Stora Enso Oyj

Hello, everyone, and welcome to Stora Enso's third quarter results presentation. I'm Jutta Mikkola, head of investor relations, and I'm joined today by Hans Ulström, our president and CEO, and Niklas Rosenlev, our CFO. The theme for today is good progress in a challenging market environment, which indeed we have done. We'll start with Hans, who will walk us through the key highlights and strategic focus areas. After that, Niklas will take you through the financial performance and we'll wrap it up with the main takeaways and key focus for the rest of the year 25. Once we're done, we'll open the floor for your questions. Thank you for being here with us today. Hans, over to you.

Thank you, Jutta. In the third quarter of 2025, despite ongoing challenges in markets and subdued demand, we remain focused on the areas within our control, driving progress where it matters most. However, before looking more closely at the third quarter highlights, I would like to announce changes in Stora Enso's group leadership team. Mikaela Turström has been appointed Executive Vice President People and Legal General Council as of 1st of January, 2026. Mikaela has been part of our group leadership team since 2023, serving as Executive Vice President Legal and General Council. Furthermore, Niklas Rosenlev, our chief financial officer, will assume additional responsibilities and represent the communication and brand organizations on top of his current duties. I want to congratulate both Mikael and Niklas for their new and extended roles. Then we are ready to look more closely at the quarterly highlights. We have taken important steps to build a stronger and more competitive Stora Enso. A major milestone in the quarter was the completion of the divestment of approximately 175,000 hectares of forest land in Sweden, representing 12.4% of our total forest holdings in Sweden. The transaction with an enterprise value of 9.8 billion Swedish crowns equivalent to approximately 900 million euros and in line with forest book value strengthens our balance sheet and improves our financial flexibility. The deal includes a long-term wood supply agreement to Stora Enso. This strengthens our cash flow and reduces net debt, which is a key priority for us. We also made progress on the strategic review of our remaining 1.2 million hectares of Swedish forest, including the assessment of a potential demerger and public listing. This review is central to unlocking further value for our shareholders, as well as strengthening our growth and business focus in both forest and renewable packaging businesses. We'll share updates as that process moves forward, aiming at capital market day later this year on November 25th. On profitability, we continue to act proactively to improve margins. These measures are essential as we navigate challenging market conditions and subdued consumer sentiment. Adjusted EBIT for the quarter was 126 million euros. Excluding the 45 million euro impact from the Oulu Consumer Board ramp up, profitability would have been comparable to the same quarter last year, reflecting a stable underlying performance despite persistent market headwinds. And finally, on sustainability, we launched a science-based framework together with IUCN to advance nature-positive forestry practices. This is an important step towards our long-term environmental goals. As we all know, market conditions have been challenging. Therefore, we have intensified our actions to improve profitability. But it's important to emphasize that these efforts are not new. We have been acting on these priorities for a good while now. Since 2023, we have been very clear on our strategic focus, improving profitability, driving performance and shaping the portfolio for long-term strength. This has been our new way of working proactive, not reactive, so we can stay ahead of market turbulence and rapidly changing global trends. On fixed cost reduction, we launched significant cost saving programs in 2023 and 2024, totaling over 230 million euros of savings. These include structural efficiency measures, site closures and divestiture across business areas and the group. Operational efficiency has been another key focus. We have implemented FTE reductions, cut external spend and driven value creation initiative across the whole company to streamline processes. Building a strong performance culture has been critical. More than 4,000 improvement measures have been identified with around 800 initiative team leaders, meaning that thousands of our employees are actively driving continuous improvement and cost savings initiatives across the company every day. We have also strengthened cash flow and working capital discipline, reducing operating working capital by about 700 million euros and improving cash flow from operations. Going forward, we remain committed to disciplined capital allocation. Finally, on portfolio actions, on top of earlier closures and divestments, we completed the sale of 12.4% of our Swedish forest assets and continue the strategic review of the remaining assets in Sweden. At the same time, we are ramping up Oulu consumer board line and the Lear corrugated site to secure cost efficiency and competitiveness. This approach gives us resilience and flexibility. By acting early and decisively, we have not just reacted to market challenges, we are shaping our future and positioning Stora Enso to thrive in a rapidly changing world. And with that, let me give you an update on the Oulu consumer board line ramp up. Sture Enso's new consumer packaging board line at the Oulu site in Finland has entered the production ramp-up phase earlier this year. While the project remains on track in terms of its original timeline and the 1 billion euro budget, the ramp-up process has progressed slower than initially anticipated, resulting in production volumes somewhat behind the original schedule. Nevertheless, we remain focused on reaching EBITDA breakeven by the end of 2025, which continues to be an achievable target. However, due to the slower than expected ramp up, the EBIT impact for Q4 is now projected to be higher than previously anticipated, estimated at about 15 to 35 million euros. Consequently, the full-year EBIT impact is expected to be in the range of 120 to 140 million euros. It is important to emphasize that the Oulu investment is a long-term strategic move that will deliver substantial value for Stora Enso over time. This transformation of the Oulu site into a state-of-the-art consumer board production facility is a cornerstone of our strategy to lead in renewable packaging. This investment is not just about near-term volumes, it is about building a competitive platform for the next decade and beyond. As the ramp-up continues, we remain confident that Oulu will become a key driver of profitable, cost-competitive growth and a benchmark for sustainable packaging innovation. This year we have seen some remarkable recognition for our design and innovation. Winning the Red Dot Design Awards 2025 underscores our ability to combine aesthetics, functionality and sustainability in everything we create. Our craftsmanship was showcased on the global stage at the World Ski Championships, where we designed official medal boxes crafted from renewable materials, fully recyclable and even featuring Braille for accessibility. This is not the first time we have been recognized by Red Dot. Earlier this year, we also received an award for our collaboration with Marmekko on a scalable, recyclable gift packaging portfolio. One of the most exciting milestones is our contribution to Atlassian Central in Sydney. Once completed, it will be the world's tallest hybrid timber tower. And the heart of this achievement is massive timber solutions. It's a powerful demonstration of how engineered wood can transform urban skylines while reducing carbon emissions. Closer to home, October brought us the Finlandia Prize for Architecture for our new headquarters at Katajanokan Lightery in Helsinki. This award celebrates not only architectural excellence, but also our leadership in sustainable building practices. Together, these achievements highlights how innovation and responsibility go hand in hand in shaping the future of construction. That concludes our review of the key highlights for the quarter, and I'll hand over now to Niklas, who will take you through our financial performance.

