Stora Enso Turns Profitable in Q4 as Stock Rallies on Earnings Reversal

Helsinki-listed paper and pulp producer Stora Enso has reported a significant swing to profitability in the fourth quarter, with shares climbing 7 percent following the announcement. The Finnish company’s turnaround in financial performance, while tempered by operational challenges, has caught investor attention amid a volatile market environment for the global packaging and pulp sector.

Profitability Rebounds While Key Metrics Face Pressure

On an IFRS basis, Enso generated a net profit of 363 million euros in Q4, a dramatic reversal from the prior year’s 379 million euro loss. Earnings per share improved to 0.46 euro from a loss of 0.43 euro in the corresponding period last year. However, the company’s core operational performance tells a more complicated story. On an adjusted basis—excluding fair value fluctuations—Enso reported a loss of 0.03 euro per share, which, while significantly better than last year’s 0.81 euro loss, still signals underlying operational headwinds.

The adjusted EBIT declined 17 percent year-over-year to 100 million euros, reflecting a challenging operating environment. Pulp prices have softened considerably, while unfavorable currency movements have weighed on results. Additionally, the new production line at the Oulu facility in Finland continues its ramp-up phase, temporarily pressuring margins as the operation scales capacity.

Adjusted EBITDA Contraction Reflects Market Headwinds

Adjusted EBITDA contracted 10.7 percent to 255 million euros, with the EBITDA margin compressing to 4.5 percent from 5.2 percent a year earlier. Revenue declined 2.9 percent to 2.254 billion euros, down from 2.322 billion euros, principally attributable to lower board and pulp pricing. Partially offsetting these declines were contributions from the Junnikkala acquisition and the consumer board line at Oulu, which are beginning to contribute to revenue growth as operations scale.

The margin compression underscores the pressure facing forest products companies as global consumer confidence remains subdued and packaging demand persists at depressed levels. Market conditions across Europe and globally continue to challenge pricing power and volume growth for traditional pulp and paper producers.

Capital Allocation and Strategic Restructuring Plans

Looking at shareholder returns, the Board of Directors has proposed a dividend of 0.25 euro per share, maintaining the payout from the prior year. This dividend will be distributed in two tranches during the second and fourth quarters of 2026, providing some income support to long-term shareholders despite the operational pressures.

Beyond dividends, Enso is undergoing significant strategic repositioning. The company is advancing plans to separate its Swedish forest assets business into a standalone, publicly listed entity, with completion anticipated in the first half of 2027. In parallel, Enso has initiated a comprehensive strategic review of its Central European sawmills and building solutions operations, signaling potential portfolio optimization ahead.

Outlook Tempered by Ramp-up Costs and Market Uncertainty

For the first quarter of 2026, Enso anticipates that the Oulu production line ramp-up will impose a negative impact of 15 million to 30 million euros on adjusted EBIT. This temporary headwind is expected to persist as the company prioritizes reaching full capacity during 2027. The company projects that packaging and pulp market demand will remain stable, albeit at currently depressed levels, with consumer confidence continuing to restrain near-term demand dynamics.

Despite near-term challenges, Enso’s strategic initiatives—including the separation of higher-margin forest assets and operational optimization—position the company for potential margin recovery once market conditions stabilize and new production capacity reaches optimal utilization. At the time of reporting, Enso shares traded at 10.53 euros, reflecting investor optimism about the company’s long-term positioning amid transitional challenges.