Quarterly Report • Oct 29, 2019
Quarterly Report
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January–September 2019
The programme is proceeding ahead of plan. The target has been increased to EUR 275 million from the previous target of EUR 200 million, and the programme was extended until the end of 2021. Approximately EUR 100 million of the cost savings were achieved by the end of the third quarter, and cumulatively about EUR 200 million is expected to be achieved by the end of 2020.
Deteriorating trading conditions caused by geopolitical uncertainties related to trade wars and a possible hard Brexit are expected to impact Stora Enso negatively. Demand growth is forecast to slow for Stora Enso's businesses in general, and the decline in demand for European paper will continue. Due to the profit protection programme, costs are forecast to remain roughly at the same level in 2019 as in 2018. Stora Enso is still implementing additional profit protection measures to mitigate negative financial impacts of the current situation.
Q4/2019 operational EBIT is expected to be in the range of EUR 100–180 million. During the fourth quarter, there will be annual maintenance shutdown at the Fors, Ingerois, Skoghall, Varkaus, Montes del Plata and Skutskär mills. The total maintenance impact is estimated to be at the same level as in Q4/2018 and in Q3/2019.
| Change % Q3/19- |
Change % Q3/19- |
Change % Q1-Q3/19– |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/19 | Q3/18 | Q3/18 | Q2/19 | Q2/19 | Q1-Q3/19 | Q1-Q3/18 | Q1-Q3/18 | 2018 |
| Sales | 2 402 | 2 585 | -7.1% | 2 608 | -7.9% | 7 644 | 7 828 | -2.4% | 10 486 |
| Operational EBITDA | 376 | 502 | -25.1% | 435 | -13.6% | 1 283 | 1 472 | -12.9% | 1 878 |
| Operational EBITDA margin | 15.7% | 19.4% | 16.7% | 16.8% | 18.8% | 17.9% | |||
| Operational EBIT | 231 | 358 | -35.5% | 287 | -19.5% | 841 | 1 054 | -20.2% | 1 325 |
| Operational EBIT margin | 9.6% | 13.8% | 11.0% | 11.0% | 13.5% | 12.6% | |||
| Operating profit (IFRS) | 170 | 363 | -53.1% | 142 | 20.1% | 624 | 1 034 | -39.6% | 1 390 |
| Profit before tax excl. IAC | 152 | 305 | -50.2% | 214 | -29.0% | 651 | 923 | -29.4% | 1 190 |
| Profit before tax (IFRS) | 115 | 305 | -62.1% | 93 | 23.9% | 490 | 895 | -45.2% | 1 210 |
| Net profit for the period (IFRS) | 59 | 204 | -71.2% | 52 | 12.9% | 336 | 690 | -51.2% | 988 |
| Cash flow from operations | 488 | 457 | 6.9% | 548 | -10.9% | 1 258 | 1 042 | 20.7% | 1 365 |
| Cash flow after investing activities | 347 | 319 | 9.0% | 428 | -18.8% | 868 | 663 | 31.0% | 811 |
| Capital expenditure | 150 | 129 | 16.3% | 126 | 18.9% | 354 | 337 | 5.1% | 574 |
| Capital expenditure excluding investments in biological assets |
130 | 109 | 20.1% | 108 | 20.4% | 303 | 276 | 9.8% | 491 |
| Depreciation and impairment charges excl. IAC |
130 | 122 | 6.9% | 134 | -2.5% | 397 | 365 | 8.9% | 479 |
| Net interest-bearing liabilities | 3 745 | 2 172 | 72.4% | 3 973 | -5.7% | 3 745 | 2 172 | 72.4% | 2 092 |
| Operational return on capital employed (ROCE) |
8.7% | 16.7% | 11.3% | 11.5% | 16.6% | 15.5% | |||
| Earnings per share (EPS) excl. IAC, EUR | 0.13 | 0.31 | -56.9% | 0.22 | -40.3% | 0.65 | 0.97 | -32.8% | 1.29 |
| EPS (basic), EUR | 0.09 | 0.27 | -67.5% | 0.08 | 17.3% | 0.46 | 0.90 | -49.2% | 1.28 |
| Return on equity (ROE) | 3.5% | 13.0% | 3.1% | 6.6% | 14.7% | 15.5% | |||
| Net debt/equity ratio | 0.55 | 0.34 | 0.59 | 0.55 | 0.34 | 0.31 | |||
| Net debt to last 12 months' operational EBITDA ratio |
2.2 | 1.1 | 2.2 | 2.2 | 1.1 | 1.1 | |||
| Fixed costs to sales, % | 24.2% | 23.3% | 23.3% | 23.3% | 23.2% | 23.6% | |||
| Equity per share, EUR | 8.72 | 8.16 | 6.8% | 8.52 | 2.3% | 8.72 | 8.16 | 6.8% | 8.51 |
| Average number of employees (FTE) | 26 414 | 26 545 | -0.5% | 26 553 | -0.5% | 26 347 | 26 059 | 1.1% | 26 067 |
| TRI rate12 | 7.4 | 4.9 | 51.0% | 7.2 | 2.8% | 7.1 | 5.4 | 31.5% | 6.1 |
Operational key figures, items affecting comparability and other non-IFRS measures: The list of Stora Enso's non-IFRS measures and the calculation of the key figures are presented at the end of this report. See also the chapter Non-IFRS measures at the beginning of the Financials section.
TRI (Total recordable incidents) rate = number of incidents per one million hours worked.
1 For own employees, including employees of the joint operations Veracel and Montes del Plata
2 Historical figures recalculated due to additional data after the previous Interim Reports
| Change % Q3/19- |
Change % Q3/19- |
Q1- | Q1- | Change % Q1-Q3/19– |
|||||
|---|---|---|---|---|---|---|---|---|---|
| Q3/19 | Q3/18 | Q3/18 | Q2/19 | Q2/19 | Q3/19 | Q3/18 | Q1-Q3/18 | 2018 | |
| Consumer board deliveries, 1 000 tonnes | 702 | 727 | -3.5% | 735 | -4.6% | 2 124 | 2 213 | -4.0% | 2 914 |
| Consumer board production, 1 000 tonnes | 702 | 730 | -3.9% | 697 | 0.6% | 2 089 | 2 228 | -6.2% | 2 922 |
| Containerboard deliveries, 1 000 tonnes | 241 | 272 | -11.9% | 222 | 8.4% | 705 | 771 | -8.6% | 985 |
| Containerboard production, 1 000 tonnes | 323 | 345 | -6.4% | 326 | -1.0% | 973 | 981 | -0.8% | 1 320 |
| Corrugated packaging deliveries, million m2 | 236 | 232 | 1.5% | 238 | -0.9% | 703 | 694 | 1.3% | 940 |
| Corrugated packaging production, million m2 | 260 | 245 | 6.2% | 269 | -3.3% | 786 | 775 | 1.5% | 1 048 |
| Market pulp deliveries, 1 000 tonnes | 559 | 476 | 17.5% | 600 | -6.8% | 1 700 | 1 484 | 14.6% | 2 017 |
| Wood products deliveries, 1 000 m3 | 1 231 | 1 242 | -0.8% | 1 290 | -4.6% | 3 724 | 3 810 | -2.3% | 5 095 |
| Paper deliveries, 1 000 tonnes | 1 010 | 1 161 | -13.0% | 1 013 | -0.4% | 3 102 | 3 470 | -10.6% | 4 591 |
| Paper production, 1 000 tonnes | 988 | 1 216 | -18.8% | 995 | -0.8% | 3 084 | 3 545 | -13.0% | 4 633 |
"As a company, we are preparing for the next market upturn through our profit protection programme which is proceeding ahead of plan. Since we were out early in launching it, we are building the prerequisites for a better and more profitable future when the cycle turns. It is important to take advantage of today's situation to build a more future-proof company by being one step ahead and working proactively. To advance even further, we have increased the target to EUR 275 million from EUR 200 million and extended the programme until the end of 2021.
Sales during the quarter decreased due to lower prices and volumes. We also saw a sharp decrease in operational EBIT for the same reasons. Approximately EUR 40 million of cost reduction have been achieved during the quarter. Imagine if we would have had this based on last year's cost levels. This is a foundation for a leaner and more efficient organisation ready for when the cycle turns. Cash flow from operations was strong, due to proactive working capital management.
Given our focus on our raw material, I am pleased that we will establish a new Forest division from the beginning of 2020. It will include our Swedish forest assets and our 41% share of Tornator with the majority of the forest assets located in Finland. Moreover, it covers our wood supply operations in Finland, Sweden, Russia and the Baltics. As a major player in the bioeconomy, access to wood is critical for our business.
Looking at our divisions, we see continued price increases in Consumer Board; in Packaging Solutions, the corrugated market is benefiting from lower containerboard prices; in Biomaterials, we note that the Chinese market is showing positive signs and in Wood Products, the margin protection continues.
As regards our transformation journey, the conversion of Enocell pulp mill from softwood to dissolving pulp has been finalised, and the gradual ramp up is starting. Our dissolving wood pulp can be used in exciting new ways to help shape the fabric of a green future. As part of our focus on our growth areas, we have also divested our 60% equity stake in the Dawang paper mill in China.
In our constant endeavours for sustainability in all dimensions, we are proud that our Sustainability Report 2018 – for the second year in a row – has been included in the top ten sustainability reports globally. This is according to the latest Reporting matters publication by the World Business Council for Sustainable Development (WBCSD). We have also received the highest rating for sustainability communications in a study assessing 95 companies listed on the Nasdaq OMX Stockholm Large Cap Index in Sweden.
To sum it up: The changed market environment creates a need to be better prepared and we use this time now to get ready for the next upturn. I am pleased that we started to take measures early on.
It is soon time for me to hand over the torch to my successor, Annica Bresky, who will step in to her new position as President and CEO as of 1 December 2019. I have enjoyed my time with Stora Enso tremendously. I am especially pleased with the progress that all of us have made in becoming the renewable materials company, sustainable in all dimensions. I wish Annica all the best in this exciting role.
As always, I would like to thank our customers for their business, our employees for their dedication, and our investors for their trust."
Karl-Henrik Sundström, CEO
Operational EBIT
9.6%
Operational ROCE
8.7%
(Target >13%)
Net debt to operational EBITDA
2.2 (Target <2.0)
| EUR million | Q3/19 | Q3/18 | Change % Q3/19- Q3/18 |
Q2/19 | Change % Q3/19- Q2/19 |
Q1- Q3/19 |
Q1- Q3/18 |
Change % Q1-Q3/19– Q1-Q3/18 |
2018 |
|---|---|---|---|---|---|---|---|---|---|
| Operational EBITDA | 376 | 502 | -25.1% | 435 | -13.6% | 1 283 | 1 472 | -12.9% | 1 878 |
| Depreciation and depletion of equity accounted investments (EAI) |
-1 | -4 | 84.8% | -2 | 71.9% | -4 | -7 | 38.5% | -7 |
| Operational decrease in the value of biological assets |
-14 | -18 | 22.2% | -13 | -13.2% | -40 | -46 | 14.1% | -66 |
| Depreciation and impairment excl. IAC | -130 | -122 | -6.9% | -134 | 2.5% | -397 | -365 | -8.9% | -479 |
| Operational EBIT | 231 | 358 | -35.5% | 287 | -19.5% | 841 | 1 054 | -20.2% | 1 325 |
| Fair valuations and non-operational items1 | -25 | 5 | n/m | -25 | 0.6% | -56 | 8 | n/m | 45 |
| Items affecting comparability (IAC) | -36 | 0 | - | -120 | 69.9% | -161 | -28 | n/m | 20 |
| Operating profit (IFRS) | 170 | 363 | -53.1% | 142 | 20.1% | 624 | 1 034 | -39.6% | 1 390 |
1 Fair valuations and non-operational items include CO2 emission rights, valuations of biological assets, and the Group's share of income tax and net financial items of EAI. Until the end of 2018, fair valuations and non-operational items also included equity incentive schemes and related hedges. The previous periods have not been restated due to immateriality.
| Sales Q3/2018, EUR million | 2 585 |
|---|---|
| Price and mix | -6% |
| Currency | 1% |
| Volume | -2% |
| Other sales1 | 0% |
| Total before structural changes | -7% |
| Structural changes2 | 0% |
| Total | -7% |
| Sales Q3/2019, EUR million | 2 402 |
1 Wood, energy, paper for recycling, by-products etc.
2 Asset closures, major investments, divestments and acquisitions
Group sales decreased 7.1% or EUR 183 million from last year's record high level to EUR 2 402 (2 585) million. Significantly lower pulp, containerboard and sawn goods prices, with significantly lower paper deliveries and the divestment of Dawang Mill in China were only partly offset by positive sales currency rates.
