Annual Report • Oct 21, 2022
Annual Report
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January–September 2022
Q3
Our purpose:
Do good for people and the planet. Replace non-renewable materials with renewable products.
| Summary | 2 |
|---|---|
| CEO comment | 5 |
| Events | 6 |
| Sustainability | 7 |
| Results | 9 |
| Divisions | 11 |
| Capital structure | 17 |
| Cash flow | 18 |
| Capital expenditure | 18 |
| Short-term risks | 19 |
| Sensitivity analysis | 19 |
| Legal proceedings | 20 |
| Financials | 21 |
"During Q3, we continued to stay vigilant in an unprecedented and volatile environment."
De Jong Packaging acquisition
The planned acquisition will accelerate growth in renewable corrugated packaging
Northvolt co-operation Sustainable batteries featuring anode produced from renewable raw materials
Paper divestments Agreements signed to divest the Maxau and Nymölla sites
17.8% (Q3/2021: 15.9%) Operational ROCE excl. the Forest division
22.2% (Q3/2021: 20.0%)
Net debt to operational EBITDA 0.8 (Q3/2021: 1.4)
(Q3/2021: 2,577)
EPS (basic) 0.47 (Q3/2021: 0.38)
Cash flow from operations EUR 639 million (Q3/2021: 485)
Global megatrends such as an increased awareness of sustainability, an accelerated focus on combatting climate change, and digitalisation underpin Stora Enso's business strategy and the demand for its renewable and eco-friendly products, both short and long term.
Stora Enso remains vigilant against the persisting market disruptions and uncertainties such as increased geopolitical risk, the rapidly changing macroeconomic environment, inflationary pressures, logistical constraints and material shortages. To manage volatility, measures such as pricing, flexibility in sourcing and logistics, as well as hedging are in place. Stora Enso also benefits from its high self-sufficiency in wood of 30% and in energy of 69% for the Group.
Stora Enso enters Q4 with the profitability of the Packaging Materials division expected to deteriorate due to escalated cost inflation in energy along with costs for planned maintenance at four of its sites including its two largest. There is stable demand in consumer board with a strong orderbook. Contracts are typically fixed long-term which are now impacted by cost inflation and will be renegotiated as they expire. The normalisation of the demand in containerboard from the third quarter continues, contracts in containerboard are short-term and hence give flexibility for renegotiations. The demand for corrugated packaging is expected to remain stable.
Pulp is showing early signs of price normalisation from the recent extraordinary high levels as the pulp market in general follows the development of the global economy. The overall pulp demand when including all our grades is expected to be flat.
In Wood Products, there is a continued market decline in traditional sawn goods from the first half year's peak levels.
In Building Solutions, the order book is good for Q4, but the demand is expected to weaken due to increased uncertainty among developers, especially impacting residential and commercial construction.
In the Forest division, wood demand in Q4 is estimated to remain on par with the previous quarter. There is strong demand for pulpwood, while sawlogs demand is at a lower level due to a weaker sawn wood market.
In the Paper division there is a solid demand outlook for the fourth quarter, supported by seasonality and a good orderbook. However, the division will be impacted in Q4 by higher energy costs and maintenance work.
The Group impact from higher energy costs in the Packaging Materials and Paper divisions will be partly offset by recognised income in Segment Other due to Stora Enso's ownership in the energy company Pohjolan Voima.
Stora Enso reiterates its full-year 2022 operational EBIT guidance to be higher than the full year operational EBIT 2021 (EUR 1,528 million).
| Change | Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/22 | Q3/21 | % Q3/22– Q3/21 |
Q2/22 | % Q3/22– Q2/22 |
Q1-Q3/22 | Q1-Q3/21 | Change % Q1-Q3/22– Q1-Q3/21 |
2021 |
| Sales | 2,963 | 2,577 | 15.0 % | 3,054 | -3.0 % | 8,816 | 7,445 | 18.4 % 10,164 | |
| Operational EBITDA | 689 | 570 | 20.8 % | 663 | 3.9 % | 2,014 | 1,582 | 27.3 % 2,184 | |
| Operational EBITDA margin | 23.2 % | 22.1 % | 21.7 % | 22.8 % | 21.2 % | 21.5 % | |||
| Operational EBIT | 527 | 410 | 28.7 % | 505 | 4.4 % | 1,536 | 1,102 | 39.4 % 1,528 | |
| Operational EBIT margin | 17.8 % | 15.9 % | 16.5 % | 17.4 % | 14.8 % | 15.0 % | |||
| Operating profit (IFRS) | 511 | 386 | 32.3 % | 399 | 27.8 % | 1,304 | 729 | 78.8 % 1,568 | |
| Profit before tax (IFRS) | 448 | 349 | 28.3 % | 370 | 20.9 % | 1,192 | 626 | 90.5 % 1,419 | |
| Net profit for the period (IFRS) | 367 | 299 | 22.7 % | 299 | 22.8 % | 953 | 652 | 46.2 % 1,268 | |
| Cash flow from operations | 639 | 485 | 31.6 % | 404 | 58.2 % | 1,445 | 1,133 | 27.5 % 1,752 | |
| Cash flow after investing activities | 489 | 347 | 40.6 % | 247 | 97.8 % | 960 | 677 | 41.6 % 1,101 | |
| Capital expenditure | 164 | 124 | 31.6 % | 161 | 1.6 % | 410 | 378 | 8.4 % | 666 |
| Capital expenditure excluding investments in biological assets |
145 | 111 | 30.9 % | 139 | 4.7 % | 356 | 336 | 5.8 % | 609 |
| Depreciation and impairment charges excl. IAC |
131 | 136 | -3.8 % | 131 | -0.2 % | 397 | 410 | -3.1 % | 555 |
| Net interest-bearing liabilities | 2,125 | 2,672 | -20.5 % | 2,434 | -12.7 % | 2,125 | 2,672 | -20.5 % 2,309 | |
| Forest assets1 | 8,135 | 7,415 | 9.7 % | 8,161 | -0.3 % | 8,135 | 7,415 | 9.7 % 7,966 | |
| Operational return on capital employed (ROCE), % |
14.9% | 13.3% | 14.9% | 14.9% | 12.2% | 12.4% | |||
| Operational ROCE excl. Forest division | 22.2% | 20.0% | 22.8% | 22.3% | 16.8% | 17.8% | |||
| Earnings per share (EPS) excl. FV, EUR | 0.47 | 0.37 | 24.5 % | 0.42 | 9.8 % | 1.24 | 0.87 | 42.0 % | 1.19 |
| EPS (basic), EUR | 0.47 | 0.38 | 23.5 % | 0.38 | 23.0 % | 1.22 | 0.83 | 48.1 % | 1.61 |
| Return on equity (ROE) | 12.3% | 12.6% | 10.9% | 11.0% | 9.4% | 13.0% | |||
| Net debt/equity ratio | 0.17 | 0.27 | 0.21 | 0.17 | 0.27 | 0.22 | |||
| Net debt to last 12 months' operational EBITDA ratio |
0.8 | 1.4 | 1.0 | 0.8 | 1.4 | 1.1 | |||
| Equity per share, EUR | 15.84 | 12.39 | 27.8 % | 14.39 | 10.0 % | 15.84 | 12.39 | 27.8 % 13.55 | |
| Average number of employees (FTE) | 21,804 | 23,358 | -6.7 % 22,327 | -2.3 % 22,049 | 23,295 | -5.3 % 23,071 |
Operational key figures, items affecting comparability and other non-IFRS measures: The list of Stora Enso's non-IFRS measures, and the calculation and definitions of the key figures are presented at the end of this report. See also the section Non-IFRS measures at the beginning of the Financials section.
1 Total forest assets value, including leased land and Stora Enso's share of Tornator.
| Q3/22 | Q3/21 | Change % Q3/22– Q3/21 |
Q2/22 | Change % Q3/22– Q2/22 |
Q1-Q3/22 | Q1-Q3/21 | Change % Q1- Q3/22– Q1-Q3/21 |
2021 | |
|---|---|---|---|---|---|---|---|---|---|
| Board deliveries1 , 1,000 tonnes |
1,090 | 1,071 | 1.8 % | 1,113 | -2.1 % | 3,284 | 3,177 | 3.4 % | 4,258 |
| Board production1 , 1,000 tonnes |
1,139 | 1,189 | -4.2 % | 1,204 | -5.4 % | 3,588 | 3,496 | 2.6 % | 4,685 |
| Corrugated packaging European deliveries, million m2 |
158 | 229 | -31.1 % | 194 | -18.8 % | 575 | 708 | -18.7 % | 949 |
| Corrugated packaging European production, million m2 |
160 | 254 | -36.8 % | 203 | -21.0 % | 599 | 787 | -23.9 % | 1,049 |
| Market pulp deliveries, 1,000 tonnes | 569 | 565 | 0.8 % | 592 | -3.9 % | 1,742 | 1,835 | -5.1 % | 2,495 |
| Wood products deliveries, 1,000 m3 | 971 | 1,107 | -12.3 % | 1,163 | -16.5 % | 3,353 | 3,646 | -8.0 % | 4,803 |
| Wood deliveries, 1,000 m3 | 2,901 | 2,847 | 1.9 % | 3,978 | -27.1 % | 9,970 | 8,934 | 11.6 % | 12,091 |
| Paper deliveries, 1,000 tonnes | 476 | 747 | -36.3 % | 517 | -7.9 % | 1,528 | 2,256 | -32.3 % | 2,872 |
| Paper production, 1,000 tonnes | 461 | 762 | -39.5 % | 526 | -12.3 % | 1,519 | 2,247 | -32.4 % | 2,776 |
1 Includes consumer board and containerboard volumes
The comparative Q3/2021 market pulp figures have been adjusted. Q2/2022 Wood deliveries and Q2/2022 Corrugated packaging European deliveries have been adjusted.
Expected and historical impact as lost value of sales and maintenance costs
| EUR million | Q4/20221 | Q3/20222 | Q2/2022 | Q1/2022 | Q4/2021 | Q3/2021 |
|---|---|---|---|---|---|---|
| Total maintenance impact | 125 | 150 | 120 | 107 | 146 | 169 |
1 Estimated
2 The estimate for Q3/2022 was EUR 132 million.
'Leading and doing what is right' is not only the core value of Stora Enso; it drives how we conduct our business and guides the choices we make. We believe that through our actions and decisions Stora Enso will play a fundamental role to operate within the planetary boundaries, to create healthy societies and to safeguard the renewable future we and future generations depend on. It is also the best way to future-proof our business and create long-term value for all our stakeholders.
During the past quarter, we continued to stay vigilant in an unprecedented and volatile environment. Inflationary cost pressures intensify, but I am pleased that we were able to mitigate and deliver strong results. We advance our growth agenda and capitalise on new sustainable business opportunities to deliver shareholder value. Our sales increased by 15% to 2,963 million euros, the highest third quarter sales since 2007, excluding Paper the increase was 17%. We delivered a 29% increase in operational EBIT to 527 million euros, the highest quarterly result since the early 2000s at an operational EBIT margin of nearly 18%.
Looking ahead, we see the first signs of potential macroeconomic slow-down that could eventually also impact our business. I am however confident in our ability to be proactive and to adapt. Stora Enso is stronger and more resilient than before due to restructuring efforts and strategic choices made over the past few years: to exit paper, reduce our debt and focus investments on our growth businesses. I'm very thankful for the commitment and teamwork of our people who have all been instrumental in making this successful.
The acquisition of De Jong Packaging Group is still subject to employee consultation and regulatory approval. However, once closed it will be one of the largest and most important investments that Stora Enso has made. The enterprise value is approximately one billion euro and through this acquisition, our sales and capacity in Packaging Solutions will double.
De Jong has an entrepreneurial spirit, a solid track record for growth and is one of the largest corrugated packaging producers in Benelux. Stora Enso's and De Jong's shared focus on agility and customer value will enable us to build a much stronger market position for future growth in renewable packaging in Western Europe. We also see opportunities to jointly optimise our containerboard portfolios and further integrate with our production site in Langerbrugge, Belgium.
Building on the successful first conversion in our site in Oulu, Finland in 2021, we will continue investing in highquality consumer board by converting the second paper machine at this site. By utilising existing infrastructure, we will significantly reduce the risks and the investment costs compared to a green field expansion. This is our third paper-to-packaging machine conversion since 2016 and we have experienced teams in place to drive the project to create a cost leading mega-site for renewable packaging. At full production, we expect annual sales of 800 million euros, reinforcing our leading position in consumer packaging, serving food end-use markets in Europe and North America.
We continue to invest in a more sustainable construction value-chain and recently inaugurated one of the world's most modern production sites for cross laminated timber (CLT). Located in the Czech Republic, the new site will generate 70 million euros in annual sales at full production. Our capacity to serve markets in Europe, Japan, Australia, and North America will increase by approximately 40%, enabling us to meet the growing demand in green, lowcarbon construction.
We are step by step commercialising our new lignin-based product portfolio, in end-uses such as glues and binders for furniture, construction and lately components in asphalt. We are scaling up production with partnerships and running customer trials to customise Lignode to specific performance needs. With partners, we also progress with our ambitions to build the world's greenest battery. In July, we signed a joint development agreement with Northvolt. In October, we signed a Letter of Intent with Beyonder, Norwegian energy storage technology company, for optimisation of properties and commercial deliveries of lignin-based anode material for batteries after industrialscale production has started.
