Stora Enso to keep Chinese production site after value increase
Stora Enso’s CEO Hans Sohlström has announced the company will end a planned divestment from its Beihai packaging board production site and forestry business, in Southern China announced in December 2022. The company now believes the value of continued operations exceeds any sale price.
Business at the Beihai site will now be developed “through a continued focus on operational excellence, cost optimization and product development,” according to the company.
By adjusting the product mix to increase the share of liquid packaging board and other premium grades, the Beihai site will strengthen Stora Enso’s position as a global supplier, it claims. No significant capital expenditure is expected in the mid-term.
“Following a thorough review and negotiations with potential buyers, we have decided to terminate the divestment process and focus on the ongoing business. We are confident that Stora Enso is best positioned to continue operating this site going forward,” says Sohlström.
“Given the recent global cost escalation of wood and logistics, the relative cost competitiveness of the Beihai site has improved. Through the Beihai site, we will continue to serve our global and most demanding customers with a premium packaging board in the Asia Pacific region.”
Stora Enso owns approximately 80% of the Beihai production site and forest operations. Its local partners and International Finance Corporation (IFC) remain owners of the balance.
The Beihai site was classified as assets held for sale from the end of 2023. As at the end of September 2024, such classification has ceased. Adjusted EBIT and IFRS operating result for Q1 to Q3/2024 will decrease by €7.5 million (US$8.1 million) per each quarter, €30 million (US$32.4 million) for the full year 2024, due to the inclusion of previously suspended depreciation into the restated results.
The Group's other liquid packaging board production sites include Imatra, Finland and Skoghall, Sweden, which together with Beihai, cater for major global customers while also serving local customers with high-quality products.
Additionally, assets held for sale classification in the balance sheet will be restated. There are no cash flow impacts as a result of the restatements.
