Stora Enso Reports Second Quarter and Half-Year 2025 Results

Stora Enso reported Q2 and half-year 2025 results.

Q2/2025 (year-on-year)

• Sales increased by 5% to EUR 2,426 (2,301) million, mainly due to higher deliveries and a positive impact from structural changes.
• Adjusted EBIT decreased by 18% to EUR 126 (153) million. Adjusted EBIT margin decreased to 5.2% (6.7%). The ramp-up of the new consumer board line at the Oulu site had a negative impact of approximately EUR 50 million.
• Operating result (IFRS) was EUR 64 (92) million, including items affecting comparability of EUR -35 million, and fair valuations and other non-operational items of EUR -27 million.
• Earnings per share were EUR 0.03 (0.05) and earnings per share excl. fair valuations (FV) were EUR 0.05 (0.06).
• The fair value of the forest assets increased to EUR 9.0 (8.7) billion, equivalent to EUR 11.40 per share.
• Cash flow from operations amounted to EUR 145 (323) million, impacted by the lower profit and decreasing trade payables.
• The net debt to adjusted EBITDA (LTM) ratio improved to 3.3 (3.5).
• Adjusted ROCE excluding the Forest segment (LTM) increased to 3.3% (1.1%).

Key highlights

• In May, Stora Enso entered into an agreement to divest approximately 175,000 hectares of forest land, equivalent to 12.4% of its total forest land holdings in Sweden for an enterprise value of EUR 900 million, equivalent to SEK 9.8 billion. Stora Enso will retain a 15% ownership and secure long-term wood supply.
• Stora Enso has initiated a strategic review of its Swedish forest assets. The review includes assessing a potential separation and public listing of the forest assets.
• The ramp-up of the new consumer board line at the Oulu site in Finland is proceeding, and the line is expected to reach full capacity during 2027.
• The acquisition of the Finnish sawmill company Junnikkala Oy was completed during the quarter.
• Stora Enso implemented a new, leaner and flatter organisational structure as of 1 July 2025, dividing its packaging business into four main areas with a reinforced focus on renewable packaging as the core business: Foodservice and Liquid Board, Cartonboard, Containerboard, and Packaging Solutions.
• FTSE Russel has upgraded Stora Enso's ESG rating score from 4.4 to 4.6 (max 5.0), and ranked the Group as the best company in its sector. Stora Enso also remains included in the FTSE4Good Index Series.
• In July, Fitch confirmed that Stora Enso's credit rating will continue as BBB- with Stable Outlook
  Outlook and focus for 2025

Stora Enso expects market demand to remain subdued and volatile, affected by heightened macroeconomic and geopolitical uncertainty.

Guidance
Stora Enso anticipates that the adverse impact on adjusted EBIT for the full year of 2025, due to the ramp-up of the new consumer packaging board line at the Oulu site in Finland, will be around or somewhat above EUR 100 million.

The Group's capital expenditure forecast for the full year of 2025 is EUR 730-790 million.
In the third quarter of 2025, maintenance costs are expected to increase by approximately EUR 10 million from Q2/2025.

Fiber costs are expected to remain at high levels.

Focus for 2025

• Continue systematic and determined work across the whole Group to improve profitability, cash flow, and cost competitiveness through a focus on sourcing, operational efficiency, commercial excellence, working capital, and fixed costs
• Complete the sale of 12.4% of Swedish forest assets.
• Conduct a strategic review of the remaining Swedish forest assets, including the assessment of a potential separation and public listing of the forest assets.
• Continue to build a leaner and flatter organisation by dividing the packaging business into four main areas — Foodservice and Liquid Board, Cartonboard, Containerboard, and Packaging Solutions — with a reinforced focus on renewable packaging as the core business. The new streamlined organisation will increase customer focus, drive operational efficiency through increased integration, reduce complexity, and enhance the Group's performance culture.
• Transition to a more integrated business model across the Nordic packaging board mills to improve the entire value chain and customer-centricity.
• Ramp up production and leverage the EUR 1 billion investment in the new packaging board line at the integrated mill in Oulu, Finland, to strengthen Stora Enso's competitive position.

Outlook from Q2/2025 to Q3/2025
Markets remain volatile, with low consumer sentiment. The direct impact of the US tariffs at current rates is limited given that Stora Enso's direct sales to the USA account for only just below 3% of total group sales (2024). Tariffs impacting global trade present both risks and opportunities to our business. However, the main risk, as it currently stands, is the overall impact on the economy and trade flows.

Overall demand in the packaging segments is expected to remain stable at a low level. Prices are expected to remain relatively stable, despite ongoing pressure from persistent overcapacity and increased competition from Asia in consumer boards. In euro terms, prices for overseas deliveries are expected to be negatively affected by a weaker US dollar.

Market demand for pulp is expected to remain weak due to market uncertainty, the low season, and increased inventory levels. Market pulp prices are expected to continue decreasing or to flatten throughout the summer and into autumn, negatively impacted by a weaker US dollar.

Following the holiday season, demand in the wood products markets is projected to return to previous low levels. Prices are expected to remain stable amid ongoing pressure from rising saw log costs.
The Forest segment is estimated to maintain stable financial performance.

The third quarter profitability will be negatively affected by the planned maintenance stops, approximately EUR 10 million, and the continuing ramp-up of the new line at Oulu, with an estimated impact of EUR 30-45 million.

TAPPI
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