Stora Enso Posts Profit Recovery in Q4 on Accounting Gains, Unveils Major Restructuring Plans

Finnish paper and pulp producer Stora Enso delivered a surprising profit turnaround in the fourth quarter, with shares climbing approximately 7 percent on the Helsinki stock exchange following the earnings announcement. The market reaction underscores investor optimism despite a deteriorating operational environment for the company.

On an IFRS basis, Enso swung to a net profit of 363 million euros in Q4 2025, reversing the prior-year loss of 379 million euros. Earnings per share reached 0.46 euro, compared to a loss of 0.43 euro in the comparable period. However, this improvement was primarily driven by favorable accounting valuations rather than operational strength. Stripping out fair value adjustments, the company posted a loss of 0.03 euro per share, showing only marginal improvement from the 0.81 euro loss recorded a year earlier.

Adjusted Metrics Reveal Underlying Pressures in Core Operations

The adjusted EBIT figures tell a more cautious story about Enso’s operational performance. Adjusted EBIT declined 17 percent year-over-year to 100 million euros, while the adjusted EBITDA fell 10.7 percent to 255 million euros, reflecting structural challenges facing the company. The adjusted EBIT margin compressed to 4.5 percent from 5.2 percent previously. Revenue contracted 2.9 percent to 2.254 billion euros, primarily due to weakness in pulp and board pricing and unfavorable foreign exchange dynamics.

The company attributed much of the earnings pressure to the ramp-up phase of its new production line in Oulu, Finland, which negatively impacted quarterly results. Additionally, lower commodity prices for pulp and board products weighed on profitability across the portfolio. The company partially offset these headwinds through acquisitions, including the Junnikkala purchase and the consumer board line expansion at the Oulu facility.

Shareholder Returns Maintained Amid Market Uncertainties

The Board of Directors proposed maintaining the dividend at 0.25 euro per share, consistent with the prior year, subject to approval at the Annual General Meeting scheduled for March 24, 2026. The dividend will be distributed in two tranches during the second and fourth quarters of 2026, providing shareholders with consistent returns despite operational headwinds.

Major Strategic Transformation Underway for Enso

Looking beyond quarterly results, Stora Enso is pursuing sweeping portfolio changes that could reshape the company. Management is advancing plans to separate its Swedish forest assets into an independent, publicly listed entity, with completion targeted for the first half of 2027. In parallel, the company has initiated a strategic review of its Central European sawmills and building solutions operations, signaling potential further adjustments to its business mix.

Navigating a Challenged Market Environment into 2027

The outlook for 2026 remains constrained by persistent market challenges. Enso expects the Oulu production line ramp-up to continue pressuring adjusted EBIT by 15 million to 30 million euros in the first quarter alone. Management cautioned that consumer confidence remains depressed, with packaging and pulp market demand expected to hover at depressed levels throughout the year.

The company plans to continue the Oulu consumer board line ramp-up with the goal of reaching full operational capacity during 2027. This investment reflects management’s belief that market conditions will eventually improve, even as near-term visibility remains limited. At current trading levels around 10.53 euros per share, investors are pricing in both the near-term headwinds and the longer-term potential of the company’s restructuring initiatives.