Stora Enso Reports Improved EBIT and Cash Flow Amidst Slight Sales Decline in Q2 2024

Stora Enso Reports Improved EBIT and Cash Flow Amidst Slight Sales Decline in Q2 2024

(IN BRIEF) Stora Enso reported a slight decrease in Q2 2024 sales but saw significant improvements in adjusted EBIT and cash flow. Key highlights include successful value creation and profit improvement programmes, a major investment in the Oulu mill, and progress in the divestment of the Beihai site. The company raised its full-year 2024 adjusted EBIT guidance, anticipating higher profitability supported by favorable market conditions and strategic initiatives.

(PRESS RELEASE) HELSINKI, 24-Jul-2024 — /EuropaWire/ — Stora Enso, a global leader in renewable solutions, has announced its half-year report for 2024, highlighting significant improvements in EBIT and cash flow despite a slight year-on-year decrease in sales.

Q2 2024 Financial Highlights

• Sales: Decreased by 3% to EUR 2,301 million from EUR 2,374 million in Q2 2023. However, continuing operations saw a growth of 1%.
• Adjusted EBIT: Increased significantly to EUR 161 million from EUR 37 million, with an adjusted EBIT margin rising to 7.0% from 1.6%.
• Operating Result (IFRS): Improved to EUR 99 million from a loss of EUR 253 million.
• Earnings Per Share (EPS): Rose to EUR 0.06 from EUR -0.29, and EPS excluding fair valuations increased to EUR 0.07 from EUR -0.27.
• Cash Flow from Operations: Grew to EUR 323 million from EUR 146 million, with cash flow after investing activities at EUR 86 million compared to EUR -70 million.
• Net Debt: Increased by EUR 466 million to EUR 3,497 million, mainly due to the board investment at the Oulu site.
• Net Debt to Adjusted EBITDA (LTM) Ratio: Stood at 3.5, with a target to keep the ratio below 2.0.

H1 2024 Financial Overview

• Sales: Totaled EUR 4,466 million, down from EUR 5,095 million year-on-year.
• Adjusted EBIT: Improved to EUR 317 million from EUR 271 million.
• Operating Result (IFRS): Rose to EUR 247 million from EUR 5 million.
• EPS: Increased to EUR 0.16 from EUR -0.05, with EPS excluding fair valuations at EUR 0.16 from EUR -0.04.
• Cash Flow from Operations: Increased to EUR 592 million from EUR 400 million, with cash flow after investing activities at EUR -18 million compared to EUR -69 million.

Key Developments and Highlights

• Operational Efficiencies: Value creation programmes focused on sourcing, operational, and commercial efficiencies are progressing well across all divisions.
• Profit Improvement Programme: Aimed at achieving EUR 120 million in annual fixed cost savings, showing positive results in improving earnings trends and cash flow.
• Working Capital: Operating working capital decreased by EUR 576 million year-on-year, reaching an all-time low.
• Oulu Mill Investment: Secured a EUR 435 million long-term loan from the European Investment Bank to fund the EUR 1 billion investment in the Oulu mill, with production expected to start in H1 2025.
• Divestment Plans: The process to divest the Beihai site in China is underway, with the site classified as assets held for sale from the end of 2023.

Future Outlook and Guidance

Stora Enso raised its full-year 2024 adjusted EBIT guidance on 15 May, expecting it to be significantly higher than the EUR 342 million achieved in 2023. The company anticipates a gradual market recovery in 2024, supported by successful initiatives to increase profitability. However, high wood costs and market uncertainties, including inflation and potential strikes, will continue to impact margins.

Sector-Specific Outlooks

• Packaging Materials: Positive outlook with strong order books and improving price outlooks.
• Packaging Solutions: Stable demand with seasonal fluctuations.
• Biomaterials: Stable pulp demand in Europe and China.
• Wood Products: Seasonal decrease in Q3 volumes expected.
• Forest: Strong market activity in Finland, Sweden, and the Baltics.

Leadership Comments

Hans Sohlström, President and CEO of Stora Enso, commented, “Our Q2 performance met our expectations, reinforcing our recently upgraded 2024 guidance. Advances in our profitability and cash flow improvement initiatives, coupled with more favorable market conditions, have supported an improved earnings trend for the third consecutive quarter. This positive development is a testament to our team’s dedication and sets a strong foundation for future success.”

Commitment to Sustainable Growth

Stora Enso is focused on capital allocation and asset strategy in growing market segments, aiming to enhance competitiveness and achieve profitable growth. The company remains committed to investing in both human and capital resources to deliver exceptional service to customers and create robust shareholder value growth.

For more detailed information on Stora Enso’s half-year performance, please refer to the full report available on the company’s website.

Media Contacts:

Media enquiries:
Carl Norell
SVP Corporate Communications
tel. +46 72 241 0349

Investor enquiries:
Anna-Lena Åström
SVP Investor Relations
tel. +46 70 210 7691

SOURCE: STORA ENSO OYJ