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Positive contribution from transformation projects accelerates

Q2 2017 results

Latest Interim Report

 

 

Q2/2017 (year-on-year)
  • Sales of EUR 2 528 (EUR 2 526) million increased marginally despite the divestment of paper mills. 
  • Sales excluding the paper business increased 7.1%.
  • Operational EBIT decreased from EUR 226 million to EUR 219 million. This was mainly due to the impact of higher maintenance costs of EUR 15 million compared to a year ago. The operational EBIT margin was 8.7% (8.9%). 
  • Balance sheet strengthened further; net debt to operational EBITDA was 2.0 (2.2) despite a dividend payment.
  • The ramp-up of Beihai Mill continues to proceed ahead of plan, and it is expected to reach operational EBITDA break-even in Q4/2017, one quarter earlier than previously forecast.
  • Varkaus kraftliner mill is expected to reach full production during the second half of 2017. A positive quarterly operational EBIT was achieved in Q2/2017.
  • Stora Enso signed today an agreement to divest its holding in the equity accounted investment Bulleh Shah Packaging Ltd. to the main owner Packages Ltd.

Q1–Q2/2017 (year-on-year)
   Sales of EUR 5 025 million increased 1.1%. Sales excluding the paper business increased 8.3%.
 Operational EBIT of EUR 434 million decreased 8.4%, mainly due to increased maintenance costs.

 


Stora Enso's CEO Karl-Henrik Sundström comments on the second quarter 2017 results:
“Our transformation towards a renewable materials growth company accelerates, and I am confident in our progress. Sales increased marginally, and excluding the paper business sales increased 7.1%. This is primarily due to the ramp-up of strategic investments – the Beihai, Murów and Varkaus mills – and higher pulp and containerboard prices.
Operational EBIT decreased from EUR 226 million to EUR 219 million. This is mainly related to extensive maintenance and a change of maintenance calendar compared to last year, amounting to EUR 15 million. The balance sheet continued to strengthen further, net debt to operational EBITDA has gone from 3.2 to 2.0 during the last four years.
The positive contribution from the transformation projects continues. I am very pleased that we continue to be ahead of plan with the ramp-up of Beihai Mill. We expect the consumer board machine to reach operational EBITDA break-even in the fourth quarter 2017, which is one quarter earlier than previously forecast. We have also made good progress in the ramp-up of the Varkaus kraftliner mill. This quarter, we reached a positive operational EBIT. 
During the period, Paper Machine 8 at Kvarnsveden Mill in Sweden was permanently shut down. Our restructuring plan for Kvarnsveden Mill is anticipated to result in annual cost savings of EUR 12 million.
In July, we announced exciting news: we will invest EUR 45 million in a new cross-laminated timber production unit at Gruvön sawmill in Sweden. This investment supports our strategy to grow in the construction industry and increase the use of wood as a building material. We are investing to meet growing customer demand globally, and expect this investment to generate annual sales of approximately EUR 50 million when run at full capacity. Over time, this investment will significantly enable the Wood Products division to exceed its profitability target. 
Today, we announce that we have signed an agreement to divest our 35% holding in the minority investment Bulleh Shah Packaging Ltd. to the main owner Packages Ltd. Due to the changing business environment in Pakistan, the Bulleh Shah Packaging asset with its product mix and related future outlook is a non-strategic fit in our consumer board roadmap. Our focus is on high quality virgin-fibre products. We are committed to making a responsible divestment and intend to leave a positive contribution to the society.
As always, I would like to thank our customers for their business, our employees for their dedication, and our investors for their trust.”

Outlook 
Q3/2017 sales are estimated to be similar to the amount of EUR 2 528 million recorded in the second quarter, and operational EBIT is expected to be somewhat or even clearly higher than the EUR 219 million recorded in Q2/2017. The operational EBIT estimate for Q3/2017 includes the negative EUR 17 million impact of the ramp-up of the Beihai operations. The impact of annual maintenance shutdowns is expected to be approximately EUR 10 million lower than in Q2/2017, and it is included in the above guidance.
The consumer board machine in Beihai is expected to reach operational EBITDA break-even in Q4/2017, one quarter earlier than previously forecast.

- Karl-Henrik Sundström-

​​​​​The interim report January-June 2017 was published on 26 July​​ 2017.