Stora Enso Financial Review (EURmn)

Balance Sheet 2 015 2 014 2 013 2 012 2 011 - Balance sheet analysis
Total assets 12 361 12 847 13 452 14 293 12 999
Non-current assets 8 797 8 432 8 219 8 919 8 389 Stora Ensos balance sheet didnt
Goodwill and other intangibles 404 399 274 273 282 change relevantly through time. Total
Property, plant & equipment 5 627 5 419 5 534 6 292 4 943 assets declined by 5% from 2011 to
Other non-current assets 2 766 2 614 2 411 2 354 3 165 2015, mainly driven by reductions in
Current assets 3 564 4 415 5 233 5 374 4 610 inventories and account receivables
Inventories 1 373 1 403 1 445 1 510 1 529 levels, both of which are probably
Tax receivables 6 8 13 18 6 explained by the reduction in sales in
Current operative receivables 1 324 1 484 1 555 1 714 1 655 the period.
Interest-bearing receivables 53 74 147 211 282
Cash and cash equivalents 808 1 446 2 073 1 921 1 139
Total equity and liabilities 12 361 12 847 13 452 14 293 12 999
- Income statement analysis
Total equity 5 513 5 237 5 273 5 862 5 960
Share capital and share premium 1 419 1 419 1 419 1 419 1 419 Although Stora Ensos top line
Other equity elements -208 749 650 957 1 153 declined 8,4% in the period, the
Retained earnings 3 495 2 970 3 257 3 486 3 048 companys operating profit climbed
Net profit/(loss) for the year 807 99 -53 0 340 39.5% while operating margin reached
10.5% (coming from 6.9% in 2011).
Non-current liabilities 4 133 4 483 5 042 5 793 4 253 There are two main drivers behind this
solid operating performance: (i) costs
Current liabilities 2 715 3 127 3 137 2 638 2 786 of materials and services declined to
Current portion of non-current debt 228 611 544 202 250 59.8% of sales (vs. 63.8% in 2011) and
Interest-bearing liabilities and bank overdrafts 627 753 756 698 784 (ii) results in equity accounted
Other provisions, other operative liabilities and tax liabilities 1 860 1 763 1 837 1 738 1 752 investments reached EUR519mn in
Income Statement 2 015 2 014 2 013 2 012 2 011 2015, up more than 300% since 2011.

Sales 10 040 10 213 10 563 10 815 10 965 Stora Enso also managed the reduce
Other operating income 128 168 140 219 209 financial expenses throughout time
Changes in inv. of finished goods and work in progress 18 3 -27 -7 32 while maintaining income taxes at a
Materials and services -6 008 -6 244 -6 688 -6 962 -6 999 minimum, allowing the increasingly
Freight and sales commissions -970 -939 -982 -1 008 -1 019 better operating performance to have
Personnel expenses -1 313 -1 383 -1 390 -1 349 -1 394 a positive impact on its bottom line.
Other operating expenses -592 -739 -479 -583 -580
Share of results in equity accounted investments 519 87 102 108 118 All-in, Stora Ensos bottom line went
Depreciation, amortization and impairment charges -763 -766 -1 189 -532 -573 up 128% in the period.
Operating profit 1 059 400 50 701 759
Financial income 25 79 62 128 43
Financial expense -270 -359 -301 -348 -381
- Financial ratios analysis
Profit/(loss) before tax 814 120 -189 481 421
Income tax -31 -30 118 9 -79
Stora Ensos liquidity ratios improved
Net profit of the year 783 90 -71 490 342
over time. The company has a below
Ratios 2015 2014 2013 2012 2011 industry average cash ratio, but it is
Sales 100,0% 100,0% 100,0% 100,0% 100,0% doing better in terms of current ratio.
Other operating income 1,3% 1,6% 1,3% 2,0% 1,9% None of these two ratios are low in
Changes in inv. of finished goods and work in progress 0,2% 0,0% -0,3% -0,1% 0,3% absolute terms, which means that the
Materials and services -59,8% -61,1% -63,3% -64,4% -63,8% company enjoys a solid liquidity
Freight and sales commissions -9,7% -9,2% -9,3% -9,3% -9,3% position.
Personnel expenses -13,1% -13,5% -13,2% -12,5% -12,7%
Other operating expenses -5,9% -7,2% -4,5% -5,4% -5,3% The companys receivables days are
Share of results in equity accounted investments 5,2% 0,9% 1,0% 1,0% 1,1% also aligned with industry averages,
Depreciation, amortization and impairment charges -7,6% -7,5% -11,3% -4,9% -5,2% but we see a subpar inventory
Operating profit 10,5% 3,9% 0,5% 6,5% 6,9% turnover. This means that theres
Financial income 0,2% 0,8% 0,6% 1,2% 0,4% probably some room for improvement
Financial expense -2,7% -3,5% -2,8% -3,2% -3,5% in terms of working capital
Profit/(loss) before tax 8,1% 1,2% -1,8% 4,4% 3,8% management.
Income tax -0,3% -0,3% 1,1% 0,1% -0,7%
Net profit of the year 7,8% 0,9% -0,7% 4,5% 3,1% That said, Stora Enso is clearly
Short term liquidity ratios outperforming the industry when it
Current ratio (curr assets / curr liab) 1,31 1,41 1,67 2,04 1,65 comes to profitability. Its net margin,
Cash ratio (cash + mkt securities / curr liab) 0,30 0,46 0,66 0,73 0,41 ROE, ROCE and ROA are all at high end
of the spectrum and believe that this
Operating cycle management ratios
Receivables days 51,04 54,31 56,48 56,84 n.a.
is something appealing to potential
Inventory turnover 4,33 4,38 4,53 4,58 n.a. investors.
Payables days n.a. n.a. n.a. n.a. n.a.