Operational EBIT decreased 35% or EUR 127 million from last year's record high level to EUR 231 (358) million. The operational EBIT margin decreased by over 4 percentage points to 9.6% (13.8%). Significantly lower prices for pulp, containerboard and sawn goods, and the negative volume impact from Paper, were only partly offset by the positive impact of the profit protection programme, resulting in lower fixed costs.
Lower sales prices, especially for pulp, containerboard and sawn goods, decreased operational EBIT by EUR 150 million. The total volume impact was a negative EUR 40 million, mainly due to lower volumes in the Paper division.
Variable costs decreased EUR 10 million mainly due to lower pulp costs. Fixed costs decreased by EUR 37 million, mainly due to the profit protection programme and the impact of the adoption of the IFRS 16 Leases standard. Net foreign exchange rates had a positive impact of EUR 27 million on operational EBIT. Operational result from equity accounted investments decreased by EUR 8 million, mainly due to the restructuring of Bergvik Skog. Since 1 June 2019, the Group's Swedish forest holdings have been reported as a subsidiary. Depreciation was EUR 3 million higher, impacted by the adoption of the IFRS 16 Leases standard, which had a slight overall positive impact on the operational EBIT level.
The planned and unplanned production downtime, to manage inventory levels, increased to 22% (4%) for paper, 11% (5%) for board, and 1% (0%) for wood products.
The average number of employees in the third quarter of 2019 was approximately 26 400 (26 500).
Fair valuations and non-operational items had a negative net impact on the operating profit of EUR 25 (positive EUR 7) million. The impact came mainly from charges related to the financial instruments in the Nordic equity accounted investment Tornator.
Earnings per share decreased by 67.5% to EUR 0.09 (0.27) and earnings per share excluding items affecting comparability (IAC) decreased to EUR 0.13 (0.31).
The Group recorded items affecting comparability (IACs) with a negative impact of EUR 36 (0) million on its operating profit. The related tax impact was a positive EUR 2 million. The IACs relate mainly to the following actions:
Net financial expenses of EUR 55 million were EUR 3 million lower than a year ago. Net interest expenses of EUR 37 million increased by EUR 3 million compared to a year ago, mainly as a result of higher gross debt levels and the implementation of IFRS 16, partly offset by the lower average interest expense rate on borrowings. Other net financial expenses were EUR 1 (9) million. The net foreign exchange rate impact in respect of cash, interest-bearing assets and liabilities and related foreigncurrency hedges amounted to a loss of EUR 17 (loss of EUR 15) million, mainly due to a revaluation of foreign currency net debt in subsidiaries.
| EUR million | Capital employed |
|---|---|
| 30 September 2018 | 8 631 |
| Capital expenditure less depreciation | 69 |
| Right-of-use assets - adoption of IFRS 16 Leases | 530 |
| Impairments and reversal of impairments | -7 |
| Fair valuation of biological assets | 3 |
| Costs related to growth of biological assets | -60 |
| Unlisted securities (mainly PVO) | 22 |
| Equity accounted investments | -966 |
| Net liabilities in defined benefit plans | -1 |
| Operative working capital and other interest-free items, net | 38 |
| Net tax liabilities | 12 |
| Acquisition of subsidiary companies | 2 321 |
| Translation difference | 48 |
| Other changes | -38 |
| 30 September 2019 | 10 602 |
The operational return on capital employed (ROCE) in the third quarter of 2019 was 8.7% (16.7%). The adoption of the IFRS 16 Leases had a negative impact of 0.4 percentage points, and the Bergvik Skog restructuring had a negative impact of 1.0 percentage points on ROCE for the third quarter of 2019.
Sales decreased 2.4% or EUR 184 million to EUR 7 644 (7 828) million due to lower sales in the third quarter. Operational EBIT decreased EUR 213 million to EUR 841 (1 054) million, representing a margin of 11.0% (13.5%). Lower sales prices in local currencies especially for pulp and containerboard decreased operational EBIT by EUR 103 million and volumes had a negative impact of EUR 86 million, especially in the Paper division. Variable costs were EUR 80 million higher, as increased wood costs were only partly offset by lower pulp costs. Fixed costs were EUR 55 million lower, supported by the profit protection programme and the impact of the adoption of the IFRS 16 Leases standard, which was also the main reason for the higher depreciation of EUR 10 million. Net foreign exchange had a positive impact of EUR 30 million. Operational result from equity accounted investments decreased by EUR 20 million, mainly due to the restructuring of Bergvik Skog. Since 1 June 2019, the Group's Swedish forest holdings have been reported as a subsidiary.
Sales decreased 7.9% or EUR 206 million, to EUR 2 402 (2 608) million. Operational EBIT decreased by EUR 56 million to EUR 231 (287) million. Sales prices in local currencies had a negative impact of EUR 88 million, mainly due to lower pulp, containerboard and sawn goods prices, while volumes had a negative impact of EUR 15 million, mainly due to lower deliveries. Variable costs were EUR 5 million higher. Fixed costs were EUR 35 million lower, mainly due to seasonally lower personnel costs, and the impacts of the profit protection programme. The net foreign exchange impact increased profitability by EUR 14 million. Depreciations were EUR 3 million lower.
The ambition of the Consumer Board division is to be the global leader in high-quality virgin fiber cartonboard. We aim to be the preferred partner of customers and brand owners in premium end-use packaging and graphical segments. Our wide board and barrier coating selection is suitable for consumer packaging for liquid, food, pharmaceutical and luxury goods.
| Change % Q3/19- |
Change % Q3/19- |
Q1- | Q1- | Change % Q1-Q3/19– |
|||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/19 | Q3/18 | Q3/18 | Q2/19 | Q2/19 | Q3/19 | Q3/18 | Q1-Q3/18 | 2018 |
| Sales | 640 | 648 | -1.3% | 675 | -5.3% | 1 949 | 1 985 | -1.8% | 2 622 |
| Operational EBITDA | 119 | 101 | 18.1% | 118 | 1.1% | 338 | 349 | -3.2% | 423 |
| Operational EBITDA margin | 18.6% | 15.6% | 17.5% | 17.3% | 17.6% | 16.1% | |||
| Operational EBIT | 73 | 50 | 45.1% | 72 | 0.5% | 199 | 207 | -3.8% | 231 |
| Operational EBIT margin | 11.3% | 7.8% | 10.7% | 10.2% | 10.4% | 8.8% | |||
| Operational ROOC | 13.2% | 10.3% | 12.8% | 12.9% | 14.3% | 11.9% | |||
| Cash flow from operations | 163 | 125 | 30.8% | 113 | 44.7% | 331 | 274 | 20.8% | 339 |
| Cash flow after investing activities | 135 | 91 | 48.7% | 84 | 60.2% | 230 | 164 | 40.0% | 177 |
| Board deliveries, 1 000 tonnes | 701 | 727 | -3.5% | 736 | -4.7% | 2 125 | 2 213 | -4.0% | 2 916 |
| Board production, 1 000 tonnes | 702 | 730 | -3.9% | 697 | 0.6% | 2 089 | 2 228 | -6.2% | 2 922 |
• Sales decreased slightly, about 1% or EUR 8 million, to EUR 640 million as lower board deliveries were only partly offset by increased pulp deliveries and higher board sales prices.
| Product | Market | Demand Q3/19 compared with Q3/18 |
Demand Q3/19 compared with Q2/19 |
Price Q3/19 compared with Q3/18 |
Price Q3/19 compared with Q2/19 |
|---|---|---|---|---|---|
| Consumer board | Europe | Stable | Slightly weaker | Slightly higher | Stable |
13.2%
(Target: >20%)
| 2020 | 2019 | 2018 | |
|---|---|---|---|
| Q1 | – | – | – |
| Q2 | n/a | – | Beihai Mill |
| Q3 | n/a | Beihai and Imatra mills |
Imatra and Ingerois mills |
| Q4 | n/a | Fors, Ingerois and Skoghall mills |
Skoghall and Fors mills |
The Packaging Solutions division provides fiber-based board materials and corrugated packaging products and services that are designed for a wide array of applications. Our renewable high-end packaging solutions serve leading converters, brand owners and retailers – including those in e-commerce that are looking to optimise performance, drive innovation and improve their sustainability.
| EUR million | Q3/19 | Q3/18 | Change % Q3/19- Q3/18 |
Q2/19 | Change % Q3/19- Q2/19 |
Q1- Q3/19 |
Q1- Q3/18 |
Change % Q1-Q3/19– Q1-Q3/18 |
2018 |
|---|---|---|---|---|---|---|---|---|---|
| Sales | 299 | 330 | -9.4% | 316 | -5.4% | 954 | 992 | -3.8% | 1 344 |
| Operational EBITDA | 48 | 86 | -44.0% | 58 | -17.7% | 176 | 236 | -25.5% | 313 |
| Operational EBITDA margin | 16.0% | 25.9% | 18.4% | 18.5% | 23.8% | 23.3% | |||
| Operational EBIT | 29 | 68 | -57.6% | 39 | -26.0% | 119 | 186 | -35.8% | 245 |
| Operational EBIT margin | 9.6% | 20.6% | 12.3% | 12.5% | 18.7% | 18.2% | |||
| Operational ROOC | 12.1% | 30.4% | 16.3% | 17.0% | 27.7% | 27.2% | |||
| Cash flow from operations | 69 | 67 | 4.3% | 65 | 7.7% | 194 | 206 | -5.9% | 272 |
| Cash flow after investing activities | 26 | 43 | -38.7% | 53 | -50.6% | 127 | 131 | -3.2% | 172 |
| Board deliveries, 1 000 tonnes | 328 | 326 | 0.5% | 314 | 4.2% | 971 | 972 | -0.1% | 1 308 |
| Board production, 1 000 tonnes | 323 | 345 | -6.4% | 326 | -1.0% | 973 | 981 | -0.8% | 1 320 |
| Corrugated packaging deliveries, million m2 |
262 | 260 | 0.7% | 267 | -2.1% | 788 | 783 | 0.7% | 1 059 |
| Corrugated packaging production, million m2 |
260 | 245 | 6.2% | 269 | -3.3% | 786 | 775 | 1.5% | 1 048 |
• Sales decreased by over 9%, or EUR 31 million, to EUR 299 million, mainly due to significantly lower recycled-paper-based (RCP) containerboard and kraftliner prices.
| Product | Market | Demand Q3/19 compared with Q3/18 |
Demand Q3/19 compared with Q2/19 |
Price Q3/19 compared with Q3/18 |
Price Q3/19 compared with Q2/19 |
|---|---|---|---|---|---|
| Virgin fiber-based containerboard |
Global | Stable | Stronger | Significantly lower | Lower |
| Recycled fiber based (RCP) containerboard |
Europe | Stable | Slightly weaker | Significantly lower | Lower |
| Corrugated packaging | Europe | Slightly stronger | Slightly weaker | Slightly lower | Slightly lower |
Sales and operational EBIT
(Target: >20%)
| 2020 | 2019 | 2018 | |
|---|---|---|---|
| Q1 | – | Ostrołęka Mill PM5 | – |
| Q2 | n/a | – | Heinola and Varkaus mills |
| Q3 | n/a | Heinola and Ostrołęka kraft mills |
Ostrołęka Mill |
| Q4 | n/a | Varkaus Mill | – |
The Biomaterials division offers a wide variety of pulp grades to meet the demands of paper, board, tissue, textile and hygiene product producers. We are maximising the business potential of the by-products extracted in our processes, such as tall oil and turpentine from biomass. Based on our strong innovation approach, all fractions of biomass, like sugars and lignin, hold substantial potential for use in various applications.
| Change % Q3/19- |
Change % Q3/19- |
Q1- | Q1- | Change % Q1-Q3/19– |
|||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/19 | Q3/18 | Q3/18 | Q2/19 | Q2/19 | Q3/19 | Q3/18 | Q1-Q3/18 | 2018 |
| Sales | 331 | 413 | -19.8% | 394 | -15.9% | 1 123 | 1 220 | -7.9% | 1 635 |
| Operational EBITDA | 67 | 157 | -57.0% | 133 | -49.2% | 335 | 433 | -22.7% | 550 |
| Operational EBITDA margin | 20.3% | 37.9% | 33.7% | 29.8% | 35.5% | 33.6% | |||
| Operational EBIT | 39 | 125 | -68.9% | 103 | -62.1% | 245 | 336 | -27.3% | 427 |
| Operational EBIT margin | 11.7% | 30.3% | 26.1% | 21.8% | 27.6% | 26.1% | |||
| Operational ROOC | 5.9% | 20.9% | 15.6% | 12.8% | 18.9% | 17.9% | |||
| Cash flow from operations | 114 | 120 | -4.8% | 138 | -17.8% | 358 | 321 | 11.4% | 438 |
| Cash flow after investing activities | 82 | 94 | -12.9% | 104 | -21.4% | 254 | 247 | 2.8% | 327 |
| Pulp deliveries, 1 000 tonnes | 596 | 595 | 0.1% | 628 | -5.0% | 1 811 | 1 821 | -0.5% | 2 432 |
• Sales decreased by about 20% or EUR 82 million from last year's record high Q3 to EUR 331 million. Significantly lower pulp prices were only partly offset by positive sales foreign exchange rates.
