Stora Enso's Adjusted EBITDA Under Pressure in Q4, Yet Stock Surges on Profit Turnaround

Stora Enso Oyj shares surged 7 percent in morning trading on the Helsinki exchange following the Finnish paper manufacturer’s announcement of a fourth-quarter profit, marking a dramatic reversal from the prior year’s loss. The positive earnings surprise overshadowed concerns about softer operational metrics, particularly the adjusted EBITDA contraction.

Q4 Profitability Rebounds Despite Operational Headwinds

The company reported a net profit of 363 million euros on an IFRS basis in Q4, compared to a 379 million euro loss in the same period last year. Earnings per share reached 0.46 euros, reversing a 0.43 euro loss from the previous year. However, when excluding fair value adjustments, the company posted a loss of 0.03 euros per share—though substantially improved from the 0.81 euro loss recorded a year prior. This adjustment reveals the underlying operational challenges that persisted despite the headline profit.

Adjusted EBITDA and EBIT Metrics Highlight Margin Compression

The adjusted EBITDA figure declined 10.7 percent year-over-year to 255 million euros, signaling ongoing pressure on the company’s cash generation capability. The contraction in adjusted EBITDA came alongside a steeper 17 percent decline in adjusted EBIT, which tumbled to 100 million euros. The margin on adjusted EBIT compressed to 4.5 percent from 5.2 percent previously, reflecting the challenging operating environment.

Multiple factors weighed on profitability. Lower pulp and board prices created headwinds across the business, while adverse currency movements further pressured results. Additionally, the ramp-up phase of the new production line in Oulu, Finland, dragged on near-term earnings as the facility continues its calibration period before reaching full operational efficiency.

Sales Decline Driven by Weak Pulp and Board Pricing

Total sales slipped 2.9 percent to 2.254 billion euros from 2.322 billion euros in the prior year. The decline was primarily attributable to depressed pulp and board prices in the market, though the impact was partially offset by contributions from the acquisition of Junnikkala and the consumer board line expansion at the Oulu facility.

Strategic Moves and Market Outlook Ahead

The company’s Board of Directors plans to propose a dividend of 0.25 euros per share at the March 24 Annual General Meeting, maintaining the same payout level as the previous year. Dividends will be distributed across two installments during the second and fourth quarters of 2026.

Looking beyond the current results, Stora Enso is undertaking significant strategic initiatives. The company is preparing to spin off its Swedish forest assets into a separately listed entity, anticipated to complete during the first half of 2027. Additionally, a strategic review of Central European sawmill and building solutions operations is underway.

For the first quarter of 2026, management anticipates adjusted EBIT headwinds ranging from 15 million to 30 million euros stemming from the continued ramp-up of the Oulu consumer board line. The broader market environment remains challenging, with dampened consumer confidence and pulp and packaging sector demand expected to stabilize at depressed levels. At the close, Stora Enso shares traded at 10.53 euros, reflecting investor optimism about the company’s profit recovery and upcoming strategic transformations.