Stora Enso Oyj - ADR

Q3 performance: steady organic growth + margin resilience despite headwinds - Organic sales +2% YoY, driven by higher deliveries in Consumer Packaging and Integrated Packaging plus price improvements in Integrated Packaging & Biomaterials. - Adjusted EBIT EUR 161m, +28% YoY (+EUR 35m) and adjusted EBIT margin above 7%, despite planned annual maintenance and war-related cost pressure from Iran (energy/logistics/chemicals). - EBIT bridge highlights: higher volumes (+EUR 31m) and variable cost improvement (+EUR 40m) (lower wood costs + own actions) more than offset price/mix (-EUR 12m) and Iran-related escalation.

Cash flow and balance sheet: strong quarter, lower capex, ongoing deleveraging - Cash flow from operations: EUR 245m; cash flow after investing: EUR 132m vs EUR 57m last year. - CAPEX reduced forecast for 2026 from EUR 550m to EUR 500m, reflecting disciplined capital allocation; company said it “won’t stop this year.” - Net debt down EUR 85m to EUR 2.5bn; net debt to adjusted EBITDA improved to 2.1x. - *What investors should watch:* management emphasizes continued deleveraging + cash generation as key to flexibility for the separation and future strategy.

Bergslagets Skogar separation: now formally decided; demerger impacts reported metrics but should be value-unlocking - Company has formally decided to proceed; first Capital Markets Day (CMD) in a few days (details on forestry and value-creation assumptions to come). - Reported sales impact limited because Bergslagets Skogar sales were historically largely internal. - Illustrative impact on earnings: LTM adjusted EBIT would be ~EUR 400m vs EUR 580m for group (impact < EUR 200m on EBIT margin). Cash impact expected to be less because adjusted EBIT includes non-cash operational fair value changes in biological assets. - ~EUR 800m net debt expected to transfer to Bergslagets Skogar at completion → reduces Stora Enso’s absolute net debt and aligns capital structure. - *Surprising detail:* they already shared Bergslagets Skogar financials via demerger releases—market can now see “Europe’s biggest pure play forest business.”