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 | 1 | 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