FULLTEXT DEL 4 AV 6
Kvartalsrapport Q4 2023
At the end of 2023, the Group's top four countries in respect to the number of employees
were Finland, Sweden, China, and Poland. 25% (25%) of all employees were women.
Stora Enso's target is to increase the share of female managers among all managers to 25% by
the end of 2024. By the end of 2023, 24% of managers were female (23%).
Personnel turnover in 2023 was 11% (14%). Illness-related absenteeism amounted to 3.7%
(4.1%) of total theoretical working hours.
The Group's wages in relation to local minimum wages are presented in the chapter
Consolidated sustainability figures in the Sustainability reporting section. Remuneration to the
Board of Directors and executive management is described in note 3.2 Board and executive
remuneration.
Safety
Key policy: Health and Safety Policy
In 2023, the Total Recordable Incident (TRI) rate was 4.7 (5.9). The milestone of 4.9 for 2023
was achieved by prioritising preventive safety measures and reinforcing divisions’ accountability
on improving performance. In 2023, Stora Enso introduced a new leading safety indicator, the
‘Safety Engagement Rate’, focused on preventive safety management. In 2023, no fatal injuries
occurred at Stora Enso’s sites.
Sustainable sourcing
Key policy: Supplier Code of Conduct (SCoC)
Stora Enso’s key performance indicator for responsible sourcing measures the proportion of
Group's total supplier spend covered by the Supplier Code of Conduct (SCoC), including all
categories and regions. Stora Enso's target is to maintain a minimum coverage level of 95% of
supplier spend covered by the SCoC. By the end of 2023, 95% of Stora Enso’s total spend on
materials, goods, and services was duly covered (96% at the end of 2022).
Respect for human rights
Key policy: Human Rights Policy and Guidelines
Stora Enso’s commitment to respect human rights covers all the Group's operations, including
employees, contractors, suppliers, and neighbouring communities. In addition to the Group's
commitment to the UN Guiding Principles on Business and Human Rights, Stora Enso’s annual
Slavery and Human Trafficking Statement is available at storaenso.com/sustainability.
While Stora Enso considers all human rights to be important and respects them, the human
rights identified as most salient remain the primary focus. This includes the following topics:
• Health and safety
• Fair labour (fair employment conditions, freedom from forced labour, freedom of association,
non-discrimination, and non-harassment)
• Land and natural resource rights acquisition and management
• Grievance mechanisms
• Children’s rights (relevant to the forest sector)
In 2023, Stora Enso shared best practices and adapted existing processes to embed the outcomes
of the three human rights due diligence deep-dive projects initiated in 2022. The projects were
carried out together with a third-party consultancy, with the aim of improving risk identification and
controls for two high-risk supply chains, as well as the due diligence processes in the Group’s own
operations. Read more in chapter Human Rights in the Sustainability reporting section.
During 2023, Stora Enso continued to address land and natural resource rights in Guangxi,
China and Bahia, Brazil.
Guangxi, China
Stora Enso leases 69,700 (73,100) hectares of land in Guangxi province China, of which 53,400
(53,400) hectares is leased from state-owned forest farms. The remaining 16,300 (19,700)
hectares, or 23% (27%) of the total area, is social land leased from village collectives, individual
households, and local forest farms.
Parts of the land leased by Stora Enso have been occupied for up to ten years for the
purpose of growing crops and trees on a small scale. In some cases, the occupiers are claiming
rights to the land based on historical land ownership documents that have been superseded by
state ownership in successive land reform processes. Recovery of occupied land continued in
2023, with 7,132 (6,124) hectares of land still under occupation at the end of the year. As
announced in December 2022, Stora Enso has initiated a sales process for a divestment of its
consumer board production site and forestry operations in Beihai, China.
Bahia, Brazil
In Bahia, Brazil, work continued on the Sustainable Settlement Initiative launched in 2012 to
provide farming land and educational support for local families in the landless people’s social
movements. In 2018, Veracel signed a new agreement with the social landless movements to
complement the earlier agreed Sustainable Settlement Initiative.
At the end of 2023, 139 (182) hectares or 0.1% (0.2%) of productive land owned by Veracel
remained occupied by movements not involved in the agreements.
At the end of 2023, the total land area owned by Veracel was 209,000 (210,000) hectares, of
which 82,000 (82,000) hectares are used for growing eucalyptus for pulp production.
Approximately half of Veracel's lands are dedicated to protecting local biodiversity by restoring
and conserving the natural Atlantic rainforest.
Anti-corruption and bribery matters
Key policies: Business Practice Policy, the Stora Enso Code (Code of Conduct)
A total of 131 (153 in 2022) potential non-compliance cases were reported in 2023. During the
past years, there has been a significant increase in reported misconduct cases, which is likely
due to a greater external and internal focus on ethical conduct, compliance, and voicing
concerns. A total of 163 (140) investigations of potential non-compliance were completed, which
also included open cases from previous years. Proven cases leading to disciplinary action, legal
action and/or process improvements were identified in 30 (44) of the investigations. Based on
the Group’s categorisation, 9 (13) of the proven cases were related to corruption and/or fraud,
resulting in employee dismissal or a disciplinary process. While Stora Enso continues to enforce
zero tolerance for corruption, none of the proven cases had a material impact on the Company.
Furthermore, 7 (12) of the proven cases were related to discrimination, harassment and/or
bullying. Remediation plans have been or are being implemented together with relevant
management representatives.
Unaudited 11 117Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 118 =====
Environmental investments and liabilities
In 2023 Stora Enso’s environmental investments amounted to EUR 132 (82) million. These
investments were mainly to improve the quality of air and water, to enhance resource and
energy efficiency, and to minimise the risk of accidental spills.
Stora Enso’s environmental costs in 2023 excluding interest and including depreciation
totalled EUR 240 (243) million. These costs include taxes, fees, refunds, permit-related costs,
and repair and maintenance costs, as well as wastewater treatment chemicals and certain
other materials.
Provisions for environmental remediation amounted to EUR 63 (73) million at 31 December
2023, details of which are in note 4.9 Provisions. There are currently no active or pending legal
claims concerning environmental issues that could have a material adverse effect on
Stora Enso’s financial position.
EU Taxonomy
To meet the EU’s climate and energy targets for 2030 and reach the objectives of the European
Green Deal, a classification system for sustainable economic activities called EU Taxonomy was
introduced in 2020. Large companies are obligated to report the share of Taxonomy-eligibility
and Taxonomy-alignment in their operations. Taxonomy-eligibility describes if an economic
activity is included in the scope of activities recognised in the EU Taxonomy Regulation.
Taxonomy-alignment describes if an economic activity is sustainable based on the technical
screening criteria for substantial contribution and do-no-significant harm specified for the activity.
Taxonomy-aligned activity needs to be also carried out in compliance with the minimum
safeguards, thus to respect basic human rights and follow good business conduct rules.
In 2023 EU Taxonomy was expanded to four remaining environmental objectives with the EU
Environmental Delegated Act and with amendments to Climate Delegated Act. The amendments
did not bring major impact on Stora Enso's Taxonomy-eligibility. The forest industry is not at the
core of the current legislation and therefore the Group has only few activities to report on. From
Stora Enso’s main products, the wood-based solutions for construction industry are included in
the EU Taxonomy through their contribution to buildings' energy efficiency. Other main products,
production of pulp, consumer board, containerboard and corrugated packaging, are out of the
scope of the EU Taxonomy and therefore the reported Taxonomy-eligible KPIs are low.
Accounting principles
The EU Taxonomy KPIs, turnover, capex and opex, are presented in separate tables as defined
in the regulation. The total turnover is the Group’s total sales, as presented in the line of sales, in
consolidated income statement, and rental income in 2023, which respectively include the
IFRS 15 and the IFRS 16 income according to the EU Taxonomy turnover definition. The
external sales connected to the economic activities are reported under Taxonomy-eligible
turnover. The total capex is the Group's total capital expenditure in 2023, as presented in the line
of additions, excluding goodwill additions, in note 4.1 Intangible assets, property, plant and
equipment and right of use assets, and note 4.2 Forest assets. The Taxonomy-eligible capex are
the investments related to the assets or processes associated with the respective economic
activities. The total opex covers the maintenance expenses, short-term lease costs, non-
capitalised research and development costs and silviculture costs at the Group level. The
Taxonomy-eligible opex include the corresponding direct non-capitalised costs related to the
economic activities.
Double counting is avoided by having a clear cost structure in reporting which ensures that
the profit centers and cost elements are separate for each activity. In reporting the activities do
not overlap between environmental objectives.
Taxonomy eligible and aligned activities
Stora Enso has identified seven eligible activities to report in the EU Taxonomy in the conducted
yearly exercise. The eligibility and alignment assessments have been carried out based on the
best interpretation of the Taxonomy Regulation and the available guidelines from the European
Commission. In case of unclarities, the conservative approach has been chosen. The
assessments and the data are covered by external assurance.
1.3 Forest management
Taxonomy-eligible forest management includes Stora Enso's own forest activities in Sweden
where the Group has full control over the activity. Tree plantations in South America and China
are not included in the activity. Of Stora Enso’s Swedish forests, 100% are certified under
certification systems (PEFC or FSC) which lays the foundation for sustainable forest
management. Stora Enso considers its forest management practices aligned with EU Taxonomy,
but has been unable to fulfill the third party verification requirement described in forest
management substantial contribution criteria (section 4. Audit). Stora Enso has been actively
searching a partner who is capable of conducting EU Taxonomy compliant verification and will
continue the search. Until then the Group reports its forest management as eligible but not-
aligned in EU Taxonomy.
The output of the activity, the grown wood, is used mostly internally in Stora Enso’s own
operations. The forest management turnover in the EU Taxonomy includes the sale of externally
sold roundwood and forest residuals.
1.4 Conservation forestry
In Brazil, Stora Enso’s 50% owned joint operation Veracel has dedicated more than half of its
land for the protection and restoration of biological biodiversity in natural Atlantic rainforest. The
forest is excluded from the harvesting activities. Stora Enso considers the conservation practises
aligned with EU Taxonomy, but has been unable to fulfil the third party verification requirement
described in conservation forestry substantial contribution criteria (section 4. Audit). The activity
is thus reported as eligible but not- aligned. Costs from the conservation operations are reported
in opex.
2.4 Remediation of contaminated sites and areas
Remediation projects of contaminated sites and areas are related to discontinued operations
and mill closures at Stora Enso sites. The expenses related to the environmental remediation
work carried out are included in the reported opex.
3.4 Manufacture of batteries
Stora Enso's pilot plant costs and research and development expenses related to hard carbon
innovation are included in Taxonomy-eligible opex. Turnover for the activity is expected within
future years. The alignment assessment is done based on the predicted future industrial scale
operations and production which will be aligned with the technical screening criteria of 3.4
Manufacture of batteries once started. For more information on Lignode® by Stora Enso, see the
Group's website storaenso.com/lignode.
Unaudited 12 118Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 119 =====
3.5 Manufacture of energy efficiency equipment for buildings
Stora Enso produces wood-based solutions for the construction industry. As Stora Enso is not
a manufacturer of the end products, the compliance with the substantial contribution was
assessed based on the knowledge of the end use and the energy efficiency related regulations
in the primary market areas. The external sales related to the share of production that is
estimated to end up for doors, windows, roofing and external wall systems, is included under
the EU Taxonomy turnover. The same share is used in the allocation of the related capex and
opex for the activity.
4.20 Cogeneration of heat/cool and power from bioenergy
Wood residuals and by-products from the pulp process are used for energy production.
The bioenergy generated from biobased feedstock is considered eligible in the EU Taxonomy
reporting. The turnover includes the external sales of the excess electricity and heat which is not
consumed internally. The largest single capex item in the reporting is the investment to
bioenergy production at the Oulu production site, expected to be in use 2025.
7.6 Installation, maintenance and repair of renewable energy technologies
The installation of renewable energy technologies is considered eligible in the EU Taxonomy
reporting. The reported capex includes the investments in the installation of solar panels at
Stora Enso sites.
Minimum safeguards
Minimum safeguards were assessed in Group-level from two angles: by reviewing the company
processes for human rights, corruption, taxation and fair competition to determine that the
adequate processes and controls are in place, and by investigating that there are no known
breaches or violations existing in the parent company, in its subsidiaries or by senior
management. The Group considers its processes to be at a robust level and with no violations to
meet the alignment with the minimum safeguards. Read more in the following chapters in the
Sustainability reporting section: Human rights, Business ethics, and Stora Enso as a taxpayer.
Unaudited 13 119Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 120 =====
Proportion of Turnover from products or services associated with Taxonomy-aligned economic activities 2023
EUR million Substantial contribution criteria DNSH criteria
('Does Not Significantly Harm')
Economic Activities Code Turnover
Proportion
of
turnover
year 2023
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular Economy
Biodiversity
Climate change mitigation
Climate change adaptation
Water
Pollution
Circular Economy
Biodiversity
Minimum safeguards
Proportion
of
Taxonomy
aligned or
eligible
turnover
year 2022
Category
enabling
activity
Category
transition
al activity
EUR % Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Forest management CCM 1.3 100%
Manufacture of energy efficiency equipment for buildings CCM 3.5 413 4.4% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E
Cogeneration of heat/cool and power from bioenergy CCM 4.20 41 0.4% Y N n/a n/a n/a n/a n/a Y Y Y n/a Y Y 96.6%
Turnover of environmentally sustainable activities (Taxonomy-
aligned) (A.1) 454 4.8% 100% 99.7%
Of which Enabling 413 4.4% 100% 78.3 % E
Of which Transitional T
A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Forest management CCM 1.3 118 1.3 % —%
Cogeneration of heat/cool and power from bioenergy CCM 4.20 2 0.0 % 3.4 %
Turnover of Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities) (A.2) 119 1.3% 0.3 %
A.Turnover of Taxonomy eligible activities (A.1+A.2) 574 6.1% 100 %
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible activities 8,836 93.9%
TOTAL1 9,410 100%
1 In the EU Taxonomy, turnover includes also rental income, therefore the figure differs slightly from the Group total sales.
Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective
N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
Unaudited 14 120Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 121 =====
Proportion of capex from products or services associated with Taxonomy-aligned economic activities 2023
EUR million Substantial contribution criteria DNSH criteria
('Does Not Significantly Harm')
Economic Activities Code Capex
Proportion
of capex
year 2023
Climate change
mitigation
Climate change
adaptation
Water
Pollution
Circular Economy
Biodiversity
Climate change
mitigation
Climate change
adaptation
Water
Pollution
Circular Economy
Biodiversity
Minimum safeguards
Proportion
of
Taxonomy
aligned or
eligible
capex year
2022
Category
enabling
activity
Category
transition
al activity
EUR % Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Forest management CCM 1.3 100%
Manufacture of batteries CCM 3.4 — 0.0% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E
Manufacture of energy efficiency equipment for buildings CCM 3.5 4 0.4% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E
District heating/cooling distribution CCM 4.15 100%
Cogeneration of heat/cool and power from bioenergy CCM 4.20 57 5.1% Y N n/a n/a n/a n/a n/a Y Y Y n/a Y Y 70.1%
Installation, maintenance and repair of renewable energy
technologies CCM 7.6 3 0.3% Y N n/a n/a n/a n/a n/a Y n/a n/a n/a n/a Y —% E
Capex of environmentally sustainable activities (Taxonomy-aligned)
(A.1) 64 5.7% 100% 94.3%
Of which Enabling 7 0.6% 100% 54.9 % E
Of which Transitional T
A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Forest management CCM 1.3 7 0.6% —%
Cogeneration of heat/cool and power from bioenergy CCM 4.20 4 0.3 % 29.9 %
Capex of Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activites) (A.2) 10 0.9% 5.7 %
A.Capex of Taxonomy eligible activities (A.1+A.2) 75 6.6% 100 %
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Capex of Taxonomy-non-eligible activities 1,051 93.4%
TOTAL 1,125 100%
Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective
N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
Unaudited 15 121Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 122 =====
Proportion of opex from products or services associated with Taxonomy-aligned economic activities 2023
EUR million Substantial contribution criteria DNSH criteria
('Does Not Significantly Harm')
Economic Activities Code Opex
Proportion
of opex
year 2023
Climate change
mitigation
Climate change
adaptation
Water
Pollution
Circular Economy
Biodiversity
Climate change
mitigation
Climate change
adaptation
Water
Pollution
Circular Economy
Biodiversity
Minimum safeguards
Proportion
of
Taxonomy
aligned or
eligible
opex year
2022
Category
enabling
activity
Category
transition
al activity
EUR % Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Forest management CCM 1.3 100%
Conservation forestry CCM 1.4 100%
Remediation of contaminated sites and areas PPC 2.4 6 0.7% n/a n/a n/a Y n/a n/a Y Y Y n/a Y Y Y —%
Manufacture of batteries CCM 3.4 21 2.6% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E
Manufacture of energy efficiency equipment for buildings CCM 3.5 20 2.5% Y N n/a n/a n/a n/a n/a Y Y Y Y Y Y 100% E
Cogeneration of heat/cool and power from bioenergy CCM 4.20 32 4.1% Y N n/a n/a n/a n/a n/a Y Y Y n/a Y Y 52.9%
Opex of environmentally sustainable activities (Taxonomy-aligned)
(A.1) 78 9.9% 92.7% 7.3% 82.9%
Of which Enabling 41 5.2% 100% 45.0 % E
Of which Transitional T
A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Forest management CCM 1.3 23 2.9% —%
Conservation forestry CCM 1.4 1 0.1 % — %
Cogeneration of heat/cool and power from bioenergy CCM 4.20 6 0.7 % 47.1 %
Opex of Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activites) (A.2) 30 3.8% 17.1 %
A.Opex of Taxonomy eligible activities (A.1+A.2) 108 13.7% 100 %
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Opex of Taxonomy-non-eligible activities 681 86.3%
TOTAL 790 100%
Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective
N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
Unaudited 16 122Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 123 =====
Risks and risk management
Our approach to risk management
Risk is an integral element of business and corporate governance, and it is characterised by
both threats and opportunities, which may have an impact on future performance and the
financial results of Stora Enso, as well as on its ability to meet certain social and environmental
objectives. Stora Enso is committed to ensuring that systematic, holistic and proactive
management of risks and opportunities is among its organisational core capabilities, and that
a culture is fostered where both are carefully considered in all business decisions. Through
consistent application of dynamic risk analysis and scenario planning, Stora Enso enhances
opportunities and manages risk in order to reduce threats which may prevent the Group from
reaching its business goals.
Risk governance
Stora Enso defines risk as the effect of uncertainty on the Group's ability to meet organisational
values, objectives and goals. The Group Risk Policy, which is approved by the Board of
Directors, sets out the overall approach to governance and the management of risks in
accordance with the COSO (Committee of Sponsoring Organizations) framework and in line with
the ISO 31000 standard. The Board retains the ultimate responsibility for the overall risk
management process and for determining predominantly through Group policies the appropriate
and acceptable level of risk.
The Board has established a Financial and Audit Committee to provide support to the Board
in monitoring the adequacy of the risk management process within Stora Enso, and specifically
regarding the management and reporting of financial risks. This oversight scope includes also
monitoring of the cybersecurity risk. The Sustainability and Ethics Committee is responsible for
overseeing the company’s sustainability and ethical business conduct, its strive to be a
responsible corporate citizen, and its contribution to sustainable development.
The head of Enterprise Risk Management, reporting to the Chief Strategy and Innovation
Officer, is responsible for the design, development and monitoring of the top-down
implementation of the Group risk management framework. Each division and Group function
head, together with their respective management teams, are responsible for process execution
and cascading the framework and guidelines further down in the organisation. The Internal Audit
unit evaluates the effectiveness and efficiency of the Stora Enso risk management process.
Risk management process
Risk management is embedded in all decision-making processes, with holistic risk assessments
conducted also as part of all significant investment decisions. In connection with the annual
strategy process, business divisions and group service and support functions conduct a holistic
baseline risk assessment, linked to their key objectives. Specific guidance regarding the risk
management process is outlined in the enterprise risk management instructions.
Business entities and functions identify the sources of risk events including changes in
circumstances and their causes and potential consequences. Stora Enso’s risk model outlines
the overall risk universe which is used to support holistic risk identification and risk consolidation,
while also providing taxonomy as well as consistency in risk terminology.
Risk analysis involves developing an understanding of the risk to provide an input for risk
evaluation. The purpose of risk evaluation is to determine the risk priorities and to support
decision making to determine which risks require treatment/actions. Risks are assessed in terms
of their impact and likelihood of occurrence, often based on specific risk scenarios.
The effectiveness of existing risk reduction is factored in to define the residual risk level. Pre-
defined impact scales consider financial, safety and reputational impacts, on both a quantitative
and qualitative basis.
Risk treatment involves selecting one or more risk management option, such as avoidance,
reduction, sharing or retention. Additional risk mitigation actions are determined for risks which
exceed the perceived risk tolerance incorporating the assignment of responsibility, schedule and
timetable of the risk response actions.
Following the annual baseline assessment, prioritised and emerging risks, as well as
the corresponding risk mitigation and business continuity plans related to those risks, are
reviewed in divisional business review meetings on a semi-annual basis.
Despite the measures taken to manage risks and mitigate the impact of risks, and while some
of the risks remain beyond the direct control of the management, there can be no absolute
assurance that risks, if they occur, will not have a materially adverse effect on Stora Enso’s
business, financial condition, operating profit or ability to meet financial obligations.
Main risks
Reputation
Reputational risks often reflect the combined impacts of many other types of risks and could be
a consequence of incidents or non-compliant behaviour of employees, contractors, suppliers or
other business partners. This includes failure to comply with norms, laws and regulations, or
policy documents. Damage to Stora Enso’s reputation and brand may result in a loss of investor
and customer confidence leading to higher cost of capital and decreased revenues.
Mitigation measures and opportunities
Policies such as the Stora Enso Code and Supplier Code of Conduct ensure that the Board has
oversight. Continuous and mandatory training sessions for employees and, on occasion,
suppliers guarantees that the policies are being implemented, and audits are conducted to
monitor that Stora Enso’s requirements are met. Stora Enso has established a Speak Up
Hotline, through which employees and any third party globally can anonymously report potential
non-compliance cases. All reported cases are subject to an established investigation and
reporting process, with proven cases leading to actions. Stora Enso continuously engages with
its stakeholders to enhance relationships, to respond to developing needs and to inform its
strategy.
Macroeconomy, geopolitics, and currency rates
Changes in global economic conditions, such as sharp market corrections and foreign exchange
volatility, could have a negative and material impact on Stora Enso's profit, cash flows and
financial position.
Stora Enso is exposed to several financial market risks that the Group is responsible for
managing under policies approved by the Board of Directors. The objective is to achieve cost-
effective funding in Group companies and manage financial risks by using financial instruments
to reduce earnings volatility. The main exposures for the Group, besides currency risk, are
interest rate risk, liquidity risk, refinancing risk, commodity price risk and credit risk. Financial
risks are discussed in detail in note 5.1 Financial risk management.
Unaudited 17 123Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 124 =====
Mitigation measures and opportunities
Stora Enso has a diversified portfolio of businesses which mitigates exposure to any one country
or product segment. The external environment is continuously monitored and planning
assumptions take account of important near- to medium-term and long-term drivers and risks
related to key macro-economic factors. The compliance to the Board-approved risk appetite is
closely monitored and cash flow and liquidity are actively managed. Stora Enso hedges 15–60%
of the highly probable 12-month net foreign exchange flows in main currency pairs. Currency
translation risk is reduced by funding assets, whenever economically possible, in the same
currency as the asset. The divisions regularly monitor their order flows and other leading
indicators, where available, so that they may respond quickly to a deterioration in trading
conditions. In the event of a significant deterioration in general economic condition and in main
leading economic indicators, the Group has a possibility to implement cost reduction measures
to offset the impact on margins from deterioration in sales.
Competition and market demand
The packaging, pulp, paper and wood products industries are mature, capital intensive and
highly competitive. Stora Enso’s principal competitors include several large international forest
products companies and numerous regional and more specialised competitors. Customer
demand is influenced by the general economic conditions and inventory levels and affects
product price levels. Product prices, which tend to be cyclical, are affected by capacity utilisation,
which decreases in times of economic slowdowns. Changes in prices differ between products
and geographic regions.
The following table shows the operating profit sensitivity to a +/- 10% change in either price or
volume for different segments based on figures for 2023.
Operating profit: Impact of changes +/- 10%, EUR million
Segments Price Volume
Packaging Materials 434 110
Packaging Solutions 107 43
Biomaterials 143 52
Wood Products 152 32
Forest 246 6
Mitigation measures and opportunities
The ability to respond to changes in product demand and consumer preferences and to develop
new products on a competitive and economic basis calls for innovation, continuous capacity
management and structural development. The risks related to factors such as demand, price,
competition and customers are regularly monitored by each division and unit as a routine part of
business management. These risks are also continuously monitored and evaluated on a Group
level to gain a perspective of the Group’s total asset portfolio and overall long-term profitability
potential.
Stora Enso, as one of the biggest private forest owners in the world, also benefits from
a strategic renewable resource base. The Group's expertise in wood and wood based renewable
materials is focused on responding to changing customer and consumer preferences, driven by
climate change. Products based on renewable materials with a low carbon footprint help
customers and society at large to reduce CO2 emissions by providing an alternative to solutions
based on fossil fuels or other non-renewable materials.
Sourcing
Increasing input costs or availability of materials, goods and services may adversely affect
Stora Enso’s profitability. Securing access to reliable low-cost supplies and proactively managing
costs and productivity are of key importance. Reliance on outside suppliers for energy also
makes Stora Enso susceptible to changes in energy market prices. There is also an increased
risk of disturbances in the supply chain due to cyber incidents, political instability and other
drivers related to global trade. The following table shows Stora Enso’s major cost items.
Composition of costs in 2023
Operative costs % of costs % of sales
Logistics and commissions 10% 10%
Manufacturing costs
Fiber 33% 32%
Chemicals and fillers 9% 8%
Energy 7% 7%
Material 10% 9%
Personnel 14% 14%
Other 11% 11%
Depreciation 6% 6%
Total costs and sales 100% 97%
Total operative costs and sales in EUR million 9,130 9,396
Associated companies, operational 76
Operational EBIT (EUR million) 342
In many areas Stora Enso is dependent on suppliers and their ability to deliver a product or
a service at the right time and of the right quality. The most important products are fiber,
chemicals and energy, and machinery and equipment in capital investment projects. Increased
demand for carbon neutral primary and secondary biomass fuels may increase energy costs.
The most important services are transport and various outsourced business support services.
For some of these inputs, the limited number of suppliers is a risk.
Mitigation measures and opportunities
Input cost volatility is closely monitored at the business unit, divisional and group level and
a consistent long-term energy risk management is applied. The price and supply risks are
mitigated through increased own generation, shareholding in competitive power assets such as
PVO/TVO, physical long-term contracts and financial derivatives. Stora Enso hedges price risks
in raw material and end-product markets and supports the development of financial hedging
markets. A wide range of suppliers are used and monitored to avoid situations that might
jeopardise continued production, business transactions or development projects.
Suppliers and subcontractors must also comply with Stora Enso’s sustainability requirements
as they are part of Stora Enso’s value chain. The sustainability requirements for suppliers and
audit schemes cover raw materials, and other goods and services procured. Suppliers are
assessed for risks related to environmental, social and business practices through our internal
risk assessment tool. Supplier code of conduct audits are conducted on high-risk suppliers and
findings from such audits are followed-up. Suppliers should have the possibility to mitigate, but
where necessary, the supplier contract would be terminated.
Stora Enso also has an opportunity to add value and bring innovation to its business globally
by building strong and measurable relationships with the best suppliers as well as enforcing
Unaudited 18 124Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 125 =====
harmonised sourcing processes to increase capabilities, increase tender quality to reduce cost,
and develop sustainable suppliers.
Regulatory changes
Stora Enso's businesses may be affected by political or regulatory developments in any of
the countries and jurisdictions where it operates, including changes to forest, biodiversity,
environmental, fiscal, tax or other regulatory regimes. Potential impacts include higher costs and
capital expenditure to meet new requirements, the expropriation of assets, imposition of royalties
or other taxes targeted at the industry, and requirements for local ownership or beneficiation.
The EU Green Deal and its climate targets for 2030 and 2050 have resulted in a proliferation
of future legislation which have been further advanced in 2022 and may impact Stora Enso's
future operations. The policy initiatives from the European Commission will include policies and
legislation on areas such as EU Forest and Biodiversity strategies, the Renewable Energy
Directive, EU Emission Trading System (ETS), Sustainable products initiative, Packaging and
Packaging waste revision as well as EU taxonomy.
Political decisions on forest resources, could limit the availability of wood, increase costs and
reduce investment opportunities.
Stora Enso has been granted various investment subsidies and has given certain investment
commitments in different countries e.g. Finland, China and Sweden. If committed planning
conditions are not met, local officials may pursue administrative measures to reclaim some of
the formerly granted investment subsidies or to impose penalties on Stora Enso, and the
outcome of such a process could result in a negative financial impact on Stora Enso.
Mitigation measures and opportunities
Active monitoring of regulatory and political developments in the countries where Stora Enso
operates as well as participation in policy development mainly through industry associations and
other partnership programmes are important risk mitigation regarding regulatory changes.
Regulatory changes can also bring significant opportunities by driving market growth for
sustainable products and create competitive advantage through resource efficiency and
renewability.
Climate change – physical impacts
Long-term (25–30 years) changes in precipitation patterns, periods of drought, frequent extreme
weather events and higher average temperatures that increase the risk of forest fires and insect
outbreaks, could cause damage to operations, forests and tree plantations, affecting forests
asset values and regional wood prices. Milder winters could also have an impact on the
harvesting and transport of wood and related costs in northern regions. More frequent extreme
weather events also increase the risk of disruptions in the production, logistics and supply of raw
materials and energy.
During 2023, focus was on deep dives into specific physical risk impacts and further
developing transition scenarios. Read more in the following TCFD chapter, and in an index table
available at storaenso.com.
Mitigation measures and opportunities
Physical risks are to a great extent subject to risk transfer and thereby within the cover of
Stora Enso's property and business interruption insurance programs. With regards to forest and
plantation assets, Stora Enso benefits from strategic resilience through geographical
diversification within the asset portfolio. Diligent plantation planning is ensured to avoid frost
sensitive areas and R&D programmes are applied to increase tolerance to extreme
temperatures. Stora Enso maintains a diversity of forest types and structures and enforces
diversification in wood sourcing. Wood harvesting in soft soils involves the implementation of
best practices guidelines.
Nordic forests in Finland and Sweden could also benefit from increased heat summation and
longer growing seasons, leading to acceleration in forest growth with direct positive impact on the
value of own forest assets and an indirect impact related to market wood availability and costs.
Biodiversity
Stora Enso’s forestry and industrial sites impact on biodiversity. At the same time, Stora Enso’s
business depends on raw material natural capital inputs, such as wood and fresh water. These
raw materials are supported by soil quality alongside ecosystem services for bioremediation,
forest disease and pest control, and climate regulation, among others. Biodiversity loss can have
a negative impact on the value of Stora Enso’s forest assets, increase risks of shortages in wood
supply and damage reputation. Read more in the TNFD chapter.
