Stora Enso’s strategic financial targets and historical figures according to the new divisional structure

STORA ENSO OYJ INVESTOR NEWS 19 March 2020 at 14:00 EET

On 4 December 2019 Stora Enso announced the creation of a new divisional structure. As of 1 January 2020, the divisions are Packaging Materials, Packaging Solutions, Biomaterials, Wood Products, Forest, and Paper.

Stora Enso merged its containerboard business with the Consumer Board division, creating a new Packaging Materials division. The remaining business in Packaging Solutions, together with the recently created Formed Fiber unit, constitute a more focused Packaging Solutions division.

As announced on 18 September 2019, Stora Enso established a Forest division and started reporting it separately as of 1 January 2020. The new Forest division includes Stora Enso’s Swedish forest assets (including the recently acquired Bergvik Skog Väst AB) and a 41% share of Tornator with the majority of its forest assets located in Finland. The Forest division also includes wood supply operations in Finland, Sweden, Russia and the Baltic countries. Tree plantations in Latin America and China, linked to local pulp mills, continue to be reported as before under the Biomaterials and Packaging Materials divisions. After establishing the new Forest division, remaining segment Other reporting includes Group functions, logistics and other operations.


Strategic financial targets

Stora Enso has updated the strategic financial targets according to the new divisional structure. The targets according to the new divisional structure as of 1 January 2020 as well as according to the divisional structure as of 31 December 2019 are presented in the tables below.

 

Division KPI TargetAs of 1 January 2020 Target as of 31 December 2019
Packaging Materials ROOC >20% -
Consumer Board ROOC - >20%
Packaging Solutions ROOC >30% >20%
Biomaterials ROOC >15% >15%
Wood Products ROOC >20% >20%
Forest ROOC >5% -
Paper Cash flow after investing activities to sales >7% >7%
GROUP ROCE >13% >13%

ROOC: Operational return on operating capital
ROCE: Operational return on capital employed

 

 

Forest division segment reporting
Growth in the value of forest represents an important component of the annual operative return for long-term rotation forest assets, where typical annual wood sales and related costs do not reflect the total profitability of the forest assets. The long-term value development of standing forests is an important driver for profitability of the forestry business.

Under previous presentation principles, all changes in fair valuation of biological assets were excluded from Operational EBIT, with the exception of depletion of capitalised silviculture costs for tree plantations in Latin America and China. From 1 January 2020 onwards, the changes in the fair valuation of biological assets will be categorised in two components:

  1. non-operational fair value changes, and
  2. operational fair value changes.


Non-operational fair value changes of biological assets reflect the changes made to valuation assumptions and parameters. Operational fair value changes of biological assets contain all other fair value changes, mainly due to inflation and differences in actual harvesting levels compared to the harvesting plan. Operational fair value changes will be reported in Operational EBITDA, whereas non-operational fair value changes will be excluded from Operational EBITDA.

In conjunction with the new segment reporting, Stora Enso will reclassify the silviculture costs of the new Forest division from Operational EBITDA to Operational EBIT. Silviculture costs mainly relate to replanting and the tending and fertilisation of trees. As per previous presentation principles, the depletion of capitalised silviculture costs in tree plantations in Latin America and China are already included in Operational EBIT, so this change aligns the presentation of Nordic forests with plantations in Latin America and China.


All of the above-mentioned changes are related to the non-IFRS alternative performance measures. Operating profit (IFRS) remains unchanged, with both operational and non-operational fair valuation changes to be included on the line change in the net value of biological assets.

The cash outflows regarding the silviculture costs of the Group’s Swedish forests will be presented in the cash flow statement as part of the investing activities instead of as operating cash flows under the previous presentation principles.

Restated figures

The restated figures for the Group, Packaging Materials, Packaging Solutions and Forest division are presented below. 
 

