7437000ZP669LKUTZ738-2023-12-31-en

Contents


Report of the Board of Directors (unaudited)
Stora Enso introduction
Markets and deliveries
Financial results – Group
Financial results – Segments
Investments and capital expenditure
Changes in the Group structure
Innovation, research and development
Non-financial information
Environmental liabilities
EU taxonomy
Risks and risk management
Climate-related financial disclosures (TCFD)
Nature-related financial disclosures (TNFD)
Corporate governance
Legal proceedings
Changes in Group management
Share capital
Outlook and short-term risks
Annual General Meeting
Proposal for the distribution of dividend
Alternative performance measures
Consolidated financial statements (audited)
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated cash flow statement
Supplemental cash flow information
Statement of changes in equity
Notes to the consolidated financial statements (audited)
1 Basis for reporting
1.1 Accounting principles
1.2 Critical accounting estimates and judgements
2 Financial performance
2.1 Segment information
2.2 Other operating income and expense
2.3 Depreciation, amortisation and impairment charges
2.4 Net financial items
2.5 Income taxes
2.6 Earnings per share
3 Employee remuneration
3.1 Personnel expenses
3.2 Board and executive remuneration
3.3 Post-employment benefit obligations
3.4 Employee variable compensation and equity incentive schemes
4 Operating capital
4.1 Intangible assets, property, plant and equipment and right-of-use assets
4.2 Forest assets
4.3 Associates


4.4 Equity instruments
4.5 Emission rights and other non-current assets
4.6 Inventories
4.7 Operative receivables
4.8 Operative liabilities
4.9 Provisions
5 Capital structure and financing
5.1 Financial risk management
5.2 Fair values
5.3 Interest-bearing assets and liabilities
5.4 Derivatives
5.5 Shareholders' equity
5.6 Cumulative translation adjustment and equity hedging
5.7 Non-controlling interests
6 Group structure
6.1 Acquisitions, disposals and assets held for sale
6.2 Group companies
6.3 Related party transactions
7 Other
7.1 Commitments and contingencies
7.2 Events after the reporting period

Notes to the parent company financial statements (audited)
Signatures for the financial statements
Auditor's Report

The official audited financial statements in Finnish are available at storaenso.com/download-centre

The audit firm PricewaterhouseCoopers Oy has provided an independent auditor’s reasonable assurance report only on Stora Enso’s

ESEF Financial Statements in Finnish in accordance with ISAE 3000 (Revised).

Unaudited 2

Report of the Board of Directors

Introduction to Stora Enso

Part of the global bioeconomy, Stora Enso is a business-to-business company and a leading

provider of renewable products in packaging, biomaterials, and wooden construction, and one of

the largest private forest owners in the world. Sustainability is integral in Stora Enso’s business

strategy, it is at the core of what we do. Stora Enso contributes to the transition towards a

biobased circular economy in three areas where it has the biggest impact and opportunities:

climate change, biodiversity, and circularity.

We create value with our low-carbon and recyclable fiber-based products, through which we

support our customers in meeting the demand for renewable sustainable products.

Stora Enso had 20,822 employees on average during 2023. The Group sales in 2023 were EUR

9.4 billion, with an operational EBIT of EUR 342 million. Stora Enso shares are listed at the Helsinki

(STEAV, STERV) and Stockholm (STE A, STE R) stock exchanges. In addition, the shares are traded

on OTC Markets (OTCQX) in the USA as ADRs and ordinary shares (SEOAY, SEOFF, SEOJF).

Markets and deliveries

Demand for cartonboard declined during 2023, with some regional exceptions. Market conditions

took a negative turn as excess inventories from the 2022 boom were destocked in combination

with weak underlying consumption due to the economic headwinds. Demand, though muted, in

the Asian region was stronger than in the more mature European and North American markets.

Containerboard demand remained weak in 2023. The economy-wide destocking cycle continued

longer than anticipated, retail sales remained stagnant and global manufacturing weakness

burdened the packaging sector. Containerboard demand declined in all regions excluding Asia,

driven by China and India. In Europe, the demand contracted to pre-pandemic levels.

The European paper demand continued to decline significantly, driven by structural demand

erosion and destocking of inventories in the whole value chain.

The European corrugated market faced challenges partly driven by weak retail demand,

especially in food, beverage, and E-commerce segments. The weakness of the European

manufacturing sector continued to drag down corrugated box demand. Overall, the European

corrugated demand is estimated to have declined by 5% in 2023.

Global demand for chemical market pulp rebounded to 3% in 2023. Demand for hardwood

pulp grew 5%, whereas softwood pulp demand increased 0.5%. Demand for unbleached kraft

pulp (UKP) dropped, whereas demand for fluff pulp continued strong. The majority of the growth

was concentrated in Asia, especially China, where pulp buyers restocked their market pulp

inventories with low priced pulp. However, the real pulp consumption in downstream markets did

not necessarily reflect the boost in demand. Demand in North America and Europe was subdued

due to a slow economy and high inflation.

The global chemical market pulp capacity increased by 2% in 2023. The hardwood capacity

increased by 5%, thanks to new capacity ramping up in South America. Due to temporary and

permanent capacity closures, softwood capacity declined by 1.5% and UKP by 9%. The overall

shipment-to-capacity balance stood at 91%, 2 percent-points up from 2022.

Global pulp inventories were elevated for the first half of the year but were considered

balanced towards the end of year. Softwood pulp inventories reached their all-time high reading

before balancing by the end of the year. Hardwood pulp inventories declined strongly in the

spring following a demand boost from China.

After the strong markets during 2021–2022, the global sawn wood consumption decreased in

2023 by 3% according to FEA (Forest Economic Advisors), with above average declines

experienced in Europe and the USA. Throughout 2023, market supply exceeded demand, which

added pressure on prices in all markets. High inflation and interest rates caused market

uncertainties and lowered customer confidence, which resulted in reduced volumes of building

permits and housing starts. Curtailments of supply started to improve the market balance during

the second half of 2023, supported by lower inventory levels.

Estimated consumption of board, pulp, sawn softwood, and paper in 2023


Tonnes, million	Europe	North America	Asia and Oceania
Consumer board	9.1	8.8	32.7
Containerboard	33.9	31.8	94.9
Corrugated board (billion m2 )1	10.5	n/a	n/a
Chemical market pulp	15.3	7.5	40.2
Sawn softwood (million m3)	82.0	97.0	74.9
Newsprint	2.7	1.1	5.2
Uncoated magazine paper	1.5	0.7	0.1
1 European focus markets (Baltics, Benelux, FI, PL, SE) Source: Afry, CEPI, Numera, PPPC, Stora Enso, Forest Economic Advisors (FEA)

Production and external deliveries


	2023	2022	Change % 2023–2022
Board deliveries1, 1,000 tonnes	3,927	4,294	-8.6%
Board production1, 1,000 tonnes	4,185	4,682	-10.6%
Corrugated packaging European deliveries, million m2	1,167	741	57.5%
Corrugated packaging European production, million m2	1,094	771	41.9%
Market pulp deliveries, 1,000 tonnes	2,220	2,374	-6.5%
Wood products deliveries, 1,000 m3	3,897	4,397	-11.4%
Wood deliveries, 1,000 m3	13,667	13,304	2.7%
Paper deliveries, 1,000 tonnes	761	1,924	-60.5%
Paper production, 1,000 tonnes	752	1,926	-60.9%

1 Includes consumer board and containerboard volumes.

The Group’s board deliveries totalled 3,927,000 tonnes, which was 368,000 tonnes, or 8.6%

lower compared to a year ago. Corrugated packaging European deliveries increased by 426

million m2 or 57.5% to 1,167 million m2 due to acquisition of De Jong Packaging Group. Market

pulp deliveries decreased by 153,000 tonnes, or 6.5%, to 2,220,000 tonnes. Wood product

deliveries decreased by 499,000 m3 or 11.4% to 3,897,000 m3. Wood deliveries increased by

363,000 m3 or 2.7% to 13,667,000 m3. Paper deliveries totalled 761,000 tonnes, down 1,163,000

tonnes, or 60.5%, from 2022, driven by the structural changes.

Alternative performance measures

The alternative performance measures used by Stora Enso are explained in the chapter

Alternative performance measures.

