
Flow
from
Operati
ons
Cash -155.0 -127.6 -79.9 -409.6 -376.9 -222.6 -94.0 -21.5 -69.3
spent
on
fixed
and
biologi
cal
assets
Acquisit -37.0 -43.5 -62.2 -128.6 -98.5 -87.1 40.5 14.9 -13.1
ions of
equity
account
ed
investm
ents
-----------------------------------------------------------------------
Cash 120.4 74.5 219.8 496.1 306.3 422.3 -45.2 61.6 -27.5
Flow
after
Investi
ng
Activit
ies
-----------------------------------------------------------------------
Capital Expenditure for January-September 2012
Additions to fixed and biological assets in the first three quarters of 2012
totalled EUR 347 million, which is 80% of depreciation in the same period. The
equity injection into Montes del Plata, a joint venture in Uruguay, was EUR 99
million in the first three quarters of 2012.
Investments in fixed assets and biological assets had a cash outflow impact of
EUR 377 million in the first three quarters of 2012.
The full year 2012 capital expenditure forecast for the Group has been
decreased to approximately EUR 550-600 million. In addition, the equity
injection into Montes del Plata, a joint venture in Uruguay, will be
approximately EUR 130 million in 2012. Annual depreciation will be
approximately EUR 580 million in 2012.
The main projects ongoing during the first three quarters of 2012 were Montes
del Plata, the Ostrołęka containerboard machine and the Skoghall woodyard
investment.
Near-term Outlook
In the fourth quarter of 2012 Group sales are expected to be at roughly similar
level and the operational EBIT in line with or slightly lower than the third
quarter of 2012. Mill maintenance will have a negative impact on Renewable
Packaging and Biomaterials during the quarter.
Segments Q3/12 compared with Q3/11
Printing and Reading
Printing and Reading's wide offering serves publishers, advertisers, printing
houses, merchants, office equipment manufacturers and office suppliers, among
others. Printing and Reading produces newsprint, SC paper, coated paper grades
and office paper.
EUR Q3/12 Q2/12 Q3/11 2011 Q1-Q3/1 Q1-Q3/1 Change Change
Change
milli 2 1 % %
%
on Q3/12- Q3/12-
Q1-Q3/
Q3/11 Q2/12
12-Q1-
Q3/11
--------------------------------------------------------------------------------
----
Sales 1 226.8 1 190.8 1 283.1 5 022.0 3 644.8 3 738.2 -4.4 3.0
-2.5
Operat 119.4 107.5 138.4 547.6 360.3 424.3 -13.7 11.1
-15.1
ional
EBITD
A
Operat 51.1 41.7 72.3 285.3 160.1 229.7 -29.3 22.5
-30.3
ional
EBIT
% of 4.2 3.5 5.6 5.7 4.4 6.1 -25.0 20.0
-27.9
sales
Operat 6.7 5.5 9.3 9.2 7.0 9.9 -28.0 21.8
-29.3
ional
ROOC,
%*
Paper 1 794 1 762 1 837 7 219 5 339 5 333 -2.3 1.8
0.1
deliv
eries,
1 000
t
Paper 1 789 1 803 1 818 7 228 5 401 5 417 -1.6 -0.8
-0.3
produ
ction,
1 000
t
-----------------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Lower sales prices in local currencies and slightly lower paper deliveries
were not fully offset by lower variable costs, especially for recycled
paper.
-- There are production curtailments to manage pricing quality and
inventories.
-- It is planned to shut down Hylte Mill PM 1 permanently by the end of 2012.
-- Stora Enso will examine the possibility of selling Corbehem Mill in France.
Markets
Produc Market Demand Q3/12 Demand Q3/12 Price Q3/12 Price Q3/12
t compared with compared with compared with compared with
Q3/11 Q2/12 Q3/11 Q2/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paper Europe Weaker Stable Lower Stable
Biomaterials
Biomaterials offers a variety of pulp grades to meet the demands of paper,
board and tissue producers. Pulp is an excellent raw material: it is made from
renewable resources in a sustainable manner, and has many different uses.
EUR Q3/12 Q2/12 Q3/11 2011 Q1-Q3/ Q1-Q3/ Change Change Change
millio 12 11 % % %
n Q3/12-Q Q3/12-Q Q1-Q3/1
3/11 2/12 2-Q1-Q3
/11
--------------------------------------------------------------------------------
Sales 267.6 246.5 276.4 1 092.0 755.8 836.6 -3.2 8.6 -9.7
Operati 37.5 13.3 61.5 200.4 65.7 174.1 -39.0 182.0 -62.3
onal
EBITDA
Operati 32.5 14.7 57.3 169.2 54.4 142.0 -43.3 121.1 -61.7
onal
EBIT
% of 12.1 6.0 20.7 15.5 7.2 17.0 -41.5 101.7 -57.6
sales
Operati 9.0 4.1 17.1 12.0 5.0 13.9 -47.4 119.5 -64.0
onal
ROOC,
%*
Pulp 467 439 461 1 851 1 365 1 386 1.3 6.4 -1.5
delive
ries, 1
000 t
------------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Market pulp prices significantly lower than a year ago were partly offset
by improved product mix.
-- The annual maintenance stoppage at Sunila Pulp Mill was completed in early
October 2012 according to plan.
-- Actions are planned to improve efficiency at Skutskär Pulp Mill in Sweden
to reduce costs and improve the mill's competitiveness in response to the
challenging market environment.
-- The Montes del Plata pulp mill project is progressing and currently more
than 70% of the construction work has been completed. The schedule is
unchanged and the mill is expected to start up approximately mid-year 2013.
Markets
Produc Market Demand Q3/12 Demand Q3/12 Price Q3/12 Price Q3/12
t compared with compared with compared with compared with
Q3/11 Q2/12 Q3/11 Q2/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Softwo Europe Slightly Stronger Significantly Lower
od stronger lower
pulp
Building and Living
Building and Living provides wood-based products and innovations for
construction and interior decoration, as well as solid biofuels for the energy
sector. Building and Living products address building, living and packaging
needs. The products are recyclable, and made from high quality renewable
European pine or spruce.
