Stora Enso Oyj Interim Report January–March 2020
Sales decreased by 16.2% to EUR 2 207 (2 635) million, due to significantly lower prices and volumes
Q1/2020 (compared with Q1/2019)
Due to the cross-border travel restrictions and safety concerns associated with Covid-19, most of Stora Enso’s annual mill maintenance shutdowns have been postponed to the second half of 2020. Only Heinola Mill annual maintenance shutdown is scheduled for the second quarter of 2020. Guidance and outlook
Stora Enso is discontinuing its quarterly guidance and annual outlook until further notice due to the uncertainty in the global economy. The current situation has accelerated the decline in demand for European paper, and the market conditions for the Group's other products continue to be mixed.
The Group continues to put focus on ensuring liquidity and cash flow, cost and working capital management to stay resilient and ensure quick recovery after the pandemic is over.
Stora Enso’s President and CEO Annica Bresky comments on the first quarter 2020 results:
– The first quarter of the year has been marked by challenging harvesting conditions, strikes in Finland and the start of the Covid-19 pandemic. Lower prices and volumes during the quarter had a negative impact on sales and operational EBIT, compared to the record levels in the first quarter of last year. Under these conditions, “a new normal” where historical references are no longer valid, I am satisfied with our performance for the quarter. We delivered a result of EUR 180 million, in the upper end of our guidance range. Our continued focus is on building business resilience and putting our efforts in the areas we can impact, that is serving our customers by keeping our operations running and mitigating supply chain challenges, securing liquidity and managing costs, margins and cash flow. Ultimately, we want to ensure our ability for a quick recovery once the tide turns.
We were out early with actions related to Covid-19, including a global travel ban, social distancing and appointed work streams to keep business momentum. So far, our operations have been running normally on a global level. We have built a strong liquidity position amounting to EUR 1.4 billion, for a potentially longer and deeper recession. We have actions in place to enhance our cash flow going forward by active working capital management and cost savings. Our profit protection programme is delivering ahead of plan and we have increased our savings target to EUR 350 million (earlier EUR 275 million) by the end of 2021. During this first quarter of 2020, we achieved cost savings amounting to EUR 40 million, including one-time cost savings. In regards to managing a potential demand decrease, we have started preparations for potential temporary layoffs or shorter working time if and when needed.
Naturally, it is fair to say that there are currently high macroeconomic uncertainties and low visibility relating to demand development. So far, our Paper and Wood Products divisions have been affected the most, while there is less impact in our packaging divisions. Biomaterials division is affected by the structural decline in paper end uses and high inventories in China, although the end uses within hygiene and tissue have good demand.
In just a short time, the Covid-19 pandemic has forced us to rethink many everyday things we have previously taken for granted. And yet, even in the most difficult of times, basic needs must be met; people need food, medicine and hygiene products. In many countries, packaging, and especially food packaging, is defined as a key or critical industry. The role and purpose of packaging - ensuring hygienic conditions and protecting e.g. food and pharmaceuticals during transportation and on the store shelves - is now as important as ever. This is among the areas where we have a solid offering.
Due the Covid-19 pandemic and its impact on trading conditions, Stora Enso’s Board of Directors (BOD) has decided to change its dividend proposal to EUR 0.15 per share. In addition, the BOD proposes to the AGM that the BOD be authorised to decide at its discretion on a dividend payment of a maximum of EUR 0.35 to be distributed in one or several instalments at a later stage when it is possible to make a more reliable estimate on the impacts of the Covid-19 pandemic on Stora Enso’s business and liquidity.
Our transformation projects are progressing well. The conversion of Oulu Mill into kraftliner is proceeding according to plan. In our constant endeavors for sustainability, we continue to launch renewable products with our customers.
<...>
Going forward, we will concentrate on what we can impact, stay close to our customers, drive innovation and continue building on our growth strategy to be ready when the market turns. I am proud to work with the committed Stora Enso team in these challenging times, as well as with our dedicated customers and partners globally. Together, we will ensure that we are prepared for a more profitable future when the cycle turns.
This release is a summary of Stora Enso’s Interim Report January–March 2020.
Источник: Stora Enso