Stora Enso sees sharp drop in its Wood Products division

Stora Enso sees sharp drop in its Wood Products division

Stora Enso's Wood Products division sales decreased by 16% in the second quarter yoy, or by EUR 65 million down to EUR 347 million.

This was mainly due to lower deliveries negatively impacted by the Covid-19 pandemic and lower classic sawn prices. The structural changes at the Pfarrkirchen sawmill in Germany, and at the Uimaharju and Kitee sawmills in Finland reduced sales by EUR 36 million.

Operational EBIT decreased by EUR 9 million to EUR 26 million. Lower sales prices were only partly offset by lower wood costs and fixed costs, supported by the profit protection programme actions. Operational ROOC decreased to 16.7% (20.3%).

Stora Enso's Wood Products division covers applications for construction, the window and door industry, as well as for the packaging and decoration industries. Pellets provide a sustainable solution for heating. The offering includes service concepts such as Building Solutions and e-business.

Commenting on the company's overall results, CEO Annica Bresky commented: ''The world continues to experience unprecedented times with the Covid-19 pandemic, which is affecting global health and creating uncertainty and volatility in the business environment. Governments have introduced significant stimuli to support economies and societies are gradually opening up. However, despite some optimistic signs, market conditions' poor visibility will continue''. 

Stora Enso delivered an operational EBIT of EUR 178 million, about the same as in the first quarter this year (EUR 180 million). Operational EBIT excluding Paper was EUR 216 million, much stronger than during the first quarter (EUR 159 million). Cash flow from operations was EUR 363 million. The CEO considers the second quarter result solid in the current circumstances. This was driven by strong performances in the Packaging Materials and Forest divisions. The pandemic's biggest effect on the company's business has been in the Paper division, accelerating the structural decline in all paper grades. Excluding Paper, Stora Enso's operational EBIT margin stayed at 13%.

Compared with last year, Stora Enso's results are significantly lower, driven by a decline in deliveries and sales, mainly in Paper and Biomaterials. The market outlook for the company's other businesses will continue to be mixed, Bresky said.

Stora Enso's Q2/2020 (compared with Q2/2019) results: 

• Sales decreased by 18.9% to EUR 2 114 (2 608) million, due to lower deliveries and prices, as a result of the impact of the Covid-19 pandemic. Sales excluding Paper decreased 11.9%.

• Operational EBIT decreased to EUR 178 (299) million. The impact of lower sales was partly offset by good cost management. Operational EBIT excluding Paper was EUR 217 (249) million.

• Operational EBIT margin was 8.4% (11.5%), excluding Paper 12.8% (13.0%). • Operating profit (IFRS) was EUR 226 (142) million.



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