Stora Enso Oyj Interim Report January–September 2020

Q3/2020 (compared with Q3/2019):
*Sales decreased by 13.5% to EUR 2 079 (2 402) million, due to lower deliveries and prices.
*Operational EBIT decreased to EUR 175 (245) million. The impact of lower sales was partly offset by continued cost management.
*Operational EBIT margin was 8.4% (10.2%).
*Operating profit (IFRS) was EUR 145 (170) million.
*EPS was EUR 0.11 (0.09) and EPS excl. IAC and fair valuations was EUR 0.14 (0.18).
*Cash flow from operations amounted to EUR 399 million, cash flow after investing activities was EUR 250 million.
*The net debt to operational EBITDA ratio at 2.4 was above the target level of less than 2.0.
*Operational ROCE was 6.7% (9.2%), below the strategic target of more than 13%.

Q1–Q3/2020 (year-on-year):
*Sales were EUR 6 400 (7 644) million, mainly as a result of the impact of the Covid-19 pandemic, and the Finnish union strikes during the first quarter.
*Operational EBIT was EUR 532 (879) million.

The Oulu Mill conversion from coated fine paper to kraftliner packaging material is planned to be completed during Q4 within budget. The packaging production is expected to start around the New Year. This conversion is estimated to have EUR 30–40 million negative impact on the Packaging Materials Q4/2020 operational EBIT. The mill is planned to reach designed capacity by the end of Q2/2021 and commercialisation of product portfolio by the end of 2021.

Paper production at the Oulu Mill stopped during Q3/2020. Paper division is planning to complete the sale of the mill’s coated fine paper inventories during Q4/2020. Therefore, Oulu Mill is still expected to have a EUR 5–10 million negative impact on the Paper division Q4/2020 operational EBIT.

During Q4/2020 there will be annual maintenance shutdowns at seven mills. The total negative impact of maintenance is estimated to be EUR 10 million less compared to Q3/2020 and EUR 15 million less compared to Q4/2019.

Stora Enso’s President and CEO Annica Bresky comments on the third quarter 2020 results:
“We have delivered a solid result for the quarter and I am satisfied with our performance, considering the unprecedented uncertainty and volatility on markets around the world.

Although we report a decreased operational EBIT of EUR 175 million compared to last year, excluding Paper, operational EBIT remained at the same level due to strong results in the Packaging Materials, Wood Products and Forest divisions. The pandemic’s biggest effect continues to be on our Paper business. I was very glad to see a return to positive cash flow for the quarter. The market also remains challenging for Biomaterials, with low pricing. On a positive note, excluding Paper, our operational EBIT margin increased to 11.8%, a sign of the resilience of our growth businesses and good cost management.

We have been successful in our focus on working capital and we delivered a good cash flow amounting to close to EUR 400 million. We continue to stay focused on what we can influence through these challenging times: ensuring the health of our employees, serving and supporting our customers, running our operations as efficiently as possible, securing our financial resilience and building our future businesses through our innovation agenda. We want to be in a strong position when the tide turns.
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