Unaudited

Financial results – Segments

Consumer Board division

The ambition of Consumer Board division is to be the global benchmark in high-quality virgin fibre cartonboard and preferred partner to the customers and brand owners in the premium end-use packaging and graphical segments. Our wide board and barrier coating selection is suitable for the design and optimisation of packaging for liquid, food, pharmaceutical and luxury goods.

EUR million 2017 2016
Sales 2 516 2 342
Operational EBITDA1 477 452
Operational EBITDA margin1 19.0% 19.3%
Operational EBIT 285 254
Operational EBIT margin 11.3% 10.8%
Operational ROOC 14.6% 12.7%
Cash flow from operations 458 453
Cash flow after investing activities 218 40
Board deliveries, 1 000 tonnes 2 816 2 507
Board production, 1 000 tonnes 2 871 2 554
1 Restated due to a change in Group’s operational EBITDA definition to include the operational EBITDA of its equity accounted investments (EAI). See chapter Change in the operational EBITDA calculation at the end of the Report of the Board of Directors.

Consumer Board division sales at EUR 2 516 (2 342) million grew over 7% due to the ramp up of the Beihai consumer board mill. Delivery volumes at the European mills board grew slightly, but the growth was offset by lower board prices and negative foreign exchange rate impact.

Operational EBIT at EUR 285 (254) million grew over 12% from previous year, due to the ramp up of the Beihai consumer board mill. Operational EBIT was negatively impacted by lower board prices, and higher pulp, chemical, energy and transportation costs. Fixed costs were also higher, mainly due to the ramp up of the Beihai consumer board mill and its first full year of production.

Packaging Solutions division

Packaging Solutions division provides fibre-based board materials and corrugated packaging products and services designed for a wide array of applications. Our renewable high-end packaging solutions serve leading converters, brand owners and retailers across multiple industries looking to optimise performance and drive innovation.

EUR million 2017 2016
Sales 1 255 1 044
Operational EBITDA1 240 131
Operational EBITDA margin1 19.1% 12.5%
Operational EBIT 170 64
Operational EBIT margin 13.5% 6.1%
Operational ROOC 19.6% 7.6%
Cash flow from operations 249 132
Cash flow after investing activities 156 63
Board deliveries, 1 000 tonnes 1 023 869
Board production, 1 000 tonnes 1 333 1 221
Corrugated packaging deliveries, million m2 1 103 1 082
Corrugated packaging production, million m2 1 102 1 073
1 Restated due to a change in Group’s operational EBITDA definition to include the operational EBITDA of its equity accounted investments (EAI). See chapter Change in the operational EBITDA calculation at the end of the Report of the Board of Directors.

Packaging Solutions division sales were EUR 1 255 (1 044) million, up 20% compared to 2016. The increase was mainly due to the ramp up of the Varkaus kraftliner mill, higher volumes in all units and favourable price development.

Operational EBIT at EUR 170 (64) million was 166% up from the previous year, mainly due to the ramp up of the Varkaus kraftliner mill, strong operational performance predominantly in China Packaging and higher prices. Higher prices in containerboard however had a negative operational EBIT impact on the corrugated business. Fixed costs were higher reflecting the growing business.

Biomaterials division

Biomaterials division offers a variety of pulp grades to meet the demands of paper, board, tissue, textile and hygiene product producers. We also develop new ways to maximise the value extractable from the wood as well as other kinds of lignocellulosic biomasses. The extracted sugars and lignin hold potential for use in a range of applications.

EUR million 2017 2016
Sales 1 483 1 376
Operational EBITDA 409 361
Operational EBITDA margin 27.6% 26.2%
Operational EBIT 264 224
Operational EBIT margin 17.8% 16.3%
Operational ROOC 10.5% 8.5%
Cash flow from operations 404 419
Cash flow after investing activities 271 278
Pulp deliveries, 1 000 tonnes 2 597 2 508

Biomaterials division sales were EUR 1 483 (1 376) million, up 8% on 2016, due to higher volumes and higher pulp sales prices in all grades.

Operational EBIT at EUR 264 (224) million was 18% up from previous year, mainly due to higher prices in all grades. Operational EBIT was negatively impacted by higher transportation, wood and chemical costs. Fixed costs were higher due to investments into innovation activities. Foreign exchange rates had a negative impact on operational EBIT, mainly due to weaker USD.

