SEOJF - Stora Enso Oyj (SEOJF) Q4 2023 Earnings Call Transcript
2024-02-01 15:46:02 ET
Stora Enso Oyj (SEOJF)
Q4 2023 Earnings Conference Call
February 01, 2024 4:00 AM ET
Company Participants
Hans Sohlström – President and Chief Executive Officer
Seppo Parvi – Chief Financial Officer
Conference Call Participants
Charlie Muir-Sands – BNP Paribas
Linus Larsson – Enskilda Securities
Samu Wilhelmsson – Nordea Markets
Cole Hathorn – Jefferies
Brian Morgan – Morgan Stanley
Robin Santavirta – Carnegie
Presentation
Hans Sohlström
Good morning, everyone, and welcome to Stora Enso's Q4 Results Presentation. Thank you for joining us today. I'm Hans Sohlström, the President and CEO of Stora Enso. I'm here with our CFO, Seppo Parvi, to take you through our performance and outlook before we take your questions. We start the presentation by taking a look at this image of the Earth Observatory on Svalbard in Norway. It is a prime example of a building that must withstand harsh weather conditions and it was constructed using cross-laminated timber from Stora Enso.
Let's now shift our focus to our full year guidance. Our projected operational EBIT for this year is expected to be higher than the €342 million achieved in 2023. And in regard to our dividend, the Board of Directors has authorized a dividend distribution of €0.10 per share in April and a potential second installment of €0.20 per share to be paid latest in the fourth quarter of this year. This reflects our commitment to delivering value to shareholders despite the current market uncertainties.
Stora Enso financial performance in the fourth quarter of 2023 was unsatisfactory as it was affected by continued market headwinds. This especially impacted our packaging and food products businesses. Group sales decreased year-on-year by 24% to approximately €2.2 billion. Low demand led to reduced deliveries and lower sales prices across all divisions except for the forest division. This resulted in an operational EBIT of €51 million down from €355 million a year ago and with an operational EBIT margin decreasing to 2.3% down from 12.4%. But on a positive note, the operational EBIT improved sequentially with an increase of €30 million.
Cash flow from operations amounted to €323 million in the fourth quarter and €954 million for the full year of 2023. We have focused on cash flow generation by reducing our operating working capital and reviewing our capital expenditure priorities. Towards the end of the year, we achieved a significant reduction in working capital to an all-time record low level. In the fourth quarter, the change in working capital was €207 million and decreased by €650 million from its peak in the first quarter of 2023.
I will now give you an overview of the main factors impacting our results. Our last quarter profitability declined significantly compared to a year ago. Despite our efforts to manage our product mix effectively, sales prices have decreased across all divisions with the exception of forest. Lower demand led to decreased deliveries in all divisions. Apart from wood costs, many variable cost categories improved. However, total variable costs still increased by €43 million. We have decreased fixed costs by €112 million, which has been achieved through careful cost management and a reduction in maintenance expenses year-on-year. While we are disappointed by the overall reduction in profitability, to remain competitive and drive growth Stora Enso will launch a profit improvement program. I will come back to this topic later in the presentation....
Stora Enso Oyj (SEOJF) Q4 2023 Earnings Call Transcript