Stora Enso Oyj Half-year Report 2024: Continued profit improvement with strengthened leverage ratio
Stora Enso Oyj reported improved profitability in Q2 2024, with adjusted EBIT increasing to EUR 161 million from EUR 37 million year-on-year. The company's adjusted EBIT margin rose to 7.0% from 1.6%. Despite a 3% decrease in sales to EUR 2,301 million, continuing operations grew by 1%.
Key highlights include:
- Progress in value creation programmes focusing on efficiencies
- Profit improvement programme targeting EUR 120 million in fixed cost savings
- Operating working capital decreased by EUR 576 million year-on-year
- Secured EUR 435 million long-term loan for Oulu mill investment
Stora Enso raised its full-year 2024 adjusted EBIT guidance, expecting it to be significantly higher than 2023's EUR 342 million. The company anticipates a gradual market recovery in 2024, supported by profitability initiatives, despite ongoing market uncertainties.
Stora Enso Oyj ha riportato un miglioramento della redditività nel Q2 2024, con un EBIT rettificato che è aumentato a 161 milioni di EUR rispetto ai 37 milioni di EUR dello stesso periodo dell'anno scorso. Il margine EBIT rettificato dell'azienda è salito al 7,0% rispetto all'1,6%. Nonostante una diminuzione delle vendite del 3% a 2.301 milioni di EUR, le operazioni continuative sono cresciute dell'1%.
I punti salienti includono:
- Progressi nei programmi di creazione di valore focalizzati su efficienze
- Programma di miglioramento dei profitti mirato a 120 milioni di EUR in risparmi sui costi fissi
- Il capitale circolante operativo è diminuito di 576 milioni di EUR rispetto all'anno precedente
- Finanziamento assicurato di 435 milioni di EUR per l'investimento nel mulino di Oulu
Stora Enso ha rivisto al rialzo le previsioni di EBIT rettificato per l'intero anno 2024, aspettandosi che sia significativamente superiore ai 342 milioni di EUR del 2023. L'azienda prevede un graduale recupero del mercato nel 2024, supportato da iniziative di redditività, nonostante le incertezze di mercato in corso.
Stora Enso Oyj reportó una mejora en la rentabilidad en el Q2 2024, con un EBIT ajustado que aumentó a 161 millones de EUR desde 37 millones de EUR interanualmente. El margen EBIT ajustado de la empresa subió al 7,0% desde el 1,6%. A pesar de una disminución del 3% en las ventas a 2.301 millones de EUR, las operaciones continuas crecieron un 1%.
Los aspectos destacados incluyen:
- Progreso en programas de creación de valor centrados en eficiencias
- Programa de mejora de ganancias con un objetivo de 120 millones de EUR en ahorros de costos fijos
- El capital de trabajo operativo disminuyó en 576 millones de EUR interanualmente
- Se aseguró un préstamo a largo plazo de 435 millones de EUR para la inversión en la planta de Oulu
Stora Enso ha elevado su guía de EBIT ajustado para todo el año 2024, esperando que sea significativamente mayor a los 342 millones de EUR de 2023. La empresa anticipa una recuperación gradual del mercado en 2024, respaldada por iniciativas de rentabilidad, a pesar de las incertidumbres actuales del mercado.
Stora Enso Oyj는 2024년 2분기에 수익성이 개선되었음을 보고했으며, 조정된 EBIT가 3,700만 유로에서 1억 6,100만 유로로 증가했습니다. 회사의 조정된 EBIT 마진은 1.6%에서 7.0%로 상승했습니다. 3%의 매출 감소에도 불구하고 매출은 23억 1,000만 유로였고, 계속 운영은 1% 증가했습니다.
주요 사항은 다음과 같습니다:
- 효율성에 집중한 가치 창출 프로그램의 진전
- 고정 비용 절감을 목표로 한 1억 2,000만 유로의 이익 개선 프로그램
- 운영 자본이 작년 대비 5억 7,600만 유로 감소
- Oulu 공장 투자를 위한 4억 3,500만 유로의 장기 대출 확보
Stora Enso는 2024년 전체 연도 조정된 EBIT 가이던스를 상향 조정하여 2023년의 3억 4,200만 유로보다 상당히 높아질 것으로 예상하고 있습니다. 이 회사는 이익 개선 이니셔티브에 의해 지원받아 2024년 시장이 점진적으로 회복될 것으로 예상하고 있습니다. 시장의 불확실성은 여전히 존재하고 있습니다.
Stora Enso Oyj a signalé une amélioration de sa rentabilité au deuxième trimestre de 2024, avec un EBIT ajusté en augmentation à 161 millions EUR contre 37 millions EUR d'une année sur l'autre. La marge EBIT ajustée de l'entreprise est passée de 1,6% à 7,0%. Malgré une baisse de 3% des ventes à 2.301 millions EUR, les opérations continues ont augmenté de 1%.
