Stora Enso CEO Comments on Second Quarter 2015 Performance
Stora Enso‘s CEO Karl-Henrik Sundström comments on the second quarter 2015 results: “In the second quarter, Stora Enso generated strong cash flow, and sales increased by 4.8%, excluding structurally declining paper and divested businesses, compared to the second quarter of 2014. This growth shows the ability of our businesses to transform.
“Operational EBIT margin remained unchanged at 8.1% compared to the second quarter of a year ago, even though the Consumer Board division was negatively affected by production challenges at the Imatra and Skoghall mills and lower harvesting volumes in Guangxi, China, amounting to EUR 12 million”.
“Moreover, preparations ahead of the start-up of the Guangxi mill increased fixed costs by EUR 10 million. Return on capital employed for the Group decreased to 9.4% from 9.8%”.
“During the quarter, we made additional progress in transforming into a renewable materials growth company. The pulp mill in Montes del Plata, Uruguay, is already an important driver of our topline as well as our profitability. Construction at our Guangxi investment project is proceeding according to plan and the main machinery is now being installed. The conversion of the Varkaus mill fine paper machine in Finland is on track and the production of kraftliner is expected to commence by the end of the year. Murow sawmill in Poland also began operating during the quarter, increasing its capacity of classic sawn products”.
“We have also announced the closure of our corrugated packaging converting unit in Chennai, India, due to unprofitability. The mill employs 350 people, who will receive compensation and support”.
“We are constantly developing our offering. I am especially happy that we and NXP Semiconductors are cooperating on the development of intelligent packaging solutions”.
“One of the achievements during the quarter was entering into a partnership with the International Labour Organization (ILO). The agreement will among other things ensure that our policies and practices are aligned with international labour standards. Moreover, we launched human rights actions plans to address the Danish Institute for Human Rights assessment findings published in February. Together with Kemira, a global chemicals company, we have begun construction to enhance the responsible use of local water in three villages in Guangxi”.
“When it comes to outlook, sales in the third quarter of 2015 are estimated to be similar to the amount of the EUR 2 562 million in the second quarter of 2015. Operational EBIT is expected to be in line with the EUR 207 million recorded in the second quarter of 2015. During the third quarter, there will be maintenance shutdowns at several mills”.
“As always, I would like to thank our employees for their commitment, our customers for their business and our investors for their trust. We work hard to keep on creating value, today and tomorrow.”
Transformation
The construction of the Guangxi consumer board mill in China is proceeding according to plan and the installation of the main machinery has begun. The board machine is expected to be operational in mid-2016 as announced earlier.
The conversion of the Varkaus mill’s fine paper machine in Finland for kraftliner is proceeding as planned and expected to start at the end of 2015.
Outlook
Q3/2015 sales are estimated to be similar to the amount of the EUR 2 562 million in Q2/2015. Operational EBIT is expected to be in line with the EUR 207 million recorded in Q2/2015. The negative maintenance impact is expected to be EUR 15 million higher in Q3 than in Q2/2015.
In the picture: Karl-Henrik Sundström
