Stora Enso (STE) Status Update summary

Strategic review and asset optimization

• Initiated a strategic review of Swedish Forest assets, considering a potential partial demerger to create a leading listed pure forest company in Europe.

• Recent sale of 12% of Swedish Forest lands for €900 million, with €790 million in cash proceeds, strengthens the balance sheet and confirms asset value.

• Remaining 88% of Swedish Forest assets, valued at €5.8 billion, are under review for further value creation and business focus.

• The review aims to unlock value in both forest assets and the core renewable materials business, with a focus on renewable packaging.

• New revenue streams such as renewable energy, carbon credits, and sequestration are being considered for the forest business.

Financial and operational performance

• Improved adjusted EBIT and profitability for four consecutive quarters through cost reduction and competitiveness initiatives.

• Reduced working capital by €700 million, lowering it from over 14% to 7% of sales.

• Sale of 12% of forest lands results in a loss of €25 million EBITDA, of which €15 million is cash EBITDA.

• The forest assets are highly productive, well-located in central Sweden, and benefit from strong regional demand.

Strategic options and structure

• The main option under review is a tax-free 100% spin-off of the Swedish Forest assets to current shareholders, with no expected tax or operational dis-synergies.

• No bond covenant issues are anticipated, and maintaining investment grade ratings is a priority.

• Long-term wood supply agreements will be secured regardless of the chosen structure.

• Key anchor shareholders, including FAM and Solidium, support the strategic review and potential creation of two leading companies.