Stora Enso is expecting its 2019 performance to be in line with that of 2018, with sustainable products and activities to help it maintain its position.
The company recorded year-on-year sales growth in both the fourth quarter of 2018 (5.8 percent to €2.6 billion EUR) and across the whole of 2018 (4.4 percent to €10.5 billion EUR). Q4 2018 was the eighth consecutive quarter of sales growth. Operational EBIT decreased slightly to €271 million EUR in Q4 2018, with operational EBIT across the 12 months increasing 32 percent to €1.3 billion EUR.
Stora Enso CEO Karl-Henrik Sundström commented: ‘We continue to deliver sustainable profitable growth for the eighth consecutive quarter, with a sales increase of close to six percent. This was the highest fourth quarter sales since 2012 and the growth was primarily due to favourable prices and our active work on product mix and pricing. Due to slightly weaker markets, we have had lower levels of deliveries. We have experienced temporary operational issues at six of our mills, which has resulted in an EBIT impact of approximately €40 million EUR. Our operational EBIT decreased a bit over three percent, while operational EBIT margin exceeded 10 percent for the sixth consecutive quarter.
‘Looking at the whole year of 2018, sales are again well above €10 billion EUR and our operational EBIT increased by 32 percent. Our operational ROCE was close to 16 percent, well above the strategic target of 13 percent. I am also very pleased with the quite significant increase in full year EPS of 62.5 percent. We continue to strengthen our balance sheet and net debt/EBITDA amounted to 1.1. Therefore, the board of directors proposes to the annual general meeting a dividend of €0.50 EUR per share, an increase of 22 percent from last year. This is the fourth year in a row with an increase. This is a vote of confidence for the future of Stora Enso.’
Stora Enso is a global provider of renewable products in packaging, biomaterials, wooden constructions and paper. It has a stated belief that everything that is made from fossil-based materials today can be made from a tree tomorrow.
Sundström continued: ‘Our transformation projects are progressing well. The investment in a new cross laminated timber (CLT) unit at the Gruvön sawmill is being completed. Commercial production will begin during the first quarter of 2019 as planned. I am additionally encouraged that we have taken an important step in securing our competitive raw material supply for the long term. We, together with the other shareholders, have signed a binding agreement aiming at completing the Bergvik Skog forestry transaction during the first half of 2019.
‘We continue to launch new products that enable our customers to leverage digital solutions to further advance their business. The most recent one is a new sustainable RFID tag technology called Eco by Stora Enso. It is designed for intelligent packaging functionalities in supply chain, retail and e-commerce applications. We have also entered an interesting partnership with H&M group and Inter IKEA group to industrialize new textile fibers in a sustainable way at attractive cost levels.’
Eco by Stora Enso is said to enable paper-based RFID tags, providing a plastic-free and recyclable option for packaging authentication. Eco RFID tags can be produced on a 100 percent fibre-based paper label, unlike traditional plastic tags, resulting in a lower carbon footprint for sustainability conscious B2B and B2C companies, according to the company.
Stora Enso has also been top-rated in combatting global warming by the international non-profit organization CDP, which works to build a sustainable global economy. CDP has included Stora Enso in its new 2018 Climate A List, which identifies the global companies that are taking leadership in climate action.
Sundström said: ‘As sustainability is in the core of our business, I am indeed proud that we have been top-rated in combatting global warming by the international non-profit organisation CDP.
‘Moreover, we have been acknowledged as the leading Swedish listed company on sustainability in a ranking of all companies listed on the Stockholm Stock Exchange and we have received the award of the Best sustainable brand of the year in our industry.’
With reference to current geopolitical developments, Sundström said: ‘There is a notable risk of escalation in protectionist measures to the extent that global trade could materially shrink. This would have major knock-on effects for inflation, business sentiment, consumer outlook and ultimately global economic growth. Therefore, we have started to implement a profit protection programme of €120 million EUR to be kicked-off immediately, to better prepare for potential market weakness.
‘In these times of increased uncertainty and less visibility, 2019 is expected to continue in line with 2018 for us, provided that the current trading conditions do not significantly change. I expect growth in demand to continue for all our businesses except for European paper, for which demand is forecast to continue to decline in 2019. Our sales are expected to be higher and costs are forecast to increase in 2019 compared to 2018. We will implement measures to mitigate these cost increases and the increased uncertainties with our profit protection program.’