Stora Enso’s Earnings Call: Balancing Achievements and Challenges

Stora Enso OYJ ((SEOAY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Stora Enso’s recent earnings call presented a balanced sentiment, highlighting both significant achievements and ongoing challenges. The company celebrated strides in cost savings, sustainability, and strategic divestments, which have bolstered the balance sheet and reduced debt. However, the call also acknowledged difficulties in market conditions, segment-specific struggles, and delays in the Oulu ramp-up, which have impacted financial performance.

Forest Land Divestment

Stora Enso successfully completed the divestment of approximately 175,000 hectares of forest land in Sweden, accounting for 12.4% of its total forest holdings. This transaction, valued at SEK 9.8 billion (around EUR 900 million), has significantly strengthened the company’s balance sheet.

Cash Flow and Debt Reduction

The divestment has notably improved Stora Enso’s cash flow and reduced net debt by nearly EUR 800 million, bringing the total net debt to EUR 3.2 billion. This reduction has resulted in a net debt to EBITDA ratio of 2.7x, reflecting a more robust financial position.

Cost-Saving Initiatives

Stora Enso has implemented cost-saving programs totaling over EUR 230 million. These initiatives have led to substantial reductions in fixed costs by EUR 30 million and improvements in operational efficiency.

Sustainability Achievements

The company launched a science-based framework with the International Union for Conservation of Nature (IUCN) to promote nature-positive forestry practices. Additionally, Stora Enso received the Red Dot Design Award for its sustainable design and innovation efforts.

Packaging Board Line Ramp-Up

The new consumer packaging board line at the Oulu site in Finland is in the process of ramping up, with the aim of reaching EBITDA breakeven by the end of 2025.

Oulu Ramp-Up Delays

The production ramp-up at the Oulu site has been slower than expected, leading to higher-than-anticipated EBIT impacts for Q4, estimated between EUR 15-35 million.

Market Challenges

Stora Enso is facing challenging market conditions characterized by subdued demand and low consumer confidence, which have affected delivery volumes in containerboard and biomaterials.

Packaging Materials Segment Pressure

The Packaging Materials segment experienced a decrease in adjusted EBIT by EUR 37 million year-on-year, primarily due to the Oulu ramp-up impact and increased costs for fiber, logistics, and tariffs.

Biomaterials Segment Struggles

Sales in the Biomaterials segment declined due to lower prices and adverse currency movements, resulting in a year-on-year decrease in adjusted EBIT.

Wood Products Segment Decline

The Wood Products segment saw a decline in EBIT due to increased sawlog costs and the absence of a EUR 10 million insurance compensation received in the previous year.

Forward-Looking Guidance

During the third quarter of 2025, Stora Enso reported an adjusted EBIT of EUR 126 million, with profitability impacted by a EUR 45 million effect from the Oulu consumer board ramp-up. Despite market challenges, the company achieved EUR 230 million in cost savings through over 4,000 measures. The Oulu site is expected to reach EBITDA breakeven by the end of 2025. Stora Enso is also considering a strategic review of its remaining 1.2 million hectares of Swedish forest, which could unlock further shareholder value.

In summary, Stora Enso’s earnings call reflected a balanced outlook, acknowledging both progress and challenges. The company has made significant strides in strengthening its financial position through strategic divestments and cost-saving initiatives. However, market conditions and operational delays continue to pose challenges. Looking ahead, Stora Enso remains focused on achieving its financial targets and exploring opportunities to enhance shareholder value.