Unaudited 3

Financial results – Group

Group sales decreased by 20% year-on-year to EUR 9,396 (11,680) million mainly due to lower

sales prices and volumes as well as divestments partly offset by acquisition of De Jong

Packaging Group. Operational EBIT was EUR 342 (1,891 ) million, and the operational EBIT

margin was 3.6%. Operational EBIT decreased mainly due to decreased sales prices and

volumes as well as increased variable costs especially wood costs. Earnings per share

decreased by 123% to EUR -0.45 ( 1.97) and earnings per share excluding fair valuations

decreased by 147% to EUR -0.73 (1.55).

The IFRS operating result includes a positive net effect of EUR 194 (positive 195) million from

biological asset valuation from subsidiaries and joint operations. The positive impact comes

mainly from the increase in fair valuation in Stora Enso owned forests in Sweden, mostly driven

by higher market prices. There is also a positive net effect of EUR 56 (positive 168) million from

Stora Enso’s share of net financial items, taxes and biological asset valuation of associated

companies. The positive impact comes mainly from increase in fair valuation in Finnish forests,

through Stora Enso's 41% investment in Tornator.

Tangible and intangible asset (including goodwill) impairments amounted to EUR 776

(114) million.

The items affecting comparability (IAC) had a negative impact of EUR 895 (245) million on

IFRS operating result. The main IACs in 2023 relate to the impairments in Packaging Materials,

Biomaterials, Wood Products and segment Other, restructurings related to Sunila, De Hoop,

Anjala and Kvarnsveden sites and Group functions and Packaging Materials division as well as

disposal of Nymölla, Maxau, Hylte and Wood Products DIY sites and biocomposite business.

The IACs in 2022 mainly relate to the disposal of Russian operations as well as impairments and

other costs related to upcoming paper site disposals. Fair valuations and non-operational items

(FV) had a positive net impact on the IFRS operating result of EUR 231 (363) million. The main

IAC and FV items are presented in the chapter Alternative Performance Measures.

The IFRS operating result was EUR -322 (2,009) million.

Key figures


	2023	2022	2021
Sales, EUR million	9,396	11,680	10,164
Operational EBIT, EUR million	342	1,891	1,528
Operational EBIT margin	3.6%	16.2%	15.0%
Operating result (IFRS), EUR million	-322	2,009	1,568
Operating result margin (IFRS)	-3.4%	17.2%	15.4%
Return on equity (ROE)	-3.8%	13.3%	13.0%
Operational ROCE	2.4%	13.7%	12.5%
Operational ROCE excl. Forest division	1.0%	20.4%	17.7%
Net debt/equity ratio	0.29	0.15	0.22
EPS (basic), EUR	-0.45	1.97	1.61
EPS excluding FV, EUR	-0.73	1.55	1.19
Dividend and distribution per share1, EUR	0.10	0.60	0.55
Payout ratio, excluding FV	-13.7%	38.6%	46.3%
Payout ratio (IFRS)	-22.1%	30.5%	34.3%
Dividend and distribution yield, (R share)	0.8%	4.6%	3.4%
Price/earnings (R share), excluding FV	-17.17	8.46	13.60
Equity per share, EUR	13.93	15.89	13.55
Market capitalisation 31 Dec, EUR million	9,864	10,503	12,809
Closing price 31 Dec, A share, EUR	12.45	13.90	16.60
Closing price 31 Dec, R share, EUR	12.53	13.15	16.14
Average price, A share, EUR	12.82	16.58	16.68
Average price, R share, EUR	11.93	16.12	15.70
Number of shares 31 Dec (thousands)	788,620	788,620	788,620
Trading volume A shares (thousands)	968	1,174	1,750
% of total number of A shares	0,5 %	0.7%	1.0%
Trading volume R shares (thousands)	476,654	455,952	422,493
% of total number of R shares	77,8 %	74.5%	69.0%
Average number of shares, basic (thousands)	788,620	788,620	788,620
Average number of shares, diluted (thousands)	789,714	789,391	789,126
1 It is proposed that the Board would be authorised to decide on an additional dividend payment of a maximum of EUR 0.20.The authorisation would be valid until 31 December 2024. See the Board of Directors' proposal for dividend distribution.

Sales and operational EBIT margin

Net debt to operational EBITDA

Operational ROCE excl. Forest

Unaudited 4

Net financial expenses at EUR 173 (151) million were EUR 23 million higher than a year ago.

Net interest expenses, at EUR 113 million, increased by EUR 8 million as a result of higher

interest rates on borrowings and higher amount of gross debt. Other net financial expenses, at

EUR 38 million, were EUR 6 million lower, mainly due to the higher write-down of Russia related

loan receivables and loss allowance included in the comparison period figures. The net foreign

exchange impact in respect of cash equivalents, interest-bearing assets and liabilities and

related foreign-currency hedges amounted to a loss of EUR 22 (loss of EUR 1) million, mainly

due to revaluation of foreign currency net debt in subsidiaries located in China.

The net tax totalled EUR 64 (-322) million, equivalent to an effective tax rate of 13.0%

(17.3%), as described in more detail in note 2.5 Income taxes.

The loss attributable to non-controlling interests was EUR 74 (loss of EUR 13) million, leaving

a loss of EUR 357 (gain of EUR 1,550) million attributable to Company shareholders.

Earnings per share excluding fair valuations were EUR -0.73 (1.55). Operational return on

capital employed was 2.4% (13.7%).

The Group capital employed was EUR 14,056 million on 31 December 2023, an decrease of

EUR 300 million, mainly due to impairments and change in the fair valuation of energy assets

(PVO) partly offset by acquisition of De Jong Packaging, investment projects and increase of the

fair valuation of forest assets.

Breakdown of capital employed change


EUR million	Capital Employed
31 December 2022	14,356
Capital expenditure excluding investments in biological assets less depreciation	521
Investments in biological assets less depletion of capitalised silviculture costs	-5
Impairments and reversal of impairments	-770
Fair valuation of forest assets	241
Unlisted securities (mainly PVO)	-627
Associated companies	94
Net liabilities in defined benefit plans	-31
Operative working capital and other interest-free items, net	-344
Emission rights	-85
Net tax liabilities	170
Acquisition of subsidiary companies	818
Disposal of subsidiary companies	-227
Translation difference	-60
Other changes	4
31 December 2023	14,056

Financing

Cash flow from operations was EUR 954 (1,873) million and cash flow after investing activities

was EUR -40 (1,162) million. Working capital decreased by EUR 300 (increased 461) million,

inventories decreased by EUR 328 million and trade receivables by EUR 389 million. Trade

payables decreased by EUR 352 million and thus had a negative impact on working capital.

Payments related to the previously recognised provisions were EUR 53 million.

Operative cash flow


EUR million	2023	2022
Operational EBITDA	989	2,529
IAC on operational EBITDA	-126	-133
Other adjustments	-210	-62
Change in working capital	300	-461
Cash flow from operations	954	1,873
Cash spent on fixed and biological assets	-989	-705
Acquisitions of associated companies	-5	-7
Cash flow after investing activities	-40	1,162

As at 31 December 2023, Group net interest-bearing liabilities were EUR 3,167 (1,853) million.

The increase in net interest-bearing liabilities was mainly driven by the acquisition of the De

Jong Packaging Group and other significant investments such as the consumer board

investment at the Oulu site in Finland. Cash and cash equivalents net of bank overdrafts

increased to EUR 2,464 (1,917) million. The net debt/equity ratio at 31 December 2023

increased to 0.29 (0.15). The ratio of net debt to the last 12 months' operational EBITDA

increased to 3.2 (0.7) due to higher net debt and lower operational EBITDA. The average

interest rate on borrowings for the full year 2023 increased to 3.7% (3.3%) with a run-rate of

4.0% as per the end of the fourth quarter.

In May 2023, Stora Enso issued two EUR 500 million green bonds with 3- and 6.25-year

maturities. In November 2023, Stora Enso issued new SEK green bonds with nominal value of

SEK 6,100 million, equal to EUR proceeds of 524 million at the transaction date FX rate. The

SEK green bonds feature several tranches with the maturities ranging from 2025 to 2028. Later

in December 2023 the Company also completed a private placement of SEK 425 million with

maturity in 2033. This was equal to EUR proceeds of 38 million at the transaction date FX rate.

