Stora Enso introduces change in operational EBITDA definition, higher strategic target for Wood Products division and CAPEX for 2018

STORA ENSO OYJ STOCK EXCHANGE RELEASE 7 November 2017 at 18.30 EET

Change in operational EBITDA definition (non-IFRS measure)

Starting from the fourth quarter of 2017, Stora Enso will include the operational EBITDA of its equity accounted investments (EAI) in the group’s operational EBITDA. Previously Stora Enso has included the operational EBIT of EAIs in the group’s operational EBIT only.

This change will affect the following key figures:

  • operational EBITDA
  • operational EBITDA margin
  • net debt to last 12 months’ operational EBITDA ratio

There will be no impact on operational EBIT, the subtotals of the consolidated income statement or the group’s other IFRS figures.

The new definition of the non-IFRS measure of operational EBITDA is: operating profit/loss excluding operational decrease in the value of biological assets, fixed asset depreciation and impairment, IACs and fair valuations. The definition includes the respective items of subsidiaries, joint arrangements and equity accounted investments.

The historical figures are restated according to the new reporting structure and presented in the tables at the end of this release.

New strategic financial target for Wood Products division

Stora Enso’s Wood Products division’s financial target, the operational return on operating capital (ROOC) percentage, has been raised from 18% to 20% to reflect better the higher value-added business in the portfolio and the overall performance potential of the division.

Capital expenditure for 2018

Stora Enso has successfully completed several major investments recently. The group continues to gradually decrease its capital expenditure (excluding investments to biological assets) to the level of depreciation. In 2018, the estimated capital expenditure will be EUR 550–600 million, including EUR 100 million for biological assets. The forecasted annual depreciation is EUR 490–510 million and operational decrease in the value of biological assets EUR 50–70 million in 2018. Capital expenditure amounts do not include potential acquisitions or divestments.

Reconciliation of operational profitability  

As published  

EUR million Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Operational EBITDA 410 341 352 1 371 310 343 355 363
Equity accounted investments (EAI), operational 20 15 14 80 31 17 16 16
Operational decrease in the value of biological assets -16 -18 -12 -65 -19 -17 -22 -7
Depreciation and impairment excl. IAC -124 -119 -139 -502 -131 -124 -123 -124
Operational EBIT 290 219 215 884 191 219 226 248
Fair valuations and non-operational items 0 -6 5 -67 -12 -14 -15 -26
Items affecting comparability (IAC) -20 -8 -27 -34 -34 -9 37 -28
Operating Profit (IFRS) 270 205 193 783 145 196 248 194

Restated

EUR million Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Equity accounted investments (EAI), operational excl. depreciation 22 18 17 92 33 21 19 19
Operational EBITDA 432 359 369 1 463 343 364 374 382
Equity accounted investments (EAI) depreciation -2 -3 -3 -12 -2 -4 -3 -3
Operational decrease in the value of biological assets -16 -18 -12 -65 -19 -17 -22 -7
Depreciation and impairment excl. IAC -124 -119 -139 -502 -131 -124 -123 -124
Operational EBIT 290 219 215 884 191 219 226 248
Fair valuations and non-operational items 0 -6 5 -67 -12 -14 -15 -26
Items affecting comparability (IAC) -20 -8 -27 -34 -34 -9 37 -28
Operating Profit (IFRS) 270 205 193 783 145 196 248 194

Change  

EUR million Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Equity accounted investments (EAI), operational excl. depreciation 22 18 17 92 33 21 19 19
Operational EBITDA 22 18 17 92 33 21 19 19
Equity accounted investments (EAI), operational -20 -15 -14 -80 -31 -17 -16 -16
Equity accounted investments (EAI) depreciation -2 -3 -3 -12 -2 -4 -3 -3
Operational decrease in the value of biological assets 0 0 0 0 0 0 0 0
Depreciation and impairment excl. IAC 0 0 0 0 0 0 0 0
Operational EBIT 0 0 0 0 0 0 0 0
Fair valuations and non-operational items 0 0 0 0 0 0 0 0
Items affecting comparability (IAC) 0 0 0 0 0 0 0 0
Operating Profit (IFRS) 0 0 0 0 0 0 0 0

Operational EBITDA by segment

As published  

EUR million Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Consumer Board 127  111 119 447 92 118 127 110
Packaging Solutions 65 56 43 129 36 37 33 23
Biomaterials 124 100 90 361 75 79 92 115
Wood Products 37 43 31 118 24 30 41 23
Paper 56 37 68 324 90 77 74 83
Other 1 -6 1 -8 -7 2 -12 9
Total 410 341 352 1 371 310 343 355 363

