Earnings Release • Feb 1, 2019
Earnings Release
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January–December 2018
The investment in a new cross laminated timber (CLT) unit at the Gruvön sawmill is being completed. Commercial production will begin during the first quarter of 2019 as planned.
Stora Enso increased its ownership up to 100% in the Sweden-based Cellutech AB.
Stora Enso announced today a profit protection programme to strengthen competitiveness. The intention is to achieve annual cost reduction of EUR 120 million as well as reduction of capital expenditure by about EUR 50 million compared to the earlier forecast.
Stora Enso introduces new way of giving annual outlook and quarterly guidance. The Group starts to guide absolute range for quarterly operational EBIT, instead of comparing quarterly sales and operational EBIT to the previous quarter qualitatively.
Stora Enso's year 2019 is expected to be largely in line with 2018, provided that the current trading conditions do not significantly change. Demand growth is expected to continue for Stora Enso's other businesses except for European Paper, for which demand is forecast to continue to decline in 2019. Group's sales are expected to be higher and costs are forecast to increase in 2019 compared to 2018. Stora Enso will implement measures to mitigate these cost increases and the increased uncertainties with the profit protection programme.
Q1/2019 operational EBIT is expected to be in the range of EUR 260–350 million. The Group's annual maintenance schedule has been changed from last year. During Q1/2019 there will be annual maintenance shutdowns at Veracel pulp mill and Ostro ka containerboard mill. The total negative impact of maintenance is estimated to be EUR 20 million more compared to Q1/2018. In Q1/2018 there were no annual maintenance shutdowns.
| Change % | Change % | |||||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Q4/18 | Q4/17 | Q4/18- Q4/17 |
Q3/18 | Q4/18- Q3/18 |
2018 | 2017 | Change % 2018–2017 |
| Sales | 2 657 | 2 511 | 5.8% | 2 585 | 2.8% | 10 486 | 10 045 | 4.4% |
| Operational EBITDA | 405 | 427 | -5.1% | 502 | -19.3% | 1 878 | 1 587 | 18.3% |
| Operational EBITDA margin | 15.3% | 17.0% | 19.4% | 17.9% | 15.8% | |||
| Operational EBIT | 271 | 280 | -3.3% | 358 | -24.4% | 1 325 | 1 004 | 32.0% |
| Operational EBIT margin | 10.2% | 11.2% | 13.8% | 12.6% | 10.0% | |||
| Operating profit (IFRS) | 356 | 236 | 50.7% | 363 | -1.9% | 1 390 | 904 | 53.7% |
| Profit before tax excl. IAC | 267 | 238 | 12.3% | 305 | -12.3% | 1 190 | 826 | 44.1% |
| Profit before tax | 315 | 209 | 50.7% | 305 | 3.3% | 1 210 | 742 | 63.1% |
| Net profit for the period | 299 | 173 | 72.5% | 204 | 46.5% | 988 | 614 | 61.0% |
| Capital expenditure | 237 | 267 | -11.1% | 129 | 84.4% | 574 | 640 | -10.3% |
| Capital expenditure excluding investments in biological assets |
215 | 251 | -14.3% | 109 | 98.0% | 491 | 560 | -12.3% |
| Depreciation and impairment charges excl. IAC | 114 | 125 | -8.5% | 122 | -6.4% | 479 | 507 | -5.5% |
| Net interest-bearing liabilities | 2 092 | 2 253 | -7.1% | 2 172 | -3.7% | 2 092 | 2 253 | -7.1% |
| Operational return on capital employed (ROCE) | 12.4% | 13.5% | 16.7% | 15.5% | 11.9% | |||
| Earnings per share (EPS) excl. IAC, EUR | 0.33 | 0.26 | 25.0% | 0.31 | 3.8% | 1.29 | 0.89 | 45.4% |
| EPS (basic), EUR | 0.39 | 0.22 | 75.0% | 0.27 | 42.6% | 1.28 | 0.79 | 62.5% |
| Return on equity (ROE) | 18.1% | 11.6% | 13.0% | 15.5% | 10.3% | |||
| Net debt/equity ratio | 0.31 | 0.38 | 0.34 | 0.31 | 0.38 | |||
| Net debt to last 12 months' operational EBITDA ratio |
1.1 | 1.4 | 1.1 | 1.1 | 1.4 | |||
| Fixed costs to sales, % | 25.0% | 26.9% | 23.3% | 23.6% | 25.1% | |||
| Equity per share, EUR | 8.51 | 7.62 | 11.7% | 8.16 | 4.3% | 8.51 | 7.62 | 11.7% |
| Average number of employees | 26 151 | 26 116 | 0.1% | 26 545 | -1.5% | 26 067 | 26 206 | -0.5% |
| TRI rate12 | 7.9 | 7.3 | 8.2% | 4.6 | 71.7% | 5.9 | 7.4 | -20.3% |
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 As of January 2018 Stora Enso's joint operations Veracel and Montes del Plata are included in the Group's consolidated safety performance. 2017 figures restated accordingly for comparability.
2 Q3/18 recalculated due to additional data after the Q3/2018 Interim Report.
| Q4/18 | Q4/17 | Change % Q4/18- Q4/17 |
Q3/18 | Change % Q4/18- Q3/18 |
2018 | 2017 | Change % 2018– 2017 |
|
|---|---|---|---|---|---|---|---|---|
| Consumer board deliveries, 1 000 tonnes |
701 | 712 | -1.5% | 727 | -3.5% | 2 914 | 2 816 | 3.5% |
| Consumer board production, 1 000 tonnes |
694 | 734 | -5.5% | 730 | -5.0% | 2 922 | 2 871 | 1.8% |
| Containerboard external deliveries, 1 000 tonnes |
213 | 274 | -22.2% | 272 | -21.5% | 985 | 1 023 | -3.8% |
| Containerboard production, 1 000 tonnes |
338 | 339 | -0.2% | 345 | -2.1% | 1 320 | 1 333 | -1.0% |
| Corrugated packaging deliveries, million m2 |
276 | 279 | -1.1% | 260 | 6.2% | 1 059 | 1 103 | -4.0% |
| Market pulp external deliveries, 1 000 tonnes |
532 | 526 | 1.2% | 476 | 11.8% | 2 017 | 2 135 | -5.5% |
| Wood product deliveries, 1 000 m3 | 1 285 | 1 308 | -1.7% | 1 242 | 3.5% | 5 095 | 5 097 | 0.0% |
| Paper deliveries, 1 000 tonnes | 1 121 | 1 146 | -2.2% | 1 161 | -3.5% | 4 591 | 4 713 | -2.6% |
| Paper production, 1 000 tonnes | 1 087 | 1 159 | -6.2% | 1 216 | -10.5% | 4 633 | 4 672 | -0.8% |
We continue to deliver sustainable profitable growth for the eighth consecutive quarter, with a sales increase of close to 6%. This was the highest fourth quarter sales since 2012 and the growth was primarily due to favourable prices and our active work on product mix and pricing. Due to slightly weaker markets, we have had lower levels of deliveries. We have experienced temporary operational issues at six of our mills, which has resulted in an EBITimpact of approximately EUR 40 million. Our operational EBIT decreased a bit over 3%, while operational EBIT margin exceeded 10% for the sixth consecutive quarter.
Looking at the whole year of 2018, sales are again well above 10 billion euros and our operational EBIT increased by 32%. Our operational ROCE was close to 16%, well above the strategic target of 13%. I am also very pleased with the quite significant increase in full year EPS of 62.5%. We continue to strengthen our balance sheet and net debt/EBITDA amounted to 1.1. Therefore, the Board of Directors proposes to the Annual General Meeting a dividend of 0.50 euros per share, an increase of 22% from last year, which is the fourth year in a row with an increase. This is a vote of confidence for the future of Stora Enso.
Our transformation projects are progressing well. The investment in a new cross laminated timber (CLT) unit at the Gruvön sawmill is being completed. Commercial production will begin during the first quarter of 2019 as planned. I am additionally encouraged that we have taken an important step in securing our competitive raw material supply for the long term. We, together with the other shareholders, have signed a binding agreement aiming at completing the Bergvik Skog forestry transaction during the first half of 2019.
We continue to launch new products that enable our customers to leverage digital solutions to further advance their business. The most recent one is a new sustainable RFID tag technology called ECO™ by Stora Enso. It is designed for intelligent packaging functionalities in supply chain, retail and e-commerce applications. We have also entered an interesting partnership with H&M group and Inter IKEA group to industrialise new textile fibres in a sustainable way at attractive cost levels.
As sustainability is in the core of our business, I am indeed proud that we have been top-rated in combatting global warming by the international non-profit organisation CDP. CDP has included us on its new 2018 Climate A List, which identifies the global companies that are taking leadership in climate action. Moreover, we have been acknowledged as the leading listed company on sustainability in a ranking of all companies listed on the Stockholm Stock Exchange and we have received the award of the Best sustainable brand of the year in our industry.
With reference to current geopolitical developments, there is a notable risk of 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 outlook and ultimately global economic growth. Therefore, we have started to implement a profit protection programme of EUR 120 million to be kicked-off immediately, to better prepare for potential market weakness.
In these times of increased uncertainty and less visibility, 2019 is expected to continue in line with the 2018 for us, provided that the current trading conditions do not significantly change. I expect growth in demand to continue for all our businesses except for European paper, for which demand is forecast to continue to decline in 2019. Our sales are expected to be higher and costs are forecast to increase in 2019 compared to 2018. We will implement measures to mitigate these cost increases and the increased uncertainties with our profit protection programme.
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
Dividend proposal per share
12.4%
(Target >13%)
Net debt to operational EBITDA
1.1 (Target <2.0)
| Change % Q4/18- |
Change % Q4/18- |
Change % | ||||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Q4/18 | Q4/17 | Q4/17 | Q3/18 | Q3/18 | 2018 | 2017 | 2018–2017 |
| Operational EBITDA | 405 | 427 | -5.1% | 502 | -19.3% | 1 878 | 1 587 | 18.3% |
| Depreciation and depletion of equity accounted investments (EAI) |
0 | -2 | 87.1% | -4 | 94.4% | -7 | -10 | 23.0% |
| Operational decrease in the value of biological assets |
-20 | -20 | 1.4% | -18 | -10.0% | -66 | -66 | -0.3% |
| Depreciation and impairment excl. IAC | -114 | -125 | 8.5% | -122 | 6.4% | -479 | -507 | 5.5% |
| Operational EBIT | 271 | 280 | -3.3% | 358 | -24.4% | 1 325 | 1 004 | 32.0% |
| Fair valuations and non-operational items1 |
37 | -15 | n/m | 5 | n/m | 45 | -16 | n/m |
| Items affecting comparability (IAC) | 47 | -29 | 262.5% | 0 | 100.0% | 20 | -84 | 123.5% |
| Operating profit (IFRS) | 356 | 236 | 50.7% | 363 | -1.9% | 1 390 | 904 | 53.7% |
1 Fair valuations and non-operational items include equity incentive schemes and related hedges, CO2 emission rights, valuations of biological assets, and the Group's share of income tax and net financial items of EAI.
| Sales Q4/2017, EUR million | 2 511 |
|---|---|
| Price and mix | 7% |
| Currency | -1% |
| Volume | -1% |
| Other sales1 | 2% |
| Total before structural changes | 6% |
| Structural changes2 | 0% |
| Total | 6% |
| Sales Q4/2018, EUR million | 2 657 |
1 Wood, energy, paper for recycling, by-products etc.
2 Asset closures, major investments, divestments and acquisitions
Group sales increased 5.8% or EUR 146 million to EUR 2 657 million, despite operational issues. This was the highest fourth quarter sales since 2012 and the eighth consecutive quarter of growth. Topline growth was driven by clearly higher sales prices in local currencies, as well as active mix management. This was only partly offset by lower deliveries, slightly negative currency impact and the divestment of Puumerkki in the Wood Products division in the fourth quarter of 2017.