 

As published: Sales

EUR million 2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 2 563 614 640 675 634 2 622
Packaging Solutions 1 247 293 299 316 338 1 344
Biomaterials 1 464 341 331 394 398 1 635
Wood Products 1 569 374 380 412 403 1 622
Paper 2 856 694 690 712 760 3 066
Other 3 396 819 786 868 922 3 425
Inter-segment sales -3 040 -724 -725 -770 -821 -3 229
Total 10 055 2 411 2 402 2 608 2 635 10 486

 

Restated: Sales

EUR million 2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Packaging Materials 3 193 755 791 833 814 3 350
Packaging Solutions 703 171 168 182 182 707
Biomaterials 1 464 341 331 394 398 1 635
Wood Products 1 569 374 380 412 403 1 622
Forest 2 321 558 518 603 642 2 285
Paper 2 856 694 690 712 760 3 066
Other 1 076 262 268 265 280 1,141
Inter-segment sales  -3 127 -743 -746 -793 -845 -3 321
Total 10 055 2 411 2 402 2 608 2 635 10 486

 

Packaging Materials: Sales

  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 2 564 614 640 676 634 2 624
Containerboard 630 141 151 157 180 727

 

As published: Operational EBITDA 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 433 95 119 118 101 423
Packaging Solutions 212 36 48 58 70 313
Biomaterials 356 21 67 133 135 550
Wood Products 153 26 39 47 40 199
Paper 318 71 76 76 95 345
Other  70 11 26 3 30 48
Total  1 542 259 376 435 471 1 878

 

Restated: Operational EBITDA 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Packaging Materials 574 115 146 156 157 684
Packaging Solutions 71 16 21 20 14 52
Biomaterials 356 21 67 133 135 550
Wood Products 153 26 39 47 40 199
Forest 145 43 37 25 39 122
Paper 318 71 76 76 95 345
Other -4 -14 10 -3 3 -26
Total 1 614 277 397 455 484 1 925
             
Total change 71 18 21 20 13 48

 

Packaging Materials: Operational EBITDA 

  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 434 96 120 118 101 424
Containerboard 139 19 27 38 56 260

 

As published: Operational EBITDA margin % 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 16.9% 15.6% 18.6% 17.5% 15.9% 16.1%
Packaging Solutions 17.0% 12.2% 16.0% 18.4% 20.7% 23.3%
Biomaterials 24.3% 6.1% 20.3% 33.7% 33.9% 33.6%
Wood Products 9.8% 7.0% 10.3% 11.5% 10.0% 12.3%
Paper 11.1% 10.2% 11.0% 10.7% 12.5% 11.3%
Other 2.1% 1.3% 3.3% 0.3% 3.3% 1.4%
Total  15.3% 10.8% 15.7% 16.7% 17.9% 17.9%

 

Restated: Operational EBITDA margin % 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Packaging Materials 18.0% 15.2% 18.5% 18.7% 19.3% 20.4%
Packaging Solutions 10.2% 9.6% 12.6% 11.0% 7.6% 7.4%
Biomaterials 24.3% 6.1% 20.3% 33.7% 33.9% 33.6%
Wood Products 9.8% 7.0% 10.3% 11.5% 10.0% 12.3%
Forest 6.2% 7.7% 7.2% 4.2% 6.1% 5.3%
Paper 11.1% 10.2% 11.0% 10.7% 12.5% 11.3%
Other  -0.3% -5.5% 3.9% -1.1% 1.2% -2.3%
Total 16.0% 11.5% 16.5% 17.5% 18.4% 18.4%
             
Total change  0.7% 0.7% 0.9% 0.8% 0.5% 0.5%

 

Packaging Materials: Operational EBITDA margin % 

  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 16.9% 15.6% 18.7% 17.5% 15.9% 16.1%
Containerboard 22.1% 13.5% 17.6% 24.0% 31.0% 35.7%

 

As published: Operational EBIT 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 250 51 73 72 54 231
Packaging Solutions 135 16 29 39 51 245
Biomaterials 233 -12 39 103 103 427
Wood Products 105 14 27 35 29 165
Paper 213 44 50 50 69 234
Other  17 0 13 -12 17 23
Total 953 112 231 287 324 1 325

 

Restated: Operational EBIT 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Packaging Materials 339 57 86 98 98 444
Packaging Solutions 46 10 15 14 8 32
Biomaterials 233 -12 39 103 103 427
Wood Products 105 14 27 35 29 165
Forest 99 31 25 11 33 88
Paper 213 44 50 50 69 234
Other  -32 -19 2 -11 -4 -38
Total  1 003 124 245 299 335 1 352
             
Total change  50 12 14 12 11 27

 

As published: Operational EBIT margin %

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 9.7% 8.3% 11.3% 10.7% 8.6% 8.8%
Packaging Solutions 10.8% 5.5% 9.6% 12.3% 15.1% 18.2%
Biomaterials 15.9% -3.5% 11.7% 26.1% 25.8% 26.1%
Wood Products 6.7% 3.6% 7.2% 8.6% 7.2% 10.2%
Paper 7.4% 6.3% 7.3% 7.0% 9.1% 7.6%
Other  0.5% -0.1% 1.7% -1.4% 1.9% 0.7%
Total  9.5% 4.6% 9.6% 11.0% 12.3% 12.6%