Mitigation measures and opportunities
Stora Enso is committed to achieving a net-positive impact on biodiversity in its own forests and
plantations by 2050. Biodiversity management is an integral part of Stora Enso’s forest
management practices, and the Group strive to do more than just to mitigate biodiversity loss.
Operations are supported by digitalisation as well as continuous research and innovation to
develop the forestry operations and to provide the best value to Stora Enso’s customers and
other stakeholders. The Group knows the origin of all the wood it uses, and 99% of the land that
it owns or manage is covered by forest certification schemes. Stora Enso engages in
collaboration with various stakeholders with the aim to protect ecosystems and safeguard
natural resources.
People and capabilities
Competition for personnel is intense and Stora Enso may, in the long term, not be successful in
attracting or retaining qualified personnel. The loss of key employees, the inability to attract new
or adequately trained employees, or a delay in hiring key personnel could seriously harm
Stora Enso’s business and impede reaching the Group's strategic objectives. Labour market
disruptions and strikes, especially in times of restructuring and redundancies due to divestments
and mill closures or during labour market negotiations, could also have adverse material effects
on Stora Enso's business, financial position and profitability.
Mitigation measures and opportunities
Stora Enso manages the risks and loss of key talents through a combination of different actions.
Some of the activities aim towards making the Stora Enso employer brand better known both
internally and externally, globalising some of the remuneration practices and intensifying the
efforts to identify and develop talents. Finally, the Group actively focuses on talent and
management assessments, including succession planning for key positions. The majority of
employees are represented by labour unions under several collective agreements in different
countries where Stora Enso operates, thus relations with unions are of high importance to
manage labour disruption risks.
Stora Enso recognises the opportunity of skilled and dedicated employees being essential for
success. Engaged high performing people enable the implementation of transformation strategy
and commercial success.
Unaudited 19 125Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 126 =====
Personal safety – employees and wider workforce
Failure to maintain high levels of safety management can result in harm to Stora Enso’s
employees and contractors, and also to communities near our operations and the environment.
Impacts in addition to physical injury, health effects and environmental damage could include
liability to employees or third parties, damage to reputation, or an inability to attract and retain
skilled employees. Government authorities could additionally enforce the closure of our
operations on a temporary basis.
Personnel safety and security can never be compromised and, thus, Stora Enso must be
aware of potential safety risks and provide adequate guidelines to people for managing risks
related to, for example, travelling, working and living in countries with security or crime concerns.
Mitigation measures and opportunities
Stora Enso’s goal is to provide an accident-free workplace. Encouraging a group-wide safety
culture means that everyone is responsible for making every workday healthy and safe – from
top management and throughout the Group. The approach to safety extends to contractors,
suppliers, and on-site visitors. Everyone is encouraged to give feedback and provide ideas on
how to further improve safety. Additionally, safety is promoted among contractors and suppliers
through a dedicated e-learning. The Group also emphasise the importance of safety by asking
suppliers for information on their safety performance in the tendering process.
Stora Enso’s Health and Safety Policy defines the objectives for safety management, as well
as a governance model on how to manage health and safety topics in practice and how to
integrate them into annual planning and reporting.
Leading health and safety performance can potentially strengthen the brand as an employer,
as well as improved engagement, efficiency and productivity.
Physical assets
The installed capacity of Stora Enso's production facilities have an inherent risk of potential for
failure or off-specification operations, which could result in poor product quality, unplanned
production downtime, lower output or increased production costs. It may also impact the Group's
ability to meet delivery commitments and the business plan. In some instances, the risks are the
result of inherent design deficiencies, failures in the mode of operation or operating practices.
The most significant asset risks lie predominantly in integrated pulp and board production and
related energy generation.
Mitigation measures and opportunities
Protecting production assets and business results is a high priority for Stora Enso. This is
achieved through structured methods of identifying, measuring and controlling different types of
process risk and exposure. Divisional risk specialists manage this process together with
insurance companies and other loss prevention specialists. Each year a number of technical risk
inspections are carried out at production units. Risk improvement programmes and cost-benefit
analyses of proposed investments are managed via internal reporting and risk assessment tools.
Internal and external property loss prevention guidelines, fire loss control assessments, key
machinery risk assessments and specific loss prevention programmes are also utilised. Planned
stoppages for maintenance and other work are important to keep machinery in good order.
Preventive maintenance programmes and spare part criticality analyses are utilized to secure
the high availability and efficiency of key machinery.
Product safety and compliance
Some of our products are used for package liquids and food consumer products, so any defects
could affect health or packaging functions and result in costly product recalls. Wood products are
incorporated into buildings, and this may involve product liability resulting from failures in
structural design, product selection or installation. Failure to ensure product safety could result in
product recalls involving significant costs including compensation for indirect costs of customers,
and reputational damage.
Mitigation measures and opportunities
The mills producing food and drink contact products have established certified hygiene
management systems based on risk and hazard analysis. To ensure the safety of its products,
Stora Enso actively participates in CEPI (Confederation of European Paper Industry) working
groups on chemical and product safety. In addition, Stora Enso mills have certified relevant ISO
quality management systems. Furthermore, contractual liability limitation and insurance
protection are used to limit the risk exposure to Stora Enso.
The Group recognises the opportunity of differentiation and value creation through superior
product quality and the highest level of product conformity.
Information technology, security, and digitalisation
Stora Enso is dependent on IT systems for both internal and external communications and for
the day-to-day management of its operations. Information systems, personnel and facilities are
subject to cyber security risk, such as ransomware. In addition, accidental disclosure of
confidential information due to a failure to follow information handling guidelines or due to
an accident or criminal act may result in financial damage, penalties, disrupted or delayed
launch of new lines of business or ventures, loss of customer and market confidence, loss of
research secrets, breach of data privacy regulation and other business critical information.
Mitigation measures and opportunities
The management of risks is actively pursued in the Information Risk Management System and
best practice change management and project methodologies are applied. We actively work to
prevent cybercrime. A number of security controls have been implemented to strengthen the
protection of confidential information and to facilitate compliance with international regulations.
Opportunities may arise from efficient operations, performance optimisation, innovative
product offerings, and new customer services through digitisation and sophisticated IT systems,
as well as new technologies offering significant potential for higher level of process optimisation
and automatisation, generating new business and enhanced value propositions for customers
and consumers.
Strategic investments
To succeed with the implementation of its strategy, Stora Enso has to understand the needs of its
customers and find the best way to serve them with the right offering and with the right production
asset portfolio. Failure to complete strategic projects in accordance with the agreed schedule,
budget or specifications can, therefore, have serious impacts on the Group's financial
performance. Significant, unforeseen changes in costs or an inability to sell the envisaged volumes
or achieve planned price levels may prevent Stora Enso from achieving its business goals.
Unaudited 20 126Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 127 =====
Mitigation measures and opportunities
Risks are mitigated through profound and detailed pre-feasibility and feasibility studies which are
prepared for each large investment. Investment guidelines stipulate the process, governance,
risk assessment, management and monitoring procedures for strategic projects, including
climate related risk factors. The guidelines also require that the calculation of potential cost and
income for CO2 emissions as part of the investment proposal, Environmental and Social Impact
Assessments (ESIAs) are conducted for all new projects that could cause significant adverse
effects in local communities. Post completion audits are carried out for all significant
investments.
Mergers, acquisitions, and divestments
Failure to realise the expected benefits from an acquisition of a company or asset can have
serious financial impacts on Stora Enso. The Group can also find itself liable for past acts or
omissions of the acquired business, without any adequate right of redress. Failure to achieve
expected values from the sales of assets or deliveries beyond the expected receipt of funds may
also impact the Group's financial position. Divestments or business restructuring may involve
additional costs due to historical and unaccounted liabilities as well as reputational impacts.
Mitigation measures and opportunities
Rigorous M&A guidelines, including due diligence procedures are applied to the evaluation and
execution of all acquisitions. Structured governance and policies such as the policy for
responsible right-sizing, are followed when making restructuring decisions. A strong balance
sheet and cash flow enable value enhancing M&A, when the timing and opportunity are right.
Ethics and compliance
Stora Enso operates in a highly regulated business area and is, thereby, exposed to risks related
to breach of applicable laws and regulations associated to e.g. capital markets regulation,
company and tax laws, customs, environment, human rights, and safety, as well as areas
covered by policies such as the Stora Enso Code and Business Practice Policy, e.g. fraud, anti-
trust, corruption, conflict of interests and other misconduct. Breaches may lead to high
compliance and remediation costs including prosecution costs, fines, penalties, and contractual,
financial and reputational damage.
Mitigation measures and opportunities
Stora Enso’s Ethics and Compliance Programme, which includes policy setting, promoting
values, training, knowledge sharing and grievance mechanisms, is continuously updated and
developed. Other compliance mechanisms include Stora Enso Group’s internal control system
and Internal Audit assurance, as well as Supplier Code of Conduct in supplier contracts, risk
assessments, trainings and audits. In response to capital markets regulations, Stora Enso’s
Disclosure Policy emphasises the importance of transparency, credibility, responsibility,
proactivity and interaction.
Environmental risks are minimised through environmental management systems and
environmental due diligence for acquisitions and divestments, and indemnification agreements
where effective and appropriate remediation projects are required. Special remediation projects
related to discontinued activities and mill closures are executed based on risk assessments.
Focus on ethics in a wider sense, not mere compliance with laws and regulations,
promotes a value-driven and more successful business, fosters accountability and enhances
corporate reputation.
Climate-related financial disclosures (TCFD)
The Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures
(TCFD) recommends a framework for disclosing climate-related risks and opportunities.
Stora Enso's disclosures with reference to TCFD recommendations are listed in an index table,
available for downloading at storaenso.com, with references to those locations where these
issues are addressed in the Group's annual reporting.
Scenario analysis in 2023
Aligned with the TCFD recommendations, Stora Enso utilises scenarios to assess the impacts of
climate change.
During 2023, the focus was on deep dives to specific physical risk impacts and further
developing transition scenarios.
Scenario analysis during the previous years
In 2020, Stora Enso developed a scenario analysis with the qualitative assessment of the
physical climate impacts on the Nordic forests and the Group's business until 2050. This work
was based on the Business-As-Usual scenario by the International Panel for Climate Change
(RCP 8.5 scenario) that would deliver a temperature increase of 4–5 degrees by the end of
the century. The climate change attributes considered were pests, diseases, droughts, wildfires,
floods, periods of frost, water scarcity, changes to precipitation patterns, rise in sea level and
changing temperatures. In 2021, the work with physical climate impacts continued by a deeper
analysis of measures improving resiliency of the forests against the negative impacts of global
warming. Results showed that sustainable forest management practices as well as possibilities
to monitor and to react to events such as forest fires and diseases, play an important role in
mitigating the negative impacts of climate change.
During 2021, Stora Enso assessed a business impact scenario for 2030 according to the
global transition required to limit the global average temperature increase in line with the Paris
agreement of 1.5 degrees (RCP 1.9). The work concluded that the overall transition to a low
carbon, circular bioeconomy is well aligned with Stora Enso’s strategy. The scenario work also
showed that potential new regulations and market mechanisms motivated by the ambitions to
limit climate change and its effects on the society and environment could impact Stora Enso’s
operating costs by limiting wood harvesting volumes or forest management practices as well as
increasing greenhouse gas emission costs and energy prices. Sustainable product initiatives
and requirements may also have an impact on the Group's future market access, product
demand growth and product development requirements.
During 2022, a quantitative resilience analysis was conducted for tree plantations in South
America against three global Shared Socioeconomic Pathway (SSP) scenarios: SSP1-1.9
(Sustainability – Taking the Green Road), SSP2-4.5 (Regional Rivalry – a Rocky Road) and
SSP5-8.5 (Fossil-fuelled Development – Taking the Highway). Results show a relative resilience
of Stora Enso's tree plantations in all the three scenarios. Financial impacts are not expected to
be material in SSP1-1.9 and SSP2-4.5 scenarios but in SSP5-8.5 scenario the growth conditions
of tree plantations would be affected resulting in potentially material financial impacts.
Unaudited 21 127Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 128 =====
Nature-related financial disclosures (TNFD)
The Taskforce on Nature-related Financial Disclosures (TNFD) is a market-led and science-
based initiative supported by national governments, businesses, and financial institutions
worldwide. The TNFD’s mission is to help companies responding to the global acceleration of
nature loss as an increasing source of risk to businesses and providers of financial capital. The
TNFD Recommendations and Additional Guidance are there to support organisations to report
and act on evolving nature-related issues. The recommendations support the outcomes of the
agreed Kunming-Montreal Global Biodiversity Framework and hope to support a shift in global
financial flows away from businesses and business activities that lead to nature-negative
outcomes and towards those that support nature-positive outcomes. The version 1.0 of the
TNFD recommendations, published in September 2023, build on the Taskforce on Climate-
related Financial Disclosures (TCFD) recommendations and are consistent with other standards
including the International Sustainability Standards Board (ISSB), IFRS Sustainability Disclosure
Standards, the Global Reporting Initiative (GRI) and the European Sustainability Reporting
Standards (ESRS). The TNFD includes 14 recommended disclosures that extend or add to
those included in the TCFD recommendations' disclosures which support integrated climate and
nature reporting.
Stora Enso’s business depends on several raw material natural capital inputs, such as
wood and fresh water, and are supported by soil quality, alongside ecosystem services for
bioremediation, forest disease and pest control, and climate regulation, among others.
The Group's dependency on and responsibility for nature is explored, for instance, through its
Biodiversity Leadership Programme to support the Group's commitment to achieve a net positive
impact on biodiversity in Stora Enso’s own forests and plantations through active biodiversity
management to align with the society’s expectations and goals for nature positive actions. Stora
Enso expects the TNFD’s recommendations to help the Group to further evolve current nature-
related disclosures, based on building on the Group's existing processes, over the coming years.
As part of the work, Stora Enso piloted the draft TNFD recommendations and parts of the
Locate, Evaluate, Assess and Prepare (LEAP) approach by undertaking a biodiversity screening
in the supply chain of the Biomaterials division. The pilot was undertaken to help prepare for
future disclosure requirements, and anticipated investor and market interest on the potential
biodiversity risks and opportunities across the supply chain. This pilot focused on transparency
in selected chemicals, logistics and energy sub-categories of the supply-chain. High-level
findings included that the Group’s current nature-related risks included: policy and legal risks in
relation to forestry legislation, potential reputational risks and location-based risks associated
with the functioning of underpinning natural capital assets and supply chain operations.
In addition to nature-related risks, potential nature-related opportunities were also identified
including the development of nature-based solutions and recognition of the multiple nature-
related benefits associated with different types of ecosystems. The pilot provides the starting
point for further qualitative and quantitative assessments of Stora Enso's business activities and
supply chains to prioritise areas for action across the Group by applying an adapted process to
other supply chains. For further details about the pilot, please see the case study at
littleblueresearch.com.
Stora Enso has participated in the WBCSD’s TNFD pilot project 'Roadmap to Nature Positive'
which provides an analysis for forest products value chain having high impact on nature. The
Group also contributed to the development of TNFD Additional Guidance for the Forest Sector
by the WBCSD Forest Solutions Group. Stora Enso is a member of Mistra’s research
programme BIOPATH, hosted by the Swedish University of Lund, which aims to identify
pathways for efficient alignment of the financial system with the requirements of biodiversity.
As announced by the TNFD in January 2024, after the reporting date, Stora Enso has signed
up as a ‘TNFD Early Adopter’ which means that Stora Enso intend to adopt the
recommendations and publish its first TNFD-aligned report in the financial year 2024.
Corporate governance in Stora Enso
Stora Enso complies with the Finnish Corporate Governance Code 2020 issued by the
Securities Market Association (the “Code”). The Code is available at cgfinland.fi. Stora Enso also
complies with the Swedish Corporate Governance Code (“Swedish Code”), with the exception of
the deviations listed in Appendix 1 of the Corporate Governance part of this report. The
deviations are due to differences between Swedish and Finnish legislation, governance code
rules and practices, and in these cases Stora Enso follows the practice in its domicile. The
Swedish Code is issued by the Swedish Corporate Governance Board and is available at
corporategovernanceboard.se.
