Business News
Stora Enso Interim Review January-September 2010
Wednesday 27. October 2010 - Profits nearly doubled year-on-year - another strong quarterly performance
EUR 255 million quarterly operating profit excluding NRI and fair valuations, up year-on-year by EUR 124 million driven mainly by improved product mix, prices and volumes;
Quarterly operating profit margin excluding NRI and fair valuations increased year-on-year to 10% (6%), ROCE excluding NRI and fair valuations 12% (7%);
Quarterly EPS excluding NRI improved year-on-year to EUR 0.23 (0.12) and CEPS excluding NRI to EUR 0.40 (0.29);
Quarterly cash flow from operations and cash position strong at EUR 304 million and EUR 1 121 million respectively;
Debt/equity ratio improved quarter-on-quarter to 0.43 (0.49), net debt reduced to EUR 2 445 million;
Market outlook remains generally favourable, but pressure on variable costs, seasonal demand weakness in some products and maintenance stoppages are expected to decrease fourth quarter earnings quarter-on-quarter;
Stora Enso is acquiring 51% of the Chinese packaging company Inpac International operating in China and India.
Summary of Third Quarter Results
Fair valuations include synthetic options net of realised and open hedges, CO2 emission rights, and valuations of biological assets related to forest assets in equity accounted investments.
NRI = Non-recurring items. These are exceptional transactions that are not related to normal business operations. The most common non-recurring items are capital gains, additional write-downs, provisions for planned restructuring and penalties. Non-recurring items are normally specified individually if they exceed one cent per share.
Near-term Outlook
In Europe and globally demand for newsprint is expected to be unchanged from a year ago. In Europe demand for coated magazine paper is forecast to be slightly stronger as demand for uncoated magazine paper slightly weaker than a year ago.
Demand for coated fine paper is predicted to be slightly stronger and demand for uncoated fine paper stronger than a year ago. Demand for consumer board is expected to be slightly stronger than a year ago but seasonally weaker than in the third quarter of 2010. Demand for industrial packaging is expected to be slightly stronger than a year ago. Demand for wood products is anticipated to be similar to a year ago but weaker than in the third quarter of 2010.
In Europe newsprint prices are forecast to be similar to the third quarter of 2010, whereas global newsprint prices are forecast to be slightly higher than in the third quarter of 2010. Prices for coated and uncoated magazine paper are expected to be slightly higher than in the previous quarter.
Fine paper prices are predicted to be slightly higher than in the third quarter of 2010. Consumer board prices are forecast to be similar to the previous quarter, whereas industrial packaging prices are forecast to be slightly higher. Prices for wood products are predicted to be lower than in the third quarter of 2010.
Maintenance stoppages and wood and RCP costs are expected to have a greater negative impact at Group level on the fourth quarter 2010 results than the third quarter 2010 results. Wood Products faces pressure on profitability due to weakening market conditions and high raw material costs.
The Group expects its cost inflation excluding internal actions to remain 2% for the full year 2010.