2012-04-24 12:00:00 CEST
2012-04-24 12:00:25 CEST
REGULATED INFORMATION
Stora Enso Oyj - Interim report (Q1 and Q3)
Stora Enso Interim Review January–March 2012
Earnings remained moderate as expected, liquidity further improved
Helsinki, Finland, 2012-04-24 12:00 CEST (GLOBE NEWSWIRE) -- STORA ENSO OYJ
INTERIM REVIEW 24 April 2012 at 13.00 EET
-- Operational EBIT decreased year-on-year to EUR 147 (EUR 258) million mainly
due to lower prices in Printing and Reading and Biomaterials, and lower
volumes in Renewable Packaging. Operational EBIT was similar to Q4 2011.
-- Cash flow from operations strong at EUR 224 (EUR 163) million. Liquidity
improved to EUR 1 251 (EUR 1 108) million year-on-year.
-- Plan to build plantation-based integrated board and pulp mills at Beihai
city in Guangxi, China.
-- Profit improvement action plans in Renewable Packaging, and Printing and
Reading announced during Q1 2012.
-- Q2 2012 sales are forecast to be slightly higher and operational EBIT
approximately in the range of Q1 2012 as there will be maintenance
stoppages in several European mills and the benefits of improving variable
costs are expected to become only slowly apparent in the results.
Summary of First Quarter Results
Q1/12 Q4/11 Q1/11
-------------------------------------------------------------------
Sales EUR million 2 673.3 2 681.6 2 726.9
Operational EBITDA EUR million 262.1 242.9 368.3
Operational EBIT EUR million 147.4 144.9 258.3
Operating profit (IFRS) EUR million 123.9 169.5 230.7
Profit before tax excl. NRI EUR million 101.0 141.4 206.7
Profit before tax EUR million 89.9 110.3 179.5
Net profit excl. NRI EUR million 80.2 80.5 175.3
Net profit EUR million 74.1 100.2 155.9
EPS excl. NRI EUR 0.10 0.10 0.22
EPS EUR 0.09 0.12 0.20
CEPS excl. NRI EUR 0.28 0.28 0.39
Operational ROCE % 6.8 6.7 11.9
---------------------------------------
The Group has adopted operational EBIT as a key operative non-IFRS measure
starting from the fourth quarter of 2011.
Operational EBIT comprises the operating profit excluding NRI and fair
valuations of the segments and Stora Enso's share of the operating profit
excluding NRI and fair valuations of its equity accounted investments (EAI).
Fair valuations include equity incentive schemes, synthetic options net of
realised and open hedges, CO2 emission rights and valuations of biological
assets related to forest assets in EAI.
Stora Enso Deliveries and Production
Q1/12 Q4/11 Q1/11 2011 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
------------------------
Paper and board 2 549 2 606 2 506 10 330 1.7 -2.2
deliveries (1 000
tonnes)
Paper and board 2 576 2 512 2 618 10 346 -1.6 2.5
production (1 000
tonnes)
Wood products 1 154 1 177 1 238 5 072 -6.8 -2.0
deliveries (1 000 m3)
Market pulp deliveries 261 289 313 1 130 -16.6 -9.7
(1 000 tonnes)*
Corrugated packaging 261 273 247 1 018 5.7 -4.4
deliveries (million
m2)
--------------------------------------------------------
*Stora Enso's net market pulp position will be about 1 million tonnes for 2012.
Breakdown of Sales Change Q1/2011 to Q1/2012
Sales
-------------------------------------------
Q1/11, EUR million 2 726.9
-------------------------------------------
Price and mix, % -1
Currency, % -1
Volume, % -1
Other sales*, % -
-------------------------------------------
Total before structural changes, % -3
Structural change**, % 1
Total, % -2
Q1/12, EUR million 2 673.3
===========================================
* Wood, energy, RCP, by-products etc.
** Asset closures, major investments, divestments and acquisitions
Key Figures
EUR million Q1/12 Q4/11 Q1/11 2011 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
Sales 2 673.3 2 2 10 -2.0 -0.3
681.6 726.9 964.9
Operational EBITDA 262.1 242.9 368.3 1 308.0 -28.8 7.9
Operational EBIT 147.4 144.9 258.3 866.7 -42.9 1.7
Operational EBIT 5.5 5.4 9.5 7.9 -42.1 1.9
margin, %
Operating profit 123.9 169.5 230.7 759.3 -46.3 -26.9
(IFRS)
Operating margin 4.6 6.3 8.5 6.9 -45.9 -27.0
(IFRS), %
Profit before tax 101.0 141.4 206.7 639.1 -51.1 -28.6
excl. NRI
Profit before tax 89.9 110.3 179.5 420.9 -49.9 -18.5
Net profit for the 80.2 80.5 175.3 498.2 -54.2 -0.4
period excl. NRI
Net profit for the 74.1 100.2 155.9 342.2 -52.5 -26.0
period
Capital expenditure 62.2 230.7 57.3 453.3 8.6 -73.0
Depreciation and 142.7 140.9 135.4 554.9 5.4 1.3
impairment charges
excl. NRI
Operational ROCE, % 6.8 6.7 11.9 10.0 -42.9 1.5
Earnings per share 0.10 0.10 0.22 0.63 -54.5 -
(EPS) excl. NRI,
EUR
EPS (basic), EUR 0.09 0.12 0.20 0.43 -55.0 -25.0
Cash earnings per 0.28 0.28 0.39 1.33 -28.2 -
share (CEPS) excl.
NRI, EUR
CEPS, EUR 0.28 0.30 0.39 1.16 -28.2 -6.7
Return on equity 5.0 6.7 9.9 5.6 -49.5 -25.4
(ROE), %
Debt/equity ratio 0.46 0.47 0.38 0.47 21.1 -2.1
Equity per share, 7.49 7.45 8.01 7.45 -6.5 0.5
EUR
Equity ratio, % 45.6 45.8 48.1 45.8 -5.2 -0.4
Average number of 29 041 29 639 26 323 27 958 10.3 -2.0
employees
Average number of
shares (million)
periodic 788.6 788.6 788.6 788.6
cumulative 788.6 788.6 788.6 788.6
cumulative, diluted 788.6 788.6 788.6 788.6
-----------------------------------------------------------
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 Q1/12 Q4/11 Q1/11 2011 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
Operational EBIT 147.4 144.9 258.3 866.7 -42.9 1.7
Fair valuations and 1.2 45.6 -0.4 -27.5 n/m -97.4
non-operational items*
Non-recurring items -24.7 -21.0 -27.2 -79.9 9.2 -17.6
-------------------------------------------------------
Operating Profit (IFRS) 123.9 169.5 230.7 759.3 -46.3 -26.9
-------------------------------------------------------
*Fair valuations and non-operational items include equity incentive schemes,
synthetic options net of realised and open hedges, CO2 emission rights and
valuations of biological assets related to forest assets in equity accounted
investments (EAI) and Group's share of tax and net financial items of EAI.