Legal proceedings
Contingent liabilities
Stora Enso has undertaken significant restructuring actions in recent years which have included
the divestment of companies, sale of assets and mill closures. These transactions include a risk
of possible environmental or other obligations the existence of which would be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Group. A provision has been recognised for obligations for which the related
amount can be estimated reliably and for which the related future cost is considered to be at
least probable.
Stora Enso is party to legal proceedings that arise in the ordinary course of business and
which primarily involve claims arising out of commercial law. The management does not
consider that liabilities related to such proceedings before insurance recoveries, if any, are likely
to be material to the Group’s financial condition or results of operations.
Veracel
On 11 July 2008, Stora Enso announced that a federal judge in Brazil had issued a decision
claiming that the permits issued by the State of Bahia for the operations of Stora Enso’s joint
operations company Veracel were not valid. The judge also ordered Veracel to take certain
actions, including reforestation with native trees on part of Veracel’s plantations and a possible
fine of, at the time of the decision, BRL 20 (EUR 4) million. Veracel disputes the decision and
has filed an appeal against it. Veracel operates in full compliance with all Brazilian laws and has
obtained all the necessary environmental and operating licences for its industrial and forestry
activities from the relevant authorities. In November 2008, a Federal Court suspended the
effects of the decision. No provisions have been recorded in Veracel’s or Stora Enso’s accounts
for the reforestation or the possible fine.
Changes in the Group management
Micaela Thorström was appointed EVP Legal and General Counsel and a member of the Group
Leadership Team as of 1 April 2023.
René Hansen EVP, Brand and Communications and a member of the Group Leadership
Team, left his position at Stora Enso in May 2023.
Annette Stube, Executive Vice President Sustainability, and a member of the Group
Leadership Team, left her position at Stora Enso in December 2023.
Unaudited 22 128Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 129 =====
Minna Björkman, Executive Vice President Sourcing and Logistics, and a member of the
Group Leadership Team (GLT), left her position in the GLT to assume a business leadership role
in Stora Enso’s Packaging Materials division in November 2023.
Ad Smit started as Executive Vice President of the Packaging Solutions division and
a member of the Group Leadership Team in December 2023. Prior to that, he led the Business
Unit Western Europe within Stora Enso’s Packaging Solutions division.
David Ekberg left his position as Executive Vice President of the Packaging Solutions division
on 30 November 2023.
Share capital
Stora Enso Oyj’s shares are divided into A and R shares. The A and R shares entitle holders to
the same dividend but different number of votes. Each A share and every ten R shares carry one
vote at a shareholders’ meeting. However, each shareholder has at least one vote. During 2023,
a total of 7,364 A shares converted into R shares were recorded in the Finnish Trade Register.
Number of shares as at 31 December 2023
A shares R shares Total
Number of shares 176,230,916 612,389,071 788,619,987
Number of votes (at least) 176,230,916 61,238,907 237,469,823
Board of Directors is authorised to decide on the repurchase and on the issuance of Stora Enso
R shares. The amount of shares to be issued or repurchased shall not exceed a total of
2,000,000 R shares, corresponding to approximately 0.25% of all shares and 0.33% of all
R shares.
Major shareholders as of 31 December 2023
By voting power A shares R shares % of
shares % of votes
1 Solidium Oy1
62,655,036 21,792,540 10,7 % 27,3 %
2 FAM AB2
63,123,386 17,000,000 10,2 % 27,3 %
3 Social Insurance Institution of Finland 23,825,086 — 3,0 % 10,0 %
4 Ilmarinen Mutual Pension Insurance Company 4,159,992 15,290,638 2,5 % 2,4 %
5 Varma Mutual Pension Insurance Company 5,163,018 1,140,874 0,8 % 2,2 %
6 MP-Bolagen i Vetlanda AB 4,885,000 1,000,000 0,7 % 2,1 %
7 Elo Mutual Pension Insurance Company 2,010,000 9,987,000 1,5 % 1,3 %
8 Bergslaget's Healthcare Foundation 626,269 1,609,483 0,3 % 0,3 %
9 The State Pension Fund — 5,600,000 0,7 % 0,2 %
10 The Society of Swedish Literature in Finland — 3,000,000 0,4 % 0,1 %
11 Avanza Pension Insurance 142,664 1,372,515 0,2 % 0,1 %
12 OP Finland Fund — 2,549,753 0,3 % 0,1 %
13 Danske Invest Finnish Equity Fund — 2,435,000 0,3 % 0,1 %
14 Unionen (Swedish trade union) — 2,312,750 0,3 % 0,1 %
15 EVLI Finland Select Fund — 1,940,000 0,2 % 0,1 %
Total 166,590,451 87,030,553 32,2 % 73,8 %
Nominee-registered shares3 75,045,090 487,121,848 71,3 % 52,1 %
1 Entirely owned by the Finnish State
2 As confirmed to Stora Enso
3 According to Euroclear Finland
The list has been compiled by the Company on the basis of shareholder information obtained from Euroclear Finland, Euroclear
Sweden and a database managed by Citibank, N.A (Citi). This information includes only directly registered holdings, thus certain
holdings (which may be substantial) of shares held in nominee or brokerage accounts are not included. The list is therefore
incomplete.
Share distribution as at 31 December 2023
By size of holding,
A share1) Shareholders % of shareholders Shares % of shares
1–100 7,111 59.83% 273,712 0.16%
101–1,000 4,211 35.43% 1,474,615 0.84%
1,001–10,000 529 4.45% 1,222,373 0.69%
10,001–100,000 24 0.20% 559,602 0.32%
100,001–1,000,000 2 0.02% 347,113 0.20%
1,000,001– 8 0.07% 172,353,501 97.80%
Total 11,885 100.00% 176,230,916 100.00%
By size of holding,
R share1) Shareholders % of shareholders Shares % of shares
1–100 17,659 37.87% 840,387 0.14%
101–1,000 22,681 48.64% 8,919,537 1.45%
1,001–10,000 5,813 12.47% 15,389,391 2.51%
10,001–100,000 408 0.88% 10,699,825 1.75%
100,001–1,000,000 47 0.10% 16,081,788 2.63%
1,000,001– 23 0.05% 560,458,143 91.53%
Total 46,631 100.00% 612,389,071 100.00%
1) According to Euroclear Finland. This list includes only directly registered shares in Euroclear Finland. E.g. Stora Enso's Swedish
shareholders are listed under their nominee bank in this list. Therefore, this listing is not comparable with the table Major shareholders
as of 31 December 2023
Unaudited 23 129Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 130 =====
Ownership distribution as at 31 December 2023
% of shares % of votes
Solidium Oy1 10.7% 27.3%
FAM AB2 10.2% 27.3%
Social Insurance Institution of Finland (KELA) 3.0% 10.0%
Finnish institutions (excl. Solidium and KELA) 11.0% 8.1%
Swedish institutions (excl. FAM) 1.1% 0.9%
Finnish private shareholders 3.9% 2.4%
Swedish private shareholders 3.0% 2.2%
ADR holders 1.6% 0.5%
Under nominee names (non-Finnish/non-Swedish shareholders) 55.4% 21.3%
1 Entirely owned by the Finnish State
2 As confirmed to Stora Enso
Short-term outlook
Stora Enso expects market conditions to remain uncertain in 2024, with ongoing pressure on
demand, prices and margins. However, there are some positive signs such as increasing pulp
prices, declining global pulp inventories, less customer destocking, and lower inflation and
interest rates.
The first quarter is not expected to show a significant market improvement following a
historical low fourth quarter in 2023 and a slow recovery. All variable costs continued to ease in
the fourth quarter, except for wood, which are expected to follow similar trends also in the first
quarter this year. The potential risk of logistical challenges from the Red Sea area could disrupt
the flow of goods and increase costs.
During the second half of 2023, Stora Enso implemented significant restructuring measures
to enhance its financial performance going forward. These included the closure of sites and
production lines, the sale of assets, the adoption of a more decentralised operating model, and a
reduction of employees by approximately 1,150. These actions are expected to improve the
Group's cost competitiveness and streamline its organisation, leading to a stronger financial
performance in the years to come.
Guidance
Stora Enso's full year 2024 operational EBIT is expected to be higher than for the full year 2023,
EUR 342 million.
Short-term risks and uncertainties
Risk is characterised by both threats and opportunities, which may affect future performance and
the financial results of Stora Enso, reputation, as well as its ability to meet certain social and
environmental objectives.
The geopolitical unrest could have an adverse impact on the Group. Retaliatory measures,
conflict-related risks to people, operations, trade credit, cyber security, supply, and demand,
could also affect the Group negatively.
The risk of a prolonged global economic downturn and recession, continued high inflation, as
well as sudden interest rate increases, currency fluctuations, trade union strike actions, and
logistical chain disruptions could all adversely affect the Group’s profits, cash flow and financial
position, as well as access to material, flow of goods and transport.
The challenging and rapidly changing macroeconomic and geopolitical disruption may
increase cost, add complexity and lower short-term visibility. A slow market recovery might
further impact market demand, prices, profit margin and volumes of the Group's products. New
capacity and volume entering the market might distort demand, volumes, inventories and pricing,
with the risk of a deepening margin squeeze. Moreover, forced capacity cuts might further
impact on profitability.
There is a risk of continued high interest rates along with increased price volatility for raw
materials such as wood, chemicals, other components and energy in Europe. The continued
tight wood market could cause increased costs, limit harvesting and cause disruptions such as
delays and/or lack of wood supply to the Group's production sites.
Stora Enso has been granted various investment subsidies and has given certain investment
commitments in several countries e.g., Finland, China and Sweden. If commitments to planning
conditions are not met, local officials may pursue administrative measures to reclaim some of
the formerly granted investment subsidies or to impose penalties on Stora Enso, the outcome of
such a process could result in adverse financial impact on Stora Enso.
Sensitivity analysis
Energy sensitivity analysis: the direct effect of a 10% change in electricity and fossil fuel market
prices would have an impact of approximately EUR 5 million on operational EBIT for the next 12
months.
Wood sensitivity analysis: the direct effect of a 10% change in wood prices would have an
impact of approximately EUR 200 million on operational EBIT for the next 12 months.
Pulp sensitivity analysis: the direct effect of a 10% change in pulp market prices would have
an impact of approximately EUR 120 million on operational EBIT for the next 12 months.
Chemical and filler sensitivity analysis: the direct effect of a 10% change in chemical and filler
prices would have an impact of approximately EUR 54 million on operational EBIT for the next
12 months.
Foreign exchange rates transaction risk sensitivity analysis for the next twelve months: the
direct effect on operational EBIT of a 10% strengthening in the value of the US dollar, Swedish
krona and British pound would be approximately positive EUR 81 million, negative EUR 9 million
and positive EUR 9 million annual impact, respectively. Weakening of the currencies would have
the opposite impact. These numbers are net of hedges and assuming no changes occur other
than a single currency exchange rate movement in an exposure currency.
The Group's consolidated income statement on operational EBIT level is exposed to a
foreign-currency translation risk worth approximately EUR 179 million expense exposure in
Brazilian real (BRL) and approximately EUR 67 million income exposure in Chinese Renminbi
(CNY). These exposures arise from the foreign subsidiaries and joint operations located in Brazil
and China, respectively. For these exposures a 10% strengthening in the value of a foreign
currency would have a negative EUR 18 million and a positive EUR 7 million impact on
operational EBIT, respectively.
Annual General Meeting
Stora Enso Oyj's Annual General Meeting (AGM) will be held on Wednesday 20 March 2024 at
16:00 EET at the Marina Congress Center in Helsinki, Finland. More information is available at
storaenso.com/agm
Proposal for the distribution of dividend
The Board of Directors proposes to the AGM that a dividend of EUR 0.10 per share be
distributed on the basis of the balance sheet adopted for the year 2023. In addition, the Board of
Directors proposes that the AGM would authorise the Board of Directors to decide at its
Unaudited 24 130Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 131 =====
discretion on the payment of an additional dividend up to a maximum of EUR 0.20 per share.
The authorisation would be valid until 31 December 2024.
The Board of Directors has assessed the Company’s financial situation and liquidity before
making the proposal. There have been no material changes in the parent company’s financial
position since 31 December 2023, the liquidity of the parent company remains good and the
proposed dividend does not risk the solvency of the Company. Stora Enso's policy is to distribute
50% of earnings per share (EPS) excluding fair valuation over the cycle. In 2023, EPS excluding
fair valuation was EUR -0.73.
The Parent company distributable shareholders’ equity on 31 December 2023 amounted to
EUR 1,542,290,968.57 including the profit for the period of EUR 44,769,653.04. The Board of
Directors proposes to the Annual General Meeting of the Company that the distributable funds
be used as follows: A dividend of EUR 0.10 per share from the distributable shareholders’ equity
to be distributed on 788,619,987 shares, not to exceed EUR 78,861,998.70, which would leave
EUR 1,463,428,969.87 in distributable shareholders’ equity.
It is proposed that the Board may at its discretion decide on a second dividend instalment of
a maximum of EUR 0.20 latest during the fourth quarter of 2024, which would lead to a further
decrease in distributable shareholders’ equity of EUR 157,723,997.40, leaving EUR
1,305,704,972.47 in distributable shareholders’ equity.
The first dividend instalment would be paid to shareholders who on the record date of the
dividend payment, 22 March 2024, are recorded in the shareholders’ register maintained by
Euroclear Finland Oy or in the separate register of shareholders maintained by Euroclear
Sweden AB for Euroclear Sweden registered shares. Dividends payable to Euroclear Sweden
registered shares will be forwarded by Euroclear Sweden AB and paid in Swedish crowns.
Dividends payable to ADR holders will be forwarded by Citibank N.A. and paid in US dollars.
The Board of Directors proposes to the AGM that the first instalment of the dividend be paid
on or about 4 April 2024.
Unaudited 25 131Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 132 =====
Alternative performance measures
According to the European Securities and Markets Authority (ESMA) Guidelines, an alternative performance measure is understood as a financial measure of historical or future financial performance,
financial position, or cash flows, not defined under IFRS. Used together with the IFRS measures, alternative performance measures provide meaningful supplemental information to the management,
investors, analysts and other parties with regards to the financial development of the business operations.
Operating result (IFRS) Net result for the period excluding income tax and net financial items (finance costs). Used in combination with below measures to determine the profitability
of the Group.
Operational EBIT Operating result (IFRS) excluding items affecting comparability (IAC) and fair valuations and non-operational items (FV) of
the line-by-line consolidated entities and Stora Enso’s share of operating result excluding IAC and FV of its associated
companies.
The Group’s key non-IFRS performance metric, which is used to
evaluate the performance of operating segments and, in combination
with below ratios, to steer allocation of resources to them.
Operational EBITDA Operating result (IFRS) excluding silviculture costs and damage to forests, fixed asset depreciation and impairment, IACs
and FV. The definition includes the respective items of subsidiaries, joint arrangements and associated companies.
Used by management to analyse the business and, from time-to-time,
for short term and long-term target setting.
Operational return on capital employed,
operational ROCE, LTM3 (%)
Operational EBIT3 x 100
Capital employed1
Used for long-term Group financial targets setting.
Operational return on operating capital,
operational ROOC, LTM3 (%)
Operational EBIT3 x 100
Operating capital 1
Used for long-term divisional financial targets setting.
Return on equity, ROE, LTM3 (%) Net result for the period x 100
Total equity1
A measure of the profitability in relation to equity.
Net debt Interest-bearing liabilities – interest-bearing assets, marked with “I” in the statement of financial position. Used for long-term Group financial targets setting.