Operational EBIT decreased 3% or EUR 9 million to EUR 271 (280) million. The operational EBIT margin decreased by 1% point to 10.2% (11.2%). Higher prices were more than offset by higher than expected costs. Main reasons for the higher temporary costs were operational issues of approximately EUR 40 million at Veitsiluoto, Nymölla, Montes del Plata, Skutskär, Imatra and Fors mills.
Clearly higher sales prices and active mix management, especially in Paper, Biomaterials, Wood Products and Packaging Solutions divisions, improved operational EBIT by EUR 168 million. The total volume impact was EUR 11 million negative, as deliveries were slightly lower in all divisions.
Variable costs continued to increase and were EUR 123 million higher, mainly due to increased wood, pulp, chemicals and logistic costs. Fixed costs increased by EUR 34 million and net foreign exchange impact decreased operational EBIT by EUR 2 million. Operational result from equity accounted investments, depreciations and closed units decreased profitability by EUR 7 million.
The planned and unplanned production downtime was 16% (9%) for paper, 9% (4%) for board, and 1% (0%) for wood products.
The average number of employees in the fourth quarter of 2018 was approximately 26 200 (26 100). The average number of employees in Europe was approximately 19 900 (19 500). In China, the average number of employees was approximately 5 300 (5 500).
Fair valuations and non-operational items had a positive net impact on the operating profit of EUR 37 million (negative EUR 15 million). The impact came mainly from an increase in fair valuation of forests of the Nordic equity accounted investment Bergvik Skog.
Earnings per share increased by 75.0% to EUR 0.39 (EUR 0.22) and earnings per share excluding items affecting comparability (IAC) increased to EUR 0.33 (EUR 0.26).
The Group recorded an item affecting comparability (IAC) with a positive impact of EUR 47 (negative EUR 29) million on its operating profit. The IAC relates to the Stora Enso's share of the disposal gain from associated company Bergvik Skog's Latvian subsidiary.
Net financial expenses at EUR 41 million were EUR 14 million higher. Net interest expenses at EUR 34 million increased by EUR 3 million. Other net financial expenses were EUR 3 (EUR 6) million. The net foreign exchange impact in respect of cash, interest-bearing assets and liabilities and related foreign-currency hedges amounted to a loss of EUR 4 (gain of EUR 10) million, mainly due to revaluation of foreign currency net debt in subsidiaries.
| EUR million | Capital employed |
|---|---|
| 31 December 2017 | 8 308 |
| Capital expenditure less depreciation | 59 |
| Impairments and reversal of impairments | -1 |
| Fair valuation of biological assets | -2 |
| Costs related to growth of biological assets | -66 |
| Unlisted securities (mainly PVO) | 104 |
| Equity accounted investments | 186 |
| Net liabilities in defined benefit plans | -27 |
| Operative working capital and other interest-free items, net | 384 |
| Net tax liabilities | -54 |
| Translation difference | -81 |
| Other changes | 14 |
| 31 December 2018 | 8 824 |
The operational return on capital employed (ROCE) in the fourth quarter of 2018 was 12.4% (13.5%).
Sales increased by EUR 72 million, or 2.8%, to EUR 2 657 million. Operational EBIT decreased by EUR 87 million to EUR 271 million. Sales prices in local currencies decreased operational EBIT by EUR 16 million, mainly due to lower pulp prices. Volume impact decreased operational EBIT by EUR 22 million, negatively impacted by too low water level at nearby lake, leading to Nymölla paper mill production restrictions. Variable costs were EUR 21 million higher, as increased wood and chemical costs were only partly offset by lower pulp costs. Fixed costs were seasonally high and decreased operational EBIT by EUR 47 million. The net foreign exchange impact increased the profitability by EUR 4 million. Operational result from equity accounted investments and depreciations increased operational EBIT by EUR 15 million.
| Sales 2017, EUR million | 10 045 | |||
|---|---|---|---|---|
| Price and mix | 8% | |||
| Currency | -1% | |||
| Volume | -1% | |||
| Other sales1 | 0% | |||
| Total before structural changes | 5% | |||
| Structural changes2 | -1% | |||
| Total | 4% | |||
| Sales 2018, EUR million | 10 486 |
1 Wood, energy, paper for recycling, by-products etc.
2 Asset closures, major investments, divestments and acquisitions
Sales increased 4.4% or EUR 441 million to EUR 10 486 million. Operational EBIT increased by EUR 321 million or 32% to EUR 1 325 million and represents a margin of 12.6% (10.0%), Improved sales prices and active mix management in all divisions increased operational EBIT by EUR 795 million. Lower volumes decreased operational EBIT by EUR 10 million. Variable costs were EUR 387 million higher, especially for wood and also for pulp, chemicals, and transportation. Fixed costs increased EUR 55 million, mainly due to higher personnel and maintenance costs. The net foreign exchange impact decreased operational EBIT by EUR 34 million. The operational result from equity accounted investments was EUR 8 million lower. The positive impact from lower depreciation was EUR 20 million.
| EUR million | 31 Dec 2018 | 30 Sep 2018 | 30 Jun 2018 | 31 Mar 2018 | 31 Dec 2017 |
|---|---|---|---|---|---|
| Operative fixed assets1 | 6 636 | 6 544 | 6 417 | 6 417 | 6 554 |
| Equity accounted investments | 1 729 | 1 596 | 1 543 | 1 536 | 1 600 |
| Operative working capital, net | 1 078 | 1 112 | 1 068 | 984 | 729 |
| Non-current interest-free items, net | -488 | -475 | -447 | -456 | -490 |
| Operating Capital Total | 8 955 | 8 777 | 8 581 | 8 481 | 8 393 |
| Net tax liabilities | -132 | -145 | -58 | -67 | -85 |
| Capital Employed | 8 824 | 8 631 | 8 523 | 8 414 | 8 308 |
| Equity attributable to owners of the Parent | 6 714 | 6 436 | 6 043 | 6 142 | 6 008 |
| Non-controlling interests | 18 | 23 | 38 | 46 | 47 |
| Net interest-bearing liabilities | 2 092 | 2 172 | 2 442 | 2 226 | 2 253 |
| Financing Total | 8 824 | 8 631 | 8 523 | 8 414 | 8 308 |
1 Operative fixed assets include goodwill, other intangible assets, property, plant and equipment, biological assets, emission rights, and unlisted securities.
Cash and cash equivalents net of overdrafts increased by EUR 145 million to EUR 1 128 million. Net debt was EUR 2 092 million, a decrease of EUR 80 million from the previous quarter. The ratio of net debt to the last 12 months' operational EBITDA was 1.1, unchanged compared to the ratio of 1.1 at the end of the previous quarter. The net debt/equity ratio on 31 December 2018 was 0.31 (0.34).
In the fourth quarter of 2018, Moody's Investors Service assigned Stora Enso Oyj an investment grade credit rating by upgrading the long-term issuer rating from Ba1 to Baa3 with stable outlook.
Stora Enso has EUR 600 million committed revolving credit facility that was fully undrawn at the year-end. Additionally, Stora Enso has access to various long-term sources of funding up to EUR 1 000 (900) million.
The fair value of Pohjolan Voima (PVO) shares, accounted for as equity investment fair valued through other comprehensive income under IFRS 9, decreased in the quarter by EUR 51 million to EUR 415 million. The change in the fair value was mainly driven by the decrease in electricity forward market prices.
| Change % Q4/18- |
Change % Q4/18- |
Change % | ||||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Q4/18 | Q4/17 | Q4/17 | Q3/18 | Q3/18 | 2018 | 2017 | 2018–2017 |
| Operational EBITDA | 405 | 427 | -5.1% | 502 | -19.3% | 1 878 | 1 587 | 18.3% |
| IAC on operational EBITDA | 47 | -24 | 297.8% | 0 | 100.0% | 20 | -76 | 125.9% |
| Other adjustments | -81 | -38 | -111.9% | -24 | -238.9% | -104 | -56 | -85.6% |
| Change in working capital | -50 | 154 | -132.2% | -22 | -127.6% | -428 | 37 | n/m |
| Cash Flow from Operations | 323 | 519 | -37.8% | 457 | -29.3% | 1 365 | 1 492 | -8.5% |
| Cash spent on fixed and biological assets |
-155 | -257 | 39.7% | -128 | -20.7% | -525 | -658 | 20.2% |
| Acquisitions of equity accounted investments |
-19 | 0 | -100.0% | -10 | -98.2% | -29 | -9 | -221.4% |
| Cash Flow after Investing Activities |
148 | 262 | -43.3% | 319 | -53.4% | 811 | 825 | -1.7% |
Fourth quarter 2018 cash flow after investing activities was EUR 148 million. Working capital increased by EUR 50 million, mainly due to higher sales and inventories. Cash spent on fixed and biological assets was EUR 155 million. Payments related to the previously announced provisions were EUR 3 million.
Additions to fixed and biological assets in the fourth quarter 2018 totalled EUR 237 million, of which EUR 215 million were fixed assets, in line with the normal annual pattern, and EUR 22 million biological assets. Depreciations and impairment charges totalled EUR 114 million. Additions in fixed and biological assets had a cash outflow impact of EUR 155 million. Capital expenditure in 2018 was EUR 574 million, slightly below the forecast maximum of EUR 600 million.
The main projects ongoing in the fourth quarter of 2018 were the malodorous gas handling and chemi-thermomechanical pulp (CTMP) flash drying at Imatra Mills in Finland, the Heinola Fluting Mill upgrade 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 new cross laminated timber (CLT) production unit at Gruvön sawmill in Sweden, the Launkalne sawmill expansion in Latvia, and the new steam turbine project at Maxau Mill in Germany.
| EUR million | Forecast 2019 |
|---|---|
| Capital expenditure | 540–590 |
| Depreciation and operational decrease in biological asset values | 590–630 |
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 new profit protection programme. The depreciation and operational decrease in biological asset values forecast includes also the IFRS 16 impact. The amount of operational decrease in biological asset values in the forecast is EUR 50–70 million.
