Transformation in progress, clear improvement in results, dividend proposal stable at EUR 0.30
Q4/2014 (compared with Q4/2013)*
- Sales at EUR 2 552 (EUR 2 612) million declined by 2.3%, sales excluding the structurally declining paper and divested businesses increased 1.4%.
- Operational EBIT EUR 209 (EUR 152) million, 38% higher than a year ago due to cost management.
- Cash flow from operations EUR 442 (EUR 462) million, cash flow after investing activities EUR 178 (EUR 246) million.
- Net debt to operational EBITDA 2.6 (2.9); liquidity EUR 1.4 (EUR 2.1) billion.
- Operational ROCE 9.7% (7.0%); operational ROCE excluding transformational investment projects 13.1% (9.0%).
Full year 2014 (compared with 2013)*
- Sales EUR 10 213 (EUR 10 563) million declined by 3.3%, sales excluding paper and divested businesses increased 1.3%.
- Operational EBIT EUR 810 (EUR 578) million, an increase of EUR 232 million or 40%, due to lower costs.
- EPS excluding non-recurring items EUR 0.40 (EUR 0.40).
- Strong cash flow from operations at EUR 1 139 (EUR 1 252) million, cash flow after investing activities EUR 255 (EUR 481) million.
Stora Enso's CEO Karl-Henrik Sundström comments on the fourth quarter and full-year 2014 results:
"Stora Enso reported yet another stable quarter. Despite some headwind in the market, our sales increased by 1.4% compared to the fourth quarter of 2013, excluding the structurally declining paper business and divested businesses. Today, our growth businesses form already 62% of our total sales. The significant improvement in operational EBIT is a result of our own initiatives to transform our business and improve cost efficiency. Return on capital employed increased from 7.0% to 9.7%. It amounted to 13.1% when excluding our transformational investment projects and we reached our strategic ROCE target of 13%.
Stora Enso is transforming into a renewable materials growth company. In December, Montes del Plata Pulp Mill reached break-even which was a major milestone. We started lignin extraction, as scheduled, at our Sunila Pulp Mill in early 2015. We continue investing in biomaterials and will open a new Innovation Centre in the Stockholm area to boost innovation within renewable materials. The Guangxi consumer board mill project, which is slightly delayed due to the permitting process, is expected to be operational in mid-2016. Towards the end of this year, we look forward to start producing kraftliner, virgin-fibre-based containerboard, at our Varkaus Mill in Finland. Moreover, Stora Enso invests EUR 43 million in a new production line for wooden building elements located in Varkaus. The production is scheduled to begin during the second quarter of 2016. We are also investing EUR 27 million to improve quality, cost-competitiveness and capacity of the consumer board machine at the Imatra Mills in Finland.
In addition, we have made progress in streamlining the business. The divestment of the Uetersen paper mill in Germany is expected to be completed in the first quarter. We completed also the divestment of the coreboard and core manufacturer Corenso business operation in late 2014. Earlier in 2014, we divested our ownership in the kaolin business in the USA. We continue our non-core asset disposal programme also in the coming year.
During the year, we shut down one paper machine at Veitsiluoto Mill in Finland. Also the Corbehem Mill in France was closed permanently.
The Renewable Packaging division has now been split into two divisions: Consumer Board and Packaging Solutions. The new structure is intended to strengthen our focus on customers, business performance and growth. It will also mean greater transparency in financial reporting.
I am also pleased that we have been recognised as a leader in disclosing climate change data. The international non-governmental organisation CDP has given us the highest possible score in the Nordic Climate Disclosure Leadership Index in the CDP Nordic 2014 Report.
When it comes to outlook, the first quarter 2015 sales are estimated to be roughly similar to the amount of EUR 2 552 million in the fourth quarter of 2014. Operational EBIT is expected to be in line with the amount of EUR 209 million recorded in the fourth quarter of 2014."
"I would like to thank our employees for your commitment, our customers for your business and our investors for your trust. We work hard to keep creating value, today and tomorrow."
Transformation
Stora Enso's share of Montes del Plata Pulp Mill production in 2014 was 240 000 tonnes and the mill reached break-even in December.
Stora Enso Guangxi consumer board mill construction is proceeding. It is expected to be operational in mid-2016. The previous target was set for early 2016.
Conversion of Varkaus Mill fine paper machine in Finland for virgin-fibre-based containerboard is proceeding as planned and expected to start at end of 2015.
Restructuring and non-core asset divestments
The divestment of the Corenso business operations was completed on 1 December 2014.
The previously announced divestment of Uetersen Mill is expected to be completed during Q1/2015.
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