EUR Q3/12 Q2/12 Q3/11 2011 Q1-Q3/1 Q1-Q3/1 Change Change Change
millio 2 1 % % %
n Q3/12-Q Q3/12- Q1-Q3/
3/11 Q2/12 12-Q1-
Q3/11
--------------------------------------------------------------------------------
Sales 403.3 443.7 414.0 1 671.1 1 228.2 1 289.1 -2.6 -9.1 -4.7
Operati 10.4 20.1 19.6 102.3 41.8 86.9 -46.9 -48.3 -51.9
onal
EBITDA
Operati 0.7 11.5 9.8 62.8 22.0 56.8 -92.9 -93.9 -61.3
onal
EBIT
% of 0.2 2.6 2.4 3.8 1.8 4.4 -91.7 -92.3 -59.1
sales
Operati 0.5 7.8 6.7 10.9 5.1 13.0 -92.5 -93.6 -60.8
onal
ROOC,
%*
Deliver 1 097 1 254 1 199 4 920 3 460 3 777 -8.5 -12.5 -8.4
ies, 1
000 m3
------------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Although demand weakened, sales prices in local currencies remained stable
year-on-year, whereas volumes decreased slightly.
-- Higher raw material prices and declining by-product income reduced profits
significantly, with Austrian and Czech raw material markets reaching their
highest-ever levels.
-- Actions are planned to improve flexibility and reduce costs at the Ala and
Gruvön sawmills in Sweden and Varkaus Sawmill in Finland from the first
quarter of 2013.
-- Co-determination negotiations concerning possible temporary capacity
reductions and lay-offs in Finland in November-March have concluded,
enabling rapid and flexible action.
-- Building and Living acquired the remaining 50% shareholding in the sawn
timber trading company RETS Timber Oy Ltd with effect from 1 September
2012.
Markets
Produc Market Demand Q3/12 Demand Q3/12 Price Q3/12 Price Q3/12
t compared with compared with compared with compared with
Q3/11 Q2/12 Q3/11 Q2/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Wood Europe Weaker Significantly Stable Stable
produ weaker
cts
Renewable Packaging
Renewable Packaging produces fibre-based packaging materials and innovative
packaging solutions for all major consumer goods and industrial packaging
applications. Renewable Packaging operates in every stage of the value chain,
from pulp production, material and package production to recycling. The
Business Area comprises three business units: Consumer Board, Packaging
Solutions and Packaging Asia.
EUR Q3/12 Q2/12 Q3/11 2011 Q1-Q3/1 Q1-Q3/1 Change Change Change
million 2 1 % % %
Q3/12- Q3/12- Q1-Q3/
Q3/11 Q2/12 12-Q1-
Q3/11
--------------------------------------------------------------------------------
Sales 812.2 826.8 800.6 3 194.6 2 418.3 2 438.0 1.4 -1.8 -0.8
Operatio 134.0 122.1 122.0 495.8 369.1 413.1 9.8 9.7 -10.7
nal
EBITDA
Operatio 82.9 72.5 73.6 301.3 217.1 268.5 12.6 14.3 -19.1
nal EBIT
% of 10.2 8.8 9.2 9.4 9.0 11.0 10.9 15.9 -18.2
sales
Operatio 14.2 13.0 13.7 14.2 12.7 16.9 3.6 9.2 -24.9
nal
ROOC,
%*
Paper 782 812 772 3 111 2 360 2 391 1.3 -3.7 -1.3
and
board
deliver
ies,
1 000 t
Paper 821 807 768 3 118 2 395 2 417 6.9 1.7 -0.9
and
board
product
ion, 1
000 t
Corrugat 275 282 256 1 018 818 745 7.4 -2.5 9.8
ed
packagi
ng
deliver
ies,
million
m2
Corrugat 269 275 251 1 006 801 742 7.2 -2.2 8.0
ed
packagi
ng
product
ion,
million
m2
-----------------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Lower average sales prices in local currencies were offset by lower
variable costs, especially for corrugated raw material and recycled fibre.
Higher volumes offset higher fixed costs mainly due to growth initiatives.
-- Stora Enso signed an agreement to establish a joint venture called Bulleh
Shah Packaging (Private) Limited with Packages Ltd. of Pakistan in
September. The joint-venture transaction is expected to be completed during
the first quarter of 2013.
-- There will be an annual maintenance stoppage similar to a year ago at
Skoghall Mill in Sweden during the fourth quarter of 2012.
-- In the integrated plantation-based board and pulp mills project at Beihai
city in Guangxi in China, the preparations are proceeding according to
plan. The project schedule will be confirmed when the final approvals are
given and detailed plans are in place.
-- The new containerboard machine project at
Ostrołęka Mill in Poland is proceeding according to plan. As announced on
11 January 2011, Stora Enso plans to shut down board machine (BM) 2 at
Ostrołęka Mill permanently.
-- The corrugated packaging plant at Ruovesi in Finland is planned to be
permanently closed down in the second quarter of 2013.
-- The woodyard investment at Skoghall Mill in Sweden will be completed
according to plan in the fourth quarter of 2012.
-- Converting operations at
Páty Mill in Hungary were permanently closed down according to plan in the
third quarter of 2012.
Markets
Product Market Demand Q3/12 Demand Q3/12 Price Q3/12 Price Q3/12
compared with compared with compared compared with
Q3/11 Q2/12 with Q3/11 Q2/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consumer Europe Stable Stable Stable Stable
board
Corrugate Europe Slightly Slightly Lower Slightly
d stronger weaker 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 Q3/12 Q2/12 Q3/11 2011 Q1-Q3/1 Q1-Q3/1 Change Change Change
millio 2 1 % % %
n Q3/12-Q Q3/12- Q1-Q3/
3/11 Q2/12 12-Q1-
Q3/11
--------------------------------------------------------------------------------
Sales 644.9 662.2 637.4 2 700.5 2 010.5 2 056.6 1.2 -2.6 -2.2
Operati -1.7 -14.9 -2.3 -38.1 -27.1 -33.3 26.1 88.6 18.6
onal
EBITDA
Operati 7.5 0.8 11.4 48.1 9.7 24.8 -34.2 n/m -60.9
onal
EBIT
% of 1.2 0.1 1.8 1.8 0.5 1.2 -33.3 n/m -58.3
sales
------------------------------------------------------------------------
-- Lower sales prices and higher harvesting costs affected Bergvik Skog's
results.
