Stora Enso CEO Comments on Third Quarter 2014 Performance

"We have taken several steps in our transformation into a customer focused renewables materials company." – Karl-Henrik Sundström, CEO, Stora Enso.

Oct. 22, 2014 - Stora Enso’s CEO Karl-Henrik Sundström made the following comments about the company's third quarter 2014 results:

“Stora Enso delivered solid performance during the third quarter. Sales, excluding the structurally declining paper business, were up by 3%. We are successful in our cost management and the operational EBIT increased 14% year-on-year. Return on capital employed increased to 9.7%, which is yet another step in the right direction. Furthermore, we have improved Net debt/EBITDA compared to a year ago from 3.1 to 2.8.

"We have taken several steps in our transformation into a customer focused renewables materials company. A key milestone was the inauguration of the pulp mill in Montes del Plata, Uruguay, and we are now ready to ramp up its production capacity.

During the quarter, we also initiated the process to convert the Varkaus Mill in Finland for production of virgin-fibre-based containerboard. Moreover, we have invested in a demonstration and market development plant in the USA for the extraction and separation of highly pure sugars from biomass to be converted into differentiated biochemicals. The investment in the consumer board machine in Guangxi, China, proceeds as planned. Our non-core asset disposal programme is moving ahead with the divestment of Corenso as the most recent step. Together with innovation in our existing product range, these initiatives will play a major role in our transformation.

"During the quarter, we have put a partly new Group Leader ship Team in place. There is a clearer focus, partly due to the fact that we have split Global Communications and Global Responsibility. Our focus on Responsibility is partly reflected by the section in our quarterly reporting. We are moving ahead.

"When it comes to outlook, the fourth quarter 2014 sales are estimated to be roughly similar to the EUR 2 514 million in the third quarter 2014. Operational EBIT is expected to be somewhat lower than the EUR 210 million in the third quarter 2014 due to normal seasonal weakness in the Renewable Packaging and Building and Living divisions.

"This was my first quarter as the CEO and I am very impressed by all our competent and committed employees who together build the future of Stora Enso. It is all about creating value for our customers, today and tomorrow.”

Transformation

  • Montes del Plata Pulp Mill in Uruguay started up in early June and the ramp-up is moving ahead, but at a slower pace than previously expected. In 2014 Stora Enso’s share of its production is expected to be 245,000 – 275,000 tonnes, 55,000 – 75,000 tonnes less than anticipated in July.
  • Stora Enso Guangxi Integrated Project and Operations proceeding as planned.
  • Conversion of Varkaus Mill fine paper machine in Finland to produce virgin-fibre-based containerboard proceeding as planned, expected to start at the end of 2015.
  • New investment in a demonstration and market development plant in the USA for the extraction and separation of highly pure sugars from biomass to be converted into differentiated biochemicals.

Restructuring

  • Stora Enso has signed an agreement to divest its Corenso business operations to Powerflute Oyj in order to streamline its business and to transform Stora Enso into a customer-focused renewable materials company. Closing is expected during Q4/2014.
  • In October the buyer of Uetersen Mill withdrew the merger approval application due to indicated negative outcome by the competition authorities. As a consequence the parties agreed to terminate the share purchase agreement. Stora Enso is currently considering its alternative options.

Outlook
Q4/2014 sales are estimated to be roughly similar to the EUR 2 514 million in Q3/2014. Operational EBIT is expected to be somewhat lower than the EUR 210 million in Q3/2014 due to normal seasonal weakness in the Renewable Packaging and Building and Living divisions.

Stora Enso produces chemical pulp, paper and board, corrugated packaging, and sawn wood products, including value-added products. To learn more, please visit: www.storaenso.com

SOURCE: Stora Enso