Stora Enso is committed to deliver a stronger and more resilient investor proposition, both now and for the long term. At our Capital Markets Day in September, we laid out a clear set of targets and long-term ambitions for 2030 to capture growth opportunities. These include increase of sales, excluding inflation, by 30% compared to 2021 and maintaining a 15% operational EBIT margin over the cycle.
But we do not do this alone. We create ecosystems with like-minded partners to build on the creativity and drive of our employees. By leading and doing what is right, we will future proof our business for tomorrow and beyond.
The renewable future grows in the forest.
President and CEO
Global megatrends such as urbanisation, digitalisation, global warming and eco and brand awareness all underpin Stora Enso's growth opportunities. Regulation promoting a circular economy further supports growth. Stora Enso creates renewable, sustainable and circular products which respond to its customers' need to substitute fossil-based materials, helping combat climate change. The global increased focus on sustainability provides us with several long-term growth opportunities and enables us to lead the green materials transition. There is strong drive to maximise the efficient use of raw materials and to make the value chains circular. This is supported by lifecycle thinking, hand in hand with rising consumer demand for eco-friendly products that enable a reduced carbon footprint. Stora Enso foresee strong, long-term, and accelerating demand for renewable, recyclable and 'net positive' products. The Company sees significant prospects to expand its total addressable market and aim to grow by >5% (excl. Paper) per year over the cycle.
Stora Enso is acquiring De Jong Packaging Group, based in the Netherlands, for an enterprise value of approximately EUR 1,020 million. The acquisition will advance Stora Enso's strategic direction, accelerate revenue growth and build market share in renewable packaging in Europe, entering new markets in Benelux, Germany, and the UK. Closure of the transaction is subject to employee consultation and regulatory approval and is expected at the beginning of 2023.
Stora Enso announced the divestments of the Maxau paper site in Germany to Schwarz Produktion and the Nymölla site in Sweden to Sylvamo for a total enterprise value of EUR 360 million. Closure of the transactions is expected at the beginning of 2023. The transactions are part of the previously announced plan to divest four of Stora Enso's five paper production sites. The divestment process continues for the Hylte and Anjala sites with no committed timeline for conclusion.
Stora Enso is conducting a feasibility study at its paper production site in Langerbrugge, Belgium, for the conversion of one of the two paper lines into a high-volume recycled containerboard line. The study is expected to be finalised in H1/2023. On a positive investment decision, the converted line could be in production during 2025. The total investment is estimated to be approximately. EUR 400 million.
Stora Enso and Tetra Pak are examining a shared beverage carton recycling solution to meet the growing recycling need in Benelux, responding to the demand for circular paper-based packaging solutions. The study includes a plan for a beverage carton recycling facility at Stora Enso's Langerbrugge site.
Stora Enso and Huhtamaki launched a paper cup recycling initiative to set new standards for paper cup collection and recycling in Europe. The programme, the first of its kind in Europe, aims to recycle and capture the value of used paper cups on an industrial scale.
On 22 July, Stora Enso and Northvolt, battery cells and systems supplier, announced a joint development agreement to create sustainable batteries using lignin-based hard carbon, Lignode® . The aim is to develop the world's first industrialised battery fully based on European strategic raw materials from the Nordic forests, both lowering the carbon footprint and increasing the quality and value.
The new production site for cross-laminated timber (CLT) in Ždírec, the Czech Republic, has started operations. Following a EUR 79 million investment, the new site is one of the most modern
Sustainability is driving Stora Enso's strategy and is a natural part of its business conduct. The Company's forest holding is a real asset which both initiates the integrated value chain and sustainability credentials throughout the whole product line. Stora Enso's products store CO2, and substitute and displace fossil-based products. The Company creates value by focusing on growing its leading positions in: renewable packaging, building solutions and biomaterials innovations. It also ensures maximising value creation in the foundation businesses: forest, biomaterials and wood products. Stora Enso helps drive the green revolution by investing in innovation, helping its customers reach their sustainability targets regarding climate impact and circular solutions. Stora Enso drives a performance culture through its business-specific processes to grow profitability long term. Responsible leadership based on a diverse and inclusive culture is a top priority and the strongest driver for performance, company culture and personal well-being.
in the world. It supports Stora Enso's strategy of growth within wooden building solutions to meet the increasing demand for sustainable, cost-effective and renewable building materials. The investment is expected to generate annual sales of approximately EUR 70 million. Stora Enso will hence strengthen its position as one of the world's leading providers of wood-based building solutions with a total capacity of 490,000 m³.
As a further step in commercialising the applications of our Lignin product portfolio, Stora Enso and Peab have paved asphalt where fossil-based binder (bitumen) is replaced with renewable lignin. Using Stora Enso's bio-based lignin binder significantly reduces the carbon footprint of roads. The purpose of the paving is to confirm the impact of lignin on the properties of asphalt for further scale-up. The potential bitumen market in Europe is EUR 8 billion. Stora Enso's bio-binders are its first products on the market in its Lignin product portfolio and pave the way for its other lignin-based innovations like anode material for batteries.
Stora Enso has disposed of its operations in Russia to local management. Minor formalities remain to complete the transaction for certain Russian legal entities.
The Finnish energy company Pohjolan Voima, in which Stora Enso has a 15.6% shareholding, comments that the testing period at the new nuclear power plant Olkiluoto 3 is ongoing and commercial use is estimated to start in the end of December. The income from energy sales is reported under the segment Other. The divisions are charged for electricity at market price.
Stora Enso presented an update on its 2030 goals and ambitions1 . Main highlights:
Stora Enso will invest approximately EUR 1 billion to convert the remaining idle paper machine at the Group's Oulu site in Finland into a state-of-the-art, high-volume consumer board production line. The converted line will be the most cost competitive folding box board machine in Europe and supports the Group's growth strategy in renewable packaging. Targeted end-use segments are food and beverage packaging, mainly in Europe and North America. Production on the converted machine is estimated to start in early 2025 with expected annual sales of approximately EUR 800 million.
1 The 2030 goals and ambition should not be considered as targets or guidance for 2030.
Stora Enso focuses its efforts towards a sustainable future concentrating on the three areas in which it has the biggest impact and opportunities: climate change, biodiversity and circularity.
Stora Enso's science-based target is to reduce absolute scope 1, 2 and 3 greenhouse gas (GHG) emissions by 50% by 2030 from the 2019 base year, in line with the 1.5 degree scenario.
By the end of the quarter, the scope 1 and 2 GHG emissions were 2.10 million tonnes or 22% less than in the base year.
Stora Enso will reduce scope 1 and 2 emissions from operations by investing in energy efficiency, and by further
increasing the share of clean energy sources, including wood-based biofuels from sustainable sources.
In 2021, Stora Enso's estimated scope 3 GHG emissions along the value chain were 7.83 million tonnes or at the same level as in the base year (2020: 7.06 million tonnes or 10% less). The emissions increased year-on-year partly due to recovered production. During 2022, Stora Enso is continuing to identify scope 3 emission reduction potential and take appropriate action.
1 For definitions, see the section Calculation of key figures.
2Historical figures recalculated due to divestments or additional data after the previous Interim Reports.
Biodiversity is an integral part of forest certifications including protection of valuable ecosystems. Stora Enso is committed to achieving a net-positive impact on biodiversity in its own forests and plantations by 2050 through active biodiversity management.
During the quarter, Stora Enso continued to implement its biodiversity action programmes for its own forests in Sweden and wood supply in Finland. A similar programme is being planned for Stora Enso's wood supply in the Baltics. The Group steers its biodiversity actions through a Biodiversity Leadership Programme that covers a number of measures and projects concerning its own forests, suppliers' forests, global forests, and biodiversity beyond the forest sector.
Forest certification ensures that the raw material used in wood-based products comes from responsibly managed forests. Stora Enso's target is to maintain the forest certification coverage level of at least 96% for the company's own and leased forest lands.
The forest certification coverage for Stora Enso's owned and leased lands has remained stable. In 2021, the coverage amounted to 99% (2020: 99%).
1 For definitions, see the section Calculation of key figures.
By the end of 2021, 93% of Stora Enso's products, such as paper and packaging products, were recyclable and the target is to reach 100% by 2030. Stora Enso aims to ensure the recyclability of products through an increased focus on circularity in the innovation processes. Stora Enso collaborates actively with customers and partners to set up the infrastructure to enable 100% circularity in its markets.
During the quarter, Stora Enso and Huhtamaki announced a partnership on an industrial-scale recycling programme for paper cups in Europe. The Cup Collective aims to recycle half a billion paper cups in the first two years and, due to scalability, has the capacity to significantly increase recycling volumes in Europe. Stora Enso and Tetra Pak announced a joint feasibility study for finding a possible solution for beverage carton recycling in Benelux.
Circularity: share of technically recyclable products1 2
1 As of 31 December 2021 2 For definitions, see the section Calculation of key figures.
30 Sep 2022 30 Jun 2022 31 Dec 2021 30 Sep 2021 Target
| Occupational safety: TRI rate, year-to-date | 5.9 | 5.6 | 6.2 | 6.3 | 5.3 by the end of 2022 |
|---|---|---|---|---|---|
| Gender balance: % of female managers among all managers | 23% | 24% | 23% | 23% 25% by the end of 2024 | |
| Water: total water withdrawal per saleable tonne (m3 /tonne)1 |
60 | 60 | 60 | 61 | Decreasing trend |
| Water: process water discharges per saleable tonne, (m3 /tonne)1 |
31 | 31 | 31 | 31 | Decreasing trend |
| Sustainable sourcing: % of supplier spend covered by the Supplier Code of Conduct (SCoC) |
95% | 95% | 96% | 96% | 95% |
For definitions, see the section Calculation of key figures.
1Historical figures recalculated due to divestments or additional data after the previous Interim Reports.
In July, there was a work-related fatality of a Stora Enso employee at the Ostrołęka plant in Poland. The incident and the root causes have been investigated together with the local authorities. The learnings from this tragic event will be acted upon to prevent such accidents from recurring.
Water performance remained stable during the quarter. Stora Enso strives constantly to improve its water performance through targeted investments. Stora Enso will introduce new targets for water performance by the end of 2022.
The KPI for sustainable sourcing measures the proportion of total supplier spend covered by the SCoC. By the end of the quarter, 95% of the spend on materials, goods, and services was covered by the SCoC.
The KPI for diversity and inclusion measures the proportion of female managers among all managers. At the end of the quarter, the proportion was 23%. The target is 25% by the end of 2024. Among all employees, the proportion of female employees was 25%. In the Group's Leadership Team, four out of 12 members were women at the end of Q3/2022.
Stora Enso actively participates in the following ESG assessment schemes:
| ESG rating | Stora Enso score | Change vs previous score | Rating against peers | Last update |
|---|---|---|---|---|
| CDP | Climate A Forest A Water B |
Unchanged | Clearly above the industry average level | Q4/2021 |
| FTSE Russell | 4.4 out of 5.0 | Improved from 4.2 to 4.4 | Clearly above the industry average level | Q2/2022 |
| ISS Corporate Rating | B- / A+ | Unchanged | Among highest decile rank in the industry sector | Q2/2022 |
| ISS QualityScore | Governance 4* Social 1 Environment 1 |
Unchanged | Clearly above the industry average level | Q3/2022 |
| MSCI | AAA / AAA | Unchanged | Clearly above the industry average level | Q3/2022 |
| Sustainalytics | 15.9 out of 100 | Improved from 18.0 to 15.9** | Clearly above the industry average level | Q1/2022 |
| VigeoEiris*** | 73 out of 100 | Improved from 68 to 73 | Highest ranked company in the industry | Q3/2021 |
* 1 indicating the lowest risk ** 0 indicating the lowest risk *** V.E. part of Moody's ESG solutions
Sales increase 15%
Operational EBIT increase 29%
Earnings per share EUR 0.47 (Q3/2021: 0.38)
Group sales increased by 15%, or EUR 387 million, to EUR 2,963 (2,577) million. This was the highest third quarter level since 2007. Group sales excluding the Paper division increased by 17%. Higher sales prices in all divisions except Wood products, supported by active mix management, improved topline. Foreign exchange rates improved sales, especially due to a stronger US dollar. This was only partly offset by the negative effect of structural changes, mainly related to paper site closures at Veitsiluoto in Finland and Kvarnsveden in Sweden, as well as the exit from the Russian operations.
Group operational EBIT increased by 29%, or EUR 117 million to EUR 527 (410) million. This was the highest quarterly profitability since the early 2000s and the operational EBIT margin increased to 17.8% (15.9%). The margin improved on the back of higher sales prices in all divisions except Wood Products. Net foreign exchange rates had a positive EUR 61 million impact on operational EBIT. The exit from Russian operations impacted volumes, which reduced operational EBIT by EUR 21 million. Increased variable costs had an impact of EUR 359 million. Fixed costs increased by EUR 21 million, mainly due to a changed annual maintenance schedule, as well as higher inflation. The impact from the closed units was positive EUR 24 million and equity accounted investments and depreciations had a positive impact of EUR 13 million on operational EBIT.
Fair valuations and non-operational items had a positive net impact on the operating profit of EUR 6 (8) million. The impact came mainly from emission rights.
The Group recorded items affecting comparability (IAC) with a negative impact of EUR 22 (-32) million on its operating profit. The related tax impact was positive EUR 1 (0) million. The IACs relate mainly to the disposal of the Russian operation in the Wood Products and Forest divisions.