In addition, during the year, the Company re-financed altogether EUR 550 million of its

bilateral loans and committed credit facility, and also drew bilateral loans of EUR 200 million in

total that were arranged but undrawn at the end of 2022. The existing loans were extended by

one to two years and new terms also include extension options. The Company also arranged a

new EUR 100 million bilateral loan with a 1.5-year maturity and a 1-year extension option during

the second quarter. In the fourth quarter a one-year extension was signed to the revolving credit

facility of EUR 700 million to extend its maturity to 2028.

Stora Enso had in total EUR 800 million committed undrawn credit facilities as per 31

December 2023. Additionally, the Company has access to EUR 1,100 million statutory pension

premium loans in Finland.

The fair valuation of cash flow hedges and equity investments fair valued through other

comprehensive income decreased equity by EUR 647 (increased by EUR 563) million. The

decrease is mainly due to a lower fair valuation of the Group’s shareholding in Pohjolan Voima

Oy (PVO), explained especially by lower electricity price forecasts.

At the end of the year, the ratings for Stora Enso’s rated bonds were as follows:


Rating agency	Long/short-term rating	Valid from
Fitch Ratings	BBB- (stable)	4 August 2023
Moody’s	Baa3 (stable) / P-3	17 November 2023

Unaudited 5

Financial results – Segments

Packaging Materials division

The Packaging Materials division is a global leader and expert in circular packaging providing premium

packaging materials based on virgin and recycled fiber. Stora Enso helps customers replace fossil-based

materials with low-carbon, renewable and recyclable alternatives for their food, beverage and transport

packaging with a wide selection of base boards and barrier coatings.


EUR million	2023	2022
Sales	4,557	5,496
Operational EBITDA	267	993
Operational EBITDA margin	5.9%	18.1%
Operational EBIT	-57	655
Operational EBIT margin	-1.3%	11.9%
Fair valuations and non-operational items (FV)1	12	7
Items affecting comparability (IAC)1	-597	-9
Operating result (IFRS)	-642	653
Operating capital, average	3,580	3,512
Operational ROOC	-1.6%	18.6%
Cash flow from operations	370	823
Cash flow after investing activities	-235	488
Board deliveries, 1,000 tonnes	4,963	5,425
Board production, 1,000 tonnes	4,843	5,502

1 The IAC for 2023 included impairments of fixed assets of EUR -228 million for the Oulu containerboard unit, EUR -202 million for China

operations, EUR -12 million for the Anjala site's paper assets, EUR -26 million of goodwill impairments related to the Anjala and De Hoop sites,

restructuring costs related to De Hoop site closure of EUR -79 million, closing down one paper line at Anjala site of EUR -26 million, restructuring

program in division management and support functions of EU -12 million and other restructuring costs of EUR -9 million, and other IAC cases of

-3 million. The IAC for 2022 included EUR -4 million expenses from disposal of Russian operations, EUR -5 million of restructuring expenses and

EUR -1 million other cases. The fair valuations for 2023 included non-operational fair valuation changes of biological assets of EUR 12 (7) million.

Comparative figures have been restated as described in the release from 29 March 2023.

The Packaging Materials division was hit by unprecedented market conditions and sales

declined by 17%, to 4,557 (5,496) million. This was driven by lower prices and volumes for

containerboard and paper, and lower volumes for consumer board. The containerboard market

remained weak throughout the year, while the consumer board market started to soften during

Q1 and stabilised at a low level in Q4.

Operational EBIT dropped from all time high level to EUR -57 (655) million, driven by lower

volumes and prices. Variable costs in many categories declined compared to a year ago, but

overall remained higher year-on-year driven by increased wood costs.

Packaging Solutions division

The Packaging Solutions division is a packaging converter that provides premium fiber-based packaging

products and services used by leading brands across multiple market areas, including retail, e-commerce,

fresh produce, and industrial applications. The division also provides design and sustainability services for

customers to optimise material use, logistics and to reduce CO2 emissions.


EUR million	2023	2022
Sales	1,077	727
Operational EBITDA	111	42
Operational EBITDA margin	10.3%	5.7%
Operational EBIT	43	16
Operational EBIT margin	4.0%	2.2%
Items affecting comparability (IAC)1	-26	-98
Operating result (IFRS)	17	-81
Operating capital, average	874	204
Operational ROOC	4.9%	7.9%
Cash flow from operations	145	11
Cash flow after investing activities	62	-14
Corrugated packaging European deliveries, million m2	1,178	767
Corrugated packaging European production, million m2	1,094	771

1 The IAC for 2023 included EUR -19 million restructuring costs in China and EUR -16 million related to the acquisition of De Jong

Packaging Group, and EUR -1 million other cases. The IAC for 2022 included EUR -93 million related to the disposal of Russian

operations, EUR -4 million restructuring costs, EUR -2 million fixed asset impairments and EUR -1 million other cases.

Comparative figures have been restated as described in the release from 29 March 2023.

Packaging Solutions division sales were at an all-time high of EUR 1,077 (727) million, up 48%,

driven by the acquisition of De Jong Packaging Group

Operational EBIT was EUR 43 (16) million. Lower raw material prices had a positive impact

on the margins. The integration of De Jong Packaging Group proceeded well and contributed

positively to the result.

Sales and operational EBIT

Packaging Materials

Operational ROOC

Packaging Materials

Sales and operational EBIT

Packaging Solutions

Operational ROOC

Packaging Solutions

Unaudited 6

Biomaterials division

The Biomaterials division’s business opportunities are strongly driven by the need to replace fossil-based and

other non-renewable materials. Stora Enso uses all fractions of a tree to develop new biobased solutions for

various applications. The division’s long-term growth is driven by new products and innovations, while pulp

continues to be the foundation.


EUR million	2023	2022
Sales	1,587	2,180
Operational EBITDA	256	822
Operational EBITDA margin	16.1%	37.7%
Operational EBIT	118	687
Operational EBIT margin	7.4%	31.5%
Fair valuations and non-operational items (FV)1	25	-17
Items affecting comparability (IAC)1	-224	-2
Operating result (IFRS)	-81	668
Operating capital, average	2,625	2,715
Operational ROOC	4.5%	25.3%
Cash flow from operations	431	682
Cash flow after investing activities	234	536
Pulp deliveries, 1,000 tonnes	2,277	2,554

1 The IAC for 2023 included restructuring expenses from the closure of the Sunila pulp production of EUR -116 million, impairments of

fixed assets of EUR -59 million for the Uimaharju site, impairment of goodwill of EUR -44 million for the Nordic Mills CGU, EUR -4 million

of other cases. The fair valuations for 2023 included non-operational fair valuation changes of biological assets of EUR 25 (-17) million.

Biomaterials division sales were EUR 1,587 (2,180) million, down 27% from all-time high sales in

2022, due to significantly lower pulp sales prices in all grades and lower sales volumes, due to

market-related curtailments and the closure of the Sunila site in Finland announced in

September 2023. Market conditions were challenging with lower demand.

Operational EBIT at EUR 118 (687) million decreased by 83%, mainly due to significantly

lower sales prices and volumes. Operational EBIT was negatively impacted by significantly

higher variable costs, mainly for wood.

Wood Products division

The Wood Products division is Europe’s largest sawn timber producer and a leading provider of sustainable

wood-based solutions for the global construction industry. Additionally, it offers window and door components,

and co-products such as pellets made from wood residuals.


EUR million	2023	2022
Sales	1,580	2,195
Operational EBITDA	-17	356
Operational EBITDA margin	-1.0%	16.2%
Operational EBIT	-64	309
Operational EBIT margin	-4.1%	14.1%
Items affecting comparability (IAC)1	-22	-56
Operating result (IFRS)	-86	253
Operating capital, average	687	714
Operational ROOC	-9.3%	43.2%
Cash flow from operations	43	346
Cash flow after investing activities	3	264
Wood products deliveries, 1,000 m3	3,727	4,235

1 The IAC for 2023 included impairments of fixed assets of EUR -7 million for the Veitsiluoto site, EUR -4 million for the Launkalne site,

EUR -5 million for the Honkalahti site, EUR -4 million impact from disposal of Näpi site and EUR -3 million from disposal of Wood

Products DIY unit, EUR 1 million other cases. The IAC for 2022 was related to disposal of Russian operations.