The ambition of the Consumer Board division is to be the global leader in high-quality virgin fibre 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 % Q4/18- |
Change % Q4/18- |
Change % | ||||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Q4/18 | Q4/17 | Q4/17 | Q3/18 | Q3/18 | 2018 | 2017 | 2018–2017 |
| Sales | 637 | 636 | 0.2% | 648 | -1.6% | 2 622 | 2 516 | 4.2% |
| Operational EBITDA | 74 | 119 | -37.8% | 101 | -26.6% | 423 | 477 | -11.3% |
| Operational EBITDA margin | 11.6% | 18.7% | 15.6% | 16.1% | 19.0% | |||
| Operational EBIT | 24 | 69 | -64.5% | 50 | -51.5% | 231 | 285 | -18.8% |
| Operational EBIT margin | 3.8% | 10.8% | 7.8% | 8.8% | 11.3% | |||
| Operational ROOC | 5.0% | 14.2% | 10.3% | 11.9% | 14.6% | |||
| Cash flow from operations | 65 | 140 | -53.8% | 125 | -48.1% | 339 | 458 | -26.1% |
| Cash flow after investing activities | 13 | 73 | -82.1% | 91 | -85.5% | 177 | 218 | -18.6% |
| Board deliveries, 1 000 tonnes | 701 | 712 | -1.5% | 727 | -3.5% | 2 914 | 2 816 | 3.5% |
| Board production, 1 000 tonnes | 694 | 734 | -5.5% | 730 | -5.0% | 2 922 | 2 871 | 1.8% |
• Sales increased slightly, 0.2% or EUR 1 million to a record high Q4 of EUR 637 million. The positive effect of higher local sales prices of EUR 10 million was offset by lower volumes.
| Product | Market | Demand Q4/18 compared with Q4/17 |
Demand Q4/18 compared with Q3/18 |
Price Q4/18 compared with Q4/17 |
Price Q4/18 compared with Q3/18 |
|---|---|---|---|---|---|
| Consumer board | Europe | Slightly stronger | Slightly stronger | Higher | Stable |
| Sales and operational EBIT | Operational ROOC |
5.0%
(Target: >20%)
| 2019 | 2018 | |
|---|---|---|
| Q1 | – | – |
| Q2 | – | Beihai Mill |
| Q3 | Beihai and Imatra mills | Imatra and Ingerois mills |
| Q4 | Fors, Ingerois and Skoghall mills |
Skoghall and Fors mills |
The Packaging Solutions division provides fibre-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 | Q4/18 | Q4/17 | Change % Q4/18-Q4/17 |
Q3/18 | Change % Q4/18-Q3/18 |
2018 | 2017 | Change % 2018–2017 |
|---|---|---|---|---|---|---|---|---|
| Sales | 352 | 334 | 5.3% | 330 | 6.6% | 1 344 | 1 255 | 7.1% |
| Operational EBITDA | 76 | 74 | 3.3% | 86 | -10.7% | 313 | 240 | 30.3% |
| Operational EBITDA margin | 21.7% | 22.2% | 25.9% | 23.3% | 19.1% | |||
| Operational EBIT | 59 | 58 | 1.7% | 68 | -13.3% | 245 | 170 | 43.9% |
| Operational EBIT margin | 16.8% | 17.4% | 20.6% | 18.2% | 13.5% | |||
| Operational ROOC | 25.7% | 26.9% | 30.4% | 27.2% | 19.6% | |||
| Cash flow from operations | 66 | 82 | -19.2% | 67 | -0.6% | 272 | 249 | 9.2% |
| Cash flow after investing activities |
41 | 39 | 4.0% | 43 | -4.8% | 172 | 156 | 10.2% |
| Board deliveries (external), 1 000 tonnes |
213 | 274 | -22.2% | 272 | -21.5% | 985 | 1 023 | -3.8% |
| Board production, 1 000 tonnes |
338 | 339 | -0.2% | 345 | -2.1% | 1 320 | 1 333 | -1.0% |
| Corrugated packaging deliveries, million m2 |
276 | 279 | -1.1% | 260 | 6.2% | 1 059 | 1 103 | -4.0% |
| Corrugated packaging production, million m2 |
273 | 277 | -1.4% | 245 | 11.3% | 1 048 | 1 102 | -4.9% |
• Sales increased 5.3%, or EUR 18 million, to all time high EUR 352 million, driven by improved prices and active sales mix management in the European-based operations. Total containerboard deliveries were stable.
| Product | Market | Demand Q4/18 compared with Q4/17 |
Demand Q4/18 compared with Q3/18 |
Price Q4/18 compared with Q4/17 |
Price Q4/18 compared with Q3/18 |
|---|---|---|---|---|---|
| Virgin fibre-based containerboard |
Global | Stable | Stable | Significantly higher | Stable |
| Recycled fibre based (RCP) containerboard |
Europe | Slightly stronger | Slightly weaker | Slightly higher | Slightly lower |
| Corrugated packaging | Europe | Slightly stronger | Slightly stronger | Higher | Stable |
Scheduled annual maintenance shutdowns
| 2019 | 2018 | |
|---|---|---|
| Q1 | – | |
| Q2 | – | Heinola and Varkaus mills |
| Q3 | Heinola and Ostro ka kraft mills |
|
| Q4 | 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 % | Change % | |||||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Q4/18 | Q4/17 | Q4/18- Q4/17 |
Q3/18 | Q4/18- Q3/18 |
2018 | 2017 | Change % 2018–2017 |
| Sales | 415 | 364 | 14.1% | 413 | 0.6% | 1 635 | 1 483 | 10.3% |
| Operational EBITDA | 116 | 95 | 22.6% | 157 | -25.6% | 550 | 409 | 34.4% |
| Operational EBITDA margin | 28.0% | 26.1% | 37.9% | 33.6% | 27.6% | |||
| Operational EBIT | 91 | 61 | 49.6% | 125 | -27.0% | 427 | 264 | 61.9% |
| Operational EBIT margin | 22.0% | 16.8% | 30.3% | 26.1% | 17.8% | |||
| Operational ROOC | 15.0% | 10.4% | 20.9% | 17.9% | 10.5% | |||
| Cash flow from operations | 117 | 106 | 10.0% | 120 | -2.6% | 438 | 404 | 8.4% |
| Cash flow after investing activities | 80 | 59 | 34.8% | 94 | -15.0% | 327 | 271 | 20.6% |
| Pulp deliveries, 1 000 tonnes | 611 | 623 | -1.9% | 595 | 2.7% | 2 432 | 2 597 | -6.3% |
• Sales increased 14.1% or EUR 51 million to another all-time high of EUR 415 million, driven by significantly higher sales prices.
• Operational EBIT was at record high Q4 level of EUR 91 million, an increase of EUR 30 million. Higher pulp prices were only partly offset by increased variable costs, especially for wood and energy. There were production problems at Montes del Plata and Skutskär mills during the quarter.
| Product | Market | Demand Q4/18 compared with Q4/17 |
Demand Q4/18 compared with Q3/18 |
Price Q4/18 compared with Q4/17 |
Price Q4/18 compared with Q3/18 |
|---|---|---|---|---|---|
| Softwood pulp | Europe | Slightly weaker | Stable | Significantly higher | Slightly lower |
| Hardwood pulp | Europe | Stable | Weaker | Higher | Slightly lower |
| Hardwood pulp | China | Significantly stronger | Slightly weaker | Slightly lower | Lower |
Scheduled annual maintenance shutdowns
| 2019 | 2018 | |
|---|---|---|
| Q1 | Veracel Mill | – |
| Q2 | – | Enocell Mill |
| Q3 | Enocell Mill | Sunila Mill |
| Q4 | 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 % Q4/18- |
Change % Q4/18- |
Change % | ||||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Q4/18 | Q4/17 | Q4/17 | Q3/18 | Q3/18 | 2018 | 2017 | 2018–2017 |
| Sales | 399 | 398 | 0.3% | 400 | -0.2% | 1 622 | 1 669 | -2.8% |
| Operational EBITDA | 50 | 36 | 39.3% | 56 | -9.9% | 199 | 147 | 35.2% |
| Operational EBITDA margin | 12.6% | 9.0% | 13.9% | 12.3% | 8.8% | |||
| Operational EBIT | 42 | 25 | 66.2% | 48 | -12.7% | 165 | 111 | 48.5% |
| Operational EBIT margin | 10.4% | 6.3% | 11.9% | 10.2% | 6.7% | |||
| Operational ROOC | 27.1% | 18.5% | 31.6% | 28.1% | 20.5% | |||
| Cash flow from operations | 38 | 40 | -6.1% | 57 | -34.1% | 147 | 152 | -3.4% |
| Cash flow after investing activities | 23 | 9 | 158.6% | 37 | -36.9% | 80 | 90 | -11.2% |
| Wood products deliveries, 1 000 m3 |
1 247 | 1 257 | -0.7% | 1 207 | 3.4% | 4 932 | 4 926 | 0.1% |
• Sales excluding the divested Puumerkki operations increased 3.5%, or EUR 13 million, mainly due to improved sales prices in classic sawn.
• Operational EBIT increased EUR 17 million, to a record high Q4 of EUR 42 million. Clearly better prices and improved mix was only partly offset by higher fixed costs related to increase in operations.
• Operational ROOC continued at a record high level of 27.1%, clearly above the strategic target of 20%.
| Product | Market | Demand Q4/18 compared with Q4/17 |
Demand Q4/18 compared with Q3/18 |
Price Q4/18 compared with Q4/17 |
Price Q4/18 compared with Q3/18 |
|---|---|---|---|---|---|
| Wood products | Europe | Slightly stronger | Stable | Higher | Stable |
Sales and operational EBIT Operational ROOC
27.1%
(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 fibre as well as our valuable industry experience, know-how and customer support.
| Change % | Change % | Change % |
||||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Q4/18 | Q4/17 | Q4/18- Q4/17 |
Q3/18 | Q4/18- Q3/18 |
2018 | 2017 | 2018– 2017 |
| Sales | 761 | 726 | 4.8% | 779 | -2.4% | 3 066 | 2 920 | 5.0% |
| Operational EBITDA | 73 | 78 | -5.8% | 93 | -20.9% | 345 | 239 | 44.3% |
| Operational EBITDA margin | 9.7% | 10.7% | 11.9% | 11.3% | 8.2% | |||
| Operational EBIT | 45 | 46 | -2.0% | 65 | -30.9% | 234 | 128 | 82.7% |
| Operational EBIT margin | 5.9% | 6.3% | 8.4% | 7.6% | 4.4% | |||
| Operational ROOC | 22.9% | 24.7% | 33.5% | 30.2% | 14.8% | |||
| Cash flow from operations | 31 | 102 | -69.8% | 78 | -60.4% | 222 | 259 | -14.3% |
| Cash flow after investing activities | 19 | 46 | -59.1% | 65 | -70.8% | 175 | 160 | 9.2% |
| Cash flow after investing activities to sales, % |
2.5% | 6.3% | 8.3% | 5.7% | 5.5% | |||
| Paper deliveries, 1 000 tonnes | 1 121 | 1 146 | -2.2% | 1 161 | -3.5% | 4 591 | 4 713 | -2.6% |
| Paper production, 1 000 tonnes | 1 087 | 1 159 | -6.2% | 1 216 | -10.5% | 4 633 | 4 672 | -0.8% |
• Sales increased 4.8%, or EUR 35 million, to EUR 761 million, as clearly higher sales prices in all grades and a better mix were only partly offset by lower sales volumes.