-- The write-down of capitalised project costs and unlisted shares in the
third quarter of 2012 was partly offset by lower costs in Group shared
services and administration.
-- Redefinition of the internal service offering has been finalised and
efficiency gains are expected from 2013 onwards.
Short-term Risks and Uncertainties
The main short-term risks and uncertainties continue to relate to the economic
situation in Europe and its potential impact on the Group's products.
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 21 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 202 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 65
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 115 million, negative EUR 95 million and positive EUR 62 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
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. On 14
December 2010 a US federal district court granted a motion for summary
judgement that Stora Enso had filed on behalf of both SEO and SENA seeking
dismissal of the direct purchaser class action claims. Following appeal, a
federal court of appeals on 6 August 2012 upheld the district court's ruling as
to SEO, which means that the direct purchaser class action claims against SEO
have been found to be without legal foundation, 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 appeal court's decision is procedural and does
not constitute a legal finding that SENA has violated antitrust laws. SENA
intends to request the US Supreme Court to review and reverse the federal court
of appeals decision vacating the district court's ruling as to SENA.
Furthermore, most of the indirect purchaser actions have been dismissed by a
consent judgement, subject, however, to being reinstated if the plaintiffs in
the direct cases are ultimately successful in obtaining a final judgement that
SENA violated antitrust laws. Since Stora Enso disposed of SENA in 2007, Stora
Enso's liability, if any, will be determined by the provisions in the SENA
Sales and Purchasing Agreement. No provisions have been made in Stora Enso's
accounts for these lawsuits.
Legal Proceedings in Finland
On 3 December 2009 the Finnish Market Court fined Stora Enso for competition
law infringements in the market for roundwood in Finland from 1997 to 2004.
Stora Enso did not appeal against the ruling.
On 31 March 2011 Metsähallitus of Finland initiated legal proceedings against
Stora Enso, UPM and Metsäliitto claiming compensation for damages allegedly
suffered due to the competition law infringements. The total claim against all
the defendants amounts to approximately EUR 160 million and the secondary claim
against Stora Enso to approximately EUR 85 million.
In addition, Finnish municipalities and private forest owners have initiated
similar legal proceedings. The total amount claimed from all the defendants
amounts to approximately EUR 70 million and the secondary claims and claims
solely against Stora Enso to approximately EUR 25 million.
Stora Enso denies that Metsähallitus and other plaintiffs have suffered any
damages whatsoever and will forcefully defend itself. No provisions have been
made in Stora Enso's accounts for these lawsuits.
Share Capital
During the quarter no A shares were converted into R shares.
On 30 September 2012 Stora Enso had 177 147 772 A shares and 612 390 727 R
shares in issue of which the Company held no A shares and 918 512 R shares with
a nominal value of EUR 1.6 million. The holding represents 0.12% of the
Company's share capital and 0.04% of the voting rights.
This report is unaudited.
Helsinki, 23 October 2012
Stora Enso Oyj
Board of Directors
Financials
Basis of Preparation
This unaudited interim financial report has been prepared in accordance with
the accounting policies set out in International Accounting Standard 34 on
Interim Financial Reporting and in the Group's Annual Report for 2011.
There were no new EU-endorsed standards or interpretations effective from 1
January 2012. IASB has published one amendment effective from 1 January 2012.
It does not affect the Group's financial statements.
New Business Area Structure
In the first quarter of 2012 Stora Enso reorganised its Business Area and
Reporting Segment structure based on the different markets and customers the
Business Areas serve. The new reporting segments are Printing and Reading,
Biomaterials, Building and Living, Renewable Packaging and Other.
The Printing and Reading Business Area comprises the former Newsprint and Book
Paper, Magazine Paper and Fine Paper reporting segments. The Biomaterials
Business Area mainly comprises tree plantations, the Group's joint-venture
Veracel and Montes del Plata pulp mills and Nordic stand-alone pulp mills. The
Wood Products Business Area was renamed the Building and Living Business Area.
The Renewable Packaging Business Area comprises the former Consumer Board and
Industrial Packaging reporting segments, and includes the plantations in
Guangxi in China. The segment Other includes the Nordic forest equity accounted
investments, Stora Enso's shareholding in Pohjolan Voima, the operations
supplying wood to the Nordic mills and Group administration. The comparative
data have been reclassified accordingly.
Equity Accounted Investment Reclassification
Stora Enso changed the presentation of its equity accounted investments and all
comparative data with effect from the fourth quarter of 2011. Stora Enso's
share of the net profit of its equity accounted investments is presented on one
line in Stora Enso's operating profit. The share of taxes of equity accounted
investments has been eliminated from tax expense. Comparative data have been
reclassified accordingly.
Operational EBIT as New Key Operative Measure
The Group adopted operational EBIT as a key operative non-IFRS measure with
effect from the fourth quarter of 2011 instead of operating profit excluding
NRI and fair valuations, which had previously been used. Operational EBIT
comprises the operating profit excluding NRI and fair valuations of the
segments and Stora Enso's share of the operating profit excluding NRI and fair
valuations of its equity accounted investments. Comparative data have been
reclassified accordingly.
