Stora Enso Oyj Class A · OMXHEX:STEAV
Stora Enso Oyj Class A — Q4 2022 Earnings Presentation
30 slides from Stora Enso Oyj Class A's earnings presentation, Jan 31, 2023
Slide 1: Financial results Q4 2022
Financial results Q4 2022 Delivering the best FY financial performance in 22 years despite Q4 market challenges Stora Enso Roadshow presentation 31 January 2023
Slide 2: Our purpose
Our purpose Replace non- Do good for renewable materials people and the with renewable planet products 2 31 January 2023 Stora Enso Roadshow presentation
Slide 3: We are creating the foundation for a renewable future
We are creating the foundation for a renewable future Our products replace and substitute fossil-based products Foundation Key strategic growth areas Traditional Sustainable Renewable Forest Pulp Renewable building wood biomaterials packaging solutions products innovations 3 31 January 2023 Stora En
Slide 4: Strategic growth areas 60% of sales (pro forma 2022)
Strategic growth areas 60% of sales (pro forma 2022) Sales 2022 Sales 2006 Sales in ~2030 Pro forma illustration** 30%* 60%* 80% Packaging Packaging Materials Growth areas Other business Packaging Solutions Wood Products Wood Products Biomaterials Paper Forest Other and eliminations *Strategic growt
Slide 5: Delivering the best FY financial performance in 22 years despite Q4 market challenges
Delivering the best FY financial performance in 22 years despite Q4 market challenges • Biomaterials delivered a quarterly all-time high result, containerboard and sawn wood experienced continued slowdown • Reshaping for future growth to drive outperformance over the cycle • Completed the De Jong ac
Slide 6: Delivered the strongest FY financial performance since 2000
Delivered the strongest FY financial performance since 2000 Sales Operational EBIT Operational ROCE excl. Forest MEUR MEUR % OpROCE excl. Forest 20.9%, Sales increased by +15% YoY OpEBIT +24% YoY above long-term target of >13% 6 31 January 2023 Stora Enso Roadshow presentation
Slide 7: Market-driven slowdown and higher cost levels impacted sales and profit in the back half of 2022
Market-driven slowdown and higher cost levels impacted sales and profit in the back half of 2022 Sales Operational EBIT Operational ROCE excl. Forest MEUR MEUR % 3,100 3,054 550 527 25 3,000 2,963 503 505 2,864 500 2,900 20 2,798 2,800 2,719 450 426 2,700 15 2,600 400 355 2,500 350 10 2,400 2,300 30
Slide 8: Continued strong performance with similar trend YoY in H2
Continued strong performance with similar trend YoY in H2 Development comparison H2/2021 vs H2/2022 Sales Operational EBIT MEUR MEUR • Maintenance costs impact on EBIT: • H2/2021: €314m • H2/2022: €330m • Q3/2021: €169m • Q3/2022: €150m • Q4/2021: €146m • Q4/2022: €180m 8 31 January 2023 Stora Enso
Slide 9: Completed De Jong Packaging Group acquisition to grow market share in Western European markets
Completed De Jong Packaging Group acquisition to grow market share in Western European markets Integration process started Stora Enso corrugated packaging operations De Jong Packaging €1* billion Capacity increase €30 million €40 million Group operations by ~1,200 million average annual additional a
Slide 10: Exiting the paper business enables investments in key strategic segments
Exiting the paper business enables investments in key strategic segments Divestments for a total EV of €378 million • Nymölla site to Sylvamo, completed in January 2023 • Maxau site to Schwarz Group and Hylte site to Sweden Timber, completions expected in H1/2023 • The divestment process for the Anj
Slide 11: Sales process for divestment of the Beihai site has been initiated
Sales process for divestment of the Beihai site has been initiated to allocate capital for growth in other core sites • Divestment would include both industrial site and forestry operations • Beihai site annual production capacity: 250kt mechanical pulp and 550kt consumer board • 73k ha leased eucal
Slide 12: Recent partnering and developments to accelerate long-term growth
Recent partnering and developments to accelerate long-term growth • Biomaterials Innovations − Partnership with Polestar to contribute to their Polestar 0 project of a climate neutral car for 2030 with Lignode − Progressing with the feasibility study for the first industrial scale production of Lign
Slide 13: All long-term Group level financial targets were exceeded in 2022
All long-term Group level financial targets were exceeded in 2022 Group long-term financial targets Q4 21 Q4 22 2021 2022 Dividend* To distribute 50% of EPS excluding fair valuation - - 0.55 0.60** over the cycle Growth excl. Paper YoY > 5% 39% 5% 29% 17% Net debt to operational < 2.0x 1.1 0.7 1.1 0
Slide 14: Higher prices were offset by increased variable costs
Higher prices were offset by increased variable costs Maintenance costs €34 million higher year-on-year 36 -388 Energy: -€51m 302 -72 73 Logistics: -€107m Chemicals and fillers: -€91m Fixed costs: -€85m Other variable costs: -€54m 426 15.7% 13 -31 355 -4 12.4% MEUR Q4 2021 Sales prices Volume Net FX
Slide 15: Packaging Materials
