Stora Enso Oyj Half-year Report January–June 2022

Q2/2022 (year-on-year)
• Sales increased by 18% to EUR 3,054 (2,592) million.
• Operational EBIT increased by 39% to EUR 505 (364) million.
• Operational EBIT margin increased to 16.5% (14.0%).
• Operating profit (IFRS) increased to EUR 399 (182) million.
• EPS was EUR 0.38 (0.26) and EPS excl. fair valuations (FV) was EUR 0.42 (0.27).
• Cash flow from operations amounted to EUR 404 (463) million. Cash flow after investing activities was EUR 247 (339) million.
• The net debt to operational EBITDA ratio improved to 1.0 (1.8). The target is to keep the ratio below 2.0.
• Operational ROCE excluding the Forest division increased to 22.8% (18.1%), the target being >13%.

Q1-Q2/2022 (year-on-year)
• Sales were EUR 5,852 (4,868) million.
• Operational EBIT was EUR 1,008 (692) million.

Stora Enso’s President and CEO Annica Bresky comments on the second quarter 2022 results:
“I am happy to report that our very strong start of the year continued in the second quarter, despite persisting macroeconomic and geopolitical turmoil. We once again demonstrate the agility and commitment of our organisation, our differentiated customer and product portfolio, and the power of the synergies across the breadth of the business. Our commitment to leverage the potential of our renewable materials and solutions has never been stronger.

We continue to grow by 21% excluding Paper year-on-year in our core businesses with margins and returns well above our long-term targets. During the quarter, the demand has been robust for our main segments but logistical challenges with low long haul vessel reliability and poor container availability has had an impact on our ability to fully serve our customers. We have high self-sufficiency in energy and wood supply which has supported and allowed us to secure our key raw materials and energy needs. Our pricing power allows us to mitigate inflationary pressures and our key priorities remain; to support our customers through inventory management and handling continued supply chain and logistical disruptions.

The humanitarian crisis in Ukraine and the horrors of war have undeniably come closer to all of us and our response was swift and necessary. The divestment of the Russian industrial operations to local management has been completed. Minor formalities are left for the wood supply legal entities, and the process will be completed latest in Q4 this year. After that, we will no longer have any exposure to Russia. In all this, I am pleased to have found a safe and sustainable long-term solution for these businesses and our former employees. We stay true to our values and responsible business is an integral part of our day-to-day decision making.

We managed to achieve the highest quarterly result since the early 2000s, with an operational EBIT of 505 million Euros, a year-on-year increase of 39% with an operational EBIT margin of 16.5%. The valuation of our forest assets reached 8.2 billion Euros, corresponding to 10.40 Euro per share. We have also prepared ourselves for tougher economic environment by good cost control, increased liquidity, and reduced debt. For the first time, we reached a net debt to operational EBITDA ratio of 1, below our target of 2 creating resilience and headroom to sustain our growth journey both organically and through selective M&As. I am very proud of these results; they have taken a lot of effort to achieve.
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