Slide 1: Financial results Q2 2024
Financial results Q2 2024 Continued profit improvement with strengthened leverage ratio Cover photo: Interior from Stora Enso's new Head Office in Helsinki Photo: ©Unikuva /Stora Enso/Puurakentajat Group Oy
Slide 2: Key highlights
Key highlights • Q2 2024 adjusted EBIT more than quadrupled year-on- year with further improvement in EBIT margin • Achieved sequential adjusted EBIT growth for the third consecutive quarter • Both the value creation and the profit improvement programmes increasingly support earnings development o T
Slide 3: Continued profit improvement driven by higher volumes and our own actions
Continued profit improvement driven by higher volumes and our own actions Year-on-Year comparison Sales EBIT Cash flow MEUR MEUR % MEUR 3,000 14 500 200 2,374 12 400 2,500 2,301 161 323 323 2,127 2,174 2,164 156 150 10 300 269 2,000 231 8 200 146 1,500 100 86 6 100 38 1,000 51 0 4 50 37 -9 500 21 2
Slide 4: Higher profitability due to cost reduction actions amidst fiber costs pressure margins
Higher profitability due to cost reduction actions amidst fiber costs pressure margins Year-on-Year comparison Other variable costs: • Energy: 3 MEUR • Logistics: 5 MEUR • Chemicals and fillers: 38 MEUR • Change in inventory and other variable costs: 10 MEUR 4
Slide 5: Packaging Materials
Packaging Materials Demand for consumer board remained solid and demand for containerboard improved Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 1,500 100 15 1,155 75 60 60 1,250 1,100 1,138 10 1,057 1,045 50 1,000 25 5 750 0 0 500 -25 -22 -5 250 -50 -34 -43 0 -75 -10 Q223 Q323 Q423 Q124
Slide 6: Packaging Solutions
Packaging Solutions Margin pressure from overcapacity and a lag in pass-through of higher input costs Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 20 20 400 15 14 15 15 288 300 266 254 247 224 10 10 6 200 5 5 100 0 0 -1 -1 0 -5 -5 Q223 Q323 Q423 Q124 Q224 Q223 Q323 Q423 Q124 Q224 Adjusted
Slide 7: Biomaterials
Biomaterials Overall stable demand with increased pulp prices Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 100 25 600 500 20 75 63 413 57 379 375 374 15 400 345 50 35 300 10 25 200 5 5 0 0 100 0 -25 -13 -5 Q223 Q323 Q423 Q124 Q224 Q223 Q323 Q423 Q124 Q224 Adjusted EBIT Adjusted EBIT % • S
Slide 8: Wood Products
Wood Products Further cost-saving measures implemented to mitigate increased raw material costs Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 600 10 50 500 436 414 5 25 400 349 341 349 7 300 0 0 200 -6 -9 -25 -5 100 -21 -27 0 -50 -10 Q223 Q323 Q423 Q124 Q224 Q223 Q323 Q423 Q124 Q224 Adjust
Slide 9: Forest
Forest Continued high demand and increased prices for all wood assortments in the Nordics Year-on-Year comparison Sales Adjusted EBIT MEUR MEUR % 800 690 100 20 650 659 620 75 76 600 534 80 70 15 62 59 60 400 10 40 200 5 20 0 0 0 Q223 Q323 Q423 Q124 Q224 Q223 Q323 Q423 Q124 Q224 Adjusted EBIT Adjust
Slide 10: Stable forest valuation
Stable forest valuation Group forest assets BEUR • Fair value* of 8.7 billion equivalent to EUR 11.06 per share 10.0 9.0 8.0 8.2 8.1 8.3 8.3 8.1 8.3 8.7 8.6 8.7 • The fair valuation of total forest assets 8.0 increased year-on-year by 660 MEUR, 8.0 7.4 7.4 7.2 primarily due to the fair value changes
Slide 11: Proceeding with committed growth investments as planned
Proceeding with committed growth investments as planned Returning to the average capex range of 600 - 800 MEUR after 2024 Average capex split for MEUR 1,200 1,125 1,030- 1,130 2014–2024 1,000-1,100 989 Depending on investment decisions 1,000 781 729 778 800 687 666 600- 640 656 800 600 574 400 200 0
Slide 12: Strengthened net debt to adjusted EBITDA and reduced operating working capital to all-time low
Strengthened net debt to adjusted EBITDA and reduced operating working capital to all-time low 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 12 750 10 2,500 2.0 8 500 6 2,000 1.0 4 250 2 1,500 0.0 0 0 Q223 Q323 Q423 Q124
Slide 13: Maintaining a strong liquidity position
Maintaining a strong liquidity position MEUR Liquidity position at the end of June 2024 • Liquidity at the end of June 2024: 3,500 − 2.1 BEUR cash and cash equivalents 100 − EUR 700 MEUR committed revolving credit facility 3,000 200 fully undrawn 700 100 100 200 − EUR 100 MEUR committed credit facil
Slide 14: Development of long-term Group financial targets
Development of long-term Group financial targets Group long-term financial targets Q2/23 Q2/24 2023 Dividend (annual) in EUR /share To distribute 50% of EPS excluding 0.10* N/A N/A fair valuation over the cycle (0.20)** Growth YoY > 5% -22% -3% -20% Net debt to adjusted EBITDA < 2.0x 1.7 3.5 3.2 Net