• Operational EBIT also decreased EUR 86 million to EUR 39 million from last year's all-time high level. Significantly lower pulp prices and higher wood costs were only partly offset by higher total volume impact.
| Product | Market | Demand Q3/19 compared with Q3/18 |
Demand Q3/19 compared with Q2/19 |
Price Q3/19 compared with Q3/18 |
Price Q3/19 compared with Q2/19 |
|---|---|---|---|---|---|
| Softwood pulp | Europe | Weaker | Stable | Significantly lower | Significantly lower |
| Hardwood pulp | Europe | Weaker | Stable | Slightly lower | Significantly lower |
| Hardwood pulp | China | Slightly stronger | Slightly stronger | Significantly lower | Significantly lower |
(Target: >15%)
| 2020 | 2019 | 2018 | |
|---|---|---|---|
| Q1 | – | Veracel Mill | – |
| Q2 | n/a | – | Enocell Mill |
| Q3 | n/a | Enocell Mill | Sunila Mill |
| Q4 | n/a | Montes del Plata and Skutskär mills |
Montes del Plata and Skutskär mills |
The Wood Products division is a leading provider of innovative wood-based solutions. The product range covers all areas of construction, including massive wooden elements and wooden components. It also includes a variety of sawn timber goods and pellets for sustainable heating. The emerging product range of Biocomposites addresses the opportunities to replace plastics in consumer goods and creates potential in various demanding exterior applications in a cost-competitive way.
| Change % Q3/19- |
Change % Q3/19- |
Q1- | Q1- | Change % Q1-Q3/19– |
|||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/19 | Q3/18 | Q3/18 | Q2/19 | Q2/19 | Q3/19 | Q3/18 | Q1-Q3/18 | 2018 |
| Sales | 380 | 400 | -4.9% | 412 | -7.6% | 1 195 | 1 223 | -2.3% | 1 622 |
| Operational EBITDA | 39 | 56 | -29.4% | 47 | -17.3% | 127 | 149 | -14.5% | 199 |
| Operational EBITDA margin | 10.3% | 13.9% | 11.5% | 10.6% | 12.2% | 12.3% | |||
| Operational EBIT | 27 | 48 | -42.7% | 35 | -23.1% | 92 | 123 | -25.5% | 165 |
| Operational EBIT margin | 7.2% | 11.9% | 8.6% | 7.7% | 10.1% | 10.2% | |||
| Operational ROOC | 15.8% | 31.6% | 20.3% | 18.9% | 28.3% | 28.1% | |||
| Cash flow from operations | 57 | 57 | 0.3% | 51 | 12.5% | 126 | 109 | 16.0% | 147 |
| Cash flow after investing activities | 47 | 37 | 25.2% | 38 | 22.0% | 93 | 57 | 64.4% | 80 |
| Wood products deliveries, 1 000 m3 | 1 185 | 1 207 | -1.8% | 1 251 | -5.2% | 3 604 | 3 684 | -2.2% | 4 932 |
• Sales decreased by about 5%, or EUR 20 million to EUR 380 million mainly due to lower classic sawn prices and slightly lower deliveries.
| Product | Market | Demand Q3/19 compared with Q3/18 |
Demand Q3/19 compared with Q2/19 |
Price Q3/19 compared with Q3/18 |
Price Q3/19 compared with Q2/19 |
|---|---|---|---|---|---|
| Wood products | Europe | Weaker | Significantly weaker | Lower | Slightly lower |
15.8%
(Target: >20%)
Stora Enso is the second largest paper producer in Europe with an established customer base and a wide product portfolio for print and office use. Customers benefit from Stora Enso's broad selection of papers made from recycled and virgin fiber as well as our valuable industry experience, know-how and customer support.
| Change % Q3/19- |
Change % Q3/19- |
Q1- | Q1- | Change % Q1-Q3/19– |
|||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/19 | Q3/18 | Q3/18 | Q2/19 | Q2/19 | Q3/19 | Q3/18 | Q1-Q3/18 | 2018 |
| Sales | 690 | 779 | -11.4% | 712 | -3.0% | 2 162 | 2 305 | -6.2% | 3 066 |
| Operational EBITDA | 76 | 93 | -18.1% | 76 | -0.4% | 248 | 271 | -8.8% | 345 |
| Operational EBITDA margin | 11.0% | 11.9% | 10.7% | 11.5% | 11.8% | 11.3% | |||
| Operational EBIT | 50 | 65 | -23.0% | 50 | 1.0% | 169 | 189 | -10.5% | 234 |
| Operational EBIT margin | 7.3% | 8.4% | 7.0% | 7.8% | 8.2% | 7.6% | |||
| Operational ROOC | 25.1% | 33.5% | 23.8% | 28.9% | 32.9% | 30.2% | |||
| Cash flow from operations | 118 | 78 | 52.3% | 70 | 70.0% | 247 | 191 | 29.2% | 222 |
| Cash flow after investing activities | 99 | 65 | 53.5% | 47 | 110.2% | 193 | 156 | 23.7% | 175 |
| Cash flow after investing activities to sales, % | 14.4% | 8.3% | 6.6% | 8.9% | 6.8% | 5.7% | |||
| Paper deliveries, 1 000 tonnes | 1 010 | 1 161 | -13.0% | 1 013 | -0.4% | 3 102 | 3 470 | -10.6% | 4 591 |
| Paper production, 1 000 tonnes | 988 | 1 216 | -18.8% | 995 | -0.8% | 3 084 | 3 545 | -13.0% | 4 633 |
• Sales decreased by about 11%, or EUR 89 million, to EUR 690 million, due to significantly lower paper deliveries. The divestment of the Dawang paper mill in China decreased third quarter sales by EUR 10 million.
• Operational EBIT decreased EUR 15 million to EUR 50 million. Significantly negative total volume impact was partly offset by good cost management, lower fixed costs due to the profit protection programme and lower variable costs mainly due to lower pulp costs.
| Product | Market | Demand Q3/19 compared with Q3/18 |
Demand Q3/19 compared with Q2/19 |
Price Q3/19 compared with Q3/18 |
Price Q3/19 compared with Q2/19 |
|---|---|---|---|---|---|
| Paper | Europe | Significantly weaker | Slightly stronger | Stable | Slightly lower |
(Target: >7%)
| 2020 | 2019 | 2018 | |
|---|---|---|---|
| Q1 | – | – | – |
| Q2 | n/a | Nymölla Mill | Oulu Mill |
| Q3 | n/a | Veitsiluoto Mill | Veitsiluoto Mill |
| Q4 | n/a | – | – |
1 The Paper division's financial target is cash flow after investing activities to sales (non-IFRS), because the division's goal is to generate cash flow for the Group so that it can transform into a renewable materials growth company.
The segment Other includes the Group's Swedish forest holdings, the Finnish forest equity-accounted investment Tornator, Stora Enso's shareholding in the energy company Pohjolan Voima, operations supplying wood to the Nordic and Baltic mills, plantations not connected to any mill site, and the Group's shared services and administration.
| Change % Q3/19- |
Change % | Q1- | Q1- | Change % Q1-Q3/19– |
|||||
|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q3/19 | Q3/18 | Q3/18 | Q2/19 | Q3/19-Q2/19 | Q3/19 | Q3/18 | Q1-Q3/18 | 2018 |
| Sales | 786 | 831 | -5.4% | 868 | -9.4% | 2 577 | 2 513 | 2.5% | 3 425 |
| Operational EBITDA | 26 | 11 | 139.0% | 3 | n/m | 59 | 33 | 78.9% | 48 |
| Operational EBITDA margin | 3.3% | 1.3% | 0.3% | 2.3% | 1.3% | 1.4% | |||
| Operational EBIT | 13 | 2 | n/m | -12 | 206.5% | 18 | 13 | 37.6% | 23 |
| Operational EBIT margin | 1.7% | 0.2% | -1.4% | 0.7% | 0.5% | 0.7% | |||
| Cash flow from operations | -34 | 11 | n/m | 112 | -130.0% | 3 | -59 | 104.6% | -52 |
| Cash flow after investing activities | -41 | -9 | n/m | 102 | -140.8% | -29 | -92 | 68.6% | -119 |
• Sales decreased EUR 45 million to EUR 786 million mainly due to decreased sales in Wood Supply, Energy services and Logistics services.
• Operational EBIT increased to EUR 13 million mainly due to lower costs.
| EUR million | 30 Sep 2019 | 30 Jun 2019 | 31 Dec 2018 | 30 Sep 2018 |
|---|---|---|---|---|
| Operative fixed assets1 | 10 057 | 10 018 | 6 636 | 6 544 |
| Equity accounted investments | 590 | 622 | 1 729 | 1 596 |
| Operative working capital, net | 1 163 | 1 274 | 1 078 | 1 112 |
| Non-current interest-free items, net | -506 | -508 | -488 | -475 |
| Operating Capital Total | 11 303 | 11 406 | 8 955 | 8 777 |
| Net tax liabilities | -701 | -710 | -132 | -145 |
| Capital Employed | 10 602 | 10 696 | 8 824 | 8 631 |
| Equity attributable to owners of the Parent |
6 875 | 6 722 | 6 714 | 6 436 |
| Non-controlling interests | -18 | 1 | 18 | 23 |
| Net interest-bearing liabilities | 3 745 | 3 973 | 2 092 | 2 172 |
| Financing Total | 10 602 | 10 696 | 8 824 | 8 631 |
1 Operative fixed assets include goodwill, other intangible assets, property, plant and equipment, right-of-use assets, biological assets, emission rights, and unlisted securities.
Cash and cash equivalents net of overdrafts decreased by EUR 132 million to EUR 694 million. Net debt decreased by EUR 228 million to EUR 3 745 (EUR 3 973) million mainly as a result of solid cash flow from operations. The ratio of net debt to the last 12 months' operational EBITDA was 2.2, unchanged from the previous quarter. The net debt/equity ratio on 30 September 2019 was 0.55 (0.59). The average interest rate on borrowings decreased to 3.3% (3.4%).
Stora Enso has a EUR 600 million committed revolving credit facility that was fully undrawn at the end of the quarter. Additionally, Stora Enso has access to various committed long-term sources of funding up to EUR 1 000 (1 000) million.
