Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Q4 2024 Earnings Presentation
47 slides from Stora Enso Oyj Class A's earnings presentation, Feb 11, 2025
Slide 1: Financial results Q4 2024: Improved results in challenging markets
Financial results Q4 2024 Improved results in challenging markets Cover photo: Stora Enso Head Office, entrance hall Photographer: Stora Enso/©Tuomas Uusheimo
Slide 2: Key highlights
Key highlights • Achieved 75% YoY growth in adjusted EBIT for FY 2024, by improved sourcing, operational efficiency and commercial excellence amidst challenging markets • Reduced fixed costs by 110 MEUR • All profit improvement actions more than offset wood cost escalation • Reduced OWC by >700 MEUR
Slide 3: Continued profit improvement driven by higher deliveries and cost saving actions
Continued profit improvement driven by higher deliveries and cost saving actions Year-on-Year comparison Sales Adj. EBIT MEUR 9,396 9,049 MEUR % 9,000 598 600 10 8,000 7,000 500 8 6,000 400 342 5,000 6 4,000 2,721 300 234 3,000 2,374 2,322 175 4 2,174 2,301 200 149 153 2,127 2,164 2,261 121 2,000 10
Slide 4: Increased profitability despite pressure from high fiber costs
Increased profitability despite pressure from high fiber costs a Year-on-Year comparison Adjusted EBIT variance 110 598 -34 328 172 10 MEUR 342 -30 -300 2023 Sales price Volume Net FX Fiber Other Fixed costs Other 2024 and mix variable cost 4
Slide 5: Finalising the heavy investment phase
Finalising the heavy investment phase CAPEX returning to the standard range of 600-800 MEUR MEUR Strategic capex 1,200 1,125 1,090 989 • The high strategic capex phase during 1,000 2023 and 2024, due to the consumer 730- 778 790 600- packaging board investment at the 800 729 800 687 666 Oulu site in
Slide 6: Well-positioned for growth in fiber-based packaging
Well-positioned for growth in fiber-based packaging underlying market growth expected for packaging. Global fiber-based packaging demand development by grades Strategic investments to strengthen long-term 2023-2033 competitiveness Million tonnes CAGR 2023-2033 Oulu, Finland +2% 297 • New consumer pa
Slide 7: Group's external sales and adjusted EBIT by division
Group’s external sales and adjusted EBIT by division Share of Group external sales FY/2024 Group external sales and adj. EBIT FY/2024 MEUR 1% 4,500 4,207 13% 4,000 3,500 3,000 Packaging materials 2,500 15% Packaging solutions 2,000 1,303 1,357 Biomaterials 1,500 1,157 977 1,000 Wood Products 500 172
Slide 8: Packaging Materials
Packaging Materials Challenging quarter with weak market cycle and annual shutdowns in several units Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 1,500 100 20 1,169 73 1,250 1,138 75 15 1,045 1,100 1,095 52 53 1,000 50 10 750 25 5 500 0 0 250 -25 -6 -5 0 -50 -10 -43 Q423 Q124 Q224 Q324 Q4
Slide 9: Packaging Solutions
Packaging Solutions Price and margin pressure due to market overcapacity Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 20 20 400 15 15 300 247 254 262 247 10 10 224 6 200 5 5 0 0 100 -1 -1 -5 -5 0 -6 -6 -10 -10 Q423 Q124 Q224 Q324 Q424 Q423 Q124 Q224 Q324 Q424 Adjusted EBIT Adjusted ROOC %
Slide 10: Biomaterials
Biomaterials Strong deliveries to customers despite generally soft market Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 600 20 80 500 67 63 413 419 57 375 374 380 60 15 400 43 300 35 10 40 200 20 5 100 0 0 0 Q423 Q124 Q224 Q324 Q424 Q423 Q124 Q224 Q324 Q424 Adjusted EBIT Adjusted ROOC % Ta
Slide 11: Wood Products
Wood Products Stronger demand although still suppressed by continued low construction activity Year-on-Year comparison Sales Adjusted EBIT % MEUR MEUR 600 100 20 500 75 15 414 400 400 341 349 359 50 10 300 25 5 7 200 0 0 -2 100 -25 -9 -12 -5 -27 0 -50 -10 Q423 Q124 Q224 Q324 Q424 Q423 Q124 Q224 Q324