Net financial expenses of EUR 63 million were EUR 26 million higher than a year ago. Net interest expenses of EUR 27 million decreased by EUR 4 million, mainly because of lower interest-bearing liabilities and higher interest income on deposits and cash. Other net financial expenses of EUR 27 million were EUR 22 million higher than a year ago, mainly due to write-down of loan receivables from disposed Russian entities. The net foreign exchange impact in respect of cash equivalents, interestbearing assets and liabilities and related foreign-currency hedges amounted to a loss of EUR 9 (-2) million.
Earnings per share increased by 24% to EUR 0.47 (0.38), and earnings per share excluding fair valuations increased by 25% to EUR 0.47 (0.37).
The operational return on capital employed (ROCE) was 14.9% (13.3%). Operational ROCE excluding the Forest division was 22.2% (20.0%).
Net debt to operational EBITDA
ROCE excluding Forest
| Sales Q3/2021, EUR million | 2,577 |
|---|---|
| Price and mix | 17 % |
| Currency | 3 % |
| Volume | 2 % |
| Other sales1 | -1 % |
| Total before structural changes | 20 % |
| Structural changes2 | -5 % |
| Total | 15 % |
| Sales Q3/2022, EUR million | 2,963 |
1 Energy, paper for recycling (PfR), by-products etc.
2 Asset closures, major investments, divestments and acquisitions
| Capital employed 30 September 2021, EUR million | 12,426 |
|---|---|
| Capital expenditure excl. investments in biological assets less depreciation |
86 |
| Investments in biological assets less depletion of capitalised silviculture costs |
-10 |
| Impairments and reversal of impairments | -91 |
| Fair valuation of forest assets | 838 |
| Unlisted securities (mainly PVO) | 892 |
| Equity accounted investments | 156 |
| Net liabilities in defined benefit plans | 234 |
| Operative working capital and other interest-free items, net |
312 |
| Emission rights | 50 |
| Net tax liabilities | -368 |
| Translation difference | 77 |
| Other changes | -18 |
| Capital employed 30 September 2022 | 14,584 |
Group sales increased by 18%, or EUR 1,371 million to EUR 8,816 (7,445) million. This was the highest third quarter YTD sales since 2007. Sales excluding the Paper division increased by 22%. Significantly higher sales prices and active mix management was only partly offset by the negative impact from the structural changes, mainly related to the paper site closures at Veitsiluoto in Finland and Kvarnsveden in Sweden as well as exit from Russian operations.
Operational EBIT grew by 39% or EUR 434 million to EUR 1,536 (1,102) million. Significantly higher sales prices in all divisions and positive net foreign exchange rate impact were only partly offset by EUR 973 million higher variable costs and EUR 109 million higher fixed costs. Volume impact was stable as higher board volumes were offset by the exit from Russian operations. The positive impact from the closed units was EUR 64 million.
Sales
EUR 8,816 million (Q1–Q3/2021: 7,445)
Operational EBIT 17.4%
(Q1–Q3/2021: 14.8%)
Group sales decreased by 3%, or EUR 91 million, to EUR 2,963 (3,054) million. Higher sales prices in Packaging Materials, Paper, Biomaterials and Forest improved profitability. This was more than offset by lower deliveries, which were negatively impacted by the annual maintenance schedule, structural changes in Paper and the exit from Russian operations.
Operational EBIT increased by EUR 22 million to EUR 527 (505) million and the margin to 17.8% (16.5%). The positive impact from higher sales prices was offset by higher variable costs. Seasonally lower fixed costs, and positive net foreign exchange rate impact were only partly offset by negative volume impact.
Operational EBIT improved by EUR 9 million due to positive impact from equity accounted investments, closed units and depreciations.
| Operational ROOC 21.3% (Target: >20%) |
|---|
| --------------------------------------------- |
Sales and operational EBIT
| EUR million | Q3/22 | Q3/21 | Change % Q3/22– Q3/21 |
Q2/22 | Change % Q3/22– Q2/22 |
Q1-Q3/22 | Q1-Q3/21 | Change % Q1-Q3/22– Q1-Q3/21 |
2021 |
|---|---|---|---|---|---|---|---|---|---|
| Sales | 1,210 | 988 | 22.5 % | 1,222 | -1.0 % | 3,563 | 2,836 | 25.6 % | 3,898 |
| Operational EBITDA | 258 | 225 | 14.6 % | 265 | -2.6 % | 796 | 636 | 25.0 % | 846 |
| Operational EBITDA margin | 21.3 % | 22.8 % | 21.7 % | 22.3 % | 22.4 % | 21.7 % | |||
| Operational EBIT | 181 | 153 | 18.7 % | 188 | -3.6 % | 565 | 423 | 33.6 % | 556 |
| Operational EBIT margin | 15.0 % | 15.4 % | 15.4 % | 15.9 % | 14.9 % | 14.3 % | |||
| Operational ROOC | 21.3 % | 19.5 % | 22.2 % | 22.9 % | 18.5 % | 18.0 % | |||
| Cash flow from operations | 278 | 236 | 17.9 % | 169 | 64.4 % | 602 | 581 | 3.6 % | 807 |
| Cash flow after investing activities | 212 | 170 | 25.0 % | 103 | 106.9 % | 389 | 331 | 17.5 % | 459 |
| Deliveries, 1,000 tonnes | 1,160 | 1,162 | -0.1 % | 1,193 | -2.8 % | 3,514 | 3,447 | 1.9 % | 4,616 |
| Production, 1,000 tonnes | 1,139 | 1,189 | -4.2 % | 1,204 | -5.4 % | 3,588 | 3,496 | 2.6 % | 4,685 |
| Product | Market | Demand Q3/22 compared with Q3/21 |
Demand Q3/22 compared with Q2/22 |
Price Q3/22 compared with Q3/21 |
Price Q3/22 compared with Q2/22 |
|---|---|---|---|---|---|
| Consumer board (FBB) | Europe | Slightly stronger | Slightly weaker | Significantly higher | Slightly higher |
| Virgin fiber-based containerboard |
Global | Slightly weaker | Slightly weaker | Significantly higher | Stable |
| Recycled fiber based (RCP) containerboard |
Europe | Slightly weaker | Slightly weaker | Significantly higher | Stable |
Source: Fastmarket RISI, Fastmarket FOEX, CEPI, Numera Analytics
| Operational ROOC 1.7% (Target: >15%) |
Sales decrease YoY -1% |
Operational EBIT margin 0.5% (Q3/2021: 4.3%) |
|---|---|---|
| • Sales of EUR 179 million were in line with Q3/2021, despite divestment of the Russian units and lower volumes in Europe, as a consequence of higher prices and record-high sales of Innovation and Service led business. • Operational EBIT decreased by EUR 7 million to EUR 1 million, due to divestment of the Russian units in the second quarter of 2022, as well as higher costs relating to investments in growing the new |
• Operational ROOC was 1.7%, below the long-term target of >15%. The target was changed from 25% to 15% due to the acquisition of De Jong Packaging, changes in the business portfolio and future growth ambitions. |
Sales and operational EBIT 250 200 150 100 50 0 -50 Q1/22 Q2/22 Q3/22 Q4/20 Q4/21 Q1/21 Q2/21 Q3/21 Sales, EUR million Operational EBIT, % |
| Change % Q3/22– |
Change % Q3/22– |
Change % Q1-Q3/22– |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/22 | Q3/21 | Q3/21 | Q2/22 | Q2/22 | Q1-Q3/22 | Q1-Q3/21 | Q1-Q3/21 | 2021 |
| Sales | 179 | 180 | -0.8 % | 189 | -5.5 % | 558 | 509 | 9.5 % | 723 |
| Operational EBITDA | 8 | 15 | -47.6 % | 4 | 87.2 % | 20 | 36 | -43.8 % | 56 |
| Operational EBITDA margin | 4.5% | 8.5 % | 2.3 % | 3.7 % | 7.2 % | 7.8 % | |||
| Operational EBIT | 1 | 8 | -87.6 % | -3 | 136.5 % | -1 | 14 | -106.3 % | 26 |
| Operational EBIT margin | 0.5% | 4.3 % | -1.4 % | -0.2 % | 2.8 % | 3.6 % | |||
| Operational ROOC | 1.7% | 12.6 % | -4.7 % | -0.5 % | 7.8 % | 10.8 % | |||
| Cash flow from operations | -7 | 3 | n/m | -2 | -180.8 % | -15 | 29 | -154.0 % | 56 |
| Cash flow after investing activities | -15 | -5 | -208.9 % | -9 | -70.2 % | -38 | 9 | n/m | 26 |
| Corrugated packaging European deliveries, million m2 |
167 | 252 | -33.8 % | 202 | -17.5 % | 601 | 782 | -23.2 % | 1,046 |
| Corrugated packaging European production, million m2 |
160 | 254 | -36.8 % | 203 | -21.0 % | 599 | 787 | -23.9 % | 1,049 |
businesses.
| Product | Market | Demand Q3/22 compared with Q3/21 |
Demand Q3/22 compared with Q2/22 |
Price Q3/22 compared with Q3/21 |
Price Q3/22 compared with Q2/22 |
|---|---|---|---|---|---|
| Corrugated packaging | Europe | Slightly weaker | Slightly weaker | Significantly higher | Higher |
| Source: Fastmarket RISI |
| Q3/22– | Q3/22– | Q1-Q3/22– | |||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/22 | Q3/21 | Q3/21 | Q2/22 | Q2/22 | Q1-Q3/22 | Q1-Q3/21 | Q1-Q3/21 | 2021 |
| Sales | 567 | 427 | 32.9 % | 522 | 8.6 % | 1,531 | 1,234 | 24.0 % | 1,728 |
| Operational EBITDA | 234 | 147 | 59.1 % | 155 | 50.5 % | 538 | 414 | 30.1 % | 618 |
| Operational EBITDA margin | 41.2 % | 34.4 % | 29.8 % | 35.1 % | 33.5 % | 35.7 % | |||
| Operational EBIT | 197 | 118 | 66.8 % | 123 | 60.4 % | 437 | 328 | 33.3 % | 495 |
| Operational EBIT margin | 34.8 % | 27.7 % | 23.6 % | 28.6 % | 26.6 % | 28.7 % | |||
| Operational ROOC | 28.0 % | 19.6 % | 18.4 % | 21.5 % | 18.8 % | 20.8 % | |||
| Cash flow from operations | 188 | 184 | 2.2 % | 145 | 29.3 % | 469 | 338 | 38.7 % | 490 |
| Cash flow after investing activities |
156 | 157 | -0.2 % | 114 | 36.5 % | 368 | 272 | 35.4 % | 391 |
| Pulp deliveries, 1,000 tonnes |
611 | 598 | 2.1 % | 639 | -4.4 % | 1,861 | 1,898 | -2.0 % | 2,576 |
| Product | Market | Demand Q3/22 compared with Q3/21 |
Demand Q3/22 compared with Q2/22 |
Price Q3/22 compared with Q3/21 |
Price Q3/22 compared with Q2/22 |
|---|---|---|---|---|---|
| Softwood pulp | Europe | Stronger | Stable | Significantly higher | Higher |
| Hardwood pulp | Europe | Stronger | Stable | Significantly higher | Higher |
| Hardwood pulp | China | Stronger | Stable | Significantly higher | Slightly higher |
Source: PPPC, Fastmarket FOEX, Fastmarket RISI, Stora Enso
Operational ROOC 38.4% (Target: >20%)
• The new CLT production site in the Czech Republic, with expected annual sales of EUR 70 million, started up as planned in October
Sales and operational EBIT
| Change % Q3/22– |
Change % Q3/22– |
Change % Q1-Q3/22– |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/22 | Q3/21 | Q3/21 | Q2/22 | Q2/22 | Q1-Q3/22 | Q1-Q3/21 | Q1-Q3/21 | 2021 |
| Sales | 520 | 503 | 3.4 % | 631 | -17.5 % | 1,724 | 1,362 | 26.5 % | 1,872 |
| Operational EBITDA | 82 | 135 | -39.4 % | 146 | -43.8 % | 357 | 310 | 15.3 % | 410 |
| Operational EBITDA margin | 15.7 % | 26.8 % | 23.1 % | 20.7 % | 22.7 % | 21.9 % | |||
| Operational EBIT | 70 | 123 | -43.1 % | 134 | -47.7 % | 322 | 275 | 17.0 % | 364 |
| Operational EBIT margin | 13.5 % | 24.5 % | 21.3 % | 18.7 % | 20.2 % | 19.5 % | |||
| Operational ROOC | 38.4 % | 76.5 % | 74.9 % | 60.4 % | 60.6 % | 59.4 % | |||
| Cash flow from operations | 74 | 97 | -24.2 % | 141 | -47.9 % | 292 | 208 | 40.5 % | 313 |
| Cash flow after investing activities | 57 | 85 | -32.1 % | 124 | -53.5 % | 236 | 169 | 40.0 % | 252 |
| Wood products deliveries, 1,000 m3 | 935 | 1,044 | -10.4 % | 1,123 | -16.7 % | 3,236 | 3,404 | -4.9 % | 4,508 |
| Product | Market | Demand Q3/22 compared with Q3/21 |
Demand Q3/22 compared with Q2/22 |
Price Q3/22 compared with Q3/21 |
Price Q3/22 compared with Q2/22 |
|---|---|---|---|---|---|
| Wood products | Europe | Significantly weaker | Significantly weaker | Significantly lower | Significantly lower |
Source: Stora Enso
Sales increase YoY 6%
EUR 8.1 billion
(Q3/2021: EUR 7.4 billion)
• Operational ROCE, at 3.4% (3.9%), was in line with the 3.5% long-term target, showing a stable performance despite the increasing fair value of Stora Enso's forest assets in the Nordics.