Thank you, Hans, and hello everyone. During the third quarter, as Hans already mentioned, our own actions resulted in good progress in a market with subdued demand and low consumer confidence. Delivery volumes were relatively low, particularly in container board and biomaterials. Sales increased by 1% to 2.3 billion euros, mainly due to the contribution of the unical acquisition and the consumer board line ramp up at the Oulu site. While market conditions continues to be volatile with low demand, we focused on the areas within our control. On that note, adjusted EBIT for the quarter was 126 million euros. And as Hans mentioned, excluding the 45 million euro impact from the old ramp up, profitability would have been comparable to the same quarter last year, reflecting a stable underlying performance despite persistent market headwinds. This we can see clearly when looking more closely at the EBIT bridge for Q3. Overall adjusted EBIT decreased by 49 million euros compared to last year, primarily due to the ramp up of the new line in Oulu. As said, Oulu had a negative impact of 45 million. In the other bar where you can see the Oulu impact, you can also see the absence of a 10 million insurance compensation that was received last year in the wood product segment, along with some other smaller movements. Looking at the other components, the picture is relatively stable. Given how volatile the markets have been, we are quite pleased with this as it reflects the result of disciplined execution of our strategy and profit improvement actions. Price mix contributed positively with 12 million euro, partly offset by a smaller negative impact from lower volumes. Variable costs were flat, as higher fiber costs were offset by lower energy and chemical costs. Fixed costs decreased by 30 million euros, driven by strong cost control and lower maintenance compared to last year. And FX had a negative impact of 20 million euros. If we then turned the focus to cash flow, despite the challenging market environment, we managed to safeguard profitability and improve cash generation. Cash flow after investing activities turned positive, as expected, following the gradual completion of the investment phase in Oulu. I want to note that in this picture, which shows the operational cash flow after investing activities, the proceeds from the Swedish forest divestment, so the 12% divestment, are not included. These proceeds were received in Q3, but they are recorded further down in the cash flow statement under divestments. And on that note, let's take a look at the net debt. net debt decreased by almost €800 million to €3.2 billion during the third quarter, reflecting the positive impact of the forest asset divestment. The ratio of net debt to the last 12 months adjusted EBITDA is now at 2.7 times, after being above 3 for most of the past two years. As the intensive strategic capex phase of the last two years nears finalization and profitability gradually improves, net debt levels and the ratio are expected to improve further. Operating working capital to sales was around 8%, that is at similar levels to the last few quarters. We intend to keep operating working capital at these levels or at these lower levels and decrease it when possible. So let's move on to the segment performance. Starting with packaging materials, where we continue to implement value creation actions during the quarter to mitigate the impact of the challenging market conditions. Sales declined, mainly due to slightly lower consumer board prices and adverse currency effects from a weaker US dollar. Adjusted EBIT decreased year on year by 37 million euros, primarily due to the adverse impact coming from the Oulu ramp up. In addition, fiber costs remained high and logistics expenses and trade tariffs increased, adding further pressure on profitability. These headwinds were, as said, partly offset by value creation initiatives. As order inflow weakened further during the quarter, we continued to manage capacity and cost levels in line with demand. In packaging solutions, we had a similar development, with market headwinds being offset by own actions. Sales increased slightly, with improved product mix offsetting a small decline in volumes. Adjusted EBIT increased year on year, supported by higher sales and improved margins, driven by value creation initiatives. Despite persistent overcapacity, actions to enhance product and customer mix combined with continuous cost efficiency improvements helped protect margins. So moving from packaging to biomaterials. In biomaterials, market conditions stabilized at low levels during the third quarter. Demand for hardwood pulp strengthened in both Europe and China, while softwood pulp demand in Europe remained weak. Sales decreased, driven by lower prices and adverse currency movements, somewhat offset by higher volumes. Adjusted EBIT decreased year on year, primarily due to lower prices, but as said, stabilized at low levels. Cost reduction measures also helped mitigate part of the negative market impact. If we then move on to wood products, protecting margins has been a key priority mitigating the increase in raw material costs. Sales increased driven mainly by higher prices and stronger volumes for sawn wood. However, EBIT declined, primarily due to increased solo costs in Central Europe and the absence of last year's €10 million insurance compensation, which affects comparability. That said, price increases and value creation initiatives helped cushion the impact and protect margins. The construction market remained weak overall, but we did see improved demand for both traditional wood products and building solutions compared to the previous year. In forest, sales increased, driven mainly by higher volumes and wood prices. However, EBIT declined slightly due to slightly higher costs. So in sum, Forest continued its stable and strong performance. I'll now hand it back to you, Hans, for the key takeaways and our focus for 2025.