Condensed Consolidated Income Statement
EUR Q3/12 Q2/12 Q3/11 Q1-Q3/12 Q1-Q3/11 2011 Change
Change Change
milli %
% %
on Q3/12-
Q3/12- Q1-Q3/
Q3/11
Q2/12 12-Q1-
Q3/11
--------------------------------------------------------------------------------
----------
Sales 2 694.1 2 720.4 2 739.3 8 087.8 8 283.3 10 964.9 -1.7
-1.0 -2.4
Other 47.7 80.0 41.7 171.2 155.8 208.9 14.4
-40.4 9.9
opera
ting
incom
e
Materi -1 724.6 -1 737.5 -1 750.3 -5 191.9 -5 175.7 -6 971.9 1.5
0.7 -0.3
als
and
servi
ces
Freigh -255.8 -250.3 -255.8 -748.1 -775.4 -1 018.9 -
-2.2 3.5
t and
sales
commi
ssions
Person -331.1 -373.0 -352.3 -1 046.2 -1 066.0 -1 393.9 6.0
11.2 1.9
nel
expen
ses
Other -127.7 -139.9 -118.0 -416.5 -426.9 -575.2 -8.2
8.7 2.4
opera
ting
expen
ses
Share 8.0 -6.1 12.4 16.6 28.1 118.0 -35.5
231.1 -40.9
of
resul
ts of
equit
y
accou
nted
inves
tments
Deprec -149.3 -140.9 -138.4 -435.0 -433.4 -572.6 -7.9
-6.0 -0.4
iation
and
impai
rment
--------------------------------------------------------------------------------
---
Operat 161.3 152.7 178.6 437.9 589.8 759.3 -9.7
5.6 -25.8
ing
Profi
t
Net -59.1 -66.8 -193.4 -159.9 -279.2 -338.4 69.4
11.5 42.7
finan
cial
items
--------------------------------------------------------------------------------
---
Profit 102.2 85.9 -14.8 278.0 310.6 420.9 n/m
19.0 -10.5
/Loss
befor
e Tax
Income -20.9 -16.4 -35.1 -53.1 -68.6 -78.7 40.5
-27.4 22.6
tax
--------------------------------------------------------------------------------
---
Net 81.3 69.5 -49.9 224.9 242.0 342.2 262.9
17.0 -7.1
Profi
t/Loss
for
the
Perio
d
Attrib
utable
to:
Owners 80.0 65.8 -50.3 218.7 241.0 339.7 259.0
21.6 -9.3
of
the
Paren
t
Non-co 1.3 3.7 0.4 6.2 1.0 2.5 225.0
-64.9 n/m
ntroll
ing
inter
ests
--------------------------------------------------------------------------------
---
81.3 69.5 -49.9 224.9 242.0 342.2 262.9
17.0 -7.1
================================================================================
===
Earnin
gs per
Share
Basic 0.10 0.09 -0.06 0.28 0.31 0.43 266.7
11.1 -9.7
earni
ngs
per
share
, EUR
Dilute 0.10 0.09 -0.06 0.28 0.31 0.43 266.7
11.1 -9.7
d
earni
ngs
per
share
, EUR
Consolidated Statement of Comprehensive Income
EUR million Q3/12 Q2/12 Q3/11 Q1-Q3/ Q1-Q3/ 2011
12 11
--------------------------------------------------------------------------------
Net profit/loss for the period 81.3 69.5 -49.9 224.9 242.0 342.2
Other Comprehensive Income
Actuarial losses on defined -2.6 - - -2.6 - -55.8
benefit pension plans
Available-for-sale financial 65.8 -131.2 -92.4 -133.9 -54.8 -240.5
assets
Currency and commodity hedges 36.2 -18.3 -55.8 41.9 -119.0 -128.4
Share of other comprehensive -3.8 -9.8 -17.7 -15.5 -14.7 -19.4
income of equity accounted
investments
Currency translation movements on 19.5 -17.8 -99.4 19.4 -172.6 -76.2
equity net investments (CTA)
Currency translation movements on -1.2 1.3 -0.7 -1.7 -2.3 -
non-controlling interests
Net investment hedges -17.8 -1.2 5.2 -25.3 19.9 6.0
Income tax relating to components -3.2 3.3 14.9 -3.8 28.2 40.8
of other comprehensive income
----------------------------------------------
Other Comprehensive Income, net 92.9 -173.7 -245.9 -121.5 -315.3 -473.5
of tax ----------------------------------------------
Total Comprehensive Income 174.2 -104.2 -295.8 103.4 -73.3 -131.3
----------------------------------------------
Total Comprehensive Income
Attributable to:
Owners of the Parent 174.1 -109.2 -295.5 98.9 -72.0 -133.8
Non-controlling interests 0.1 5.0 -0.3 4.5 -1.3 2.5
----------------------------------------------
174.2 -104.2 -295.8 103.4 -73.3 -131.3
==============================================
Condensed Consolidated Statement of Cash Flows
EUR million Q1-Q3/1 Q1-Q3/1
2 1
--------------------------------------------------------------------------------
Cash Flow from Operating Activities
Operating profit 437.9 589.8
Hedging result from OCI 40.5 -116.9
Adjustments for non-cash items 411.1 441.0
Change in net working capital -40.8 -293.3
-----------------
Cash Flow Generated by Operations 848.7 620.6
Net financial items paid -206.3 -61.8
Income taxes paid, net -91.3 -94.0 -----------------
Net Cash Provided by Operating Activities 551.1 464.8
-----------------
Cash Flow from Investing Activities
Acquisitions of subsidiaries and business operations, net of -11.1 -24.5
acquired cash
Acquisitions of equity accounted investments -98.5 -87.1
Proceeds from sale of fixed assets and shares, net of disposed 6.0 18.9
cash
Capital expenditure -376.9 -222.6
Payments/proceeds of non-current receivables, net -41.8 -3.4
-----------------
Net Cash Used in Investing Activities -522.3 -318.7
-----------------
Cash Flow from Financing Activities
Proceeds from issue of new long-term debt 1 471.7 50.0
Long-term debt, payments -476.3 -64.0
Change in short-term borrowings -189.4 149.5
Dividends paid -236.6 -197.2
Dividend to non-controlling interests -2.5 -1.8
-----------------
Net Cash Provided by/Used in Financing Activities 566.9 -63.5
-----------------
Net Increase in Cash and Cash Equivalents 595.7 82.6
Translation adjustment -30.3 -5.1
Net cash and cash equivalents at the beginning of period 1 134.3 1 103.1
-----------------
Net Cash and Cash Equivalents at Period End 1 699.7 1 180.6
-----------------
Cash and Cash Equivalents at Period End 1 707.8 1 183.3
Bank Overdrafts at Period End -8.1 -2.7
-----------------
Net Cash and Cash Equivalents at Period End 1 699.7 1 180.6
-----------------
Acquisitions
Cash and cash equivalents, net of bank overdraft 1.8 14.7
Fixed assets 5.8 49.6
Working capital 8.5 12.6
Tax assets and liabilities 0.6 -4.4
Interest-bearing liabilities and receivables -5.0 -5.1
-----------------
Fair Value of Net Assets Acquired 11.7 67.4
Non-controlling interest (as proportionate share) -0.2 -35.5
Goodwill (provisional for 2011) 0.1 10.7
Value of previously held equity interests -2.8 - -----------------
