Change in the reporting of costs related to growth of biological assets
Stora Enso is changing its reporting regarding the costs related to the growth of biological assets (i.e. growing trees) starting from the fourth quarter of 2016.
Costs related to the development of biological assets are capitalised on the balance sheet during the growth cycle (i.e. until the time of harvesting). At harvesting, the capitalised costs are transferred from biological assets to inventory. Prior to the change, Stora Enso has included the costs related to the growth of biological assets in its operational EBITDA.
Starting from the fourth quarter of 2016, these growth costs will be excluded from operational EBITDA and presented as Operational decrease in the value of biological assets. The reason for the change is to align the reporting of the growth costs with industry benchmarks.
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 official Condensed 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, share of results of equity accounted investments, IAC and fair valuations.
The historical figures are restated according to the new reporting structure and presented in the tables below.
RECONCILIATION OF OPERATIONAL PROFITABILITY
As published
| EUR million | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Operational EBITDA | 326 | 333 | 356 | 1 352 | 341 | 353 | 318 | 340 |
| Equity accounted investments (EAI), operational | 17 | 16 | 16 | 80 | 22 | 21 | 24 | 13 |
| Depreciation and impairment excl. IAC | -124 | -123 | -124 | -517 | -121 | -128 | -135 | -133 |
| Operational EBIT | 219 | 226 | 248 | 915 | 242 | 246 | 207 | 220 |
| Fair valuations and non-operational items | -14 | -15 | -26 | 378 | 401 | -25 | 15 | -13 |
| Items affecting comparability (IAC) | -9 | 37 | -28 | -234 | -250 | 16 | -8 | 8 |
| Operating profit (IFRS) | 196 | 248 | 194 | 1 059 | 393 | 237 | 214 | 215 |
Restated
| EUR million | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Operational EBITDA | 343 | 355 | 363 | 1 408 | 351 | 369 | 337 | 351 |
| Equity accounted investments (EAI), operational | 17 | 16 | 16 | 80 | 22 | 21 | 24 | 13 |
| Operational decrease in the value of biological assets | -17 | -22 | -7 | -56 | -10 | -16 | -19 | -11 |
| Depreciation and impairment excl. IAC | -124 | -123 | -124 | -517 | -121 | -128 | -135 | -133 |
| Operational EBIT | 219 | 226 | 248 | 915 | 242 | 246 | 207 | 220 |
| Fair valuations and non-operational items | -14 | -15 | -26 | 378 | 401 | -25 | 15 | -13 |
| Items affecting comparability (IAC) | -9 | 37 | -28 | -234 | -250 | 16 | -8 | 8 |
| Operating profit (IFRS) | 196 | 248 | 194 | 1 059 | 393 | 237 | 214 | 215 |
Change
| EUR million | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Operational EBITDA | 17 | 22 | 7 | 56 | 10 | 16 | 19 | 11 |
| Equity accounted investments (EAI), operational | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Operational decrease in the value of biological assets | -17 | -22 | -7 | -56 | -10 | -16 | -19 | -11 |
| 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 SEGMENTS
As published
| EUR million | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Consumer Board | 109 | 113 | 108 | 434 | 89 | 116 | 114 | 115 |
| Packaging Solutions | 37 | 33 | 23 | 147 | 37 | 32 | 38 | 40 |
| Biomaterials | 71 | 84 | 110 | 420 | 108 | 125 | 87 | 100 |
| Wood Products | 30 | 41 | 23 | 111 | 26 | 30 | 32 | 23 |
| Paper | 77 | 74 | 83 | 231 | 74 | 44 | 52 | 61 |
| Other | 2 | -12 | 9 | 9 | 7 | 6 | -5 | 1 |
| Total | 326 | 333 | 356 | 1 352 | 341 | 353 | 318 | 340 |
Restated