Slide 12: Forest
Forest Continued high demand for all wood assortments in the Nordics Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 784 800 690 695 100 20 650 659 81 81 75 76 600 80 70 15 60 400 10 40 200 5 20 0 0 0 Q423 Q124 Q224 Q324 Q424 Q423 Q124 Q224 Q324 Q424 Adjusted EBIT Adjusted ROCE Target: LTM A
Slide 13: Steadily increasing forest value
Steadily increasing forest value Group forest assets • Fair value** of 8.9 BEUR equivalent to BEUR EUR 11.28 per share 10.0 9.0 8.7 8.7 8.8 8.9 • Fair value of total forest assets increased 8.6 year-on-year by 163 MEUR 8.2 8.1 8.3 8.3 8.1 8.3 8.0 8.0 8.0 7.4 7.4 7.0 7.2 2.7 2.6 2.6 2.6 2.6 2.6 2.3 •
Slide 14: Improved net debt to adjusted EBITDA and operating working capital
Improved net debt to adjusted EBITDA and operating working capital Net debt to adjusted EBITDA Operating working capital MEUR MEUR % 4,000 5.0 20 1,500 18 3,500 4.0 1,250 16 14 1,000 3,000 3.0 12 10 750 2,500 2.0 8 500 6 2,000 1.0 4 250 2 1,500 0.0 0 0 Q123 Q223 Q323 Q423 Q124 Q224 Q324 Q424 Q123 Q2
Slide 15: Stable cash flow from operations driven by higher profitability and reduced working capital
Stable cash flow from operations driven by higher profitability and reduced working capital Year-on-Year comparison MEUR MEUR 350 1,187 152 325 1,200 300 285 954 1,000 250 -32 800 600 200 400 323 323 325 150 -81 269 271 200 74 86 88 4 100 88 0 -236 -40 -9 50 -200 -104 2023 2024 Q423 Q124 Q224 Q324 Q
Slide 16: Surpassing the 2030 target of a 50% reduction in Scope 1 and 2 CO2
Surpassing the 2030 target of a 50% reduction in Scope 1 and 2 CO2 emissions Climate change Circularity Biodiversity -50% 100% Net positive Targets Reduction in absolute Recyclable products Impact on biodiversity emissions by 2030 (Scope 1,2,3) by 2030 by 2050 Committed to reaching -53% net-zero CO2
Slide 17: Market and business outlook for Q1 2025
Market and business outlook for Q1 2025 from Q4 2024 Packaging Packaging Biomaterials Wood Forest Materials Solutions Products • Soft demand • Market demand • Pulp market near • Stable outlook; low • Wood demand challenges fiber remains volatile with cyclical low; demand for classic expected to rema
Slide 18: Key takes – powering ahead
Key takes – powering ahead • Achieved 75% YoY growth in adjusted EBIT for FY 2024, by improved sourcing, operational efficiency and commercial excellence amidst challenging markets • Reduced fixed costs by 110 MEUR • All profit improvement actions more than offset wood cost escalation • Reduced OWC
Slide 19: Disclaimer
Disclaimer It should be noted that Stora Enso and its business are exposed to various risks and uncertainties and certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profi
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Slide 21: Stora Enso – end use geographies and segments
Stora Enso – end use geographies and segments Group sales by geography (FY/2024)* Group sales by end use (FY/2024)* Consumer Construction end uses 6% 12% (packaging) 5% 65% Industrial 12% end uses Food & 23% beverages 38% Other industrial Pharma & 65% 5% Personalcare 12% 10% E-commerce Industrial 3%
Slide 22: Strategic growth areas represented 53% of Group sales in Q4/2024
Strategic growth areas represented 53% of Group sales in Q4/2024 Sales FY/2006 Sales Q4/2024 Sales in ~FY/2030 30%* 53%* 80%* Strategic growth areas Strategic growth areas Strategic growth areas Paper Foundation sales Foundation sales Calculations are based on external sales *Strategic growth areas
Slide 23: Overview per division
Overview per division Sales, MEUR Packaging Materials Packaging Solutions Biomaterials Wood Products Forest 6,000 5,496 6,000 6,000 6,000 6,000 4,508 4,557 4,502 3,548 4,000 4,000 4,000 4,000 4,000 2,519 2,490 2,827 1,728 2,180 1,872 2,195 1,580 1,522 2,046 2,311 1,587 1,587 1,386 2,000 2,000 1,077
