Continued focus on cash and costs
Profit protection programme target increased to EUR 275 million
Q3/2019 (compared with Q3/2018)
Q1–Q3/2019 (year-on-year)
Outlook for 2019
Deteriorating trading conditions caused by geopolitical uncertainties related to trade wars and a possible hard Brexit are expected to impact Stora Enso negatively. Demand growth is forecast to slow for Stora Enso's businesses in general, and the decline in demand for European paper will continue. Due to the profit protection programme, costs are forecast to remain roughly at the same level in 2019 as in 2018. Stora Enso is still implementing additional profit protection measures to mitigate negative financial impacts of the current situation.
Guidance for Q4/2019
Q4/2019 operational EBIT is expected to be in the range of EUR 100–180 million. During the fourth quarter, there will be annual maintenance shutdown at the Fors, Ingerois, Skoghall, Varkaus, Montes del Plata and Skutskär mills. The total maintenance impact is estimated to be at the same level as in Q4/2018 and in Q3/2019.
Key figures
| EUR million | Q3/19 | Q3/18 | Change % Q319–Q3/18 | Q2/19 | Change % Q3/19–Q2/19 | Q1–Q3/19 | Q1–Q3/18 | Change % Q1-Q3/19–Q1-Q3/18 | 2018 |
| Sales | 2 402 | 2 585 | -7.1% | 2 608 | -7.9% | 7 644 | 7 828 | -2.4% | 10 486 |
| Operational EBITDA | 376 | 502 | -25.1% | 435 | -13.6% | 1 283 | 1 472 | -12.9% | 1 878 |
| Operational EBIT | 231 | 358 | -35.5% | 287 | -19.5% | 841 | 1 054 | -20.2% | 1 325 |
| Operational EBIT margin | 9.6% | 13.8% | 11.0% | 11.0% | 13.5% | 12.6% | |||
| Operating profit (IFRS) | 170 | 363 | -53.1% | 142 | 20.1% | 624 | 1 034 | -39.6% | 1 390 |
| Profit before tax excl. IAC | 152 | 305 | -50.2% | 214 | -29.0% | 651 | 923 | -29.4% | 1 190 |
| Profit before tax (IFRS) | 115 | 305 | -62.1% | 93 | 23.9% | 490 | 895 | -45.2% | 1 210 |
| Net profit for the period (IFRS) | 59 | 204 | -71.2% | 52 | 12.9% | 336 | 690 | -51.2% | 988 |
| Net interest-bearing liabilities | 3 745 | 2 172 | 72.4% | 3 973 | -5.7% | 3 745 | 2 172 | 72.4% | 2 092 |
| Operational ROCE | 8.7% | 16.7% | 11.3% | 11.5% | 16.6% | 15.5% | |||
| Earnings per share (EPS) excl. IAC, EUR | 0.13 | 0.31 | -56.9% | 0.22 | -40.3% | 0.65 | 0.97 | -32.8% | 1.29 |
| EPS (basic), EUR | 0.09 | 0.27 | -67.5% | 0.08 | 17.3% | 0.46 | 0.90 | -49.2% | 1.28 |
| Net debt/last 12 months’ operational EBITDA ratio | 2.2 | 1.1 | 2.2 | 2.2 | 1.1 | 1.1 | |||
| Average number of employees | 26 414 | 26 545 | -0.5% | 26 553 | -0.5% | 26 347 | 26 059 | 1.1% | 26 067 |
Stora Enso’s CEO Karl-Henrik Sundström comments on the third quarter 2019 results:
“As a company, we are preparing for the next market upturn through our profit protection programme which is proceeding ahead of plan. Since we were out early in launching it, we are building the prerequisites for a better and more profitable future when the cycle turns. It is important to take advantage of today's situation to build a more future-proof company by being one step ahead and working proactively. To advance even further, we have increased the target to EUR 275 million from EUR 200 million and extended the programme until the end of 2021.
Sales during the quarter decreased due to lower prices and volumes. We also saw a sharp decrease in operational EBIT for the same reasons. Approximately EUR 40 million of cost reduction have been achieved during the quarter. Imagine if we would have had this based on last year’s cost levels. This is a foundation for a leaner and more efficient organisation ready for when the cycle turns. Cash flow from operations was strong, due to proactive working capital management.
