The increased importance of forests as a valuation driver

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Published 19 November 2020
Stora Enso will start using a valuation method based on market transactions for its forest assets in the Nordics in Q4/2020. Preliminary estimations indicate that the value of the Group’s forest assets, including leased land, will be EUR 6.5–7.0 billion, compared with a fair value of EUR 5.4 billion at the end of Q3/2020.

CFO Seppo Parvi, why is Stora Enso changing the valuation method now?

We are one of the largest private forest owners globally. We have over 2 million hectares of forest land, out of which 1.6 million is productive land. Our annual forest growth is exceeding harvesting by more than 1 million cubic metres.

Why change? The importance of forests as a valuation driver for Stora Enso has increased. Forests form a big part of our balance sheet, and there has been a significant difference between the market and balance sheet values. Also, the market practice for forest valuation is changing in the Nordic countries. Many companies have already changed their forest valuation to a transaction-based method. We believe that reliable market transaction data provides a more transparent valuation basis for our forests.

How will the forest valuation methodology change?

Forest assets are defined as standing growing trees and the related forest land. As of Q4/2020, our forest asset value will be based on market transactions. This applies to Nordic forest assets, especially in Sweden. The methodology will be based on market transactions in the regions where Stora Enso’s forests are located, on standing stock and price data of the traded forest, and also on average prices per region from external sources.

For the Finnish forest assets (through Stora Enso’s 41% ownership in Tornator), the market approach is not considered a reliable valuation method as the market data is not available in enough detail, for example in terms of forest cubic meters of the traded estates. As a result, there is no change in valuation method for biological assets. However, Stora Enso’s share of the forest land, currently accounted at historical cost, will be revaluated in Stora Enso’s books by using the DCF method. Also, income from hunting rights and soil sales, for example, are included in the land valuation.

The valuation of our plantations in Uruguay, Brazil and China will not change, due to lack of sufficient market transaction data and shorter harvesting cycles of 6–12 years versus the long-term growing cycle of 60–100 years in the Nordics. Plantation forest land will continue to be accounted at historical cost and will be classified as a separate asset class, as compared to Nordic forest land, to reflect the different nature, usage and characteristics.

Changes in forest valuation methodology




Tornator (41%)

(Finland, Estonia, Romania)


(Brazil, Uruguay, China)

Forest assets Market transaction-based method    
Biological assets Allocation of forest assets fair value based on DCF DCF method*
DCF method*
Forest land Allocation of forest assets fair value based on DCF DCF method
At historical cost*

* No change

How will the actual value of your forests change?

This will lead to a significant increase in forest fair valuation. According to our preliminary estimations, the value of the Group’s forest assets, including leased land, will increase from the current EUR 5.4 billion to EUR 6.5–7.0 billion. We will confirm the valuation in connection with our full-year 2020 report which will be published on 29 January 2021.

The biggest change will be in Sweden, where we directly own 1.4 million hectares of forest land. We estimate that the fair value of our biological assets will increase from EUR 3.3 billion to EUR 3.4–3.7 billion. Forest land value is expected to increase significantly from the current EUR 0.3 billion to EUR 1.4–1.6 billion. In Finland, the impact will not be material.

Seppo Parvi

Seppo Parvi

Chief Financial Officer

Deputy to the CEO and Country Manager Finland
If you want to learn more - please see the related material below.

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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