The fair value of Pohjolan Voima Oy (PVO) shares, accounted for as equity investment fair valued through other comprehensive income under the IFRS 9, increased in the quarter by EUR 98 million to EUR 493 million mainly due to the increase in electricity forward market prices and the lower cost of capital, partly offset by the delay in the Olkiluoto 3 nuclear power plant unit's regular electricity production start-up schedule to July 2020.
| EUR million | Q3/19 | Q3/18 | Change % Q3/19-Q3/18 |
Q2/19 | Change % Q3/19- Q2/19 |
Q1- Q3/19 |
Q1- Q3/18 |
Change % Q1-Q3/19– Q1-Q3/18 |
2018 |
|---|---|---|---|---|---|---|---|---|---|
| Operational EBITDA | 376 | 502 | -25.1% | 435 | -13.6% | 1 283 | 1 472 | -12.9% | 1 878 |
| IAC on operational EBITDA | -22 | 0 | - | -127 | 82.5% | -150 | -28 | n/m | 20 |
| Other adjustments | 8 | -24 | 132.2% | 163 | -95.3% | 159 | -23 | n/m | -104 |
| Change in working capital | 126 | -22 | n/m | 76 | 67.3% | -34 | -379 | 91.0% | -428 |
| Cash Flow from Operations | 488 | 457 | 6.9% | 548 | -10.9% | 1 258 | 1 042 | 20.7% | 1 365 |
| Cash spent on fixed and biological assets |
-141 | -128 | -9.7% | -120 | -17.4% | -384 | -370 | -3.8% | -525 |
| Acquisitions of equity accounted investments |
0 | -10 | 100.3% | 0 | -57.6% | -6 | -10 | 34.9% | -29 |
| Cash Flow after Investing Activities | 347 | 319 | 9.0% | 428 | -18.8% | 868 | 663 | 31.0% | 811 |
Third quarter 2019 cash flow after investing activities was strong at EUR 347 million. Working capital decreased by EUR 126 million, mainly due to active working capital management. Cash spent on fixed and biological assets was EUR 141 million. Payments related to the previously announced provisions amounted to EUR 9 million.
Additions to fixed and biological assets in the third quarter 2019 totalled EUR 150 (129) million, of which EUR 130 million were fixed assets including EUR 10 million of leases capex, and EUR 20 million of biological assets. Depreciations and impairment charges totalled EUR 130 (122) million. Additions in fixed and biological assets had a cash outflow impact of EUR 141 (128) million.
The main projects ongoing in the third quarter of 2019 were the Oulu Mill conversion in Finland, the chemi-thermomechanical pulp (CTMP) flash drying at Imatra Mills in Finland, the capacity extension and technology upgrade in the China Packaging unit, the fluff pulp investment at Skutskär Mill in Sweden, the dissolving pulp investment at Enocell Mill in Finland, the Launkalne wood products investment in Latvia, and the new steam turbine project at Maxau Mill in Germany.
| EUR million | Forecast 2019 | Forecast 2020 |
|---|---|---|
| Capital expenditure | 610–660 | 800–850 |
| Depreciation and operational decrease in biological asset values | 580–600 | 590–620 |
Stora Enso's capital expenditure forecast for 2019 includes approximately EUR 100 million for the Group's biological assets and the capitalised leasing contracts according to IFRS 16 Leases of approximately EUR 40 million. The capital expenditure forecast takes into account a reduction of EUR 50 million as part of the profit protection programme and the addition of EUR 70 million due to the conversion of Oulu Mill. The depreciation and operational decrease in the biological asset values forecast includes also the impact of IFRS 16. The operational decrease in biological asset values is forecast to be EUR 50–70 million.
TRI rate
| Q3/19 | Q3/18 | Q2/19 | Q1-Q3/19 | Q1-Q3/18 | 2018 | Milestone | Milestone to be reached by |
|
|---|---|---|---|---|---|---|---|---|
| TRI rate 1 2 | 7.4 | 4.9 | 7.2 | 7.1 | 5.4 | 6.1 | 5.3 | end of 2019 |
TRI (Total recordable incident) rate = number of incidents per one million hours worked
1 For own employees, including employees of the joint operations Veracel and Montes del Plata
2 Historical figures recalculated due to additional data after the previous Interim Reports
The injury rate increased during the third quarter. Slips, trips and poor control of equipment outside normal operations dominated reported incidents. During the quarter, the Consumer Board division worked for sixty-five days (more than one million working hours) without recordable incidents, showing that an accident-free workplace is possible.
| 30 Sep 2019 | 30 Jun 2019 | 31 Dec 2018 | 30 Sep 2018 | Target | |
|---|---|---|---|---|---|
| % of supplier spend covered by the | 95% | ||||
| Supplier Code of Conduct1 | 96% | 96% | 95% | 95% |
1 Excluding joint operations, intellectual property rights, leasing fees, financial trading, government fees such as customs, and wood purchases from private individual forest owners.
The target is to maintain the high coverage level of 95%.
Agreements with social landless movements and land occupations in Bahia, Brazil
| 30 Sep 2019 | 30 Jun 2019 | 31 Dec 2018 | 30 Sep 2018 | |
|---|---|---|---|---|
| Productive area occupied by social movements not involved in the |
||||
| agreements, ha | 469 | 480 | 468 | 3 019 |
At the end of the third quarter, 469 hectares of productive land owned by Veracel were occupied by social landless movements not involved in the agreements. Veracel continues to recover occupied areas through legal processes, and during the quarter the company resumed forest management on 11 hectares.
Previously Veracel has voluntarily reserved 16 500 hectares to support the Sustainable Settlement Initiative. At the end of 2018, the total land area owned by Veracel was 213 500 hectares, of which 76 000 hectares are planted with eucalyptus for pulp production.
Science-based target (SBT) performance compared to 2010 base-year level
| Q3/19 | Q3/18 | Q2/19 | Q1-Q3/19 | Q1-Q3/18 | 2018 | Target | Target to be reached by |
|
|---|---|---|---|---|---|---|---|---|
| Reduction of fossil CO2e emissions | ||||||||
| per saleable tonne of board, pulp, and | ||||||||
| paper (kg/t) 1 2 | -26% | -23% | -23% | -21% | -18% | -18% | -31% | end of 2030 |
1 Covering direct fossil CO2e emissions from production and indirect fossil CO2e emissions related to purchased electricity and heat (Scope 1 and 2). Excluding joint operations.
² Historical figures recalculated due to additional data after the Q2/2019 Interim Report.
In 2017, the Science Based Target initiative approved our 2030 target to reduce by 31% our greenhouse gas (GHG) emissions from operations per tonne of board, pulp, and paper produced compared to a 2010 base-year.
In the third quarter, the CO2e emissions decreased due to a significant new contract to purchase certified renewable electricity in Poland from the national pool.
Stora Enso was ranked first out of companies based in Finland, and first out of companies in the forest sector for gender balance and gender equality by Equileap.
Stora Enso received the highest rating for sustainability communications in a report by the Mistra Center for Sustainable markets and the Stockholm School of Economics assessing 95 companies listed on the Nasdaq OMX Stockholm Large Cap Index in Sweden.
Stora Enso's Annual Report 2018 including the Sustainability report, was top-ranked by ReportWatch. Stora Enso's report received the highest A+ ranking among more than 300 reports globally.
Stora Enso's Sustainability report 2018 was rated among the top ten globally by the World Business Council for Sustainable Development (WBCSD).
During the quarter, Stora Enso was reconfirmed asa FTSE4Good Index Series constituent.
Increasing competition, and supply and demand imbalances in the paper, pulp, packaging, wood products and roundwood markets may affect Stora Enso's market share and profitability. Changes in the global economic and political environment, sharp market corrections, increasing volatility in foreign exchange rates and deteriorating economic conditions in the main markets could all affect Stora Enso's profits, cash flows and financial position.
With reference to current geopolitical circumstances, there is an increasing risk of an escalation in protectionist measures to the extent that global trade could materially shrink. This would have major knock-on effects for inflation, business sentiment, consumer sentiment and ultimately global economic growth.
To mitigate the impact of deteriorating geopolitical and macroeconomic conditions, and increased uncertainty in the global economy, Stora Enso has initiated a Profit Protection Programme, targeting EUR 275 million reductions in fixed and variable costs by the end of 2021.
Other risks and uncertainties include, but are not limited to, general industry conditions, such as changes in the cost or availability of raw materials, energy and transportation costs, unanticipated expenditures related to the cost of compliance with existing and new environmental and other governmental regulations and to actual or potential litigation, material disruption at one of our manufacturing facilities, risks inherent in conducting business through joint ventures, and other factors that can be found in Stora Enso's press releases and disclosures.
A more detailed description of risks is available in Stora Enso's Financial Report at storaenso.com/annualreport2018
Energy sensitivity analysis: the direct effect of a 10% increase in electricity and fossil fuel market prices would have a negative impact of approximately EUR 14 million on operational EBIT for the next 12 months.
Wood sensitivity analysis: the direct effect of a 10% increase in wood prices would have a negative impact of approximately EUR 193 million on operational EBIT for the next 12 months.
Pulp sensitivity analysis: the direct effect of a 10% increase in pulp market prices would have a positive impact of approximately EUR 125 million on operational EBIT for the next 12 months.
Chemical and filler sensitivity analysis: the direct effect of a 10% increase in chemical and filler prices would have a negative impact of approximately EUR 55 million on operational EBIT for the next 12 months.
A decrease of energy, wood, pulp or chemical and filler prices would have the opposite impact.
Foreign exchange rates 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 against the euro would be approximately positive EUR 140 million, negative EUR 98 million and positive EUR 31 million annual impact, respectively. Weakening of the currencies would have the opposite impact. These numbers are before the effect of hedges and assuming no changes occur other than a single currency exchange rate movement.
The Group incurs annual unhedged net costs worth approximately EUR 120 million in Brazilian real (BRL) in its operations in Brazil and approximately EUR 110 million in Chinese Renminbi (CNY) in its operations in China. For these flows, a 10% strengthening in the value of a foreign currency would have a EUR 12 million and EUR 11 million negative 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.
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.
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 BRL 20 (EUR 5) 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.
In July and August 2016, six Swedish insurance companies filed lawsuits in the Environmental Court and the District Court of Falun against Stora Enso, due to damage caused by the forest fire in Västmanland, Sweden, in 2014. The claimed amount is approximately SEK 300 (EUR 30) million, excluding interest. Stora Enso denies liability. The Supreme Court has in a decision found that the Environmental code is not applicable on damage caused by fire, closing the procedure in the Environmental Court. Further the Supreme Court, in a case in which Stora Enso is not party, has ruled that a traffic insurance held by Stora Enso's sub-supplier is applicable on the damage. This traffic insurance cover damage up to SEK 300 million, excluding interest, which corresponds to the amount claimed from Stora Enso.
In January 2018, a Swedish prosecutor filed a lawsuit against Stora Enso and its supplier, due to the forest fire in Västmanland, Sweden in 2014, claiming a company fine of SEK 5 million each. Both Stora Enso and the supplier have disputed the claim. The trial is currently ongoing, and is expected to be finalised during the fourth quarter of 2019.
On 25 September 2019 Stora Enso's Board of Directors appointed Annica Bresky as President and CEO of Stora Enso as of 1 December 2019. She is currently Executive Vice President and Head of Stora Enso's Consumer Board division. She replaces the current CEO Karl-Henrik Sundström, who announced in August 2019 that he would leave his position.
Stora Enso will establish a new Forest division and start reporting it separately at the beginning of 2020. The new division will include the Group's Swedish forest assets (including the recently-acquired Bergvik Skog Väst AB) and its 41% share of the equity accounted investment Tornator with the majority of its forest assets located in Finland. The Forest division will also include wood supply operations in Finland, Sweden, Russia and the Baltic countries. Tree plantations in Asia and South America linked to local pulp mills continue to be reported as previously under the Biomaterials and Consumer Board divisions.
Stora Enso Oyj's Annual General Meeting (AGM) was held on 14 March 2019 in Helsinki. The AGM approved the proposal by the Board of Directors that the Company distributes a dividend of EUR 0.50 per share for the year 2018.
The AGM approved the proposal that of the current members of the Board of Directors – Jorma Eloranta, Elisabeth Fleuriot, Hock Goh, Christiane Kuehne, Antti Mäkinen, Richard Nilsson, Göran Sandberg, and Hans Stråberg – be re-elected members of the Board of Directors until the end of the following AGM and that Mikko Helander be elected new member of the Board of Directors for the same term of office. The AGM elected Jorma Eloranta as Chair of the Board of Directors and Hans Stråberg as Vice Chair.
