Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stora Enso Oyj (SEOAY, Financial) achieved a robust 75% year-on-year growth in adjusted EBIT for 2024, driven by improved sourcing, operational efficiency, and commercial excellence.
- The company reduced its fixed costs by EUR110 million, which helped offset rising wood costs.
- Operating working capital reached an all-time low, decreasing by over EUR700 million, reducing the operating working capital to sales ratio from over 14% to 7%.
- The Board proposed a dividend increase to EUR0.25 per share, up from EUR0.20 last year, reflecting a commitment to shareholder value.
- Stora Enso Oyj (SEOAY) achieved a 53% reduction in Scope 1 and 2 emissions, surpassing its target of a 50% reduction by 2030, demonstrating strong progress in sustainability efforts.
Negative Points
- Full-year sales declined by 4% to EUR9 billion, primarily due to capacity closures and divestments in 2023.
- The Packaging Solutions division faced margin pressure due to market overcapacity, resulting in a negative adjusted EBIT of EUR6 million.
- Wood Products division's adjusted EBIT remained negative at EUR12 million, despite improvements in volumes and prices.
- The company is still far from its long-term financial targets, indicating ongoing challenges in achieving desired profitability levels.
- Market uncertainties and fluctuations in demand and pricing persisted throughout 2024, impacting overall business performance.
Q & A Highlights
Q: Can you indicate the main strategic CapEx items after the Oulu ramp-up?
A: Hans Sohlstrom, CEO: The projected CapEx includes strategic investments. One disclosed opportunity is the Langerbrugge newsprint mill conversion to testliner, forming a competitive entity with the De Jong facility. No decisions or timelines are set yet. Regarding working capital, the 7% of sales is sustainable, and we continue to improve efficiency.
Q: With the need to improve profitability, are there structural actions planned for the Oulu ramp-up?
A: Hans Sohlstrom, CEO: We are systematically improving cost efficiency with 3,600 identified actions. The Oulu investment will gradually ramp up, adding 750,000 tonnes to a 50 million tonne market by 2027. No capacity closures are planned. For Packaging Solutions, a new divisional leader is in place to improve profitability.
Q: How do you see the transaction volume dynamics and pricing for forest assets?
A: Hans Sohlstrom, CEO: We see wood costs stabilizing. Our forest asset valuation is based on deals over the last three years, showing a long-term trend of increasing value. We don't speculate on future developments.
Q: What is the plan for Oulu's sales, considering global market conditions?
A: Hans Sohlstrom, CEO: The Oulu line will primarily serve Europe and the USA, with preparations for US market entry ongoing. The US currently represents less than 5% of our sales. We are prepared for potential tariffs, though they currently have minimal impact.
Q: Can you quantify the potential cost savings from your efficiency programs?
A: Hans Sohlstrom, CEO: Despite a EUR300 million increase in wood costs, we improved adjusted EBIT by 75% last year. We continue to focus on sourcing, operational efficiency, and commercial excellence to enhance profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