Sales and operational EBIT
| Change % Q3/22– |
Change % Q3/22– |
Change % Q1-Q3/22– |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/22 | Q3/21 | Q3/21 | Q2/22 | Q2/22 | Q1-Q3/22 | Q1-Q3/21 | Q1-Q3/21 | 2021 |
| Sales | 581 | 546 | 6.5 % | 649 | -10.6 % | 1,856 | 1,714 | 8.3 % 2,311 | |
| Operational EBITDA | 60 | 63 | -5.2 % | 59 | 1.7 % | 177 | 258 | -31.3 % | 318 |
| Operational EBITDA margin | 10.3 % | 11.6 % | 9.1 % | 9.5 % | 15.0 % | 13.7 % | |||
| Operational EBIT | 47 | 49 | -4.9 % | 47 | 0.4 % | 142 | 219 | -35.0 % | 267 |
| Operational EBIT margin | 8.1 % | 9.0 % | 7.2 % | 7.7 % | 12.8 % | 11.5 % | |||
| Operational ROCE | 3.4 % | 3.9 % | 3.4 % | 3.5 % | 5.8 % | 5.1 % | |||
| Cash flow from operations | 59 | 12 | n/m | 23 | 161.5 % | 126 | 85 | 49.0 % | 158 |
| Cash flow after investing activities | 48 | 4 | n/m | 11 | n/m | 93 | 51 | 83.0 % | 112 |
| Wood deliveries, 1,000 m3 | 8,366 | 9,454 | -11.5 % | 10,491 | -20.3 % | 29,081 | 29,940 | -2.9 % | 39,652 |
| Operational fair value change of biological assets |
23 | 22 | 5.6 % | 20 | 14.3 % | 65 | 62 | 4.6 % | 82 |
• Paper business turnaround after restructuring • Tight supply-demand balance continued with good orderbooks • Sales from the retained businesses rose by 52% YoY and cash flow turned positive Cash flow after investing activities to sales ratio 6.0% (Target: >7%) Sales increase YoY (retained businesses*) 52% Operational EBITDA margin 13.4% (Q3/2021: -3.0%) • Sales increased by 7% or EUR 30 million, to EUR 471 million, supported by higher sales prices from retained business after the closures of the Veitsiluoto site in Finland and the Kvarnsveden site in Sweden during Q3/2021. • Operational EBIT increased by EUR 80 million to EUR 49 million, resulting in an EBIT margin of 10.5% (-7.0%). Higher paper prices fully mitigated higher variable costs. Structural changes, as mentioned • The cash flow after investing activities to sales ratio improved to 6.0% (-7.7%). This was due to improved profitability and working capital efficiency. The cash flow to sales ratio for retained business improved to 14.3% (-6.9%). Sales and operational EBITDA Sales, EUR million Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 -400 -200 0 200 400 600 -12% -6% 0% 6% 12% 18%
* Retained businesses include the sites of Langerbrugge, Anjala, Hylte, and the divestments of Maxau and Nymölla (pending regulatory approval).
| Change % | Change % | Change % Q1- |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/22 | Q3/21 | Q3/22– Q3/21 |
Q2/22 | Q3/22– Q2/22 |
Q1-Q3/22 | Q1-Q3/21 | Q3/22– Q1-Q3/21 |
2021 |
| Sales | 471 | 441 | 6.9 % | 462 | 2.0 % | 1,349 | 1,314 | 2.6 % 1,703 | |
| Operational EBITDA | 63 | -13 | n/m | 67 | -5.7 % | 183 | -54 | n/m | -48 |
| Operational EBITDA margin | 13.4 % | -3.0% | 14.5 % | 13.6 % | -4.1% | -2.8% | |||
| Operational EBIT | 49 | -31 | 258.9 % | 51 | -2.6 % | 136 | -114 | 219.1 % | -124 |
| Operational EBIT margin | 10.5 % | -7.0% | 10.9 % | 10.1 % | -8.7% | -7.3% | |||
| Operational ROOC | 66.6 % | -74.2% | 84.3 % | 84.1 % | -47.7% | -40.3% | |||
| Cash flow from operations | 44 | -20 | n/m | 20 | 116.2 % | 66 | -28 | n/m | -25 |
| Cash flow after investing activities | 28 | -34 | 182.7 % | 4 | n/m | 19 | -66 | 129.3 % | -77 |
| Cash flow after investing activities to sales, % | 6.0 % | -7.7% | 0.8% | 1.4 % | -5.0% | -4.5% | |||
| Paper deliveries, 1,000 tonnes | 476 | 747 | -36.3 % | 517 | -7.9 % | 1,528 | 2,256 | -32.3 % | 2,872 |
| Paper production, 1,000 tonnes | 461 | 762 | -39.5 % | 526 | -12.3 % | 1,519 | 2,247 | -32.4 % | 2,776 |
above, lowered fixed costs and
volumes.
| Product | Market | Demand Q3/22 compared with Q3/21 |
Demand Q3/22 compared with Q2/22 |
Price Q3/22 compared with Q3/21 |
Price Q3/22 compared with Q2/22 |
|---|---|---|---|---|---|
| Paper | Europe | Significantly weaker | Slightly weaker | Significantly higher | Significantly higher |
Source: PPPC
Operational EBITDA, %
The segment Other includes Stora Enso's shareholding in the energy company Pohjolan Voima (PVO), and the Group's shared services and administration.
| EUR million | Q3/22 | Q3/21 | Change % Q3/22– Q3/21 |
Q2/22 | Change % Q3/22– Q2/22 |
Q1-Q3/22 | Q1-Q3/21 | Change % Q1-Q3/22– Q1-Q3/21 |
2021 |
|---|---|---|---|---|---|---|---|---|---|
| Sales | 282 | 302 | -6.7 % | 290 | -2.7 % | 808 | 807 | 0.2 % 1,092 | |
| Operational EBITDA | -10 | 5 | -288.4 % | -18 | 46.8 % | -37 | -4 | n/m | -9 |
| Operational EBITDA margin | -3.4 % | 1.7 % | -6.3 % | -4.5 % | -0.5 % | -0.8 % | |||
| Operational EBIT | -12 | -3 | -289.9 % | -19 | 36.0 % | -46 | -30 | -52.5 % | -48 |
| Operational EBIT margin | -4.4 % | -1.1 % | -6.7 % | -5.7 % | -3.7 % | -4.4 % | |||
| Cash flow from operations | 3 | -27 | 111.6 % | -92 | 103.4 % | -96 | -80 | -19.8 % | -48 |
| Cash flow after investing activities | 1 | -28 | 103.7 % | -99 | 101.1 % | -109 | -89 | -21.9 % | -62 |
• Sales decreased to EUR 282 million and operational EBIT decreased by EUR 9 million to EUR -12 million.
• A higher result from energy sales, driven by increased electricity prices, was more than offset by higher Group services costs.
• The divisions are charged for electricity at market prices. Through its 15.6% shareholding in the Finnish energy company Pohjolan Voima (PVO), Stora Enso is entitled to receive, at cost, 8.9% of the electricity produced by the Olkiluoto nuclear reactors, and 20.6% of the electricity from the hydropower plants.
| EUR million | 30 Sep 2022 | 30 Jun 2022 | 31 Dec 2021 | 30 Sep 2021 |
|---|---|---|---|---|
| Operative fixed assets1 | 14,608 | 13,891 | 13,696 | 12,926 |
| Equity accounted investments | 624 | 608 | 580 | 470 |
| Operative working capital, net | 968 | 936 | 448 | 656 |
| Non-current interest-free items, net | -167 | -243 | -417 | -440 |
| Operating Capital Total | 16,033 | 15,192 | 14,307 | 13,612 |
| Net tax liabilities | -1,450 | -1,433 | -1,331 | -1,186 |
| Capital Employed2 | 14,584 | 13,759 | 12,976 | 12,426 |
| Equity attributable to owners of the Parent | 12,489 | 11,350 | 10,683 | 9,769 |
| Non-controlling interests | -30 | -25 | -16 | -15 |
| Net interest-bearing liabilities | 2,125 | 2,434 | 2,309 | 2,672 |
| Financing Total2 | 14,584 | 13,759 | 12,976 | 12,426 |
1 Operative fixed assets include goodwill, other intangible assets, property, plant and equipment, right-of-use assets, forest assets, emission rights, and unlisted securities.
2 Including assets held for sale and related liabilities.
Cash and cash equivalents net of overdrafts increased by EUR 291 million to EUR 1,620 million.
Net debt decreased by EUR 309 million to EUR 2,125 (2,434) million during the third quarter. The ratio of net debt to the last 12 months' operational EBITDA was at slightly lower level at 0.8 (1.0). The net debt/equity ratio on 30 September 2022 decreased to 0.17 (0.21). The average interest expense rate on borrowings was at reporting date 3.3% (3.3%).
Stora Enso had EUR 900 million committed fully undrawn credit facilities as per 30 September 2022.
The value of total forest assets, including leased land and Stora Enso's share of Tornator's forest assets, decreased by EUR 25 million to EUR 8,135 (8,161) million. The decrease is mainly a result of negative foreign exchange impact. The fair value of biological assets, including Stora Enso's share of Tornator, decreased by EUR 3 million to EUR 5,296 (5,299) million. The value of forest land, including leased land and Stora Enso's share of Tornator, decreased by EUR 22 million to EUR 2,839 (2,861) million.
| Rating agency | Long/short-term rating | Valid from |
|---|---|---|
| Fitch Ratings | BBB- (stable) | 8 August 2018 |
| Moody's | Baa3 (stable) / P-3 | 1 November 2018 |
| EUR million | Q3/22 | Q3/21 | Change % Q3/22– Q3/21 |
Q2/22 | Change % Q3/22– Q2/22 |
Q1-Q3/22 | Q1-Q3/21 | Change % Q1-Q3/22– Q1-Q3/21 |
2021 |
|---|---|---|---|---|---|---|---|---|---|
| Operational EBITDA | 689 | 570 | 20.8 % | 663 | 3.9 % | 2,014 | 1,582 | 27.3 % | 2,184 |
| IAC on operational EBITDA | -20 | -32 | 38.2 % | -60 | 66.8 % | -141 | -199 | 29.3 % | -213 |
| Other adjustments | -25 | -26 | 4.9 % | 27 | -192.2 % | 15 | -134 | 111.1 % | -194 |
| Change in working capital | -5 | -27 | 79.5 % | -227 | 97.6 % | -443 | -115 | -286.2 % | -25 |
| Cash flow from operations | 639 | 485 | 31.6 % | 404 | 58.2 % | 1,445 | 1,133 | 27.5 % | 1,752 |
| Cash spent on fixed and biological assets | -150 | -138 | -8.9 % | -153 | 2.2 % | -480 | -452 | -6.2 % | -645 |
| Acquisitions of equity accounted investments |
0 | 0 | -18.2 % | -3 | 100.6 % | -5 | -4 | -30.8 % | -6 |
| Cash flow after investing activities | 489 | 347 | 40.6 % | 247 | 97.8 % | 960 | 677 | 41.6 % | 1,101 |
Strong cash flow after investing activities at EUR 489 (247) million. Working capital increased by EUR 5 million, mainly due to increased inventories and trade receivables, and was offset by increased payables. Cash spent on fixed and biological assets was EUR 150 million. Payments related to the previously announced provisions amounted to EUR 34 million. EUR million
Additions to fixed and biological assets totalled EUR 164 (124) million, of which EUR 145 (111) million were fixed assets and EUR 18 (13) million biological assets.
Depreciations and impairment charges excluding IACs totalled EUR 131 (136) million. Additions in fixed and biological assets had a cash outflow impact of EUR 150 (138) million.
| EUR million | Q3/22 | Q1-Q3/22 | Investment to be finalised |
|
|---|---|---|---|---|
| Packaging Materials | 80 | 188 | Wood handling upgrade at Imatra, Finland Board machine 8 capacity increase at Skoghall in Sweden |
Q3/2022 2024 |
| Packaging Solutions | 8 | 18 | n/a | |
| Biomaterials | 34 | 94 | Skutskär bleach plant upgrade in Sweden Lignin related investments at Sunila, Finland |
2024 Q1/2023 |
| Wood Products | 23 | 55 | Cross laminated timber (CLT) investment at Ždírec, Czech Republic |
Q3/2022 |
| Forest | 4 | 16 | n/a | |
| Paper | 12 | 31 | n/a | |
| Total | 164 | 410 |
| EUR million | Forecast 2022 |
|---|---|
| Capital expenditure | 730–780 |
| Depreciation and depletion of capitalised silviculture costs | 610–650 |
The capital expenditure forecast for 2022 is increased from EUR 700–750 million to EUR 730–780 million.
Stora Enso's capital expenditure forecast includes approximately EUR 70 million for the Group's forest assets. The depletion of capitalised silviculture costs is forecast to be EUR 65–80 million.
Risk is characterised by both threats and opportunities, which may have an impact on future performance and the financial results of Stora Enso, as well as on its ability to meet certain social and environmental objectives.
The rapidly changing macroeconomic and geopolitical disruption caused by the war in Ukraine is increasing complexity. The sanctions on Russia, retaliatory measures as well as conflict-related risks to people, operations, trade credit, cyber security, supply, and demand, could all have an adverse impact on the Group.