The AGM approved the proposed annual remuneration for the Board of Directors as follows:
| Chair | EUR 192 000 (2018: 175 000) | |
|---|---|---|
| Vice Chair | EUR 109 000 (2018: 103 000) | |
| Members | EUR 74 000 (2018: 72 000) |
The AGM also approved the proposal that the annual remuneration for the members of the Board of Directors, be paid in Company shares and cash so that 40% will be paid in Stora Enso R shares to be purchased on the Board members' behalf from the market at a price determined in public trading, and the rest in cash.
The AGM also approved the proposed annual remuneration for the Board committees.
The AGM approved the proposal that PricewaterhouseCoopers Oy be elected as auditor until the end of the following AGM. PricewaterhouseCoopers Oy has notified the company that Samuli Perälä, APA, will act as the responsible auditor. It was resolved that the remuneration for the auditor shall be paid according to invoice approved by the Financial and Audit Committee.
The AGM approved the proposals that the Board of Directors be authorised to decide on the repurchase and on the issuance of Stora Enso R shares. The amount of shares to be issued or repurchased shall not exceed a total of 2 000 000 R shares, corresponding to approximately 0.25% of all shares and 0.33% of all R shares.
At its meeting held after the AGM, Stora Enso's Board of Directors elected Richard Nilsson (chair), Jorma Eloranta, and Elisabeth Fleuriot as members of the Financial and Audit Committee.
Jorma Eloranta (chair), Antti Mäkinen and Hans Stråberg were elected members of the Remuneration Committee.
Christiane Kuehne (chair), Hock Goh and Göran Sandberg were elected members of the Sustainability and Ethics Committee.
During the third quarter of 2019, the conversions of 772 A shares into R shares were recorded in the Finnish trade register. On 30 September 2019, Stora Enso had 176 258 064 A shares and 612 361 923 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 237 494 256.
On 15 October, the conversion of 1 000 A shares into R shares was recorded in the Finnish trade register. On 22 October, Stora Enso announced that it had completed the divestment of its stake in the Dawang paper mill in China.
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. This report has been prepared in Finnish, English and Swedish. If there are any variations in the content between the versions, the English version shall govern. This report is unaudited.
Helsinki, 29 October 2019 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 2018 with the exception of new and amended standards applied to the annual periods beginning on 1 January 2019.
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.
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 items affecting comparability are capital gains and losses, additional write-downs or reversals of write-downs, provisions for planned restructuring, 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, valuations of biological assets and the Group's share of income tax and net financial items of EAI. Until the end of 2018, fair valuations and non-operational items also included equity incentive schemes and related hedges. The previous periods have not been restated due to immateriality.
Cash flow from operations (non-IFRS) is a Group specific way to present operative cash flow starting from operational EBITDA instead of operating profit.
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.
The full list of the non-IFRS measures is presented at the end of this report.
Stora Enso has applied the following new and amended standards from 1 January 2019:
• IFRS 16 Leases. The new leasing standard replaced the guidance in IAS 17 and related interpretations and is a significant change in accounting by lessees in particular. IFRS 16 requires lessees to recognize a lease liability reflecting future lease payments and a right-of-use (ROU) asset for virtually all lease contracts. The distinction between operating and finance lease is removed for lessees. Before transition to IFRS 16, the Group had mainly contracts classified as operating leases, which were not capitalised and Stora Enso did not have any material finance lease contracts in effect at the end of 2018. Stora Enso is mainly acting as a lessee and does not have any material lease agreements where it would act as a lessor.
In accordance IFRS 16, at inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The change in lease definition mainly relates to the concept of control and amendment in lease definition have no material effect to the Group.
Stora Enso adopted IFRS 16 on 1 January 2019, using the modified retrospective approach and therefore the comparative information will not be restated and continues to be reported under IAS 17 and IFRIC 4. Effect of initial application of IFRS 16 is recognised in balance sheet at 1 January 2019. At transition, lease liabilities are measured at the present value of the remaining lease payments, discounted at the Group's incremental borrowing rate. ROU assets are measured an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. The Group allocates the consideration in the contract to each lease component and will separate non-lease components if these are identifiable.
ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted mainly for lease payments made at or before the commencement date. The ROU assets are subsequently depreciated using the straightline method from the commencement date to the earlier of the end of the lease term or the end of the useful life of the ROU asset. In addition, the ROU asset is adjusted for certain remeasurements of the lease liability. ROU assets are tested for impairment in accordance with IAS 36 Impairment of Assets.
Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Group's incremental borrowing rate. The lease term applied corresponds to the non-cancellable period except in cases where the Group is reasonably certain to exercise renewal option or prolong the contract. The lease liabilities are measured at amortised cost using the effective interest method. Lease liabilities are remeasured mainly when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in the Group's assessment whether it will exercise an extension option. When lease liability is remeasured, a corresponding adjustment is generally made to the carrying amount of the ROU asset.
The Group has elected not to recognise ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. The Group has also applied the exemption not to recognise contracts which are ending in 2019. The Group has defined low value asset exemption to include leases in which the underlying asset is not material to Stora Enso. The assessment of whether the underlying asset is material and is within the scope or excluded from the recognition requirements of IFRS 16 is based on the concept of materiality in the Conceptual Framework and IAS 1. Leases of low value assets are mainly including IT and office equipment, certain vehicles and machinery and other low value items. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. In addition the Group has applied hindsight in determination of lease term if lease contract includes extension options.
On transition to IFRS 16, leases previously classified as operating leases under IAS 17 resulted in the recognition of ROU assets and lease liabilities. It also resulted in decrease in operative expenses and an increase in depreciation charges and interest expenses. Under IFRS 16, cash paid for interest portion of lease liability is presented as part of operating activities and cash payments for the principal portion of lease liability is presented as part of financing activities. The adoption of IFRS 16 does not have an impact on the total net cash flow. Stora Enso's most material lease agreements capitalised at the implementation consist of land leases (~55%), operative machinery and equipment (~30%) and properties (~15%).
Undiscounted operating lease commitments at the end of 2018 were EUR 731 million. On transition to IFRS 16, the Group recognised an additional EUR 525 million of lease liabilities. No adjustment to the opening balance of retained earnings has been made due to IFRS 16 transition. The weighted average discount rate was 4.1%.
| EUR million | 1 Jan 2019 |
|---|---|
| Operating lease commitments at 31 December 2018 | 731 |
| Discounted using the incremental borrowing rates at 1 January 2019 | 544 |
| Finance lease liabilities recognised as at 31 December 2018 | 1 |
| Short term leases | -9 |
| Leases of low-value assets | -16 |
| Other* | 5 |
| Lease liabilities recognised at 1 January 2019 | 526 |
| Finance lease liabilities recognised as at 31 December 2018 | -1 |
| Additional lease liabilities as a result of the initial application of IFRS 16 | 525 |
* Lease period adjustments (e.g. extension options), exclusion of non-lease components and variable rents not included in the measurement of the lease liability
As at 1 January 2019, the Group recognised an additional EUR 530 million of ROU assets. Amount is including prepaid expenses of EUR 5 million, presented as accrued expenses in balance sheet before transition and reclassified to ROU assets at IFRS 16 implementation. In addition certain land use contracts, amounting to EUR 80 million, before IFRS 16 transition accounted as intangible assets were classified on transition to IFRS 16 as leases. All the liabilities related to the arrangements have already been settled in previous periods and therefore there is no effect on the lease liability or income statement.
• Other amended IFRS standards and interpretations do not have material effect on the Group.
• No future standard changes endorsed by the EU.
| EUR million | Q3/19 | Q3/18 | Q2/19 | Q1-Q3/19 | Q1-Q3/18 | 2018 |
|---|---|---|---|---|---|---|
| Sales | 2 402 | 2 585 | 2 608 | 7 644 | 7 828 | 10 486 |
| Other operating income | 40 | 19 | 33 | 110 | 65 | 92 |
| Change in inventories of finished goods and WIP | -27 | 58 | -28 | -14 | 127 | 125 |
| Materials and services | -1 429 | -1 527 | -1 523 | -4 529 | -4 555 | -6 157 |
| Freight and sales commissions | -221 | -232 | -228 | -679 | -700 | -932 |
| Personnel expenses | -302 | -308 | -349 | -984 | -991 | -1 330 |
| Other operating expenses | -120 | -115 | -302 | -537 | -393 | -526 |
| Share of results of equity accounted investments | -12 | 25 | 69 | 63 | 70 | 181 |
| Change in net value of biological assets | -16 | -20 | -11 | -40 | -51 | -68 |
| Depreciation, amortisation and impairment charges | -145 | -122 | -128 | -408 | -365 | -479 |
| Operating Profit | 170 | 363 | 142 | 624 | 1 034 | 1 390 |
| Net financial items | -55 | -58 | -48 | -134 | -139 | -180 |
| Profit before Tax | 115 | 305 | 93 | 490 | 895 | 1 210 |
| Income tax | -57 | -101 | -41 | -154 | -205 | -221 |
| Net Profit for the Period | 59 | 204 | 52 | 336 | 690 | 988 |
| Attributable to: | ||||||
| Owners of the Parent | 70 | 214 | 59 | 360 | 709 | 1 013 |
| Non-controlling interests | -11 | -10 | -7 | -24 | -19 | -24 |
| Net Profit for the Period | 59 | 204 | 52 | 336 | 690 | 988 |
| Earnings per Share | ||||||
| Basic earnings per share, EUR | 0.09 | 0.27 | 0.08 | 0.46 | 0.90 | 1.28 |
| Diluted earnings per share, EUR | 0.09 | 0.27 | 0.08 | 0.46 | 0.90 | 1.28 |
| EUR million | Q3/19 | Q3/18 | Q2/19 | Q1-Q3/19 | Q1-Q3/18 | 2018 |
|---|---|---|---|---|---|---|
| Net profit/loss for the period | 59 | 204 | 52 | 336 | 690 | 988 |
| Other Comprehensive Income (OCI) | ||||||
| Items that will Not be Reclassified to Profit and Loss | ||||||
| Equity instruments at fair value through other comprehensive income | 99 | 151 | -4 | 76 | 155 | 97 |
| Actuarial gains and losses on defined benefit plans | -4 | -4 | 0 | -4 | -4 | -24 |