| EUR million | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Consumer Board | 118 | 127 | 110 | 466 | 94 | 128 | 124 | 120 |
| Packaging Solutions | 37 | 33 | 23 | 147 | 37 | 32 | 38 | 40 |
| Biomaterials | 79 | 92 | 115 | 444 | 113 | 129 | 96 | 106 |
| Wood Products | 30 | 41 | 23 | 111 | 26 | 30 | 32 | 23 |
| Paper | 77 | 74 | 83 | 231 | 74 | 44 | 52 | 61 |
| Other | 2 | -12 | 9 | 9 | 7 | 6 | -5 | 1 |
| Total | 343 | 355 | 363 | 1 408 | 351 | 369 | 337 | 351 |
Change
| EUR million | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Consumer Board | 9 | 14 | 2 | 32 | 5 | 12 | 10 | 5 |
| Packaging Solutions | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Biomaterials | 8 | 8 | 5 | 24 | 5 | 4 | 9 | 6 |
| Wood Products | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Paper | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 17 | 22 | 7 | 56 | 10 | 16 | 19 | 11 |
OPERATIONAL EBITDA MARGIN BY SEGMENTS
As published
| % | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Consumer Board | 18.2% | 18.9% | 19.1% | 18.5% | 15.9% | 19.1% | 18.9% | 20.2% |
| Packaging Solutions | 14.3% | 12.8% | 9.4% | 16.1% | 15.4% | 14.2% | 16.8% | 18.1% |
| Biomaterials | 21.3% | 24.6% | 31.3% | 28.3% | 28.9% | 31.9% | 23.9% | 28.2% |
| Wood Products | 7.8% | 9.5% | 6.0% | 6.9% | 6.6% | 8.0% | 7.3% | 5.9% |
| Paper | 9.7% | 8.8% | 9.7% | 6.4% | 8.3% | 4.8% | 5.7% | 6.7% |
| Other | 0.4% | -1.9% | 1.4% | 0.4% | 1.1% | 1.1% | -0.8% | 0.2% |
| Total | 13.6% | 13.2% | 14.6% | 13.5% | 13.7% | 14.1% | 12.4% | 13.6% |
Restated
| % | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Consumer Board | 19.7% | 21.2% | 19.5% | 19.9% | 16.8% | 21.1% | 20.6% | 21.1% |
| Packaging Solutions | 14.3% | 12.8% | 9.4% | 16.1% | 15.4% | 14.2% | 16.8% | 18.1% |
| Biomaterials | 23.7% | 26.9% | 32.8% | 29.9% | 30.2% | 32.9% | 26.4% | 29.9% |
| Wood Products | 7.8% | 9.5% | 6.0% | 6.9% | 6.6% | 8.0% | 7.3% | 5.9% |
| Paper | 9.7% | 8.8% | 9.7% | 6.4% | 8.3% | 4.8% | 5.7% | 6.7% |
| Other | 0.4% | -1.9% | 1.4% | 0.4% | 1.1% | 1.1% | -0.8% | 0.2% |
| Total | 14.3% | 14.1% | 14.8% | 14.0% | 14.1% | 14.8% | 13.2% | 14.1% |
Change
| Percentage point | Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 |
| Consumer Board | 1.5 | 2.3 | 0.4 | 1.4 | 0.9 | 2.0 | 1.7 | 0.9 |
| Packaging Solutions | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Biomaterials | 2.4 | 2.3 | 1.5 | 1.6 | 1.3 | 1.0 | 2.5 | 1.7 |
| Wood Products | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Paper | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total | 0.7 | 0.9 | 0.2 | 0.5 | 0.4 | 0.7 | 0.8 | 0.5 |
NET DEBT/LAST 12 MONTHS' OPERATIONAL EBITDA RATIO
As published
| Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 | |
| Net debt/last 12 months' operational EBITDA ratio | 2.1 | 2.3 | 2.3 | 2.4 | 2.4 | 2.5 | 2.7 | 2.6 |
Restated
| Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 | |
| Net debt/last 12 months' operational EBITDA ratio | 2.1 | 2.2 | 2.2 | 2.3 | 2.3 | 2.3 | 2.6 | 2.5 |
Change
| Q3/16 | Q2/16 | Q1/16 | 2015 | Q4/15 | Q3/15 | Q2/15 | Q1/15 | |
| Net debt/last 12 months' operational EBITDA ratio | 0.0 | -0.1 | -0.1 | -0.1 | -0.1 | -0.2 | -0.1 | -0.1 |
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, wooden constructions and paper on global markets. Our aim is to replace fossil based materials by innovating and developing new products and services based on wood and other renewable materials. We employ some 26 000 people in more than 35 countries, and our sales in 2015 were EUR 10.0 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) on the International OTCQX over-the-counter market. 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