Given the ongoing unfavourable market conditions and high cost levels, Stora Enso’s financial figures for the second quarter and first half of the year were considerably weaker than one year ago.
Annica Bresky, President and CEO of Stora Enso, described the figures as “disappointing” at the presentation of the results. She explained that demand had considerably weakened in all business areas, except the divisions Packaging Solutions and Forest.
In the second quarter, Stora Enso reported Ebitda of €198m (Q2 2022: €663m) but was firmly in the red with an operating loss of €253m (profit of €399m). The company recorded a net loss of €257m (profit of €299m), while sales fell to €2.37bn (€3.01bn).
In the group’s largest divisions, Packaging Materials, Biomaterials and Wood Products, there was inventory destocking and weak demand throughout the entire supply chain, said Stora Enso, adding that margins had come under pressure due to high costs. Although the cost of some raw materials, such as wood and chemicals, had retreated from their peaks, most costs were still at a relatively high level. The pulp business, bundled in the Biomaterials division, experienced the “fastest ever decline in global market pulp prices.” A significant amount of new capacity is entering the market at a time when demand is low and the global market pulp inventories are on very high levels, according to the company.
Stora Enso announced that it would continue to pursue its restructuring plans. In addition to the already announced closures of its Sunila pulp production unit, the De Hoop containerboard site in the Netherlands, one containerboard line at its Ostrołęka site in Poland and the Näpi sawmill in Estonia, the group now also intends to divest its wood products DIY (Do It Yourself) unit in the Netherlands. These plans will reportedly affect approximately 600 employees. Moreover, Stora Enso plans to reduce the number of office employees in group functions and eliminate around 300 of the approximately 1,300 positions in this area.
Stora Enso wants to continue advancing the development of its businesses in the Biomaterials and Packaging Solutions divisions based on renewable materials.
Stora Enso believes the market will remain challenging in the coming months. The market outlook for 2023 “remains uncertain with low short-term visibility, persisting high inflation, higher interest rates and low consumer confidence,” the company said. Stora Enso’s Finnish sites are affected by the tight wood market for wood caused by increasing demand for wood for energy generation and lower supply due to the lack of wood imports from Russia. The company assumes “continued weakness in demand and volumes,” particularly in its Packaging Materials, Wood Products and Biomaterials divisions.