| Income tax relating to items that will not be reclassified | 1 | 1 | 1 | 2 | 0 | 5 |
| 95 | 148 | -3 | 73 | 151 | 78 | |
| Items that may be Reclassified Subsequently to Profit and Loss | ||||||
| Share of OCI of EAIs that may be reclassified | 0 | 1 | 11 | 11 | 3 | 4 |
| Currency translation movements on equity net investments (CTA) | 25 | 17 | 129 | 181 | -69 | -36 |
| Currency translation movements on non-controlling interests | 0 | -1 | 0 | 0 | -1 | 0 |
| Net investment hedges and loans | -11 | -3 | 1 | -16 | -11 | -14 |
| Cash flow hedges | -31 | 18 | 4 | -61 | -45 | -24 |
| Cost of hedging - time value of options | -1 | 1 | 2 | 0 | -1 | -2 |
| Non-controlling interests' share of cash flow hedges | 0 | -1 | -1 | -1 | -1 | -2 |
| Income tax relating to items that may be reclassified | 8 | -5 | -5 | 12 | 11 | 7 |
| -11 | 27 | 140 | 126 | -114 | -68 | |
| Total Comprehensive Income | 143 | 379 | 189 | 536 | 727 | 999 |
| Attributable to: | ||||||
| Owners of the Parent | 154 | 391 | 198 | 561 | 748 | 1 025 |
| Non-controlling interests | -11 | -12 | -9 | -25 | -21 | -27 |
| Total Comprehensive Income | 143 | 379 | 189 | 536 | 727 | 999 |
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
EAI = Equity Accounted Investments
| EUR million | 30 Sep 2019 | 31 Dec 2018 | 30 Sep 2018 |
|---|---|---|---|
| Assets | |||
| Goodwill O |
312 | 243 | 238 |
| Other intangible assets O |
168 | 254 | 246 |
| Property, plant and equipment O |
5 530 | 5 234 | 5 113 |
| Right-of-use assets O |
530 | 0 | 0 |
| 6 539 | 5 731 | 5 596 | |
| Biological assets O |
2 982 | 457 | 444 |
| Emission rights O |
39 | 26 | 30 |
| Equity accounted investments O |
590 | 1 729 | 1 596 |
| Listed securities I |
9 | 13 | 17 |
| Unlisted securities O |
496 | 422 | 474 |
| Non-current interest-bearing receivables I |
76 | 54 | 55 |
| Deferred tax assets T |
85 | 120 | 81 |
| Other non-current assets O |
40 | 48 | 46 |
| Non-current Assets | 10 857 | 8 601 | 8 339 |
| Inventories O |
1 519 | 1 567 | 1 503 |
| Tax receivables T |
9 | 9 | 10 |
| Operative receivables O |
1 319 | 1 487 | 1 453 |
| Interest-bearing receivables I |
16 | 55 | 54 |
| Cash and cash equivalents I |
713 | 1 130 | 1 005 |
| Current Assets | 3 576 | 4 248 | 4 025 |
| Total Assets | 14 432 | 12 849 | 12 364 |
| Equity and Liabilities | |||
| Owners of the Parent | 6 875 | 6 714 | 6 436 |
| Non-controlling Interests | -18 | 18 | 23 |
| Total Equity | 6 857 | 6 732 | 6 459 |
| Post-employment benefit provisions O |
383 | 401 | 386 |
| Other provisions O |
130 | 101 | 102 |
| Deferred tax liabilities T |
744 | 168 | 143 |
| Non-current interest-bearing liabilities I |
3 508 | 2 265 | 2 243 |
| Other non-current operative liabilities O |
34 | 34 | 34 |
| Non-current Liabilities | 4 798 | 2 970 | 2 907 |
| Current portion of non-current debt I |
332 | 403 | 425 |
| Interest-bearing liabilities I |
700 | 675 | 613 |
| Bank overdrafts I |
19 | 1 | 21 |
| Other provisions O |
21 | 16 | 16 |
| Other operative liabilities O |
1 653 | 1 960 | 1 828 |
| Tax liabilities T |
52 | 92 | 93 |
| Current Liabilities | 2 778 | 3 147 | 2 997 |
| Total Liabilities | 7 575 | 6 117 | 5 904 |
| Total Equity and Liabilities | 14 432 | 12 849 | 12 364 |
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-Q3/19 | Q1-Q3/18 |
|---|---|---|
| Cash Flow from Operating Activities | ||
| Operating profit | 624 | 1 034 |
| Adjustments for non-cash items | 668 | 387 |
| Change in net working capital | -34 | -379 |
| Cash Flow Generated by Operations | 1 258 | 1 042 |
| Net financial items paid | -112 | -99 |
| Income taxes paid, net | -139 | -124 |
| Net Cash Provided by Operating Activities | 1 008 | 819 |
| Cash Flow from Investing Activities | ||
| Acquisition of subsidiary shares and business operations, net of acquired cash | -464 | 0 |
| Acquisitions of equity accounted investments | -6 | -10 |
| Proceeds from disposal of subsidiary shares and business operations, net of disposed cash | 0 | 40 |
| Proceeds from disposal of unlisted securities | 5 | 1 |
| Proceeds and advances from disposal of intangible assets and property, plant and equipment | 7 | 7 |
| Capital expenditure | -384 | -370 |
| Proceeds from non-current receivables, net | -19 | 3 |
| Net Cash Used in Investing Activities | -863 | -330 |
| Cash Flow from Financing Activities | ||
| Proceeds from issue of new long-term debt | 871 | 568 |
| Repayment of long-term debt and lease liabilities | -1 043 | -331 |
| Change in short-term borrowings | -15 | -17 |
| Dividends paid | -394 | -323 |
| Buy-out of interest in subsidiaries from non-controlling interests | -8 | 0 |
| Equity injections from, less dividends to, non-controlling interests | -4 | -2 |
| Purchase of own shares1 | -3 | -5 |
| Net Cash Provided by Financing Activities | -597 | -111 |
| Net Change in Cash and Cash Equivalents | -452 | 378 |
| Translation adjustment | 18 | 2 |
| Net cash and cash equivalents at the beginning of period | 1 128 | 603 |
| Net Cash and Cash Equivalents at Period End | 694 | 983 |
| Cash and Cash Equivalents at Period End | 713 | 1 005 |
| Bank Overdrafts at Period End | -19 | -21 |
| Net Cash and Cash Equivalents at Period End | 694 | 983 |
1 Own shares purchased for the Group's share award programme. The Group did not hold any of its own shares at 30 September 2019.
| Fair Valuation Reserve | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR million | Share Capital |
Share Premium and Reserve fund |
Invested Non Restricted Equity Fund |
Treasury Shares |
Step Acquisition Revaluation Surplus |
Equity investments through OCI |
Available for-Sale Investments |
Cash Flow Hedges |
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 31 December 2017 | 1 342 | 77 | 633 | — | 4 | — | 205 | 15 | -14 | -288 | 4 034 | 6 008 | 47 | 6 055 |
| Adoption of IFRS 2 and IFRS 9 | — | — | — | — | — | 205 | -205 | — | — | — | 8 | 8 | — | 8 |
| Balance at 1 January 2018 | 1 342 | 77 | 633 | — | 4 | 205 | — | 15 | -14 | -288 | 4 042 | 6 016 | 47 | 6 063 |
| Profit/loss for the period | — | — | — | — | — | — | — | — | — | — | 709 | 709 | -19 | 690 |
| OCI before tax | — | — | — | — | — | 155 | — | -47 | 3 | -80 | -4 | 28 | -2 | 26 |
| Income tax relating to components of OCI |
— | — | — | — | — | 1 | — | 9 | — | 2 | -1 | 11 | — | 11 |
| Total Comprehensive Income | — | — | — | — | — | 156 | — | -37 | 3 | -78 | 704 | 748 | -21 | 727 |
| Dividend | — | — | — | — | — | — | — | — | — | — | -323 | -323 | -3 | -326 |
| Purchase of treasury shares | — | — | — | -5 | — | — | — | — | — | — | — | -5 | — | -5 |
| Share-based payments | — | — | — | 5 | — | — | — | — | — | — | -5 | — | — | — |
| Balance at 30 September 2018 | 1 342 | 77 | 633 | — | 4 | 361 | — | -22 | -11 | -366 | 4 418 | 6 436 | 23 | 6 459 |
| Profit/loss for the period | — | — | — | — | — | — | — | — | — | — | 304 | 304 | -5 | 299 |
| OCI before tax | — | — | — | — | — | -58 | — | 20 | — | 30 | -20 | -28 | — | -28 |
| Income tax relating to components of OCI |
— | — | — | — | — | 1 | — | -5 | — | 1 | 5 | 2 | — | 2 |
| Total Comprehensive Income | — | — | — | — | — | -57 | — | 16 | — | 31 | 288 | 278 | -6 | 272 |
| Dividend | — | — | — | — | — | — | — | — | — | — | — | — | 1 | 1 |
| Acquisitions and disposals | — | — | — | — | — | — | — | — | — | — | — | — | -2 | -2 |
| NCI buy-out | — | — | — | — | — | — | — | — | — | — | -2 | -2 | 2 | — |
| Purchase of treasury shares | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Share-based payments | — | — | — | — | — | — | — | — | — | — | 2 | 2 | — | 2 |
| Balance at 31 December 2018 | 1 342 | 77 | 633 | — | 4 | 304 | — | -7 | -11 | -335 | 4 706 | 6 714 | 18 | 6 732 |
| Profit/loss for the period | — | — | — | — | — | — | — | — | — | — | 360 | 360 | -24 | 336 |
| OCI before tax | — | — | — | — | — | 76 | — | -61 | 11 | 164 | -4 | 186 | — | 186 |
| Income tax relating to components of OCI |
— | — | — | — | — | 1 | — | 9 | — | 3 | 1 | 14 | — | 14 |
| Total Comprehensive Income | — | — | — | — | — | 77 | — | -51 | 11 | 167 | 357 | 561 | -25 | 536 |
| Dividend | — | — | — | — | — | — | — | — | — | — | -394 | -394 | -1 | -395 |
| Acquisitions and disposals | — | — | — | — | — | — | — | — | — | — | — | — | -10 | -10 |
| Purchase of treasury shares | — | — | — | -3 | — | — | — | — | — | — | — | -3 | — | -3 |
| Share-based payments | — | — | — | 3 | — | — | — | — | — | — | -5 | -2 | — | -2 |
| Balance at 30 September 2019 | 1 342 | 77 | 633 | — | 4 | 381 | — | -58 | — | -168 | 4 664 | 6 875 | -18 | 6 857 |
CTA = Cumulative Translation Adjustment OCI = Other Comprehensive Income NCI = Non-controlling Interests
| EUR million | Q1-Q3/19 | Q1-Q3/18 | 2018 |
|---|---|---|---|
| Carrying value at 1 January | 6 187 | 6 224 | 6 224 |
| Additions in right-of-use assets due to adoption of IFRS 16 | 530 | 0 | 0 |
| Additions in tangible and intangible assets | 281 | 276 | 491 |
| Additions in right-of-use assets | 22 | 0 | 0 |
| Additions in biological assets | 51 | 61 | 83 |
| Costs related to growth of biological assets | -40 | -46 | -66 |
| Acquisition of subsidiary companies | 2 925 | 0 | 5 |
| Disposals | -5 | -10 | -5 |
| Disposals of subsidiary companies | 0 | -30 | -37 |
| Depreciation and impairment | -408 | -365 | -479 |
| Fair valuation of biological assets | 0 | -5 | -2 |
| Translation difference and other | -22 | -65 | -26 |
| Statement of Financial Position Total | 9 521 | 6 040 | 6 187 |
The Group owns 49.8% of shares in Bergvik Skog AB which continue to be reported as an equity accounted investment.
On 31 May 2019, Bergvik Väst AB, a subsidiary of Bergvik Skog AB, was distributed as dividend to the shareholders of Bergvik Skog AB. At the same date the Group acquired additional 20% of the shares in Bergvik Väst AB from other shareholders resulting in a total holding in Bergvik Väst AB of 69.8%. Simultaneously, Bergvik Väst AB was demerged and Stora Enso became the 100% owner of a new subsidiary holding around 69.8% of the former Bergvik Väst AB assets and liabilities. The acquisition date of the new subsidiary is 31 May 2019.
As a result of the transaction Stora Enso's direct forest holdings in Sweden are 1.4 million hectares, of which 1.15 million hectares is productive forest land.
Separately from the above transactions Stora Enso also acquired from Bergvik Skog AB 100% of the nursery business Bergvik Skog Plantor AB, three wind turbine projects and real estates companies, presented in the table below as Other acquisitions.
The fair values of the identifiable assets and liabilities as at the acquisition date are presented in the table below:
| Acquisition of 69.8% of |
|||
|---|---|---|---|
| EUR million | Bergvik Väst AB |
Other acquisitions |
Total |
| Cash and cash equivalents, net of bank overdrafts | 64 | 0 | 64 |
| Land | 305 | - | 305 |
| Other property, plant and equipment | 8 | 19 | 27 |
| Biological assets | 2 524 | - | 2 524 |
| Operating working capital | -35 | 7 | -29 |
| Tax liabilities 1 | -582 | 0 | -583 |
| Interest-bearing liabilities | -793 | - | -793 |
| Fair value of Net Assets Acquired | 1 491 | 25 | 1 516 |
| Purchase consideration on acquisitions, cash part 1 | 500 | 27 | 527 |
| Fair value of 49.8% of shares in Bergvik Väst AB, non-cash | 1 058 | - | 1 058 |
| Total Purchase Consideration | 1 558 | 27 | 1 585 |
| Fair value of Net Assets Acquired | -1 491 | -25 | -1 516 |
| Goodwill (provisional for 2019) | 67 | 2 | 69 |
| Cash out flow with purchase consideration on acquisitions 1 | -500 | -27 | -527 |
| Cash and cash equivalents, net of bank overdrafts of acquired subsidiaries | 64 | 0 | 64 |
| Cash flow on acquisition of subsidiary shares and business operations, net of acquired cash |
-436 | -27 | -463 |
1 Tax liabilities decreased by EUR 8 million and cash consideration decreased by EUR 1 million versus the preliminary balances presented in Q2/2019 Interim Report.
