Stora Enso signs an agreement to divest its Hylte paper site and will discontinue the Anjala site divestment process

Stora Enso has signed an agreement to divest its paper production site in Hylte, Sweden, and all its related assets to Sweden Timber, a Sweden-based sawmill and planning mill company. The enterprise value is approximately 18 million euros. The completion of the transaction is expected in the first half of 2023. Concerning the Anjala paper site in Finland, Stora Enso has decided to discontinue the divestment process.

The Hylte site transaction, along with the discontinuation of the Anjala divestment, concludes Stora Enso's plan announced in March 2022 to divest four of Stora Enso's five paper production sites. In line with its strategy, Stora Enso's focus is on long-term growth for its renewable products in packaging, building solutions, and biomaterials innovations.

"I am pleased that Sweden Timber will continue to serve Hylte's paper customers with the intent to further develop the operations. For the Anjala site, we have concluded that the benefits from retaining the site within the Group exceed the value of explored divestment opportunities," says Seppo Parvi, chief financial officer, Stora Enso.

The Hylte site's annual capacity is 245,000 tonnes of newsprint paper. Based on the 2021 figures, the divestment is expected to reduce Stora Enso's annual sales by approximately 90 million euros. Subject to closing date adjustments, Stora Enso will book a disposal loss of approximately EUR 35 million, in addition to the impairment loss of 19 million euro recorded in Q4/2022, in its IFRS operating profit in Q1/2023, as an item affecting comparability. The transaction does not affect the Packaging Solutions division's formed fiber and biocomposite operations located at the Hylte site.

The Anjala paper site, together with the retained Langerbrugge paper site in Belgium, was integrated into the Packaging Materials division on 1 January 2023. The Anjala site already today leverages integrated operations with Stora Enso's neighboring Ingerois packaging materials site, utilizing synergies in raw material and energy supply. For the Langerbrugge site, the ongoing feasibility study for the potential conversion of one of the site's two paper lines into a packaging materials line is expected to be finalized in the first half of 2023.

The retained Anjala and Langerbrugge sites will continue paper production and serving their respective customers. The agreement to divest the Hylte paper site to Sweden Timber has no immediate impact on production or customer deliveries. The previously disclosed agreement to divest the Maxau paper site in Germany to Schwartz Produktion is expected to conclude at the beginning of this year. Divestment of the Nymölla paper site in Sweden was concluded on 2 January with ownership transferred to Sylvamo.

BofA Securities acted as Stora Enso's financial advisor on this transaction.