Stora Enso Interim Report January–March 2018
Accelerated profitable growth continues; promising start of the year
STORA ENSO OYJ, Helsinki, Finland
INTERIM REPORT 27 April 2018 at 9.30 EEST
- Sales increased by 3.3% to EUR 2 579 (2 497) million, primarily due to favourable prices and the ramp-up of strategic investments.
- Operational EBIT increased 72% to EUR 369 (215) million as announced on 13 April, mainly due to favourable prices and mix optimisation combined with continued successful ramp-ups of the strategic investments.
- The operational EBIT margin was 14.3% (8.6%), the highest for any quarter since 2001.
- EPS was EUR 0.35 (0.14). EPS excl. IAC increased to EUR 0.35 (0.17).
- Balance sheet strengthened further and net debt was reduced by EUR 485 million; the net debt to operational EBITDA ratio improved to 1.3 (1.9).
- Record high operational ROCE at 17.7% (10.0%), the highest since 2000.
Q2/2018 sales are estimated to be similar to or slightly higher than the amount of EUR 2 579 million recorded in the first quarter of 2018, and operational EBIT is expected to be in line with or somewhat lower than the EUR 369 million recorded in the first quarter of 2018.
The impact of annual maintenance shutdowns is expected to be approximately EUR 40 million higher than in the first quarter of 2018. The Nordic wood supply situation is expected to continue tight, as the inventory levels are relatively low after a mild winter. The impacts are expected to be at same level or lower than in the first quarter, approximately EUR 10 million. These impacts are included in the above outlook
|EUR million||Q1/18||Q1/17||Change % Q1/18–Q1/17||Q4/17||Change % Q1/18–Q4/17||2017|
|Sales||2 579||2 497||3.3%||2 511||2.7%||10 045|
|Operational EBITDA||504||369||36.6%||427||18.0%||1 587|
|Operational EBIT||369||215||71.6%||280||31.8%||1 004|
|Operational EBIT margin||14.3%||8.6%||11.2%||10.0%|
|Operating profit (IFRS)||355||193||83.9%||236||50.4%||904|
|Profit before tax excl. IAC||333||191||74.3%||238||39.9%||826|
|Profit before tax||333||164||103.0%||209||59.3%||742|
|Net profit for the period||273||107||155.1%||173||57.8%||614|
|Net interest-bearing liabilities||2 226||2 711||-17.9%||2 253||-1.2%||2 253|
|Earnings per share (EPS) excl. IAC, EUR||0.35||0.17||0.26||0.89|
|EPS (basic), EUR||0.35||0.14||0.22||0.79|
|Net debt/last 12 months’ operational EBITDA ratio||1.3||1.9||1.4||1.4|
|Average number of employees||25 442||25 591||-0.6%||26 116||-2.6%||26 206|
Stora Enso’s CEO Karl-Henrik Sundström comments on the first quarter 2018 results:
“As pre-announced on 13 April, we experience strong profitable growth resulting in a promising start of the year. Our transformation strategy goes from strength to strength.
Sales increased 3.3%, primarily due to favourable prices and the ramp-up of strategic investments in Beihai, Varkaus, and Murów sawmill. I am very pleased that operational EBIT increased 72% to EUR 369 million, mainly due to favourable prices and a better product mix and continued strong operational performance. The operational EBIT margin was 14.3%, which is the highest quarter since 2001. We also report a record high operational ROCE at 17.7% (10.0%), the highest since 2000. All in all, we have experienced record sales, profit, or improved operational efficiency in all five divisions!
The strong financial performance has also given us the opportunity to continue to strengthen the balance sheet. We have decreased our net debt by nearly EUR 500 million compared to year ago and the net debt to EBITDA ratio has improved from 1.9 to 1.3.
We continue to see good progress in our transformation projects. The ramp up of the production line for wooden building components (LVL) at Varkaus Mill continues and it is expected to be completed in mid-2018. We also move forward with the construction of the cross laminated timber (CLT) unit at Gruvön, Sweden. Production is scheduled to begin during the first quarter of 2019. These projects will strengthen our position in the bioeconomy even further. We have also kicked off the production of biocomposite granules at our Swedish Hylte Mill and, early summer, we will have a formal inauguration.
I am proud to say that we have won the Bio-Based Product of the Year for Lineo by Stora Enso. Lineo is made from lignin, one of the main building blocks of a tree, and it is one step towards replacing fossil-based products with renewable solutions. I am also pleased that we have been chosen as the provider of wooden material for a 14-storey wooden building in Joensuu, Finland. Once completed, the building will be Finland’s tallest wooden high-rise building. I am happy that Finland goes for new innovative solutions in massive wood – it is a responsible choice, not the least since wooden buildings store carbon during their lifecycle.
As always, I would like to thank our customers for their business, our employees for their dedication, and our investors for their trust.”
1) Press conference and webcast for media at 11.00 Finnish time (10.00 CEST)
Stora Enso’s CEO Karl-Henrik Sundström and CFO Seppo Parvi will present the results at the press conference which will be webcast. The event, hosted by EVP, Communications Ulrika Lilja, will be held in English and take place at Stora Enso’s Head Office, Kanavaranta 1, Helsinki at 11.00 EEST (10.00 CEST, 9.00 UK time, 4.00 EDT). The webcast may be accessed at https://storaenso.videosync.fi/2018-04-27-q1-press-conference
2) Webcast and conference call for analysts and investors at 14.30 Finnish time
The webcast and conference call for analysts and investors will take place at 14.30 EEST (13.30 CEST, 12.30 UK time, 07.30 EDT). It will be hosted by CEO Karl-Henrik Sundström, CFO Seppo Parvi, and SVP Head of Investor Relations Ulla Paajanen-Sainio, and may be accessed at https://edge.media-server.com/m6/p/hjpuzacg.
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 14.30 EEST|
|UK||+44 (0)330 336 9411|
|Finland||+358 (0)9 7479 0404|
|Sweden||+46 (0)8 5065 3942|
|USA||+1 646 828 8156|
The links to the webcasts are also available on the Stora Enso website: storaenso.com/investors
For further information, please contact:
Seppo Parvi, CFO, tel. +358 2046 21205
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 40 763 8767
Ulrika Lilja, EVP, Communications, tel. +46 72 221 9228
This release is a summary of Stora Enso’s Interim Report January–March 2018. The complete report is attached to this release as a pdf file. It is also available on the company website at storaenso.com/investors.
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 2017 were EUR 10 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/investors
STORA ENSO OYJ
For further information, please contact:
tel. +358 2046 21205
SVP, Investor Relations
tel. +358 40 763 8767
tel. +46 72 221 9228