Total Purchase Consideration 8.8 42.6
Less cash and cash equivalents in acquired companies -1.8 -14.7
-----------------
Net Purchase Consideration 7.0 27.9
-----------------
Cash part of the consideration, net of acquired cash 11.1 24.5
Non-cash part of the consideration 0.2 3.4
Payment concerning unfinished 2011 acquisition -4.3 -
-----------------
Net Purchase Consideration 7.0 27.9
-----------------
Inpac Acquisition
EUR million Final Fair Value
Table
--------------------------------------------------------------------------------
Cash and cash equivalents, net of bank overdraft 15.7
Fixed assets 52.4
Working capital 12.5
Tax assets and liabilities -4.6
Interest-bearing assets and liabilities -5.4
Non-controlling interest -37.6
--------------------
Net assets 33.0
Goodwill 11.5
--------------------
Purchase consideration 44.5
--------------------
Consideration 44.5
Cash and cash equivalents in acquired companies, net of -15.7
bank overdraft
--------------------
Cash flow impact 28.8
--------------------
Inpac acquisition
On 28 July 2011 Stora Enso completed the acquisition of 51% of the shares in
the Chinese packaging company Inpac International Print & Packaging Co., Ltd.,
subsequently renamed Stora Enso Inpac Packaging Co. Ltd. Inpac is a packaging
products company with production operations in China and India, and service
operations in Korea. Inpac specialises in manufacturing consumer packaging,
especially for global manufacturers of consumer electronics and other consumer
goods. The acquisition gives Stora Enso access to new customers in the
fast-growing Chinese, Indian and Korean markets, and will enable it to grow
with global key customers in new geographic areas.
The Inpac acquisition accounting was finalised in the third quarter of 2012 and
the final consideration amounted to EUR 44.5 million and goodwill to EUR 11.5
million. During 2012 there was a EUR 0.2 million adjustment to the provisional
net asset amount presented in 2011 Annual Report. The acquisition was financed
from the Group's own cash assets. The goodwill is based on future earnings
expectations and synergy benefits. The non-controlling interest in Inpac was
valued as the proportionate share of the acquiree's net assets.
Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million Q1-Q3/12 2011 Q1-Q3/11
------------------------------------------------------------------
Carrying value at 1 January 5 480.2 5 565.8 5 565.8
Acquisition of subsidiary companies 5.9 63.3 60.3
Additions in fixed assets 334.0 436.1 210.5
Additions in biological assets 12.9 17.2 12.1
Change in emission rights -3.5 2.0 15.7
Disposals -1.8 -13.4 -12.5
Depreciation and impairment -435.0 -572.6 -433.4
Translation difference and other 108.8 -18.2 -96.2
----------------------------
Statement of Financial Position Total 5 501.5 5 480.2 5 322.3
============================
Borrowings
EUR million 30 Sep 12 31 Dec 11 30 Sep 11
----------------------------------------------------------------------
Non-current borrowings 4 433.7 3 339.4 3 328.7
Current borrowings 778.0 1 034.0 1 016.8
--------------------------------
5 211.7 4 373.4 4 345.5
================================
--------------------------------
Q1-Q3/12 2011 Q1-Q3/11
--------------------------------
Carrying value at 1 January 4 373.4 4 011.2 4 011.2
Debt acquired with new subsidiaries 0.4 5.4 13.5
Proceeds of borrowings (net) 767.6 331.6 357.6
Translation difference and other 70.3 25.2 -36.8
--------------------------------
Statement of Financial Position Total 5 211.7 4 373.4 4 345.5
================================
Condensed Consolidated Statement of Financial Position
EUR million 30 Sep 12 31 Dec 11 30 Sep 11
--------------------------------------------------------------------------------
Assets
Fixed Assets and Other Non-current
Investments
Fixed assets O 5 242.7 5 224.6 5 066.4
Biological assets O 219.3 212.6 199.2
Emission rights O 39.5 43.0 56.7
Equity accounted investments O 1 977.5 1 913.1 1 726.8
Available-for-sale: Interest-bearing I 92.0 82.0 75.7
Available-for-sale: Operative O 499.7 640.2 832.8
Non-current loan receivables I 225.6 125.3 130.6
Deferred tax assets T 124.2 121.9 107.9
Other non-current assets O 41.4 26.6 48.5
--------------------------------
8 461.9 8 389.3 8 244.6
--------------------------------
Current Assets
Inventories O 1 525.9 1 528.7 1 571.5
Tax receivables T 17.9 6.2 7.3
Operative receivables O 1 754.3 1 654.6 1 633.2
Interest-bearing receivables I 186.5 281.5 308.4
Cash and cash equivalents I 1 707.8 1 138.8 1 183.3
--------------------------------
5 192.4 4 609.8 4 703.7
--------------------------------
Total Assets 13 654.3 12 999.1 12 948.3
================================
Equity and Liabilities
Owners of the Parent 5 735.0 5 872.7 5 934.5
Non-controlling Interests 89.3 87.1 83.4
--------------------------------
Total Equity 5 824.3 5 959.8 6 017.9
================================
Non-current Liabilities
Post-employment benefit provisions O 334.0 333.1 312.2
Other provisions O 141.1 147.7 138.8
Deferred tax liabilities T 430.7 401.0 381.0
Non-current debt I 4 433.7 3 339.4 3 328.7
Other non-current operative liabilities O 27.4 31.9 33.1
--------------------------------
5 366.9 4 253.1 4 193.8
--------------------------------
Current Liabilities
Current portion of non-current debt I 207.9 250.0 217.9
Interest-bearing liabilities I 570.1 784.0 798.9
Operative liabilities O 1 638.7 1 678.7 1 618.2
Tax liabilities T 46.4 73.5 101.6
--------------------------------
2 463.1 2 786.2 2 736.6
--------------------------------
Total Liabilities 7 830.0 7 039.3 6 930.4
================================
Total Equity and Liabilities 13 654.3 12 999.1 12 948.3
================================
Items designated with “O” comprise Operating Capital
Items designated with “I” comprise Interest-bearing Net Liabilities
