Stora Enso paper wing in big turnaround

Jo Francis
Friday, July 22, 2022

Stora Enso’s share price fell by nearly 10% after the group missed analysts’ earnings expectations – despite achieving its best quarterly results since the early 2000s, including a big improvement in performance at its remaining paper operation.

Stora Enso: logistical challenges in Q2
Stora Enso: logistical challenges in Q2

The group filed overall sales up 17.8% in Q2 at €3.05bn (£2.6bn). Operational EBITDA margins improved to 21.7% from 20.2%.

Operating profit more than doubled, to €399m (2021: €182m). 

CEO Annica Bresky said that sales at its “core business” excluding paper were up 21%. 

She said that margins and returns were “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,” she stated.

“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.”

Regarding Stora Enso’s exit from Russia and the war in Ukraine, Bresky commented: “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, Stora Enso 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,” she stated.

For the half year, sales were up 20% to €5.85bn, while operational EBIT jumped 46% to just over €1bn. 

Q2 sales at the Paper division were up 4% to €462m, while sales from retained businesses jumped by 62%.

In March Stora announced that it planned to divest four of its remaining five paper mills. 

The group also closed its Veitsiluoto mill in Finland and the Kvarnsveden site in Sweden during Q3 2021.

Operational EBIT at Paper improved by €100m, a huge turnaround on the prior year’s Q2 loss of €49m. Margins were nearly 11%. 

The shift in the group’s focus and massive restructuring programme is evident in the production figures. Stora Enso manufactured 526,000 tonnes of paper in Q2, 29% lower than the same period in 2021 when it made 741,000 tonnes, while deliveries were down nearly 33% at 517,000 tonnes. 

At Packaging Materials Q2 sales jumped 24% to an all-time-high of €1.22bn.

Operational EBIT margins improved to 15.4% from 14.6%. 

“Higher sales prices and volumes more than offset higher variable costs such as energy, pulp, chemicals and logistics,” Stora Enso said.

During the period it launched its new 100% virgin fibre-based kraftliner, AvantForte WhiteTop. It is targeted at “demanding premium segments, such as fresh food, e-commerce, and shelf-ready packaging”. 

“The accelerating shift from plastic to renewable packaging in fresh foods and e-commerce is increasing the demand for high performing kraftliners,” Stora Enso noted. 

At Packaging Solutions, its corrugated business, sales were up 11% at €189m, but the business posted a €3m loss due to Stora Enso’s exit from Russia.

The Biomaterials division posted Q2 sales up 15% at €522m, a record high. However, operational EBIT slipped by €22m to €123m as higher sales prices did not fully offset negative impacts from “higher variable costs, annual maintenance costs and lower volumes”.

Wood Products posted all-time high sales and operational EBIT at €631m and €134m. 

Regarding the future outlook, Stora Enso said that global mega-trends such as an increased awareness of sustainability, an accelerated focus on combatting climate change, and digitalisation would continue to underpin the group’s business strategy, and demand for renewable and eco-friendly products, in the short- and long-term.

It has entered into a joint development agreement with battery cells and systems specialist Northvolt to create a battery with wood-based components sourced sustainably and locally in the Nordic countries.

Stora Enso's share price hit a 20-year high in April but has been on the slide since. It fell 9.9% to €14.66 on the results announcement. 


Please note: We are currently doing some essential maintenance on our Disqus integration. As a result it may not be possible to post new comments or they may not immediately appear - full service should resume by 4 October.

Printweek welcomes informed debate, but all comments must comply with our house rules which can be read here: A-Z of using the Printweek forums


© MA Business Limited 2023. Published by MA Business Limited, St Jude's Church, Dulwich Road, London, SE24 0PB, a company registered in England and Wales no. 06779864. MA Business is part of the Mark Allen Group .