Q1/2012 Results (compared with Q1/2011)
Operational EBIT at EUR 147 million was EUR 111 million lower than a year ago.
This represents an operational EBIT margin of 5.5% (9.5%).
Lower prices in local currencies, mainly in paper and pulp grades, decreased
operational EBIT by EUR 33 million and slightly lower deliveries and production
decreased operational EBIT by EUR 26 million. Paper and board production was
curtailed by 7% (7%) and sawnwood production by 10% (2%) to manage inventories.
The costs of chemicals and energy were higher than a year ago, but productivity
improvements and cost savings partly compensated for the cost increases. The
overall net impact of variable costs in local currencies was a negative EUR 32
million, partially due to operational issues.
Fixed costs net of cost saving actions were similar to the first quarter of
2011 despite the Inpac acquisition during the second half of 2011.
Exchange rates had a negative net impact on sales and costs totalling EUR 18
million, after hedges.
The Group recorded as non-recurring items (NRI) a negative EUR 25 million at
operating profit level and a positive EUR 14 million at financial item level in
the first quarter of 2012.
Net financial items were EUR -34 (EUR -51) million. Net interest expenses
increased from EUR 23 million to EUR 38 million. Net foreign exchange gains
amounted to EUR 8 (loss EUR 12) million. The net loss from other financial
items totalled EUR 4 (EUR 16) million, including a NRI with EUR 14 million
positive impact due to the reversal of a provision relating to the NewPage
lease guarantee and a net accounting loss of EUR 12 million relating to the
repurchase of a portion of the Eurobond maturing in 2014. The remaining loss of
EUR 6 million was mainly related to the fair valuations of interest rate
derivatives and financial fees.
Group capital employed was EUR 8 705 million on 31 March 2012, a net decrease
of EUR 63 million on a year earlier. Group capital employed decreased primarily
due to a EUR 320 million reduction in the valuation of PVO mainly resulting
from lower anticipated future electricity prices, EUR 120 million from capital
expenditure being lower than depreciation and a EUR 40 million decrease in
operative working capital. Increases were primarily due to a EUR 200 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, a EUR 100 million decrease in net tax
liabilities and EUR 70 million from the Inpac acquisition. In addition, changes
in the impact of foreign exchange rates increased capital employed by EUR 40
million, mainly due to strengthening of the Chinese Renminbi.
The operational return on capital employed at 6.8% (11.9%) was below cost of
capital.
Q1/2012 Results (compared with Q4/2011)
Sales were similar to the previous quarter at EUR 2 673 million. Operational
EBIT was EUR 2 million higher than in the previous quarter at EUR 147 million.
Higher capacity utilisation than in the previous quarter more than offsetting
slightly lower delivery volumes increased operational EBIT by EUR 30 million.
Lower sales prices in local currencies than in the previous quarter decreased
operational EBIT by EUR 24 million. Lower maintenance activity and an impact
from fixed costs increased operational EBIT by EUR 29 million. Lower capital
gains and volumes in Bergvik Skog and Tornator than in the fourth quarter of
2011 decreased operational EBIT by EUR 15 million as expected.
Capital Structure
EUR million 31 Mar 12 31 Dec 11 31 Mar 11
----------------------------------------------------------------------------
Operative fixed assets 6 032.0 6 120.4 6 394.2
Equity accounted investments 1 925.9 1 913.1 1 725.4
Operative working capital, net 1 529.6 1 504.6 1 530.3
Non-current interest-free items, net -467.6 -486.1 -473.2
--------------------------------
Operating Capital Total 9 019.9 9 052.0 9 176.7
Net tax liabilities -315.0 -346.4 -408.6
--------------------------------
Capital Employed 8 704.9 8 705.6 8 768.1
================================
Equity attributable to Company shareholders 5 906.7 5 872.7 6 318.1
Non-controlling interests 86.5 87.1 49.0
Net interest-bearing liabilities 2 711.7 2 745.8 2 401.0
--------------------------------
Financing Total 8 704.9 8 705.6 8 768.1
================================
Financing Q1/2012 (compared with Q4/2011)
Cash flow from operations was EUR 224 (EUR 302) million. Cash flow after
investing activities was EUR 111 (EUR 74) million. Interest-bearing net
liabilities of the Group decreased by EUR 34 million to EUR 2 712 million due
to cash flow generation from the operations.
Total unutilised committed credit facilities were unchanged at EUR 700 million,
and cash and cash equivalents net of overdrafts remained strong at EUR 1 251
million, which is EUR 117 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.
In February 2012 Stora Enso raised a long-term loan of EUR 150 million from the
European Investment Bank (EIB) to finance the new containerboard machine
investment at Ostrołęka Mill in Poland announced in January 2011.
In February 2012 Stora Enso issued a EUR 500 million seven-year bond under the
EMTN (Euro Medium Term Note) programme. The new notes were issued with a 5.531%
yield and were priced at 99.824. Stora Enso also announced a tender offer for
its EUR 750 million Eurobond maturing in 2014. On 9 March 2012 Stora Enso
announced that it had successfully repurchased notes with nominal value EUR 337
million from the 2014 bond and the transaction was priced at 105.970.
The debt/equity ratio at 31 March 2012 was 0.46 (0.47). The currency effect on
owners' equity net of the hedging of equity translation risks was positive EUR
13 million.
