STORA ENSO OYJ INTERIM REPORT 25 April 2024 at 8:30 EEST HELSINKI, April 25, 2024 /PRNewswire/ -- Continuous efforts to improve profits, competitiveness, and cash flowQ1/2024 (year-on-year) Sales decreased by 20% to EUR 2,164 (2,721) million. Adjusted EBIT decreased to EUR 156 (234) million. Adjusted EBIT margin was 7.2% (8.6%). Operating result (IFRS) decreased to EUR 148 (258) million. EPS was EUR 0.11 (0.24) and EPS excl. fair valuations (FV) was EUR 0.09 (0.23). Cash flow from operations amounted to EUR 269 (254) million. Cash flow after investing activities was EUR -104 (1) million. Net debt increased by EUR 601 million to EUR 3,518 (2,917) million, mainly due to the board investment at the Oulu site. The net debt to adjusted EBITDA ratio (last 12 months) was 4.0 (1.3). The target is to keep the ratio below 2.0. Adjusted ROCE (last 12 months) excluding the Forest division decreased to 0.0% (16.5%), the target being above 13%. Key highlights The profit improvement programme, initiated in the first quarter, has progressed well and the annual profit improvement target has been increased to EUR 120 million, from the initial EUR 80 million, driven by additional fixed cost reductions. The programme does not include site closures and may result in the reduction of approximately 1,000 employees. Operating working capital decreased by EUR 551 million year-on-year, driven by our continued focus to improve working capital efficiency. The consumer board investment at the Oulu site in Finland is progressing on schedule. Production is expected to start in the first half of 2025, with full capacity estimated to be reached during 2027. The plan to divest the Beihai site in China is proceeding according to plan. The site is classified as assets held for sale from the end of 2023 onwards. GuidanceStora Enso's full year 2024 adjusted EBIT is expected to be higher than for the full year 2023, EUR 342 million. OutlookMarket outlook:Stora Enso anticipates a gradual recovery in market conditions in 2024, with increased demand for consumer board, higher pulp demand and prices. However, profits are expected to be adversely impacted in the second quarter, mainly due to the sequentially higher maintenance costs in the quarter, higher wood costs, and the recent political strikes in Finland. Market uncertainties such as a continued high inflationary environment, strikes, demand and price development, and other external disruptions which may impact the Group's profits, are expected to persist towards the end of the year.Packaging Materials:The Packaging Materials market has stabilised and orderbooks have improved, though the weak macroeconomy, including sluggish retail markets, is still slowing the recovery. Demand for consumer board is stable to positive, especially in liquid packaging board. Demand is expected to continue to recover in kraftliner and testliner, and announced price increases in the containerboard market are filtering through. For recycled board, demand has improved but underlying demand remains weak.Packaging Solutions:The Packaging Solutions division expects a stronger sequential demand in the second quarter due to seasonal effects. However, heavy overcapacity in the market, mainly in Eastern Europe, will continue to pose challenges, together with increasing containerboard prices.Biomaterials: The European demand is expected to slightly increase due to the ongoing Red Sea Crisis, which benefits board and paper producers in Europe. However, new capacities could impact the market later in the year.Wood Products:The Wood Products division continues to face challenges due to low demand, prices, volumes, and high wood costs. A seasonal demand improvement is expected in the classic sawn market during the second quarter of this year. The construction sector is still not improving.Forest:The Forest division expects a gradual rise in wood demand as markets in the second quarter remain tight in Finland, Sweden, and the Baltics. Wood prices are estimated to rise throughout the rest of 2024 in both Finland and Sweden. Long-term growth opportunities:Despite current challenges, Stora Enso sees long-term growth opportunities in sustainable packaging, wood construction, and innovative biomaterials. Regulations and sustainability megatrends support these developments.Key figures EUR million Q1/24 Q1/23 Change % Q1/24–Q1/23 Q4/23 Change % Q1/24–Q4/23 2023 Sales 2,164 2,721 -20.5 % 2,174