Les points clés comprennent :
- Avancées dans les programmes de création de valeur axés sur l'efficacité
- Programme d'amélioration des bénéfices visant 120 millions EUR d'économies de coûts fixes
- Le fonds de roulement opérationnel a diminué de 576 millions EUR par rapport à l'année précédente
- Un prêt à long terme de 435 millions EUR a été sécurisé pour l'investissement dans l'usine d'Oulu
Stora Enso a relevé ses prévisions d'EBIT ajusté pour l'exercice 2024, s'attendant à ce qu'il soit nettement supérieur à celui de 2023, qui était de 342 millions EUR. L'entreprise prévoit un rétablissement progressif du marché en 2024, soutenu par des initiatives de rentabilité, malgré les incertitudes actuelles du marché.
Stora Enso Oyj meldete im Q2 2024 eine verbesserte Rentabilität, mit einem bereinigten EBIT, das auf 161 Millionen EUR anstieg von 37 Millionen EUR im Vorjahresvergleich. Die bereinigte EBIT-Marge des Unternehmens stieg auf 7,0% von 1,6%. Trotz eines Rückgangs der Verkäufe um 3% auf 2.301 Millionen EUR wuchsen die fortgeführten Aktivitäten um 1%.
Wichtige Highlights sind:
- Fortschritte in den Wertschöpfungsprogrammen mit Fokus auf Effizienz
- Gewinnverbesserungsprogramm mit dem Ziel, 120 Millionen EUR an Fixkosteneinsparungen zu erzielen
- Der betriebliche Working Capital verringerte sich im Jahresvergleich um 576 Millionen EUR
- Gesicherter langfristiger Kredit über 435 Millionen EUR für Investitionen in die Oulu-Mühle
Stora Enso hat die Prognose für das bereinigte EBIT für das gesamte Jahr 2024 angehoben und erwartet, dass es deutlich höher sein wird als die 342 Millionen EUR von 2023. Das Unternehmen rechnet mit einer schrittweisen Markterholung im Jahr 2024, unterstützt von Rentabilitätsinitiativen, trotz anhaltender Marktentwicklungen.
- Adjusted EBIT increased to EUR 161 million from EUR 37 million year-on-year
- Adjusted EBIT margin improved to 7.0% from 1.6%
- Continuing operations grew by 1% despite overall sales decrease
- Operating working capital decreased by EUR 576 million year-on-year
- Secured EUR 435 million long-term loan for Oulu mill investment
- Raised full-year 2024 adjusted EBIT guidance
- Forest assets value increased to EUR 8.7 billion
- Overall sales decreased by 3% to EUR 2,301 million
- Net debt increased by EUR 466 million to EUR 3,497 million
- Net debt to adjusted EBITDA ratio increased to 3.5 from 1.7 year-on-year
- Adjusted ROCE excluding Forest division decreased to 1.3% from 10.7%
- High wood costs continue to pressure margins
STORA ENSO OYJ HALF-YEAR REPORT 24 July 2024 at 8:30 EEST
Q2/2024 (year-on-year)
- Sales decreased by
3% toEUR 2,301 (2,374) million; however, continuing operations grew by1% . - Adjusted EBIT increased to
EUR 161 (37) million. - Adjusted EBIT margin increased to
7.0% (1.6% ). - Operating result (IFRS) was
EUR 99 (-253) million. - Earnings per share (EPS) were
EUR 0.06 (-0.29) and EPS excl. fair valuations (FV) wasEUR 0.07 (-0.27). - The value of the forest assets increased to
EUR 8.7 (8.1) billion, equivalent toEUR 11.06 per share. - Cash flow from operations amounted to
EUR 323 (146) million. Cash flow after investing activities wasEUR 86 (-70) million. - Net debt increased by
EUR 466 million toEUR 3,497 (3,030) million, mainly due to the board investment at the Oulu site. - The net debt to adjusted EBITDA (LTM1) ratio was 3.5 (1.7). The target to keep the ratio below 2.0 remains.
H1/2024 (year-on-year)
- Sales were
EUR 4,466 (5,095) million. - Adjusted EBIT was
EUR 317 (271) million. - Operating result (IFRS) was
EUR 247 (5) million. - Earnings per share (EPS) were
EUR 0.16 (-0.05) and EPS excl. fair valuations (FV) wasEUR 0.16 (-0.04). - Cash flow from operations amounted to
EUR 592 (400) million. Cash flow after investing activities wasEUR -18 (-69) million. - Adjusted ROCE excluding the Forest division (LTM1) decreased to
1.3% (10.7% ), the target being above13% .