Wood Products division sales were EUR 1,580 (2,195) million, down 28%, due to the weakened

market demand and clearly lower sales prices. Weakness in construction industry resulted in

decline in building permits and project starts, and reduced the demand of the division's products

through the year. To balance the lower demand, production curtailments were implemented.

Operational EBIT was weak, at EUR -64 (309) million, a decrease of 121%. The negative

impact of sales prices and volumes could not be compensated by the division's actions to lower

the fixed costs.

Sales and operational EBIT

Biomaterials

Operational ROOC

Biomaterials

Sales and operational EBIT

Wood Products

Operational ROOC

Wood Products

Unaudited 7

Forest division

The Forest division is responsible for wood sourcing for Stora Enso’s Nordic and Baltic operations and B2B

customers. It manages the Group’s forest assets in Sweden and a 41% share of Tornator, whose forests are

mainly located in Finland. The division’s operations are based on sustainable forest management from

planning and logistics to harvesting and forest regeneration.


EUR million	2023	2022
Sales	2,490	2,519
Operational EBITDA	305	256
Operational EBITDA margin	12.2%	10.2%
Operational EBIT	253	204
Operational EBIT margin	10.2%	8.1%
Fair valuations and non-operational items (FV)1	206	367
Items affecting comparability (IAC)1	2	-48
Operating result (IFRS)	461	523
Capital employed, average	5,740	5,518
Operational ROCE	4.4%	3.7%
Cash flow from operations	70	146
Cash flow after investing activities	19	91
Wood deliveries, 1,000 m3	32,401	38,217
Operational fair value change of biological assets	120	87

1 The IAC for 2023 included a reversal of land related impairment of EUR 5 million and other provision updates of EUR -3 million. The

IAC for 2022 included land related impairment of EUR -5 million and EUR -43 million related disposal of Russian operations. The fair

valuations for 2023 included non-operational fair valuation changes of biological assets of EUR 156 (201) million, non-operational items

of associated companies of EUR 56 (169) million, and EUR -5 (-3) million impact from adjustments for differences between fair value and

acquisition cost of forest assets upon disposal.

Forest division sales were EUR 2,490 (2,519) million, down 1%. Higher sales prices were offset

by lower demand.

Operational EBIT at EUR 253 (204) million increased by 24%. The increase was due to the

strong operational performance and higher sales prices in the Group’s own forest assets.

Other

The segment Other includes the divested paper sites until the completion of the divestments, the reporting of

the emerging businesses (including Formed Fiber and Selfly Stores), as well as Stora Enso’s shareholding in

the energy company Pohjolan Voima (PVO), and the Group’s shared services and administration.


EUR million	2023	2022
Sales	964	2,150
Operational EBITDA	18	102
Operational EBITDA margin	1.9%	4.7%
Operational EBIT	1	63
Operational EBIT margin	0.1%	2.9%
Fair valuations and non-operational items (FV)1	-13	6
Items affecting comparability (IAC)1	-28	-33
Operating result (IFRS)	-41	36
Cash flow from operations	-105	-136
Cash flow after investing activities	-123	-203

1 The IAC for 2023 included EUR 29 million related to restructuring of Kvarnsveden, EUR 9 million to restructuring of Veitsiluoto, and

EUR -15 million to restructuring of Group Functions, EUR 52 million related to disposal of Maxau, EUR -30 million to disposal of Nymölla,

EUR -45 million to disposal of Hylte, EUR -14 million to disposal of biocomposite business, and EUR -6 million on disposal transactions

costs, EUR -14 million related to fixed asset impairments in Group Operations unit and EUR 6 million related to environmental provision

updates. The IAC for 2022 included EUR 13 million related to restructuring of Kvarnsveden, EUR -10 million to restructuring of

Veitsiluoto, EUR -28 million on impairments, transaction cost and other items related to paper site disposals of Nymölla, Hylte and

Maxau, EUR -13 million related updates in environmental provisions, EUR 8 million on Kvarnsveden site disposal, EUR -1 million related

to disposal of Russian operations and EUR -1 million other cases. The fair valuations for 2023 included non-cash income and expenses

related to CO2 emission rights and liabilities of EUR -13 (6) million.

Comparative figures have been restated as described in our release from 29 March 2023.

Sales for the segment Other were at EUR 964 (2,150) million and operational EBIT EUR 1 (63)

million. The reduction from the previous year was mainly driven by the sale of the paper

production units in Sweden and Germany.

Sales and operational EBIT

Forest

Operational ROCE

Forest

Unaudited 8

Investments and capital expenditure

Additions to fixed and biological assets including internal costs capitalised in 2023 totalled EUR

1,125 (778) million. The total amount includes additions in biological assets of EUR 71 (77 )

million.

In February, Stora Enso announced approximately EUR 30 million investment in its Heinola

Fluting site in Finland to renew the energy set-up and process equipment. After the investment,

the site can replace also the remaining fossil-based fuels with renewable bioenergy. This will

reduce the site’s fossil-based greenhouse gas emissions by more than 90%.

In June, Stora Enso and Tetra Pak completed the investment in increasing the recycling

capacity of beverage cartons in Poland. The total investment was EUR 29 million, of which Stora

Enso’s share was EUR 17 million. A new repulping line was built at the Ostrołęka site recovering

the carton fibers.

The EUR 21 million investment, announced in June 2021, to improve the competitiveness

and environmental performance of the Anjalankoski production sites was completed during the

third quarter of 2023.

The expansion of board production capacity, announced in 2021, at the Skoghall site in

Sweden was completed in November. Following the investment, the annual packaging board

production increased by approximately 100,000 tonnes to over 900,000 tonnes. The site started

to deliver commercial quality in liquid packaging board (LPB) and coated unbleached kraft (CUK)

according to plan.

The EUR 10 million investment, decided in April 2022, at the Enocell site, Finland, was

completed during the fourth quarter of 2023. The investment reduced annual operational CO2

emissions replacing fossil-based fuel oil with renewable pitch oil made from trees. This

complements the main energy source, sawdust powder, utilising 100% bio energy.

The EUR 1 billion investment at the Oulu site in Finland to convert the remaining idle paper

machine into a high-volume consumer board line is moving ahead according to schedule.

Production is expected to start during 2025. The investment supports the Group’s growth

strategy in renewable packaging by providing new volume for growing packaging segments. The

targeted end-use segments are food and beverage packaging, especially frozen and chilled, and

dry and fast food, mainly in Europe and North America.

During the year, Stora Enso completed a feasibility study regarding the conversion of one of

the two paper line at its Langerbrugge site in Belgium into a high-volume recycled

containerboard line, and decided to postpone the decision regarding the possible future

conversion, until there are more favourable market conditions for containerboard.

The other main projects ongoing at the end of 2023 were were De Lier site expansion in the

Netherlands and improvements of fluff pulp production at the Skutskär site in Sweden.

Changes in the Group structure

The acquisition of De Jong Packaging Group, based in the Netherlands, for an enterprise value

of EUR 1,020 million was completed in January 2023.

Stora Enso finalised the divestment of its paper assets in 2023. The divestment of the

Nymölla paper site in Sweden to Sylvamo was completed in January, the divestment of the

Maxau site in Germany to Schwarz Produktion was completed in March and the divestment of

the Hylte site in Sweden to Sweden Timber was completed in April. The Anjala paper mill in

Finland and the Langerbrugge paper mill in the Netherlands were retained in the Group.

During the year, Stora Enso closed down its Sunila pulp production and lignin extraction unit

in Finland, the De Hoop containerboard site in the Netherlands, one containerboard line at its

Ostrołęka site in Poland, and the Näpi sawmill in Estonia.

Stora Enso is in the process of divesting its consumer packaging site and forestry operations

in Guangxi, China.

Innovation, research and development

Stora Enso’s total spend on innovation, research and development in 2023 was EUR 114 (112)

million, equivalent to 1.2% (1.0%) of total sales. Research and development work is a basic

element for staying relevant and competitive towards customers. In 2023, Stora Enso employed

approximately 330 people in research and development. The responsibility of product

innovations and development of services is with the business divisions.

Stora Enso's growth focus is on the development of sustainable packaging applications to

replace plastic-based materials; bio-based barriers solutions for packaging; innovative

biomaterials or high-end applications; and the development of sustainable wooden-based

materials and components which store carbon and improve energy efficiency of buildings.