Given our focus on our raw material, I am pleased that we will establish a new Forest division from the beginning of 2020. It will include our Swedish forest assets and our 41% share of Tornator with the majority of the forest assets located in Finland. Moreover, it covers our wood supply operations in Finland, Sweden, Russia and the Baltics. As a major player in the bioeconomy, access to wood is critical for our business.
Looking at our divisions, we see continued price increases in Consumer Board; in Packaging Solutions, the corrugated market is benefiting from lower containerboard prices; in Biomaterials, we note that the Chinese market is showing positive signs and in Wood Products, the margin protection continues.
As regards our transformation journey, the conversion of Enocell pulp mill from softwood to dissolving pulp has been finalised, and the gradual ramp up is starting. Our dissolving wood pulp can be used in exciting new ways to help shape the fabric of a green future. As part of our focus on our growth areas, we have also divested our 60% equity stake in the Dawang paper mill in China.
In our constant endeavours for sustainability in all dimensions, we are proud that our Sustainability Report 2018 – for the second year in a row – has been included in the top ten sustainability reports globally. This is according to the latest Reporting matters publication by the World Business Council for Sustainable Development (WBCSD). We have also received the highest rating for sustainability communications in a study assessing 95 companies listed on the Nasdaq OMX Stockholm Large Cap Index in Sweden.
To sum it up: The changed market environment creates a need to be better prepared and we use this time now to get ready for the next upturn. I am pleased that we started to take measures early on.
It is soon time for me to hand over the torch to my successor, Annica Bresky, who will step in to her new position as President and CEO as of 1 December 2019. I have enjoyed my time with Stora Enso tremendously. I am especially pleased with the progress that all of us have made in becoming the renewable materials company, sustainable in all dimensions. I wish Annica all the best in this exciting role.
As always, I would like to thank our customers for their business, our employees for their dedication, and our investors for their trust.”
Events today
1) Webcast and press conference in Helsinki at 11.00 EET
The webcast and press conference for media will take place at 11.00 EET (10.00 CET, 09.00 UK time, 04.00 EDT) at Stora Enso’s Head Office, Kanavaranta 1, Helsinki. The event will be held in English and it will be hosted by CEO Karl-Henrik Sundström, CFO Seppo Parvi, and EVP, Communications Ulrika Lilja. The webcast may be accessed at storaenso.videosync.fi/2019-q3-results
2) Webcast and conference call for analysts and investors at 15.00 EET
The webcast and conference call for analysts and investors will take place at 15.00 EET (14.00 CET, 13.00 UK time, 09.00 EDT). It will be hosted by CEO Karl-Henrik Sundström, CFO Seppo Parvi, and SVP, Head of Investor
Relations Ulla Paajanen, and may be accessed at https://edge.media-server.com/mmc/p/upjs2avo.
Those analysts and investors who wish to ask questions should join the conference call (details below). All participants can follow the presentation over the webcast.
Dial-in details for the analyst and investor conference call
| Live event at 15.00 EET | |
| UK | +44 (0)2071 928 000 |
| Finland | +358 (0)9 4245 0806 |
| Sweden | +46 (0)8 5069 2180 |
| USA | +1 631 510 7495 |
| Confirmation Code: | 4094617 |
| Replay Dial-In #: | |
| UK/International | +44 (0)3333 009 785 |
| Access Code: | 4094617 |
The links to the webcasts will be also available on the Stora Enso website: storaenso.com/investors
This release is a summary of Stora Enso’s Financial Report January–September 2019. The complete report is attached to this release as a pdf file. It is also available on the company website at storaenso.com/investors.
For further information, please contact:
Ulrika Lilja
EVP, Communications
tel. +46 72 221 9228
Investor enquiries:
Ulla Paajanen
SVP, Investor Relations
tel. +358 40 763 8767
Part of the bioeconomy, Stora Enso is a leading global provider of renewable solutions in packaging, biomaterials, wooden constructions and paper. We believe that everything that is made from fossil-based materials today can be made from a tree tomorrow. Stora Enso has some 26 000 employees in over 30 countries. Our sales in 2018 were EUR 10.5 billion. Stora Enso shares are listed on Nasdaq Helsinki (STEAV, STERV) and Nasdaq Stockholm (STE A, STE R). In addition, the shares are traded in the USA as ADRs (SEOAY). storaenso.com
STORA ENSO OYJ
For further information, please contact:
Ulrika Lilja
EVP, Communications
tel. +46 72 221 9228
Investor enquiries:
Ulla Paajanen
SVP, Investor Relations
tel. +358 40 763 8767