Q&A on the impacts of Covid-19 on Stora Enso’s operations

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We continue to experience unprecedented times with the Covid-19 pandemic, which is affecting global health and creating uncertainty and volatility in the business environment. Stora Enso Investors Relations has received several questions from investors and analysts related to the Covid-19 and its impacts on our business operations. Please find below some typical questions and answers.

Q: What precautions have you taken against Covid-19?

A: The health and safety of Stora Enso’s employees is a key priority during the pandemic. Thanks to our proactive approach during Covid-19 thus far, there has been minimal impact on the Group’s ability to serve customers and run operations.

Stora Enso has secured the health and safety of its employees by various measures and closely monitoring the Covid-19 situation. All business travel is restricted. All visits to Stora Enso for physical meetings are banned. We have instructed our employees to monitor their health, follow the advice of the health authorities, and remote working is encouraged in the workplaces where this is possible. The use of face masks has been required in accordance with the official instructions. Our Sourcing & Logistics team provides ongoing guidance regarding visits by contractors and suppliers.

Q: What is the current Covid-19 situation at the Oulu mill?

A: In the end of November 2020, a number of Covid-19 infections were detected among contractors working on the Oulu Mill conversion project. Following the infections, Stora Enso further enhanced guidelines to prevent Covid-19 infections, tested the entire personnel including contractors, working at the mill and continued the testing as required. The situation is currently under control.

In order to implement the extensive investment project in Oulu, precise instructions were made already in the early stages of the pandemic to prevent Covid-19 infections. The work was divided into two different construction sites, one at the pulp mill and the other at the board mill. The work has been done in small groups, where physical contact between the different groups has been avoided according to a detailed shift and break schedule.

Q: How Covid-19 impacted on your Q4/2020 performance?

A: Covid-19 mainly impacted on our Paper division business performance. Our deliveries were clearly lower in Paper, as the global overcapacity and Covid-19 pandemic reduced the demand. In other divisions, Covid-19 did not materially impact on our performance. In Q4/2020, Group sales excluding the Paper division decreased by 2% compared to the previous year. Operational EBIT excluding Paper increased to EUR 122 (80) million or 7.3% (4.6%) of net sales.

Q: Have your units and mills been operating normally?

A: All our units and mills operated normally in the fourth quarter 2020. Stora Enso plays an important role in the society by providing vital materials for the food, hygiene and medical industries.

Q: How Covid-19 has impacted on your annual maintenance shutdowns?

A: Due to the cross-border travel restrictions and safety concerns associated with Covid-19, most of Stora Enso’s annual mill maintenance shutdowns were postponed from the first half until the second half of 2020. In Q4/2020, Stora Enso had maintenance shutdowns at Fors (Packaging Materials), Skoghall (Packaging Materials), Ostroleka (Packaging Materials), Montes Del Plata (Biomaterials), Skutskär (Biomaterials) and Nymöllä (Paper).

Q: What have been the impacts on your supply chain and deliveries?

A: Covid-19 had only minor impacts on supply chain inbound and outbound in Q4/2020. Our supply chain crisis management process, now solidly in place for almost four quarters, ensure swift and agile response to potential disruptions. Availability of containers decreased slightly in Q4/2020 compared to the previous quarter. However, our customer orders were fulfilled even if some minor delivery delays were noted. In addition, we have strengthened the Sourcing and Logistics On-call process to secure proactive awareness of potential issues ensuring swift and agile responses.

Q: Did Covid-19 impact on your harvesting operations in Q4/2020?

A: Our harvesting operations were running seasonally on a normal level during Q4/2020. Covid-19 negative impacts have been mainly the higher uncertainty in wood markets and impacts to graphical paper wood demand. On the positive note, continued high activity at the sawmills has resulted in strong saw log demand.

Q: What kind of actions you have taken to mitigate the negative impacts from Covid-19 on your financial performance?

A: To address costs and mitigate negative market demand impacts, Stora Enso continues to implement cost reduction actions. We are delivering on our EUR 400 million profit protection programme promise and we have further reduced working capital to record low levels in Q4/2020, enhancing our cash flow.

In Q4/2020, we continued tight control of variable and fixed costs. Stora Enso maintains a Covid-19 risk assessment process to determine the potential near- and medium-term implications of the direct and indirect impacts on Stora Enso’s business operations. The Group will continue to focus on customer service and cash flow generation in 2021.

Q: What is Stora Enso’s current liquidity position?

A: Our cash and cash equivalents net of overdrafts increased by EUR 299 million to EUR 1 655 million in Q4/2020 compared to the previous quarter. Net debt decreased by EUR 87 million to EUR 2 921 (EUR 3 008) million mainly as a result of solid cash flow from operations even after investments and dividend payment. During the fourth quarter Stora Enso successfully issued a new EUR 500 million green bond under its EMTN (Euro Medium Term Note) programme and Stora Enso's Green Bond framework.

Stora Enso has a EUR 600 million committed revolving credit facility that was fully undrawn at the end of the fourth quarter. In addition, Stora Enso has undrawn committed bilateral credit facility arrangements with commercial banks up to EUR 250 million. The original tenor of these bilateral arrangements varies from 18 to 24 months and they mature in 2021 and 2022. Stora Enso also has an undrawn committed EUR 150 million loan signed with the European Investment Bank during the fourth quarter that can be drawn at the latest in 2022 for a five-year maturity. Additionally, Stora Enso has access to statutory pension premium loans in Finland up to EUR 950 (950) million.

We continue to have a good access to various funding sources.

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Part of the bioeconomy, Stora Enso is a leading global provider of renewable solutions in packaging, biomaterials, wooden construction and paper. We employ some 23 000 people and have sales in more than 50 countries and our shares are listed on the Helsinki (STEAV, STERV) and Stockholm (STE A, STE R) stock exchanges.

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