Packaging Materials Price increases to mitigate cost inflation continues in consumer board The containerboard market demand remained weak • Sales +6% YoY, driven by higher board prices • OpEBIT -€102m YoY • Consumer board demand remained stable, price increases • Increased short-term operating costs
Slide 16: Packaging Solutions
Packaging Solutions Sales and profitability were impacted by the exit from Russian operations and high inflationary pressures • Sales -16% YoY • OpEBIT -€13m YoY • Lower sales mainly due to the divestment of the • Negatively impacted by the exit from Russia Russian units • Higher sales prices in the
Slide 17: Biomaterials
Biomaterials All-time high quarterly sales and profitability reached through record high pricing and effective operational performance • Sales +32% YoY, all-time high quarter • OpEBIT +49% YoY, all-time high quarter • The record high sales were driven by strong prices • Higher sales prices and posit
Slide 18: Wood Products
Wood Products Rapid market decline in sawn wood with continued stability in Building Solutions • Sales -7% YoY • OpEBIT -€103m YoY • The construction market was impacted by market • Lower sales prices and increased costs for logistics, slowdown with fewer building permits and projects electricity an
Slide 19: Forest
Forest Wood demand and prices remained on a high level • Sales +11% YoY driven by increased wood demand • OpEBIT +30% YoY and higher prices • Supported by efficient operational performance • Tighter wood markets both in Finland and Sweden • Positive impact from land sales in Sweden of €10m mitigated
Slide 20: Paper
Paper Delivered significantly improved profitability due to business turnaround after restructuring • Sales +9% YoY • OpEBIT +€59m YoY • Higher sales prices for Stora Enso’s products • Higher paper prices more than offset higher variable costs • Volumes impacted by scheduled maintenance • Cash flow
Slide 21: Market transaction-based fair valuation applied for Tornator
Market transaction-based fair valuation applied for Tornator Group forest assets • Fair value of €8.3 billion equivalent to €10.52 € billion per share 8.3 8.0 8.2 8.1 • Change in the fair valuation method from DCF 2.7 to market transaction-based in Finland resulted 2.5 2.9 2.8 in a €265m positive im
Slide 22: Energy self-sufficiency is expected to increase in 2023
Energy self-sufficiency is expected to increase in 2023 Energy self-sufficiency excl. JVs (FY2023e) 79% 75% 72% 74% 68% Group OL3 impact for 2023 Total energy Fuels Electricity 22 31 January 2023 Stora Enso Roadshow presentation
Slide 23: Higher capex estimate mainly due to growth investments in consumer board
Higher capex estimate mainly due to growth investments in consumer board Capital expenditure The majority of the increase in 2023 relates to the consumer board investment in Oulu, Finland Biological capex Strategic capex Maintenance and development capex Capex estimate for 2023 Depreciation and depl
Slide 24: Dividend proposal: to increase to an all-time high of €0.60 per share
Dividend proposal: to increase to an all-time high of €0.60 per share Dividend EUR 0,7 CAGR 8% 0.60* 0,6 0,5 Dividend reduction due Target: 0,4 to covid-19 50% of EPS pandemic excluding fair 0,3 valuation over 0,2 the cycle 0,1 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 25: Changes in segment reporting – exited the Paper division
Changes in segment reporting – exited the Paper division Changes as of 1 January 2023 • The Paper division is discontinued • The Maxau and Hylte paper sites are reported in Segment Other until completion of the divestments • The Langerbrugge and Anjala sites, retained in Stora Enso, are reported as
Slide 26: Annual guidance: full-year 2023 operational EBIT expected to be lower than 2022
Annual guidance: the full-year 2023 operational EBIT is expected to be lower than for the full-year 2022 (€1,891m) • Market conditions and inflationary pressures are expected to be more challenging in 2023 than in 2022 • To manage market volatility, measures like pricing, flexibility in product mix,
Slide 27: Market development
Market development Q1/2023 market demand outlook year-on-year The overall demand for consumer board is expected Packaging Materials to remain stable while the overall containerboard demand is expected to remain weak Packaging Solutions Demand for corrugated packaging is expected to weaken in Europe
Slide 28: Delivering the best FY financial performance in 22 years despite Q4 market challenges
Delivering the best FY financial performance in 22 years despite Q4 market challenges • Our performance in 2022 demonstrates the strength of our leading market positions and our ability to be proactive and agile • Quarterly all-time high results in Biomaterials, with continued slowdown in containerb
Slide 29: Disclaimer
Disclaimer It should be noted that Stora Enso and its business are exposed to various risks and uncertainties and certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profi
Slide 30: 31 January 2023 Stora Enso Roadshow presentation
30 31 January 2023 Stora Enso Roadshow presentation