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Stora Enso Interim Review January--June 2014

Significant operational earnings improvement continues; fixed cost reduction programme target clearly exceeded

HELSINKI, Finland, July 21, 2014 (GLOBE NEWSWIRE) --

Q2/2014 (compared with Q2/2013)*

  • Sales EUR 2 579 (EUR 2 726) million, EUR 147 million lower than a year ago, partly due to structural decline in demand for paper.
  • Operational EBIT EUR 209 (EUR 124) million, an increase of EUR 85 million due to lower fixed and variable costs. Renewable Packaging and Building and Living continued to perform strongly.
  • Non-recurring items EUR -106 million including planned closure of Corbehem Mill and divestment of Uetersen Mill.
  • EPS excluding NRI EUR 0.13 (EUR 0.05).
  • Cash flow from operations EUR 288 (EUR 317) million, cash flow after investing activities EUR 29 (EUR 117) million.
  • Net debt to operational EBITDA 2.8 (3.2), liquidity remained strong at EUR 1.6 (1.9) billion.
  • Operational ROCE 9.8 (5.4)%.

Q1–Q2/2014 (compared with Q1–Q2/2013)*

  • Sales EUR 5 147 (EUR 5 398) million, operational EBIT EUR 391 (EUR 242) million due to lower costs and lower depreciation.

Transformation

  • Montes del Plata Pulp Mill in Uruguay started up in early June, with first shipments to customers in mid-July. In 2014 Stora Enso's share of its production expected to be 300 000–350 000 tonnes, about 50 000 tonnes less than previously anticipated.
  • Consumer board machine investment in Guangxi, China proceeding as planned.
  • Varkaus Mill fine paper machine in Finland to be converted to produce virgin-fibre-based containerboard.
  • Stora Enso acquired 100% of the US-based biotechnology company Virdia for Biomaterials in order to enable a step-change entry into high-value renewable materials technologies.

Restructuring

  • The streamlining and structure simplification programme announced in April 2013 completed and annualised cost savings of EUR 244 million versus 2012 cost base achieved exceeding the original target by EUR 44 million or 22%.
  • Non-core asset divestments are proceeding. Divestment of Uetersen Mill in Germany announced, subject to approval from regulatory authorities.
  • Social plan for Corbehem Mill in France agreed and mill closure plan announced.

*Data for the comparative periods in 2013 have been restated following adoption of the new IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities standards.

Summary of Second Quarter Results*

EUR million Q2/14 Q2/13 Change %
Q2/14–
Q2/13
Q1/14 Change %
Q2/14–
Q1/14
Q1–Q2/14 Q1–Q2/13 Change %
Q1–Q2/14–
Q1–Q2/13
2013
Sales 2 579 2 726 -5.4 2 568 0.4 5 147 5 398 -4.6 10 563
Operational EBITDA 326 257 26.8 302 7.9 628 511 22.9 1 090
Operational EBITDA margin, % 12.6 9.4 11.8 12.2 9.5 10.3
Operational EBIT 209 124 68.5 182 14.8 391 242 61.6 578
Operational EBIT margin, % 8.1 4.5 7.1 7.6 4.5 5.5
Operating profit (IFRS) 85 83 2.4 195 -56.4 280 104 169.2 50
Operating margin (IFRS), % 3.3 3.0 7.6 5.4 1.9 0.5
Profit before tax excl. NRI 145 57 154.4 106 36.8 251 113 122.1 350
Profit/loss before tax 39 24 62.5 130 -70.0 169 -11 n/m -189
Net profit/loss for the period 1 21 -95.2 100 -99.0 101 5 n/m -71
Operational ROCE, % 9.8 5.4 8.6 9.2 5.3 6.5
EPS (basic), EUR 0.00 0.02 0.13 0.13 0.00 -0.07
Cash earnings per share (CEPS) excl. NRI, EUR 0.30 0.25 0.27 0.57 0.52 1.16

* Data for the comparative periods in 2013 have been restated following adoption of the new IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities standards.

Operational EBIT comprises the operating profit excluding NRI and fair valuations of the segments and Stora Enso's share of the operating profit excluding NRI and fair valuations of its equity accounted investments (EAI). Fair valuations and non-operational items include equity incentive schemes, synthetic options net of realised and open hedges, CO2 emission rights and valuations of biological assets and the Group's share of tax and net financial items of EAI.

NRI = Non-recurring items. These are exceptional transactions that are not related to normal business operations. The most common non-recurring items are capital gains, additional write-downs or reversals of write-downs, provisions for planned restructuring and penalties. Non-recurring items are normally disclosed individually if they exceed one cent per share.

Near-term Outlook

In the third quarter of 2014 sales are forecast to be roughly similar to the EUR 2 579 million and operational EBIT similar to or slightly lower than the strong EUR 209 million in the second quarter of 2014. All segments are scheduled to have maintenance shutdowns during the third quarter. The maintenance impact in the third quarter of 2014 is expected to be approximately EUR 30 million higher than in the second quarter.

For further information, please contact:
Jouko Karvinen, CEO, tel. +358 2046 21410
Seppo Parvi, CFO, tel. +358 2046 21205
Ulla Paajanen-Sainio, SVP, Investor Relations, tel. +358 2046 21242

The full-length version of the Stora Enso interim review is available on the Stora Enso website at www.storaenso.com/investors

Stora Enso's third quarter 2014 results will be published on 22 October 2014.

Stora Enso is the global rethinker of the paper, biomaterials, wood products and packaging industry. We always rethink the old and expand to the new to offer our customers innovative solutions based on renewable materials. Stora Enso employs some 29 000 people worldwide, and our sales in 2013 amounted to EUR 10.6 billion. Stora Enso shares are listed on NASDAQ OMX Helsinki (STEAV, STERV) and Stockholm (STE A, STE R). In addition, the shares are traded in the USA as ADRs (SEOAY) in the International OTCQX over-the-counter market.

STORA ENSO OYJ

Source:Stora Enso Oyj