Stora Enso decides to discontinue the divestment process of its Beihai production site in China (Inside information)

Rhea-AI Summary

Stora Enso has decided to halt the divestment process of its Beihai packaging board production site and forestry business in China, which was announced in December 2022. The company believes the value of keeping the assets exceeds potential sale value. The site will focus on operational excellence, cost optimization, and increasing production of liquid packaging board and premium grades. Stora Enso owns 80% of the Beihai operations, with local partners and IFC holding the remainder. The decision will impact financial reporting, with adjusted EBIT and IFRS operating results decreasing by EUR 7.5 million per quarter, totaling EUR 30 million for 2024, due to previously suspended depreciation.

Positive

• Improved cost competitiveness of Beihai site due to global cost escalation of wood and logistics
• Strategic strengthening of global supplier position in premium packaging board market
• No significant capital expenditure expected in mid-term

Negative

• EUR 30 million decrease in adjusted EBIT and IFRS operating result for full year 2024
• Quarterly decrease of EUR 7.5 million in operating results due to depreciation restatement

News Market Reaction

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Data tracked by StockTitan Argus on the day of publication.

STORA ENSO OYJ INSIDE INFORMATION 23 October 2024 at 13:00 EEST

HELSINKI, Oct. 23, 2024 /PRNewswire/ -- Stora Enso has decided to discontinue the divestment process for its Beihai packaging board production site and forestry business, announced in December 2022. Stora Enso is of the view that the value in own use of the assets exceeds the achievable transaction value, and has therefore chosen to retain these operations within the Group.

Stora Enso's strategic ambition is to build on its global leading position in the fiber-based packaging market. The business of the Beihai site will be developed through a continued focus on operational excellence, cost optimisation, and product development. By adjusting the product mix to increase the share of liquid packaging board and other premium grades, the Beihai site will strengthen Stora Enso's leading position as a global supplier. No significant capital expenditure is expected in the mid-term.

The Group's other liquid packaging board production sites include Imatra, Finland and Skoghall, Sweden, which together with Beihai, cater for major global customers while also serving local customers with high-quality products.

"Following a thorough review and negotiations with potential buyers, we have decided to terminate the divestment process and focus on the ongoing business. We are confident that Stora Enso is the best positioned to continue operating this site going forward. Given the recent global cost escalation of wood and logistics, the relative cost competitiveness of the Beihai site has improved. Through the Beihai site, we will continue to serve our global and most demanding customers with premium packaging board in the Asia Pacific region," says Stora Enso's President and CEO Hans Sohlström.

Stora Enso owns approximately 80% of the Beihai production site and forest operations, its local partners and International Finance Corporation (IFC) remain owners of the balance.

Impact on financial reporting
The Beihai site was classified as assets held for sale from the end of 2023. As at the end of September 2024, such classification has been ceased. Adjusted EBIT and IFRS operating result for Q1 to Q3/2024 will decrease by EUR 7.5 million per each quarter, EUR 30 million for the full year 2024, due to the inclusion of previously suspended depreciation into the restated results. Additionally, asset held for sale classification in balance sheet will be restated. There are no cash flow impacts as a result of the restatements.

Part of the global bioeconomy, Stora Enso is a leading provider of renewable products in packaging, biomaterials and wooden construction, and one of the largest private forest owners in the world. We create value with our low-carbon and recyclable fiber-based products, through which we support our customers in meeting the demand for renewable sustainable products. Stora Enso has approximately 20,000 employees and our sales in 2023 were EUR 9.4 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 OTC Markets (OTCQX) in the USA as ADRs and ordinary shares (SEOAY, SEOFF, SEOJF). storaenso.com/investors

STORA ENSO OYJ

For further information, please contact:
Carl Norell
SVP Corporate Communications
tel. +46 72 241 0349

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

This information was brought to you by Cision http://news.cision.com

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SOURCE Stora Enso Oyj

FAQ

Why did Stora Enso (SEOAY) cancel the Beihai site divestment in October 2024?

Stora Enso canceled the divestment because they determined the value of keeping the Beihai assets in operation exceeds the achievable transaction value, and the site's cost competitiveness has improved due to global cost escalation in wood and logistics.

How will the Beihai divestment cancellation affect Stora Enso's (SEOAY) 2024 financial results?

The cancellation will decrease adjusted EBIT and IFRS operating results by EUR 7.5 million per quarter, totaling EUR 30 million for full year 2024, due to inclusion of previously suspended depreciation.

What is Stora Enso's (SEOAY) ownership percentage in the Beihai site?

Stora Enso owns approximately 80% of the Beihai production site and forest operations, with local partners and International Finance (IFC) owning the remaining stake.