STORA ENSO OYJ FINANCIAL STATEMENT RELEASE 11 February 2025 at 8:30 EET

Q4/2024 (year-on-year)

·     Sales increased by 7% to EUR 2,322 (2,174) million.

·        Adjusted EBIT increased to EUR 121 (51) million.

·        Adjusted EBIT margin increased to 5.2% (2.3%).

·        Operating result (IFRS) was EUR -279 (-326) million, including items affecting comparability of EUR -768 million related mainly to impairments booked as part of the annual impairment review, and fair valuations and other non-operational items of EUR 368 million mostly from increase in the fair value of the standing growing trees (biological assets).

·        Earnings per share (EPS) were EUR -0.43 (-0.36) and EPS excl. fair valuations (FV) was EUR -0.81 (-0.64).

·        The fair value of the forest assets increased to EUR 8.9 (8.7) billion, equivalent to EUR 11.28 per share.

·        Cash flow from operations amounted to EUR 325 (323) million. Cash flow after investing activities was EUR 88 (-9) million.

·        Net debt increased by EUR 540 million to EUR 3,707 (3,167) million, mainly due to the board investment at the Oulu site.

·        The net debt to adjusted EBITDA (LTM) ratio improved to 3.0 (3.2). The target to keep the ratio below 2.0 remains.

Year 2024 (year-on-year)

·        Sales were EUR 9,049 (9,396) million.

·        Adjusted EBIT was EUR 598 (342) million.

·        Operating result (IFRS) was EUR 93 (-322) million.

·        Earnings per share (EPS) were EUR -0.17 (-0.45) and EPS excl. fair valuations (FV) was EUR -0.56 (-0.73).

·        Cash flow from operations amounted to EUR 1,187 (954) million. Cash flow after investing activities was EUR 74 (-40) million.

·        Adjusted ROCE excluding the Forest division increased to 3.6% (1.0%), the target being above 13%.

Key highlights

·        The profit improvement programme, initiated in Q1/2024 with a target of EUR 120 million in annual gross fixed cost savings, progressed well, with the full impact realised from the start of 2025. During the year, fixed costs decreased by EUR 110 million.

·     Stora Enso signed an agreement to acquire the Finnish sawmill company Junnikkala Oy to secure a cost-efficient wood supply to the packaging board site in Oulu, Finland, and to support the wood products business with new production assets.

·     Stora Enso achieved a 53% reduction in Scope 1 and 2 greenhouse gas emissions by year-end, surpassing the 2030 target of a 50% reduction from the 2019 base year.

·     The consumer board investment at the Oulu site in Finland is progressing on schedule. Production is estimated to start in the coming months with full capacity estimated to be reached during 2027.

·     Stora Enso intends to sell approximately 12% of its total forest assets of 1.4 million hectares in Sweden, with a fair value of EUR 6.3 billion. The sales process is ongoing.

Proposed dividend
The Board of Directors will propose a dividend of EUR 0.25 (EUR 0.20) per share at the Annual General Meeting on 20 March 2025. The Board of Directors proposes that the dividend be paid in two instalments, during the second and fourth quarter of 2025.

Outlook
NB: As a change to prior practices, Stora Enso will continue to provide comments on its outlook but not a specific annual EBIT guidance. This aligns with international practice.

We expect demand to remain subdued and volatile, affected by macroeconomic confidence and continued geopolitical uncertainty. Wood prices are expected to remain at high levels. Throughout 2025, we continue with our actions to reduce costs and strengthen operational and commercial excellence with the aim to improve operational performance and competitiveness.

In the first quarter of 2025, maintenance costs are expected to decrease to EUR 64 million from EUR 118 million in Q4/2024, due to no major planned maintenance activities in the quarter.

During the full year 2025, the Group's adjusted EBIT is anticipated to be adversely impacted by approximately EUR 100 million, primarily in H1/2025, due to the ramp-up in the coming months of the new packaging board line in Oulu, Finland.

The Group's capital expenditure forecast for the full year 2025 is EUR 730-790 million.

Packaging Materials
The fiber packaging market is currently challenged by soft demand due to slow economic recovery, low operating rates and uncertain visibility. Consumer board volumes in Q1/2025 are anticipated to increase following planned maintenance stops and seasonally low demand in Q4/2024. With continued weak demand and excess capacity, containerboard operating rates in fresh fiber are expected to improve but still remain at a relatively low level. Recycled containerboard volumes are expected to remain stable. High wood fiber costs continue to put pressure on margins. The division's average price level is expected to remain stable quarter-on-quarter.

Packaging Solutions
Market demand continues to be unpredictable and volatile with vast overcapacity. The first quarter typically represents a low season for the division. Volumes in Q1/2025 in Central, Northern and Western Europe are anticipated to be stable quarter-on-quarter, while the Chinese market is expected to return to normal levels following their peak season at year-end. High containerboard costs and the ongoing ramp up of the corrugated packaging site in De Lier, in the Netherlands are expected to continue to constrain margin growth beyond Q1/2025.

Biomaterials
The pulp market is currently positioned near its cyclical low. Leading pulp producers have announced price increases, with potential effects likely becoming more apparent in Q2/2025. Demand outlook is uncertain driven by economic activity and geopolitical risks.

