11 November 2018 Paper

StoraEnso reaps rewards of higher paper prices

The paper division of the Finnish paper company enjoyed a stand out quarter, but it is not enough to shift the focus from bio materials as a renewable resource for building, plastics and packaging.

Finnish wood products group StoraEnso claimed a seventh successive quarter of sales growth helped by strong growth from the paper division.

The company is still investigating the potential of converting its Oulu mill in Finland from production of coated printing paper to packaging grades. And during the fourth-quarter production of uncoated papers at Nymölla was hit by a low water levels in a local lake which forced restrictions in production. This is expected to result in a €10 million hit in the final quarter of the year.

But for Q3 the results across the board were looking upwards. Its sales in the quarter rose 3% to €2585 million (€2,509 million) and operating profit increased 23.4% to €358 million (€290 million). In the meantime both packaging and paper produced increased sales and profits to help the group achieve the reported growth.

CEO Karl-Henrik Sondström highlights the contribution from paper: “Paper stands out with strong sales growth, solid profitability and cash flow,” he says. However, it is unlikely to deter the company from its switch to packaging grades at Oulu where an environmental impact assessment is ongoing.

Investment at Nymölla will create energy from the waste effluent at the mill, while there is a spend of €9 million to expand corrugated board production in Latvia. Packaging enjoyed an all time high quarter with sales reaching €330 million (€316 million).

Work to introduce a replacement for fossil fuel derived plastics is being accelerated and the company is expecting to be able to launch its first products in Q1 next year.

The paper division increased sales to €779 million (€727 million), up 7.2% while Ebit rose to €65 million (€29 million). While pulp prices increased again in the quarter, it did not harm the rise in paper prices Stora has been able to achieve.

At the group level, paper’s importance is diminishing and is considered a cash generating operation to underwrite the transformation of the business into a renewable materials growth company.

The company has agreed a further environmental target, to cut carbon emissions per tonne of paper or wood produced by 31% of the 2010 level by 2030.

Gareth Ward

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