• Operational EBIT decreased EUR 1 million to EUR 45 million. Significantly higher sales prices in all grades were offset by higher variable costs, especially in wood, pulp and chemicals . Production reductions caused by water shortage at Nymölla Mill and technical problems at the Veitsiluoto pulp mill had a EUR 16 million negative impact. Both mills are now back at normal operation. Softness of the coated woodfree paper market led to market curtailments at Oulu Mill.
• Cash flow after investing activities to sales ratio was 2.5% (6.3%), negatively impacted by temporary working capital challenges.
| Product | Market | Demand Q4/18 compared with Q4/17 |
Demand Q4/18 compared with Q3/18 |
Price Q4/18 compared with Q4/17 |
Price Q4/18 compared with Q3/18 |
|
|---|---|---|---|---|---|---|
| Paper | Europe | Weaker | Slightly stronger | Significantly higher | Stable |
Sales and operational EBITDA Cash flow after investing activities to sales1
2.5%
(Target: >7%)
| 2019 | 2018 | |
|---|---|---|
| Q1 | – | – |
| Q2 | Nymölla Mill | Oulu Mill |
| Q3 | Veitsiluoto Mill | Veitsiluoto Mill |
| Q4 | Oulu Mill | – |
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 Nordic forest equity-accounted investments, 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 % Q4/18- |
Change % Q4/18- |
Change % | ||||||
|---|---|---|---|---|---|---|---|---|
| EUR million | Q4/18 | Q4/17 | Q4/17 | Q3/18 | Q3/18 | 2018 | 2017 | 2018–2017 |
| Sales | 913 | 618 | 47.7% | 831 | 9.9% | 3 425 | 2 490 | 37.6% |
| Operational EBITDA | 15 | 25 | -40.7% | 11 | 38.6% | 48 | 75 | -35.7% |
| Operational EBITDA margin | 1.6% | 4.0% | 1.3% | 1.4% | 3.0% | |||
| Operational EBIT | 9 | 21 | -55.1% | 2 | n/m | 23 | 46 | -50.4% |
| Operational EBIT margin | 1.0% | 3.4% | 0.2% | 0.7% | 1.8% | |||
| Cash flow from operations | 7 | 49 | -86.3% | 11 | -38.0% | -52 | -30 | -74.1% |
| Cash flow after investing activities | -27 | 36 | -174.6% | -10 | -177.2% | -119 | -70 | -70.5% |
• Sales increased as transport and freight sales and silviculture services in Finland previously presented under other operating income were transferred to sales due to an accounting change. These are mainly internal services. The effect on external sales was EUR 11 million in the fourth quarter.
• Operational EBIT decreased by EUR 12 million to EUR 9 million due to extraordinary high profitability in Nordic forest associates in comparative period of 2017.
TRI rate
| Q4/18 | Q4/17 | Q3/18 | 2018 | 2017 | Milestone | Milestone to be reached by |
|
|---|---|---|---|---|---|---|---|
| TRI rate 1 2 3 | 7.9 | 7.3 | 4.6 | 5.9 | 7.4 | 6.7 | end of 2018 |
TRI (Total recordable incident) rate = number of incidents per one million hours worked. 1
For own employees. ² As of January 2018 Stora Enso's joint operations Veracel and Montes del Plata are included in the Group's consolidated safety performance. 2017 figures restated accordingly for comparability.
³ Q3/18 recalculated due to additional data after the Q3/2018 Interim Report.
The milestone for 2018 was achieved. Compared to 2017, a 20% reduction was achieved on the TRI-rate. The milestone for 2019 will be communicated in the Q1 Interim Report.
Implementation of the Supplier Code of Conduct
| 31 Dec 2018 | 30 Sep 2018 | 31 Dec 2017 | Target | |
|---|---|---|---|---|
| % of supplier spend covered by the Supplier Code of Conduct1 | 95% | 95% | 95% | 95% |
1 Excluding joint operations, intellectual property rights, leasing fees, financial trading, and government fees such as customs, and wood purchases from private individual forest owners.
The target to maintain the high coverage level of 95% was achieved.
During the quarter, the focus was on finalising a compliance monitoring programme on the Group's eight highest priority human rights. The ambition is to have this work completed by the end of the first quarter of 2019.
Agreements with social landless movements and land occupations in Bahia, Brazil
| 31 Dec 2018 | 30 Sep 2018 | 31 Dec 2017 | |
|---|---|---|---|
| Productive area occupied by social movements not involved in the agreement, ha |
468 | 3 019 | 3 043 |
During the quarter, Veracel signed a new agreement with the social landless movements to complement the earlier agreed Sustainable Settlement Initiative. In the new agreement Veracel sells 3 300 hectares of previously occupied lands to the movements and related associations, and the movements will leave from Veracel's lands corresponding to 800 hectares. In addition, Veracel donates 225 hectares. After this new agreement, 468 hectares of productive land owned by Veracel remained occupied by social landless movements not involved in the Sustainable Settlement Initiative or in the new agreement. Veracel will continue to seek repossessions of remaining occupied areas through legal processes. 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
| Q4/18 | Q4/17 | Q3/18 | 2018 | 2017 | Target | Target to be reached by |
|
|---|---|---|---|---|---|---|---|
| Reduction of fossil CO2e emissions per saleable tonne of pulp, paper and board (kg/t) 1 2 |
-17% | -16% | -25% | -18% | -21% | -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 Q3/2018 Interim Report.
In December 2017, Stora Enso's Science Based Targets to combat global warming were approved by the Science Based Target Initiative. With the new targets, Stora Enso commits to reduce greenhouse gas (GHG) emissions from operations 31% per tonne of pulp, paper and board produced by 2030 from a 2010 base-year. The full-year performance declined three percentage points from 2017, mainly due to the increased use of peat at two Finnish mills and a higher fossil content in the generation of the purchased electricity in Finland and Poland.
Stora Enso's Sustainability Report 2017 was chosen as best by Finnish financial journalists in a competition organised by seven organisations including the leading corporate responsibility network FIBS. The report was short-listed among the 10 best reports in the overall competition.
For the second time in a row, Stora Enso was top-ranked in both management quality and carbon performance by the Transition Pathway Initiative.
Stora Enso was top-rated in combatting global warming by the international non-profit organisation CDP. CDP has included Stora Enso on its new 2018 Climate A List, which identifies the global companies that are taking leadership in climate action.
In December 2017, Stora Enso's Science Based Targets to combat global warming were approved by the Science Based Target Initiative (SBTi). This initiative was founded by the UN Global Compact and three international non-profit organisations, including CDP, to encourage greater emissions reductions by companies in support of the Paris Agreement. These targets commit Stora Enso to reducing greenhouse gas (GHG) emissions from operations 31% per tonne of pulp, paper and board produced by 2030 compared to a 2010 base-year. Progress is reported in our quarterly interim reports.
Stora Enso was awarded 'Industry Leader 2018' in the Sustainable Brand Index™ B2B, which is the largest brand study on sustainability in the Nordics. The study covers over one hundred business-to-business brands across more than 10 industries in Sweden. Stora Enso was ranked as the most sustainable listed company in Sweden by Dagens Industri, Aktuell Hållbarhet and Lund University School of Economics and Management.
Stora Enso and the Forest Stewardship Council (FSC) signed an international partnership agreement establishing a long-term strategic collaboration to develop and promote sustainable forestry. Stora Enso promotes all main forest certification systems and is committed to responsible sourcing of wood and fibre only from sustainably managed forests and tree plantations.
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.
Furthermore, as the global economy is moving into a new phase where the main central banks will begin to reduce or reverse their lenient monetary policy positions, such developments may give rise to significant uncertainty and negatively affect Stora Enso's business conditions.
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/investors/annual-report.
Energy sensitivity analysis: the direct effect of a 10% increase in electricity, heat, oil and other fossil fuel market prices would have a negative impact of approximately EUR 12 million on operational EBIT for the next 12 months, after the effect of hedges.
Wood sensitivity analysis: the direct effect of a 10% increase in wood prices would have a negative impact of approximately EUR 203 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 130 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 62 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 184 million, negative EUR 99 million and positive EUR 38 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 December 2009, the Finnish Market Court fined Stora Enso for competition law infringements in the market for roundwood in Finland from 1997 to 2004. Stora Enso did not appeal against the ruling. In March 2011, Metsähallitus of Finland initiated legal proceedings against Stora Enso, UPM and Metsäliitto claiming compensation for damage allegedly suffered due to the competition infringement. In its judgement rendered in June 2016, the Helsinki District Court dismissed Metsähallitus' claim for damages against Stora Enso, UPM and Metsäliitto. Metsähallitus appealed against the District Court's judgment to the Helsinki Court of Appeal, which rendered its judgement in the matter in May 2018. In its judgement, the Court of Appeal dismissed Metsähallitus' appeal and upheld the District Court's judgement. The total amount of Metsähallitus' claim jointly and severally against Stora Enso, UPM and Metsäliitto in the Court of Appeal was approximately EUR 125 million and the secondary claim against Stora Enso was approximately EUR 68 million. Metsähallitus applied for a leave of appeal from the Supreme Court. The Supreme Court decided on 29 January 2019 that the application to appeal is denied. This concludes the case without Stora Enso having any payment obligation towards Metsähallitus. Further the entire round woodclaim case can be now considered closed without any material financial effects on Stora Enso. The quarterly reporting will discontinue.
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. Stora Enso denies liability. So far the Environmental Court and thereafter the Environmental Court of Appeal has found that the Environmental code is not applicable on damage caused by fire.
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.
Stora Enso Oyj's Annual General Meeting (AGM) was held on 28 March 2018 in Helsinki. The AGM approved the proposal by the Board of Directors that the Company distributes a dividend of EUR 0.41 per share for the year 2017.
The AGM approved the proposal that of the current members of the Board of Directors – Anne Brunila, Jorma Eloranta, Elisabeth Fleuriot, Hock Goh, Christiane Kuehne, 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 Antti Mäkinen be elected new member of the Board of Directors for the same term of office. The AGM elected Jorma Eloranta as Chairman of the Board of Directors and Hans Stråberg as Vice Chairman.