Items designated with “T” comprise Net Tax Liabilities
Statement of Changes in Equity
EUR Share Share Invest Treasu Step Availa Curren OCI of CTA
Retaine Attribu Non-co Total
milli Capital Premiu ed ry Acquis ble-fo cy and Equity and
d table ntroll
on m and Non-Re Shares ition r-Sale Commod Accoun Net
Earning to ing
Reserv strict Revalu Financ ity ted Invest
s Owners Intere
e fund -ed ation ial Hedges Invest ment
of the sts
Equity Surplu Assets ments Hedges
Parent
Fund s
--------------------------------------------------------------------------------
----------------------------------
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 - - - - - - - - -
241.0 241.0 1.0 242.0
for
the
perio
d
OCI - - - - - -54.8 -119.0 -14.7 -152.7
- -341.2 -2.3 -343.5
befor
e tax
Income - - - - - 2.1 31.3 - -5.2
- 28.2 - 28.2
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - -52.7 -87.7 -14.7 -157.9
241.0 -72.0 -1.3 -73.3
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
-197.2 -197.2 -1.8 -199.0
nd
Acquis - - - - - - - - -
- - 35.5 35.5
itions
Buy-ou - - - - - - - - -
0.8 0.8 -0.8 -
t of
non-c
ontrol
ling
inter
est
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 727.3 -9.8 -24.5 -54.2
3 250.1 5 934.5 83.4 6 017.9
e at
30
Sep
2011
--------------------------------------------------------------------------------
---------------------------
Profit - - - - - - - - -
98.7 98.7 1.5 100.2
for
the
perio
d
OCI - - - - - -185.7 -9.4 -4.7 82.5
-55.8 -173.1 2.3 -170.8
befor
e tax
Income - - - - - -1.0 2.0 - 3.7
7.9 12.6 - 12.6
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - -186.7 -7.4 -4.7 86.2
50.8 -61.8 3.8 -58.0
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
- - -1.8 -1.8
nd
Acquis - - - - - - - - -
- - 1.7 1.7
itions
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 540.6 -17.2 -29.2 32.0
3 300.9 5 872.7 87.1 5 959.8
e at
31
Dec
2011
--------------------------------------------------------------------------------
---------------------------
Profit - - - - - - - - -
218.7 218.7 6.2 224.9
for
the
perio
d
OCI - - - - - -133.9 41.9 -15.5 -5.9
-2.6 -116.0 -1.7 -117.7
befor
e tax
Income - - - - - -0.6 -10.1 - 6.2
0.7 -3.8 - -3.8
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - -134.5 31.8 -15.5 0.3
216.8 98.9 4.5 103.4
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
-236.6 -236.6 -2.5 -239.1
nd
Acquis - - - - - - - - -
- - 0.2 0.2
itions
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 406.1 14.6 -44.7 32.3
3 281.1 5 735.0 89.3 5 824.3
e at
30
Sep
2012
--------------------------------------------------------------------------------
---------------------------
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
EUR million 30 Sep 12 31 Dec 11 30 Sep 11
--------------------------------------------------------------------------
On Own Behalf
Pledges 0.8 1.3 -
Mortgages 9.7 9.7 16.1
On Behalf of Equity Accounted Investments
Guarantees 582.0 390.2 298.1
On Behalf of Others
Guarantees 5.1 5.0 7.3
Other Commitments, Own
Operating leases, in next 12 months 60.2 66.1 46.9*
Operating leases, after next 12 months 497.4 525.8 501.9*
Pension liabilities 0.4 0.4 0.4
Other commitments 5.0 5.1 9.4*
--------------------------------
Total 1 160.6 1 003.6 880.1*
================================
Pledges 0.8 1.3 -
Mortgages 9.7 9.7 16.1
Guarantees 587.1 395.2 305.4
Operating leases 557.6 591.9 548.8*
Pension liabilities 0.4 0.4 0.4
Other commitments 5.0 5.1 9.4*
--------------------------------
Total 1 160.6 1 003.6 880.1
================================
* Starting from the fourth quarter of 2011, Stora Enso has ceased the reporting
of the Group's purchase agreement commitments for consumables and services. As
a result, commitments as at 30 September 2011 have been reclassified to comply
with the changes in reporting.
Capital commitments
The Group's direct capital expenditure contracts, excluding acquisitions,
amounted to EUR 120 million at 30 September 2012 (compared with EUR 238 million
at 30 September 2011 and EUR 214 million at 31 December 2011).
The Group's share of capital expenditure contracts in equity accounted
investments, excluding acquisitions, amounted to EUR 272 million at 30
September 2012 (compared with EUR 431 million at 30 September 2011 and EUR 436
million at 31 December 2011) of which Stora Enso has guaranteed EUR 189 million
(compared with EUR 189 million at 30 September 2011 and EUR 189 million at 31
December 2011).
Fair Values of Derivative Financial Instruments
EUR million 30 Sep 12 31 Dec 11 30 Sep 11
--------------------------------------------------------------------------------
Positive Negative Net Fair Net Fair Net Fair
Fair Fair Values Values Values
Values Values
Interest rate 125.4 -64.8 60.6 95.8 100.7
swaps
Interest rate - -55.8 -55.8 -51.0 -54.7
options
Forward 8.4 -71.8 -63.4 4.8 34.7
contracts
Currency options 32.9 -9.4 23.5 -16.1 -16.5
Commodity 11.1 -14.8 -3.7 -2.1 5.7
contracts
Equity swaps - -1.9 -1.9 -22.6 -27.1
("TRS")
---------------------------------------------------------------
Total 177.8 -218.5 -40.7 8.8 42.8
===============================================================
Nominal Values of Derivative Financial Instruments
EUR million 30 Sep 12 31 Dec 11 30 Sep 11
-------------------------------------------------------------
Interest Rate Derivatives
Interest rate swaps
Maturity under 1 year 34.8 61.6 26.8
Maturity 2-5 years 2 085.7 2 073.3 1 888.6
Maturity 6-10 years 250.0 250.0 300.0
--------------------------------
2 370.5 2 384.9 2 215.4
Interest rate options 523.0 522.8 908.3
--------------------------------
Total 2 893.5 2 907.7 3 123.7
--------------------------------
Foreign Exchange Derivatives
Forward contracts 2 352.5 1 750.2 2 027.6
Currency options 2 570.4 2 669.4 2 895.9
--------------------------------
Total 4 922.9 4 419.6 4 923.5
--------------------------------
.