 

Restated: Operational EBIT margin % 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Packaging Materials 10.6% 7.5% 10.9% 11.7% 12.0% 13.3%
Packaging Solutions 6.6% 5.9% 8.9% 7.5% 4.1% 4.5%
Biomaterials 15.9% -3.5% 11.7% 26.1% 25.8% 26.1%
Wood Products 6.7% 3.6% 7.2% 8.6% 7.2% 10.2%
Forest 4.3% 5.6% 4.8% 1.7% 5.1% 3.9%
Paper 7.4% 6.3% 7.3% 7.0% 9.1% 7.6%
Other -3.0% -7.4% 0.9% -4.1% -1.5% -3.3%
Total  10.0% 5.1% 10.2% 11.5% 12.7% 12.9%
             
Total change  0.5% 0.5% 0.6% 0.5% 0.4% 0.3%

 

As published: Operating capital 

EUR million  31 Dec 2019 30 Sep 2019 30 Jun 2019 31 Mar 2019 31 Dec 2018
Consumer Board 2 100 2 166 2 244 2 287 1 951
Packaging Solutions 962 945 961 954 923
Biomaterials 2 496 2 631 2 638 2 633 2 462
Wood Products 647 679 701 699 621
Paper 657 764 835 839 796
Other  4 601 4 119 4 027 2 340 2 204
Total  11 462 11 303 11 406 9 752 8 955

 

Restated: Operating capital

EUR million 31 Dec 2019 30 Sep 2019 30 Jun 2019 31 Mar 2019 31 Dec 2018
Packaging Materials 2 824 2 861 2 938 2 976 2 627
Packaging Solutions 241 251 267 265 246
Biomaterials 2 496 2 631 2 638 2 633 2 462
Wood Products 647 679 701 699 621
Forest 4 138 3 641 3 722 2 009 1 940
Paper 657 764 835 839 796
Other 460 477 305 330 264
Total 11 462 11 303 11 406 9 752 8 955

 

As published: Return on operating capital (ROOC)

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 12.3% 9.5% 13.2% 12.8% 10.3% 11.9%
Packaging Solutions 14.4% 6.8% 12.1% 16.3% 21.8% 27.2%
Biomaterials 9.4% -1.9% 5.9% 15.6% 16.2% 17.9%
Wood Products 16.6% 8.2% 15.8% 20.3% 17.7% 28.1%
Paper 29.3% 24.7% 25.1% 23.8% 33.7% 30.2%

 

Restated: ROOC 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Packaging Materials 12.4% 8.0% 11.9% 13.2% 14.0% 16.9%
Packaging Solutions 18.9% 16.4% 23.1% 20.5% 11.8% 14.6%
Biomaterials 9.4% -1.9% 5.9% 15.6% 16.2% 17.9%
Wood Products 16.6% 8.2% 15.8% 20.3% 17.7% 28.1%
Forest 3.3% 3.2% 2.7% 1.5% 6.6% 4.7%
Paper 29.3% 24.7% 25.1% 23.8% 33.7% 30.2%

 

Group Return on capital employed (ROCE) 

  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
ROCE as published 9.8% 4.2% 8.7% 11.3% 14.0% 15.5%
ROCE restated 10.3% 4.7% 9.2% 11.8% 14.5% 15.8%
Total change  0.5% 0.5% 0.5% 0.5% 0.5% 0.3%
             
ROCE excluding Forest division restated 12.8% 5.0% 11.7% 15.2% 16.7% 18.9%

 

 

Net debt / operational EBITDA 

  31 Dec 2019 30 Sep 2019 30 Jun 2019 31 Mar 2019 31 Dec 2018
Net debt / operational EBITDA as published 2.1 2.2 2.2 1.7 1.1
Net debt / operational EBITDA restated 2.0 2.1 2.1 1.6 1.1
Total change  -0.1 -0.1 -0.1 0.0 0.0

 

 

As published: Reconciliation of operational profitability

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Operational EBITDA 1 542 259 376 435 471 1 878
Depreciation and depletion of equity accounted investments (EAI) -6 -1 -1 -2 -2 -7
Operational decrease in the value of biological assets -51 -11 -14 -13 -13 -66
Depreciation and impairment excl. IAC -533 -136 -130 -134 -133 -479
Operational EBIT 953 112 231 287 324 1 325
Fair valuations and non-operational items1 544 600 -25 -25 -7 45
Items affecting comparability (IAC)  -192 -32 -36 -120 -4 20
Operating profit (IFRS)  1 305 680 170 142 313 1 390

1 Fair valuations and non-operational items include CO emission rights, valuations of biological assets and the Group’s share of income tax and net financial items of EAI.
 