Stora Enso’s long-term science and research priority is to address the early research at

universities and institutes for enabling breakthroughs and competence build-up to meet the

needs of the divisions. The Group Innovation and R&D is working closely with the strategic

partner universities, research institutes and excellence centers to get answers to central

scientific questions related to renewable materials.

Intellectual property (IP) is an important tool to support Stora Enso's development of

innovative products and processes and safeguarding the Group's intellectual assets. During

2023, Stora Enso continued to strengthen its patent portfolio by applying for patents for 83 new

innovations. The focus of the new patent filings was within the Biomaterials, Packaging Materials

and Packaging Solutions divisions. The Biomaterials division has new patent filings related to

Lignode, biobinders, biofoam, and circular chemicals. The Packaging Materials division

continues to strengthen the patent portfolio with filings related to barriers, board technology and

circular packaging. The Packaging Solutions division has new patent filings related to, for

example, formed fiber and packaging design. Stora Enso’s patent portfolio amounts to over

3,500 applications and granted patents.

Non-financial information

Requirements of non-financial information reporting according to the Finnish Accounting Act are

reported below. The scope of the reporting includes those non-financial topics that relate to the

Group’s key risks.

Risks and policy principles related to these topics are additionally described in the chapters

Risks and Risk Management, Task Force on Climate-related Financial Disclosures (TCFD), and

Task Force on Nature-related Financial Disclosures (TNFD).

Business model

Stora Enso is one of the leading providers of renewable products in packaging, biomaterials, and

wooden construction, and one of the largest private forest owners in the world. Sustainability is

embedded in the Group's strategy and responsible business practices. Stora Enso contributes to

the transition towards a circular bioeconomy in the three areas where it has the biggest impact

and opportunities: climate change, biodiversity, and circularity. A description of Stora Enso's

business model is presented at the beginning of the Report of the Board of Directors.

Stora Enso acknowledges the importance of the United Nations Sustainable Development Goals

(SDGs) and supports all seventeen SDGs. The SDGs ‘Responsible consumption and

production’ (goal 12), ‘Climate action’ (goal 13), and ‘Life on land’ (goal 15) have been identified as

the most relevant, where the Group has the largest impact through its own operations and products.

Unaudited 9

Sustainability governance

Sustainability is a key element of Stora Enso’s corporate governance owned by the Board of

Directors, the President and Chief Executive Officer (CEO), and the Group Leadership Team

(GLT). The CEO carries the ultimate responsibility for the implementation of the sustainability

agenda. Sustainability work is led by the Executive Vice President, Sustainability, who reports

directly to the CEO and is part of the Group Leadership Team (GLT). The Board of Directors’

Sustainability and Ethics Committee oversees the implementation of Stora Enso’s sustainability

agenda, and Ethics and Compliance Strategy. The Committee met four times in 2023.

Stora Enso’s Sustainability Policy describes the Group's overall approach to sustainability

and the governance model. The Code of Conduct and other policies, guidelines, and statements

on specific sustainability topics further elaborate the approach, while also guiding the Group’s

employees in their everyday work. These documents are available at storaenso.com/

sustainability.

More information about Stora Enso’s approach to sustainability is available in the sections

Our strategy, Our people, and Sustainability reporting.

Environmental matters

Climate change

Key policy: Policy for Energy and Climate change

Stora Enso's science-based target is to reduce absolute Scope 1 and 2 CO2e emissions from

operations by 50% by 2030 from the 2019 baseline, in line with the 1.5-degree scenario. Stora

Enso is also committed to reducing absolute Scope 3 CO2e emissions by 50% by 2030 from the

2019 baseline.

In 2023, Stora Enso’s absolute CO2e emissions (Scope 1 and 2) were 41% lower than the

baseline level (27% 1 lower in 2022). The Group's CO2e emissions elsewhere along the value

chain (Scope 3) were 34% lower than the baseline level (24%1 lower in 2022). During 2023, the

emissions in all three Scope categories decreased mainly as a consequence of lower production

volumes as well as site and production line closures.

Sustainable forestry and biodiversity

Key policy: Wood and Fiber Sourcing and Land Management Policy

Stora Enso is committed to achieving a net-positive impact on biodiversity in its own forests and

plantations by 2050 through active biodiversity management. The Group steers its biodiversity

actions through a Biodiversity Leadership Programme to improve biodiversity at species, habitat,

and landscape levels. Progress is monitored with science-based impact indicators reported in

the chapter Sustainable forestry and biodiversity of the Sustainability reporting section.

Stora Enso uses its own forest in Sweden as a platform for continuously developing new

biodiversity management practices to be adapted to local conditions and implemented in

different geographical areas when feasible. Measures to be developed, tested, and used in the

Group's own forests in Sweden include: application of digital tools to improve accuracy of

planning and operations; increasing amount of deadwood and broad-leaved trees, especially

birch; continuous cover forestry in suitable areas; and increasing use of controlled burning in

forest regeneration.

Currently, Stora Enso follows its progress on sustainable forestry with a key performance

indicator that measures the proportion of land in wood production and harvesting owned or

leased by Stora Enso covered by forest certification schemes. At the end of 2023, Stora Enso's

owned or leased lands covered a total area of 2.02 million hectares (2.01 million hectares in

2022). The majority of Stora Enso’s owned or leased lands are located in Sweden. For more

details, see note 4.2 Forest assets. The Group’s target is to maintain the high level of 96%, and

in 2023, the certification coverage amounted to 99% (99% 2 in 2022). Certain purchased areas in

Stora Enso’s joint operations in Brazil and Uruguay were in the certification process but not yet

certified by the end of 2023.

In 2023, the total amount of wood (including roundwood and wood chips) delivered to Stora

Enso's production sites was 28.1 million m3 (solid under bark) (35.1 million m3 in 2022). The

proportion of third-party certified wood in the Group's total wood supply was 81% (80%).

Circularity

Key policy: Circular Design Guidelines

Stora Enso is committed to circular material flows that help to minimise waste and combat

climate change. The target is to achieve 100% technically recyclable products by 2030. By the

end of 2023, 94% (94% in 2022) of the Group's products were recyclable. 3

Water

Key policy: Environmental Guidelines

Stora Enso constantly strives to improve its water performance through targeted investments. As

of 2023, a new Group goal was set to reduce specific process water discharges per saleable

tonne (m3 tonne) by 17% from the 2019 baseline (36 m3/tonne) by 2030. In 2023, the process

water discharges were 35 m3/tonne (34 m3 in 2022), with a 3% decrease from the baseline.

For total water withdrawal, the target is to maintain a decreasing trend from the 2016 baseline

(60m3/tonne). In 2023, total water withdrawal was 61 m3 per saleable tonne (57 m3 in 2022).

Lower production volumes are currently adversely affecting the performance per saleable tonne,

as a regular water flow needs to be maintained, particularly in wastewater treatment.

Social and employee matters

Employees

Key policies: Minimum Human Resources Requirements for labour conditions

On 31 December 2023, there were 19,842 (20,879) employees in the Group. The average

number of employees in 2023 was 20,822, which is 969 less than the average number in 2022.

The figures include 50% of the employees at Veracel in Brazil and Montes del Plata in Uruguay.

Read more in the chapter Employees in the Sustainability reporting section.

Personnel expenses totalled EUR 1,275 (1,315) million or 13.6% of sales. Wages and

salaries were EUR 962 (996) million, pension costs EUR 147 (152) million, and other employer

costs amounted to EUR 162 (160) million.

Unaudited 10

1 Comparative figures are restated due to structural changes or additional data after previous annual report.

2 Reporting on total land area and its forest certification coverage aligned with financial reporting on forests assets. For more information, see note 4.2

3 Based on the technical recyclability of products and their production volumes consolidated as tonnes. Technical recyclability is defined by international standards and tests, when available, and in absence of these, by Stora Enso’s own tests that prove recyclability. The reporting

scope includes Stora Enso’s packaging, pulp, paper, and solid wood products as well as biochemical by-products.

At the end of 2023, the Group's top four countries in respect to the number of employees

were Finland, Sweden, China, and Poland. 25% (25%) of all employees were women. Stora

Enso's target is to increase the share of female managers among all managers to 25% by the

end of 2024. By the end of 2023, 24% of managers were female (23%).