Slide 15: Progressing towards our sustainability targets and initiatives
Progressing towards our sustainability targets and initiatives Highest EcoVadis rating for the Climate change Circularity Biodiversity eighth year, Platinum -50% 100% Net positive Targets Reduction in absolute Recyclable products Impact on biodiversity emissions by 2030 (Scope 1,2,3) by 2030 by 2050
Slide 16: Market demand development from Q2/2024 to Q3/2024
Market demand development from Q2/2024 to Q3/2024 • Demand for consumer board in Europe is expected to be stable and slightly stronger in China Packaging • European demand for containerboard is expected to be stable Materials • European demand for paper is expected to be stable at a low level Packag
Slide 17: Building a more profitable and competitive company
Building a more profitable and competitive company Oulu investment Restructuring Profit improvement ~ 1 BEUR during programme programme 2023–2024 EBIT impact 110 MEUR EBIT impact 120 MEUR annually annually Decentralised P&L Oulu investment ramping divisions and up ~800 MEUR sales business units annu
Slide 18: New Chief Financial Officer
New Chief Financial Officer Niclas Rosenlew • Current Group CFO at the Swedish stock-listed industrial company SKF since 2019 • Former CFO at Basware from 2014 to 2019, with preceding senior finance roles at Microsoft and Nokia • Master of Science degree in Finance • Niclas will join Stora Enso late
Slide 19: New Head of Packaging Solutions
New Head of Packaging Solutions Carolyn Wagner • Current Divisional CEO of the Packaging Division at the German company Klingele Paper & Packaging Group since 2021, with prior managerial roles at the same company since 2019 • Previous senior positions at other European corrugated packaging companies
Slide 20: Key takes – building a stronger future
Key takes – building a stronger future Powering ahead • Achieving significant variable cost reductions through value creation programmes across divisions • Executing profit improvement programme to reduce fixed costs, contributing to improved earnings and cash flow, and strengthening net debt to EBI
Slide 21: 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 23: Kraftliner and testliner segments are recovering
Kraftliner and testliner segments are recovering supported by stable demand and price increases 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 o
Slide 24: Pulp inventory levels in balance and European pulp prices record high
Pulp inventory levels in balance and European pulp prices record high 90 Inventory levels Price development 85 USD/tonne Bleached softwood kraft pulp Europe NBSK/USD, Delivered 80 Bleached hardwood kraft pulp 1,800 Europe BHKP/USD, Delivered 75 China BHKP/USD NET, Delivered 70 1,600 Highest China NB
Slide 25: Continued weak construction and housing market weighs on Wood Products' performance
Continued weak construction and housing market weighs on Wood Products’ performance 25
Slide 26: Strategic growth areas represented 56% of Group sales in Q2/2024
Strategic growth areas represented 56% of Group sales in Q2/2024 Sales FY/2006 Sales Q2/2024 Sales in ~FY/2030 30%* 56%* 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 27: Stora Enso – end use geographies and segments
Stora Enso – end use geographies and segments Group sales by geography (FY/2023)* Group sales by end use (FY/2023)* Construction Consumer 5% 3% 10% end uses (packaging) 10% 65% Industrial Food & end uses beverages 5% 25% 35% Other industrial Pharma & 77% 5% Personalcare 10% Industrial packaging E-co
Slide 28: Development of long-term targets
Development of long-term targets Financial performance Q2/2023 Q2/2024 Growth YoY > 5% -22% -3% Net debt to adjusted EBITDA < 2.0x 1.7 3.5 Net debt to equity < 60% 27% 33% Adjusted ROCE excl. Forest > 13% 11% 1% Dividend per share (EUR ) To distribute 50% of EPS excluding 0.10* 0.60 fair valuation o
Slide 29: Mainly cost driven sales price increases and improved volumes
Mainly cost driven sales price increases and improved volumes despite annual maintenance shutdowns Quarter-on-Quarter comparison Other variable costs: • Energy: 3 MEUR • Logistics: -8 MEUR • Chemicals and fillers: 7 MEUR • Change in inventory and other variable costs: -38 MEUR 29
Slide 30: Maintenance shutdowns impacting quarterly results
Maintenance shutdowns impacting quarterly results Group total planned maintenance Planned maintenance shutdowns in 2024 impact on adjusted EBIT Packaging Materials Biomaterials MEUR 200 Q1: - Q1: - 180 Q2: Beihai, Langerbrugge Q2: Montes del Plata, 180 Q3: Oulu, Varkaus, Heinola Skutskär 160 150 146
