STORA ENSO OYJ HALF-YEAR FINANCIAL REPORT
Q2/2023 (year-on-year)
Sales decreased by 22% to
Operational EBIT decreased by 93% to
Operational EBIT margin decreased to 1.6% (16.5%).
Operating profit (IFRS) decreased to
EPS was
Cash flow from operations amounted to
The net debt to operational EBITDA ratio (last 12 months) was 1.7 (1.0). The target is to keep the ratio below 2.0.
Operational ROCE excluding the Forest division (last 12 months) decreased to 10.7% (21.7%), the target being above 13%.
Q1-Q2/2023 (year-on-year) Sales were
Operational EBIT was
Operating result (IFRS) was
Key highlights
The above-mentioned planned restructuring actions are expected to improve operational EBIT by approximately
One of the two paper machines at the Anjala site in
A new, high-tech corrugated packaging unit started operations at
The consumer board investment at the Oulu site in
Guidance
Outlook for the full year 2023
On 20 April this year,
The headwinds in the first quarter of weak demand across most of the Group's segments and customer destocking, continue. Based on the current macroeconomic and market specific challenges,
Packaging Materials: Weak market conditions and destocking in the value chain continues. The containerboard market has stabilised at a low level, but the demand for consumer board market is weakening. For Paper, the pace of the decline in demand is estimated to be slower as destocking is coming to an end.
Packaging Solutions: The demand for corrugated packaging is expected to have bottomed out. The potential slight improvement is not expected to reach the normal seasonal peak during the latter part of the year; the market remains unpredictable.
Wood Products: The activity in the construction sector has not improved and the expectation is that it will continue to remain challenging with a low number of issued building permits and new housing starts. This is expected to impact the demand for both sawn wood and building solutions.
Biomaterials: The market is expected to remain weak; demand is expected to decrease further due to high inventory levels which will take time to normalise. Customer destocking and new capacity entering the market during the year will add to the market imbalance.
Forest: The wood market in the Baltics and Nordics is expected to remain tight despite increasing market curtailments in the pulp and sawmill sector that have temporarily reduced demand for wood. During the autumn, the tight wood market will be mainly driven by demand from the energy sector.
To protect margins and cash flow, restructuring actions such as closures of sites and production lines, divestments, and a more de-centralised operating model with empowered divisions, and leaner Group functions are being implemented. These initiatives are expected to improve competitiveness, reduce costs, and support focused capital allocation into strategic growth markets. The bulk of them are expected to be concluded during the second half of 2023 and would support 2024 financial performance.
On the back of these initiatives,
Weak financial performance in difficult market conditions
The demand slowdown continued for all our businesses except for Packaging Solutions and Forest division. For our largest divisions Packaging Materials, Biomaterials and Wood Products, we continue to experience destocking in the supply chain and weakening demand, in combination with margin pressure due to high input costs.
Some raw material costs have come down from their peak, however most of them, such as wood and chemicals, were still elevated compared to historic levels. For our Biomaterials division especially, we faced the fastest ever decline in global market pulp prices. A significant amount of new capacity is entering the market at a time when demand is low and the global market pulp inventories are on very high levels.
This has resulted in a very weak financial performance for the quarter and naturally we are disappointed. Group sales were
Strategic initiatives to improve resilience, competitiveness and profitability
We stay committed to continue strengthening and building resilience into
Our focus short term, is on delivering on our committed investment projects and improving our profitability: our cost leading consumer board production line at our site in Oulu, the integration of our
We are also taking the next step in simplifying our organisation and increasingly empowering our divisions. The recently announced restructuring actions will strengthen the Group's long-term competitiveness, reduce complexity and deliver tailor-made services for the benefit of our customers. We will be reducing costs, improving efficiency, and focusing capital allocation in strategic growth markets. These are my key priorities. The planned actions would result in an annual profitability improvement of approximately
Restructuring and closing or divesting production is never an easy decision, especially considering the impact it has on our people. But, it is necessary to optimise our asset base to protect margins, now and for the future and I am very grateful for the commitment of our teams in these challenging times.
Advancing our leading position in sustainability
Sustainability is a natural part of everything we do and integrated also in our funding and financing activities. Recently,
Our values enable adaptation
Market dynamics have changed dramatically in the last year, with enduring uncertainties. This means that we also need to continue adapting to be better equipped to support the long-term growing demand for
Contact:
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