Key highlights
- The value creation programmes, centred on sourcing, operational and commercial efficiencies, are making good progress across all divisions.
- In addition, the profit improvement programme focusing on fixed costs, initiated in the first quarter 2024, targeting
EUR 120 million has continued to progress well. This has supported an improvement in the earnings trend due to enhanced efficiencies and cash flow, and strengthened the leverage ratio: net debt to EBITDA. - Operating working capital decreased by
EUR 576 million year-on-year to an all-time low, driven by our continued focus to improve working capital efficiency. - Stora Enso secured a
EUR 435 million long-term loan, on 11 July, from the European Investment Bank to fund itsEUR 1 billion investment in the Oulu mill,Finland . Loan repayment extends until 2036, improving and lengthening the Group's debt maturity profile. The loan is currently undrawn. - The consumer board investment at the Oulu site in
Finland is progressing on schedule. Production is expected to start in the first half of 2025, with full capacity estimated to be reached during 2027. - The plan to divest the Beihai site in
China is in process. The site has been classified as assets held for sale from the end of 2023.
Guidance
On 15 May, Stora Enso raised its guidance for the full year 2024 adjusted EBIT, due to successful implementation of profit improvement actions and more favourable market conditions. The new guidance is: Stora Enso's full year 2024 adjusted EBIT is expected to be significantly higher than for the full year 2023,
Outlook
Market and business outlook
Stora Enso anticipates a gradual market recovery in 2024. The positive forecast is supported by successful initiatives to increase profitability, which have contributed to the earnings trend over the past three quarters and helped reduce the Group's net debt to EBITDA ratio. Despite this, high wood costs will continue to pressure margins. Market uncertainties, including high inflation, potential strikes, and demand and price fluctuations, are expected to continue through the end of the year.
Packaging Materials
The outlook for Q3 is slightly positive, supported by strong order books and an improving price outlook. Price increases announced during Q2 in both the consumer and containerboard segments are expected to contribute positively to the results, mainly in the second half of this year. The liquid and food service board segments show improved stability and demand, while carton board demand remains stable following a strong recovery. Kraftliner and testliner segments are recovering, supported by stable demand and three rounds of price increases announced during H1 this year. However, high fiber costs and seasonally higher fixed costs due to annual shutdowns in virgin fiber containerboard units will impact the second half of the year. Paper demand is expected to continue its steady, gradual decline.
Packaging Solutions
Demand for Q3 is expected to remain stable with seasonal fluctuations. In
Biomaterials
Looking ahead in Q3, overall pulp demand in
Wood Products
Q2 experienced a seasonal surge in volumes of classic sawn products. However, sales and volumes are projected to decrease sequentially in Q3 due to the holiday season. Building permits are anticipated to fall below 2023 levels and are expected to slightly decline in
Forest
In Q3, wood market activity is expected to remain strong in
Long-term growth opportunities
Stora Enso holds leading positions in markets and segments poised for long-term growth, particularly in sustainable packaging, wood construction, and innovative biomaterials. The Group stands to benefit from sustainability trends and regulatory advancements which favour its offerings, thereby supporting its market presence and facilitating development.
Key figures
EUR million | Q2/24 | Q2/23 | Change % Q2/24–Q2/23 | Q1/24 | Change % Q2/24–Q1/24 | Q1-Q2/24 | Q1-Q2/23 | Change % Q1-Q2/24– | 2023 |
Sales | 2,301 | 2,374 | -3.0 % | 2,164 | 6.3 % | 4,466 | 5,095 | -12.4 % | 9,396 |
Adjusted EBITDA | 312 | 198 | 57.4 % | 298 | 4.9 % | 610 | 597 | 2.2 % | 989 |
Adjusted EBIT | 161 | 37 | n/m | 156 | 2.8 % | 317 | 271 | 17.2 % | 342 |
Adjusted EBIT margin | 7.0 % | 1.6 % | 7.2 % | 7.1 % | 5.3 % | 3.6 % | |||
Operating result (IFRS) | 99 | -253 | 139.2 % | 148 | -33.2 % | 247 | 5 | n/m | -322 |
Result before tax (IFRS) | 50 | -304 | 116.5 % | 101 | -50.4 % | 152 | -76 | 299.3 % | -495 |
Net result for the period (IFRS) | 42 | -257 | 116.4 % | 84 | -49.9 % | 126 | -72 | 276.2 % | -431 |
Forest assets1 | 8,725 | 8,065 | 8.2 % | 8,626 | 1.1 % | 8,725 | 8,065 | 8.2 % | 8,731 |
Adjusted return on capital employed | 2.8 % | 8.1 % | 1.9 % | 2.8 % | 8.1 % | 2.4 % | |||
Adjusted ROCE excl. Forest division, LTM2 | 1.3 % | 10.7 % | 0.0 % | 1.3 % | 10.7 % | 1.0 % | |||
Earnings per share (EPS) excl. FV, EUR | 0.07 | -0.27 | 125.3 % | 0.09 | -23.5 % | 0.16 | -0.04 | n/m | -0.73 |