Restated  

EUR million Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Consumer Board 128  113 117 452 93 119 128 112
Packaging Solutions 66 56 44 131 36 38 34 23
Biomaterials 124 100 90 361 75 79 92 115
Wood Products 37 43 31 118 24 30 41 23
Paper 55 37 69 327 91 78 74 84
Other 22 10 18 74 24 20 5 25
Total 432 359 369 1 463 343 364 374 382

Change

EUR million Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Consumer Board 2 -2 5 1 1 1 2
Packaging Solutions 1 0 1 2 0 1 1 0
Biomaterials 0 0 0 0 0 0 0 0
Wood Products 0 0 0 0 0 0 0 0
Paper -1 0 1 3 1 1 0 1
Other 21 16 17 82 31 18 17 16
Total 22 18 17 92 33 21 19 19

Operational EBITDA margin by segment

As published  

% Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Consumer Board 19.9%  17.6% 19.5% 19.1% 15.9% 19.7% 21.2% 19.5%
Packaging Solutions 20.4% 17.9% 14.8% 12.4% 12.8% 14.3% 12.8% 9.4%
Biomaterials 32.7% 27.0% 24.4% 26.2% 21.5% 23.7% 26.9% 32.8%
Wood Products 8.9% 9.8% 7.5% 7.4% 6.1% 7.8% 9.5% 6.0%
Paper 7.7% 5.1% 9.1% 10.0% 11.8% 9.7% 8.8% 9.7%
Other 0.2% -1.0% 0.2% -0.3% -1.1% 0.4% -1.9% 1.4%
Total 16.3% 13.5% 14.1% 14.0% 12.7% 14.3% 14.1% 14.8%

Restated  

% Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Consumer Board 20.0%  17.9% 19.6% 19.3% 16.0% 19.9% 21.4% 19.9%
Packaging Solutions 20.8% 17.9% 15.2% 12.5% 12.8% 14.7% 13.2% 9.4%
Biomaterials 32.7% 27.0% 24.4% 26.2% 21.5% 23.7% 26.9% 32.8%
Wood Products 8.9% 9.8% 7.5% 7.4% 6.1% 7.8% 9.5% 6.0%
Paper 7.6% 5.1% 9.1% 10.1% 12.0% 9.7% 8.8% 9.8%
Other 3.7% 1.6% 2.8% 3.0% 3.7% 3.6% 0.8% 3.9%
Total 17.2% 14.2% 14.8% 14.9% 14.1% 15.2% 14.8% 15.6%

Change

Percentage point Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Consumer Board 0.1  0.3 0.1 0.2 0.1 0.2 0.2 0.4
Packaging Solutions 0.4 0 0.4 0.1 0 0.4 0.4 0
Biomaterials 0 0 0 0 0 0 0 0
Wood Products 0 0 0 0 0 0 0 0
Paper -0.1 0 0 0.1 0.2 0 0 0.1
Other 3.5 2.6 2.6 3.3 4.8 3.2 2.7 2.5
Total 0.9 0.7 0.7 0.9 1.4 0.9 0.7 0.8

Net debt/last 12 months’ operational EBITDA ratio

As published  

Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Net debt/last 12 months' operational EBITDA ratio 1.8  2.0 2.0 2.0 2.0 2.1 2.2 2.2

Restated  

Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Net debt/last 12 months' operational EBITDA ratio 1.6  1.9 1.9 1.9 1.9 1.9 2.1 2.1

Change  

Q3/17 Q2/17 Q1/17 2016 Q4/16 Q3/16 Q2/16 Q1/16
Net debt/last 12 months' operational EBITDA ratio -0.2  -0.1 -0.1 -0.1 -0.1 -0.2 -0.1 -0.1

Capital Markets Day webcast
Stora Enso’s Capital Markets Day takes place in London tomorrow. You are welcome to follow the presentations focusing on an update on Stora Enso’s strategy, including an in-depth review of the Consumer Board, Packaging Solutions and Biomaterials businesses in a live webcast starting at 11.30 UK time (12.30 CET, 13.30 EET) at  https://edge.media-server.com/m6/p/w3h5m973 .

For further information, please contact:  
Ulrika Lilja, EVP Communications, tel. +46 72 221 9228

Investor enquiries:
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 40 763 8767


Stora Enso is a leading provider of renewable solutions in packaging, biomaterials, wood and paper on global markets. Our aim is to replace non-renewable materials by innovating and developing new products and services based on wood and other renewable materials. We employ some 25 000 people in more than 35 countries, and our sales in 2016 were EUR 9.8 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-Sainio
SVP, Investor Relations
tel. +358 40 763 8767

Subscribe