There is a risk of continuously higher cost inflation and increased price volatility for raw materials such as wood, components and energy in Europe, as well as continued logistical disruptions across the markets. The logistical infrastructure challenges to transporting wood in Finland, could cause disruptions such as delays and/or lack of wood supply to the Group's production sites. The war in Ukraine has also increased the risk of a global economic downturn and recession, as well as sudden interest rate increases and currency fluctuations, which could all affect the Group's profits, cash flow and financial position negatively.
Other risks and uncertainties include, but are not limited to; general industry conditions, unanticipated expenditures related to the cost of compliance with existing and new environmental and other governmental regulations, and related to actual or potential litigation; material process disruption at one of Stora Enso's manufacturing facilities with operational or environmental impacts; risks inherent in conducting business through joint ventures; and other factors that can be found in Stora Enso's press releases and disclosures.
Stora Enso has been granted various investment subsidies and has given certain investment commitments in several countries e.g. Finland, China and Sweden. If commitments to planning conditions are not met, local officials may pursue administrative measures to reclaim some of the formerly granted investment subsidies or to impose penalties on Stora Enso, and the outcome of such a process could result in adverse financial impact on Stora Enso.
A more detailed description of risks is included in Stora Enso's Annual Report 2021 storaenso.com/annualreport.
Energy sensitivity analysis: the direct effect of a 10% change in electricity and fossil fuel market prices would have an impact of approximately EUR 64 million on operational EBIT for the next 12 months.
Wood sensitivity analysis: the direct effect of a 10% change in wood prices would have an impact of approximately EUR 236 million on operational EBIT for the next 12 months.
Pulp sensitivity analysis: the direct effect of a 10% change in pulp market prices would have an impact of approximately EUR 165 million on operational EBIT for the next 12 months.
Chemical and filler sensitivity analysis: the direct effect of a 10% change in chemical and filler prices would have an impact of approximately EUR 61 million on operational EBIT for the next 12 months.
Foreign exchange rates transaction risk sensitivity analysis for the next twelve months: the direct effect on operational EBIT of a 10% strengthening in the value of the US dollar, Swedish krona and British pound would be approximately positive EUR 136 million, negative EUR 12 million and positive EUR 25 million annual impact, respectively. Weakening of the currencies would have the opposite impact. These numbers are net of hedges and assuming no changes occur other than a single currency exchange rate movement in an exposure currency.
The Group's consolidated income statement on operational EBIT level is exposed to a foreign-currency translation risk worth approximately EUR 111 million expense exposure in Brazilian real (BRL) and approximately EUR 83 million income exposure in Chinese Renminbi (CNY). These exposures arise from the foreign subsidiaries and jointoperations located in Brazil and China, respectively. For these exposures a 10% strengthening in the value of a foreign currency would have a negative EUR 11 million and a positive EUR 8 million impact on operational EBIT, respectively.
Stora Enso has undertaken significant restructuring actions in recent years which have included the divestment of companies, sale of assets and mill closures. These transactions include a risk of possible environmental or other obligations the existence of which would be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A provision has been recognised for obligations for which the related amount can be estimated reliably and for which the related future cost is considered to be at least probable.
Stora Enso is party to legal proceedings that arise in the ordinary course of business and which primarily involve claims arising out of commercial law. The management does not consider that liabilities related to such proceedings before insurance recoveries, if any, are likely to be material to the Group's financial condition or results of operations.
As announced in Stora Enso's stock exchange release on 12 October 2021, the European Commission has conducted unannounced inspections in locations at several member states at the premises of companies active in the wood pulp sector. Stora Enso was included in the European Commission's inspection at its headquarters in Helsinki, Finland.
Stora Enso is cooperating fully with the authorities. As stated by the Commission, the fact that they carry out such
Stora Enso's Shareholders' Nomination Board was established in September. The Shareholders' Nomination Board consists of the following members: Antti Mäkinen (Chair of Stora Enso's Board of Directors), Håkan Bushke (Vice Chair of Stora Enso's Board of Directors),
Stora Enso's Annual General Meeting (AGM) was held on 15 March 2022 at the Company's Head Office in Helsinki, Finland. In order to prevent the spread of the Covid-19 pandemic, a shareholder or his/her proxy representative could not be present at the venue of the meeting.
The AGM approved the proposal by the Board of Directors that the Company distribute a dividend of EUR 0.55 per share for the year 2021. The dividend was paid on 24 March 2022.
inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself.
Stora Enso is under strict confidentiality rules regarding the details of the ongoing European Commission investigation and cannot pre-empt or speculate regarding the next steps or eventual outcome of the investigation.
On 11 July 2008, Stora Enso announced that a federal judge in Brazil had issued a decision claiming that the permits issued by the State of Bahia for the operations of Stora Enso's joint operations company Veracel were not valid. The judge also ordered Veracel to take certain actions, including reforestation with native trees on part of Veracel's plantations and a possible fine of, at the time of the decision, BRL 20 (EUR 4) million. Veracel disputes the decision and has filed an appeal against it. Veracel operates in full compliance with all Brazilian laws and has obtained all the necessary environmental and operating licences for its industrial and forestry activities from the relevant authorities. In November 2008, a Federal Court suspended the effects of the decision. No provisions have been recorded in Veracel's or Stora Enso's accounts for the reforestation or the possible fine.
Harri Sailas (Chair of the Board of Directors of Solidium Oy), and Marcus Wallenberg (Chair of the Board of Directors of FAM AB). The Shareholders' Nomination Board elected Marcus Wallenberg as its Chair.
Kari Jordan was elected as a new member of the Board of Directors. Mikko Helander had announced that he was not available for re-election to the Board of Directors.
More information about the AGM in 2022 is available in the release Stora Enso's Annual General Meeting and decisions by the Board of Directors.
This report has been prepare in English, Finnish, and Swedish. If there are any variations in the content between the versions, the English version shall govern. This report is unaudited.
Helsinki, 21 October 2022 Stora Enso Oyj Board of Directors
This unaudited interim financial report has been prepared in accordance with the accounting policies set out in International Accounting Standard 34 on Interim Financial Reporting and in the Group's Financial Report for 2021 with the exception of new and amended standards applied to the annual periods beginning on 1 January 2022 and changes in accounting principles described below.
All figures in this Interim Report have been rounded to the nearest million, unless otherwise stated. Therefore, percentages and figures in this report may not add up precisely to the totals presented and may vary from previously published financial information.
Stora Enso had three corrugated packaging plants, two wood products sawmills and forest operations in Russia, employing around 1,100 people. In 2021, sales in Russia represented about 3% of total Group revenues. As announced in March 2022, all import and export activities from and to Russia were halted, and the sawmills and wood supply in Russia stopped. As a result of the worsened business outlook, in Q1/2022 the Group recognised fixed asset impairments and write-downs in inventories and trade receivables of EUR 112 million related to its Russian operations and customers.
During Q2/2022 Stora Enso disposed of its corrugated packaging plants in Russia to local management for an undisclosed sale consideration, receivable in instalments at future dates.
The loss on disposal was approximately EUR 54 million, consisting mainly of cumulative translation adjustments (CTA) being released from equity to income statement at closing.
During Q3/2022 Stora Enso disposed of its two wood products sawmills and most of the forest operations in Russia to local management for an undisclosed sale consideration, receivable in instalments. Minor formalities remain to complete the transaction for certain Russian legal entities.
The loss on disposal recorded in Q3/2022 was EUR 27 million, including cumulative translation adjustments (CTA) being released from equity to income statement at closing. In addition there was a write-down of loan receivables of EUR 23 million from disposed Russian entities.
The following table is reflecting the net assets of companies sold, including disposal consideration.
| EUR million | Q1-Q3/22 | Q1-Q3/21 |
|---|---|---|
| Net Assets Sold | ||
| Cash and cash equivalents | 102 | 12 |
| Property, plant and equipment and Intangible assets | 10 | 32 |
| Working capital | 0 | 10 |
| Tax assets and liabilities | 8 | 9 |
| Interest-bearing assets and liabilities | -26 | -1 |
| Net assets in disposed companies | 94 | 62 |
| Total disposal consideration | 63 | 67 |
As announced in September 2022, Stora Enso has signed agreements to dispose of the Maxau paper production site in Germany and the Nymölla paper site in Sweden. Both units are 100% owned by and belong to the Paper division.
Assets are classified as held for sale, if their carrying amounts will be recovered mainly through a sale transaction rather than through continuing use. The assets must be available for immediate sale in their present condition subject only to terms that are usual and customary for sale of such assets. Also, the sale must be highly probable and expected to be completed within one year from the date of classification.
These assets and related liabilities are presented separately in the consolidated statement of financial position and measured at the lower of the carrying amount and fair value less costs to sell. Comparative information is not restated. Assets classified as held for sale are not depreciated.
Accordingly, assets held for sale at the end of Q3/2022 include the Maxau and Nymölla sites. Assets held for sale include mainly fixed assets, inventories and operative receivables, whereas related liabilities consist mainly of current and non-current operative liabilities.
The Group's key non-IFRS performance metric is operational EBIT, which is used to evaluate the performance of its operating segments and to steer allocation of resources to them.
Operational EBIT comprises the operating profit excluding items affecting comparability (IAC) and fair valuations from the segments and Stora Enso's share of the operating profit of equity accounted investments (EAI), also excluding items affecting comparability and fair valuations.
Items affecting comparability are exceptional transactions that are not related to recurring business operations. The most common IAC are capital gains and losses, impairments or impairment reversals, disposal gains and losses relating to Group companies, provisions for planned restructurings, environmental provisions, changes in depreciation due to restructuring and penalties. Items affecting comparability are normally disclosed individually if they exceed one cent per share.
Fair valuations and non-operational items include CO2 emission rights, non-operational fair valuation changes of biological assets, adjustments for differences between fair value and acquisition cost of forest assets upon disposal and the Group's share of income tax and net financial items of EAI. Non-operational fair value changes of biological assets reflect changes made to valuation assumptions and parameters. Operational fair value changes of biological assets contain all other fair value changes, mainly due to inflation and differences in actual harvesting levels compared to the harvesting plan. The adjustments for differences between fair value and acquisition cost of forest assets upon disposal are a result of the fact that the cumulative non-operational fair valuation changes of disposed forest assets were included in previous periods in IFRS operating profit (biological assets) and other comprehensive income (forest land) and are included in operational EBIT only at the disposal date.
Cash flow after investing activities (non-IFRS) is calculated as follows: cash flow from operations (non-IFRS) excluding cash spent on intangible assets, property, plant and equipment, and biological assets and acquisitions of EAIs.
Capital expenditure on fixed assets includes investments in and acquisitions of tangible and intangible assets as well as internally generated assets and capitalised borrowing costs, net of any related subsidies. Capital expenditure on leased assets includes new capitalised leasing contracts. Capital expenditure on biological assets consists of acquisitions of biological assets and capitalisation of costs directly linked to growing trees in plantation forests. The cash flow impact of capital expenditure is presented in cash flow from investing activities, excluding lease capex, where the cash flow impact is based on paid lease liabilities and presented in cash flow from financing and operating activities.
The full list of the non-IFRS measures is presented at the end of this report.
• Amended standards and interpretations did not have material effect on the Group.
• No future standard changes endorsed by the EU which would have material effect on the Group.
