• Stora Enso reported strong Q3 21A results this morning: Sales up 24% y/y (-1% q/q), with EBITDA up 73% y/y and up 9% q/q. This resulted in robust margin expansion to 22.1% (+620 bps y/y and +190bps q/q) and ROCE over 13%. Net debt/EBITDA continues to improve reaching 1.4x with net debt declining by 11%.
  • Strong quarter for the Packaging Materials division (FBB and containerboard): Sales increased by 28% y/y (+0.1% q/q), while EBITDA was up 34% y/y and 5% q/q, driving margin expansion to 22.8%. Sale volumes increased by 16% y/y but were down 2% q/q. Demand for FBB and testliner was slightly weaker q/q, while kraftliner demand was stable.
  • Packaging Solutions benefitted from higher prices (corrugated): Sales increased by 24% y/y and were up 6% q/q, while EBITDA increased by 3% y/y and by 58% q/q. Despite this, the margin came under pressure, reaching 8.5% due to higher fixed costs. Corrugated demand was stable in the quarter.
  • Paper segment was impacted by restructuring and higher input costs: Sales declined by 6% y/y and by -1% q/q. EBITDA was in the red at –EUR 13mn, a significant improvement from Q2 21A (-EUR 31mn). This meant an EBITDA margin of -3%. Encouragingly, sales from the remaining paper business increased by 18% y/y. This segment was flagged for adverse impacts from higher energy, fibre and logistic costs, coupled with lower pricing. Paper demand was slightly stronger q/q. The Paper segment will now move towards only 10% of group sales.
  • Further kraftliner capacity likely to be added: Stora will complete a pre-feasibility study in early 2022 in terms of converting the second idle former paper line at its Oulu site in Finland.
  • Outlook guidance remains unchanged: Demand remains resilient for Stora’s key segment and still expected EBIT for FY 21E to be higher y/y.

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