Stora Enso Interim Report January–June 2016
Stora Enso has published its interim report January–June 2016. Sales EUR 2 526 (EUR 2 562) million decreased 1.4%.
Sales excluding the structurally declining paper business and divested Barcelona Mill increased 3.6%, primarily due to the ramp-up of Varkaus kraftliner mill and additional volumes from Ostrołęka containerboard mill.
Operational EBIT increased 9.2% to EUR 226 (EUR 207) million, including a bad debt provision of EUR 6 million in the Paper division, lower variable costs, and a positive net currency impact. The EBIT margin was 8.9% (8.1%).
Cash flow from operations record high at EUR 493 (EUR 489) million, due to increased operational EBITDA and release of working capital; cash flow after investing activities was EUR 321 (EUR 261) million.
Continued strengthening of the balance sheet; net debt to operational EBITDA 2.3 (2.7) despite dividend payment; liquidity reduced to EUR 511 (EUR 986) million, as planned.
Operational ROCE 10.3% (9.4%), operational ROCE excluding the Beihai Mill investment 12.5% (10.9%).
The comments of Stora Enso’s CEO Karl-Henrik Sundström on the second quarter 2016 results
“In the second quarter of 2016, sales excluding the structurally declining paper business and the divested Consumer Board Barcelona Mill increased 3.6% compared to the same quarter last year. This was primarily due to the ramp-up of Varkaus kraftliner mill and additional volumes from the Ostrołęka containerboard mill. Cash flow year-on-year was record high, due to higher profitability and release of working capital.
This quarter we have stepped up a gear in our transformation to a renewable materials growth company. We have taken a major leap forward and many parts of the puzzle are falling into place. We are now ready for the next chapter in our transformation journey. The consumer board machine at Beihai Mill in China successfully started production, ahead of plan, which is an historical milestone for us. Our aim is to benefit from the growing demand in China and Asia Pacific for high-quality consumer board. One of the key end products from Beihai Mill will be Liquid Packaging Board, of which more than 80 per cent today is imported to China.
We continue to invest for growth and strengthened competitiveness. To further enhance our position as a leading global supplier of premium paperboards, we are investing EUR 70 million in Imatra Mills in Finland. This is to increase coating capacity and allow further product development of the new generation bio-barriers. Customer demand for food service board and liquid packaging board is estimated to grow above industry average. Furthermore, to meet the growing demand in the hygiene market, we will invest EUR 26.5 million in Skutskär pulp mill to increase the mill’s fluff capacity.
To strengthen our bio-based chemicals development, we have signed a joint technology development agreement with specialty chemicals company Rennovia Inc. This is a logical next step for us as we are targeting new markets and developing new products in this area. The commercialisation of lignin from Sunila Mill in Finland is going forward and the first customer agreement has been signed”.
