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Stora Enso Oyj Interim Report January–March 2019
A promising start of the year, supported by the profit protection programme

Q1/2019 (compared with Q1/2018)

  • Sales increased 2.2% to EUR 2 635 (2 579) million, the highest first quarter since 2013 and the ninth consecutive quarter of growth.
  • Operational EBIT decreased to EUR 324 (369) million which was in the upper end of our guidance range of EUR 260–350 million.
  • The operational EBIT margin was 12.3% (14.3%), above 10% for the seventh consecutive quarter.
  • Operating profit (IFRS) was EUR 313 (355) million.
  • EPS decreased by 16.0% to EUR 0.29 (0.35) and EPS excl. IAC was EUR 0.30 (0.35).
  • Cash flow from operations decreased slightly to EUR 223 (229) million. Cash flow after investing activities amounted to EUR 94 (113) million.
  • The net debt to operational EBITDA ratio increased to 1.7 (1.3), due to the adoption of IFRS 16 Leases (impact 0.3) and dividend payment.
  • Operational ROCE was 14.0% (17.7%), above the strategic target of 13%.

Outlook for 2019

Stora Enso's year 2019 is expected to be largely in line with 2018, provided that the current trading conditions do not significantly change. Demand growth is expected to continue for Stora Enso’s other businesses except for European Paper, for which demand is forecast to continue to decline in 2019. Group’s sales are expected to be higher and costs are forecast to increase in 2019 compared to 2018. Stora Enso will implement measures to mitigate these cost increases and the increased uncertainties with the profit protection programme.

Guidance for Q2/2019

Q2/2019 operational EBIT is expected to be in the range of EUR 270–350 million. During the second quarter, there will be annual maintenance shutdown at the Nymölla paper mill. The total negative impact of maintenance is estimated to be EUR 35 million less compared to Q2/2018.

Stora Enso’s CEO Karl-Henrik Sundström comments on the first quarter 2019 results:

Karl-Henrik Sundström, Stora Enso’s CEO. Фото © storaenso.com

- We have had a promising start of the year and I am pleased to see that the profit protection programme is already supporting our development. Given the potential market weakness, we are convinced that the timing for activating the programme is right. During the first quarter of 2019, we focused on the balance between value creation and profit protection. It has obviously paid off. Sales continue to grow and profitability is on a good level. The sales increase of roughly 2% was primarily due to higher prices in all divisions and improved product mix, despite lower volumes. Operational EBIT decreased, while keeping a double-digit operational margin for the seventh consecutive quarter. Operational ROCE remains above our strategic target of 13%, despite additional capital of nearly EUR 300 million due to the implementation of IFRS 16.

Looking at our divisions, we had first quarter records in four out of five: Packaging Solutions and Biomaterials had record sales, while Wood Products and Paper delivered record profitability. Moreover, it is satisfying that our price increases are coming through gradually in Consumer Board.

We continue to drive our transformation projects forward and take active steps to contribute to a renewable future. Our recent investment in Hylte will enable manufacturing of formed fiber products that are designed for circularity. These products are renewable, recyclable, biodegradable and do not contain any plastic. Also, the first commercial volumes were produced during the quarter from our new cross laminated timber (CLT) investment at Gruvön. Wooden elements store carbon dioxide and substitute fossil based building materials, making them suitable for the development of green and sustainable cities.

On the note of sustainability, I am pleased that we have successfully issued our first Green Bonds to finance our ongoing transaction in Bergvik Skog. The aim is to complete the transaction during the second quarter of 2019. We have also completed our feasibility study of the potential conversion of the Oulu paper mill into packaging board production. The decision on the potential conversion is planned to be made by the Board of Directors during the first half of 2019 after the co-determination process has been completed.

I find it is important to support initiatives that can help to drive economics and society towards a plastic free future and we have joined the New Plastics Economy Global Commitment to eliminate plastic waste and pollution. This is led by the Ellen MacArthur Foundation, in collaboration with UN Environment. We contribute with our customers and suppliers by developing circular and low carbon solutions to replace plastic.

All in all, we have made good progress in increasing our share of the bioeconomy!

I am very proud that Stora Enso received the highest score in a recent diversity report in Finland. We believe diversity strengthens innovation and drives competitiveness, and we aim to reflect the societies in which we operate.

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

Stora Enso Interim Report January–March 2019 (EN, .pdf, 509 КБ)

Источник: Stora Enso Oyj

06.05.2019

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