STORA ENSO OYJ HALF-YEAR REPORT 24 July 2024 at 8:30 EEST HELSINKI, July 24, 2024 /PRNewswire/ --  Q2/2024 (year-on-year) Sales decreased by 3% to EUR 2,301 (2,374) million; however, continuing operations grew by 1%. Adjusted EBIT increased to EUR 161 (37) million. Adjusted EBIT margin increased to 7.0% (1.6%). Operating result (IFRS) was EUR 99 (-253) million. Earnings per share (EPS) were EUR 0.06 (-0.29) and EPS excl. fair valuations (FV) was EUR 0.07 (-0.27). The value of the forest assets increased to EUR 8.7 (8.1) billion, equivalent to EUR 11.06 per share. Cash flow from operations amounted to EUR 323 (146) million. Cash flow after investing activities was EUR 86 (-70) million. Net debt increased by EUR 466 million to EUR 3,497 (3,030) million, mainly due to the board investment at the Oulu site. The net debt to adjusted EBITDA (LTM1) ratio was 3.5 (1.7). The target to keep the ratio below 2.0 remains. H1/2024 (year-on-year) Sales were EUR 4,466 (5,095) million. Adjusted EBIT was EUR 317 (271) million. Operating result (IFRS) was EUR 247 (5) million. Earnings per share (EPS) were EUR 0.16 (-0.05) and EPS excl. fair valuations (FV) was EUR 0.16 (-0.04). Cash flow from operations amounted to EUR 592 (400) million. Cash flow after investing activities was EUR -18 (-69) million. Adjusted ROCE excluding the Forest division (LTM1) decreased to 1.3% (10.7%), the target being above 13%. Key highlights The value creation programmes, centred on sourcing, operational and commercial efficiencies, are making good progress across all divisions. In addition, the profit improvement programme focusing on fixed costs, initiated in the first quarter 2024, targeting EUR 120 million has continued to progress well. This has supported an improvement in the earnings trend due to enhanced efficiencies and cash flow, and strengthened the leverage ratio: net debt to EBITDA. Operating working capital decreased by EUR 576 million year-on-year to an all-time low, driven by our continued focus to improve working capital efficiency. Stora Enso secured a EUR 435 million long-term loan, on 11 July, from the European Investment Bank to fund its EUR 1 billion investment in the Oulu mill, Finland. Loan repayment extends until 2036, improving and lengthening the Group's debt maturity profile. The loan is currently undrawn. 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 in process. The site has been classified as assets held for sale from the end of 2023. Guidance On 15 May, Stora Enso raised its guidance for the full year 2024 adjusted EBIT, due to successful implementation of profit improvement actions and more favourable market conditions. The new guidance is: Stora Enso's full year 2024 adjusted EBIT is expected to be significantly higher than for the full year 2023, EUR 342 million. Outlook Market and business outlook Stora Enso anticipates a gradual market recovery in 2024. The positive forecast is supported by successful initiatives to increase profitability, which have contributed to the earnings trend over the past three quarters and helped reduce the Group's net debt to EBITDA ratio. Despite this, high wood costs will continue to pressure margins. Market uncertainties, including high inflation, potential strikes, and demand and price fluctuations, are expected to continue through the end of the year. Packaging Materials The outlook for Q3 is slightly positive, supported by strong order books and an improving price outlook. Price increases announced during Q2 in both the consumer and containerboard segments are expected to contribute positively to the results, mainly in the second half of this year. The liquid and food service board segments show improved stability and demand, while carton board demand remains stable following a strong recovery. Kraftliner and testliner segments are recovering, supported by stable demand and three rounds of price increases announced during H1 this year. However, high fiber costs and seasonally higher fixed costs due to annual shutdowns in virgin fiber containerboard units will impact the second half of the year. Paper demand is expected to continue its steady, gradual decline. Packaging Solutions Demand for Q3 is expected to remain stable with seasonal fluctuations. In Western Europe, volumes are anticipated to normalise post weather-related delays in the fresh-produce season. Asia usually experiences a downturn in Q3, with improvements expected in Q4. Central, Northern, and Eastern Europe should see consistent demand. Market challenges continue due to overcapacity. Biomaterials Looking ahead in Q3, overall pulp demand in Europe and China is projected to remain stable. The European softwood pulp market remains balanced, with no signs of demand improvement. In China, demand is stable. Demand for fluff pulp in hygiene and tissue products continues to be stable, supported by global inventories which are at or below the 5-year average. Wood Products Q2 experienced a seasonal surge in volumes of classic sawn products. However, sales and volumes are projected to decrease sequentially in Q3 due to the holiday season. Building permits are anticipated to fall below 2023 levels and are expected to slightly decline in Western Europe in the foreseeable future. Meanwhile, wood costs are forecast to remain elevated. Forest In Q3, wood market activity is expected to remain strong in Finland, Sweden, and the Baltics, with tight conditions driven by increasing demand for industrial wood (pulpwood and sawlogs). Long-term growth opportunities Stora Enso holds leading positions in markets and segments poised for long-term growth, particularly in sustainable packaging, wood construction, and innovative biomaterials. The Group stands to benefit from sustainability trends and regulatory advancements which favour its offerings, thereby supporting its market presence ...