Slide 31: Improved cash flow from operations supported by decreased working capital
Improved cash flow from operations supported by decreased working capital MEUR • Cash flow after investing activities was 86 (-70) MEUR • Working capital decreased by 92 MEUR, mainly due to lower trade receivables partly offset by higher inventories • Cash spent on fixed and biological assets was 23
Slide 32: Cash flow by division Q2/2024
Cash flow by division Q2/2024 MEUR 175 150 141 120 125 104 101 100 75 75 50 40 34 24 25 14 0 -25 -50 -75 -100 -76 -78 -87 -125 -150 Packaging Materials Packaging Solutions Biomaterials Wood Products Forest Other Cash flow from operations Cash flow after investing activities 32
Slide 33: Maturity profile 2024
Maturity profile 2024 June 2024 MEUR 1,300 11% Bonds 1,200 23% 22% Loans from Financial Institutions 1,100 Joint Venture Financing 1,000 Commercial Papers 900 16% 13% Loans from Wood Suppliers 800 Other Loans / Liabilities 700 11% Committed Credit Facility 600 10% 10% 500 400 6% 300 200 100 1% 0 202
Slide 34: Overview per division
Overview per division Sales, MEUR Packaging Materials Packaging Solutions Biomaterials Wood Products Forest 1,500 1,500 1,500 1,500 1,500 1,155 1,057 1,045 1,100 1,138 1,000 1,000 1,000 1,000 1,000 690 620 650 659 534 379 345 375 374 413 436 349 349 414 500 500 288 266 247 254 500 500 341 500 224 0
Slide 35: Adjusted EBIT per division
Adjusted EBIT per division MEUR Change % Change % Q2/24 Q2/23 Q1/24 Q2/24-Q2/23 Q2/24-Q1/24 Packaging Materials 60 -22 n/m 60 0.4% % of sales 5.3% -1.9% 5.5% Packaging Solutions -1 15 -107.0% -1 -3.0% % of sales -0.4% 5.2% -0.5% Biomaterials 63 -13 n/m 57 10.6% % of sales 15.3% -3.4% 15.3% Wood Prod
Slide 36: Stora Enso's wood and energy self-sufficiency
Stora Enso’s wood and energy self-sufficiency Group energy self-sufficiency excl. JVs (2024e) Group wood self-sufficiency by country 2023 100% 72% 70% 84% 76% 65% 67% 24% Total energy Fuels Electricity Finland Sweden Uruguay Brazil China 36
Slide 37: Energy balance in detail
Energy balance in detail Group energy balance estimate excl. JVs 2024e 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 30 70% Fossil fuel price ~6,6 20 Self-sufficiency 10 84% Energy hedgi
Slide 38: Biomass as primary fuel source
Biomass as primary fuel source Group fuel consumption Q2/2024 3% 3% 1% 1% 4% Biomass Coal Gas Other Fossil Fuel Oil Peat 89% Stora Enso Group’s total Q2/2024 fuel consumption was 6,8 TWh 38
Slide 39: Net financial items
Net financial items MEUR Change Change Q2/24 Q2/23 Q1/24 Q2/24-Q2/23 Q2/24-Q1/24 Net interest expense -32 -28 -4 -31 -1 Average interest rate* 4.1% 3.5% 4.2% Foreign exchange gains and losses -4 -22 17 -7 2 Other financial items -12 -1 -11 -9 -3 Total net financial items -49 -51 3 -47 -2 *Quarterly
Slide 40: Net FX per division
Net FX per division Packaging Materials Packaging Solutions Biomaterials Wood Products Forest -10 -5 0 5 10 15 MEUR Q2/2024 y-o-y Q1/2024 y-o-y Q4/2023 y-o-y Q3/2023 y-o-y 40
Slide 41: Indicators driving the demand for packaging
Indicators driving the demand for packaging Private consumption Industrial production* Annual growth rate (%) Annual growth rate (%) 12 10 10 8 8 6 6 4 4 2 0 2 -2 0 -4 -2 -6 -8 -4 -10 -6 -12 -14 -8 2020 2021 2022 2023 2024F 2020 2021 2022 2023 2024F EU UK US China Source: Consensus, The World Bank “
Slide 42: Indicators driving the demand for packaging
Indicators driving the demand for packaging GDP Inflation 10 Annual growth rate (%) 10 Annual growth rate (%) 8 9 6 8 4 7 2 6 0 5 -2 4 -4 3 -6 2 -8 -10 1 -12 0 2020 2021 2022 2023 2024F 2020 2021 2022 2023 2024F EU UK US China Source: Consensus 42
Slide 43: Paper for recycling price development
Paper for recycling price development 360 Mixed OCC ONP/ONG 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 Source: Fastmarkets FOEX 43
Slide 44: 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 Source: Luonnonvarakeskus 44
Slide 45: Forest property market transaction-based price development
Forest property market transaction-based price development Index Sweden 1,000 900 800 700 600 500 400 300 200 100 0 1995 2000 2005 2010 2015 2020 2023 Southern Sweden Central Sweden Northern Sweden Sweden Source: Ludvig & Co 25 January 2024 report, based on nominal prices 45
Slide 46: ESG ratings and recognition Q2/2024
ESG ratings and recognition Q2/2024 Climate A-, Forest A ESG rating AAA (highest and Water A- possible score) Highest recognition level, Platinum, Total ESG rating 13.7** 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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