Stora Enso Announces Significant Impairments in Q4 Results

Stora Enso Announces Significant Non-Cash Impairments

Stora Enso, a key player in the renewable products sector, recently revealed its plans to record non-cash impairments amounting to approximately EUR 724 million in its operating result for the fourth quarter of 2024. These impairments will appear as items affecting comparability (IAC) within their reports.

Implications of the Impairments on Financial Results

After considering an estimated positive tax effect of around EUR 56 million, the net result impact from these charges is projected to be a negative adjustment of approximately EUR 668 million. Such a significant impact highlights the challenges the company currently faces, urging them to reassess their future financial strategies.

Breakdown of Impairment Charges Across Divisions

The allocations for the impairment charges are designated across key segments. Here’s how the figures stack up:

Packaging Materials

For the Packaging Materials division, impairments total EUR 299 million, impacting both goodwill and non-current assets significantly. This branch especially feels the pinch due to its operations in various international markets.

Packaging Solutions

The Packaging Solutions segment also faces considerable challenges, reporting impairments that sum up to EUR 369 million. Factors contributing to these charges include diminished demand and increasing operational costs.

Wood Products Division

Meanwhile, the Wood Products division, although less affected, still shows impairments amounting to EUR 56 million, indicative of a tightening market for natural resources and products.

Reasons Behind the Impairments

The root cause of these impairments primarily stems from Stora Enso's recalibrated long-term cash flow predictions, which now forecast weaker performances than previously anticipated. The changes are influenced by several key factors including lower sales prices, rising costs, and a generally weaker supply-demand balance within the market, impacting overall business viability.

Future Financial Outlook and Adjustments

As a direct outcome of recognizing these impairments, Stora Enso anticipates a reduction in annual depreciation, estimated at around EUR 37 million moving forward. Importantly, this adjustment will not affect the company’s overall guidance for adjusted EBIT for the full year of 2024, allowing stakeholders to monitor the ongoing performance with clarity.

About Stora Enso

Stora Enso is part of the global bioeconomy, specializing in the production of renewable products spanning packaging, biomaterials, and wooden constructions. As one of the largest private forest owners globally, Stora Enso employs around 20,000 people and reported remarkable sales of EUR 9.4 billion for the year 2023. The shares of Stora Enso are publicly traded on both Nasdaq Helsinki Oy (STEAV, STERV) and Nasdaq Stockholm AB (STE A, STE R), with additional trades occurring in OTC Markets in the USA, showcasing a diverse investment landscape.

Investor Contact Information

For investor-related inquiries, Anna-Lena Åström serves as the SVP of Investor Relations. For questions, potential investors can reach her at +46 70 210 7691, ensuring access to crucial information as the company navigates these operational adjustments.

Frequently Asked Questions

What total impairment amount is Stora Enso reporting for Q4?

Stora Enso is reporting a total impairment amount of EUR 724 million for the fourth quarter.

How will these impairments affect Stora Enso’s financial guidance?

The impairments are expected to decrease annual depreciation by approximately EUR 37 million but will not impact their adjusted EBIT guidance for the full year 2024.

Which segments are most affected by the impairments?

The most affected segments include Packaging Materials, Packaging Solutions, and Wood Products, with significant impairments recorded across each.

What are the major reasons behind the impairment charges?

The impairments are largely due to lower sales prices, rising costs, and a weaker market supply-demand situation compared to previous forecasts.

Who should investors contact for more information?

Investors looking for more insight can contact Anna-Lena Åström, the SVP of Investor Relations, for detailed inquiries.

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