Wood Products
The overall outlook for Q1/2025 is expected to remain relatively unchanged from Q4/2024, characterised by low and stable demand for classic sawn in Europe and overseas, alongside some price increases driven by high raw material costs. Raw material costs are projected to continue at a stable level, with an upward trend in log cost. Construction activity is expected to remain low.

Forest
Wood demand in the Nordics is expected to remain robust in Q1/2025, despite reductions in pulpwood consumption from curtailments in packaging and pulp markets, as forest companies are minimising costly imports.

Key figures

1 Total forest assets value, including leased land and Stora Enso's share of Tornator.

2 LTM=Last 12 months

Stora Enso's President and CEO Hans Sohlström comments on the fourth quarter 2024 results:
2024 marked a year of substantial progress for Stora Enso, demonstrating our commitment to building a foundation for sustained profitable growth. Our actions to improve sourcing and operational efficiency as well as commercial excellence, and the implementation of cost reductions across the Company have borne fruit, enhancing our profitability and competitiveness. Despite facing macroeconomic uncertainties, fluctuations in market demand, and rising wood costs, these actions have progressed well.

In 2024, we increased our adjusted EBIT by 75%, reaching 598 million euro, or a 6.6% margin. This improvement was supported by higher deliveries across all divisions, partially offset by lower sales prices. Sales decreased by 4% to 9,049 million euro, due to structural changes; within that, sales for continuing businesses increased by 1%. We reduced our fixed costs by 110 million euro and offset the continued wood cost escalation with efficiency improvements and reductions in other variable cost categories.

In the fourth quarter of 2024, adjusted EBIT increased by 139% to 121 million euro compared to the same quarter previous year, corresponding to a margin of 5.2%. The improvement was driven by price increases and cost saving actions. Sales increased to 2,322 million euro, a year-on-year growth of 7%.

Our focused actions to reduce operating working capital resulted in an all-time low operating working capital of 544 million euro in the fourth quarter, a reduction of more than 700 million euro in 1.5 years with an operating working capital to sales ratio of 7% down from 14%. This further improved our cash flow from operations to 325 million euro in the quarter.

The fair value of our total forest assets reached 8.9 billion euro, or 11.28 euro per share, highlighting the enduring value and potential of our asset base. Additionally, as announced in the fourth quarter last year, we are preparing to sell approximately 12% of our forest assets in Sweden. This move is aimed at further reducing our net debt, increasing financial flexibility and confirm the financial value of the Company's forest holdings.

We are also proud to announce that we have surpassed our 2030 target by achieving a 53% reduction in Scope 1 and 2 greenhouse gas emissions, demonstrating our commitment to sustainability and environmental responsibility.

The 1 billion euro investment in building a consumer board packaging line at our Oulu site in Finland is on schedule and expected to commence production ramp-up in the coming months. We estimate the start-up to adversely impact our 2025 adjusted EBIT by approximately 100 million euro, primarily in the first half of the year, followed by a gradual improvement in earnings thereafter.

We need to continue with our actions to make Stora Enso more efficient and stronger. While short-term demand outlook continues to be subdued, we continue our systematic and structured work to reduce our fixed and variable costs as well as improve operative performance during 2025.

In the longer term, Stora Enso is poised to leverage the recent big investments and cost reductions to further strengthen our market position, strive to deliver exceptional service to our customers, and continue our journey of sustainable development towards our long-term financial targets and improved shareholder value creation.

I would like to thank all our employees, customers, suppliers, and shareholders for their commitment and support during 2024. I am exceptionally proud of our team's resilience, engagement and dedication, which have been crucial in navigating this year's challenges and setting the stage for future successes.

Webcast for analysts, investors, and media
Analysts, investors, and media are invited to participate in the webcast with a teleconference today at 11:30 am EET (10:30 CET, 9:30 BST, 4:30 EDT). The results will be presented by President and CEO Hans Sohlström and CFO Niclas Rosenlew. The presentation can be followed live via the link: stora-enso-oyj-financial-statement-for-full-year-2024.open-exchange.net

During the webcast presentation, analysts and investors will also have the possibility to ask questions. To participate in the teleconference, please choose the "Teleconference" option on the homepage of the webcast. Recording of the webcast will be available shortly after the event at the same address and at storaenso.com/en/investors/interim-report

Media representatives who wish to ask questions after the publication of the report may contact Carl Norell, SVP Corporate Communications at Stora Enso on +46 72 241 0349.

This release is a summary of Stora Enso's Financial Statements Release 2024. The complete report is attached to this release as a pdf file. It is also available on the company website at storaenso.com/en/investors/interim-report.

Media enquiries:
Carl Norell
SVP Corporate Communications
tel. +46 72 241 0349

Investor enquiries:
Anna-Lena Åström
SVP Investor Relations
tel. +46 70 210 7691

The forest is at the heart of Stora Enso and we believe that everything made from fossil-based materials today can be made from a tree tomorrow. We are the leading provider of renewable products in packaging, biomaterials, and wooden construction, and one of the largest private forest owners in the world. Stora Enso has approximately 19,000 employees and our sales in 2024 were EUR 9 billion. Stora Enso shares are listed on Nasdaq Helsinki Oy (STEAV, STERV) and Nasdaq Stockholm AB (STE A, STE R). In addition, the shares are traded in the USA on OTC Markets (OTCQX) as ADRs and ordinary shares (SEOAY, SEOFF, SEOJF). storaenso.com/investors

STORA ENSO OYJ