The AGM approved the proposed annual remuneration for the Board of Directors as follows:
| Chairman | EUR 175 000 (2017: EUR 170 000) |
|---|---|
| Vice Chairman | EUR 103 000 (2017: EUR 100 000) |
| Members | EUR 72 000 (2017: EUR 70 000) |
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.
At its meeting held after the AGM, Stora Enso's Board of Directors elected Richard Nilsson (chairman), Jorma Eloranta, Antti Mäkinen and Christiane Kuehne as members of the Financial and Audit Committee.
Jorma Eloranta (chairman), Elisabeth Fleuriot and Hans Stråberg were elected members of the Remuneration Committee.
Anne Brunila (chairman), Hock Goh and Göran Sandberg were elected members of the Sustainability and Ethics Committee.
The Shareholders' Nomination Board was appointed in September and it consists of the same members as for the previous period: Jorma Eloranta (Chairman of Stora Enso's Board of Directors), Hans Stråberg (Vice Chairman of Stora Enso's Board of Directors), Harri Sailas (Chairman of the Board of Directors of Solidium Oy), and Marcus Wallenberg (Chairman of the Board of Directors of FAM AB). The Shareholders' Nomination Board elected Marcus Wallenberg as its Chairman.
The Shareholders' Nomination Board proposes to the AGM to be held on 14 March 2019 that the Company's Board of Directors shall have nine (9) members.
The Shareholders' Nomination Board proposes 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 reelected 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 Shareholders' Nomination Board proposes that Jorma Eloranta be elected Chairman and Hans Stråberg be elected Vice Chairman of the Board of Directors. Anne Brunila has announced that she is not available for re-election to the Board of Directors.
Stora Enso Oyj's Annual General Meeting (AGM) will be held on Thursday 14 March 2019 at 4.00 p.m. Finnish time at Finlandia Hall, Mannerheimintie 13 e, Helsinki, Finland.
The proposals for decisions relating to the agenda of the AGM and the AGM notice are available on Stora Enso Oyj's website at storaenso.com/agm. Stora Enso Oyj's annual accounts, the report of the Board of Directors and the auditor's report for 2018 will be published on Stora Enso Oyj's website storaenso.com/investors/annual-report during the week commencing 11 February 2019. The proposals for decisions and the other meeting documents will also be available at the AGM. The minutes of the AGM will be available on Stora Enso Oyj's website from 28 March 2019 at the latest.
The Board of Directors proposes to the AGM that a dividend of EUR 0.50 per share be distributed for the year 2018.
The dividend would be paid to shareholders who on the record date of the dividend payment, 18 March 2019, are recorded in the shareholders' register maintained by Euroclear Finland Oy or in the separate register of shareholders maintained by Euroclear Sweden AB for Euroclear Sweden registered shares. Dividends payable to Euroclear Sweden registered shares will be forwarded by Euroclear Sweden AB and paid in Swedish crowns. Dividends payable to ADR holders will be forwarded by Citibank N.A. and paid in US dollars.
The Board of Directors proposes to the AGM that the dividend be paid on or about 25 March 2019.
During the fourth quarter of 2018, the conversions of 14 375 A shares into R shares were recorded in the Finnish trade register. During 2018, a total of 79 648 A-shares converted into R-shares were recorded in the Finnish Trade Register.
On 31 December 2018, Stora Enso had 176 312 672 A shares and 612 307 315 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 237 543 403.
On 29 January the Supreme Court denied the Finnish Metsähallitus' application to appeal in the roundwood claim case.
On 1 February Stora Enso announced a profit protection programme to strengthen competitiveness. The intention is to achieve annual cost reduction of EUR 120 million as well as reduction of capital expenditure by about EUR 50 million compared to the earlier forecast.
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, 1 February 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 2017 with the exception of new and amended standards applied to the annual periods beginning on 1 January 2018.
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, additional write-downs or reversals of write-downs, provisions for planned restructuring and penalties. Items affecting comparability are normally disclosed individually if they exceed one cent per share.
Fair valuations and non-operational items include equity incentive schemes and related hedges, CO2 emission rights, valuations of biological assets and the Group's share of income tax and net financial items of EAI.
Cash flow from operations (non-IFRS) is a Group specific way to present operative cash flow without hedging result from OCI and 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 2018:
• The Group has adopted IFRS 9 Financial Instruments standard effective from 1 January 2018. The standard replaced IAS 39 Financial instruments: Recognition and Measurement. The standard includes revised requirements for recognition and measurement of financial assets and liabilities, impairment and general hedge accounting.
The new impairment model for financial assets requires recognition of loss allowances based on the expected credit loss model. At the adoption of IFRS 9, the Group has updated its impairment methodology to be in line with IFRS 9. For trade receivables, simplified approach has been implemented and loss allowances are recognised based on expected lifetime credit losses. For receivables measured at amortised cost or fair value through other comprehensive income, general approach has been implemented with the loss allowance being recognised based on 12-month expected credit losses if there has not been a significant increase in credit risk since the initial recognition. As a result of the new impairment methodology, the Group recognised EUR 3 million negative pre-tax transition adjustment to the opening balance of retained earnings for 2018.
The Group has evaluated its financial assets and liabilities based on the new classification and measurement criteria under IFRS 9. Stora Enso has categorised its financial assets to be measured at amortised cost, at fair value through other comprehensive income and at fair value through Income statement. For financial liabilities, the classification is based on amortised cost and fair value through Income Statement categories. On the date of initial application, 1 January 2018, the financial assets and liabilities of the Group were as follows:
| Measurement category | Carrying amount | |||||
|---|---|---|---|---|---|---|
| Classification under IAS 39 | Classification under IFRS 9 | Original | New | Difference | ||
| Non-current financial assets | ||||||
| Listed securities | Available-for-sale financial assets |
Fair value through Other comprehensive income (FVTOCI) |
21 | 21 | 0 | |
| Unlisted securities | Available-for-sale financial assets |
Fair value through Other comprehensive income (FVTOCI) and Fair value through Income Statement (FVTPL) |
318 | 318 | 0 | |
| Non-current loan receivables | Loans and receivables (amortised cost) |
Amortised cost | 55 | 55 | 0 | |
| Current financial assets | ||||||
| Trade and other operative receivables | Loans and receivables (amortised cost) |
Amortised cost and Fair value through Other comprehensive income (FVTOCI) |
965 | 962 | -3 | |
| Interest-bearing receivables | Loans and receivables (amortised cost) |
Amortised cost | 15 | 15 | 0 | |
| Derivatives (under hedge accounting) | Fair value through other comprehensive income (FVTOCI) |
Fair value through Other comprehensive income (FVTOCI) |
49 | 49 | 0 | |
| Derivatives (not under hedge accounting) |
Fair value through Income Statement (FVTPL) |
Fair value through Income Statement (FVTPL) |
16 | 16 | 0 | |
| Cash and cash equivalents | Loans and receivables (amortised cost) |
Amortised cost | 607 | 607 | 0 | |
| Total financial assets | 2 046 | 2 043 | -3 | |||
| Non-current financial liabilities | ||||||
| Non-current debt | Amortised cost | Amortised cost | 2 046 | 2 046 | 0 | |
| Current financial liabilities | ||||||
| Current portion of non-current debt | Amortised cost | Amortised cost | 370 | 370 | 0 | |
| Interest-bearing liabilities | Amortised cost | Amortised cost | 560 | 560 | 0 | |
| Derivatives (under hedge accounting) | Fair value through other comprehensive income (FVTOCI) |
Fair value through Other comprehensive income (FVTOCI) |
32 | 32 | 0 | |
| Derivatives (not under hedge accounting) |
Fair value through Income Statement (FVTPL) |
Fair value through Income Statement (FVTPL) |
4 | 4 | 0 | |
| Bank overdrafts | Amortised cost | Amortised cost | 4 | 4 | 0 | |
| Contingent consideration | Fair value through Income Statement (FVTPL) |
Fair value through Income Statement (FVTPL) |
20 | 20 | 0 | |
The Group has elected to classify its equity investments in Pohjolan Voima shares and certain listed shares held by the Group, earlier classified as available-for-sale investments (AFS) under IAS 39, at fair value through other comprehensive income (FVTOCI) under IFRS 9. The gains and losses resulting from changes in the fair value of equity investments under FVTOCI are not recycled to the Income Statement upon impairment or disposal, with only dividend income being recognised in the Income Statement.
Trade and other operative payables Amortised cost Amortised cost 1 576 1 576 0 Total financial liabilities 4 612 4 612 0
Under IFRS 9 the changes in the time value of currency options used as hedges of foreign currency sales will be recognised in Other Comprehensive income to the extent that they relate to the hedged items, and will be reclassified from equity to profit or loss in the same period or periods during which the expected future cash flows will affect the profit or loss. The change will reduce Income Statement volatility compared to IAS 39. The outstanding option time value as at the date of adoption amounted to EUR 1 million negative and was recognised as a transition adjustment to the opening balance of retained earnings for 2018.
Figures in the comparison periods have not been restated.
• The Group has adopted IFRS 15 Revenue from Contracts with Customers standard and related clarifications effective from 1 January 2018. The standard replaced IAS 18 Revenue and IAS 11 Construction Contracts standards and related interpretations. The new standard specifies how and when revenue is recognised. The standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The Group has reviewed its performance obligations, main customer contracts for each division and evaluated the impact of IFRS 15 based on the amount and timing of revenue recognition.
In conclusion, the adoption of IFRS 15 has no significant impact on the substance of the principles applied by the Group to the amount and timing of revenue recognition. The revenue recognition principles and delivery terms applied by the Group remain generally unaltered and are presented in Stora Enso's Financial Report 2017.
The Group has adopted the modified retrospective application of IFRS 15 from 1 January 2018, without adjusting prior reporting periods. The new guidance is applied only to contracts that are not completed at the adoption date. No adjustment to the opening balance of retained earnings has been made as there are no changes in the timing of the revenue recognition. As from 1 January 2018 non-significant amounts of transport and freight sales and silviculture services previously presented under Other operating income have been reclassified to the Sales line in the Consolidated Income Statement. In 2018 the amount of these items was EUR 56 million. The previous year's figures have not been restated due to immateriality.
• IFRS 16 Leases. This standard replaces the current 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. 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. 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 recognized 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 rates. 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.
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 capitalise 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.
Undiscounted operating lease commitments at the end of Q4 are EUR 731 million. In accordance with the current assessment of the impact of implementing IFRS 16 indicates that a lease liability in the range of EUR 500–550 million will be recognised. It is expected that operating profit (IFRS) / operational EBIT will somewhat increase since the interest component of leasing payments will be presented in financial expenses. It is also assumed that operational EBITDA will increase, since both depreciation and interest component will be presented below EBITDA. Impact on EPS is not expected to be material. Operating cash flow will increase and financing cash flow will decrease since most of the lease payments are shown in financing cash flow, no impact to total cash flow.
