A mixed bag report from Stora Enso

Stora Enso’s (OMX: STERV) Q4 operational EBIT was down 18% vs. Q4 2010 to 145 million Euros. Strong liquidity and cash flow improvement to 302 million in Q4 masked disappointment. Full year operational EBIT was 867 million Euros and ROCE hit 10% spot on. Cash flow is the star point in the report and was over a billion for the year as a whole

CEO Jouko Karvinen foresees another challenging year ahead, particularly in the first few months. He described 2011 as another year of change where the company nonetheless delivered a solid performance. Slowing down of the economy was clearly visible in fourth quarter with still limited visibility particularly in Europe at the time of this report.

Stora Enso announced large improvement plans in mill maintenance in Sweden. Workforce will be reduced by approximately 130 employees at Hylte, Skoghall, Skutskär, Fors and Kvarnsveden mills. This represents over 16% of the total maintenance work force at those sites. The company also plans to restructure magazine paper operations in Corbehem Mill in France, Veitsiluoto Mill in Finland and Kabel Mill in Germany with up to 110 jobs at risk and 48 million savings foreseen in annual costs.

The Board is proposing a dividend increase to 0.3 Euro from 0.25 a year ago. The guidance calls for Q1 2012 sales and EBIT in line with Q4 2011. The announced cost cutting measures will only start impacting later on in the year. The stock is trading up 3% at 5.83 Euros few minutes after the report.