The fair value of the shares received as dividend was determined based on the acquired net assets value of Bergvik Väst AB, whereby the fair values of the biological assets and land were estimated through a discounted cash flow model. A deferred tax liability was also included in the acquisition balances.
The fair values of the acquired assets, liabilities and goodwill as at 30 June 2019 have been determined on a provisional basis pending finalisation of the post-combination review of the fair value of the acquired assets mainly with respect to biological assets valuation and related deferred tax liabilities.
The provisional goodwill represents the value of securing a competitive raw material supply for the long term in Sweden. With direct ownership, Stora Enso will have better visibility of its wood supply and the acquisition provides better opportunities to further develop sustainable forest management and strengthening of Group's competitiveness. The goodwill has been allocated to the Divisions benefiting from the acquisition.
Almost all the revenues of the acquired entity are internal from Stora Enso Group point of view. The acquired entity's net profit has been reported for the first five months of the year in the Group result as part of the Share of results of the equity accounted investments. Therefore, even if the acquisition would have taken place from 1 January 2019 it would not have a significant impact on the Group sales and net profit figure for Q219 and for the first half of 2019. Related transaction costs during 2019 amounted to EUR 3 million and were recorded to Other operating expenses.
Mainly as a result of these transactions the total amount of equity accounted investments of the Group decreased from EUR 1 729 million at end of 2018 to EUR 622 million at end of June 2019.
| EUR million | 30 Sep 2019 | 30 Sep 2018 | 31 Dec 2018 |
|---|---|---|---|
| Bond loans | 1 970 | 1 499 | 1 523 |
| Loans from credit institutions | 1 363 | 1 162 | 1 140 |
| Lease liabilities | 466 | 0 | 0 |
| Finance lease liabilities | 0 | 1 | 1 |
| Derivative financial liabilities | 35 | 0 | 0 |
| Other non-current liabilities | 6 | 6 | 4 |
| Non-current interest bearing liabilities including current portion | 3 840 | 2 668 | 2 668 |
| Short-term borrowings | 610 | 498 | 566 |
| Interest payable | 33 | 38 | 40 |
| Derivative financial liabilities | 58 | 77 | 68 |
| Bank overdrafts | 19 | 21 | 1 |
| Total Interest-bearing Liabilities | 4 559 | 3 302 | 3 344 |
| EUR million | Q1-Q3/19 | Q1-Q3/18 | 2018 |
|---|---|---|---|
| Carrying value at 1 January | 3 344 | 3 016 | 3 016 |
| Additions in lease liabilities due to adoption of IFRS 16 | 525 | 0 | 0 |
| Acquisition of subsidiary companies | 793 | 0 | 0 |
| Proceeds of new long-term debt | 871 | 568 | 578 |
| Additions in lease liabilities | 22 | 0 | 0 |
| Repayment of long-term debt | -988 | -331 | -358 |
| Repayment of lease liabilities | -56 | 0 | 0 |
| Change in short-term borrowings and interest payable | 36 | -24 | 46 |
| Change in derivative financial liabilities | 25 | 41 | 32 |
| Translation differences and other | -14 | 32 | 30 |
| Total Interest-bearing Liabilities | 4 559 | 3 302 | 3 344 |
| EUR million | 30 Sep 2019 | 31 Dec 2018 | 30 Sep 2018 |
|---|---|---|---|
| On Own Behalf | |||
| Mortgages | 2 | 2 | 2 |
| Operating leases, in next 12 months | 0 | 100 | 91 |
| Operating leases, after next 12 months | 0 | 631 | 537 |
| Other commitments | 3 | 6 | 7 |
| On Behalf of Equity Accounted Investments | |||
| Guarantees | 4 | 4 | 4 |
| On Behalf of Others | |||
| Guarantees | 6 | 23 | 24 |
| Other commitments | 13 | 13 | 14 |
| Total | 28 | 779 | 679 |
| Mortgages | 2 | 2 | 2 |
| Guarantees | 10 | 27 | 28 |
| Operating leases | 0 | 731 | 628 |
| Other commitments | 17 | 19 | 21 |
| Total | 28 | 779 | 679 |
Operating lease obligations have been reported on balance sheet in accordance with requirements of IFRS 16 Leases since 1 January 2019.
| EUR million | 30 Sep 2019 | 31 Dec 2018 | 30 Sep 2018 |
|---|---|---|---|
| Total | 266 | 111 | 118 |
The Group's direct capital expenditure contracts include the Group's share of direct capital expenditure contracts in joint operations.
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 |
|---|---|---|---|---|---|---|---|---|
| Consumer Board | 640 | 675 | 634 | 2 622 | 637 | 648 | 691 | 646 |
| Packaging Solutions | 299 | 316 | 338 | 1 344 | 352 | 330 | 329 | 333 |
| Biomaterials | 331 | 394 | 398 | 1 635 | 415 | 413 | 413 | 394 |
| Wood Products | 380 | 412 | 403 | 1 622 | 399 | 400 | 430 | 393 |
| Paper | 690 | 712 | 760 | 3 066 | 761 | 779 | 754 | 772 |
| Other | 786 | 868 | 922 | 3 425 | 913 | 831 | 844 | 838 |
| Inter-segment sales | -725 | -770 | -821 | -3 229 | -820 | -815 | -797 | -797 |
| Total | 2 402 | 2 608 | 2 635 | 10 486 | 2 657 | 2 585 | 2 664 | 2 579 |
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 |
|---|---|---|---|---|---|---|---|---|
| Consumer Board | 636 | 672 | 630 | 2 608 | 634 | 645 | 688 | 642 |
| Packaging Solutions | 294 | 310 | 332 | 1 318 | 346 | 323 | 323 | 326 |
| Biomaterials | 268 | 323 | 318 | 1 233 | 325 | 305 | 319 | 284 |
| Wood Products | 356 | 382 | 370 | 1 497 | 367 | 366 | 398 | 366 |
| Paper | 675 | 699 | 745 | 3 004 | 747 | 764 | 738 | 756 |
| Other | 174 | 223 | 239 | 825 | 239 | 183 | 198 | 206 |
| Total | 2 402 | 2 608 | 2 635 | 10 486 | 2 657 | 2 585 | 2 664 | 2 579 |
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 |
|---|---|---|---|---|---|---|---|---|
| Product sales | 2 372 | 2 567 | 2 608 | 10 346 | 2 623 | 2 550 | 2 626 | 2 547 |
| Service sales | 31 | 40 | 27 | 140 | 34 | 35 | 38 | 32 |
| Total | 2 402 | 2 608 | 2 635 | 10 486 | 2 657 | 2 585 | 2 664 | 2 579 |
Sales comprise mainly sales of products and are typically recognised at a point in time when Stora Enso transfers control of products to a customer.
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | |
|---|---|---|---|---|---|---|---|---|---|
| Consumer Board | Product sales | 637 | 672 | 631 | 2 611 | 634 | 645 | 688 | 643 |
| Service sales | 3 | 3 | 3 | 11 | 3 | 3 | 3 | 3 | |
| Packaging Solutions | Product sales | 298 | 315 | 338 | 1 340 | 351 | 329 | 328 | 332 |
| Service sales | 1 | 1 | 1 | 4 | 1 | 1 | 1 | 1 | |
| Biomaterials | Product sales | 324 | 386 | 391 | 1 610 | 410 | 407 | 407 | 387 |
| Service sales | 8 | 8 | 7 | 25 | 5 | 6 | 6 | 7 | |
| Wood Products | Product sales | 375 | 406 | 400 | 1 619 | 398 | 399 | 429 | 392 |
| Service sales | 5 | 6 | 3 | 3 | 1 | 0 | 1 | 1 | |
| Paper | Product sales | 687 | 708 | 757 | 3 043 | 755 | 773 | 748 | 767 |
| Service sales | 3 | 4 | 3 | 23 | 6 | 5 | 7 | 5 | |
| Other | Product sales | 549 | 627 | 690 | 2 430 | 665 | 579 | 587 | 599 |
| Service sales | 237 | 241 | 232 | 995 | 248 | 252 | 257 | 239 | |
| Inter-segment sales | Product sales | -499 | -548 | -599 | -2 307 | -590 | -583 | -562 | -573 |
| Service sales | -226 | -222 | -223 | -922 | -229 | -232 | -236 | -224 | |
| Total | 2 402 | 2 608 | 2 635 | 10 486 | 2 657 | 2 585 | 2 664 | 2 579 |
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 |
|---|---|---|---|---|---|---|---|---|
| Consumer Board | 73 | 72 | 54 | 231 | 24 | 50 | 65 | 91 |
| Packaging Solutions | 29 | 39 | 51 | 245 | 59 | 68 | 57 | 61 |
| Biomaterials | 39 | 103 | 103 | 427 | 91 | 125 | 109 | 102 |
| Wood Products | 27 | 35 | 29 | 165 | 42 | 48 | 47 | 29 |
| Paper | 50 | 50 | 69 | 234 | 45 | 65 | 54 | 69 |
| Other | 13 | -12 | 17 | 23 | 9 | 2 | -5 | 17 |
| Operational EBIT | 231 | 287 | 324 | 1 325 | 271 | 358 | 327 | 369 |
| Fair valuations and non-operational items1 | -25 | -25 | -7 | 45 | 37 | 5 | 17 | -14 |
| Items affecting comparability | -36 | -120 | -4 | 20 | 47 | 0 | -28 | 0 |
| Operating Profit (IFRS) | 170 | 142 | 313 | 1 390 | 356 | 363 | 317 | 355 |
| Net financial items | -55 | -48 | -31 | -180 | -41 | -58 | -60 | -22 |
| Profit before Tax | 115 | 93 | 282 | 1 210 | 315 | 305 | 257 | 333 |
| Income tax expense | -57 | -41 | -56 | -221 | -16 | -101 | -44 | -60 |
| Net Profit | 59 | 52 | 226 | 988 | 299 | 204 | 213 | 273 |
1 Fair valuations and non-operational items include CO2 emission rights, valuations of biological assets, and the Group's share of income tax and net financial items of EAI. Until the end of 2018, fair valuations and non-operational items also included equity incentive schemes and related hedges. The previous periods have not been restated due to immateriality.
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 |
|---|---|---|---|---|---|---|---|---|
| Impairments and impairment reversals | -14 | 6 | -3 | 0 | 0 | 0 | 0 | 0 |
| Restructuring costs excluding impairments | -5 | -31 | -1 | 0 | 0 | 0 | 0 | 0 |
| Acquisition and disposals | -15 | -88 | 0 | 20 | 47 | 0 | -28 | 0 |
| Other | -2 | -8 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total IAC on Operating Profit | -36 | -120 | -4 | 20 | 47 | 0 | -28 | 0 |
| Fair valuations and non-operational items | -25 | -25 | -7 | 45 | 37 | 5 | 17 | -14 |
| Total | -61 | -145 | -11 | 65 | 84 | 5 | -11 | -14 |
As an update to Bergvik Skog restructuring transactions reported in Q2/2019, an expense of EUR 7 million was recorded as items affecting comparability in Q3/2019. The amount includes an update to reclassification of exchange rate differences historically accumulated to equity (CTA reserve) through the Income Statement and other expenses directly related to transaction. In Q2/2019 as a result of the Bergvik Skog restructuring transactions, an expense of EUR 88 million was recorded as items affecting comparability. This includes a reclassification of exchange rate differences historically accumulated to equity (CTA reserve) through the Income Statement of EUR -171 million in Other operating expenses. In addition, a net gain of EUR 82 million on the transaction was presented in Share of results of equity accounted investments.