Personnel turnover in 2023 was 11% (14%). Illness-related absenteeism amounted to 3.7%

(4.1%) of total theoretical working hours.

The Group's wages in relation to local minimum wages are presented in the chapter

Consolidated sustainability figures in the Sustainability reporting section. Remuneration to the

Board of Directors and executive management is described in note 3.2 Board and executive

remuneration.

Safety

Key policy: Health and Safety Policy

In 2023, the Total Recordable Incident (TRI) rate was 4.7 (5.9). The milestone of 4.9 for 2023

was achieved by prioritising preventive safety measures and reinforcing divisions’ accountability

on improving performance. In 2023, Stora Enso introduced a new leading safety indicator, the

‘Safety Engagement Rate’, focused on preventive safety management. In 2023, no fatal injuries

occurred at Stora Enso’s sites.

Sustainable sourcing

Key policy: Supplier Code of Conduct (SCoC)

Stora Enso’s key performance indicator for responsible sourcing measures the proportion of

Group's total supplier spend covered by the Supplier Code of Conduct (SCoC), including all

categories and regions. Stora Enso's target is to maintain a minimum coverage level of 95% of

supplier spend covered by the SCoC. By the end of 2023, 95% of Stora Enso’s total spend on

materials, goods, and services was duly covered (96% at the end of 2022).

Respect for human rights

Key policy: Human Rights Policy and Guidelines

Stora Enso’s commitment to respect human rights covers all the Group's operations, including

employees, contractors, suppliers, and neighbouring communities. In addition to the Group's

commitment to the UN Guiding Principles on Business and Human Rights, Stora Enso’s annual

Slavery and Human Trafficking Statement is available at storaenso.com/sustainability.

While Stora Enso considers all human rights to be important and respects them, the human

rights identified as most salient remain the primary focus. This includes the following topics:

• Health and safety

• Fair labour (fair employment conditions, freedom from forced labour, freedom of association,

non-discrimination, and non-harassment)

• Land and natural resource rights acquisition and management

• Grievance mechanisms

• Children’s rights (relevant to the forest sector)

In 2023, Stora Enso shared best practices and adapted existing processes to embed the outcomes

of the three human rights due diligence deep-dive projects initiated in 2022. The projects were

carried out together with a third-party consultancy, with the aim of improving risk identification and

controls for two high-risk supply chains, as well as the due diligence processes in the Group’s own

operations. Read more in chapter Human Rights in the Sustainability reporting section.

During 2023, Stora Enso continued to address land and natural resource rights in Guangxi,

China and Bahia, Brazil.

Guangxi, China

Stora Enso leases 69,700 (73,100) hectares of land in Guangxi province China, of which 53,400

(53,400) hectares is leased from state-owned forest farms. The remaining 16,300 (19,700)

hectares, or 23% (27%) of the total area, is social land leased from village collectives, individual

households, and local forest farms.

Parts of the land leased by Stora Enso have been occupied for up to ten years for the

purpose of growing crops and trees on a small scale. In some cases, the occupiers are claiming

rights to the land based on historical land ownership documents that have been superseded by

state ownership in successive land reform processes. Recovery of occupied land continued in

2023, with 7,132 (6,124) hectares of land still under occupation at the end of the year. As

announced in December 2022, Stora Enso has initiated a sales process for a divestment of its

consumer board production site and forestry operations in Beihai, China.

Bahia, Brazil

In Bahia, Brazil, work continued on the Sustainable Settlement Initiative launched in 2012 to

provide farming land and educational support for local families in the landless people’s social

movements. In 2018, Veracel signed a new agreement with the social landless movements to

complement the earlier agreed Sustainable Settlement Initiative.

At the end of 2023, 139 (182) hectares or 0.1% (0.2%) of productive land owned by Veracel

remained occupied by movements not involved in the agreements.

At the end of 2023, the total land area owned by Veracel was 209,000 (210,000) hectares, of

which 82,000 (82,000) hectares are used for growing eucalyptus for pulp production.

Approximately half of Veracel's lands are dedicated to protecting local biodiversity by restoring

and conserving the natural Atlantic rainforest.

Anti-corruption and bribery matters

Key policies: Business Practice Policy, the Stora Enso Code (Code of Conduct)

A total of 131 (153 in 2022) potential non-compliance cases were reported in 2023. During the

past years, there has been a significant increase in reported misconduct cases, which is likely

due to a greater external and internal focus on ethical conduct, compliance, and voicing

concerns. A total of 163 (140) investigations of potential non-compliance were completed, which

also included open cases from previous years. Proven cases leading to disciplinary action, legal

action and/or process improvements were identified in 30 (44) of the investigations. Based on

the Group’s categorisation, 9 (13) of the proven cases were related to corruption and/or fraud,

resulting in employee dismissal or a disciplinary process. While Stora Enso continues to enforce

zero tolerance for corruption, none of the proven cases had a material impact on the Company.

Furthermore, 7 (12) of the proven cases were related to discrimination, harassment and/or

bullying. Remediation plans have been or are being implemented together with relevant

management representatives.

Unaudited 11

Environmental investments and liabilities

In 2023 Stora Enso’s environmental investments amounted to EUR 132 (82) million. These

investments were mainly to improve the quality of air and water, to enhance resource and

energy efficiency, and to minimise the risk of accidental spills.

Stora Enso’s environmental costs in 2023 excluding interest and including depreciation

totalled EUR 240 (243) million. These costs include taxes, fees, refunds, permit-related costs,

and repair and maintenance costs, as well as wastewater treatment chemicals and certain other

materials.

Provisions for environmental remediation amounted to EUR 63 (73) million at 31 December

2023, details of which are in note 4.9 Provisions. There are currently no active or pending legal

claims concerning environmental issues that could have a material adverse effect on Stora

Enso’s financial position.

EU Taxonomy

To meet the EU’s climate and energy targets for 2030 and reach the objectives of the European

Green Deal, a classification system for sustainable economic activities called EU Taxonomy was

introduced in 2020. Large companies are obligated to report the share of Taxonomy-eligibility

and Taxonomy-alignment in their operations. Taxonomy-eligibility describes if an economic

activity is included in the scope of activities recognised in the EU Taxonomy Regulation.

Taxonomy-alignment describes if an economic activity is sustainable based on the technical

screening criteria for substantial contribution and do-no-significant harm specified for the activity.

Taxonomy-aligned activity needs to be also carried out in compliance with the minimum

safeguards, thus to respect basic human rights and follow good business conduct rules.

In 2023 EU Taxonomy was expanded to four remaining environmental objectives with the EU

Environmental Delegated Act and with amendments to Climate Delegated Act. The amendments

did not bring major impact on Stora Enso's Taxonomy-eligibility. The forest industry is not at the

core of the current legislation and therefore the Group has only few activities to report on. From

Stora Enso’s main products, the wood-based solutions for construction industry are included in

the EU Taxonomy through their contribution to buildings' energy efficiency. Other main products,

production of pulp, consumer board, containerboard and corrugated packaging, are out of the

scope of the EU Taxonomy and therefore the reported Taxonomy-eligible KPIs are low.

Accounting principles

The EU Taxonomy KPIs, turnover, capex and opex, are presented in separate tables as defined

in the regulation. The total turnover is the Group’s total sales, as presented in the line of sales, in

consolidated income statement, and rental income in 2023, which respectively include the

IFRS 15 and the IFRS 16 income according to the EU Taxonomy turnover definition. The

external sales connected to the economic activities are reported under Taxonomy-eligible

turnover. The total capex is the Group's total capital expenditure in 2023, as presented in the line

of additions, excluding goodwill additions, in note 4.1 Intangible assets, property, plant and

equipment and right of use assets, and note 4.2 Forest assets. The Taxonomy-eligible capex are

the investments related to the assets or processes associated with the respective economic

activities. The total opex covers the maintenance expenses, short-term lease costs, non-

capitalised research and development costs and silviculture costs at the Group level. The

Taxonomy-eligible opex include the corresponding direct non-capitalised costs related to the

economic activities.

Double counting is avoided by having a clear cost structure in reporting which ensures that

the profit centers and cost elements are separate for each activity. In reporting the activities do

not overlap between environmental objectives.