Net debt/equity ratio Net debt
Equity2
Used for long-term Group financial targets setting.
Net debt/last 12 months’ operational
EBITDA ratio
Net debt
LTM operational EBITDA
Used for long-term Group financial targets setting.
Earnings per share (EPS) excluding FV Net result for the period excluding fair valuations and non-operational items after tax divided by the weighted average
number of shares
Stora Enso's dividend policy is to distribute 50% of earnings per share
(EPS) excluding fair valuation over the cycle.
Operating capital and capital employed Operating capital is comprised of items marked with “O” in the statement of financial position. Capital employed = Operating
capital – Net tax liabilities. Net tax liabilities are marked with "T" in the statement of financial position.
Used for long-term Group financial targets setting.
Items affecting comparability (IAC) The most common IAC are significant capital gains and losses, impairments or impairment reversals, disposal gains and losses
relating to Group companies, provisions for planned restructurings, environmental provisions, changes in depreciation due to
restructuring and penalties. Items affecting comparability are normally disclosed individually if they exceed one cent per share.
Represent certain significant items, identified by the management,
considered not indicative of the operating business performance due to
their nature and/or frequency.
Fair valuations and non-operational
items (FV)
Fair valuations and non-operational items include non-cash income and expenses related to CO2 emission rights and
liabilities, non-operational fair valuation changes of biological assets, adjustments for differences between fair value and
acquisition cost of forest assets upon disposal and the Group’s share of income tax and net financial items of associated
companies. Non-operational fair value changes of biological assets reflect changes made to valuation assumptions and
parameters. The adjustments for differences between fair value and acquisition cost of forest assets upon disposal are a
result of the fact that the cumulative non-operational fair valuation changes of disposed forest assets were included in
previous periods in IFRS operating result (biological assets) and other comprehensive income (forest land) and are
included in operational EBIT only at the disposal date (for non-strategic forest assets disposals).
Represent adjustments for certain items considered by the management
less relevant for understanding operating business performance. These
adjustments result in differences in the recognition and measurement
principles applicable under IFRS.
Operational fair value change of
biological assets
Operational fair value changes of biological assets contain all other fair value changes (see above about non-operational fair value
changes of biological assets), mainly due to inflation and differences in actual harvesting levels compared to the harvesting plan.
The long-term value change of the growing forests is an important
component of the forestry business profitability.
Cash flow from operations (non-IFRS)
and Cash flow after investing activities
(non-IFRS)
Cash flow from operations (non-IFRS) is equal to Net cash provided by operating activities (IFRS) before cash flows related
to financial items and income taxes. Cash flow after investing activities (non-IFRS) is equal to Cash flow from operations
(non-IFRS) minus cash spent on intangible assets, property, plant and equipment, and biological assets and acquisitions of
associated companies.
These are measures of cash generation, working capital efficiency and
capital expenditure outflows.
Capital expenditure Capital expenditure on fixed assets includes investments in and acquisitions of tangible and intangible assets as well as
internally generated assets and capitalised borrowing costs, net of any related subsidies. Capital expenditure on leased
assets includes new capitalised leasing contracts. Capital expenditure on biological assets consists of acquisitions of
biological assets and capitalisation of costs directly linked to growing trees in plantation forests. The cash flow impact of
capital expenditure is presented in cash flow from investing activities, excluding lease capex, where the cash flow impact is
based on paid lease liabilities and presented in cash flow from financing and operating activities.
A measure of the operating business investments capitalised as tangible
and intangibles assets.
Fixed costs Maintenance, personnel and other administration type of costs, excluding IAC and FV. A measure of the costs that are less variable in nature.
Alternative performance measures Definition Purpose
1 Average for the last five quarter ends 2 Attributable to the owners of the Parent 3 Last 12 months prior to the end of reporting period
26 132Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 133 =====
Changes in the calculation of operational ROCE and ROOC
Presenting return measures based on the last 12 months is an effective way to analyse the most
recent financial data on an annualised basis and is considered more suitable for tracking the
development of long-term targets.
From Q1/2023 onwards, Stora Enso presents the operational return on capital employed
(operational ROCE) based on the last 12 months prior to the end of the reporting period. This is
calculated by dividing the operational EBIT of the last 12 months with the average capital
employed. The average capital employed for the last 12 months is determined as the average of
the published capital employed of the last five quarter-ends.
Similarly, the return on operating capital (operational ROOC) for the divisions and the return
on equity (ROE) for the Group will be based on the last 12 months prior to the end of the
reporting period.
The presentation of operational ROCE, operational ROOC and ROE based on quarter or
year-to-date figures has been discontinued.
Reconciliation of key figures
EUR million 2023 2022 2021
Operational EBIT 342 1,891 1,528
Capital employed, average 14,230 13,795 12,243
Operational ROCE 2.4% 13.7 % 12.5 %
Operational EBIT excl. Forest division 89 1,687 1,262
Capital employed excl. Forest division, average 8,490 8,276 7,120
Operational ROCE excl. Forest division 1.0% 20.4% 17.7%
Net result for the period -431 1,536 1,268
Total equity, average 11,413 11,532 9,730
Return on equity (ROE) -3.8% 13.3% 13,0 %
Net debt 3,167 1,853 2,309
Operational EBITDA 989 2,529 2,184
Net debt to operational EBITDA ratio 3.2 0.7 1.1
Earnings per share (EPS) excl. fair valuation
EUR million 2023 2022 2021
Earnings per share (EPS) excl. FV EUR
Net result for the period attributable to owners
of the Parent -357 1,550 1,266
FV on net result for the period attributable to
owners of the Parent 218 324 330
Net result for the period attributable to
owners of the parent excl. FV -575 1,225 936
Average number of shares 789 789 789
Earnings per share (EPS) excl. FV EUR -0.73 1.55 1.19
Reconciliation of operational profitability
EUR million 2023 2022 2021
Operational EBITDA 989 2,529 2,184
Depreciation and silviculture costs of
associated companies -11 -11 -11
Silviculture costs1 -102 -100 -89
Depreciation and impairment excl. IAC -534 -527 -555
Operational EBIT 342 1,891 1,528
Fair valuations and non-operational items 231 363 394
Items affecting comparability (IAC) -895 -245 -354
Operating result (IFRS) -322 2,009 1,568
1 Including damages to forests
Segment share of operational EBIT, IAC, fair valuations and non-operational items and
operating profit/loss
Operational EBIT
IAC, fair valuations and
non-operational items Operating profit/loss
EUR million 2023 2022 2023 2022 2023 2022
Packaging Materials -57 655 -585 -2 -642 653
Packaging Solutions 43 16 -27 -98 17 -81
Biomaterials 118 687 -199 -19 -81 668
Wood Products -64 309 -22 -56 -86 253
Forest 253 204 208 319 461 523
Other 1 63 -42 -27 -41 36
Total 342 1,891 -664 118 -322 2,009
Net financial items -173 -151
Profit before Tax -495 1,858
Income tax expense 64 -322
Net Profit -431 1,536
27 133Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 134 =====
Items affecting comparability in 2023
EUR million 2023
Impairments - Packaging Materials -468
Impairments - Biomaterials -103
Impairments - Wood Products -16
Impairments - Segment Other -14
Impairment reversal - Forest 5
Disposal of Nymölla -30
Disposal of Hylte -45
Disposal of Maxau 52
Disposal of biocomposite business -15
Disposal of Wood Products DIY unit -4
Disposals related transaction costs -6
Acquisition of De Jong Packaging Group -16
Closure of Sunila pulp mill -116
Closure of De Hoop -79
Restructuring - Anjala -26
Restructuring - Packaging Materials -21
Restructuring - Packaging Solutions -10
Restructuring - Wood Products -5
Restructuring - Biomaterials -4
Restructuring - Group functions -15
Restructuring (2021 announced) - Kvarnsveden 29
Restructuring (2021 announced) - Veitsiluoto 9
Updates in environmental provisions -5
Other items -2
Total -895
Items affecting comparability in 2022
EUR million 2022
Disposal of Russian operations - Packaging Solutions -93
Disposal of Russian operations - Wood Products -56
Disposal of Russian operations - Forest -43
Disposal of Russian operations - other divisions -6
Impairments, transaction costs and other items related to the upcoming paper site
disposals (Nymölla, Hylte and Maxau) -28
Disposal of Kvarnsveden site 8
Impairments - Forest -5
Impairments - Segment Other -2
Restructuring (2021 announced) - Kvarnsveden 13
Restructuring (2021 announced) - Veitsiluoto -10
Restructuring - Packaging Materials -4
Restructuring - Packaging Solutions -5
Restructuring - Biomaterials -4
Updates in environmental provisions (mainly closed Finnish sites -13
Other items -3
Total -245
Fair valuations and non-operational items in 2023 and 2022
EUR million 2023 2022
Non-operational fair valuation changes of biological assets, Packaging Materials 12 7
Non-operational fair valuation changes of biological assets, Biomaterials 25 -17
Non-operational fair valuation changes of biological assets, Forest 156 201
Non-cash income and expenses related to CO2 emission rights and liabilities,
Other -13 6
Non-operational items of associated companies, Forest 56 169
Adjustments for differences between fair value and acquisition cost of forest
assets upon disposal, Forest -5 -3
Total 231 363
Calculation of net debt
EUR million 31 Dec 2023 31 Dec 2022
Listed securities 9 8
Non-current interest-bearing receivables 76 120
Current interest-bearing receivables 64 77
Cash and cash equivalents 2,464 1,917
Interest-bearing assets 2,613 2,122
Non-current interest-bearing liabilities 4,446 2,792
Current portion of non-current debt 286 667
Current interest-bearing liabilities 476 513
Interest-bearing liabilities held-for-sale 571 4
Interest-bearing liabilities 5,780 3,976
Net debt 3,167 1,853
28 134Stora Enso 2023: Financials
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Financials
Report of the Board of Directors 109
Introduction 109
Markets and deliveries 109
Results 110
Investments 115
Changes in Group structure 115
Innovation, R&D 115
Non-financial information 115
EU taxonomy 118
Risk management 123
TCFD 127
TNFD 128
Legal proceedings 128
Changes in management 128
Share capital 129
Outlook and sensitivity analysis 130
AGM 130
Dividend 130
Alternative performance measures 132
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 135 =====
Consolidated financial statements
Consolidated income statement
Year ended 31 December
EUR million Note 2023 2022
Sales 2.1 9,396 11,680
Other operating income 2.2 378 326
Changes in inventories of finished goods and work in progress -209 258
Materials and services -6,133 -6,979
Freight and sales commissions -883 -1,148
Personnel expenses 3.1 -1,275 -1,315
Other operating expenses 2.2 -638 -594
Share of results of associated companies 4.3 136 221
Change in net value of biological assets 4.2 209 195
Depreciation, amortisation and impairment charges 2.3 -1,303 -635
Operating result 2.1 -322 2,009
Financial income 2.4 91 40
Financial expense 2.4 -264 -191
Result before Tax -495 1,858
Income tax 2.5 64 -322
Net result for the year -431 1,536
Attributable to
Owners of the Parent 5.5 -357 1,550
Non-controlling Interests 5.7 -74 -13
Net result for the year -431 1,536
Earnings per share
Basic earnings per share, EUR 2.6 -0.45 1.97
Diluted earnings per share, EUR 2.6 -0.45 1.96
Consolidated statement of comprehensive income
Year ended 31 December
EUR million Note 2023 2022
Net result for the year -431 1,536
Other Comprehensive Income (OCI)
Items that will not be reclassified to profit and loss
Equity instruments at fair value through OCI 4.4 -645 519
Actuarial gains and losses on defined benefit plans 3.3 -52 147
Revaluation of forest land 4.2 -49 259
Share of OCI of associated companies 4.3 -23 58
Income tax relating to items that will not be reclassified 2.5 22 -77
-748 906
Items that may be reclassified subsequently to profit and loss
Cumulative translation adjustment (CTA) 5.6 56 -197
Net investment hedges and loans 5.6 -15 -27
Cash flow hedges and cost of hedging 5.4 -1 52
Share of OCI of non-controlling interests (NCI) 5.7 5 0
Income tax relating to items that may be reclassified 2.5 -1 -6
44 -177
Total comprehensive income -1,135 2,265
Attributable to
Owners of the Parent -1,066 2,278
Non-controlling interests 5.7 -69 -13
Total comprehensive income -1,135 2,265
The accompanying Notes are an integral part of these consolidated financial statements.
29 135Stora Enso 2023: Financials
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Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 136 =====
Consolidated statement of financial position
Assets
Goodwill O 4.1 505 244
Other intangible assets O 4.1 283 121
Property, plant and equipment O 4.1 4,544 4,860
Right-of-use assets O 4.1 323 418
5,656 5,643
Forest assets O 4.2 6,921 6,846
Biological assets O 4.2 4,652 4,531
Forest land O 4.2 2,269 2,315
Emission rights O 4.5 108 123
Investments in associated companies O 4.3 926 832
Listed securities I 4.4 9 8
Unlisted securities O 4.4 810 1,437
Non-current interest-bearing receivables I 5.3 76 120
Deferred tax assets T 2.5 134 74
Other non-current assets O 4.5 58 38
Non-current assets 14,699 15,120
Inventories O 4.6 1,466 1,810
Tax receivables T 31 11
Operative receivables O 4.7 1,191 1,473
Interest-bearing receivables I 5.3 64 77
Cash and cash equivalents I 2,464 1,917
Current assets 5,216 5,287
Assets held for sale 6.1 839 514
Total assets 20,754 20,922
As at 31 December
EUR million Note 2023 2022
Equity and liabilities
Share capital 5.5 1,342 1,342
Share premium 77 77
Invested non-restricted equity fund 633 633
Fair value reserve 2,293 3,002
Cumulative translation adjustment 5.6 -375 -415
Retained earnings 7,015 7,893
Equity attributable to owners of the Parent 10,985 12,532
Non-controlling Interests 5.7 -97 -30
Total equity 10,889 12,502
Post-employment benefit obligations O 3.3 217 159
Provisions O 4.9 83 81
Deferred tax liabilities T 2.5 1,433 1,443
Non-current interest-bearing liabilities I 5.3 4,446 2,792
Non-current operative liabilities O 4.8 11 11
Non-current liabilities 6,190 4,486
Current portion of non-current debt I 5.3 286 667
Interest-bearing liabilities I 5.3 476 513
Provisions O 4.9 85 43
Operative liabilities O 4.8 2,112 2,410
Tax liabilities T 2.5 45 64
Current liabilities 3,004 3,697
Liabilities related to assets held for sale 6.1 671 237
Total liabilities 9,865 8,419
Total equity and liabilities 20,754 20,922
Items designated "O" comprise Operating Capital, items designated "I" comprise Interest-bearing Net Liabilities, items designated "T"
comprise Net Tax Liabilities.
The accompanying Notes are an integral part of these consolidated financial statements.
