Coronavirus outbreak, Brexit, trade wars, and the strikes in the pulp and paper industry in Finland are some of the business uncertainties for Q1 2020.
In the 2019 earnings report released today, Stora Enso reported weaker results in a challenging year. 2019 sales were down by 4 % to €10.06bn due to significantly lower prices and lower paper volumes, the company said. EBIT result for the year plunged by almost 30% due to lower prices in all segments except for Consumer Board and Paper. The effect was reportedly compounded by lower paper volumes: In 2019, Stora Enso sold 460,000 t less paper compared to the previous year.
Net profit for the period was down by 13% to €856m.
Stora Enso put a lot of effort in active cost management in 2019. The company cut its cost by €150m, but "this was not enough to offset the sales price decline," said Annica Bresky, President and CEO of Stora Enso. Stora Enso said it would continue with the "profit protection programme" in 2020 to achieve €275m costs savings by the end of 2021.
On the positive side, Stora Enso also stressed the record cash flow from operations which in 2019 stood at €1.98bn compared to €1.37bn in 2018.
Coronavirus outbreak in China creates uncertainty for demand development in China
The decline in demand for European paper would persist, and demand for other group products was expected to remain mixed, Stora Enso said in the 2020 outlook. Stora Enso anticipates subdued and mixed trading conditions caused by geopolitical uncertainties to continue to impact the company in 2020. Recent news surrounding Wuhan coronavirus outbreak in China, and the strike in the forest products industry in Finland are adding to business uncertainties for Stora Enso, the company explained.
So far, the coronavirus outbreak had no impact on Stora Enso's operation in China. The company is watching closely the decisions taken by Chinese government, said Stora Enso CFO and Deputy CEO Seppo Parvi.
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