Taxonomy eligible and aligned activities

Stora Enso has identified seven eligible activities to report in the EU Taxonomy in the conducted

yearly exercise. The eligibility and alignment assessments have been carried out based on the

best interpretation of the Taxonomy Regulation and the available guidelines from the European

Commission. In case of unclarities, the conservative approach has been chosen. The

assessments and the data are covered by external assurance.

1.3 Forest management

Taxonomy-eligible forest management includes Stora Enso's own forest activities in Sweden

where the Group has full control over the activity. Tree plantations in South America and China

are not included in the activity. Of Stora Enso’s Swedish forests, 100% are certified under

certification systems (PEFC or FSC) which lays the foundation for sustainable forest

management. Stora Enso considers its forest management practices aligned with EU Taxonomy,

but has been unable to fulfill the third party verification requirement described in forest

management substantial contribution criteria (section 4. Audit). Stora Enso has been actively

searching a partner who is capable of conducting EU Taxonomy compliant verification and will

continue the search. Until then the Group reports its forest management as eligible but not-

aligned in EU Taxonomy.

The output of the activity, the grown wood, is used mostly internally in Stora Enso’s own

operations. The forest management turnover in the EU Taxonomy includes the sale of externally

sold roundwood and forest residuals.

1.4 Conservation forestry

In Brazil, Stora Enso’s 50% owned joint operation Veracel has dedicated more than half of its

land for the protection and restoration of biological biodiversity in natural Atlantic rainforest. The

forest is excluded from the harvesting activities. Stora Enso considers the conservation practises

aligned with EU Taxonomy, but has been unable to fulfil the third party verification requirement

described in conservation forestry substantial contribution criteria (section 4. Audit). The activity

is thus reported as eligible but not- aligned. Costs from the conservation operations are reported

in opex.

2.4 Remediation of contaminated sites and areas

Remediation projects of contaminated sites and areas are related to discontinued operations

and mill closures at Stora Enso sites. The expenses related to the environmental remediation

work carried out are included in the reported opex.

3.4 Manufacture of batteries

Stora Enso's pilot plant costs and research and development expenses related to hard carbon

innovation are included in Taxonomy-eligible opex. Turnover for the activity is expected within

future years. The alignment assessment is done based on the predicted future industrial scale

operations and production which will be aligned with the technical screening criteria of 3.4

Manufacture of batteries once started. For more information on Lignode® by Stora Enso, see the

Group's website storaenso.com/lignode.

Unaudited 12

3.5 Manufacture of energy efficiency equipment for buildings

Stora Enso produces wood-based solutions for the construction industry. As Stora Enso is not a

manufacturer of the end products, the compliance with the substantial contribution was

assessed based on the knowledge of the end use and the energy efficiency related regulations

in the primary market areas. The external sales related to the share of production that is

estimated to end up for doors, windows, roofing and external wall systems, is included under the

EU Taxonomy turnover. The same share is used in the allocation of the related capex and opex

for the activity.

4.20 Cogeneration of heat/cool and power from bioenergy

Wood residuals and by-products from the pulp process are used for energy production. The

bioenergy generated from biobased feedstock is considered eligible in the EU Taxonomy

reporting. The turnover includes the external sales of the excess electricity and heat which is not

consumed internally. The largest single capex item in the reporting is the investment to

bioenergy production at the Oulu production site, expected to be in use 2025.

7.6 Installation, maintenance and repair of renewable energy technologies

The installation of renewable energy technologies is considered eligible in the EU Taxonomy

reporting. The reported capex includes the investments in the installation of solar panels at Stora

Enso sites.

Minimum safeguards

Minimum safeguards were assessed in Group-level from two angles: by reviewing the company

processes for human rights, corruption, taxation and fair competition to determine that the

adequate processes and controls are in place, and by investigating that there are no known

breaches or violations existing in the parent company, in its subsidiaries or by senior

management. The Group considers its processes to be at a robust level and with no violations to

meet the alignment with the minimum safeguards. Read more in the following chapters in the

Sustainability reporting section: Human rights, Business ethics, and Stora Enso as a taxpayer.

Unaudited 13

Proportion of Turnover from products or services associated with Taxonomy-aligned economic activities 2023

EUR million

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic Activities

Code

Turnover

Proportion

turnover

year 2023

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular Economy

Biodiversity

Climate change mitigation

Climate change adaptation

Water

Pollution

Circular Economy

Biodiversity

Minimum safeguards

Proportion

Taxonomy

aligned or

eligible

turnover

year 2022

Category

enabling

activity

Category

transition

al activity

EUR

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Forest management

CCM 1.3

100%

Manufacture of energy efficiency equipment for buildings

CCM 3.5

413

4.4%

n/a

100%

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

0.4%

n/a

96.6%

Turnover of environmentally sustainable activities (Taxonomy-

aligned) (A.1)

454

4.8%

100%

99.7%

Of which Enabling

413

4.4%

100%

78.3%

Of which Transitional

A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

Forest management

CCM 1.3

118

1.3%

—%

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

0.0%

3.4%

Turnover of Taxonomy-eligible but not environmentally sustainable

activities (not Taxonomy-aligned activities) (A.2)

119

1.3%

0.3%

A.Turnover of Taxonomy eligible activities (A.1+A.2)

574

6.1%

100%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible activities

8,836

93.9%

TOTAL1

9,410

100%

1 In the EU Taxonomy, turnover includes also rental income, therefore the figure differs slightly from the Group total sales.

Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective

N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective

N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective

Unaudited 14

Proportion of capex from products or services associated with Taxonomy-aligned economic activities 2023

EUR million

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic Activities

Code

Capex

Proportion

of capex

year 2023

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular Economy

Biodiversity

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular Economy

Biodiversity

Minimum safeguards

Proportion

Taxonomy

aligned or

eligible

capex year

2022

Category

enabling

activity

Category

transition

al activity

EUR

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Forest management

CCM 1.3

100%

Manufacture of batteries

CCM 3.4

—

0.0%

n/a

100%

Manufacture of energy efficiency equipment for buildings

CCM 3.5

0.4%

n/a

100%

District heating/cooling distribution

CCM 4.15

100%

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

5.1%

n/a

70.1%

Installation, maintenance and repair of renewable energy

technologies

CCM 7.6

0.3%

n/a

—%

Capex of environmentally sustainable activities (Taxonomy-aligned)

(A.1)

5.7%

100%

94.3%

Of which Enabling

0.6%

100%

54.9%

Of which Transitional

A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

Forest management

CCM 1.3

0.6%

—%

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

0.3%

29.9%

Capex of Taxonomy-eligible but not environmentally sustainable

activities (not Taxonomy-aligned activites) (A.2)

0.9%

5.7%

A.Capex of Taxonomy eligible activities (A.1+A.2)

6.6%

100%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Capex of Taxonomy-non-eligible activities

1,051

93.4%

TOTAL

1,125

100%

Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective

N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective

N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective

Unaudited 15

Proportion of opex from products or services associated with Taxonomy-aligned economic activities 2023

EUR million

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic Activities

Code

Opex

Proportion

of opex

year 2023

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular Economy

Biodiversity

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular Economy

Biodiversity

Minimum safeguards

Proportion

Taxonomy

aligned or

eligible

opex year

2022

Category

enabling

activity

Category

transition

al activity

EUR

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Forest management

CCM 1.3

100%

Conservation forestry

CCM 1.4

100%

Remediation of contaminated sites and areas

PPC 2.4

0.7%

n/a

—%

Manufacture of batteries

CCM 3.4

2.6%

n/a

100%

Manufacture of energy efficiency equipment for buildings

CCM 3.5

2.5%

n/a

100%

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

4.1%

n/a

52.9%

Opex of environmentally sustainable activities (Taxonomy-aligned)

(A.1)

9.9%

92.7%

7.3%

82.9%

Of which Enabling

5.2%

100%

45.0%

Of which Transitional

A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

Forest management

CCM 1.3

2.9%

—%

Conservation forestry

CCM 1.4

0.1%

—%

Cogeneration of heat/cool and power from bioenergy

CCM 4.20

0.7%

47.1%

Opex of Taxonomy-eligible but not environmentally sustainable

activities (not Taxonomy-aligned activites) (A.2)

3.8%

17.1%

A.Opex of Taxonomy eligible activities (A.1+A.2)

108

13.7%

100%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Opex of Taxonomy-non-eligible activities

681

86.3%

TOTAL

790

100%

Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective

N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective

N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective

Unaudited 16

Risks and risk management

Our approach to risk management

Risk is an integral element of business and corporate governance, and it is characterised by

both threats and opportunities, which may have an impact on future performance and the

financial results of Stora Enso, as well as on its ability to meet certain social and environmental

objectives. Stora Enso is committed to ensuring that systematic, holistic and proactive

management of risks and opportunities is among its organisational core capabilities, and that a

culture is fostered where both are carefully considered in all business decisions. Through

consistent application of dynamic risk analysis and scenario planning, Stora Enso enhances

opportunities and manages risk in order to reduce threats which may prevent the Group from

reaching its business goals.