Capital structure or leverage ratio

Long term debt to equity n.a. n.a. n.a. n.a. n.a.

Profitability ratios
Net profit margin 7,8% 0,9% -0,7% 4,5% 3,1%
ROE 14,6% 1,7% -1,3% 8,3% n.a.
ROCE 10,9% 4,0% 0,5% 6,4% n.a.
ROA 6,2% 0,7% -0,5% 3,6% n.a.
Suzano Pulp & Paper Financial Review (BRLmn)

Balance Sheet 2 015 2 014 2 013 2 012 2 011 - Balance Sheet Analysis
Total assets 28 260 28 119 27 149 25 353 21 715
Non-current assets 21 671 21 510 20 678 18 666 16 371 Suzano showed a strong expansion in
Goodwill and other intangibles 330 292 225 213 215 its balance sheet between 2011 and
Property, plant & equipment 16 346 16 681 16 552 15 148 13 142 2015. The companys total assets
Other non-current assets 4 995 4 537 3 901 3 306 3 015 went up by 30,1% in the period.
Current assets 6 589 6 609 6 472 6 687 5 344
Inventories 1 316 1 077 905 684 636 The bulk of the growth in assets can
Tax receivables 597 476 280 268 265 be attributed to increases in the PP&E,
Current operative receivables 1 935 1 274 1 474 1 103 1 041 inventories and receivables accounts.
Other assets 293 97 122 294 128 All of that probably allowed the
Cash and cash equivalents 2 448 3 686 3 690 4 338 3 274 company to produce more and sell
Total equity and liabilities 28 260 28 119 27 149 25 353 21 715 more, which also explains the strong
Total equity 9 192 10 315 10 687 11 002 9 674 top line growth in the P&L.
Share capital and share premium 6 242 6 242 6 242 6 241 3 446
Other equity elements 2 275 2 312 2 258 -211 3 599 Since we didnt have any significant
Retained earnings 706 1 852 2 187 2 470 2 629 change in the companys
Net profit/(loss) for the year -31 -91 0 2 503 0 shareholders equity and we observed
a steep expansion of non-current
Non-current liabilities 15 557 14 737 14 181 11 495 8 899 liabilities, it is fair to assume that the
aforementioned asset expansion was
Current liabilities 3 511 3 068 2 281 2 856 3 143 mostly debt financed.
Current portion of non-current debt 1 819 1 795 1 009 1 622 2 253
Interest-bearing liabilities and bank overdrafts 91 79 53 36 44 - Income statement analysis
Other provisions, other operative liabilities and tax liabilities 1 601 1 193 1 220 1 198 846
Income Statement 2 015 2 014 2 013 2 012 2 011 Suzanos revenues more than doubled
from 2011 to 2015 (+110,9%).
Sales 10 224 7 265 5 689 5 192 4 848
Other operating income 0 0 0 0 0 As it was the case for Stora Enso,
Changes in inv. of finished goods and work in progress 0 0 0 0 0 Suzano also experienced a strong
Materials and services -4 765 -4 140 -3 301 -3 301 -3 147 reduction in materials costs which
Freight and sales commissions -410 -301 -251 -248 -248 ended at 46,6% of revenues in 2105
Personnel expenses -456 -393 -377 -404 -334 (vs. 64,9% in 2011).
Other operating expenses -105 13 105 32 182
Share of results in equity accounted investments 0 0 0 0 0 The strong top line growth also
Depreciation, amortization and impairment charges -1 419 -1 216 -889 -727 -625 allowed Suzano to dilute freights and
Operating profit 3 070 1 229 976 544 676 personnel expenses during the period.
Financial income 285 265 0 0 525
Consequently, we could observe a
Financial expense -4 714 -1 859 -1 256 -855 -1 300
bold operating margin expansion:
Profit/(loss) before tax -1 359 -365 -280 -311 -98
30,0% in 2015 vs 14,0% in 2011.
Income tax 433 102 60 129 128
Net profit of the year -925 -263 -220 -182 30
Unlike Stora Enso, Suzano has very
Ratios 2015 2014 2013 2012 2011 heavy financial expenses and this
Sales 100,0% 100,0% 100,0% 100,0% 100,0% prevented the company from posting