Cash Flow
EUR million Q1/12 Q4/11 Q1/11 2011 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
Operating profit 123.9 169.5 230.7 759.3 -46.3 -26.9
Depreciation and other 111.6 51.0 111.1 492.0 0.5 118.8
non-cash items
Change in working -11.8 81.8 -178.9 -217.0 93.4 -114.4
capital
---------------------------------------------------------
Cash Flow from 223.7 302.3 162.9 1 034.3 37.3 -26.0
Operations
Cash spent on fixed -94.3 -187.0 -57.3 -409.6 -64.6 49.6
and biological assets
Acquisitions of equity -18.0 -41.5 -13.9 -128.6 -29.5 56.6
accounted investments
---------------------------------------------------------
Cash Flow after 111.4 73.8 91.7 496.1 21.5 50.9
Investing Activities
---------------------------------------------------------
Capital Expenditure for January-March 2012
Additions to fixed and biological assets in the first quarter of 2012 totalled
EUR 62 million, which is 44% of depreciation in the same period. In addition,
the equity injection into Montes del Plata, a joint venture in Uruguay, was EUR
18 million in the first quarter of 2012. Investments in fixed assets and
biological assets had a cash outflow impact of EUR 94 million in the first
quarter of 2012.
The capital expenditure forecast for the Group for the full year 2012 has
changed due to the announced consumer board and pulp mill project in China and
is approximately EUR 700-750 million. Annual depreciation in 2012 will be about
EUR 580 million. In addition, the equity injection into Montes del Plata, a
joint venture in Uruguay, will be approximately EUR 150 million in 2012.
The main projects ongoing during the first quarter of 2012 were the Ostrołęka
containerboard machine and the Skoghall woodyard investment.
Near-term Outlook
In the second quarter of 2012 Group sales are forecast to be slightly higher
and operational EBIT approximately in the range of the first quarter of 2012 as
there will be maintenance stoppages in several European mills and the benefits
of improving variable costs are expected to become only slowly apparent in the
results. The main maintenance impact is anticipated to be in the Biomaterials
Business Area.
Segments Q1/12 compared with Q1/11
Stora Enso has 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 comparative data have been reclassified
accordingly.
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 million Q1/12 Q4/11 Q1/11 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
Sales 1 227.2 1 283.8 1 212.5 1.2 -4.4
Operational EBITDA 133.4 123.3 147.8 -9.7 8.2
Operational EBIT 67.3 55.6 85.2 -21.0 21.0
% of sales 5.5 4.3 7.0 -21.4 27.9
Operational ROOC, 8.9 7.2 10.8 -17.6 23.6
%*
Paper deliveries, 1 783 1 886 1 707 4.5 -5.5
1 000 t
Paper production, 1 809 1 811 1 767 2.4 -0.1
1 000 t
-------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Lower
sales prices in local currencies than a year ago were not fully offset by
lower variable costs.
-- Volumes were higher than a year ago due to efficient sales and production
even though European paper demand was weaker than in the previous year.
-- Acquisition of Danish RCP collector Danfiber A/S was completed in January
2012. The consideration for a 51% shareholding amounted to EUR 0.4 million.
-- Plans to reduce annual costs by approximately EUR 48 million
with the full impact
from the third quarter of 2013 onwards
through restructuring and selected investments in coated magazine paper
operations are proceeding.
-- Co-determination negotiations regarding plans to streamline Swedish mill maintenance operations are ongoing and expected to be completed during the
second quarter of 2012. Plans are expected to reduce annual costs by
approximately EUR 7 million starting gradually from late 2012 onwards.
Markets
Produc Market Demand Q1/12 Demand Q1/12 Price Q1/12 Price Q1/12
t compared with compared with compared with compared with
Q1/11 Q4/11 Q1/11 Q4/11
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paper Europe Weaker Weaker Slightly lower Slightly lower
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 million Q1/12 Q4/11 Q1/11 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
Sales 241.7 255.4 291.6 -17.1 -5.4
Operational EBITDA 14.9 26.3 63.6 -76.6 -43.3
Operational EBIT 7.2 27.2 53.5 -86.5 -73.5
% of sales 3.0 10.6 18.3 -83.6 -71.7
Operational ROOC, %* 2.0 7.7 16.1 -87.6 -74.0
Pulp deliveries, 1 459 465 478 -4.0 -1.3
000 t
-----------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Market pulp prices were significantly lower than a year ago.
-- Volumes were lower than a year ago due to annual maintenance in Veracel
Pulp Mill in the first quarter of 2012.
-- Softwood pulp production volumes were lower due to operational issues in
Nordic pulp mills.Montes del Plata 1.3 million tonnes per year pulp mill
project is progressing, with almost 5 000 workers on site. Civil works on
the site are advancing well. Erection of the digester, pre-assembly of
bleaching towers and erection of recovery boiler structural steel and
evaporator effects have continued.
-- Production of dissolving pulp at Enocell Mill in Finland and deliveries to
customers successfully started during the first quarter of 2012.
Markets
Produc Market Demand Q1/12 Demand Q1/12 Price Q1/12 Price Q1/12
t compared with compared with compared with compared with
Q1/11 Q4/11 Q1/11 Q4/11
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Softwo Europe Weaker Stronger Significantly Lower
od 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 million Q1/12 Q4/11 Q1/11 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
Sales 381.2 382.0 409.7 -7.0 -0.2
Operational EBITDA 11.3 15.4 22.6 -50.0 -26.6
Operational EBIT 9.8 6.0 11.8 -16.9 63.3
% of sales 2.6 1.6 2.9 -10.3 62.5
Operational ROOC, 6.8 4.2 8.0 -15.0 61.9
%*
Deliveries, 1 000 1 109 1 143 1 199 -7.5 -3.0
m3
------------------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Lower sales volumes than a year ago were partly offset by lower fixed
costs; further cost reductions will be implemented in the second quarter of
2012.
-- One-time gain of EUR 8 million in the first quarter of 2012 due to
consolidation of equity accounted investment.
-- Production curtailments implemented at highest-cost assets to defend
margins and manage inventory levels will continue during the second quarter
of 2012 if necessary in response to the slowdown in the global construction
industry.
-- CLT-based solutions in urban multi-storey building continued to grow as
planned, with Nordic market as trailblazer. The new 60 000 m3 per year CLT
production unit at Ybbs in Austria started up on schedule. In addition, the
focus is now on strengthening design and project management resources.
-- Progress as planned towards long-term target of transforming the business
from basic sawmilling to more value-added products and concepts, such as
post and beam products, building solutions and industrial components. Share
of value-added products increased to 35% of end product sales, compared
with 33% a year ago.