As at 31 December
EUR million Note 2023 2022
30 136Stora Enso 2023: Financials
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Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 137 =====
Consolidated cash flow statement
Cash flow from operating activities
Net result for the year -431 1,536
Adjustments and reversal of non-cash items:
Taxes 2.5 -64 322
Depreciation and impairment charges 2.3 1,303 635
Change in value of biological assets 4.2 -209 -195
Change in fair value of share awards -2 7
Share of results of associated companies 4.3 -136 -221
CTA and profits and losses on sale of fixed assets and
investments1 2.2 -20 52
Net financial items 2.4 173 151
Other adjustments 16 22
Dividends received from associated companies 4.3 25 25
Interest received 64 13
Interest paid -149 -119
Other financial items, net -31 -7
Income taxes paid 2.5 -85 -178
Change in net working capital, net of businesses acquired or sold 300 -461
Net cash provided by operating activities 752 1,582
Cash flow from investing activities
Acquisition of subsidiary shares and business operations, net of
acquired cash 6.1 -584 0
Acquisition of shares in associated companies 4.3 -5 -7
Acquisition of unlisted securities 4.4 -18 -11
Cash flow on disposal of subsidiary shares and business
operations, net of disposed cash 6.1 237 -77
Cash flow on disposal of shares in associated companies 4.3 0 10
Cash flow on disposal of intangible assets and property, plant and
equipment 4.1 47 17
Capital expenditure 2.1, 4.1 -897 -603
Investment in biological assets 4.2 -92 -101
Proceeds from/payment of non-current receivables, net -1 31
Net cash used in investing activities -1,313 -742
Year ended 31 December
EUR million Note 2023 2022
Cash flow from financing activities
Proceeds from issue of new long-term debt 5.3 2,006 366
Repayment of long-term debt and lease liabilities 5.3 -716 -390
Change in short-term interest-bearing liabilities 5.3 272 9
Dividends paid -472 -434
Purchase of own shares -6 -1
Net cash used in financing activities 1,084 -450
Net change in cash and cash equivalents 523 389
Translation adjustment 24 48
Net cash and cash equivalents at beginning of year 1,917 1,480
Net cash and cash equivalents at year end 2,464 1,917
Cash and cash equivalents at year end2 2,464 1,917
Bank overdrafts at year end 0 0
Net cash and cash equivalents at year end 2,464 1,917
1 CTA = Cumulative Translation Adjustment
2 Cash and cash equivalents comprise cash-in-hand, deposits held at call with banks and other liquid investments with original maturity
of less than three months. Bank overdrafts are included in current liabilities.
The accompanying Notes are an integral part of these consolidated financial statements.
Year ended 31 December
EUR million Note 2023 2022
31 137Stora Enso 2023: Financials
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Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 138 =====
Consolidated cash flow statement
Supplemental cash flow information
Year ended 31 December
EUR million Note 2023 2022
Change in net working capital consists of:
Change in inventories 328 -454
Change in interest-free receivables:
Current 347 -165
Non-current -19 -1
Change in interest-free liabilities:
Current -355 163
Non-current -2 -3
Change in net working capital, net of
businesses acquired or sold 300 -461
Cash and cash equivalents consist of:
Cash on hand and at banks 825 1,272
Cash equivalents 1,639 646
Cash and cash equivalents 2,464 1,917
Non-cash investing activities
Total capital expenditure excluding right-of-use assets 946 656
Amounts paid -897 -603
Non-cash part of additions to intangible assets
and property, plant and equipment 49 53
Cash flow on acquisitions of subsidiaries and business
operations
Purchase consideration on acquisitions, cash part 6.1 -612 0
Cash and cash equivalents in acquired companies, net of bank
overdraft 6.1 27 0
Net cash flow on acquisition -584 0
Cash flow on disposals of subsidiaries and business operations
Cash part of the consideration 6.1 266 13
Cash and cash equivalents in divested companies 6.1 -29 -90
Net cash flow from disposal 237 -77
The accompanying Notes are an integral part of these consolidated financial statements.
32 138Stora Enso 2023: Financials
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Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 139 =====
Statement of changes in equity
Fair value reserve
EUR million
Share
capital
Share
premium
and reserve
fund
Invested
non-
restricted
equity fund
Treasury
shares
Equity
instruments
through
OCI
Cash flow
hedges
Revaluation
reserve
OCI of
associated
companies
CTA and net
investment
hedges and
loans
Retained
earnings
Attributable
to owners
of the
parent
Non-
controlling
interests Total
Balance at 1 January 2022 1,342 77 633 — 778 -4 1,373 29 -195 6,650 10,683 -16 10,666
Net result for the year — — — — — — — — — 1,550 1,550 -13 1,536
OCI before tax — — — — 519 52 259 58 -224 147 812 — 812
Income tax relating to OCI — — — — 1 -9 -53 — 3 -25 -83 — -83
Total Comprehensive Income — — — — 520 43 206 58 -220 1,672 2,278 -13 2,265
Dividend — — — — — — — — — -434 -434 — -434
Acquisitions and disposals — — — — — — — — — — — — —
Purchase of treasury shares — — — -1 — — — — — — -1 — -1
Share-based payments — — — 1 — — — — — 5 6 — 6
Balance at 31 December 2022 1,342 77 633 — 1,298 39 1,579 87 -415 7,893 12,532 -30 12,502
Net result for the year — — — — — — — — — -357 -357 -74 -431
OCI before tax — — — — -645 -1 -49 -23 41 -52 -730 5 -726
Income tax relating to OCI — — — — — — 10 — — 12 22 — 22
Total Comprehensive Income — — — — -645 -1 -39 -23 41 -397 -1,066 -69 -1,135
Dividend — — — — — — — — — -473 -473 — -473
Acquisitions and disposals — — — — — — — — — — — 2 2
Purchase of treasury shares — — — -6 — — — — — — -6 — -6
Share-based payments — — — 6 — — — — — -8 -2 — -2
Balance at 31 December 2023 1,342 77 633 — 653 38 1,540 63 -375 7,015 10,985 -97 10,889
CTA = Cumulative Translation Adjustment, NCI = Non-controlling Interests, OCI = Other Comprehensive Income
33 139Stora Enso 2023: Financials
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Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 140 =====
Notes to the consolidated financial statements
1 Basis for reporting
1.1 Accounting principles
Principal activities
Stora Enso Oyj (“the Company”) is a Finnish
public limited liability company organised
under the laws of the Republic of Finland
and with its registered address at
Salmisaarenaukio 2, 00180 Helsinki. Its
shares are currently listed on Nasdaq
Helsinki and Stockholm. The operations of
Stora Enso Oyj and its subsidiaries (together
“Stora Enso” or “the Group”) are organised
into the following reportable segments:
Packaging Materials, Packaging Solutions,
Biomaterials, Wood Products, Forest and
segment Other. The Group’s main market is
Europe.
The Financial Statements were
authorised for issue by the Board of
Directors on 31 January 2024.
Basis of preparation
The consolidated financial statements of
Stora Enso have been prepared in
accordance with IFRS Accounting Standards
as adopted by the European Union.
The consolidated financial statements of
Stora Enso have been prepared according to
the historical cost convention, except as
disclosed in the accounting policies. The
detailed accounting principles are explained
in the related notes with a few exceptions
where the accounting principles are
presented in this note. The consolidated
financial statements are presented in euros,
which is the parent company’s functional
currency.
All figures in these consolidated financial
statements have been rounded to the
nearest million, unless otherwise stated.
Therefore, figures in this report may not add
up precisely to the totals presented and may
vary from previously published financial
information.
New and amended standards and
interpretations adopted in 2023
The Group has applied the following new
and amended standards and interpretations
which are effective from 1 January 2023:
• Amendments to IAS 1 Presentation of
Financial Statements: Disclosure of
Accounting policies. The amendment
requires entities to disclose their material
accounting policy information rather than
their significant accounting policies.
The effective date is 1 January 2023.
The amendment had a minor impact on
the disclosures.
• Amendments to IAS 8 Accounting
policies, Changes in Accounting
Estimates and Errors: Definition of
Accounting Estimates. The amendments
introduce the definition of accounting
estimates and includes other
amendments to IAS 8 to help entities
distinguish changes in accounting
estimates from changes in accounting
policies. The effective date is 1 January
2023. The amendment did not have
a significant impact on the Group.
• Amendments to IAS 12 Income Taxes:
Deferred Tax related to Assets and
Liabilities arising from a Single
Transaction. The amendments clarify how
entities account for deferred tax on
transactions such as leases and
decommissioning obligations. The main
change is related to the initial recognition
exemption and is in accordance with the
amendment; the initial recognition
exemption does not apply to transactions
in which equal amounts of deductible and
taxable temporary differences arise on
initial recognition. The effective date is
1 January 2023. The amendment did not
have a significant impact on the Group.
• Amendment to IAS 12 Income taxes:
Pillar Two rules. The amendment includes
1) a mandatory temporary exception to
IAS 12 meaning that an entity does not
recognise or disclose information about
deferred tax assets and liabilities related
to Pillar Two, and a requirement to
disclose that the exception has been
applied; 2) a requirement to disclose
separately the current tax expense
(income) related to Pillar Two; and 3) for
periods in which Pillar Two legislation is
enacted or substantively enacted, but not
yet in effect, a requirement to disclose the
known or reasonably estimable
information about the entity’s exposure to
Pillar Two income taxes. The effective
date is 1 January 2023. The Group has
applied the exception and provides an
estimate of the impact of Pillar Two in
note 2.5 Income taxes.
• Other standards, standard amendments
and interpretations did not have any
significant impact on the Group's
consolidated financial statements or
disclosures.
Changes in segment reporting
Due to the divestments and reorganisation
of retained Paper division operations,
Stora Enso's segment reporting was
changed as of 1 January 2023. The Paper
division was discontinued and not reported
as a separate segment from 1 January 2023
onwards. The paper sites divested in 2023
(Maxau, Nymölla and Hylte) together with all
previously sold and closed sites are reported
as part of the segment Other. The retained
sites Langerbrugge and Anjala are reported
as part of the Packaging Materials division.
As of 1 January 2023, emerging business
related units in the Packaging Solutions
division were moved to the segment Other.
These units include Formed Fiber, Circular
Solutions (biocomposites) and Selfly Store.
The comparative figures have been
restated accordingly. As of 1 January 2023,
the reportable segments are Packaging
Materials, Packaging Solutions, Biomaterials,
Wood Products, Forest, and segment Other.
Consolidation principles
The consolidated financial statements
include the parent company, Stora Enso Oyj,
and all companies controlled by the Group.
Control is defined as when the Group:
• has power over the investee,
• is exposed, or has rights, to variable
returns from its involvement with the
investee; and
• has the ability to use its power to affect its
returns.
If facts and circumstances indicate that there
are changes to the three elements of control
listed above the Group reassess whether or
not it controls an investee. Acquired
companies are accounted for under the
acquisition method whereby they are
included in the consolidated financial
statements from the date the control over the
subsidiary is obtained, whereas, conversely,
disposed companies are included up to the
date when the control is lost. The
subsidiaries and joint operations are listed in
note 6.2 Group companies.
All intercompany transactions,
receivables, liabilities and unrealised profits,
34 140Stora Enso 2023: Financials
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Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 141 =====
as well as intragroup profit distributions,
are eliminated. Accounting policies for
subsidiaries, joint arrangements and
associated companies are adjusted where
necessary to ensure consistency with the
policies adopted by Stora Enso.
Associated companies over which Stora
Enso exercises significant influence are
accounted for by using the equity method.
These companies are investments in which
the Group has significant influence, but
which it does not control. Significant
influence means the power to participate in
the financial and operating policy decisions
of the company without control or joint
control over those policies. More detailed
information is presented in note 4.3
Associates.
Joint control is the contractually agreed
sharing of control of the joint arrangement,
which exists only when decisions on relevant
activities require the unanimous consent of
the parties sharing control. Joint operations
are joint arrangements, whereby the partners
who have joint control of the arrangement
have rights to the assets, and obligations for
the liabilities, relating to the arrangement.
Joint ventures are joint arrangements,
whereby the partners who have joint control
of the arrangement have rights to the net
assets of the joint arrangement.
The Group has two joint operations,
Veracel and Montes del Plata. In both
companies, Stora Enso’s ownership is 50%.
The arrangements are based on
shareholders’ agreements, which give
Stora Enso rights to a share of returns and
make the Group indirectly liable for the
liabilities, as its ability to pay for the pulp is
used to finance debts. In relation to its
interest in joint operations, the Group
recognises its share of assets, liabilities,
revenues, expenses and cash flows of
the joint operation. The share is determined
based on rights to the assets and obligations
for the liabilities of each joint operator.
• Veracel is a jointly owned company of
Stora Enso and Suzano located in Brazil.
The pulp mill produces 1.2 million tonnes
of bleached eucalyptus hard wood pulp
per year and both owners are entitled to
half of the mill’s output. The eucalyptus is
sourced mostly from the company’s own
forest plantations. The mill commenced
production in 2005.
• Montes del Plata is a jointly owned
company of Stora Enso and Arauco
located in Uruguay. The Montes del Plata
Pulp Mill’s annual capacity is 1.4 million
tonnes of bleached eucalyptus hard wood
pulp and Stora Enso’s part, 0.7 million
tonnes, is sold entirely as market pulp.
The eucalyptus is sourced mostly from
the company’s own forest plantations.
The mill commenced production in 2014.
Revenue recognition
Sales comprise products, raw materials
and services less indirect sales tax and
discounts, and are adjusted for cash flow
hedging result on sales in foreign currencies.
Sales are recognised after Stora Enso has
transferred the control of goods and services
to a customer and the Group retains neither
a continuing right to dispose of the goods,
nor effective control of those goods; usually,
this means that sales are recorded upon
the delivery of goods to customers in
accordance with the agreed terms of
delivery.
Stora Enso’s terms of delivery are based
on Incoterms 2020, which are the official
rules for the interpretation of trade terms as
issued by the International Chamber of
Commerce (ICC). The main categories of
the terms covering Group sales are:
• “D” terms, under which the group is
obliged to deliver the goods to the buyer
at the agreed place in the manner
specified in the chosen rule, in which case
the point of sale is the moment of delivery
to the buyer.
• “C” terms, whereby the Group arranges
and pays for the external carriage and
certain other costs, though the Group
ceases to be responsible for the goods
once they have been handed over to
the carrier in accordance with the relevant
term. The point of sale is thus the handing
over of the goods to the carrier contracted
by the seller for the carriage to the agreed
destination.
• “F” terms, being where the buyer
arranges and pays for the carriage, thus
the point of sale is the handing over of
the goods to the carrier contracted by
the buyer at the agreed point.
Where local rules may result in invoices
being raised in advance of the above,
the effect of this revenue advancement is
quantified, and an adjustment is made
accordingly. Stora Enso’s sales mainly
comprise sales of products and the revenue
is typically recognised at a point in time when
Stora Enso transfers control of these
products to a customer. Revenues from
services are recognised over time once the
service has been performed. More detailed
information regarding Stora Enso's principal
activities from which the Group generates its
revenue and disaggregation of revenue is
presented in note 2.1 Segment information.
Foreign currency transactions
Transactions in foreign currencies are
recorded at the rate of exchange prevailing
at the transaction date, but at the end of the
month foreign-currency-denominated
receivables and liabilities are translated
using the month-end exchange rate. Foreign
exchange differences for operating items are
presented in the appropriate income
statement line in the operating profit, and, for
financial assets and liabilities, they are
presented in the financial items in the
consolidated income statement, except when
deferred in equity as qualifying cash flow
hedges, net investment hedges or net
investment loans. Translation differences on
non-monetary financial assets, such as
equities classified at fair value through other
comprehensive income (FVTOCI), are
included in equity.
Foreign currency translations
The income statements of Group companies
with functional and presentational currencies
other than the euro are translated into the
Group reporting currency using the average
exchange rates of the year, whereas the
statements of the financial position of these
companies are translated using the
exchange rates at the reporting date. The
Group is exposed to currency risks arising
from exchange rate fluctuations on the value
of its net investment in non-euro foreign
entities. Exchange differences arising from
the retranslation of net investments in foreign
entities that are non-euro foreign
subsidiaries, joint operations or associated
companies and of financial instruments that
are designated to hedge such investments,
are recorded directly in equity as cumulative
translation adjustment (CTA). See note 5.6
Cumulative translation adjustment and equity
hedging for more details.