Commodity Derivatives
Commodity contracts 313.3 236.7 195.2
--------------------------------
Total 313.3 236.7 195.2
--------------------------------
Total Return (Equity) Swaps
Equity swaps ("TRS") 54.8 73.3 75.6
--------------------------------
Total 54.8 73.3 75.6
--------------------------------
Sales by Segment
EUR Q3/12 Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
millio
n
--------------------------------------------------------------------------------
Printin 1 226.8 1 190.8 1 227.2 5 022.0 1 283.8 1 283.1 1 242.6 1 212.5
g and
Readin
g
Biomate 267.6 246.5 241.7 1 092.0 255.4 276.4 268.6 291.6
rials
Buildin 403.3 443.7 381.2 1 671.1 382.0 414.0 465.4 409.7
g and
Living
Renewab 812.2 826.8 779.3 3 194.6 756.6 800.6 829.6 807.8
le
Packag
ing
Other 644.9 662.2 703.4 2 700.5 643.9 637.4 700.1 719.1
Inter-s -660.7 -649.6 -659.5 -2 715.3 -640.1 -672.2 -689.2 -713.8
egment
sales
------------------------------------------------------------------------
Total 2 694.1 2 720.4 2 673.3 10 964.9 2 681.6 2 739.3 2 817.1 2 726.9
========================================================================
Operational EBIT by Segment
EUR million Q3/12 Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and Reading 51.1 41.7 67.3 285.3 55.6 72.3 72.2 85.2
Biomaterials 32.5 14.7 7.2 169.2 27.2 57.3 31.2 53.5
Building and Living 0.7 11.5 9.8 62.8 6.0 9.8 35.2 11.8
Renewable Packaging 82.9 72.5 61.7 301.3 32.8 73.6 93.9 101.0
Other 7.5 0.8 1.4 48.1 23.3 11.4 6.6 6.8
---------------------------------------------------------
Operational EBIT 174.7 141.2 147.4 866.7 144.9 224.4 239.1 258.3
Fair valuations and -13.4 -33.1 1.2 -27.5 45.6 -45.8 -26.9 -0.4
non-operational
items*
Non-recurring Items - 44.6 -24.7 -79.9 -21.0 - -31.7 -27.2
---------------------------------------------------------
Operating Profit 161.3 152.7 123.9 759.3 169.5 178.6 180.5 230.7
(IFRS)
Net financial items -59.1 -66.8 -34.0 -338.4 -59.2 -193.4 -34.6 -51.2
Profit/Loss before Tax 102.2 85.9 89.9 420.9 110.3 -14.8 145.9 179.5
Income tax expense -20.9 -16.4 -15.8 -78.7 -10.1 -35.1 -9.9 -23.6
---------------------------------------------------------
Net Profit/Loss 81.3 69.5 74.1 342.2 100.2 -49.9 136.0 155.9
=========================================================
*Fair valuations and non-operational items include equity incentive schemes,
synthetic options net of realised and open hedges, CO2 emission rights,
valuations of biological assets related to forest assets in EAI and Group's
share of tax and net financial items of EAI.
NRI by Segment
EUR million Q3/12 Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and Reading - 12.9 -9.6 -29.1 3.7 - -27.5 -5.3
Biomaterials - - - 12.6 7.5 - -1.9 7.0
Building and Living - - - -33.5 -4.6 - - -28.9
Renewable Packaging - - -15.1 -8.9 -6.6 - -2.3 -
Other - 31.7 - -21.0 -21.0 - - -
---------------------------------------------------------
NRI on Operating - 44.6 -24.7 -79.9 -21.0 - -31.7 -27.2
Profit
NRI on Financial items - 9.5 13.6 -138.3 -10.1 -128.2 - -
NRI on tax - 1.9 5.0 62.2 50.8 - 3.6 7.8
---------------------------------------------------------
NRI on Net Profit - 56.0 -6.1 -156.0 19.7 -128.2 -28.1 -19.4
=========================================================
Fair Valuations and Non-operational Items* by Segment
EUR million Q3/12 Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and Reading - -0.4 -1.0 -7.9 2.0 -0.3 -9.2 -0.4
Biomaterials -7.9 -22.8 -4.6 -18.5 2.7 -11.6 -5.4 -4.2
Building and Living -0.1 -0.1 -2.2 -1.8 - - -1.8 -
Renewable Packaging - - -0.7 -6.6 - - -6.6 -
Other -5.4 -9.8 9.7 7.3 40.9 -33.9 -3.9 4.2
-------------------------------------------------------
Fair Valuations and -13.4 -33.1 1.2 -27.5 45.6 -45.8 -26.9 -0.4
Non-operational Items
on Operating Profit
=======================================================
*Fair valuations and non-operational items include equity incentive schemes,
synthetic options net of realised and open hedges, CO2 emission rights,
valuations of biological assets related to forest assets in EAI and Group'sshare of tax and net financial items of EAI.