Markets
Produc Market Demand Q1/12 Demand Q1/12 Price Q1/12 Price Q1/12
t compared with compared with compared with compared with
Q1/11 Q4/11 Q1/11 Q4/11
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Wood Europe Slightly weaker Stable Slightly Stable
produ higher
cts
Renewable Packaging
Renewable Packaging produces fibre-based packaging materials and innovative
packaging solutions for all major consumer goods and industrial packaging
applications. Renewable Packaging operates in every stage of the value chain,
from pulp production, material and package production to recycling. The
Business Area comprises three business units: Consumer Board, Packaging
Solutions and Packaging Asia.
EUR million Q1/12 Q4/11 Q1/11 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
Sales 779.3 756.6 807.8 -3.5 3.0
Operational EBITDA 113.0 82.7 148.5 -23.9 36.6
Operational EBIT 61.7 32.8 101.0 -38.9 88.1
% of sales 7.9 4.3 12.5 -36.8 83.7
Operational ROOC, %* 11.4 6.1 19.1 -40.3 86.9
Paper and board deliveries, 766 720 799 -4.1 6.4
1 000 t
Paper and board production, 767 701 851 -9.9 9.4
1 000 t
Corrugated packaging 261 273 247 5.7 -4.4
deliveries, million m2
Corrugated packaging 257 264 249 3.2 -2.7
production, million m2
----------------------------------------------------
* Operational ROOC = 100% x Operational EBIT/Average operating capital
-- Production volumes were lower than a year ago due to tight inventory
control and some selected capacity was curtailed due to somewhat weaker
demand.
-- Stora Enso plans to invest EUR 1.6 billion in building integrated
plantation-based board (450 000 tonnes per year) and pulp (total capacity
900 000 tonnes per year) mills at Beihai city in Guangxi, southern China.
-- Stora Enso plans permanent closure of its converting unit at Páty in
Hungary and improvements to the operational cost efficiency of its consumer
board mill at Barcelona in Spain. Plans are expected to reduce annual costs
by approximately EUR 4 million starting gradually from late 2012 onwards.
-- Co-determination negotiations at Fors and Skoghall mills regarding plans to
streamline Swedish mill maintenance operations and a general mill review
are ongoing and expected to be completed during the second quarter of 2012.
Plans are expected to reduce annual costs by approximately EUR 8 million
starting gradually from late 2012 onwards.
Markets
Product Market Demand Q1/12 Demand Q1/12 Price Q1/12 Price Q1/12
compared with compared with compared compared with
Q1/11 Q4/11 with Q1/11 Q4/11
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Consumer Europe Weaker Stronger Stable Stable
board
Corrugate Europe Slightly Stable Slightly Slightly lower
d weaker lower
packagin
g
Other
The segment Other includes the Nordic forest equity accounted investments,
Stora Enso's shareholding in Pohjolan Voima, operations supplying wood to the
Nordic mills and Group shared services and administration.
EUR million Q1/12 Q4/11 Q1/11 Change % Change %
Q1/12-Q1/11 Q1/12-Q4/11
--------------------------------------------------------------------------------
Sales 703.4 643.9 719.1 -2.2 9.2
Operational EBITDA -10.5 -4.8 -14.2 26.1 -118.8
Operational EBIT 1.4 23.3 6.8 -79.4 -94.0
% of sales 0.2 3.6 0.9 -77.8 -94.4
-------------------------------------------------------------
-- Operational EBIT was as expected lower than a year ago in Bergvik Skog and
Tornator due to lower volumes.
-- Operational EBIT was clearly lower than a year ago in Nordic wood sourcing
operations mainly due to EUR 5 million inventory adjustment.
-- Planning
is in progress
to redefine the internal service offering.
Short-term Risks and Uncertainties
The main short-term risks and uncertainties are related to continuing economic
uncertainty and its potential impact on demand for 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 26 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 207 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 58
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 116 million, negative EUR 90 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
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. The total claim against all
the defendants amounts to approximately EUR 159 million and the secondary claim
against Stora Enso to approximately EUR 87 million.
In addition, Finnish municipalities and private forest owners have initiated
similar legal proceedings. The total amount claimed from all the defendants
amounts to approximately EUR 72 million and the secondary claims and claims
solely against Stora Enso to approximately EUR 26 million.
Stora Enso denies that Metsähallitus and other plaintiffs have suffered any
damages whatsoever and will forcefully defend itself. No provisions have been
made in Stora Enso's accounts for these lawsuits.
Changes in Organisational Structure and Group Management
The Group Executive Team has been as follows since 19 March 2012:
Jouko Karvinen, Chief Executive Officer
Juan Bueno, Executive Vice President, Biomaterials Business Area
Lars Häggström, Executive Vice President, Global People and Organisation
Hannu Kasurinen, Executive Vice President, Building and Living Business Area
Per Lyrvall, Executive Vice President, Global Ethics and Compliance, General
Counsel
Mats Nordlander, Executive Vice President, Renewable Packaging Business Area
Lauri Peltola, Executive Vice President, Global Identity
Karl-Henrik Sundström, Executive Vice President, Chief Financial Officer (as of
1 August 2012)
Juha Vanhainen, Executive Vice President, Printing and Reading Business Area
The current CFO, Markus Rauramo, has been appointed as CFO of Fortum
Corporation. He will remain with Stora Enso and in the Group Executive Team
until Karl-Henrik Sundström joins the Company.
Share Capital
During the quarter the conversion of 1 000 A shares into R shares was recorded
in the Finnish trade register on 16 January 2012.
On 31 March 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, 24 April 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
Stora Enso has reorganised its Business Area and Reporting Segment structure
based on the different markets and customers the Business Areas serve. The new
reporting segments are Printing and Reading, Biomaterials, Building and Living,
Renewable Packaging and Other.
The Printing and Reading Business Area comprises the former Newsprint and Book
Paper, Magazine Paper and Fine Paper reporting segments. The Biomaterials
Business Area mainly comprises tree plantations, the Group's joint-venture
Veracel and Montes del Plata pulp mills and Nordic stand-alone pulp mills. The
Wood Products Business Area was renamed the Building and Living Business Area.
The Renewable Packaging Business Area comprises the former Consumer Board and
Industrial Packaging reporting segments, and includes the plantations in
Guangxi in China. The segment Other includes the Nordic forest equity accounted
investments, Stora Enso's shareholding in Pohjolan Voima, the operations
supplying wood to the Nordic mills and Group administration. The comparative
data have been reclassified accordingly.