In addition certain land use contracts, amounting to EUR 76 million, before IFRS 16 transition accounted as intangible assets will be 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.
| EUR million | Q4/18 | Q4/17 | Q3/18 | 2018 | 2017 |
|---|---|---|---|---|---|
| Sales | 2 657 | 2 511 | 2 585 | 10 486 | 10 045 |
| Other operating income | 27 | 53 | 19 | 92 | 147 |
| Change in inventories of finished goods and WIP | -2 | 22 | 58 | 125 | 28 |
| Materials and services | -1 602 | -1 507 | -1 527 | -6 157 | -5 945 |
| Freight and sales commissions | -232 | -239 | -232 | -932 | -968 |
| Personnel expenses | -339 | -342 | -308 | -1 330 | -1 331 |
| Other operating expenses | -133 | -143 | -115 | -526 | -551 |
| Share of results of equity accounted investments | 112 | 31 | 25 | 181 | 66 |
| Change in net value of biological assets | -17 | -20 | -20 | -68 | -72 |
| Depreciation, amortisation and impairment charges | -114 | -130 | -122 | -479 | -515 |
| Operating Profit | 356 | 236 | 363 | 1 390 | 904 |
| Net financial items | -41 | -27 | -58 | -180 | -162 |
| Profit before Tax | 315 | 209 | 305 | 1 210 | 742 |
| Income tax | -16 | -36 | -101 | -221 | -128 |
| Net Profit for the Period | 299 | 173 | 204 | 988 | 614 |
| Attributable to: | |||||
| Owners of the Parent | 304 | 174 | 214 | 1 013 | 625 |
| Non-controlling interests | -5 | -1 | -10 | -24 | -11 |
| Net Profit for the Period | 299 | 173 | 204 | 988 | 614 |
| Earnings per Share | |||||
| Basic earnings per share, EUR | 0.39 | 0.22 | 0.27 | 1.28 | 0.79 |
| Diluted earnings per share, EUR | 0.39 | 0.22 | 0.27 | 1.28 | 0.79 |
| EUR million | Q4/18 | Q4/17 | Q3/18 | 2018 | 2017 |
|---|---|---|---|---|---|
| Net profit/loss for the period | 299 | 173 | 204 | 988 | 614 |
| Other Comprehensive Income (OCI) | |||||
| Items that will Not be Reclassified to Profit and Loss | |||||
| Equity instruments at fair value through other comprehensive income |
-58 | 0 | 151 | 97 | 0 |
| Actuarial gains and losses on defined benefit plans | -20 | 57 | -4 | -24 | 61 |
| Income tax relating to items that will not be reclassified | 6 | -9 | 1 | 5 | -10 |
| -73 | 48 | 148 | 78 | 51 | |
| Items that may be Reclassified Subsequently to Profit and Loss |
|||||
| Share of OCI of EAIs that may be reclassified | 0 | 2 | 1 | 4 | 5 |
| Currency translation movements on equity net investments (CTA) | 33 | -60 | 17 | -36 | -288 |
| Currency translation movements on non-controlling interests | 0 | 1 | -1 | 0 | -3 |
| Net investment hedges | -3 | 4 | -3 | -14 | 40 |
| Cash flow hedges | 21 | 5 | 18 | -24 | 32 |
| Cost of hedging - time value of options | -1 | 0 | 1 | -2 | 0 |
| Non-controlling interests' share of cash flow hedges | -1 | 0 | -1 | -2 | 0 |
| Available-for-sale investments | 0 | 38 | 0 | 0 | 39 |
| Income tax relating to items that may be reclassified | -4 | -3 | -5 | 7 | -10 |
| 46 | -13 | 27 | -68 | -185 | |
| Total Comprehensive Income | 272 | 208 | 379 | 999 | 480 |
| Attributable to: | |||||
| Owners of the Parent | 277 | 208 | 391 | 1 025 | 494 |
| Non-controlling interests | -6 | 0 | -12 | -27 | -14 |
| Total Comprehensive Income | 272 | 208 | 379 | 999 | 480 |
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
EAI = Equity Accounted Investments
| EUR million | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| Assets | ||
| Goodwill O |
243 | 237 |
| Other intangible assets O |
254 | 229 |
| Property, plant and equipment O |
5 234 | 5 310 |
| 5 731 | 5 776 | |
| Biological assets O |
457 | 448 |
| Emission rights O |
26 | 12 |
| Equity accounted investments O |
1 729 | 1 600 |
| Listed securities I |
13 | 21 |
| Unlisted securities O |
422 | 318 |
| Non-current loan receivables I |
54 | 55 |
| Deferred tax assets T |
120 | 154 |
| Other non-current assets O |
48 | 50 |
| Non-current Assets | 8 601 | 8 434 |
| Inventories O |
1 567 | 1 321 |
| Tax receivables T |
9 | 9 |
| Operative receivables O |
1 487 | 1 319 |
| Interest-bearing receivables I |
55 | 80 |
| Cash and cash equivalents I |
1 130 | 607 |
| Current Assets | 4 248 | 3 336 |
| Total Assets | 12 849 | 11 770 |
| Equity and Liabilities | ||
| Owners of the Parent | 6 714 | 6 008 |
| Non-controlling Interests | 18 | 47 |
| Total Equity | 6 732 | 6 055 |
| Post-employment benefit provisions O |
401 | 377 |
| Other provisions O |
101 | 111 |
| Deferred tax liabilities T |
168 | 166 |
| Non-current debt I |
2 265 | 2 046 |
| Other non-current operative liabilities O |
34 | 52 |
| Non-current Liabilities | 2 970 | 2 752 |
| Current portion of non-current debt I |
403 | 370 |
| Interest-bearing liabilities I |
675 | 596 |
| Bank overdrafts I |
1 | 4 |
| Other provisions O |
16 | 23 |
| Other operative liabilities O |
1 960 | 1 888 |
| Tax liabilities T |
92 | 82 |
| Current Liabilities | 3 147 | 2 963 |
| Total Liabilities | 6 117 | 5 715 |
| Total Equity and Liabilities | 12 849 | 11 770 |
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 | 2018 | 2017 |
|---|---|---|
| Cash Flow from Operating Activities | ||
| Operating profit | 1 390 | 904 |
| Hedging result from OCI | 0 | 0 |
| Adjustments for non-cash items | 404 | 551 |
| Change in net working capital | -428 | 37 |
| Cash Flow Generated by Operations | 1 365 | 1 492 |
| Net financial items paid | -121 | -193 |
| Income taxes paid, net | -152 | -97 |
| Net Cash Provided by Operating Activities | 1 092 | 1 202 |
| Cash Flow from Investing Activities | ||
| Acquisition of subsidiary shares and business operations, net of disposed cash | -4 | 0 |
| Acquisitions of equity accounted investments | -29 | -9 |
| Acquisitions of unlisted securities | -3 | -8 |
| Proceeds from disposal of subsidiary shares and business operations, net of disposed cash | 42 | -4 |
| Proceeds from disposal of shares in equity accounted investments | 3 | 5 |
| Proceeds from disposal of unlisted securities | 1 | 0 |
| Proceeds and advances from disposal of intangible assets and property, plant and equipment | 9 | 45 |
| Income taxes paid on disposal of property | 0 | -15 |
| Capital expenditure | -525 | -658 |
| Proceeds from non-current receivables, net | 8 | -52 |
| Net Cash Used in Investing Activities | -497 | -696 |
| Cash Flow from Financing Activities | ||
| Proceeds from issue of new long-term debt | 578 | 425 |
| Repayment of long-term debt | -358 | -1 034 |
| Change in short-term borrowings | 39 | 76 |
| Dividends paid | -323 | -292 |
| Buy-out of interest in subsidiaries from non-controlling interests | -2 | 0 |
| Equity injections from, less dividends to, non-controlling interests | -2 | -1 |
| Purchase of own shares1 | -5 | -3 |
| Net Cash Provided by Financing Activities | -73 | -829 |
| Net Change in Cash and Cash Equivalents | 521 | -323 |
| Translation adjustment | 4 | -23 |
| Net cash and cash equivalents at the beginning of period | 603 | 949 |
| Net Cash and Cash Equivalents at Period End | 1 128 | 603 |
| Cash and Cash Equivalents at Period End | 1 130 | 607 |
| Bank Overdrafts at Period End | -1 | -4 |
| Net Cash and Cash Equivalents at Period End | 1 128 | 603 |
| Disposals | ||
| Cash and cash equivalents | 2 | 7 |
| Other intangible assets, property, plant and equipment and biological assets | 38 | 3 |
| Working capital | -2 | 1 |
| Interest-bearing assets and liabilities | 0 | -1 |
| Non-controlling interests | -1 | 0 |
| Net Assets in Divested Companies | 38 | 10 |
| Gain on sale, excluding CTA release and transaction costs | 6 | -9 |
| Total Disposal Consideration | 44 | 1 |
| Cash part of consideration | 44 | 0 |
| Non-cash/ not received part of consideration | 0 | 1 |
| Total Disposal Consideration | 44 | 1 |
| Cash Received Regarding Previous Year Disposals | 0 | 3 |
1 Own shares purchased for the Group's share award programme. The Group did not hold any of its own shares at 31 December 2018.
| Fair Valuation Reserve | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR million | Share Capital |
Share Premium and Reserve fund |
Invested Non Restricted Equity Fund |
Treasury Shares |
Step Acquisition Revaluation Surplus |
Equity invest ments through OCI |
Available for-Sale Invest ments |
Cash Flow Hedges |
OCI of Equity Accounted Invest ments |
CTA and Net Investment Hedges |
Retained Earnings |
Attributable to Owners of the Parent |
Non controlling Interests |
Total |
| Balance at 31 December 2016 | 1 342 | 77 | 633 | 0 | 4 | 0 | 162 | -11 | -19 | -32 | 3 650 | 5 806 | 62 | 5 868 |
| Profit/loss for the period | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 625 | 625 | -11 | 614 |
| OCI before tax | 0 | 0 | 0 | 0 | 0 | 0 | 39 | 32 | 5 | -248 | 61 | -111 | -3 | -114 |
| Income tax relating to components of OCI |
0 | 0 | 0 | 0 | 0 | 0 | 4 | -6 | -8 | -10 | -20 | -20 | ||
| Total Comprehensive Income | 0 | 0 | 0 | 0 | 0 | 0 | 43 | 26 | 5 | -256 | 676 | 494 | -14 | 480 |
| Dividend | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -292 | -292 | -1 | -293 |
| Purchase of treasury shares | 0 | 0 | 0 | -3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -3 | -3 | |
| Share-based payments | 0 | 0 | 0 | 3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3 | 3 | |
| Balance at 31 December 2017 | 1 342 | 77 | 633 | 0 | 4 | 0 | 205 | 15 | -14 | -288 | 4 034 | 6 008 | 47 | 6 055 |
| Adoption of IFRS 2 and IFRS 91 | 205 | -205 | 8 | 8 | 8 | |||||||||
| Balance at 1 January 2018 | 1 342 | 77 | 633 | 0 | 4 | 205 | 0 | 15 | -14 | -288 | 4 042 | 6 016 | 47 | 6 063 |
| Profit/loss for the period | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 013 | 1 013 | -24 | 988 |
| OCI before tax | 0 | 0 | 0 | 0 | 0 | 97 | 0 | -26 | 4 | -50 | -24 | 0 | -2 | -2 |
| Income tax relating to components of OCI |
0 | 0 | 0 | 0 | 0 | 1 | 0 | 5 | 0 | 3 | 4 | 13 | 0 | 13 |
| Total Comprehensive Income | 0 | 0 | 0 | 0 | 0 | 98 | 0 | -22 | 4 | -47 | 993 | 1 026 | -27 | 999 |
| Dividend | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -323 | -323 | -2 | -326 |
| Acquisitions and disposals | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2 | -2 |
| NCI buy-out | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2 | -2 | 2 | 0 |
| Purchase of treasury shares | 0 | 0 | 0 | -5 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -5 | 0 | -5 |
| Share-based payments | 0 | 0 | 0 | 5 | 0 | 0 | 0 | 0 | 0 | 0 | -3 | 2 | 0 | 2 |
| Balance at 31 December 2018 | 1 342 | 77 | 633 | 0 | 4 | 304 | 0 | -7 | -11 | -335 | 4 706 | 6 714 | 18 | 6 732 |
