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 last year’s EUR 342 million.

• Profit improvement and value creation programs, targeting EUR 120 million in annual fixed cost savings, are delivering results across all divisions.

• Operating working capital was reduced to an all-time low, enhancing liquidity and financial flexibility.

• Sustainability remains a strategic focus, with significant progress on emissions reduction, product recyclability, and top-tier ESG ratings.

• The plan to divest the Beihai site in China is ongoing, with assets classified as held for sale.

Financial highlights

• Group sales decreased by 3% to EUR 2.3 billion due to structural changes, but sales from continuing operations grew by 1%.

• Adjusted EBIT rose to EUR 161 million (7.0% margin) from EUR 37 million (1.6%) a year ago, driven by higher volumes, lower variable and fixed costs.

• Cash flow from operations reached EUR 323 million, supported by a EUR 576 million year-over-year reduction in operating working capital.

• Net debt to adjusted EBITDA ratio improved to 3.5 from 4.0 in Q1, though still above the 2.0 target.

• Earnings per share (EPS) in Q2 was EUR 0.06, up from -0.29 a year ago.

Outlook and guidance

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

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

• Market recovery is expected to be gradual, with pricing improvements driving near-term profitability, but high wood costs and market uncertainties will continue to pressure margins.