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• Sales increased by 23% to EUR 2,798 (2,276) million.
• Operational EBIT increased by 53% to EUR 503 (328) million.
• Operational EBIT margin increased to 18.0% (14.4%).
• Operating profit (IFRS) increased to EUR 394 (161) million.
• EPS was EUR 0.37 (0.18) and EPS excl. fair valuations (FV) was EUR 0.35 (0.22).
• Strong cash flow from operations amounted to EUR 403 (185) million. Cash flow after investing activities was EUR 224 (-9) million.
• The net debt to operational EBITDA ratio improved to 1.1 (2.3). The target is to keep the ratio below 2.0.
• Operational ROCE excluding the Forest division almost doubled to 23.6% (12.0%), the target being >13%.

Key highlights

• Sales process initiated to divest four out of five paper production sites to focus on growth in the key strategic areas: renewable packaging, building solutions and biomaterials innovations.
• Feasibility study for the conversion of an idle paper machine at the Oulu site, Finland to explore expansion in renewable packaging board with an additional capacity of 750,000 tonnes.
• Lignode: feasibility study started at the Sunila site, Finland, to assess the first production site for local supply of fossil-free hard carbon in Europe. A pre-feasibility study to investigate the extraction of lignin has started at the Skutskär site, Sweden.
• All import and export activities from and to Russia are halted, wood supply in Russia has stopped. Mitigation and re-routing are in place to manage supply and risk. In April, Stora Enso announced that it is divesting its two sawmills in Russia to local management of the sites, including its Russian forest operation which through its harvesting, supplies wood to the sawmills. Sales in Russia represented approx. 3% of total Group revenues (2021). The impact from these initiatives on Stora Enso’s sales and operational EBIT is not material.
• A dividend of 0.55 euros per share was paid on 24 March 2022 for the full year 2021.

Outlook

Global megatrends such as an increased eco awareness, an accelerated focus on combatting climate change, and digitalisation underpin Stora Enso’s business strategy and the demand for its renewable and eco-friendly products, both short and long term.

The general macroeconomic environment and the pandemic are persisting uncertainties. However, with Russia’s invasion of Ukraine risks have increased across the world. Sustained commercial momentum is supported by the market demand for Stora Enso’s products across all divisions. To manage volatility, measures such as pricing, flexibility in sourcing and logistics, as well as hedging are in place.

Guidance remains unchanged

Stora Enso’s full-year 2022 operational EBIT is estimated to be approximately in line with the full year operational EBIT for 2021 (EUR 1,528 million).

Stora Enso’s President and CEO Annica Bresky comments on the first quarter 2022 results:

“This year has started on a very strong note for Stora Enso. We delivered record high profitability and maintained our growth momentum from last year in a very turbulent environment. Our sales reached close to EUR 2.8 billion, an increase of 29% excluding Paper. We have seen strong demand for our products with high prices and solid volumes in all our segments and regions. Our strategic positioning and investments in growth within renewable materials is paying off, with our key focus areas being our star performers. This has led to our highest quarterly operational EBIT in around 20 years, up by 53% from a year ago, and an all-time high EBIT margin of 18%.

It has undeniably been a quarter with additional geopolitical challenges on top of lingering pandemic effects and supply chain headwinds. We were early in taking a stand on supporting Ukraine by ceasing our Russian operations. At the same time, safeguarding the safety of our 1,100 people employed in Russia has been, and still is, a key priority, along with minimising the disruption for our customers. Our direct and indirect forest ownership in Sweden and Finland have enabled valuable wood sourcing alternatives to compensate for ceased Russian volumes. Overall, the impact on sales and operational EBIT is not material as Russia represented 3% of Group sales in 2021.

As the next step in our strategy implementation, we have taken the decision to streamline our business to further favour growth in our key focus areas. Paper is not a strategic growth area for us and as such, we have initiated a process to divest four of our five paper sites, retaining our site in Belgium for a possible future conversion. Since 2006, we have reduced our exposure in this segment from 70% of our sales, to around 15% in the first quarter this year. The sites that are up for sale are competitive and operate in attractive paper segments with improving market conditions. We have no deadline for the conclusion of the divestment, and I am confident we will find responsible new owners that can continue to develop the businesses further.

To further accelerate our growth within the packaging segment, we are exploring expansion in renewable consumer board. We have initiated a feasibility study for the possible conversion of an idle paper machine into a high-volume consumer board line. In this market, we target customer segments in which we already hold a leading, global market position.

Our recently revised operational model has already proven its success after having been put to test this quarter. Our more decentralised structure provides agility in decision making, bringing us closer to our customers. This enables us to quickly counteract many of the impacts we now see around the world. We foresee an increased regionalisation of goods, something we believe will benefit our opportunities for further growth in the markets we are active in.

We are fully booked, see no weakening in our markets and we continuously work to mitigate higher input costs. Beyond favourable sustainability trends, many of our products are day-to-day necessities used regardless of recession, geopolitical uncertainties, and other disruptions. Hence, at this moment in time, we do not see any potential negative spillover effects, and we feel confident in our full year guidance. We have also continued to strengthen our balance sheet and secure good liquidity, a good position to have in a case of a possible macroeconomic downturn.

Key for delivering sustainable and profitable growth is to have the right ecosystem of customers, partners and committed people. Quarter by quarter, our decisions are guided by our purpose: to do what is right for people and planet by replacing fossil-based materials with renewable ones. We will continue our efforts to help our customers become 100% climate positive and circular, creating value for all our stakeholders long-term.

The renewable future grows in the forest.”

Analysts, investors and media are invited to participate in the webcast and conference call today at 14:00 EEST (13:00 CEST, 12:00 BST, 7:00 EDT). The result will be presented by President and CEO Annica Bresky and CFO Seppo Parvi, and may be accessed at https://edge.media-server.com/mmc/p/jvrf8zpz.

All participants can follow the presentation over the webcast.

Analysts and investors who wish to ask questions should join the conference call (details below).

Media representatives who wish to ask questions after the Interim Report is published, may contact Carl Norell, press officer at Stora Enso on +46 72 2410349.

The link to the webcast will be also available on Stora Enso’s website: storaenso.com/investors

Dial-in details for the analyst and investor conference call

UK +44 333 300 0804
Finland +358 (0) 981 710 310
Sweden +46 8 566 426 51
USA +1 631 913 1422
Confirmation Code: 43094260#

Replay Dial-In #:
UK/International +44 (0) 333 300 0819
Access Code: 425020333#

The conference call replay will be available via the dial-in number until 5 May 2022. The webcast will be archived on storaenso.com/en/investors/reports-and-presentations.