| EUR million | Q3/22 | Q3/21 | Q2/22 | Q1-Q3/22 | Q1-Q3/21 | 2021 |
|---|---|---|---|---|---|---|
| Sales | 2,963 | 2,577 | 3,054 | 8,816 | 7,445 | 10,164 |
| Other operating income | 68 | 77 | 80 | 237 | 201 | 345 |
| Change in inventories of finished goods and WIP | 76 | 89 | 92 | 257 | 132 | 122 |
| Materials and services | -1,709 | -1,565 | -1,831 | -5,223 | -4,369 | -5,936 |
| Freight and sales commissions | -317 | -242 | -298 | -860 | -699 | -939 |
| Personnel expenses | -307 | -307 | -355 | -986 | -1,019 | -1,351 |
| Other operating expenses | -150 | -121 | -174 | -459 | -441 | -610 |
| Share of results of equity accounted investments | 17 | 10 | 28 | 65 | 28 | 143 |
| Change in net value of biological assets | 2 | 6 | -64 | -74 | -10 | 328 |
| Depreciation, amortisation and impairment charges | -134 | -136 | -132 | -470 | -540 | -697 |
| Operating profit | 511 | 386 | 399 | 1,304 | 729 | 1,568 |
| Net financial items | -63 | -37 | -29 | -111 | -103 | -149 |
| Profit before tax | 448 | 349 | 370 | 1,192 | 626 | 1,419 |
| Income tax | -81 | -50 | -71 | -240 | 26 | -151 |
| Net profit for the period | 367 | 299 | 299 | 953 | 652 | 1,268 |
| Attributable to | ||||||
| Owners of the Parent | 372 | 301 | 303 | 964 | 650 | 1,266 |
| Non-controlling interests | -5 | -2 | -4 | -11 | 1 | 3 |
| Net profit for the period | 367 | 299 | 299 | 953 | 652 | 1,268 |
| Earnings per share | ||||||
| Basic earnings per share, EUR | 0.47 | 0.38 | 0.38 | 1.22 | 0.83 | 1.61 |
| Diluted earnings per share, EUR | 0.47 | 0.38 | 0.38 | 1.22 | 0.83 | 1.60 |
| EUR million | Q3/22 | Q3/21 | Q2/22 | Q1-Q3/22 | Q1-Q3/21 | 2021 |
|---|---|---|---|---|---|---|
| Net profit for the period | 367 | 299 | 299 | 953 | 652 | 1,268 |
| Other comprehensive income (OCI) | ||||||
| Items that will not be reclassified to profit and loss | ||||||
| Equity instruments at fair value through OCI | 725 | 243 | -98 | 694 | 305 | 501 |
| Actuarial gains and losses on defined benefit plans | 64 | 27 | 107 | 249 | 142 | 126 |
| Revaluation of forest land | -6 | -1 | 414 | 408 | 139 | 225 |
| Share of OCI of Equity accounted investments (EAI) | 0 | -1 | 0 | 0 | -2 | 16 |
| Income tax relating to items that will not be reclassified | -11 | -5 | -98 | -119 | -52 | -68 |
| 772 | 263 | 325 | 1,232 | 532 | 800 | |
| Items that may be reclassified subsequently to profit and loss | ||||||
| Cumulative translation adjustment (CTA) | 26 | -7 | 15 | 66 | 34 | 56 |
| Net investment hedges and loans | -17 | 2 | -14 | -30 | 6 | 14 |
| Cash flow hedges and cost of hedging | -23 | 1 | -12 | -3 | -33 | -35 |
| Share of OCI of Non-controlling Interests (NCI) | 0 | 0 | -1 | -3 | 0 | -3 |
| Income tax relating to items that may be reclassified | 8 | 0 | 5 | 8 | 9 | 9 |
| -7 | -4 | -7 | 39 | 15 | 42 | |
| Total comprehensive income | 1,132 | 558 | 617 | 2,224 | 1,199 | 2,110 |
| Attributable to | ||||||
| Owners of the Parent | 1,138 | 560 | 623 | 2,237 | 1,198 | 2,110 |
| Non-controlling interests | -5 | -2 | -5 | -14 | 1 | 0 |
| Total comprehensive income | 1,132 | 558 | 617 | 2,224 | 1,199 | 2,110 |
CTA = Cumulative translation adjustment
OCI = Other comprehensive income
EAI = Equity accounted investments
| EUR million | 30 Sep 2022 | 31 Dec 2021 | 30 Sep 2021 |
|---|---|---|---|
| Assets | |||
| Goodwill O |
252 | 282 | 280 |
| Other intangible assets O |
130 | 124 | 130 |
| Property, plant and equipment O |
4,835 | 5,060 | 4,894 |
| Right-of-use assets O |
434 | 441 | 441 |
| 5,651 | 5,907 | 5,745 | |
| Forest assets O |
6,889 | 6,747 | 6,335 |
| Biological assets O |
4,369 | 4,547 | 4,210 |
| Forest land O |
2,520 | 2,201 | 2,126 |
| Emission rights O |
186 | 137 | 136 |
| Equity accounted investments O |
624 | 580 | 470 |
| Listed securities I |
10 | 13 | 13 |
| Unlisted securities O |
1,601 | 905 | 710 |
| Non-current interest-bearing receivables I |
184 | 51 | 102 |
| Deferred tax assets T |
109 | 143 | 161 |
| Other non-current assets O |
120 | 34 | 29 |
| Non-current assets | 15,376 | 14,517 | 13,700 |
| Inventories O |
1,766 | 1,478 | 1,468 |
| Tax receivables T |
21 | 17 | 15 |
| Operative receivables O |
1,572 | 1,449 | 1,442 |
| Interest-bearing receivables I |
99 | 84 | 26 |
| Cash and cash equivalents I |
1,624 | 1,481 | 1,272 |
| Current assets | 5,083 | 4,509 | 4,222 |
| Assets held for sale | 422 | 0 | 0 |
| Total assets | 20,880 | 19,026 | 17,922 |
| Equity and liabilities | |||
| Owners of the Parent | 12,489 | 10,683 | 9,769 |
| Non-controlling Interests | -30 | -16 | -15 |
| Total equity | 12,459 | 10,666 | 9,754 |
| Post-employment benefit obligations O |
158 | 347 | 339 |
| Provisions O |
88 | 91 | 119 |
| Deferred tax liabilities T |
1,457 | 1,430 | 1,331 |
| Non-current interest-bearing liabilities I |
3,010 | 3,313 | 3,465 |
| Non-current operative liabilities O |
10 | 13 | 12 |
| Non-current liabilities | 4,723 | 5,195 | 5,265 |
| Current portion of non-current debt I |
442 | 180 | 180 |
| Interest-bearing liabilities I |
587 | 444 | 422 |
| Bank overdrafts I |
4 | 1 | 16 |
| Provisions O |
63 | 139 | 124 |
| Operative liabilities O |
2,318 | 2,339 | 2,129 |
| Tax liabilities T |
98 | 61 | 31 |
| Current liabilities | 3,512 | 3,165 | 2,903 |
| Liabilities related to assets held for sale | 186 | 0 | 0 |
| Total liabilities | 8,422 | 8,360 | 8,168 |
| Total equity and liabilities | 20,880 | 19,026 | 17,922 |
Items designated with "O" comprise Operating Capital
Items designated with "I" comprise Net Interest-bearing Liabilities
Items designated with "T" comprise Net Tax Liabilities
| EUR million | Q1-Q3/22 | Q1-Q3/21 |
|---|---|---|
| Cash flow from operating activities | ||
| Operating profit | 1,304 | 729 |
| Adjustments for non-cash items | 584 | 519 |
| Change in net working capital | -443 | -115 |
| Cash flow from operations | 1,445 | 1,133 |
| Net financial items paid | -82 | -93 |
| Income taxes paid, net | -149 | -100 |
| Net cash provided by operating activities | 1,214 | 940 |
| Cash flow from investing activities | ||
| Acquisitions of equity accounted investments | -5 | -4 |
| Acquisitions of unlisted securities | 0 | -1 |
| Cash flow on disposal of subsidiary shares and business operations, net of disposed cash | -72 | 55 |
| Cash flow on disposal of forest and intangible assets and property, plant and equipment | 12 | 100 |
| Capital expenditure | -480 | -452 |
| Proceeds from/payment of non-current receivables, net | -10 | 0 |
| Net cash used in investing activities | -556 | -301 |
| Cash flow from financing activities | ||
| Proceeds from issue of new long-term debt | 259 | 15 |
| Repayment of long-term debt and lease liabilities | -353 | -752 |
| Change in short-term borrowings | -14 | -65 |
| Dividends paid | -434 | -237 |
| Purchase of own shares1 | -1 | -3 |
| Net cash provided by financing activities | -543 | -1,041 |
| Net change in cash and cash equivalents | 115 | -402 |
| Translation adjustment | 25 | 3 |
| Net cash and cash equivalents at the beginning of period | 1,480 | 1,655 |
| Net cash and cash equivalents at period end | 1,620 | 1,256 |
| Cash and cash equivalents at period end | 1,624 | 1,272 |
| Bank overdrafts at period end | -4 | -16 |
| Net cash and cash equivalents at period end | 1,620 | 1,256 |
1 Own shares purchased for the Group's share award programme. The Group did not hold any of its own shares on 30 September 2022.
| Fair Value Reserve | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR million | Share Capital |
Share Premium and Reserve fund |
Invested Non Restricted Equity Fund |
Treasury Shares |
Equity instruments through OCI |
Cash Flow Hedges |
Revaluation reserve |
OCI of Equity Accounted Investments |
CTA and Net Investment Hedges and loans |
Retained Earnings |
Attributable to Owners of the Parent |
Non controlling Interests |
Total |
| Balance at 1 January 2021 | 1,342 | 77 | 633 | — | 277 | 23 | 1,195 | 12 | -267 | 5,518 | 8,809 | -16 | 8,793 |
| Net profit for the period | — | — | — | — | — | — | — | — | — | 650 | 650 | 1 | 652 |
| OCI before tax | — | — | — | — | 305 | -33 | 139 | -2 | 40 | 142 | 591 | — | 590 |
| Income tax relating to OCI | — | — | — | — | 1 | 7 | -29 | 2 | -24 | -43 | -43 | ||
| Total Comprehensive Income | — | — | — | — | 306 | -26 | 110 | -2 | 41 | 768 | 1,198 | 1 | 1,199 |
| Dividend | — | — | — | — | — | — | — | — | — | -237 | -237 | — | -237 |
| Acquisitions and disposals | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Purchase of treasury shares | — | — | — | -3 | — | — | — | — | — | — | -3 | — | -3 |
| Share-based payments | — | — | — | 3 | — | — | — | — | — | -1 | 2 | — | 2 |
| Balance at 30 September 2021 | 1,342 | 77 | 633 | — | 583 | -3 | 1,305 | 11 | -226 | 6,048 | 9,769 | -15 | 9,754 |
| Net profit for the period | — | — | — | — | — | — | — | — | — | 615 | 615 | 1 | 616 |
| OCI before tax | — | — | — | — | 195 | -1 | 86 | 18 | 30 | -16 | 313 | -3 | 310 |
| Income tax relating to OCI | — | — | — | — | — | — | -18 | — | — | 2 | -15 | — | -15 |
| Total Comprehensive Income | — | — | — | — | 195 | -1 | 69 | 18 | 31 | 601 | 912 | -1 | 911 |
| Dividend | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Acquisitions and disposals | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Purchase of treasury shares | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Share-based payments | — | — | — | — | — | — | — | — | — | 1 | 1 | — | 1 |
| Balance at 31 December 2021 | 1,342 | 77 | 633 | — | 778 | -4 | 1,373 | 29 | -195 | 6,650 | 10,683 | -16 | 10,666 |
| Net profit for the period | — | — | — | — | — | — | — | — | — | 964 | 964 | -11 | 953 |
| OCI before tax | — | — | — | — | 694 | -3 | 408 | — | 36 | 249 | 1,384 | -3 | 1,381 |
| Income tax relating to OCI | — | — | — | — | 1 | 1 | -84 | — | 7 | -35 | -110 | -110 | |
| Total Comprehensive Income | — | — | — | — | 695 | -1 | 324 | — | 43 | 1,177 | 2,237 | -14 | 2,224 |
| Dividend | — | — | — | — | — | — | — | — | — | -434 | -434 | — | -434 |
| Acquisitions and disposals | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Purchase of treasury shares | — | — | — | -1 | — | — | — | — | — | — | -1 | — | -1 |
| Share-based payments | — | — | — | 1 | — | — | — | — | — | 3 | 4 | — | 4 |
| Balance at 30 September 2022 | 1,342 | 77 | 633 | — | 1,473 | -6 | 1,697 | 28 | -152 | 7,396 | 12,489 | -30 | 12,459 |
CTA = Cumulative Translation Adjustment OCI = Other Comprehensive Income NCI = Non-controlling Interests
| EUR million | Q1-Q3/22 | Q1-Q3/21 | 2021 |
|---|---|---|---|
| Carrying value at 1 January | 12,654 | 12,130 | 12,130 |
| Additions in tangible and intangible assets | 334 | 315 | 576 |
| Additions in right-of-use assets | 22 | 21 | 33 |
| Additions in biological assets | 54 | 42 | 58 |
| Depletion of capitalised silviculture costs | -58 | -46 | -68 |
| Disposals and classification as held for sale1 | -295 | -102 | -106 |
| Depreciation and impairment | -478 | -540 | -697 |
| Fair valuation of forest assets | 392 | 174 | 621 |
| Translation difference and other | -85 | 86 | 108 |
| Statement of Financial Position Total | 12,540 | 12,080 | 12,654 |
1Including company disposals
| EUR million | 30 Sep 2022 | 30 Sep 2021 | 31 Dec 2021 |
|---|---|---|---|
| Bond loans | 2,499 | 2,496 | 2,497 |
| Loans from credit institutions | 552 | 719 | 577 |
| Lease liabilities | 398 | 400 | 387 |
| Long-term derivative financial liabilities | 1 | 25 | 30 |
| Other non-current liabilities | 2 | 6 | 4 |
| Non-current interest bearing liabilities including current portion | 3,452 | 3,645 | 3,493 |
| Short-term borrowings | 407 | 354 | 372 |
| Interest payable | 34 | 33 | 34 |
| Short-term derivative financial liabilities | 146 | 36 | 38 |
| Bank overdrafts | 4 | 16 | 1 |
| Total Interest-bearing Liabilities | 4,042 | 4,084 | 3,938 |
| EUR million | Q1-Q3/22 | Q1-Q3/21 | 2021 |
|---|---|---|---|
| Carrying value at 1 January | 3,938 | 4,756 | 4,756 |
| Proceeds of new long-term debt | 259 | 15 | 19 |
| Additions in lease liabilities | 22 | 21 | 33 |
| Repayment of long-term debt | -322 | -712 | -870 |
| Repayment of lease liabilities and interest | -44 | -53 | -88 |
| Change in short-term borrowings and interest payable | 35 | -61 | -42 |
| Change in derivative financial liabilities | 78 | 31 | 38 |
| Disposals and classification as held for sale | -27 | -1 | -1 |
| Translation differences and other | 104 | 88 | 93 |
| Total Interest-bearing Liabilities | 4,042 | 4,084 | 3,938 |
| EUR million | 30 Sep 2022 | 31 Dec 2021 | 30 Sep 2021 |
|---|---|---|---|
| On Own Behalf | |||
| Guarantees | 15 | 15 | 14 |
| On Behalf of Equity Accounted Investments | |||
| Guarantees | 5 | 0 | 2 |
| On Behalf of Others | |||
| Guarantees | 6 | 6 | 6 |
| Other commitments | 36 | 36 | 36 |
| Total | 61 | 57 | 57 |
| Guarantees1 | 25 | 21 | 21 |
| Other commitments1 | 36 | 36 | 36 |
| Total | 61 | 57 | 57 |
1The comparative figures have been restated.