Equity Accounted Investment Reclassification
Stora Enso changed the presentation of its equity accounted investments and all
comparative data with effect from the fourth quarter of 2011. Stora Enso's
share of the net profit of its equity accounted investments is presented on one
line in Stora Enso's operating profit. The share of taxes of equity accounted
investments has been eliminated from tax expense. Comparative data have been
reclassified accordingly.
Operational EBIT as new key operative measure
The Group adopted operational EBIT as a key operative non-IFRS measure with
effect from the fourth quarter of 2011 instead of operating profit excluding
NRI and fair valuations, which had previously been used. Operational EBIT
comprises the operating profit excluding NRI and fair valuations of the
segments and Stora Enso's share of the operating profit excluding NRI and fair
valuations of its equity accounted investments. Comparative data have been
reclassified accordingly.
Inpac acquisition
Stora Enso acquired 51% of Inpac International on 28 July 2011. Inpac is a
Chinese packaging company with production operations in China and India, and
service operations in Korea. The company specialises in manufacturing consumer
packaging, especially for global manufacturers of consumer electronics and
other consumer goods.
The preliminary consideration amounted to EUR 45 million. The initial
acquisition accounting of the integration of the company has been only
provisionally determined at the end of the first quarter of 2012. The necessary
fair valuations and other calculations have not been finalised and they are
based on management's best estimate. For more information, see Annual Report
2011, Note 4, Acquisitions and Disposals.
Condensed Consolidated Income Statement
EUR million Q1/12 Q4/11 Q1/11 2011 Change % Change %
Q1/12-Q1/ Q1/12-Q4/
11 11
--------------------------------------------------------------------------------
Sales 2 673.3 2 681.6 2 726.9 10 964.9 -2.0 -0.3
Other operating 43.5 53.1 57.0 208.9 -23.7 -18.1
income
Materials and -1 729.8 -1 796.2 -1 668.2 -6 971.9 -3.7 3.7
services
Freight and sales -242.0 -243.5 -257.1 -1 018.9 5.9 0.6
commissions
Personnel expenses -342.1 -327.9 -343.2 -1 393.9 0.3 -4.3
Other operating -148.9 -148.3 -143.3 -575.2 -3.9 -0.4
expenses
Share of results 14.7 89.9 13.5 118.0 8.9 -83.6
of equity
accounted
investments
Depreciation and -144.8 -139.2 -154.9 -572.6 6.5 -4.0
impairment
-------------------------------------------------------------
Operating Profit 123.9 169.5 230.7 759.3 -46.3 -26.9
Net financial -34.0 -59.2 -51.2 -338.4 33.6 42.6
items
-------------------------------------------------------------
Profit before Tax 89.9 110.3 179.5 420.9 -49.9 -18.5
Income tax -15.8 -10.1 -23.6 -78.7 33.1 -56.4
-------------------------------------------------------------
Net Profit for the 74.1 100.2 155.9 342.2 -52.5 -26.0
Period
Attributable to:
Owners of the 72.9 98.7 155.6 339.7 -53.1 -26.1
Parent
Non-controlling 1.2 1.5 0.3 2.5 n/m -20.0
interests
-------------------------------------------------------------
74.1 100.2 155.9 342.2 -52.5 -26.0
=============================================================
Earnings per Share
Basic earnings per 0.09 0.12 0.20 0.43 -55.0 -25.0
share, EUR
Diluted earnings 0.09 0.12 0.20 0.43 -55.0 -25.0
per share, EUR
-------------------------------------------------------------
Consolidated Statement of Comprehensive Income
EUR million Q1/12 Q4/11 Q1/11 2011
--------------------------------------------------------------------------------
Net profit for the period 74.1 100.2 155.9 342.2
Other Comprehensive Income
Actuarial losses on defined benefit pension plans - -55.8 - -55.8
Available for sale financial assets -68.5 -185.7 8.1 -240.5
Currency and commodity hedges 24.0 -9.4 -3.1 -128.4
Share of other comprehensive income of equity -1.9 -4.7 3.0 -19.4
accounted investments
Currency translation movements on equity net 17.7 96.4 -52.2 -76.2
investments (CTA)
Currency translation movements on non-controlling -1.8 2.3 -1.9 -
interests
Net investment hedges -6.3 -13.9 3.5 6.0
Income tax relating to components of other -3.9 12.6 0.3 40.8
comprehensive income
--------------- -------
-------
Other Comprehensive Income, net of tax -40.7 -158.2 -42.3 -473.5
-----------------------------
Total Comprehensive Income 33.4 -58.0 113.6 -131.3
-----------------------------
Total Comprehensive Income Attributable to:
Owners of the Parent 34.0 -61.8 115.2 -133.8
Non-controlling interests -0.6 3.8 -1.6 2.5
-----------------------------
33.4 -58.0 113.6 -131.3
=============================
Condensed Consolidated Statement of Cash Flows
EUR million Q1/12 Q1/11
--------------------------------------------------------------------------------
Cash Flow from Operating Activities
Operating profit 123.9 230.7
Hedging result from OCI 21.4 -5.0
Adjustments for non-cash items 111.6 111.1
Change in net working capital -8.8 -205.9 -----------------
-----------------
Cash Flow Generated by Operations 248.1 130.9
Net financial items paid -68.6 -71.4
Income taxes paid, net -54.6 -47.3
-----------------
Net Cash Provided by Operating Activities 124.9 12.2
-----------------
Cash Flow from Investing Activities
Acquisitions of subsidiaries, net of acquired cash -3.3 -
Acquisitions of equity accounted investments -18.0 -13.9
Proceeds from sale of fixed assets and shares, net of disposed 1.6 9.4
cash
Capital expenditure -94.3 -57.3
Payments/proceeds of non-current receivables, net -1.7 3.1
