Stora Enso Oyj Half-year Report January–June 2020

Q2/2020 (compared with Q2/2019)
*Sales decreased by 18.9% to EUR 2 114 (2 608) million, due to lower deliveries and prices, as a result of the impact of the Covid-19 pandemic.
*Operational EBIT decreased to EUR 178 (299) million. The impact of lower sales was partly offset by good cost management.
*Operational EBIT margin was 8.4% (11.5%).
*Operating profit (IFRS) was EUR 226 (142) million.
*Strong liquidity at EUR 2.1 billion, including cash and committed credit facilities and good access to funding sources.
*Operational ROCE was 6.8% (11.8%), below the strategic target of over 13%.

Managing uncertainties
The health and safety of Stora Enso’s employees is a key priority. Stora Enso has secured the health and safety of its employees by various measures and is closely monitoring the Covid-19 situation. Thanks to Stora Enso’s proactive approach thus far, there has been minimal impact on the Group’s ability to serve customers and run operations.

Stora Enso’s liquidity and funding position is strong. At the end of Q2/2020, cash and cash equivalents were at EUR 1 062 million. Additionally, the Company has undrawn committed credit facilities of EUR 1 000 million, and a possibility to have EUR 950 million statutory pension premium loans in Finland. There are no financial covenants on Stora Enso Oyj’s debt.

To address costs and mitigate negative market demand impacts, Stora Enso continues to implement additional cost reduction actions. The Group also continues to focus on ensuring liquidity and cash flow, and working capital management to remain resilient and ensure quick recovery.

Due to the cross-border travel restrictions and safety concerns associated with Covid-19, most of Stora Enso’s annual mill maintenance shutdowns were postponed from the first half until the second half of 2020. The upcoming maintenance shutdowns are well prepared to ensure the health and safety of the Group’s employees, contractors and communities in which it operates.

Stora Enso’s President and CEO Annica Bresky comments on the second quarter 2020 results:
“We continue to experience unprecedented times with the Covid-19 pandemic, which is affecting global health and creating uncertainty and volatility in the business environment. Governments have introduced significant stimuli to support economies and societies are gradually opening up. However, despite some optimistic signs, market conditions’ poor visibility will continue. We stay focused on what we can influence through these challenging times: serving and supporting our customers; ensuring the health of our employees; running our operations as efficiently as possible; securing our financial resilience; and driving our innovation agenda.

We delivered an operational EBIT of EUR 178 million, about the same as in the first quarter this year (EUR 180 million). Operational EBIT excluding Paper was EUR 216 million, much stronger than during the first quarter (EUR 159 million). Cash flow from operations was EUR 363 million. We consider the second quarter result solid in the current circumstances. This was driven by strong performances in the Packaging Materials and Forest divisions, and Wood Products division delivering a better result than expected. The pandemic’s biggest effect on our business has been in the Paper division, accelerating the structural decline in all paper grades. Excluding Paper, our operational EBIT margin stayed at 13%, showing the resilience of our growth businesses.

Our transformation project at Oulu Mill is proceeding as planned and the conversion to kraftliner production will start in the fourth quarter this year. Currently, 80% of our sales come from our growth businesses and after the conversion, the share of paper products will be even lower. The market remains challenging for Biomaterials with low prices and a decline in the graphical paper end uses. Compared with last year, our results are significantly lower, driven by a decline in deliveries and sales, mainly in Paper and Biomaterials. The market outlook for our other businesses will continue to be mixed.
more detail at: https://www.storaenso.com/en/newsroom/regulatory-and-investor-releases/2020/7/stora-enso-oyj-half-year-report-january-june-2020?prid=d54333fad36898f9

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