| EUR million | 30 Sep 2022 | 31 Dec 2021 | 30 Sep 2021 |
|---|---|---|---|
| Total | 213 | 220 | 241 |
The Group's direct capital expenditure contracts include the Group's share of direct capital expenditure contracts in joint operations.
| Change % Q3/22– |
Change % Q3/22– |
Change % Q1-Q3/22– |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/22 | Q3/21 | Q3/21 | Q2/22 | Q2/22 | Q1-Q3/22 | Q1-Q3/21 | Q1-Q3/21 | 2021 |
| Operational EBITDA | 689 | 570 | 20.8 % | 663 | 3.9 % | 2,014 | 1,582 | 27.3 % | 2,184 |
| Depreciation and silviculture costs of EAI |
-4 | -3 | -21.4 % | -2 | -72.3 % | -8 | -8 | -4.8 % | -11 |
| Silviculture costs1 | -26 | -21 | -27.7 % | -24 | -11.2 % | -73 | -62 | -17.3 % | -89 |
| Depreciation and impairment excl. IAC |
-131 | -136 | 3.8 % | -131 | 0.2 % | -397 | -410 | 3.1 % | -555 |
| Operational EBIT | 527 | 410 | 28.7 % | 505 | 4.4 % | 1,536 | 1,102 | 39.4 % | 1,528 |
| Fair valuations and non-operational items2 |
6 | 8 | -31.7 % | -45 | 112.4 % | -18 | -43 | 57.6 % | 394 |
| Items affecting comparability (IAC)2 | -22 | -32 | 30.3 % | -61 | 63.1 % | -214 | -329 | 35.1 % | -354 |
| Operating profit (IFRS) | 511 | 386 | 32.3 % | 399 | 27.8 % | 1,304 | 729 | 78.8 % | 1,568 |
1Including damages to forests
2 See section Non-IFRS measures for IAC and fair valuations and non-operational items definitions.
| EUR million | Q3/22 | Q2/22 | Q1/22 | 2021 | Q4/21 | Q3/21 | Q2/21 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Packaging Materials | 1,210 | 1,222 | 1,132 | 3,898 | 1,062 | 988 | 987 | 862 |
| Packaging Solutions | 179 | 189 | 191 | 723 | 214 | 180 | 170 | 159 |
| Biomaterials | 567 | 522 | 442 | 1,728 | 494 | 427 | 453 | 355 |
| Wood Products | 520 | 631 | 573 | 1,872 | 510 | 503 | 477 | 382 |
| Forest | 581 | 649 | 626 | 2,311 | 597 | 546 | 586 | 582 |
| Paper | 471 | 462 | 416 | 1,703 | 389 | 441 | 446 | 428 |
| Other | 282 | 290 | 236 | 1,092 | 285 | 302 | 265 | 240 |
| Inter-segment sales | -846 | -910 | -817 | -3,163 | -831 | -809 | -792 | -732 |
| Total | 2,963 | 3,054 | 2,798 | 10,164 | 2,719 | 2,577 | 2,592 | 2,276 |
| EUR million | Q3/22 | Q2/22 | Q1/22 | 2021 | Q4/21 | Q3/21 | Q2/21 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Packaging Materials | 1,158 | 1,163 | 1,078 | 3,715 | 1,006 | 937 | 945 | 827 |
| Packaging Solutions | 173 | 182 | 186 | 704 | 209 | 175 | 166 | 155 |
| Biomaterials | 471 | 435 | 370 | 1,499 | 424 | 364 | 393 | 318 |
| Wood Products | 487 | 595 | 540 | 1,766 | 479 | 481 | 450 | 355 |
| Forest | 195 | 219 | 211 | 781 | 208 | 180 | 197 | 196 |
| Paper | 448 | 443 | 399 | 1,644 | 373 | 425 | 431 | 413 |
| Other | 32 | 17 | 14 | 55 | 20 | 14 | 10 | 12 |
| Total | 2,963 | 3,054 | 2,798 | 10,164 | 2,719 | 2,577 | 2,592 | 2,276 |
| EUR million | Q3/22 | Q2/22 | Q1/22 | 2021 | Q4/21 | Q3/21 | Q2/21 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Product sales | 2,927 | 3,000 | 2,753 | 10,047 | 2,670 | 2,539 | 2,581 | 2,257 |
| Service sales | 37 | 54 | 45 | 117 | 49 | 38 | 11 | 18 |
| Total | 2,963 | 3,054 | 2,798 | 10,164 | 2,719 | 2,577 | 2,592 | 2,276 |
| EUR million | Q3/22 | Q2/22 | Q1/22 | 2021 | Q4/21 | Q3/21 | Q2/21 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Packaging Materials | 181 | 188 | 196 | 556 | 133 | 153 | 144 | 127 |
| Packaging Solutions | 1 | -3 | 1 | 26 | 12 | 8 | 2 | 4 |
| Biomaterials | 197 | 123 | 117 | 495 | 167 | 118 | 145 | 65 |
| Wood Products | 70 | 134 | 118 | 364 | 89 | 123 | 100 | 52 |
| Forest | 47 | 47 | 49 | 267 | 48 | 49 | 46 | 123 |
| Paper | 49 | 51 | 36 | -124 | -10 | -31 | -49 | -34 |
| Other | -12 | -19 | -14 | -48 | -17 | -3 | -16 | -11 |
| Inter-segment eliminations | -6 | -15 | 0 | -8 | 5 | -7 | -8 | 1 |
| Operational EBIT | 527 | 505 | 503 | 1,528 | 426 | 410 | 364 | 328 |
| Fair valuations and non-operational items1 | 6 | -45 | 21 | 394 | 437 | 8 | -11 | -40 |
| Items affecting comparability1 | -22 | -61 | -130 | -354 | -25 | -32 | -171 | -126 |
| Operating Profit (IFRS) | 511 | 399 | 394 | 1,568 | 839 | 386 | 182 | 161 |
| Net financial items | -63 | -29 | -19 | -149 | -46 | -37 | -30 | -36 |
| Profit before Tax | 448 | 370 | 374 | 1,419 | 793 | 349 | 152 | 125 |
| Income tax expense | -81 | -71 | -88 | -151 | -177 | -50 | 56 | 20 |
| Net Profit | 367 | 299 | 287 | 1,268 | 616 | 299 | 207 | 145 |
1 See section Non-IFRS measures for IAC and fair valuations and non-operational items definitions.
| EUR million | Q3/22 | Q2/22 | Q1/22 | 2021 | Q4/21 | Q3/21 | Q2/21 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Impairments and impairment reversals | -2 | -2 | -111 | -141 | -12 | 0 | -20 | -110 |
| Restructuring costs excluding impairments | -5 | -3 | -6 | -227 | -31 | -30 | -145 | -21 |
| Acquisitions and disposals | -17 | -56 | 0 | 11 | 16 | -5 | 0 | 0 |
| Other | 1 | 0 | -13 | 4 | 2 | 3 | -6 | 5 |
| Total IAC on Operating Profit | -22 | -61 | -130 | -354 | -25 | -32 | -171 | -126 |
| Fair valuations and non-operational items | 6 | -45 | 21 | 394 | 437 | 8 | -11 | -40 |
| Total | -17 | -106 | -109 | 40 | 413 | -24 | -182 | -167 |
Items affecting comparability had a negative impact on the operating profit of EUR 22 (-32) million. The IACs relate mainly to the disposal of the Russian operation in the Wood Products and Forest divisions. Fair valuation and non-operational items had a positive impact on the operating profit of EUR 6 (8) million. The impact came mainly from emission rights.
| EUR million | Q3/22 | Q2/22 | Q1/22 | 2021 | Q4/21 | Q3/21 | Q2/21 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Packaging Materials | -3 | 1 | -5 | -12 | -11 | 2 | -3 | 0 |
| Packaging Solutions | -5 | -57 | -36 | -4 | -2 | -1 | 0 | 0 |
| Biomaterials | 0 | 0 | -2 | -5 | 0 | 1 | -1 | -5 |
| Wood Products | -21 | -2 | -27 | -1 | -1 | 0 | 0 | 0 |
| Forest | -6 | 0 | -43 | 17 | 17 | 0 | 0 | 0 |
| Paper | 10 | -1 | -4 | -304 | -11 | -31 | -136 | -126 |
| Other | 1 | -2 | -14 | -46 | -16 | -4 | -31 | 5 |
| IAC on Operating Profit | -22 | -61 | -130 | -354 | -25 | -32 | -171 | -126 |
| IAC on tax | 1 | 1 | 4 | 58 | 2 | 0 | 31 | 26 |
| IAC on Net Profit | -21 | -60 | -126 | -296 | -23 | -33 | -139 | -101 |
| EUR million | Q3/22 | Q2/22 | Q1/22 | 2021 | Q4/21 | Q3/21 | Q2/21 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Packaging Materials | 1 | 2 | -12 | 8 | 7 | 0 | 0 | 0 |
| Packaging Solutions | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Biomaterials | 0 | -6 | -2 | 16 | 16 | 0 | 0 | 0 |
| Wood Products | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Forest | 2 | -47 | 10 | 338 | 412 | -5 | -21 | -48 |
| Paper | -6 | 0 | 11 | 6 | -3 | 7 | 1 | 1 |
| Other | 8 | 6 | 14 | 27 | 6 | 6 | 9 | 6 |
| FV on Operating Profit | 6 | -45 | 21 | 394 | 437 | 8 | -11 | -40 |
| FV on tax | -1 | 13 | -4 | -64 | -72 | -2 | 2 | 8 |
| FV on Net Profit | 5 | -32 | 17 | 330 | 366 | 6 | -10 | -32 |
| EUR million | Q3/22 | Q2/22 | Q1/22 | 2021 | Q4/21 | Q3/21 | Q2/21 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Packaging Materials | 179 | 191 | 179 | 552 | 129 | 155 | 141 | 127 |
| Packaging Solutions | -4 | -59 | -35 | 23 | 10 | 7 | 2 | 4 |
| Biomaterials | 198 | 117 | 113 | 506 | 182 | 119 | 144 | 60 |
| Wood Products | 49 | 133 | 91 | 363 | 88 | 123 | 100 | 52 |
| Forest | 43 | 0 | 16 | 622 | 477 | 44 | 25 | 75 |
| Paper | 54 | 49 | 43 | -423 | -24 | -55 | -185 | -159 |
| Other | -3 | -15 | -13 | -67 | -28 | -1 | -38 | 0 |
| Inter-segment eliminations | -6 | -15 | 0 | -8 | 5 | -7 | -8 | 1 |
| Operating Profit (IFRS) | 511 | 399 | 394 | 1,568 | 839 | 386 | 182 | 161 |
| Net financial items | -63 | -29 | -19 | -149 | -46 | -37 | -30 | -36 |
| Profit before Tax | 448 | 370 | 374 | 1,419 | 793 | 349 | 152 | 125 |
| Income tax expense | -81 | -71 | -88 | -151 | -177 | -50 | 56 | 20 |
| Net Profit | 367 | 299 | 287 | 1,268 | 616 | 299 | 207 | 145 |
| One Euro is | Closing Rate | Average Rate (Year-to-date) | ||
|---|---|---|---|---|
| 30 Sep 2022 | 31 Dec 2021 | 30 Sep 2022 | 31 Dec 2021 | |
| SEK | 10.8993 | 10.2503 | 10.5237 | 10.1448 |
| USD | 0.9748 | 1.1326 | 1.0650 | 1.1835 |
| GBP | 0.8830 | 0.8403 | 0.8469 | 0.8600 |
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
• Level 3: techniques which use inputs that have a significant effect on the recorded fair values that are not based on observable market data.