-----------------
Net Cash Used in Investing Activities -115.7 -58.7
-----------------
Cash Flow from Financing Activities
Proceeds from issue of new long-term debt 657.5 19.0
Long-term debt, payments -397.0 -15.4
Change in short-term borrowings -152.8 52.3
Dividend to non-controlling interests -0.2 -1.2
Net Cash Provided by Financing Activities 107.5 54.7
-----------------
Net Increase in Cash and Cash Equivalents 116.7 8.2
Translation adjustment -0.2 -3.7
Net cash and cash equivalents at the beginning of period 1 134.3 1 103.1
-----------------
Net Cash and Cash Equivalents at Period End 1 250.8 1 107.6
-----------------
Cash and Cash Equivalents at Period End 1 251.0 1 115.0
Bank Overdrafts at Period End -0.2 -7.4
-----------------
Net Cash and Cash Equivalents at Period End 1 250.8 1 107.6
-----------------
Acquisitions of Subsidiary Companies
Cash and cash equivalents, net of bank overdraft 1.1 -
Fixed assets 0.4 -
Working capital -1.2 -
Tax assets and liabilities 0.1 -
-----------------
-----------------
Fair Value of Net Assets Acquired 0.4 -
Non-controlling interest (as proportionate share) -0.2 -
Provisional goodwill 0.1 -
-----------------
Total Purchase Consideration 0.3 -
Less cash and cash equivalents in acquired companies -1.1 -
-----------------
Net Purchase Consideration -0.8 -
-----------------
Acquisitions of subsidiaries 3.3 -
Payment concerning unfinished 2011 acquisition -4.1 -
-----------------
Net Purchase Consideration -0.8 -
-----------------
Property, Plant and Equipment, Intangible Assets and Goodwill
EUR million Q1/12 Q1/11 2011
----------------------------------------------------------------
Carrying value at 1 January 5 480.2 5 565.8 5 565.8
Acquisition of subsidiary companies 0.4 - 63.3
Additions in fixed assets 59.0 54.6 436.1
Additions in biological assets 3.2 2.7 17.2
Change in emission rights 32.4 59.9 2.0
Disposals -1.0 -8.2 -13.4
Depreciation and impairment -144.8 -154.9 -572.6
Translation difference and other 30.5 -14.3 -18.2
--------------------------
Statement of Financial Position Total 5 459.9 5 505.6 5 480.2
==========================
Borrowings
EUR million 31 Mar 12 31 Dec 11 31 Mar 11
----------------------------------------------------------------------
Non-current borrowings 3 597.9 3 339.4 3 320.7
Current borrowings 863.1 1 034.0 748.4
--------------------------------
4 461.0 4 373.4 4 069.1
================================
--------------------------------
Q1/12 2011 Q1/11
--------------------------------
Carrying value at 1 January 4 373.4 4 011.2 4 011.2
Debt acquired with new subsidiaries - 5.4 -
Proceeds of borrowings (net) 79.1 331.6 67.8
Translation difference and other 8.5 25.2 -9.9
--------------------------------
Statement of Financial Position Total 4 461.0 4 373.4 4 069.1
================================
Condensed Consolidated Statement of Financial Position
EUR million 31 Mar 12 31 Dec 11 31 Mar 11
--------------------------------------------------------------------------------
Assets
Fixed Assets and Other Non-current
Investments
Fixed assets O 5 175.0 5 224.6 5 221.1
Biological assets O 209.5 212.6 183.6
Emission rights O 75.4 43.0 100.9
Equity accounted investments O 1 925.9 1 913.1 1 725.4
Available-for-sale: Interest-bearing I 83.8 82.0 79.0
Available-for-sale: Operative O 572.1 640.2 888.6
Non-current loan receivables I 127.5 125.3 125.0
Deferred tax assets T 130.1 121.9 100.3
Other non-current assets O 32.0 26.6 30.6
--------------------------------
8 331.3 8 389.3 8 454.5
--------------------------------
Current Assets
Inventories O 1 541.2 1 528.7 1 596.7
Tax receivables T 13.7 6.2 6.7
Operative receivables O 1 709.2 1 654.6 1 713.5
Interest-bearing receivables I 287.0 281.5 349.1
Cash and cash equivalents I 1 251.0 1 138.8 1 115.0
--------------------------------
--------------------------------
4 802.1 4 609.8 4 781.0
--------------------------------
Total Assets 13 133.4 12 999.1 13 235.5
================================
Equity and Liabilities
Owners of the Parent 5 906.7 5 872.7 6 318.1
Non-controlling Interests 86.5 87.1 49.0
--------------------------------
Total Equity 5 993.2 5 959.8 6 367.1
================================
Non-current Liabilities
Post-employment benefit provisions O 332.3 333.1 319.0
Other provisions O 141.0 147.7 150.3
Deferred tax liabilities T 416.0 401.0 415.9
Non-current debt I 3 597.9 3 339.4 3 320.7
Other non-current operative liabilities O 26.3 31.9 34.5
--------------------------------
4 513.5 4 253.1 4 240.4
--------------------------------
Current Liabilities
Current portion of non-current debt I 244.9 250.0 228.3
Interest-bearing liabilities I 618.2 784.0 520.1
Operative liabilities O 1 720.8 1 678.7 1 779.9
Tax liabilities T 42.8 73.5 99.7
--------------------------------
2 626.7 2 786.2 2 628.0 --------------------------------
Total Liabilities 7 140.2 7 039.3 6 868.4
================================
Total Equity and Liabilities 13 133.4 12 999.1 13 235.5
================================
Items designated with “O” comprise Operating Capital
Items designated with “I” comprise Interest-bearing Net Liabilities
Items designated with “T” comprise Net Tax Liabilities
Statement of Changes in Equity
EUR Share Share Invest Treasu Step Availa Curren OCI of CTA
Retaine Attribu Non-co Total
milli Capital Premiu ed ry Acquis ble cy and Equity and
d table ntroll
on m and Non-Re Shares ition for Commod Accoun Net
Earning to ing
Reserv strict Revalu Sale ity ted Invest
s Owners Intere
e fund ed ation Financ Hedges Invest ment
