Stora Enso has signalled that it will record non-cash impairments of approximately €724m million in its IFRS operating result in the fourth quarter of 2024.
Stora Enso’s pre-close Q4 2024 update says that including the estimated positive tax effect of €56m, the net result impact will be approximately €668m negative.
The impairments in the Packaging Materials division mainly relate to the Beihai operations in China, and the division’s containerboard operations; in the Packaging Solutions division to the operations in western Europe; and in the Wood Product division to the operations in northern Europe.
The impairments are mainly a consequence of Stora Enso’s predictions of weaker long-term (5+ years) cash flow estimates compared to the previous forecasts for these units. The main reasons behind the weaker estimates are lower sales prices, increasing costs, and a weaker market supply-demand situation compared to a year ago.
Demand for classic sawn products, and pellets especially for heating, is expected to rise sequentially in the fourth quarter due to seasonal factors. European construction confidence indicator continued to be negative and has been negative since January 2023. Continued elevated wood cost impacts margins. The insurance compensation received as a one-time benefit last quarter will not contribute to the financial results of the fourth quarter.
The company said wood markets in the Baltic Rim remain tight. General cost inflation, especially in logistics and harvesting, will also impact on the fourth quarter.
In October 2024, Stora Enso announced its plan to sell approximately 12% of its forest assets in Sweden. This sale is intended to reduce debt and demonstrate the financial value of the Company’s forest holdings.
Stora Enso also entered into an agreement to acquire Finnish sawmill company Junnikkala Oy to secure cost-efficient wood supply for its Oulu packaging board site and enhance its wood products business. The transaction, valued up to €137m is subject to regulatory approvals and expected to close in the first half of 2025.
The company said wood markets in the Baltic Rim remain tight. General cost inflation, especially in logistics and harvesting, will also impact on the fourth quarter.
Stora Enso reiterates that its full year 2024 adjusted EBIT is expected to be significantly higher than for the full year 2023.