Slide 24: Planned maintenance shutdowns impacting quarterly results
Planned maintenance shutdowns impacting quarterly results Group total planned maintenance Planned maintenance shutdowns in 2025 impact on adjusted EBIT Packaging Materials Biomaterials MEUR 200 Q1: - Q1: - 180 Q2: Beihai, Langerbrugge Q2: Skutskär 180 Q3: Oulu, Heinola, Varkaus, Ostroleka Q3: Enocel
Slide 25: Development of long-term Group financial targets
Development of long-term Group financial targets Group long-term financial targets Q4/23 Q4/24 2023 2024 Dividend (annual) in EUR /share To distribute 50% of EPS excluding fair valuation over N/A N/A 0.20* 0.25** the cycle Growth YoY > 5% -24% 7% -20% -4% Net debt to adjusted EBITDA < 2.0x 3.2 3.0 3
Slide 26: Development of long-term targets
Development of long-term targets Financial performance Q4/2023 Q4/2024 Growth YoY > 5% -24% 7% Net debt to adjusted EBITDA < 2.0x 3.2 3.0 Net debt to equity < 60% 29% 37% Adjusted ROCE excl. Forest > 13% 1% 4% Dividend per share (EUR ) To distribute 50% of EPS excluding 0.20* 0.25** fair valuation o
Slide 27: Adjusted EBIT per division
Adjusted EBIT per division MEUR Change % Change % Q4/24 Q4/23 Q3/24 Q4/24-Q4/23 Q4/24-Q3/24 Packaging Materials -6 -43 85.7% 73 -108.3% % of sales -0.6% -4.1% 6.3% Packaging Solutions -6 6 -207.8% -6 4.7% % of sales -2.5% 2.3% -2.5% Biomaterials 67 35 93.2% 43 54.6% % of sales 16.0% 9.3% 11.4% Wood
Slide 28: Net financial items
Net financial items MEUR Change Change Q4/24 Q4/23 Q3/24 Q4/24-Q4/23 Q4/24-Q3/24 Net interest expense -32 -30 -2 -31 -1 Average interest rate* 4.1% 3.7% 4.1% Foreign exchange gains and losses -12 9 -21 3 -16 Other financial items -29 -31 2 -13 -16 Total net financial items -74 -52 -22 -41 -33 *Quart
Slide 29: Quarterly adjusted EBIT variance: Q3 to Q4 2024
Improved other variable costs more than offset by higher fiber and fixed costs Quarterly adjusted EBIT variance 175 1 104 -33 17 121 -19 0 MEUR -68 -57 Q324 Sales price Volume Net FX Fiber Other Fixed costs Depreciation Other Q424 and mix variable costs 29
Slide 30: Higher sales prices, especially for board products offset by high fibre cost
Higher sales prices, especially for board products offset by high fibre cost Quarterly adjusted EBIT variance 22 109 -14 60 8 1 120 -9 MEUR 50 -106 Q423 Sales price Volume Net FX Fiber Other Fixed Costs Depreciation Other Q424 and mix variable costs 30
Slide 31: Cash flow by division Q4/2024
Cash flow by division Q4/2024 MEUR 150 138 125 109 100 91 75 56 50 45 24 25 9 1 0 -2 -3 -25 -14 -50 -40 Packaging Materials Packaging Solutions Biomaterials Wood Products Forest Other Cash flow from operations Cash flow after investing activities 31
Slide 32: Maintaining a strong liquidity position
Maintaining a strong liquidity position MEUR • Liquidity at the end of December 2024: 3,500 Liquidity position at the end of December 2024 − 2.0 BEUR cash and cash equivalents 100 100 100 3,000 − 700 MEUR committed revolving credit facility fully 200 435 435 700 100 100 undrawn 200 2,500 400 700 − 1
Slide 33: Maturity profile 2024
Maturity profile 2024 December 2024 Bonds MEUR Loans from Financial Institutions 1,800 33% 1,700 23% Joint Venture Financing 1,600 Commercial Papers 1,500 1,400 Loans from Wood Suppliers 1,300 16% 11% 1,200 Other Loans / Liabilities 1,100 Committed Credit Facility 1,000 900 800 13% 700 600 10% 10% 5
Slide 34: Net FX effect per division
Net FX effect per division MEUR Packaging Materials Packaging Solutions Biomaterials Wood Products Forest -10 -5 0 5 10 15 Q4/2024 y-o-y Q3/2024 y-o-y Q2/2024 y-o-y Q1/2024 y-o-y 34
Slide 35: Stora Enso's wood and energy self-sufficiency