The valuation techniques are described in more detail in the Group's Financial Report. The instruments carried at fair value in the following tables are measured at fair value on a recurring basis.
| Fair value | Fair value through |
Total | Fair value hierarchy | |||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Amortised cost |
through OCI |
income statement |
carrying amount |
Fair value | Level 1 | Level 2 | Level 3 |
| Financial assets | ||||||||
| Listed securities | — | 10 | — | 10 | 10 | 10 | — | — |
| Unlisted securities | — | 1,597 | 4 | 1,601 | 1,601 | — | — | 1,601 |
| Non-current interest-bearing receivables | 117 | 57 | 11 | 184 | 184 | — | 67 | — |
| Derivative assets | — | 57 | 11 | 67 | 67 | — | 67 | — |
| Loan receivables | 117 | — | — | 117 | 117 | — | — | — |
| Trade and other operative receivables | 1,239 | 100 | — | 1,339 | 1,339 | — | 100 | — |
| Current interest-bearing receivables | 58 | 41 | 2 | 101 | 101 | — | 43 | — |
| Derivative assets | — | 41 | 2 | 43 | 43 | — | 43 | — |
| Other short-term receivables | 58 | — | — | 58 | 58 | — | — | — |
| Cash and cash equivalents | 1,624 | — | — | 1,624 | 1,624 | — | — | — |
| Total | 3,038 | 1,805 | 17 | 4,860 | 4,860 | 10 | 211 | 1,601 |
| Fair value | Fair value through |
Total | Fair value hierarchy | |||||
|---|---|---|---|---|---|---|---|---|
| Amortised | through | income | carrying | |||||
| EUR million Financial liabilities |
cost | OCI | statement | amount | Fair value | Level 1 | Level 2 | Level 3 |
| Non-current interest-bearing liabilities | 3,009 | 1 | — | 3,010 | 2,979 | — | 1 | — |
| Derivative liabilities | — | 1 | — | 1 | 1 | — | 1 | — |
| Non-current debt | 3,009 | — | — | 3,009 | 2,979 | — | — | — |
| Current portion of non-current debt | 443 | — | — | 443 | 443 | — | — | — |
| Current interest-bearing liabilities | 440 | 102 | 46 | 588 | 588 | — | 148 | — |
| Derivative liabilities | — | 102 | 46 | 148 | 148 | — | 148 | — |
| Current debt | 440 | — | — | 440 | 440 | — | — | — |
| Trade and other operative payables | 2,017 | — | — | 2,017 | 2,017 | — | — | — |
| Bank overdrafts | 4 | — | — | 4 | 4 | — | — | — |
| Total | 5,913 | 103 | 46 | 6,062 | 6,031 | — | 149 | — |
In accordance with IFRS, derivatives are classified as fair value through income statement. In the above tables for financial assets and liabilities the cash flow hedge accounted derivatives are however presented as fair value through OCI, in line with how they are booked for the effective portion.
| Fair value | Fair value through |
Total | Fair value hierarchy | |||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Amortised cost |
through OCI |
income statement |
carrying amount |
Fair value | Level 1 | Level 2 | Level 3 |
| Financial assets | ||||||||
| Listed securities | — | 13 | — | 13 | 13 | 13 | — | — |
| Unlisted securities | — | 900 | 5 | 905 | 905 | — | — | 905 |
| Non-current interest-bearing receivables | 45 | 6 | — | 51 | 51 | — | 6 | — |
| Derivative assets | — | 6 | — | 6 | 6 | — | 6 | — |
| Loan receivables | 45 | — | — | 45 | 45 | — | — | — |
| Trade and other operative receivables | 1,110 | 39 | — | 1,149 | 1,149 | — | 39 | — |
| Current interest-bearing receivables | 52 | 31 | 1 | 84 | 84 | — | 32 | — |
| Derivative assets | — | 31 | 1 | 32 | 32 | — | 32 | — |
| Other short-term receivables | 52 | — | — | 52 | 52 | — | — | — |
| Cash and cash equivalents | 1,481 | — | — | 1,481 | 1,481 | — | — | — |
| Total | 2,687 | 990 | 6 | 3,683 | 3,683 | 13 | 77 | 905 |
| Amortised | Fair value through |
Fair value through income |
Total carrying |
Fair value hierarchy | ||||
|---|---|---|---|---|---|---|---|---|
| EUR million | cost | OCI | statement | amount | Fair value | Level 1 | Level 2 | Level 3 |
| Financial liabilities | ||||||||
| Non-current interest-bearing liabilities | 3,284 | 7 | 23 | 3,313 | 3,618 | — | 30 | — |
| Derivative liabilities | — | 7 | 23 | 30 | 30 | — | 30 | — |
| Non-current debt | 3,284 | — | — | 3,284 | 3,589 | — | — | — |
| Current portion of non-current debt | 180 | — | — | 180 | 180 | — | — | — |
| Current interest-bearing liabilities | 403 | 35 | 7 | 444 | 444 | — | 42 | — |
| Derivative liabilities | — | 35 | 7 | 42 | 42 | — | 42 | — |
| Current debt | 403 | — | — | 403 | 403 | — | — | — |
| Trade and other operative payables | 1,960 | — | — | 1,960 | 1,960 | — | — | — |
| Bank overdrafts | 1 | — | — | 1 | 1 | — | — | — |
| Total | 5,827 | 42 | 29 | 5,899 | 6,204 | — | 71 | — |
In accordance with IFRS, derivatives are classified as fair value through income statement. In the above tables for financial assets and liabilities the cash flow hedge accounted derivatives are however presented as fair value through OCI, in line with how they are booked for the effective portion.
| EUR million | Q1-Q3/22 | 2021 | Q1-Q3/21 |
|---|---|---|---|
| Financial assets | |||
| Opening balance at 1 January | 905 | 401 | 401 |
| Reclassifications | -1 | 0 | 0 |
| Gains/losses recognised in other comprehensive income | 697 | 504 | 309 |
| Additions | 0 | 1 | 1 |
| Closing balance | 1,601 | 905 | 710 |
The Group did not have level 3 financial liabilities as at 30 September 2022.
At period end, Level 3 financial assets included EUR 1 597 million of Pohjolan Voima Oy (PVO) shares for which the valuation method is described in more detail in the Annual Report. The valuation is most sensitive to changes in electricity prices and discount rates. The discount rate of 6.58% used in the valuation model is determined using the weighted average cost of capital method. A +/- 5% change in the electricity price used in the DCF would change the valuation by EUR +132 million and -131 million, respectively. A +/- percentage point change in the discount rate would change the valuation by EUR -95 million and +126 million, respectively.
During the third quarter of 2022, the conversions of 1,401 A shares into R shares were recorded in the Finnish trade register.
On 30 September 2022, Stora Enso had 176,238,697 A shares and 612,381,290 R shares in issue. The company did not hold its own shares. The total number of Stora Enso shares in issue was 788,619,987 and the total number votes at least 237,476,826.
On 17 October, the conversion of 140 A shares into R shares was recorded in the Finnish trade register.
| Helsinki | Stockholm | ||||
|---|---|---|---|---|---|
| A share | R share | A share | R share | ||
| July | 71,671 | 34,222,800 | 202,742 | 6,536,686 | |
| August | 64,397 | 26,088,016 | 134,511 | 3,968,364 | |
| September | 97,554 | 32,575,827 | 170,642 | 5,817,678 | |
| Total | 233,622 | 92,886,643 | 507,895 | 16,322,728 |
| Helsinki, EUR | Stockholm, SEK | |||||
|---|---|---|---|---|---|---|
| A share | R share | A share | R share | |||
| July | 15.85 | 15.06 | 162.80 | 156.70 | ||
| August | 15.40 | 14.88 | 165.80 | 159.00 | ||
| September | 13.90 | 13.09 | 146.00 | 142.70 |
| Million | Q3/22 | Q3/21 | Q2/22 | 2021 |
|---|---|---|---|---|
| At period end | 788.6 | 788.6 | 788.6 | 788.6 |
| Average | 788.6 | 788.6 | 788.6 | 788.6 |
| Average, diluted | 789.5 | 789.3 | 789.6 | 789.1 |
| Operational return on capital employed, operational ROCE (%) |
100 x | Annualised operational EBIT Capital employed1 2 |
|
|---|---|---|---|
| Operational return on operating capital, operational ROOC (%) |
100 x | Annualised operational EBIT Operating capital 2 |
|
| Return on equity, ROE (%) | 100 x | Net profit/loss for the period Total equity2 |
|
| Net interest-bearing liabilities | Interest-bearing liabilities – interest-bearing assets | ||
| Net debt/equity ratio | Net interest-bearing liabilities Equity3 |
||
| Earnings per share (EPS) | Net profit/loss for the period3 Average number of shares |
||
| Operational EBIT | Operating profit/loss excluding items affecting comparability (IAC) and fair valuations of the segments and Stora Enso's share of operating profit/loss excluding IAC and fair valuations of its equity accounted investments (EAI) |
||
| Operational EBITDA | Operating profit/loss excluding silviculture costs and damage to forests, fixed asset depreciation and impairment, IACs and fair valuations. The definition includes the respective items of subsidiaries, joint arrangements and equity accounted investments. |
||
| Net debt/last 12 months' operational EBITDA ratio |
Net interest-bearing liabilities LTM operational EBITDA |
||
| Fixed costs | Maintenance, personnel and other administration type of costs, excluding IAC and fair valuations. |
||
| Last 12 months (LTM) | 12 months prior to the end of reporting period | ||
| 1 Capital employed = Operating capital – Net tax liabilities |
2 3 Average for the financial period Attributable to the owners of the Parent |
||
| List of non-IFRS measures | |||
| Operational EBITDA | Depreciation and impairment charges excl. IAC | ||
| Operational EBITDA margin | Operational ROCE | ||
| Operational EBIT Operational EBIT margin |
Earnings per share (EPS), excl. FV Net debt/last 12 months' operational EBITDA ratio |
||
| Capital expenditure | Operational ROOC | ||
| Capital expenditure excl. investments in biological assets | Cash flow after investing activities | ||
| Capital employed | |||
| Definitions and calculation of key sustainability figures | |||
| GHG emissions, scope 1 + 2 | Direct fossil CO2e emissions from production (scope 1) and indirect fossil CO2e emissions related to purchased electricity and heat (scope 2). Excluding joint operations. Reported as last four quarters. Calculated in accordance with the Greenhouse Gas Protocol. |
||
| GHG emissions, scope 3 | Fossil CO2e emissions from supply chain, transportation and customer operations are estimated based on the most recent methodology. Joint operations included as suppliers. Currently, material emission categories for Scope 3 emissions are updated annually or every second year. Accounting based on guidelines provided by the Greenhouse Gas Protocol of the World Resource Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). |
||
| Forest certification coverage | The proportion of land in wood production and harvesting owned or leased by Stora Enso that is covered by forest certification schemes. Reporting on total land area and its forest certification coverage aligned with financial reporting on forests assets. Historical figures have been recalculated for comparability. |
||
| Share of technically recyclable products | The proportion of technically recyclable products based on production volumes as tonnes. Technical recyclability is defined by international standards and tests when available, such as PTS and CTP, and in the absence of these, by Stora Enso's own tests that prove recyclability. The reporting scope includes Stora Enso's packaging, pulp, paper and solid wood products as well as biochemical by-products. The recyclability of corrugated packaging is estimated in 2021 reporting and will be confirmed by further testing. |
||
| TRI (Total recordable incidents) rate | Number of incidents per one million hours worked. The figure represents own employees, including employees of the joint operations Veracel and Montes del Plata. |
||
| Gender balance | Calculated based on the headcount of permanent and temporary employees, including both fulltime and part-time employees. |
||
| Total water withdrawal and Process water discharges per saleable tonne |
Last four quarters for board, pulp and paper units. Excluding joint operations. Excluding mechanical wood product units and packaging converting units due to their low impact on the Group's consolidated water use and different metrics for sales production (cubic metre and square metre) compared to board, pulp and paper units (tonnes). |
||
| Supplier Code of Conduct (SCoC) coverage | owners. | % of supplier spend (last 12 months) covered by the Supplier Code of Conduct (SCoC). Excludes joint operations, intellectual property rights, leasing fees, financial trading, government fees such as customs, and wood purchases from private individual forest |
Stora Enso's diversified business portfolio creates resilience to changing market dynamics and fluctuations in demand, while enabling flexibility for evolving transformation.
Packaging Materials
Leading the development of circular packaging, providing premium packaging materials based on virgin and recycled fiber.
Packaging Solutions Developing and selling premium fiber-based packaging products and services.
Biomaterials Meeting the growing demand for bio-based solutions to replace fossil-based and hazardous materials.
Wood Products One of the largest sawn wood producers in Europe and a global leading provider of renewable wood-based solutions.
Forest Creating value through sustainable forest management, competitive wood supply and innovation.
Paper A major paper producer in Europe with a wide product portfolio for print and office use.
FI-00101 Helsinki, Finland SE-107 24 Stockholm, Sweden Tel. +358 2046 111 Klarabergsviadukten 70
P.O.Box 309 P.O.Box 70395 storaenso.com/investors Visiting address: Salmisaarenaukio 2 Visiting address: World Trade Center Tel. +46 1046 46 000
Stora Enso Oyj Stora Enso AB storaenso.com
Anna-Lena Åström, SVP Investor Relations, tel. +46 702 107 691 Carl Norell, Press officer, tel. +46 722 410 349
Part of the global bioeconomy, Stora Enso is a leading provider of renewable products in packaging, biomaterials, wooden construction and paper, and one of the largest private forest owners in the world. We believe that everything that is made from fossil-based materials today can be made from a tree tomorrow. Stora Enso has approximately 22,000 employees and Group sales in 2021 of EUR 10.2 billion. Stora Enso shares are listed on Nasdaq Helsinki Oy (STEAV, STERV) and Nasdaq Stockholm AB (STE A, STE R). In addition, the shares are traded in the USA as ADRs (SEOAY). storaenso.com/investors
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 profitability; and statements preceded by "believes", "expects", "anticipates", "foresees", or similar expressions, are forward-looking statements. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties, which may cause actual results to materially differ from those expressed in such forward-looking statements. Such factors include, but are not limited to: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development, acceptance of new products or services by the Group's targeted customers, success of the existing and future collaboration arrangements, changes in business strategy or development plans or targets, changes in the degree of protection created by the Group's patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group's products and the pricing pressures thereto, price fluctuations in raw materials, financial condition of the customers and the competitors of the Group, the potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group's principal geographic markets or fluctuations in exchange and interest rates. All statements are based on management's best assumptions and beliefs in light of the information currently available to it and Stora Enso assumes no obligation to publicly update or revise any forward-looking statement except to the extent legally required.
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