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Stora Enso's 2024 Financial Results: A Year of Profitability and Improvement

Stora Enso Oyj has released its financial statements for the fourth quarter and year of 2024, showcasing notable achievements despite challenging market conditions. The company reported a 7% increase in sales for Q4 2024, amounting to EUR 2,322 million compared to EUR 2,174 million in the same period last year. Moreover, adjusted earnings before interest and taxes (EBIT) skyrocketed by 138.6% to EUR 121 million, further reflecting strong operational advancements.

Looking at the year as a whole, Stora Enso recorded sales of EUR 9,049 million, slightly down from EUR 9,396 million in 2023. However, the adjusted EBIT saw substantial growth from EUR 342 million to EUR 598 million, indicating a solid recovery strategy which was implemented throughout the year.

Key Highlights from the Financial Report

• - Profit Improvement Programme: Initiated in Q1 2024, this program aimed to achieve EUR 120 million in annual gross fixed cost savings. By the end of 2024, Stora Enso successfully decreased fixed costs by EUR 110 million, illustrating effective management and operational reforms.
• - Strategic Acquisitions: The company announced its agreement to acquire Junnikkala Oy, a Finnish sawmill, to ensure a cost-effective wood supply to its packaging board site in Oulu. This acquisition also prepares the firm for expansion in wood product manufacturing.
• - Sustainability Goals: Stora Enso achieved a 53% reduction in Scope 1 and 2 greenhouse gas emissions, surpassing their target of a 50% reduction by 2030. This significant accomplishment reflects the company’s dedication to environmental responsibility and sustainable production.
• - Forest Asset Evaluation: The company's total forest assets have seen an increase in fair value to EUR 8.9 billion, translating to EUR 11.28 per share. Additionally, Stora Enso is in the process of selling about 12% of its forest assets in Sweden, valuing approximately EUR 6.3 billion, as a step towards optimizing financial flexibility.

Financial Details

Stora Enso's operating result under IFRS for Q4 was reported at EUR -279 million, which includes considerable impairments. However, the cash flow from operations was stable at EUR 325 million. As the year advanced, net debt rose to EUR 3,707 million, primarily due to investments in infrastructure at the Oulu site; this also led to an improved net debt to adjusted EBITDA ratio to 3.0.

Earnings per share (EPS) saw varying fortunes, with the reported EPS at EUR -0.43 for Q4, compared to EUR -0.36 in the previous year. Excluding fair valuations, the EPS was EUR -0.81, marking a significant decline driven by operational challenges.

Forward Outlook

Looking forward to 2025, Stora Enso maintains a cautiously optimistic stance despite the uncertainty in demand due to broader macroeconomic factors. The company will continue with its cost-cutting measures and plans to ramp up production at its new consumer board line at the Oulu facility. However, it anticipates an adverse impact of around EUR 100 million on adjusted EBIT during the first half of the year due to initial operational scaling. The management aims for a capital expenditure between EUR 730 million to EUR 790 million, reflecting strategic investments aimed at enhancing production capabilities while navigating through economic fluctuations.

In summary, Stora Enso's 2024 financial results underscore a resilient performance and a strategic commitment to sustainable growth even amidst global challenges. With clear strategies in place for operational efficiency and cost reductions, the company is poised for further success in the forthcoming years.