of the sts
Equity Surplu ial ments Hedges
Parent
Fund s Assets
--------------------------------------------------------------------------------
----------------------------------
-------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 780.0 77.9 -9.8 103.7
3 205.5 6 202.9 51.8 6 254.7
e at
31
Decem
ber
2010
--------------------------------------------------------------------------------
---------------------------
Profit - - - - - - - - -
155.6 155.6 0.3 155.9
for
the
perio
d
OCI - - - - - 8.1 -3.1 3.0 -48.7
- -40.7 -1.9 -42.6
befor
e tax
Income - - - - - 0.3 0.9 - -0.9
- 0.3 - 0.3
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - 8.4 -2.2 3.0 -49.6
155.6 115.2 -1.6 113.6
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
- - -1.2 -1.2
nd
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 788.4 75.7 -6.8 54.1
3 361.1 6 318.1 49.0 6 367.1
e at
31
March
2011
--------------------------------------------------------------------------------
---------------------------
Profit - - - - - - - - -
184.1 184.1 2.2 186.3
for
the
perio
d
OCI - - - - - -248.6 -125.3 -22.4 -21.5
-55.8 -473.6 1.9 -471.7
befor
e tax
Income - - - - - 0.8 32.4 - -0.6
7.9 40.5 - 40.5
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - -247.8 -92.9 -22.4 -22.1
136.2 -249.0 4.1 -244.9
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
-197.2 -197.2 -2.4 -199.6
nd
Acquis - - - - - - - - -
- - 37.2 37.2
itions
and
dispo
sals
Gain - - - - - - - - -
0.8 0.8 -0.8 -
on
buy-o
ut of
non-c
ontrol
ling
inter
est
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 540.6 -17.2 -29.2 32.0
3 300.9 5 872.7 87.1 5 959.8
e at
31
Dec
2011
--------------------------------------------------------------------------------
---------------------------
Profit - - - - - - - - -
72.9 72.9 1.2 74.1
for
the
perio
d
OCI - - - - - -68.5 24.0 -1.9 11.4
- -35.0 -1.8 -36.8
befor
e tax
Income - - - - - 0.1 -5.5 - 1.5
- -3.9 - -3.9
tax
relat
ing to
compo
nents
of
OCI
--------------------------------------------------------------------------------
---------------------------
Total - - - - - -68.4 18.5 -1.9 12.9
72.9 34.0 -0.6 33.4
Compr
ehensi
ve
Incom
e
--------------------------------------------------------------------------------
---------------------------
Divide - - - - - - - - -
- - -0.2 -0.2
nd
Acquis - - - - - - - - -
- - 0.2 0.2
itions
--------------------------------------------------------------------------------
---------------------------
Balanc 1 342.2 76.6 633.1 -10.2 3.9 472.2 1.3 -31.1 44.9
3 373.8 5 906.7 86.5 5 993.2
e at
31
Mar
2012
--------------------------------------------------------------------------------
---------------------------
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
Commitments and Contingencies
EUR million 31 Mar 12 31 Dec 11 31 Mar 11
--------------------------------------------------------------------------
On Own Behalf
Pledges 1.1 1.3 -
Mortgages 9.7 9.7 5.2
On Behalf of Equity Accounted Investments
Guarantees 433.8 390.2 137.6
On Behalf of Others
Guarantees 5.1 5.0 102.1
Other Commitments, Own
Operating leases, in next 12 months 64.6 66.1 55.2*
Operating leases, after next 12 months 522.9 525.8 482.2*
Pension liabilities 0.4 0.4 0.4
Other commitments 5.4 5.1 59.7*
--------------------------------
Total 1 043.0 1 003.6 842.4
================================
Pledges 1.1 1.3 -
Mortgages 9.7 9.7 5.2
Guarantees 438.9 395.2 239.7
Operating leases 587.5 591.9 537.4*
Pension liabilities 0.4 0.4 0.4
Other commitments 5.4 5.1 59.7*
--------------------------------
Total 1 043.0 1 003.6 842.4
================================
* 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 31 March 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 199 million at 31 March 2012, compared with EUR 35 million at
31 March 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 393 million (compared with
NIL at 31 March 2011 and EUR 436 million at 31 December 2011) of which Stora
Enso has guaranteed EUR 189 million (compared with NIL at 31 March 2011 and EUR
189 million at 31 December 2011).
Fair Values of Derivative Financial Instruments
--------------------------------------------------------------------------------
EUR million 31 Mar 12 31 Dec 11 31 Mar 11
Positive Negative Net Fair Net Fair Net
Fair Fair Values Values Fair
Values Values Values
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Interest rate 151.2 -54.2 97.0 95.8 124.6
swaps
Interest rate - -48.3 -48.3 -51.0 -27.4
options
Forward contracts 8.0 -27.1 -19.1 4.8 20.9
Currency options 18.8 -12.4 6.4 -16.1 40.5
Commodity 15.1 -19.6 -4.5 -2.1 16.7
contracts
Equity swaps - -6.3 -6.3 -22.6 18.7
("TRS")
--------------------------------------------------------------
Total 193.1 -167.9 25.2 8.8 194.0
==============================================================
Nominal Values of Derivative Financial Instruments
EUR million 31 Mar 12 31 Dec 11 31 Mar 11
-------------------------------------------------------------
Interest Rate Derivatives
Interest rate swaps
Maturity under 1 year 60.5 61.6 781.8
Maturity 2-5 years 2 067.7 2 073.3 1 568.0
Maturity 6-10 years 250.0 250.0 768.7
--------------------------------
2 378.2 2 384.9 3 118.5
Interest rate options 511.9 522.8 547.7
--------------------------------
Total 2 890.1 2 907.7 3 666.2
--------------------------------
Foreign Exchange Derivatives
Forward contracts 2 310.1 1 750.2 2 287.0
Currency options 2 485.7 2 669.4 2 502.6
--------------------------------
Total 4 795.8 4 419.6 4 789.6
--------------------------------
.
