Stora Enso Oyj Half-year Report January–June 2020

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.

Guidance and outlook

Stora Enso has discontinued its quarterly guidance and annual outlook until further notice, due to the uncertainty in the global economy. The Covid-19 crisis has accelerated the decline in demand for European paper, and the market conditions for the Group’s other products continue to be mixed.

During Q3/2020 there will be annual maintenance shutdowns at six mills. The total negative impact of maintenance is estimated to be EUR 45 million more compared to Q2/2020 and similar to Q3/2019.

• 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.
• EPS was EUR 0.19 (0.08) and EPS excl. IAC and fair valuations was EUR 0.14 (0.27).
• Cash flow from operations amounted to EUR 363 (550) million. Cash flow after investing activities was EUR 239 (428) million.
• The net debt to operational EBITDA ratio at 2.5 (2.1) was above the target level of less than 2.0.
• 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%.

Q1–Q2/2020 (year-on-year)

• Sales were EUR 4 321 (5 242) million.
• Operational EBIT was EUR 357 (634) million.