Stora Enso’s wood and energy self-sufficiency Group energy self-sufficiency excl. JVs 2024 Group wood self-sufficiency by country 2024 100% 86% 76% 73% 71% 80% 65% 23% Total energy Fuels Electricity Finland Sweden Uruguay Brazil China 35
Slide 36: Group energy balance in detail
Group energy balance in detail Group energy balance estimate excl. JVs 2024 Impact on non-hedged volume on MEUR operating profit from 10% change p.a. TWh/a for the next 12 months in: 50 Electricity market price ~0,0 40 Self-sufficiency 71% Fossil fuel price ~6,0 30 20 Self-sufficiency 80% Energy hed
Slide 37: Biomass as primary fuel source
Biomass as primary fuel source Group fuel consumption Q4/2024 3% 1% 1% 3% 4% Biomass Coal Gas Other Fossil Fuel Oil Peat 89% Stora Enso Group’s total Q4/2024 fuel consumption was 7,2 TWh 37
Slide 38: Continued weak construction and housing market weighs on Wood Products' performance
Continued weak construction and housing market weighs on Wood Products’ performance Photo: WO2 ©Patrick Raffin Arboretum, Nanterre, France 38
Slide 39: Pulpwood and sawlog price development in Finland
Pulpwood and sawlog price development in Finland Pulpwood, Pine Sawlogs, Pine 90 80 70 60 50 EUR /m3 40 30 20 10 0 Q113 Q313 Q114 Q314 Q115 Q315 Q116 Q316 Q117 Q317 Q118 Q318 Q119 Q319 Q120 Q320 Q121 Q321 Q122 Q322 Q123 Q323 Q124 Q324 Source: Luonnonvarakeskus 39
Slide 40: Forest property market transaction-based price development
Forest property market transaction-based price development Index Sweden SEK/m3fo 1,000 900 800 700 600 500 400 300 200 100 0 1995 2000 2005 2010 2015 2020 2024 Southern Sweden Central Sweden Northern Sweden Sweden Source: Ludvig & Co 23 January 2025 report, based on nominal prices 40
Slide 41: Global pulp inventories rose while pulp prices declined
Global pulp inventories rose while pulp prices declined 90 Inventory levels Price development 85 USD/tonne Europe NBSK/USD, Delivered Bleached softwood kraft pulp 80 1,800 Europe BHKP/USD, Delivered Bleached hardwood kraft pulp 75 China BHKP/USD NET, Delivered 1,600 70 China NBSK/USD NET, Delivered
Slide 42: Cost-driven price increases in containerboard, stable development in folding box board
Cost-driven price increases in containerboard, stable development in folding box board EUR Containerboard price development EUR /tonnes Folding Box Board price development /tonnes 1,600 1,400 1,500 1,200 EUR (average) per ton EUR (average) per ton 1,400 1,000 1,300 Price decline 800 1,200 of ~9% Pri
Slide 43: Paper for recycling price development
Paper for recycling price development 360 Mixed OCC* ONP/OMG** 320 280 240 200 EUR /tonne 160 120 80 40 0 Q216 Q416 Q217 Q417 Q218 Q418 Q219 Q419 Q220 Q420 Q221 Q421 Q222 Q422 Q223 Q423 Q224 Q424 Source: Fastmarkets FOEX *OCC: Old corrugated containers **ONP: Old newspapers - OMG: Old magazines 43
Slide 44: Indicators driving the demand for packaging
Indicators driving the demand for packaging Private consumption Industrial production Annual growth rate (%) Annual growth rate (%) 12 10 11 8 10 6 9 8 4 7 2 6 0 5 4 -2 3 -4 2 -6 1 0 -8 2021 2022 2023 2024F 2025F 2021 2022 2023 2024F 2025F EU UK US China Source: Consensus, The World Bank “China Econ
Slide 45: Indicators driving the demand for packaging
Indicators driving the demand for packaging GDP Inflation 10 Annual growth rate (%) 10 Annual growth rate (%) 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 2021 2022 2023 2024F 2025F 2021 2022 2023 2024 2025F EU UK US China Source: Consensus 45
Slide 46: ESG ratings and recognition Q4/2024
ESG ratings and recognition Q4/2024 Climate A-, Forest A ESG rating AAA (highest and Water A- possible score) Highest recognition level, Platinum, Total ESG rating 15.6** out of 100 score 82 out of 100 FTSE Transition ESG rating 4.4 out of 5.0 Top-ranked in both Pathway management quality Russell In
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