Future standard changes
endorsed by the EU but not yet
effective in 2023
• Amendments to IAS 1 Presentation of
Financial Statements: Information about
long-term debt with covenants. IAS 1
requires a company to classify debt as
non-current only if the company can avoid
settling the debt in the 12 months after the
reporting date. However, a company’s
ability to do so is often subject to
complying with covenants. The
amendments specify that covenants to be
complied with after the reporting date do
not affect the classification of debt as
current or non-current at the reporting
date. Instead, the amendments require
a company to disclose information about
these covenants in the notes to the
financial statements. The effective date is
1 January 2024. The Group is evaluating
the impact of the amendments and
expects that the amendment does not
have significant impact.
35 141Stora Enso 2023: Financials
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Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 142 =====
• Amendments to IAS 1 Presentation of
Financial Statements: Classification of
liabilities as current or non-current.
The amendments clarify a criterion for
classifying a liability as non-current. The
amendments specify that an entity’s right
to defer settlement must exist at the end
of the reporting period; clarify that
classification is unaffected by
management’s intentions or expectations
about whether the entity will exercise its
right to defer settlement; clarify how
lending conditions affect classification;
and clarify requirements for classifying
liabilities an entity will or may settle by
issuing its own equity instruments.
The effective date is 1 January 2024.
The Group is evaluating the impact of
the amendment and expects that the
amendment does not have
significant impact.
• Amendments to IFRS 16 Leases: Lease
Liability in Sale and Leaseback.
Amendment requires a seller-lessee to
subsequently measure lease liabilities
arising from a leaseback in a way that it
does not recognise any amount of the
gain or loss that relates to the right of use
it retains. The new requirements do not
prevent a seller-lessee from recognising
in profit or loss any gain or loss relating to
the partial or full termination of a lease.
The effective date is 1 January 2024.
The Group expects that the amendment
does not have a significant impact.
• No other published standards, standard
amendments or interpretations which
would be expected to have any significant
impact on the Group’s consolidated
financial statements or disclosures.
Future standard changes not yet
effective and not yet endorsed
by the EU in 2023
• Amendments to IAS 7 Statement of Cash
Flows and IFRS 7 Financial Instruments:
Disclosures: Supplier Finance
Arrangements. The amendments require
entities to add disclosure requirements,
and ‘signposts’ within existing disclosure
requirements that ask entities to provide
qualitative and quantitative information
about supplier finance arrangements.
The effective date is 1 January 2024.
The Group is engaged in supply chain
financing and is evaluating the impact of
the amendment and expects that the
amendment will result in additional
disclosures in the notes of the
consolidated financial statements.
• Amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates:
Lack of Exchangeability. The amendment
contains guidance to specify when a
currency is exchangeable and how to
determine the exchange rate when it is
not. The effective date is 1 January 2025.
The Group expects that the amendment
does not have a significant impact.
• Other published standards, standard
amendments or interpretations are not
expected to have any significant impact
on the Group’s consolidated financial
statements or disclosures.
1.2 Critical accounting
estimates and judgements
The preparation of consolidated financial
statements in accordance with IFRS requires
management to make estimates, judgements
and assumptions that affect the reported
assets and liabilities, as well as the
disclosure of contingent assets and liabilities
at the reporting date and the reported
revenues and expenses during the period.
These estimates, judgments and
assumptions might have a significant impact
on the amounts recognised in the
consolidated financial statements. The
estimates are based on historical experience
and various other assumptions that are
believed to be reasonable and reflect
management's best estimates, though actual
result and timing could differ from these. The
estimates, judgements and assumptions are
reviewed regularly and updated if there are
changes in circumstances or as a result of
new information. The accounting items
presented below represent those matters
which include the most estimation
uncertainty and exercise of judgement.
Property, plant and
equipment, intangible assets
and right-of-use assets
The carrying amounts of property, plant and
equipment and intangible assets and right-of-
use assets are assessed at each reporting
date to determine whether there is any
indication that an asset may be impaired. If
an indicator of impairment exists, the asset's
recoverable amount is determined and
compared with its carrying amount. The
recoverable amount of an asset is estimated
as the higher of fair value less the cost of
disposal and the value in use, and an
impairment charge is recognised whenever
the carrying amount exceeds the recoverable
amount. The value in use is calculated using
a discounted cash flow method which is most
sensitive to the discount rate as well as the
expected future cash flows. The key
assumptions used in the impairment testing,
are explained further in note 2.3
Depreciation, amortisation and impairment
charges.
Management believes that the assigned
values and useful lives, as well as the
underlying assumptions, are reasonable,
though different assumptions and assigned
useful lives could have a significant impact
on the reported amounts. For material
intangible assets and property, plant and
equipment in an acquisition, an external
advisor makes a fair valuation of the
acquired intangible assets and property,
plant and equipment and assists in
determining their remaining useful life.
Goodwill
Goodwill is tested per cash generating unit
(CGU) or by a group of CGUs at least on an
annual basis and recoverable amount is
determined as the higher of fair value less
cost to sell and their value in use (discounted
cash flow method). Impairment is recognised
if the carrying amount exceeds the
recoverable amount. The discounted cash
flow method uses future projections of cash
flows from each of the reporting units in a
CGU or a group of CGUs and includes,
among other estimates, projections of future
product pricing, production levels, product
costs, market supply and demand, projected
capital expenditures and an assumption of
the weighted average cost of capital. The
discount rates used reflect the best estimate
of the weighted average cost of capital.
The Group has evaluated the most
sensitive estimates and assumptions, which,
when changed, could have a material impact
on the valuation of the assets including
goodwill and, therefore, could lead to an
impairment. These estimates and
assumptions are expected sales prices,
expected operating costs and the discount
rate. The key assumptions used in the
impairment testing are presented in note 2.3
Depreciation, amortisation and impairment
charges.
Leases
When assessing the lease term and if an
extension or renewal options are included or
not, the Group considers all relevant facts,
circumstances and incentives that might
have an impact on the assessment. Options
to extend or renew the lease are included in
the lease term only if it is reasonably certain
that Stora Enso will exercise the option. The
Group will do a reassessment, for example
upon changes in circumstances, receiving
new information or an occurrence of
a significant event that is within the control of
the lessee and might have an impact on the
assessment. See note 4.1 Intangible assets,
property, plant and equipment and right-of-
36 142Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 143 =====
use assets for more details about right-of-
use assets and note 5.3 Interest-bearing
assets and liabilities for more details about
lease liabilities.
Biological assets
The Group has biological assets in
subsidiaries, joint operations and associated
company. Biological assets, in the form of
standing trees, are measured at fair value
less the costs to sell. Fair value is
determined by using discounted cash flows
from continuous operations based on
sustainable forest management plans taking
into account the growth potential of one
cycle. These discounted cash flows require
estimates of growth, harvesting, sales price,
costs and discount rate. In determining
the fair value of biological assets, the
management needs to make estimates of
future price levels and trends for sales and
costs, and to undertake regular surveys of
the forest to establish the volumes of wood
available for harvesting and their current
growth rates.
See next chapter for estimates and
judgement applied in valuation of Nordic
forest assets and note 4.2 Forest assets for
more detailed information about Nordic and
plantation forest assets.
Nordic forest assets
The fair value of forest assets in the Nordics
is determined using a market approach,
which is based on the forest market
transactions in the areas where Stora Enso’s
forests are located. Market prices between
areas vary significantly and judgement is
applied to define relevant areas for market
transactions used in valuation. The valuation
of the forest assets is based on detailed
transaction data and price statistics as
provided by market data suppliers. Market
transaction data is adjusted to consider
characteristics and nature of Stora Enso's
forest assets and to exclude certain non-
forest assets and transactions considered as
outliers compared to other transactions. The
valuation takes into account where the forest
land is located, price levels and volume of
standing stock. The value of the forest
assets will be affected by changes in
transaction prices and by how the volume of
standing stock develops. Stora Enso is
applying weighted three-year average
market transaction prices and this is
considered to include a sufficient amount of
transactions and estimated to represent
market conditions at the reporting date.
The value of the forest assets is allocated
to biological assets and forest land.
Allocation of the combined fair value of forest
assets is based on the income approach
where separate present values of expected
net cash flows are calculated for both
biological assets and forest land. The
discount rate is determined as the rate at
which the valuation based on market
transaction prices matches the total forest
assets combined cash flows for biological
assets and forest land. The total net cash
flows for each of the components include
estimates in respect of future harvesting
volumes, sales price levels, and cost
development. See note 4.2 Forest assets for
more information.
Fair value of financial instruments
Where the fair value of financial assets and
liabilities cannot be derived directly from
publicly quoted market prices, other
valuation techniques, such as discounted
cash flow models, transaction multiples, the
Black and Scholes model and the Gordon
model, are applied. The key judgements
include future cash flows, credit risk, volatility
and changes in assumptions about these
factors which could affect the reported fair
value of the financial instruments.
Investments in debt and equity instruments
of unlisted entities, such as Pohjolan Voima
Oyj (PVO), represent a significant portion of
the Group’s assets and require management
judgement, as explained in more detail in
notes 4.4 Equity instruments and 5.1
Financial risk management.
Income taxes
Tax assets and liabilities are reviewed on
a regular basis and balances are adjusted
appropriately. The deferred tax assets,
whether arising from temporary differences
or from tax losses, are recognised only to the
extent that it is probable that future taxable
profits will be available against which the
assets can be utilised. Management
considers that adequate provision has been
made for future tax consequences based on
the current facts, circumstances and tax
laws. However, should any tax positions be
challenged and not prevail, different
outcomes could result and have a significant
impact on the amounts reported in the
consolidated financial statements. See note
2.5 Income taxes for more detailed
information.
Post-employment benefits
The determination of the Group pension
obligation and expense is subject to the
selection of certain assumptions used by
actuaries in calculating such amounts,
including, among others, the discount rate,
the annual rate of increase in future
compensation levels and estimated
lifespans. Amounts charged in the income
statement are determined by independent
actuaries; however, where actual results
differ from the initial estimates, together with
the effect of any change in assumptions or
other factors, these differences are
recognised directly in equity, as disclosed in
the statement of comprehensive income.
See note 3.3 Post-employment benefit
obligations for detailed information on the
assumptions used in the pension obligation
calculations.
Provisions
The Group has recognised provisions for
known environmental, restructuring and
other obligations, where legal or constructive
obligation exist as a result of past events.
The amounts recognised as provisions are
based on the management’s best estimate of
the costs required to settle the obligation.
Due to uncertainty regarding the timing and
amount of these costs, the actual costs might
differ significantly from the original estimate.
The carrying amounts of provisions are
reviewed regularly and adjusted when
needed to consider changes in cost
estimates, regulations, applied technologies
and conditions. See note 4.9 Provisions for
more detailed information.
37 143Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 144 =====
2 Financial performance
2.1 Segment information
Accounting principles
Stora Enso’s reportable segments are Packaging Materials, Packaging Solutions, Biomaterials, Wood
Products, Forest and the segment Other. Operating segments reflect the Group’s management structure and
the way financial information is regularly reviewed by Stora Enso’s President and CEO who is responsible for
allocating resources and assessing the performance of the operating segments. Costs, revenues, assets and
liabilities are allocated to operating segments on a consistent basis. Transactions between operating
segments are based on arm’s length terms, and they are eliminated on consolidation. The activities of
the reportable segments are:
Packaging Materials
The Packaging Materials division is a global leader and expert in circular packaging providing
premium packaging materials based on virgin and recycled fiber. Stora Enso helps customers
replace fossil-based materials with low-carbon, renewable and recyclable alternatives for their
food, beverage and transport packaging with a wide selection of base boards and barrier
coatings.
Packaging Solutions
The Packaging Solutions division is a packaging converter that provides premium fiber-based
packaging products and services used by leading brands across multiple market areas, including
retail, e-commerce, fresh produce, and industrial applications. The division also provides design
and sustainability services for customers to optimise material use, logistics and to reduce CO2
emissions.
Biomaterials
The Biomaterials division’s business opportunities are strongly driven by the need to replace
fossil-based and other non-renewable materials. Stora Enso uses all fractions of a tree to
develop new biobased solutions for various applications. The division’s long-term growth is
driven by new products and innovations, while pulp continues to be the foundation.
Wood Products
The Wood Products division is Europe’s largest sawn timber producer and a leading provider of
sustainable wood-based solutions for the global construction industry. Additionally, it offers
window and door components, and co-products such as pellets made from wood residuals.
Forest
The Forest division is responsible for wood sourcing for Stora Enso’s Nordic and Baltic
operations and B2B customers. It manages the Group’s forest assets in Sweden and a 41%
share of Tornator, whose forests are mainly located in Finland. The division’s operations are
based on sustainable forest management from planning and logistics to harvesting and forest
regeneration.
Segment Other
The segment Other includes the divested paper sites until the completion of the divestments, the
reporting of the emerging businesses (including Formed Fiber and Selfly Stores), as well as
Stora Enso’s shareholding in the energy company Pohjolan Voima (PVO), and the Group’s
shared services and administration.
Read more about the changes in segment reporting in 2023 in the note 1.1 Accounting
principles. The comparative figures for 2022 have been restated accordingly.
38 144Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 145 =====
Operating segments 2023
EUR million
Packaging
Materials
Packaging
Solutions Biomaterials Wood Products Forest Other Eliminations Group
External sales 4,362 1,066 1,363 1,453 989 162 0 9,396
Internal sales 195 11 223 127 1,501 801 -2,859 0
Sales total 4,557 1,077 1,587 1,580 2,490 964 -2,859 9,396
Product sales 9,317
Service sales 79
Sales total 9,396
Operating result -642 17 -81 -86 461 -41 49 -322
Net financial expense -173
Income taxes 64
Result for the period -431
Operative assets 3,562 1,223 2,772 855 7,906 1,189 -371 17,136
Tax receivables 166
Interest-bearing receivables 2,613
Assets held for sale 839
Total assets 20,754
Operative liabilities 1,059 195 321 238 549 505 -358 2,508
Tax liabilities 1,478
Interest-bearing liabilities 5,209
Liabilities related to assets held for sale 671
Total liabilities 9,865
Other items
Depreciations/impairments/impairment reversals -805 -74 -297 -67 -21 -38 0 -1,303
Capital expenditures 636 161 162 51 29 15 0 1,054
Operating capital1 3,243 1,028 2,451 617 7,358 684 -13 15,368
Average personnel 7,269 4,389 2,196 4,079 1,434 1,455 0 20,822
1 Including assets held for sale and related liabilities.
39 145Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 146 =====
Operating segments 2022
EUR million
Packaging
Materials
Packaging
Solutions Biomaterials Wood Products Forest Other Eliminations Group
External sales 5,257 704 1,798 2,058 848 1,014 0 11,680
Internal sales 239 23 382 137 1,671 1,136 -3,589 0
Sales total 5,496 727 2,180 2,195 2,519 2,150 -3,589 11,680
Product sales 11,521
Service sales 159
Sales total 11,680
Operating result 653 -81 668 253 523 36 -42 2,009
Net financial expense -151
Income taxes -322
Result for the period 1,536
Operative assets 4,792 351 3,095 998 7,481 1,924 -440 18,201
Tax receivables 85
Interest-bearing receivables 2,122
Assets held for sale 514
Total assets 20,922
Operative liabilities 1,265 146 299 280 518 574 -377 2,704
Tax liabilities 1,507
Interest-bearing liabilities 3,972
Liabilities related to assets held for sale 237
Total liabilities 8,419
Other items
Depreciations/impairments/impairment reversals -287 -62 -110 -59 -50 -67 0 -635
Capital expenditures 363 36 121 87 35 59 0 701
Operating capital1 3,527 205 2,796 718 6,963 1,660 -63 15,806
Average personnel 7,113 3,865 2,135 4,445 1,412 2,822 0 21,790
1 Including assets held for sale and related liabilities.
Comparative figures have been restated as described in the Group's release from 29 March 2023.