1 See Basis of Preparation relating to new and amended standards applied to annual periods beginning in January 2018.
CTA = Cumulative Translation Adjustment
OCI = Other Comprehensive Income
NCI = Non-controlling Interests
| EUR million | 2018 | 2017 |
|---|---|---|
| Carrying value at 1 January | 6 224 | 6 518 |
| Additions in tangible and intangible assets | 491 | 560 |
| Additions in biological assets | 83 | 80 |
| Costs related to growth of biological assets | -66 | -66 |
| Acquisition of subsidiary companies | 5 | 0 |
| Disposals | -5 | -12 |
| Disposals of subsidiary companies | -37 | -3 |
| Depreciation and impairment | -479 | -515 |
| Fair valuation of biological assets | -2 | -6 |
| Translation difference and other | -26 | -332 |
| Statement of Financial Position Total | 6 187 | 6 224 |
| EUR million | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| Bond loans | 1 523 | 1 352 |
| Loans from credit institutions | 1 140 | 1 029 |
| Finance lease liabilities | 1 | 29 |
| Other non-current liabilities | 4 | 6 |
| Non-current Debt including Current Portion | 2 668 | 2 416 |
| Short-term borrowings | 566 | 525 |
| Interest payable | 40 | 35 |
| Derivative financial liabilities | 68 | 36 |
| Bank overdrafts | 1 | 4 |
| Total Interest-bearing Liabilities | 3 344 | 3 016 |
| EUR million | 2018 | 2017 |
| Carrying value at 1 January | 3 016 | 3 774 |
| Proceeds of new long-term debt | 578 | 425 |
| Repayment of long-term debt | -358 | -1 034 |
| Change in short-term borrowings and interest payable | 46 | 54 |
| Change in derivative financial liabilities | 32 | -21 |
| Translation differences and other | 30 | -182 |
Total Interest-bearing Liabilities 3 344 3 016
| EUR million | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| On Own Behalf | ||
| Mortgages | 2 | 2 |
| Operating leases, in next 12 months | 100 | 81 |
| Operating leases, after next 12 months | 631 | 644 |
| Other commitments | 6 | 6 |
| On Behalf of Equity Accounted Investments | ||
| Guarantees | 4 | 4 |
| On Behalf of Others | ||
| Guarantees | 23 | 26 |
| Other commitments | 13 | 0 |
| Total | 779 | 763 |
| Mortgages | 2 | 2 |
| Guarantees | 27 | 30 |
| Operating leases | 731 | 725 |
| Other commitments | 19 | 6 |
| Total | 779 | 763 |
| EUR million | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| Total | 111 | 152 |
The Group's direct capital expenditure contracts include the Group's share of direct capital expenditure contracts in joint operations.
| EUR million | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | 2017 | Q4/17 | Q3/17 | Q2/17 | Q1/17 |
|---|---|---|---|---|---|---|---|---|---|---|
| Consumer Board | 2 622 | 637 | 648 | 691 | 646 | 2 516 | 636 | 639 | 630 | 611 |
| Packaging Solutions | 1 344 | 352 | 330 | 329 | 333 | 1 255 | 334 | 318 | 313 | 290 |
| Biomaterials | 1 635 | 415 | 413 | 413 | 394 | 1 483 | 364 | 379 | 371 | 369 |
| Wood Products | 1 622 | 399 | 400 | 430 | 393 | 1 669 | 398 | 415 | 440 | 416 |
| Paper | 3 066 | 761 | 779 | 754 | 772 | 2 920 | 726 | 727 | 719 | 748 |
| Other | 3 425 | 913 | 831 | 844 | 838 | 2 490 | 618 | 593 | 628 | 651 |
| Inter-segment sales | -3 229 | -820 | -815 | -797 | -797 | -2 288 | -565 | -562 | -573 | -588 |
| Total | 10 486 | 2 657 | 2 585 | 2 664 | 2 579 | 10 045 | 2 511 | 2 509 | 2 528 | 2 497 |
| EUR million | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | 2017 | Q4/17 | Q3/17 | Q2/17 | Q1/17 |
|---|---|---|---|---|---|---|---|---|---|---|
| Product sales | 10 346 | 2 623 | 2 550 | 2 626 | 2 547 | 9 957 | 2 489 | 2 486 | 2 507 | 2 475 |
| Service sales1 | 140 | 34 | 35 | 38 | 32 | 88 | 22 | 23 | 21 | 22 |
| Total | 10 486 | 2 657 | 2 585 | 2 664 | 2 579 | 10 045 | 2 511 | 2 509 | 2 528 | 2 497 |
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.
1 As from 1 January 2018, transport and freight sales and silviculture services in Finland previously presented under other operating income are presented in sales. In 2018, the amount of the external sales items was EUR 56 million at Group level, in addition to the internal service sales eliminations. The previous periods have not been restated due to immateriality.
| EUR million | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | 2017 | Q4/17 | Q3/17 | Q2/17 | Q1/17 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Consumer Board | Product sales | 2 611 | 634 | 645 | 688 | 643 | 2 505 | 633 | 636 | 628 | 608 |
| Service sales | 11 | 3 | 3 | 3 | 3 | 11 | 3 | 3 | 2 | 3 | |
| Packaging Solutions | Product sales | 1 340 | 351 | 329 | 328 | 332 | 1 251 | 333 | 317 | 312 | 289 |
| Service sales | 4 | 1 | 1 | 1 | 1 | 4 | 1 | 1 | 1 | 1 | |
| Biomaterials | Product sales | 1 610 | 410 | 407 | 407 | 387 | 1 453 | 357 | 371 | 364 | 361 |
| Service sales | 25 | 5 | 6 | 6 | 7 | 30 | 7 | 8 | 7 | 8 | |
| Wood Products | Product sales | 1 619 | 398 | 399 | 429 | 392 | 1 667 | 398 | 415 | 439 | 415 |
| Service sales | 3 | 1 | 0 | 1 | 1 | 2 | 0 | 0 | 1 | 1 | |
| Paper | Product sales | 3 043 | 755 | 773 | 748 | 767 | 2 910 | 724 | 726 | 716 | 744 |
| Service sales | 23 | 6 | 5 | 7 | 5 | 10 | 2 | 1 | 3 | 4 | |
| Other | Product sales | 2 430 | 665 | 579 | 587 | 599 | 2 240 | 551 | 528 | 566 | 595 |
| Service sales | 995 | 248 | 252 | 257 | 239 | 250 | 67 | 65 | 62 | 56 | |
| Inter-segment sales | Product sales | -2 307 | -590 | -582 | -562 | -573 | -2 069 | -507 | -507 | -518 | -537 |
| Service sales | -922 | -229 | -232 | -236 | -224 | -219 | -58 | -55 | -55 | -51 | |
| Total | 10 486 | 2 657 | 2 585 | 2 664 | 2 579 | 10 045 | 2 511 | 2 509 | 2 528 | 2 497 |
| EUR million | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | 2017 | Q4/17 | Q3/17 | Q2/17 | Q1/17 |
|---|---|---|---|---|---|---|---|---|---|---|
| Consumer Board | 231 | 24 | 50 | 65 | 91 | 285 | 69 | 86 | 69 | 61 |
| Packaging Solutions | 245 | 59 | 68 | 57 | 61 | 170 | 58 | 48 | 40 | 24 |
| Biomaterials | 427 | 91 | 125 | 109 | 102 | 264 | 61 | 88 | 62 | 53 |
| Wood Products | 165 | 42 | 48 | 47 | 29 | 111 | 25 | 29 | 35 | 22 |
| Paper | 234 | 45 | 65 | 54 | 69 | 128 | 46 | 29 | 11 | 42 |
| Other | 23 | 9 | 2 | -5 | 17 | 46 | 21 | 10 | 2 | 13 |
| Operational EBIT | 1 325 | 271 | 358 | 327 | 369 | 1 004 | 280 | 290 | 219 | 215 |
| Fair valuations and non operational items1 |
45 | 37 | 5 | 17 | -14 | -16 | -15 | 0 | -6 | 5 |
| Items affecting comparability | 20 | 47 | 0 | -28 | 0 | -84 | -29 | -20 | -8 | -27 |
| Operating Profit (IFRS) | 1 390 | 356 | 363 | 317 | 355 | 904 | 236 | 270 | 205 | 193 |
| Net financial items | -180 | -41 | -58 | -60 | -22 | -162 | -27 | -46 | -60 | -29 |
| Profit before Tax | 1 210 | 315 | 305 | 257 | 333 | 742 | 209 | 224 | 145 | 164 |
| Income tax expense | -221 | -16 | -101 | -44 | -60 | -128 | -36 | -33 | -2 | -57 |
| Net Profit | 988 | 299 | 204 | 213 | 273 | 614 | 173 | 191 | 143 | 107 |
1 Fair valuations and non-operational items include equity incentive schemes and related hedges, CO2 emission rights, valuations of biological assets, and the Group's share of income tax and net financial items of EAI.
