Stora Enso OYJ Navigates Mixed Earnings Call with Strategic Focus

Stora Enso OYJ ((SEOAY)) has held its Q4 earnings call. Read on for the main highlights of the call.

The latest earnings call for Stora Enso OYJ offered a mixed sentiment, characterized by significant improvements in adjusted EBIT and operational efficiencies, juxtaposed with challenges such as sales decline and divisional performances. Positives included advancements in sustainability and cost reductions, although concerns persist regarding market volatility and high costs.

Significant Growth in Adjusted EBIT

Stora Enso reported a remarkable 75% year-on-year growth in adjusted EBIT, amounting to €598 million. This impressive performance was attributed to improved sourcing, enhanced operational efficiency, and commercial excellence, marking a strong financial advancement for the company in 2024.

Reduction in Operating Working Capital

The company achieved a significant reduction in operating working capital by more than €700 million, decreasing from over 14% to 7% of sales. This reduction highlights Stora Enso’s effective management of its resources and commitment to financial efficiency.

Fixed Costs Reduction

Stora Enso successfully reduced its fixed costs by €110 million. This cost reduction was crucial in offsetting the escalation of wood costs, showcasing the company’s ability to maintain financial stability amid rising expenses.

Dividend Increase

The Board of Stora Enso announced a proposed dividend increase to €0.25 per share, up from €0.20 last year, reflecting the company’s solid financial performance and its commitment to delivering value to shareholders.

Progress in Sustainability Targets

The company achieved a 53% reduction in Scope 1 and 2 emissions by the end of 2024, surpassing its goal of a 50% reduction by 2030. This accomplishment underscores Stora Enso’s dedication to sustainability and environmental responsibility.

Decline in Full Year Sales

Stora Enso experienced a 4% decline in full-year sales to €9 billion, primarily due to capacity closures and divestments in 2023. This decline points to the challenges faced by the company in adapting to changing market conditions.

Challenges in Packaging Solutions

The Packaging Solutions division struggled with overcapacity and margin pressure, resulting in an adjusted EBIT loss of €6 million. This highlights the operational challenges within the division that need to be addressed.

Wood Products Division Performance

Despite some improvements, the Wood Products division’s adjusted EBIT remained negative at €12 million, indicating ongoing challenges in achieving profitability in this segment.

High Wood Fiber Costs

The company faced a significant increase in wood fiber costs throughout 2024, which impacted profitability. Managing these costs is a critical focus for maintaining financial health moving forward.

Forward-Looking Guidance

Looking ahead, Stora Enso plans to continue enhancing cost efficiency in 2025, despite subdued demand forecasts and challenging market conditions. The company remains focused on growth through strategic acquisitions and developments like the new packaging board line in Oulu. Efforts to improve financial performance and shareholder value remain a top priority.

In conclusion, the earnings call for Stora Enso OYJ painted a picture of resilience and strategic planning amid challenges. The company demonstrated significant growth in adjusted EBIT and made strides in sustainability, though it faces hurdles in sales and divisional performances. Moving forward, Stora Enso aims to leverage its operational efficiencies and strategic initiatives to enhance shareholder value.