Other operating income 0,0% 0,0% 0,0% 0,0% 0,0% a positive bottom line in most of the
Changes in inv. of finished goods and work in progress 0,0% 0,0% 0,0% 0,0% 0,0% years.
Materials and services -46,6% -57,0% -58,0% -63,6% -64,9%
Freight and sales commissions -4,0% -4,1% -4,4% -4,8% -5,1% - Financial ratios analysis
Personnel expenses -4,5% -5,4% -6,6% -7,8% -6,9%
Other operating expenses -1,0% 0,2% 1,9% 0,6% 3,7% Suzano is above the industry average
Share of results in equity accounted investments 0,0% 0,0% 0,0% 0,0% 0,0% in terms of liquidity ratios as both its
Depreciation, amortization and impairment charges -13,9% -16,7% -15,6% -14,0% -12,9% Current ratio and Cash ratio exceeds
Operating profit 30,0% 16,9% 17,1% 10,5% 14,0% industry standards.
Financial income 2,8% 3,7% 0,0% 0,0% 10,8%
Financial expense -46,1% -25,6% -22,1% -16,5% -26,8% In terms of working, we see room for
Profit/(loss) before tax -13,3% -5,0% -4,9% -6,0% -2,0% improvement as receivables days are
Income tax 4,2% 1,4% 1,0% 2,5% 2,6% above industry average while
Net profit of the year -9,1% -3,6% -3,9% -3,5% 0,6%
inventory turnover is lagging
Short term liquidity ratios industrys best practices. Improving
Current ratio (curr assets / curr liab) 1,88 2,15 2,84 2,34 1,70 working capital can translate into a
Cash ratio (cash + mkt securities / curr liab) 0,70 1,20 1,62 1,52 1,04 one-time strong cash inflow for the
Operating cycle management ratios
company.
Receivables days 57,28 69,03 82,67 75,36 n.a.
Inventory turnover 3,98 4,18 4,15 5,00 n.a. Although Suzanos ROCE is above
Payables days n.a. n.a. n.a. n.a. n.a. industry average, the high level of
financial expenses prevented the
Capital structure or leverage ratio company from posting either a
Long term debt to equity n.a. n.a. n.a. n.a. n.a.
positive ROE or a positive net margin.
Profitability ratios Thus, Suzano presents below average
Net profit margin -9,1% -3,6% -3,9% -3,5% 0,6% profitability ratios.
ROE -9,5% -2,5% -2,0% -1,8% n.a.
ROCE 12,3% 4,9% 4,1% 2,7% n.a.
ROA -3,3% -0,9% -0,8% -0,8% n.a.
International Paper Financial Review (USDmn)

Balance Sheet 2 015 2 014 2 013 2 012 2 011 - Balance sheet analysis
Total assets 30 531 28 684 31 528 32 153 27 018
Non-current assets 24 054 20 725 22 503 23 248 16 562 Although Stora Enso had strong
Goodwill and other intangibles 3 335 3 773 3 987 4 315 2 346 bottom line prints across the periods,
Property, plant & equipment 12 346 13 235 14 229 14 571 11 817 we didnt see a correspondingly
Other non-current assets 8 373 3 717 4 287 4 362 2 399 expansion in its balance sheet (and we
Current assets 6 477 7 959 9 025 8 905 10 456 actually saw a contraction in
Inventories 2 228 2 424 2 825 2 730 2 320 shareholders equity). This probably
Tax receivables 312 331 302 323 296 means that the company is
Current operative receivables 2 675 3 083 3 756 3 562 3 486 distributing significant dividends (or
Other assets 212 240 340 988 360 buying back shares).
Cash and cash equivalents 1 050 1 881 1 802 1 302 3 994
Total equity and liabilities 30 531 28 684 31 528 32 153 27 018
On the assets side, we saw some
Total equity 3 909 5 263 8 284 6 636 6 985 reduction in the inventories and
Share capital and share premium 6 692 6 694 6 910 2 642 3 290 receivables lines, both of which are
Other equity elements -1 724 -1 194 -313 332 340 explained by the top line contraction
Retained earnings 4 649 4 409 4 446 3 662 3 355 over the period.
Net profit/(loss) for the year -5 708 -4 646 -2 759 0 0

