Stora Enso Reports Robust Business Performance Amid Volatile Market Demand

Stora Enso's Half-year Report: A Closer Look at H1 2025

Stora Enso Oyj's recent half-year report for January to June 2025 presents a compelling narrative about the company’s growth and adaptability in the face of fluctuating demand dynamics. For the second quarter of 2025, the company's sales witnessed a remarkable 5% increase, reaching EUR 2,426 million in comparison to EUR 2,301 million in the same period last year. This surge in sales can be attributed to heightened delivery volumes and beneficial structural changes within the organization.

Despite the sales growth, Stora Enso faced its share of challenges. The adjusted earnings before interest and taxes (EBIT) experienced an 18% decline, dropping to EUR 126 million from EUR 153 million year-on-year. This translated to a decrease in the adjusted EBIT margin, which fell to 5.2% from the previous 6.7%. A significant factor contributing to this decline was the ongoing ramp-up of a new consumer board line at the Oulu site, which was estimated to impact earnings negatively by approximately EUR 50 million.

The operating result under IFRS standards registered EUR 64 million, down from EUR 92 million, factoring in certain items that affected comparability, including fair valuations and non-operational financial impacts, totaling EUR -62 million. Furthermore, earnings per share saw a decrease from EUR 0.05 to EUR 0.03, highlighting the tough quarter experienced by the company.

In terms of operational cash flow, Stora Enso reported EUR 145 million, a stark contrast to the robust EUR 323 million from the previous year's second quarter, further underscoring the financial pressures stemming from reduced profits and diminishing trade payables. However, amid these adversities, the forest-related assets' fair value saw an appreciation, reaching EUR 9.0 billion, equivalent to EUR 11.40 per share.

Key Highlights from the First Half of 2025

Over the course of the first half of 2025, Stora Enso's sales totalled EUR 4,789 million, up from EUR 4,466 million year-on-year. The adjusted EBIT remained relatively stable at EUR 301 million, while the IFRS operating result showed a slight increase at EUR 235 million compared to EUR 232 million in H1 2024. Earnings per share demonstrated a positive trend, rising to EUR 0.17 from EUR 0.15, showcasing some resilience in the company’s performance.

A pivotal moment for Stora Enso occurred in May 2025 when the company announced an agreement to divest around 175,000 hectares of forest land in Sweden, accounting for approximately 12.4% of its total holdings in the country. This action, which has an enterprise value of EUR 900 million, is projected to enhance Stora Enso’s financial flexibility while securing a 15% ownership stake in the divested entity, alongside a long-term wood supply agreement.

In conjunction with the divestiture, Stora Enso has initiated a strategic review of its remaining Swedish forest assets, evaluating opportunities for potential separation and public listing of these assets. This move indicates the company’s commitment to optimizing its portfolio and enhancing shareholder value.

Another focus for the company has been its operational efficiency. Stora Enso has implemented a leaner corporate structure as of July 1, 2025, dividing its packaging operations into four primary business areas. This strategic restructuring aims to sharpen the company's focus on renewable packaging as a core business line, thereby enhancing customer-centricity and operational integration across Nordic packaging board mills.

Looking ahead, Stora Enso anticipates that market conditions will remain challenging and demand fluctuates due to persistent macroeconomic and geopolitical uncertainties. The company estimates an adverse effect on adjusted EBIT due to the new consumer packaging board line ramp-up will be in the vicinity of EUR 100 million for the full year.

To bolster profitability and cash flow, Stora Enso is intensifying its initiatives on sourcing, operational efficiency, and commercial excellence. The company's outlook remains cautious, with expected increases in maintenance costs and pressure on fiber costs. Although the organization is facing significant headwinds, it is committed to navigating these challenges with resilience and strategic foresight.

In conclusion, Stora Enso's narrative of the first half of 2025 provides a compelling tale of growth against a backdrop of operational shifts and market volatility. While the company experiences hurdles, particularly with its ongoing projects and external market factors, its proactive strategies and commitment to sustainable growth position it for potential success in the evolving landscape of renewable materials.

For updates on Stora Enso's performance and strategies, stakeholders can follow the latest developments on the company's investor relations page.