Operating Profit/Loss by Segment
EUR million Q3/12 Q2/12 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and Reading 51.1 54.2 56.7 248.3 61.3 72.0 35.5 79.5
Biomaterials 24.6 -8.1 2.6 163.3 37.4 45.7 23.9 56.3
Building and Living 0.6 11.4 7.6 27.5 1.4 9.8 33.4 -17.1
Renewable Packaging 82.9 72.5 45.9 285.8 26.2 73.6 85.0 101.0
Other 2.1 22.7 11.1 34.4 43.2 -22.5 2.7 11.0
---------------------------------------------------------
Operating Profit 161.3 152.7 123.9 759.3 169.5 178.6 180.5 230.7
(IFRS)
Net financial items -59.1 -66.8 -34.0 -338.4 -59.2 -193.4 -34.6 -51.2
---------------------------------------------------------
Profit/Loss before Tax 102.2 85.9 89.9 420.9 110.3 -14.8 145.9 179.5
Income tax expense -20.9 -16.4 -15.8 -78.7 -10.1 -35.1 -9.9 -23.6
---------------------------------------------------------
Net Profit/Loss 81.3 69.5 74.1 342.2 100.2 -49.9 136.0 155.9
=========================================================
Key Exchange Rates for the Euro
One Euro is Closing Rate Average Rate
-------------------------------------------------------
30 Sep 12 31 Dec 11 30 Sep 12 31 Dec 11
-------------------------------------------
SEK 8.4498 8.9120 8.7341 9.0307
USD 1.2930 1.2939 1.2817 1.3922
GBP 0.7981 0.8353 0.8122 0.8678
-------------------------------------------
Transaction Risk and Hedges in Main Currencies as at 30 September 2012
EUR million USD GBP SEK
------------------------------------------------------------------------------
------------------------------------------------------------
Estimated annual net operating cash flow exposure 1 150 620 -950
Transaction hedges as at 30 Sep 2012 -580 -280 380
------------------
Hedging percentage as at 30 Sep 2012 for the next 12 months 50% 45% 40%
------------------
Additional GBP hedges for 13-16 months increase the hedging percentages by 6%.
Changes in Exchange Rates on Operational EBIT
Operational EBIT: Currency strengthening of + 10% EUR million
--------------------------------------------------------------
--------------------------------------------------
USD 115
SEK -95
GBP 62
--------------------------------------------------------------
The sensitivity is based on estimated next 12 months net operating cash flow.
The calculation does not take into account currency hedges, and assumes no
changes occur other than a single currency exchange rate movement. Weakening
would have the opposite impact.
Stora Enso Shares
Trading Volume Helsinki Stockholm
------------------------------------------
A share R share A share R share
---------------------------------------------------------
July 28 398 83 248 082 49 283 24 521 468
August 60 754 72 564 074 77 160 31 075 003
September 66 177 70 369 945 81 073 25 549 055
------------------------------------------
Total 155 329 226 182 101 207 516 81 145 526 ------------------------------------------
Closing Price Helsinki, EUR Stockholm, SEK
------------------------------------------
A share R share A share R share
---------------------------------------------------------
July 6.15 4.65 53.00 38.88
August 6.13 4.80 51.00 40.12
September 5.81 4.83 50.75 40.88
Calculation of Key Figures
Operational return on capital employed, operational ROCE 100 x Operational
(%) EBIT
Capital
employed 1)
2)
Operational return on operating capital, operational 100 x Operational
ROOC (%) EBIT
Operating
capital 2)
Return on equity, 100 x Profit before
ROE (%) tax and
non-controlli
ng items -
taxes
Total equity
2)
Equity ratio (%) 100 x Total equity
Total assets
Interest-bearing net liabilities Interest-beari ng liabilities
-
interest-bear
ing assets
Debt/equity ratio Interest-beari
ng net
liabilities
Equity
Fixed asset
CEPS Net
profit/loss
for the
period 3) -
depreciation
and
impairment
Average number
of shares
EPS Net
profit/loss
for the
period 3)
Average number
of shares
Operational EBIT Operating profit/loss
excluding NRI
and fair
valuations 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-beari
ng 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:
Jouko Karvinen, CEO, tel. +358 2046 21410
Karl-Henrik Sundström, CFO, tel. +46 1046 71660
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 2046 21242
Sanna Lahti, SVP, Global Communications, tel. +358 2046 21251
Stora Enso's full year 2012 results will be published on 5 February 2013.
PRESS CONFERENCE IN STOCKHOLM
Time: 13.00 local time today (14.00 EET)
Location: World Trade Center Stockholm, plan 4, sektion D
Address: Klarabergsviadukten 70/Kungsbron 1
Presentations: Jouko Karvinen, CEO
Karl-Henrik Sundström, CFO
The conference will be held in English. Questions can be addressed to Jouko
Karvinen and Karl-Henrik Sundström after the presentation.
ANALYST CONFERENCE CALL
CEO Jouko Karvinen, CFO Karl-Henrik Sundström 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 US Eastern time).
If you wish to participate, please dial:
Continental Europe and the UK +44 (0) 20 7136 6283
Finland +358 (0) 9 6937 9543
Sweden +46 (0) 8 5352 6408
USA +1 212 444 0896
Access code: 8894140
The live webcast may be accessed at www.storaenso.com/investors
Stora Enso is the global rethinker of the paper, biomaterials, wood products
and packaging industry. We always rethink the old and expand to the new to
offer our customers innovative solutions based on renewable materials. Stora
Enso employs some 30 000 people worldwide, and our sales in 2011 amounted to
EUR 11.0 billion. Stora Enso shares are listed on NASDAQ OMX Helsinki (STEAV,
STERV) and Stockholm (STE A, STE R). In addition, the shares are traded in the
USA as ADRs (SEOAY) in the International OTCQX over-the-counter market.
It should be noted that certain statements herein which are not historical
facts, including, without limitation those regarding expectations for market
growth and developments; expectations for growth and profitability; and
statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or
similar expressions, are forward-looking statements within the meaning of the
United States Private Securities Litigation Reform Act of 1995. Since these
statements are based on current plans, estimates and projections, they involve
risks and uncertainties, which may cause actual results to materially differ
from those expressed in such forward-looking statements. Such factors include,
but are not limited to: (1) operating factors such as continued success of
manufacturing activities and the achievement of efficiencies therein, continued
success of product development, acceptance of new products or services by the
Group's targeted customers, success of the existing and future collaboration
arrangements, changes in business strategy or development plans or targets,
changes in the degree of protection created by the Group's patents and other
intellectual property rights, the availability of capital on acceptable terms;
(2) industry conditions, such as strength of product demand, intensity of
competition, prevailing and future global market prices for the Group's
products and the pricing pressures thereto, price fluctuations in raw
materials, financial condition of the customers and the competitors of the
Group, the potential introduction of competing products and technologies by
competitors; and (3) general economic conditions, such as rates of economic
growth in the Group's principal geographic markets or fluctuations in exchange
and interest rates.
www.storaenso.com
www.storaenso.com/investors
STORA ENSO OYJ
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