Stora Enso Reports Third Quarter 2019 Results
"As a company, we are preparing for the next market upturn through our profit protection programme which is proceeding ahead of plan." – Karl-Henrik Sundström, CEO, Stora Enso.
Oct. 29, 2019 - Stora Enso today reported third quarter 2019 results. Q3/2019 (compared with Q3/2018)
Outlook for 2019Deteriorating trading conditions caused by geopolitical uncertainties related to trade wars and a possible hard Brexit are expected to impact Stora Enso negatively. Demand growth is forecast to slow for Stora Enso's businesses in general, and the decline in demand for European paper will continue. Due to the profit protection programme, costs are forecast to remain roughly at the same level in 2019 as in 2018. Stora Enso is still implementing additional profit protection measures to mitigate negative financial impacts of the current situation. Guidance for Q4/2019Q4/2019 operational EBIT is expected to be in the range of EUR 100–180 million. During the fourth quarter, there will be annual maintenance shutdown at the Fors, Ingerois, Skoghall, Varkaus, Montes del Plata and Skutskär mills. The total maintenance impact is estimated to be at the same level as in Q4/2018 and in Q3/2019. CEO CommentsStora Enso's CEO Karl-Henrik Sundström comments on the third quarter 2019 results: “As a company, we are preparing for the next market upturn through our profit protection programme which is proceeding ahead of plan. Since we were out early in launching it, we are building the prerequisites for a better and more profitable future when the cycle turns. It is important to take advantage of today's situation to build a more future-proof company by being one step ahead and working proactively. To advance even further, we have increased the target to EUR 275 million from EUR 200 million and extended the programme until the end of 2021. Sales during the quarter decreased due to lower prices and volumes. We also saw a sharp decrease in operational EBIT for the same reasons. Approximately EUR 40 million of cost reduction have been achieved during the quarter. Imagine if we would have had this based on last year's cost levels. This is a foundation for a leaner and more efficient organisation ready for when the cycle turns. Cash flow from operations was strong, due to proactive working capital management. Given our focus on our raw material, I am pleased that we will establish a new Forest division from the beginning of 2020. It will include our Swedish forest assets and our 41% share of Tornator with the majority of the forest assets located in Finland. Moreover, it covers our wood supply operations in Finland, Sweden, Russia and the Baltics. As a major player in the bioeconomy, access to wood is critical for our business. Looking at our divisions, we see continued price increases in Consumer Board; in Packaging Solutions, the corrugated market is benefiting from lower containerboard prices; in Biomaterials, we note that the Chinese market is showing positive signs and in Wood Products, the margin protection continues. As regards our transformation journey, the conversion of Enocell pulp mill from softwood to dissolving pulp has been finalised, and the gradual ramp up is starting. Our dissolving wood pulp can be used in exciting new ways to help shape the fabric of a green future. As part of our focus on our growth areas, we have also divested our 60% equity stake in the Dawang paper mill in China. In our constant endeavours for sustainability in all dimensions, we are proud that our Sustainability Report 2018 — for the second year in a row — has been included in the top ten sustainability reports globally. This is according to the latest Reporting matters publication by the World Business Council for Sustainable Development (WBCSD). We have also received the highest rating for sustainability communications in a study assessing 95 companies listed on the Nasdaq OMX Stockholm Large Cap Index in Sweden. To sum it up: The changed market environment creates a need to be better prepared and we use this time now to get ready for the next upturn. I am pleased that we started to take measures early on. It is soon time for me to hand over the torch to my successor, Annica Bresky, who will step in to her new position as President and CEO as of 1 December 2019. I have enjoyed my time with Stora Enso tremendously. I am especially pleased with the progress that all of us have made in becoming the renewable materials company, sustainable in all dimensions. I wish Annica all the best in this exciting role. As always, I would like to thank our customers for their business, our employees for their dedication, and our investors for their trust.” Part of the bioeconomy, Stora Enso is a leading global provider of renewable solutions in packaging, biomaterials, wooden constructions and paper. To learn more, please visit: www.storaenso.com. SOURCE: Stora Enso |