Restated: Reconciliation of operational profitability

EUR million 2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Operational EBITDA1 1 614 277 397 455 484 1 925
Depreciation and depletion of equity accounted investments (EAI) -16 -2 -3 -7 -3 -28
Silviculture costs2 -62 -15 -19 -15 -13 -66
Depreciation and impairment excl. IAC -533 -136 -130 -134 -133 -479
Operational EBIT 1 003 124 245 299 335 1 352
Fair valuations and non-operational items3 494 588 -39 -37 -18 18
Items affecting comparability (IAC)  -192 -32 -36 -120 -4 20
Operating profit (IFRS)  1 305 680 170 142 313 1 390

1 Restated Operational EBITDA includes operational fair value changes of biological assets of EUR 50 million for 2019 and EUR 27 million for 2018. In addition, the Nordic forests silviculture costs of EUR 21 million for 2019 and EUR 20 million for 2018 have been presented under Operational EBITDA.

2 Including damage to forests

3 Fair valuations and non-operational items include CO emission rights, non-operational fair value changes of biological assets and the Group’s share of income tax and net financial items of EAI. Non-operational fair value changes of biological assets reflect changes made to valuation assumptions and parameters, usually during the annual valuation process. Operational fair value changes of biological assets are included in Operational EBITDA and contain all other fair value changes, mainly due to inflation and differences in actual harvesting levels compared to the harvesting plan.

 

Reconciliation of operational profitability: Change

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Operational EBITDA 71 18 21 20 13 48
Depreciation and depletion of equity accounted investments (EAI) -10 -1 -2 -5 -1 -20
Silviculture costs -11 -4 -5 -2 0 0
Depreciation and impairment excl. IAC 0 0 0 0 0 0
Operational EBIT 50 12 14 12 11 27
Fair valuations and non-operational items -50 -12 -14 -12 -11 -27
Items affecting comparability (IAC)  0 0 0 0 0 0
Operating profit (IFRS)  0 0 0 0 0 0

 

As published: Cash Flow from Operations 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 476 145 163 113 56 339
Packaging Solutions 248 55 69 65 60 272
Biomaterials 423 66 114 138 105 438
Wood Products 183 57 57 51 19 147
Paper 344 97 118 70 59 222
Other  305 302 -34 112 -76 -52
Total  1 980 721 488 548 223 1 365

 

 

Restated: Cash Flow from Operations 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Packaging Materials 632 175 189 167 101 580
Packaging Solutions 93 26 43 10 14 30
Biomaterials 423 66 114 138 105 438
Wood Products 183 57 57 51 19 147
Forest 370 273 47 112 -61 -34
Paper 344 97 118 70 59 222
Other -55 32 -76 3 -14 -18
Total  1 991 725 493 550 223 1 365
             
Total change  11 4 5 2 0 0

 

As published: Cash Flow after Investing Activities 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Consumer Board 328 98 135 84 11 177
Packaging Solutions 135 8 26 53 48 172
Biomaterials 266 11 82 104 69 327
Wood Products 135 42 47 38 8 80
Paper 264 72 99 47 46 175
Other  258 287 -41 102 -89 -119
Total  1 386 518 347 428 94 811

 

Restated: Cash Flow after Investing Activities 

EUR million  2019 Q4/19 Q3/19 Q2/19 Q1/19 2018
Packaging Materials 401 87 133 132 50 351
Packaging Solutions 58 16 27 5 10 -1
Biomaterials 266 11 82 104 69 327
Wood Products 135 42 47 38 8 80
Forest 333 258 37 104 -66 -55
Paper 264 72 99 47 46 175
Other  -71 32 -78 -2 -23 -64
Total  1 386 518 347 428 93 811

 


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

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

 

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 2019 were EUR 10.1 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
SVP, Investor Relations
tel. +358 40 763 8767

Subscribe

Documents & Links