- Q1 20A
EBIT down 46% to EUR 180m: This
was at the top end of guidance. As guided, Q1 was negatively impacted by an
exceptional mild winter in the Nordics and labour union strikes in Finland (impacting
Paper and Containerboard). Planned/unplanned production downtime increased to
22% (10%) for paper, 11% (9%) for board, and 6% (1%) for wood.
- Group sales decreased by 16.2% y/y from
record high in Q1 19A: This
was from price declines
in pulp, containerboard, sawn goods and paper. Most volumes were in the
red, with containerboard -3.2% y/y (-1.6% q/q); corrugated: -2.1% (-6.2% q/q) and paper: -15.0% y/y (-10.8% q/q).
- Paper EBITDA margin declines to 8.1%: Margin contracted by 211bps q/q, with lower
volumes (-15% y/y) mainly attributed to the Finnish strikes.
- Disclosure has improved: Containerboard and corrugated EBITDA margins
are now disclosed. It appears containerboard margins collapsed y/y to 11.1%
(-107 bps q/q), while corrugated expanded by 252 bps y/y to 10.3% (+60 bps
q/q).
- To date, operations have been running
normally: From a demand perspective,
Paper and Wood have been most impacted, with less impact on packaging.
- Liquidity
bolstered to EUR 1.4bn as Stora not sure how deep this recession will be: Final dividend
proposal lowered by 70% to EUR 0.15/share. Annual mill maintenance postponed to
H2 20e and CapEx lowered by EUR 25m (range: EUR 675-725m). Gearing ticked up
with net debt/EBITDA of 2.3x (no financial covenants).
- Transformation
journey continues: 1.1mt of their graphic paper capacity will be converted
to Kraftliner (Oulu mill), with
start-up (market dependent) expected by the end of 2020. Self-help continues,
with profit protection programme upgraded by EUR 85m to EUR 350m by the end of
FY 21e.
- Guidance
for 2020 suspended due to the uncertainty from COVID: “Too difficult to predict demand for the
rest of the year”. They are not bullish on pulp (high inventories) or DWP
prices and are seeing collection issues for recycled fibre (they purchase c. 2,800
tons p.a.)
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