Non-current liabilities 22 698 18 512 18 117 20 519 15 295 - Income statement analysis

Current liabilities 3 924 4 909 5 127 4 998 4 738 International Papers top line declined
Current portion of non-current debt 426 742 661 444 719 14,1% between 2011 and 2015, but,
Interest-bearing liabilities and bank overdrafts 0 0 0 0 0 just like the other companies, it
Other provisions, other operative liabilities and tax liabilities 3 498 4 167 4 466 4 554 4 019 managed to dilute materials costs
Income Statement 2 015 2 014 2 013 2 012 2 011 throughout time.

Sales 22 365 23 617 23 483 21 852 26 034 However, this reduction was almost
Other operating income 0 0 0 0 0 entirely offset by pressures in
Changes in inv. of finished goods and work in progress 0 0 0 0 0 depreciation/amortization and other
Materials and services -15 468 -16 254 -16 282 -15 287 -18 960 expenses, which means that operating
Freight and sales commissions -1 406 -1 521 -1 583 -1 470 -1 390 margins didnt expand much between
Personnel expenses -1 645 -1 793 -1 783 -1 674 -1 887 2011 and 2015.
Other operating expenses -420 -1 026 -334 -224 -146
Share of results in equity accounted investments 117 -200 -39 61 140 Financial expenses were somewhat
Depreciation, amortization and impairment charges -1 605 -1 544 -1 661 -1 559 -1 652 stable during these years, but, in 2015
Operating profit 1 938 1 279 1 801 1 699 2 139 specifically, we observed unusually
Financial income 0 0 0 0 0 high income taxes.
Financial expense -555 -607 -612 -671 -541
Profit/(loss) before tax 1 383 672 1 189 1 028 1 598
Income tax -445 -117 206 -234 -276
- Financial ratios analysis
Net profit of the year 938 555 1 395 794 1 322
Ratios 2015 2014 2013 2012 2011 International Papers liquidity ratios
Sales 100,0% 100,0% 100,0% 100,0% 100,0% are in good shape. While its Current
Other operating income 0,0% 0,0% 0,0% 0,0% 0,0% ratio is above industry average, we
Changes in inv. of finished goods and work in progress 0,0% 0,0% 0,0% 0,0% 0,0% have a Cash ratio somewhat aligned
Materials and services -69,2% -68,8% -69,3% -70,0% -72,8% with industry practices.
Freight and sales commissions -6,3% -6,4% -6,7% -6,7% -5,3%
Personnel expenses -7,4% -7,6% -7,6% -7,7% -7,2% International Papers operating cycle
Other operating expenses -1,9% -4,3% -1,4% -1,0% -0,6% ratios are the best among the
Share of results in equity accounted investments 0,5% -0,8% -0,2% 0,3% 0,5% companies we analysed. Receivables
Depreciation, amortization and impairment charges -7,2% -6,5% -7,1% -7,1% -6,3% days are 9% below industry average
Operating profit 8,7% 5,4% 7,7% 7,8% 8,2% while inventory turnover is 33% above
Financial income 0,0% 0,0% 0,0% 0,0% 0,0% industry standards.
Financial expense -2,5% -2,6% -2,6% -3,1% -2,1%
Profit/(loss) before tax 6,2% 2,8% 5,1% 4,7% 6,1% In terms of profitability, International
Income tax -2,0% -0,5% 0,9% -1,1% -1,1% Paper also stands out. The company
Net profit of the year 4,2% 2,4% 5,9% 3,6% 5,1% presented above average net margin,
Short term liquidity ratios ROE and ROA. ROCE was also the
Current ratio (curr assets / curr liab) 1,65 1,62 1,76 1,78 2,21 highest in the industry every year
Cash ratio (cash + mkt securities / curr liab) 0,27 0,38 0,35 0,26 0,84 except in 2015.
Operating cycle management ratios
Receivables days 46,99 52,85 56,87 58,86 n.a.
Inventory turnover 6,65 6,19 5,86 6,05 n.a.
Payables days n.a. n.a. n.a. n.a. n.a.

Capital structure or leverage ratio

Long term debt to equity n.a. n.a. n.a. n.a. n.a.

Profitability ratios
Net profit margin 4,2% 2,4% 5,9% 3,6% 5,1%
ROE 20,5% 8,2% 18,7% 11,7% n.a.
ROCE 7,7% 5,1% 6,7% 6,9% n.a.
ROA 3,2% 1,8% 4,4% 2,7% n.a.