Stora Enso (STE) Q2 2024 earnings summary

Executive summary

• Q2 2024 adjusted EBIT more than quadrupled year-over-year to EUR 161 million, marking the third consecutive quarter of sequential growth and supporting upgraded full-year EBIT guidance to be significantly higher than 2023’s EUR 342 million.

• Value creation and profit improvement programs, targeting EUR 120 million in annual fixed cost savings, are driving earnings growth and operational efficiency.

• Operating working capital was reduced to an all-time low by EUR 576 million year-over-year, boosting liquidity and financial flexibility.

• Strategic restructuring, divestments, and targeted investments, including the ongoing divestment of the Beihai site in China, are positioning the company for sustainable growth.

• Leadership changes include a new CFO and head of Packaging Solutions joining by January 2025.

Financial highlights

• Group sales decreased by 3% to EUR 2.3 billion due to site divestments and closures, but sales from continuing operations grew by 1%.

• Adjusted EBIT rose to EUR 161 million (7.0% margin) from EUR 37 million a year ago, driven by higher volumes, lower variable and fixed costs.

• Cash flow from operations reached EUR 323 million, with cash flow after investing activities at EUR 86 million.

• Net debt increased to EUR 3,497 million, mainly due to Oulu investment; net debt to adjusted EBITDA at 3.5, above the 2.0 target.

• Cash and cash equivalents stand at EUR 2.1 billion, with EUR 1.9 billion in unused credit facilities and EUR 1.1 billion in pension loans available.

Outlook and guidance

• Full-year 2024 adjusted EBIT is expected to be significantly higher than 2023, with a target of +50% or more over last year’s EUR 342 million.

• Stable demand is anticipated for consumer board, container board, and pulp, with a seasonal decline in sawn wood and increased industrial wood demand.

• Market recovery is expected to be gradual, with pricing improvements in board grades and continued focus on cost efficiency.