| EUR million | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | 2017 | Q4/17 | Q3/17 | Q2/17 | Q1/17 |
|---|---|---|---|---|---|---|---|---|---|---|
| Impairments and reversals of intangible assets, PPE and biological assets |
0 | 0 | 0 | 0 | 0 | -8 | -5 | 0 | 0 | -3 |
| Restructuring costs excluding fixed asset impairments |
0 | 0 | 0 | 0 | 0 | -14 | 0 | 0 | 0 | -14 |
| Disposals | 20 | 47 | 0 | -28 | 0 | -28 | -8 | -20 | 0 | 0 |
| Other | 0 | 0 | 0 | 0 | 0 | -34 | -16 | 0 | -8 | -10 |
| Total IAC on Operating Profit | 20 | 47 | 0 | -28 | 0 | -84 | -29 | -20 | -8 | -27 |
| Fair valuations and non-operational items | 45 | 37 | 5 | 17 | -14 | -16 | -15 | 0 | -6 | 5 |
| Total | 65 | 85 | 5 | -11 | -14 | -100 | -44 | -20 | -14 | -22 |
| EUR million | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | 2017 | Q4/17 | Q3/17 | Q2/17 | Q1/17 |
|---|---|---|---|---|---|---|---|---|---|---|
| Consumer Board | 0 | 0 | 0 | 0 | 0 | -30 | 1 | -20 | -8 | -3 |
| Packaging Solutions | 0 | 0 | 0 | 0 | 0 | -3 | 0 | 0 | 0 | -3 |
| Biomaterials | 0 | 0 | 0 | 0 | 0 | -3 | 0 | 0 | 0 | -3 |
| Wood Products | 0 | 0 | 0 | 0 | 0 | -9 | -9 | 0 | 0 | 0 |
| Paper | 0 | 0 | 0 | 0 | 0 | -22 | -4 | 0 | 0 | -18 |
| Other | 20 | 47 | 0 | -28 | 0 | -17 | -17 | 0 | 0 | 0 |
| IAC on Operating Profit | 20 | 47 | 0 | -28 | 0 | -84 | -29 | -20 | -8 | -27 |
| IAC on tax | -27 | 0 | -27 | 0 | 0 | 11 | 4 | 0 | 1 | 6 |
| IAC on Net Profit | -8 | 47 | -27 | -28 | 0 | -73 | -25 | -20 | -7 | -21 |
| Attributable to: | ||||||||||
| Owners of the Parent | -8 | 47 | -27 | -28 | 0 | -73 | -25 | -20 | -7 | -21 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| IAC on Net Profit | -8 | 47 | -27 | -28 | 0 | -73 | -25 | -20 | -7 | -21 |
| EUR million | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | 2017 | Q4/17 | Q3/17 | Q2/17 | Q1/17 |
|---|---|---|---|---|---|---|---|---|---|---|
| Consumer Board | -1 | 0 | 0 | 0 | -1 | -2 | 0 | 0 | -1 | -1 |
| Packaging Solutions | -1 | 0 | 0 | 0 | -1 | -1 | 0 | 0 | 0 | -1 |
| Biomaterials | -3 | 3 | -2 | -3 | -1 | -7 | 0 | -4 | -2 | -1 |
| Wood Products | -1 | 0 | 0 | 0 | -1 | 0 | 1 | 0 | 0 | -1 |
| Paper | 0 | -4 | -1 | 4 | 1 | 0 | 0 | 0 | 0 | 0 |
| Other | 51 | 38 | 7 | 17 | -11 | -6 | -16 | 4 | -3 | 9 |
| FV and Non-operational Items on Operating Profit |
45 | 37 | 5 | 17 | -14 | -16 | -15 | 0 | -6 | 5 |
1 Fair valuations and non-operational items include equity incentive schemes and related hedges, CO2 emission rights, valuations of biological assets, and the Group's share of income tax and net financial items of EAI.
| EUR million | 2018 | Q4/18 | Q3/18 | Q2/18 | Q1/18 | 2017 | Q4/17 | Q3/17 | Q2/17 | Q1/17 |
|---|---|---|---|---|---|---|---|---|---|---|
| Consumer Board | 230 | 25 | 50 | 65 | 90 | 253 | 70 | 66 | 60 | 57 |
| Packaging Solutions | 244 | 59 | 68 | 56 | 60 | 166 | 58 | 48 | 40 | 20 |
| Biomaterials | 425 | 94 | 123 | 106 | 101 | 254 | 61 | 84 | 60 | 49 |
| Wood Products | 164 | 42 | 48 | 47 | 28 | 102 | 17 | 29 | 35 | 21 |
| Paper | 234 | 41 | 65 | 58 | 70 | 106 | 42 | 29 | 11 | 24 |
| Other | 93 | 95 | 9 | -16 | 6 | 23 | -12 | 14 | -1 | 22 |
| Operating Profit (IFRS) | 1 390 | 356 | 363 | 317 | 355 | 904 | 236 | 270 | 205 | 193 |
| Net financial items | -180 | -41 | -58 | -60 | -22 | -162 | -27 | -46 | -60 | -29 |
| Profit before Tax | 1 210 | 315 | 305 | 257 | 333 | 742 | 209 | 224 | 145 | 164 |
| Income tax expense | -221 | -16 | -101 | -44 | -60 | -128 | -36 | -33 | -2 | -57 |
| Net Profit | 988 | 299 | 204 | 213 | 273 | 614 | 173 | 191 | 143 | 107 |
| One Euro is | Closing Rate | Average Rate | |||
|---|---|---|---|---|---|
| 31 Dec 2018 | 31 Dec 2017 | 31 Dec 2018 | 31 Dec 2017 | ||
| SEK | 10.2548 | 9.8438 | 10.2567 | 9.6369 | |
| USD | 1.1450 | 1.1993 | 1.1815 | 1.1293 | |
| GBP | 0.8945 | 0.8872 | 0.8847 | 0.8761 |
| EUR million | EUR | USD | SEK | GBP | Other | Total |
|---|---|---|---|---|---|---|
| Sales during 2018 | 5 935 | 1 961 | 1 083 | 418 | 1 089 | 10 486 |
| Costs during 2018 | -4 931 | -369 | -1 986 | -56 | -1 386 | -8 728 |
| Net amount | 1 004 | 1 592 | -903 | 362 | -297 | 1 758 |
| Estimated annual operating cash flow exposure | 1 840 | -990 | 380 | |||
| Transaction hedges as at 31 December 2018 | -930 | 630 | -190 | |||
| Hedging percentage as at 31 December 2018 for the next 12 months | 51% | 64% | 50% |
For the next 13–18 months, 19% of the estimated exposure in SEK is hedged.
| Operational EBIT: Currency strengthening of +10% | EUR million |
|---|---|
| USD | 184 |
| SEK | -99 |
| GBP | 38 |
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 | - | 13 | - | - | 13 | 13 |
| Unlisted securities | - | 415 | 8 | - | 422 | 422 |
| Non-current loan receivables | 54 | - | - | - | 54 | 54 |
| Trade and other operative receivables | 1 092 | 44 | - | - | 1 136 | 1 136 |
| 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 debt | 2 265 | - | - | 2 265 | 2 541 |
| Current portion of non-current debt | 403 | - | - | 403 | 403 |
| 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 | Loans and Receivables |
Financial Items at Fair Value through Income Statement |
Hedging Derivatives |
Available for-Sale Investments |
Carrying Amounts |
Fair Value |
|---|---|---|---|---|---|---|
| Financial Assets | ||||||
| Available-for-sale | - | - | - | 339 | 339 | 339 |
| Non-current loan receivables | 55 | - | - | - | 55 | 55 |
| Trade and other operative receivables | 965 | - | - | - | 965 | 965 |
| Interest-bearing receivables | 15 | 16 | 49 | - | 80 | 80 |
| Cash and cash equivalents | 607 | - | - | - | 607 | 607 |
| Carrying Amount by Category | 1 642 | 16 | 49 | 339 | 2 046 | 2 046 |
| EUR million | Financial Items at Fair Value through Income Statement |
Hedging Derivatives |
Measured at Amortised Cost |
Carrying Amounts |
Fair Value | |
|---|---|---|---|---|---|---|
| Financial Liabilities | ||||||
| Non-current debt | - | - | 2 046 | 2 046 | 2 357 | |
| Current portion of non-current debt | - | - | 370 | 370 | 370 | |
| Interest-bearing liabilities | 4 | 32 | 560 | 596 | 596 | |
| Trade and other operative payables | 20 | - | 1 576 | 1 596 | 1 596 | |
| Bank overdrafts | - | - | 4 | 4 | 4 | |
| Carrying Amount by Category | 24 | 32 | 4 556 | 4 612 | 4 923 | |
| EUR million | Level 1 | Level 2 | Level 3 | Total | ||
| Derivative financial assets | - | 65 | - | 65 | ||
| Trade and other operative receivables | - | - | - | - | ||
| Available-for-sale investments | 21 | - | 318 | 339 | ||
| Derivative financial liabilities | - | 36 | - | 36 | ||
| Trade and other operative liabilities | - | - | 20 | 20 |
| EUR million | 2018 | 2017 |
|---|---|---|
| Financial assets | ||
| Opening balance at 1 January | 318 | 253 |
| Gains/losses recognised in income statement | -2 | -2 |
| Gains/losses recognised in other comprehensive income | 104 | 60 |
| Additions | 3 | 7 |
| Disposals | -1 | 0 |
| Closing Balance | 422 | 318 |
| EUR million | 2018 | 2017 |
| Financial liabilities | ||
| Opening balance at 1 January | 20 | 23 |
| Gains/losses recognised in income statement | 1 | -3 |
| Closing Balance | 21 | 20 |
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 4.06% 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 +54 million and -41 million, respectively. A +/- 1%-point change in the discount rate would change the valuation by EUR -34 million and +100 million, respectively.
| Helsinki | Stockholm | |||
|---|---|---|---|---|
| A share | R share | A share | R share | |
| October | 111 950 | 58 161 667 | 195 654 | 7 890 144 |
| November | 83 820 | 55 842 805 | 109 324 | 13 080 621 |
| December | 228 185 | 47 916 924 | 220 614 | 12 447 653 |
| Total | 423 955 | 161 921 396 | 525 592 | 33 418 418 |
| Helsinki, EUR | Stockholm, SEK | |||
|---|---|---|---|---|
| A share | R share | A share | R share | |
| October | 14.00 | 13.31 | 144.00 | 137.70 |
| November | 12.90 | 11.26 | 132.00 | 116.60 |
| December | 11.05 | 10.09 | 116.00 | 103.40 |
| Million | Q4/18 | Q4/17 | Q3/18 | 2018 | 2017 |
|---|---|---|---|---|---|
| Periodic | 788.6 | 788.6 | 788.6 | 788.6 | 788.6 |
| Cumulative | 788.6 | 788.6 | 788.6 | 788.6 | 788.6 |
| Cumulative, diluted | 789.7 | 790.0 | 789.7 | 789.9 | 790.0 |
| 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 |
Tel. +358 2046 131 Klarabergsviadukten 70
Stora Enso Oyj Stora Enso AB storaenso.com P.O.Box 309 P.O.Box 70395 storaenso.com/investors FI-00101 Helsinki, Finland SE-107 24 Stockholm, Sweden Visiting address: Kanavaranta 1 Visiting address: World Trade Center Tel. +46 1046 46 000
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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