Stora Enso sets new financial targets
STORA ENSO OYJ INVESTOR NEWS 11 November 2020 at 9.00 EET
Stora Enso has updated its strategy and certain financial targets, to support the Group’s focus on growth and value creation. The updated strategy and financial targets will be presented in Stora Enso’s Capital Markets Day online today. The presentations will cover the Group’s three focus areas for growth, market growth drivers, the recent forest fair value change and new selective capital allocation.
“We have renewed our strategy and long-term financial targets, shaping our business for accelerated growth and value. In line with this, we continue to create value in the bioeconomy with our renewable products, solving global sustainability challenges. We focus on meeting consumer demand for eco-friendly and circular solutions and we concentrate our efforts in innovation,” says President and CEO Annica Bresky.
Stora Enso will have three focus areas for growth:
- Packaging Materials and Packaging Solutions, driven by high demand for plastic free and eco-friendly circular packaging. We hold leading market positions and see attractive investment options.
- Building Solutions, within our Wood Products division, driven by a growing wooden buildings market. We offer alternatives to fossil-based construction material and are a leading global supplier.
- Biomaterials innovation, where our agenda is focused on lignin, and targets strong growth in new applications and markets.
At the foundation for value creation, and supporting our growth areas:
- Our substantial forest assets, securing a renewable, cost-competitive fiber base.
- Our sawmills in the Wood Products division, providing fiber to our pulp mills and serving as a base for growth in Building Solutions.
- Our pulp mills, supporting our board and paper manufacturing and providing strong cash flow, with highly competitive eucalyptus pulp production facilities in Latin America and specialty pulp mills in the Nordics.
Paper will continue to be run in order to maximise cash flow in the declining market.
“To sum up, we focus on leading positions and accelerated growth in packaging, building solutions and our biomaterials innovation programme. Our innovation initiatives will be concentrated in the areas of new sustainable packaging materials, sustainable barriers and our biochemical platform in lignin. Our forest, traditional wood products and market pulp make up the foundation for value creation in our company,” Annica Bresky concludes.
Capital expenditure for 2021
Stora Enso’s capital expenditure is expected to be in the range of EUR 675–725 million in 2021. The Group will be allocating capital expenditure selectively to the above-mentioned focus areas for growth. The annual depreciation and depletion of capitalised silviculture costs is forecast to be EUR 600–640 million.
Stora Enso’s long-term financial targets
Stora Enso has revised its long-term financial targets. There are new Group level targets for growth and return on capital employed (ROCE). The divisional targets for Packaging Solutions and Forest will also change. Also, dividend policy is updated to distribute 50% of EPS excluding fair valuation over the cycle. Other targets remain unchanged.
| KPI | New target | Comparison to old targets | |
| Group | Dividend* | To distribute 50% of EPS excluding fair valuation over the cycle | To distribute 50% of EPS over the cycle |
| Growth** | > 5% per annum | To grow faster than the relevant market | |
| Net debt to operational EBITDA | <2.0x | No change | |
| Net debt to equity | <60% | No change | |
| Operational ROCE excl. Forest | >13% | > 13%, but including Forest | |
| Packaging Materials | Operational ROOC | >20% | No change |
| Packaging Solutions | Operational ROOC | >25% | Operational ROOC >30% |
| Biomaterials | Operational ROOC | >15% | No change |
| Wood Products | Operational ROOC | >20% | No change |
| Forest | Operational ROCE | >3.5%*** | Operational ROOC >5% |
| Paper | Cash flow after investing activities to sales | >7% | No change |
*Annual dividend **Excl. Paper ***Including deferred tax liabilities
ROCE = Return on Capital Employed
ROOC = Return on Operating Capital
Capital Markets Day webcast
Stora Enso is arranging a virtual Capital Markets Day 2020 for investors and analysts today. You are welcome to follow the presentations by President and CEO Annica Bresky and CFO Seppo Parvi in a live webcast starting at 14.00 EET (13.00 CET, 12.00 UK time and 07.00 EST) and ending at approximately 17.00 EET. Watch at https://storaenso.videosync.fi/2020-cmd.
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 25 000 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