EPS (basic), EUR | 0.06 | -0.29 | 119.4 % | 0.11 | -48.2 % | 0.16 | -0.05 | n/m | -0.45 |
Net debt to LTM2 adjusted EBITDA ratio | 3.5 | 1.7 | 4.0 | 3.5 | 1.7 | 3.2 | |||
Average number of employees (FTE) | 19,469 | 21,171 | -8.0 % | 19,412 | 0.3 % | 19,465 | 21,182 | -8.1 % | 20,822 |
1 Total forest assets value, including leased land and Stora Enso's share of Tornator. 2 LTM=Last 12 months | |||||||||
Stora Enso's President and CEO Hans Sohlström comments on the second quarter 2024 results:
I am encouraged by the fact that our Q2 performance met our expectations, reinforcing our recently upgraded 2024 guidance. Advances in our profitability and cash flow improvement initiatives, coupled with more favourable market conditions in some segments, have supported an improved earnings trend for the third consecutive quarter. Additionally, this has strengthened our leverage ratio in the quarter despite record high growth investments. This positive development is a testament to our team's dedication and sets a strong foundation for future success.
Our year-on-year Group sales dipped slightly, by
While we managed to improve our net debt to adjusted EBITDA ratio to 3.5 from 4.0 in Q1 this year, it remains above our target of 2.0 and has increased compared to the 1.7 ratio in Q2 last year. This highlights the need for further profitability improvement and working capital reduction actions, which remain our priority. The stable valuation of our forest assets at
Our value creation programmes, centred on sourcing, operational and commercial efficiencies, are making good progress across all divisions, thanks to an analytical and structured approach. These efforts have had a significant impact on profits and cost competitiveness, with about 1,900 identified improvement initiatives led by approximately 500 project owners. Additionally, our profit improvement programme, which aims for an annual fixed cost saving of
The plan to divest the Beihai operation in
Our decentralised operating model is firmly in place and progressing well towards achieving a more focused customer and business oriented structure. I am delighted with the strides we have made, and we are already witnessing the advantages of a more efficient and agile framework. This not only benefits our strategic execution, but also enhances the service we provide to our customers.
In the quarter, we conducted an Employee Engagement pulse survey across three of our five divisions. The results indicate that the level of employee engagement has remained consistently high and has even shown a slight increase in these divisions. This is particularly encouraging given the challenging circumstances in which we have been operating.
We increased our outlook for the adjusted EBIT for the full year 2024 on 15 May, projecting it to be significantly higher than the profits of
We are intensifying our focus on capital allocation and asset strategy in growing market segments, laying the groundwork for improved competitiveness and profitable growth across the Group. Looking ahead, we anticipate further advancements this year. We remain committed to investing in both human and capital resources to provide exceptional service to our customers and create robust shareholder value growth.
Webcast for analysts, investors, and media
Analysts, investors, and media are invited to participate in the webcast with a teleconference today at 11:00 am EEST (10:00 CEST, 9:00 BST, 4:00 EDT). The results will be presented by President and CEO Hans Sohlström and CFO Seppo Parvi. The presentation can be followed live via the link: https://stora-enso-oyj-q2-earnings-presentation-2024.open-exchange.net/registration
During the webcast presentation, analysts and investors will also have the possibility to ask questions. To participate in the teleconference, please choose the "Teleconference" option on the homepage of the webcast. Recording of the webcast will be available shortly after the event at the same address and at storaenso.com/en/investors/interim-report
Media representatives who wish to ask questions after the publication of the report may contact Carl Norell, SVP Corporate Communications at Stora Enso on +46 72 241 0349.
This release is a summary of Stora Enso's Half-year Report 2024. The complete report is attached to this release as a pdf file. It is also available on the company website at storaenso.com/en/investors/interim-report.
Media enquiries:
Carl Norell
SVP Corporate Communications
tel. +46 72 241 0349
Investor enquiries:
Anna-Lena Åström
SVP Investor Relations
tel. +46 70 210 7691
Part of the global bioeconomy, Stora Enso is a leading provider of renewable products in packaging, biomaterials, and wooden construction, and one of the largest private forest owners in the world. Stora Enso has approximately 20,000 employees and our sales in 2023 were
STORA ENSO OYJ
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