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 |
|---|---|---|---|---|---|---|---|---|
| Consumer Board | 0 | -4 | -4 | 0 | 0 | 0 | 0 | 0 |
| Packaging Solutions | -6 | 17 | 0 | 0 | 0 | 0 | 0 | 0 |
| Biomaterials | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Wood Products | 0 | -10 | 0 | 0 | 0 | 0 | 0 | 0 |
| Paper | -21 | -27 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other | -9 | -96 | 0 | 20 | 47 | 0 | -28 | 0 |
| IAC on Operating Profit | -36 | -120 | -4 | 20 | 47 | 0 | -28 | 0 |
| IAC on tax | 2 | 6 | 1 | -27 | 0 | -27 | 0 | 0 |
| IAC on Net Profit | -35 | -115 | -3 | -8 | 47 | -27 | -28 | 0 |
| Attributable to: | ||||||||
| Owners of the Parent | -35 | -115 | -3 | -8 | 47 | -27 | -28 | 0 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| IAC on Net Profit | -35 | -115 | -3 | -8 | 47 | -27 | -28 | 0 |
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 |
|---|---|---|---|---|---|---|---|---|
| Consumer Board | 0 | 0 | 0 | -1 | 0 | 0 | 0 | -1 |
| Packaging Solutions | 0 | 0 | 0 | -1 | 0 | 0 | 0 | -1 |
| Biomaterials | -2 | 1 | 0 | -3 | 3 | -2 | -3 | -1 |
| Wood Products | 0 | 0 | 0 | -1 | 0 | 0 | 0 | -1 |
| Paper | -3 | -3 | 5 | 0 | -4 | -1 | 4 | 1 |
| Other | -20 | -23 | -12 | 51 | 38 | 7 | 17 | -11 |
| FV and Non-operational Items on Operating Profit |
-25 | -25 | -7 | 45 | 37 | 5 | 17 | -14 |
1 Fair valuations and non-operational items include CO2 emission rights, valuations of biological assets, and the Group's share of income tax and net financial items of EAI. Until the end of 2018, fair valuations and non-operational items also included equity incentive schemes and related hedges. The previous periods have not been restated due to immateriality.
| EUR million | Q3/19 | Q2/19 | Q1/19 | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 |
|---|---|---|---|---|---|---|---|---|
| Consumer Board | 73 | 68 | 50 | 230 | 25 | 50 | 65 | 90 |
| Packaging Solutions | 23 | 56 | 51 | 244 | 59 | 68 | 56 | 60 |
| Biomaterials | 37 | 104 | 103 | 425 | 94 | 123 | 106 | 101 |
| Wood Products | 27 | 25 | 29 | 164 | 42 | 48 | 47 | 28 |
| Paper | 26 | 20 | 74 | 234 | 41 | 65 | 58 | 70 |
| Other | -16 | -132 | 5 | 93 | 95 | 9 | -16 | 6 |
| Operating Profit (IFRS) | 170 | 142 | 313 | 1 390 | 356 | 363 | 317 | 355 |
| Net financial items | -55 | -48 | -31 | -180 | -41 | -58 | -60 | -22 |
| Profit before Tax | 115 | 93 | 282 | 1 210 | 315 | 305 | 257 | 333 |
| Income tax expense | -57 | -41 | -56 | -221 | -16 | -101 | -44 | -60 |
| Net Profit | 59 | 52 | 226 | 988 | 299 | 204 | 213 | 273 |
| One Euro is | Closing Rate | Average Rate | ||
|---|---|---|---|---|
| 30 Sep 2019 | 31 Dec 2018 | 30 Sep 2019 | 31 Dec 2018 | |
| SEK | 10.6958 | 10.2548 | 10.5672 | 10.2567 |
| USD | 1.0889 | 1.1450 | 1.1237 | 1.1815 |
| GBP | 0.8857 | 0.8945 | 0.8830 | 0.8847 |
| EUR million | USD | SEK | GBP |
|---|---|---|---|
| Estimated annual operating cash flow exposure | 1 403 | -975 | 305 |
| Transaction hedges as at 30 September 2019 | -702 | 609 | -134 |
| Hedging percentage as at 30 September 2019 for the next 12 months | 50% | 62% | 44% |
| Operational EBIT: Currency strengthening of +10% | EUR million |
|---|---|
| USD | 140 |
| SEK | -98 |
| GBP | 31 |
The sensitivity is based on the estimated net operating cash flow for the next 12 months. The calculation does not take into account currency hedges, and it assumes that no changes occur other than exchange rate movement in a currency. A currency weakening would have the opposite impact.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
The valuation techniques are described in more detail in the Group's Financial Report.
| EUR million | Amortised cost | Fair value through OCI |
Fair value through Income Statement |
Hedge accounted derivatives |
Total carrying amount |
Fair value |
|---|---|---|---|---|---|---|
| Financial assets | ||||||
| Listed securities | - | 9 | - | - | 9 | 9 |
| Unlisted securities | - | 493 | 4 | - | 496 | 496 |
| Non-current interest-bearing receivables | 72 | - | - | 4 | 76 | 76 |
| Trade and other operative receivables | 966 | 36 | - | - | 1 002 | 1 002 |
| Short-term interest-bearing receivables | 3 | - | 2 | 11 | 16 | 16 |
| Cash and cash equivalents | 713 | - | - | - | 713 | 713 |
| Total | 1 753 | 538 | 6 | 15 | 2 312 | 2 312 |
| EUR million | Amortised cost | Fair value through Income Statement |
Hedge accounted derivatives |
Total carrying amount |
Fair value |
|---|---|---|---|---|---|
| Financial liabilities | |||||
| Non-current interest-bearing liabilities | 3 473 | 1 | 34 | 3 508 | 3 867 |
| Current portion of non-current debt | 332 | - | - | 332 | 332 |
| Short-term interest-bearing liabilities | 640 | 5 | 56 | 700 | 700 |
| Trade and other operative payables | 1 361 | 22 | - | 1 383 | 1 383 |
| Bank overdrafts | 19 | - | - | 19 | 19 |
| Total | 5 824 | 28 | 90 | 5 942 | 6 301 |
The following items are measured at fair value on a recurring basis.
| EUR million | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Listed securities | 9 | - | - | 9 |
| Unlisted securities | - | - | 496 | 496 |
| Trade and other operative receivables | - | 36 | - | 36 |
| Derivative financial assets | - | 17 | - | 17 |
| Total financial assets | 9 | 53 | 496 | 559 |
| Trade and other operative liabilities | - | - | 22 | 22 |
| Derivative financial liabilities | - | 96 | - | 96 |
| Total financial liabilities | - | 96 | 22 | 118 |
| EUR million | Amortised cost | Fair value through OCI |
Fair value through Income Statement |
Hedge accounted derivatives |
Total carrying amount |
Fair value |
|---|---|---|---|---|---|---|
| Financial assets | ||||||
| Listed securities | - | 13 | - | - | 13 | 13 |
| Unlisted securities | - | 415 | 8 | - | 422 | 422 |
| Non-current interest-bearing receivables | 54 | - | - | - | 54 | 54 |
| Trade and other operative receivables | 1 092 | 44 | - | - | 1 136 | 1 136 |
| Short-term interest-bearing receivables | 1 | - | 5 | 49 | 55 | 55 |
| Cash and cash equivalents | 1 130 | - | - | - | 1 130 | 1 130 |
| Total | 2 277 | 472 | 13 | 49 | 2 811 | 2 811 |
| EUR million | Amortised cost | Fair value through Income Statement |
Hedge accounted derivatives |
Total carrying amount |
Fair value |
|---|---|---|---|---|---|
| Financial liabilities | |||||
| Non-current interest-bearing liabilities | 2 265 | - | - | 2 265 | 2 541 |
| Current portion of non-current debt | 403 | - | - | 403 | 403 |
| Short-term interest-bearing liabilities | 604 | 7 | 63 | 675 | 675 |
| Trade and other operative payables | 1 627 | 21 | - | 1 648 | 1 648 |
| Bank overdrafts | 1 | - | - | 1 | 1 |
| Total | 4 901 | 28 | 63 | 4 992 | 5 268 |
The following items are measured at fair value on a recurring basis.
| EUR million | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Listed securities | 13 | - | - | 13 |
| Unlisted securities | - | - | 422 | 422 |
| Trade and other operative receivables | - | 44 | - | 44 |
| Derivative financial assets | - | 54 | - | 54 |
| Total financial assets | 13 | 98 | 422 | 533 |
| Trade and other operative liabilities | - | - | 21 | 21 |
| Derivative financial liabilities | - | 70 | - | 70 |
| Total financial liabilities | - | 70 | 21 | 91 |
| EUR million | Q1-Q3/19 | 2018 | Q1-Q3/18 |
|---|---|---|---|
| Financial assets | |||
| Opening balance at 1 January | 422 | 318 | 318 |
| Gains/losses recognised in income statement | -1 | -2 | -2 |
| Gains/losses recognised in other comprehensive income | 80 | 104 | 158 |
| Additions | 0 | 3 | 0 |
| Disposals | -5 | -1 | -1 |
| Closing Balance | 496 | 422 | 474 |
| EUR million | Q1-Q3/19 | 2018 | Q1-Q3/18 |
| Financial liabilities | |||
| Opening balance at 1 January | 21 | 20 | 20 |
| Gains/losses recognised in income statement | 1 | 1 | 1 |
| Closing Balance | 22 | 21 | 21 |
The level 3 financial assets consist mainly of 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 3.03% 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 +98 million and -68 million, respectively. A +/- 1%-point change in the discount rate would change the valuation by EUR -72 million and +205 million, respectively.
| Helsinki | Stockholm | |||||
|---|---|---|---|---|---|---|
| A share | R share | A share | R share | |||
| July | 68 436 | 67 163 653 | 178 818 | 23 841 756 | ||
| August | 59 375 | 51 629 012 | 72 748 | 21 448 525 | ||
| September | 83 382 | 59 942 805 | 112 606 | 28 221 885 | ||
| Total | 211 193 | 178 735 470 | 364 172 | 73 512 166 |
| Helsinki, EUR | Stockholm, SEK | ||||
|---|---|---|---|---|---|
| A share | R share | A share | R share | ||
| July | 12.95 | 10.44 | 139.00 | 111.20 | |
| August | 12.15 | 10.17 | 132.00 | 110.10 | |
| September | 12.75 | 11.06 | 137,50 | 118,40 |
| Million | Q3/19 | Q3/18 | Q2/19 | 2018 |
|---|---|---|---|---|
| Periodic | 788.6 | 788.6 | 788.6 | 788.6 |
| Cumulative | 788.6 | 788.6 | 788.6 | 788.6 |
| Cumulative, diluted | 789.5 | 789.7 | 789.7 | 789.9 |
| 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 operational decrease in the value of biological assets, 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 | |
| TRI | Total recordable incident rate = number of incidents per one million hours worked | |
1 Capital employed = Operating capital – Net tax liabilities 2
Average for the financial period 3
Attributable to the owners of the Parent
| Operational EBITDA | Depreciation and impairment charges excl. IAC |
|---|---|
| Operational EBITDA margin | Operational ROCE |
| Operational EBIT | Earnings per share (EPS), excl. IAC |
| Operational EBIT margin | Net debt/last 12 months' operational EBITDA ratio |
| Profit before tax excl. IAC | Fixed costs to sales |
| Capital expenditure | Operational ROOC |
| Capital expenditure excl. investments in biological assets | Cash flow from operations |
| Capital employed | Cash flow after investing activities |
FI-00101 Helsinki, Finland SE-107 24 Stockholm, Sweden Tel. +358 2046 131 Klarabergsviadukten 70
P.O.Box 309 P.O.Box 70395 storaenso.com/investors Visiting address: Kanavaranta 1 Visiting address: World Trade Center Tel. +46 1046 46 000
Stora Enso Oyj Stora Enso AB storaenso.com
Seppo Parvi, CFO, tel. +358 2046 21205 Ulla Paajanen, SVP, Investor Relations, tel. +358 40 763 8767 Ulrika Lilja, EVP, Communications, tel. +46 72 221 9228
Part of the bioeconomy, Stora Enso is a leading global provider of renewable solutions in packaging, biomaterials, wooden constructions and paper. We believe that everything that is made from fossil-based materials today can be made from a tree tomorrow. Stora Enso has some 26 000 employees in over 30 countries. Our sales in 2018 were EUR 10.5 billion. Stora Enso shares are listed on Nasdaq Helsinki Oy (STEAV, STERV) and Nasdaq Stockholm AB (STE A, STE R). 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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