Commodity Derivatives
Commodity contracts 257.3 236.7 279.6
--------------------------------
Total 257.3 236.7 279.6
--------------------------------
Total Return (Equity) Swaps
Equity swaps ("TRS") 67.2 73.3 73.3
--------------------------------
Total 67.2 73.3 73.3
--------------------------------
Sales by Segment
EUR million Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
---------------------------------------------------------------------------
Printing and Reading 1 227.2 5 022.0 1 283.8 1 283.1 1 242.6 1 212.5
Biomaterials 241.7 1 092.0 255.4 276.4 268.6 291.6
Building and Living 381.2 1 671.1 382.0 414.0 465.4 409.7
Renewable Packaging 779.3 3 194.6 756.6 800.6 829.6 807.8
Other 703.4 2 700.5 643.9 637.4 700.1 719.1
Inter-segment sales -659.5 -2 715.3 -640.1 -672.2 -689.2 -713.8
------------------------------------------------------
Total 2 673.3 10 964.9 2 681.6 2 739.3 2 817.1 2 726.9
======================================================
Operational EBIT by Segment
EUR million Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and Reading 67.3 285.3 55.6 72.3 72.2 85.2
Biomaterials 7.2 169.2 27.2 57.3 31.2 53.5
Building and Living 9.8 62.8 6.0 9.8 35.2 11.8
Renewable Packaging 61.7 301.3 32.8 73.6 93.9 101.0
Other 1.4 48.1 23.3 11.4 6.6 6.8 -------------------------------------------
Operational EBIT 147.4 866.7 144.9 224.4 239.1 258.3
Fair valuations and non-operational 1.2 -27.5 45.6 -45.8 -26.9 -0.4
items*
Non-recurring items -24.7 -79.9 -21.0 - -31.7 -27.2
-------------------------------------------
Operating Profit (IFRS) 123.9 759.3 169.5 178.6 180.5 230.7
Net financial items -34.0 -338.4 -59.2 -193.4 -34.6 -51.2
Profit/Loss before Tax 89.9 420.9 110.3 -14.8 145.9 179.5
Income tax expense -15.8 -78.7 -10.1 -35.1 -9.9 -23.6
-------------------------------------------
Net Profit/Loss 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 and
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 Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
-------------------------------------------------------------------
Printing and Reading -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 - -21.0 -21.0 - - -
-------------------------------------------
NRI on Operating Profit -24.7 -79.9 -21.0 - -31.7 -27.2
NRI on Financial items 13.6 -138.3 -10.1 -128.2 - -
NRI on tax 5.0 62.2 50.8 - 3.6 7.8
NRI on Net Profit -6.1 -156.0 19.7 -128.2 -28.1 -19.4
===========================================
Fair Valuations and Non-operational Items* by Segment
EUR million Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
--------------------------------------------------------------------------------
Printing and Reading -1.0 -7.9 2.0 -0.3 -9.2 -0.4
Biomaterials -4.6 -18.5 2.7 -11.6 -5.4 -4.2
Building and Living -2.2 -1.8 - - -1.8 -
Renewable Packaging -0.7 -6.6 - - -6.6 -
Other 9.7 7.3 40.9 -33.9 -3.9 4.2
-----------------------------------------
Fair Valuations and Non-operational 1.2 -27.5 45.6 -45.8 -26.9 -0.4
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 and
valuations of biological assets related to forest assets in EAI and Group's
share of tax and net financial items of EAI.
Operating Profit/Loss by Segment
EUR million Q1/12 2011 Q4/11 Q3/11 Q2/11 Q1/11
-------------------------------------------------------------------
Printing and Reading 56.7 248.3 61.3 72.0 35.5 79.5
Biomaterials 2.6 163.3 37.4 45.7 23.9 56.3
Building and Living 7.6 27.5 1.4 9.8 33.4 -17.1
Renewable Packaging 45.9 285.8 26.2 73.6 85.0 101.0
Other 11.1 34.4 43.2 -22.5 2.7 11.0
-------------------------------------------
Operating Profit (IFRS) 123.9 759.3 169.5 178.6 180.5 230.7
Net financial items -34.0 -338.4 -59.2 -193.4 -34.6 -51.2
-------------------------------------------
Profit/Loss before Tax 89.9 420.9 110.3 -14.8 145.9 179.5
Income tax expense -15.8 -78.7 -10.1 -35.1 -9.9 -23.6
-------------------------------------------
Net Profit/Loss 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
-------------------------------------------------------
31 Mar 12 31 Dec 11 31 Mar 12 31 Dec 11
-------------------------------------------
SEK 8.8455 8.9120 8.8524 9.0307
USD 1.3356 1.2939 1.3110 1.3922
GBP 0.8339 0.8353 0.8345 0.8678
-------------------------------------------
Transaction Risk and Hedges in Main Currencies as at 31 March 2012
EUR million USD GBP SEK
------------------------------------------------------------------------------
------------------------------------------------------------
Estimated annual net operating cash flow exposure 1 160 620 -900
Transaction hedges as at 31 Mar 2012 -580 -280 390
------------------
Hedging percentage as at 31 Mar 2012 for the next 12 months 50% 45% 43%
------------------
Additional USD and GBP hedges for 13-14 months increase the hedging percentages
by 2% and 4% respectively.
Changes in Exchange Rates on Operational EBIT
Operational EBIT: Currency strengthening of + 10% EUR million
--------------------------------------------------------------
--------------------------------------------------
USD 116
SEK -90
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
---------------------------------------------------------
January 124 956 114 203 048 245 891 38 175 676
February 115 237 90 036 594 143 346 21 685 228
March 73 232 98 490 288 93 020 20 562 593
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Total 313 425 302 729 930 482 257 80 423 497
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Closing Price Helsinki, EUR Stockholm, SEK
------------------------------------------
A share R share A share R share
---------------------------------------------------------
January 6.68 5.44 60.50 48.35
February 6.74 5.64 60.00 49.61
March 6.77 5.57 59.30 49.20
Calculation of Key Figures
Operational return on capital employed,
operational ROCE (%) 100 x
Operational EBIT
Capital employed 1) 2)
Operational return on operating capital, 100 x Operational EBIT
operational ROOC (%)
Operating capital 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
Operational EBIT
Operating profit/loss excluding NRI and fair valuations and Stora Enso's share
of operating profit/loss excluding NRI and fair valuations of its equity
accounted investments (EAI)
1) Capital employed = Operating capital - Net tax liabilities
2) Average for the financial period
3) Attributable to owners of the Parent
For further information, please contact:
Jouko Karvinen, CEO, tel. +358 2046 21410
Markus Rauramo, CFO, tel. +358 2046 21121
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 2046 21242
Lauri Peltola, EVP, Global Identity, tel. +358 2046 21380
Stora Enso's second quarter 2012 results will be published on 20 July 2012 at
13.00 EET.
PRESS CONFERENCE IN HELSINKI
Time: 13.15 local time today
Location: Marina Congress Center, Helsinki
Address: Katajanokanlaituri 6
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 SVP Investor Relations Ulla Paajanen-Sainio will be
hosting a combined conference call and webcast today at 14:30 Finnish time
(13:30 CET, 12:30 UK time, 07:30 US Eastern time).
If you wish to participate, please dial:
Continental Europe and the UK +44(0)20 7136 2051
Finland +358(0)9 6937 9590
Sweden +46(0)8 5876 9446
USA +1646 254 3360
Access code: 6346554
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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