40 146Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 147 =====
Geographical information
External sales by
destination
Non-current assets by
country1
Capital expenditure by
country2
EUR million 2023 2022 2023 2022 2023 2022
Austria 347 450 134 128 15 16
Baltic States 271 377 66 74 9 12
Czech Republic 189 231 193 198 8 41
Finland 664 759 2,872 2,729 587 311
France 299 449 2 2 0 0
Germany 862 1,208 34 53 9 10
Italy 453 650 0 0 1 0
Netherlands 597 317 797 9 131 7
Poland 511 733 407 379 30 35
Sweden 1,111 1,071 7,127 6,837 174 173
UK 344 444 8 0 0 0
Other Europe 901 1,245 126 135 12 16
Total Europe 6,548 7,934 11,767 10,543 975 623
China (incl. Hong Kong) 991 1,125 43 1,044 15 25
Japan 242 417 0 0 0 0
Uruguay 33 31 1,543 1,580 35 31
USA 302 397 0 32 0 0
Other countries 1,279 1,776 316 282 29 22
Total 9,396 11,680 13,669 13,481 1,054 701
1 Non-current assets excluding assets held for sale, financial instruments and deferred tax assets.
2 Excluding biological asset capital expenditure
2.2 Other operating income and expense
Accounting principles
Research and development
Research costs are expensed as incurred in other operating expenses in the consolidated income statement.
Development costs are also expensed as incurred unless they meet the criteria to be recognised as
intangible assets in accordance with IAS 38, in which case they are capitalised as intangible assets and
amortised over their expected useful lives.
Government grants
Government grants relating to the purchase of property, plant and equipment are deducted from the carrying
value of the asset, while the net cost is capitalised. Other government grants are recognised as income on a
systematic basis over the periods necessary to match them with the related costs which they were intended
to compensate.
Green certificates
Stora Enso is part of the local green energy production system which entitles selected mills in Europe to
receive green certificates based on megawatt hours of green energy produced. Green certificates received
are recognised at grant date market value only in the balance sheet. As such, subsequent changes in market
prices do not have an impact on the income statement and the income is recognised only when certificates
are sold.
Other operating income and expense
EUR million 2023 2022
Other operating income
Emission rights allocated and disposal gains 145 177
Sale of green certificates 12 10
Gains on disposal of fixed assets 44 4
Gains on disposal of Group companies and business operations 52 18
Dividend and gain on sale of unlisted shares 1 1
Insurance compensation 8 10
CTA release 0 5
Government grants 40 16
Other1 76 85
Total 378 326
1 Including rent income, fair value changes for non-hedge accounted derivatives and other items. Derivatives are discussed in more detail
in note 5.4 Derivatives.
EUR million 2023 2022
Other operating expenses
Lease expenses 43 40
Credit losses, net of reversals 9 13
Losses on disposal of fixed assets 4 0
Losses on disposal of Group companies and business operations 19 26
CTA release 56 52
Provision changes in income statement 94 31
Other1 414 431
Total 638 594
1 Including expenses related to, among others, consultancy and other services, IT and telecommunications, properties and
administration, audit, training, travelling, insurance, penalties, and currency translation differences on operative payables.
Materials and services include 2023 2022
Emissions rights to be delivered 82 112
The Group has recorded an other operating income of EUR 145 (177) million related to emission
rights. Actual realised profits amounted to EUR 75 (59) million on the disposal of surplus rights.
Under Materials and Services an expense of EUR 82 (112) million has been booked related to
the cost of CO2 emissions from production. See note 4.5 Emission rights and other non-current
assets for more details related to emission rights. The income from the sale of green certificates
amounted to EUR 12 (10) million.
Lease expenses include expenses relating to short-term leases of EUR 12 (12) million, low-
value assets of EUR 26 (21) million and variable lease payments not included in the measurement
of lease liabilities of EUR 2 (2) million. Lease expenses also include service payments included in
lease contracts, which are not included in the measurement of lease liabilities.
In 2023, research and development expenses of EUR 98 (89) million were recorded.
41 147Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 148 =====
Auditor's fees and services
EUR million 2023 2022
Audit fees 4 4
Audit-related fees 0 0
Tax fees 0 0
Other fees 0 0
Total 5 4
Aggregate fees for professional services rendered to the Group principal auditor PwC amounted
to EUR 5 (4) million. Audit fees relate to the auditing of the annual financial statements or
ancillary services normally provided in connection with statutory and regulatory filings. Audit-
related fees are incurred for assurance and associated services that are reasonably related to
the performance of the audit or for the review of financial statements.
2.3 Depreciation, amortisation and impairment charges
Accounting principles
Depreciation, amortisation and impairment charges
Depreciation or amortisation of an asset begins when it is available for use in the location and condition
necessary for it to be operated in the manner intended by management. Depreciation or amortisation ceases
when the asset is derecognised or classified as held for sale. Depreciation or amortisation does not cease
when the asset becomes idle. Tangible and intangible assets are depreciated and amortised on a straight-line
basis during their useful lives. Useful lives are reviewed annually. If an asset is disposed and the asset’s book
value is higher than the disposal proceeds, the difference is recognised as an impairment in the period when
reliable estimate of disposal loss is available, at the latest when a binding sales contract is signed. Right-of-
use (ROU) assets are depreciated using the straight line method from the commencement date of the
contract to the earlier of the end of the lease term or the end of the useful life of the ROU assets.
The carrying amounts of intangible assets, property, plant and equipment and ROU assets are reviewed
at each reporting date to determine whether there is any indication of impairment, whereas goodwill is tested
annually. If any such indication exists, the recoverable amount is estimated as the higher of the fair value less
costs of disposal and the value in use, with an impairment loss being recognised whenever the carrying
amount exceeds the recoverable amount.
A previously recognised impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount, however, not to an extent higher than the carrying amount that would
have existed had no impairment loss been recognised in prior years. For goodwill, however, a recognised
impairment loss is not reversed.
Whilst intangible assets, property, plant and equipment and ROU assets are subject to impairment testing
at the cash generating unit (CGU) level, goodwill is subject to impairment testing at the CGU level for groups
of CGUs, which represents the lowest level within the Group at which goodwill is monitored for internal
management purposes.
Depreciation, amortisation and impairment charges
EUR million 2023 2022
Depreciation and amortisation
Intangible assets 41 24
Buildings and structures 76 81
Plant and equipment 349 371
Right-of-use assets 59 50
Other tangible assets 8 8
Total 533 533
Impairment
Goodwill 85 11
Intangible assets 24 1
Buildings and structures 134 25
Plant and equipment 494 75
Right-of-use assets 33 0
Other tangible assets 6 2
Total 776 114
Reversal of impairment
Plant and equipment -6 -7
Total -6 -7
Disposal gains/losses
Gain on sale of assets 0 -10
Loss on sale of assets 0 4
Total 0 -5
Depreciation, amortisation and impairment charges 1,303 635
Impairment testing
The recoverable amount for the cash generating units (CGUs) has been determined as
the higher of fair value less cost to sell and their value in use. Value in use is determined by
using cash flow projections from financial estimates approved by the Board of Directors and
management. The pre-tax discount rates are calculated for each CGU, taking into account the
business environment of the CGU and the tax and risk profile of the country in which the cash
flow is generated. The table in the goodwill impairment testing section below sets out the pre-tax
discount rates used for goodwill impairment testing, which are similar to those used in the
impairment testing of other intangible assets, property, plant and equipment, and ROU assets.
The following assumptions were used in calculating value in use for each CGU:
• Sales price estimates in accordance with internal and external specialist analysis;
• Cash flows and discount rates were prepared in nominal terms;
• Current cost structure to remain unchanged;
• For goodwill testing, a five-year future period was used, after which the perpetuity value was
determined using inflation based growth rates;
• For intangible assets, property, plant and equipment, and ROU assets testing period was
the remaining expected economic life of the assets.
42 148Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 149 =====
Property, plant and equipment, other intangible assets
and ROU assets impairments
The total impairment charges on property, plant and equipment, other intangible assets and
ROU assets in 2023 amounted to EUR 691 (103) million and resulted from business
restructuring, Group company disposals and predictions of a weaker outlook compared to
previous estimates.
In 2023, impairments were mainly related to Biomaterials and Packaging Materials divisions.
Biomaterials related impairments of EUR 146 million concerned Nordic Mills CGU and are
mainly related to Sunila due to the closure of pulp production site Finland and Uimaharju site
due to predictions of a weaker outlook compared to previous estimates. Packaging Materials
related impairments of EUR 490 million concerned mainly Containerboard Oulu CGU of
EUR 228 million due to predictions of a weaker outlook compared to previous estimates,
Consumer Board China CGU of EUR 202 million in connection to potential disposal transaction
and based on fair value less cost to sell, and CGU De Hoop of EUR 42 million due to the closure
of the site in the Netherlands.
In 2022, impairments were mainly related to Group company disposals in Russia and
disposals in the Paper division. Russia related impairments of EUR 75 million concerned Wood
Products Baltic and Russia CGU, Packaging Solutions Corrugated Nordics, and CEE CGU and
Forest operations CGU. Paper related impairments of EUR 22 million concerned News and
Office CGUs. Due to disposals, Wood Products Baltic and Russia CGU no longer exists as its
own CGU. Due to segment changes in 2023, News and Office CGUs, previously part of Paper,
are presented as part of the segment Other.
Goodwill impairments
In 2023, a goodwill impairment of EUR 28 million was recognised in Anjala Mill CGU and
EUR 13 million in De Hoop mill CGU mainly due to restructurings in the Packaging Materials
division. Additionally, a goodwill impairment of EUR 44 million was recognised in the
Biomaterials division's CGU Nordic Mills, due to predictions of a weaker outlook compared to
previous estimates.
Due to disposals in 2022 in the Paper division, a goodwill impairment of EUR 11 million was
recognised in News and Office CGUs. Due to segment changes in 2023, News and Office
CGUs, previously part of Paper, are presented as part of the segment Other.
The most material groups of CGUs containing goodwill
2023 2022
EUR million
Goodwill at
year end
Pre-tax
discount rate
Goodwill at
year end1
Pre-tax
discount rate
Packaging Solutions - Western Europe 277 9.3 % 0 —
Wood Products - Southern Europe 110 11.8 % 111 9.9 %
Biomaterials - Nordic Mills 0 10.1 % 45 8.2 %
Other CGUs 119 88
Total 505 244
1 Goodwill excluding assets held for sale
The calculation of value in use is highly sensitive to discount rates, sales prices and costs.
Sensitivity analysis are conducted to calculate the amounts by which the value assigned to the
key assumption must change in order for the unit’s recoverable amount to be equal to its
carrying amount for the CGUs for which a reasonably possible change in an assumption could
result in an impairment. In 2023, any reasonably possible change in key assumptions would not
cause carrying amount to exceed its recoverable amount.
Summary of impairments and impairment reversals per division
EUR million 2023 2022
Packaging Materials 530 0
Packaging Solutions 5 36
Biomaterials 190 0
Wood Products 20 10
Forest 1 31
Other 23 28
Total (impairment +) / (Impairment reversal -) 770 107
2.4 Net financial items
Accounting principles
Net financial items comprise net interest expenses, foreign exchange gains and losses and other financial
income and expenses mainly arising from interest-bearing assets and liabilities.
43 149Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 150 =====
Financial income and expense
EUR million 2023 2022
Net financial expense in the income statement
Financial income 91 40
Financial expense -264 -191
Total -173 -151
Represented by
Interest expense
Interest expense from borrowings measured at amortised cost -167 -96
Interest component of the effective hedges under cash flow hedge 9 -12
Interest expense on leases -23 -17
Interest capitalised 7 0
Interest income on loans and receivables measured at amortised cost 61 20
Net interest expense -113 -105
Foreign exchange gains and losses
Currency derivatives -12 8
Borrowings, cash equivalents, lease liabilities and other -10 -10
Net foreign exchange gains and losses -22 -1
Other financial income 6 2
Other financial expense
Financial fees -28 -8
Fair valuation losses 0 -4
Impairments of interest-bearing assets -11 -30
Net interest on net defined benefit liabilities -5 -3
Net other financial expense -38 -45
Total -173 -151
Gains and losses on derivative financial instruments are shown in note 5.4 Derivatives.
In 2023, the net interest expense increased mainly as a result of higher interest rates on
borrowings and higher amount of gross debt. The negative impact was partly offset by higher
interest income on loans and receivables.
The amount of interest costs capitalised during the year amounted to EUR 7 (EUR 0) million,
and were mainly related to the Oulu site conversion project in Finland. The average interest rate
used for capitalisation was 3.6% (-). Costs on long-term debt issues capitalised as part of non-
current debt amounted to EUR 9 (6) million in the statement of financial position. During the
year, EUR 2 (2) million was amortised through interest expense by using the effective interest
rate method.
Exchange gains and losses for currency derivatives mainly relate to non-hedge accounted
instruments fair valued in the income statement. In 2023, the amount reported as other financial
income mainly consists of fair valuation gains, while other financial expense in the table above
relates to net financial fees for unused committed credit facilities, guarantees, and factoring and
supply chain financing programmes. Impairments of interest-bearing assets relate to receivables
originating from the sale of the Russia operations in 2022 and are discussed in more detail in
note 5.3 Interest-bearing assets and liabilities.
2.5 Income taxes
Accounting principles
The Group income tax expense/benefit includes taxes of Group companies based on taxable profit/loss for
the period, together with tax adjustments for previous periods and the change in deferred taxes. Tax assets
and liabilities reflect uncertainty related to income taxes, if any.
Deferred taxes are provided using the liability method, as measured with enacted, or substantially enacted,
tax rates, to reflect the net tax effects of all temporary differences between the tax bases and the accounting
bases of assets and liabilities. No deferred tax is recognised for the initial recognition of goodwill and the
initial recognition of an asset or liability in a transaction which is not a business combination, and at the time
of the transaction this affects neither accounting profit nor taxable profit. Deferred tax is recognised on
transactions in which equal amounts of deductible and taxable temporary differences arise on initial
recognition. Deferred tax assets reduce income taxes payable on taxable income in future years. The
deferred tax assets, whether arising from temporary differences or from tax losses, are recognised only to the
extent that it is probable that future taxable profits will be available against which the assets can be utilised.
Tax expense
EUR million 2023 2022
Current tax -54 -196
Deferred tax 119 -126
Total income tax 64 -322
Income tax rate reconciliation
EUR million 2023 2022
Profit before tax -495 1,858
Tax at statutory rates applicable to profits in the country concerned1 121 -337
Non-deductible expenses and tax exempt income2 -10 -15
Valuation of deferred tax assets -60 15
Taxes from prior years -3 2
Changes in tax rates and tax laws -1 0
Results from associated companies 27 44
Other -10 -31
Total income taxes 64 -322
Effective tax rate 13.0 % 17.3 %
Statutory tax rate (blended) 24.5 % 18.2 %
1 Includes a EUR 22 million impact from countries with tax holidays and tax benefits in 2023 and a EUR 55 million impact from tax
holidays and other tax benefits in 2022.
2 The tax value of non-deductible expenses of EUR 12 million has been netted against tax exempt income of 3 EUR million in 2023, and
tax value of non-deductible expenses of EUR 16 million has been netted against tax exempt income of EUR 1 million in 2022.
The statutory tax rate is a weighted average of the statutory tax rates prevailing in jurisdictions
where Stora Enso operates.
44 150Stora Enso 2023: Financials
Our year 2023 This is Stora Enso Our strategy Our people Shareholders AppendixRemunerationGovernanceSustainability reporting Financials
Financials
Report of the Board of Directors 109
Consolidated financial statements 135
Notes to the Consolidated
financial statements 140
1 Basis for reporting 140
2 Financial performance 144
3 Employee remuneration 152
4 Operating capital 158
5 Capital structure and financing 169
6 Group structure 186
7 Other 192
Parent Coompany
financial statement and notes 193
Signatures 205
Auditor’s report 206
===== SIDA 151 =====