Wood Products division

Wood Products division provides versatile wood-based solutions for building and housing. Our product range covers all areas of construction, including massive wood elements, wood components and sawn goods. We also offer pellets for sustainable heating. Our customers are mainly merchants and retailers, industrial integrators and construction companies.

EUR million 2017 2016
Sales 1 669 1 595
Operational EBITDA 147 118
Operational EBITDA margin 8.8% 7.4%
Operational EBIT 111 88
Operational EBIT margin 6.7% 5.5%
Operational ROOC 20.5% 16.8%
Cash flow from operations 152 142
Cash flow after investing activities 90 75
Deliveries, 1 000 m3 4 926 4 643

Wood Products division sales were EUR 1 669 (1 595) million, up 5% from 2016 mainly due to the ramp ups of the Varkaus laminated veneer lumber (LVL) line and the modernisation and expansion of the Murów sawmill. Higher prices and the growth in value added business, especially CLT, also impacted sales positively. The Building components sales increased by 14%. In November 2017, Stora Enso divested 100% of its shares in the Finnish Puumerkki Oy and the Estonian Puumerkki AS. In addition the Baltic Wood supply sourcing operations were moved to Segment Other in Q2 2017. The comparable sales growth would have been 7%.

Operational EBIT at EUR 111 (88) million was 26% up from previous year, mainly due to higher volumes, higher prices and growth in value added business. Operational EBIT was negatively impacted by higher raw material costs, especially log prices and foreign exchange loss.

Paper division

Paper division provides best-in-class paper solutions for the print media and office use. The wide selection covers papers made from virgin wood and recycled fibres. Our main customer groups include publishers, retailers, printing houses, merchants, converters, and office suppliers. We create value for our customers by providing competitive products and services that meet their quality and sustainability requirements.

EUR million 2017 2016
Sales 2 920 3 245
Operational EBITDA1 239 327
Operational EBITDA margin1 8.2% 10.1%
Operational EBIT 128 211
Operational EBIT margin 4.4% 6.5%
Operational ROOC 14.8% 19.4%
Cash flow from operations 259 351
Cash flow after investing activities 160 277
Cash flow after investing activities to sales 5.5% 8.5%
Paper deliveries, 1 000 tonnes 4 713 5 141
Paper production, 1 000 tonnes 4 672 5 155
1 Restated due to a change in Group’s operational EBITDA definition to include the operational EBITDA of its equity accounted investments (EAI). See chapter Change in the operational EBITDA calculation at the end of the Report of the Board of Directors.

Paper division sales were EUR 2 920 (3 245) million, down 10% from 2016 mainly due to restructuring and disposals. Foreign exchange losses had EUR 33 million negative impact on sales. In addition, especially Wood Free Coated (WFC) paper prices were clearly lower than during 2016. Volumes of the ongoing business were lower mainly due to Veitsiluoto PM2 accident in August 2017. Stora Enso divested the Arapoti Paper Mill in Brazil in late 2015 and the divestment was completed in March 2016. Divestment of the Suzhou Mill site in China was announced and paper production ceased in June 2016. Stora Enso’s 33.33% ownership of the Swedish recycled materials company IL Recycling AB was divested in June 2016. Divestment of the Kabel coated magazine paper mill in Germany was completed in September 2016.

Operational EBIT at EUR 128 (211) million was 39% down from 2016 mainly due to lower volumes, lower prices especially in WFC, negative foreign exchange impact and higher variable costs in chemicals, energy and paper for recycling. Fixed costs had a positive impact on operational EBIT.

Segment Other

The segment Other includes the Nordic forest equity-accounted investments, Stora Enso’s shareholding in the energy company Pohjolan Voima, operations supplying wood to the Nordic and Baltic mills, plantations not connected to any mill site, and Group shared services and administration.

EUR million 2017 2016
Sales 2 490 2 477
Operational EBITDA1 75 74
Operational EBITDA margin1 3.0% 3.0%
Operational EBIT 46 43
Operational EBIT margin 1.8% 1.7%
Cash flow from operations -30 136
Cash flow after investing activities -70 101
1 Restated due to a change in Group’s operational EBITDA definition to include the operational EBITDA of its equity accounted investments (EAI). See chapter Change in the operational EBITDA calculation at the end of the Report of the Board of Directors.

Sales of the Segment Other at EUR 2 490 (2 477) million and Operational EBIT at EUR 46 (43) million were both slightly up from previous year.

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