Risk governance

Stora Enso defines risk as the effect of uncertainty on the Group's ability to meet organisational

values, objectives and goals. The Group Risk Policy, which is approved by the Board of

Directors, sets out the overall approach to governance and the management of risks in

accordance with the COSO (Committee of Sponsoring Organizations) framework and in line with

the ISO 31000 standard. The Board retains the ultimate responsibility for the overall risk

management process and for determining predominantly through Group policies the appropriate

and acceptable level of risk.

The Board has established a Financial and Audit Committee to provide support to the Board

in monitoring the adequacy of the risk management process within Stora Enso, and specifically

regarding the management and reporting of financial risks. This oversight scope includes also

monitoring of the cybersecurity risk. The Sustainability and Ethics Committee is responsible for

overseeing the company’s sustainability and ethical business conduct, its strive to be a

responsible corporate citizen, and its contribution to sustainable development.

The head of Enterprise Risk Management, reporting to the Chief Strategy and Innovation

Officer, is responsible for the design, development and monitoring of the top-down

implementation of the Group risk management framework. Each division and Group function

head, together with their respective management teams, are responsible for process execution

and cascading the framework and guidelines further down in the organisation. The Internal Audit

unit evaluates the effectiveness and efficiency of the Stora Enso risk management process.

Risk management process

Risk management is embedded in all decision-making processes, with holistic risk assessments

conducted also as part of all significant investment decisions. In connection with the annual

strategy process, business divisions and group service and support functions conduct a holistic

baseline risk assessment, linked to their key objectives. Specific guidance regarding the risk

management process is outlined in the enterprise risk management instructions.

Business entities and functions identify the sources of risk events including changes in

circumstances and their causes and potential consequences. Stora Enso’s risk model outlines

the overall risk universe which is used to support holistic risk identification and risk consolidation,

while also providing taxonomy as well as consistency in risk terminology.

Risk analysis involves developing an understanding of the risk to provide an input for risk

evaluation. The purpose of risk evaluation is to determine the risk priorities and to support

decision making to determine which risks require treatment/actions. Risks are assessed in terms

of their impact and likelihood of occurrence, often based on specific risk scenarios. The

effectiveness of existing risk reduction is factored in to define the residual risk level. Pre-defined

impact scales consider financial, safety and reputational impacts, on both a quantitative and

qualitative basis.

Risk treatment involves selecting one or more risk management option, such as avoidance,

reduction, sharing or retention. Additional risk mitigation actions are determined for risks which

exceed the perceived risk tolerance incorporating the assignment of responsibility, schedule and

timetable of the risk response actions.

Following the annual baseline assessment, prioritised and emerging risks, as well as the

corresponding risk mitigation and business continuity plans related to those risks, are reviewed

in divisional business review meetings on a semi-annual basis.

Despite the measures taken to manage risks and mitigate the impact of risks, and while some

of the risks remain beyond the direct control of the management, there can be no absolute

assurance that risks, if they occur, will not have a materially adverse effect on Stora Enso’s

business, financial condition, operating profit or ability to meet financial obligations.

Main risks

Reputation

Reputational risks often reflect the combined impacts of many other types of risks and could be

a consequence of incidents or non-compliant behaviour of employees, contractors, suppliers or

other business partners. This includes failure to comply with norms, laws and regulations, or

policy documents. Damage to Stora Enso’s reputation and brand may result in a loss of investor

and customer confidence leading to higher cost of capital and decreased revenues.

Mitigation measures and opportunities

Policies such as the Stora Enso Code and Supplier Code of Conduct ensure that the Board has

oversight. Continuous and mandatory training sessions for employees and, on occasion,

suppliers guarantees that the policies are being implemented, and audits are conducted to

monitor that Stora Enso’s requirements are met. Stora Enso has established a Speak Up

Hotline, through which employees and any third party globally can anonymously report potential

non-compliance cases. All reported cases are subject to an established investigation and

reporting process, with proven cases leading to actions. Stora Enso continuously engages with

its stakeholders to enhance relationships, to respond to developing needs and to inform its

strategy.

Macroeconomy, geopolitics, and currency rates

Changes in global economic conditions, such as sharp market corrections and foreign exchange

volatility, could have a negative and material impact on Stora Enso's profit, cash flows and

financial position.

Stora Enso is exposed to several financial market risks that the Group is responsible for

managing under policies approved by the Board of Directors. The objective is to achieve cost-

effective funding in Group companies and manage financial risks by using financial instruments

to reduce earnings volatility. The main exposures for the Group, besides currency risk, are

interest rate risk, liquidity risk, refinancing risk, commodity price risk and credit risk. Financial

risks are discussed in detail in note 5.1 Financial risk management.

Unaudited 17

Mitigation measures and opportunities

Stora Enso has a diversified portfolio of businesses which mitigates exposure to any one country

or product segment. The external environment is continuously monitored and planning

assumptions take account of important near- to medium-term and long-term drivers and risks

related to key macro-economic factors. The compliance to the Board-approved risk appetite is

closely monitored and cash flow and liquidity are actively managed. Stora Enso hedges 15–60%

of the highly probable 12-month net foreign exchange flows in main currency pairs. Currency

translation risk is reduced by funding assets, whenever economically possible, in the same

currency as the asset. The divisions regularly monitor their order flows and other leading

indicators, where available, so that they may respond quickly to a deterioration in trading

conditions. In the event of a significant deterioration in general economic condition and in main

leading economic indicators, the Group has a possibility to implement cost reduction measures

to offset the impact on margins from deterioration in sales.

Competition and market demand

The packaging, pulp, paper and wood products industries are mature, capital intensive and

highly competitive. Stora Enso’s principal competitors include several large international forest

products companies and numerous regional and more specialised competitors. Customer

demand is influenced by the general economic conditions and inventory levels and affects

product price levels. Product prices, which tend to be cyclical, are affected by capacity utilisation,

which decreases in times of economic slowdowns. Changes in prices differ between products

and geographic regions.

The following table shows the operating profit sensitivity to a +/- 10% change in either price or

volume for different segments based on figures for 2023.

Operating profit: Impact of changes +/- 10%, EUR million


Segments	Price	Volume
Packaging Materials	434	110
Packaging Solutions	107	43
Biomaterials	143	52
Wood Products	152	32
Forest	246	6

Mitigation measures and opportunities

The ability to respond to changes in product demand and consumer preferences and to develop

new products on a competitive and economic basis calls for innovation, continuous capacity

management and structural development. The risks related to factors such as demand, price,

competition and customers are regularly monitored by each division and unit as a routine part of

business management. These risks are also continuously monitored and evaluated on a Group

level to gain a perspective of the Group’s total asset portfolio and overall long-term profitability

potential.

Stora Enso, as one of the biggest private forest owners in the world, also benefits from a

strategic renewable resource base. The Group's expertise in wood and wood based renewable

materials is focused on responding to changing customer and consumer preferences, driven by

climate change. Products based on renewable materials with a low carbon footprint help

customers and society at large to reduce CO2 emissions by providing an alternative to solutions

based on fossil fuels or other non-renewable materials.

Sourcing

Increasing input costs or availability of materials, goods and services may adversely affect Stora

Enso’s profitability. Securing access to reliable low-cost supplies and proactively managing costs

and productivity are of key importance. Reliance on outside suppliers for energy also makes

Stora Enso susceptible to changes in energy market prices. There is also an increased risk of

disturbances in the supply chain due to cyber incidents, political instability and other drivers

related to global trade. The following table shows Stora Enso’s major cost items.

Composition of costs in 2023


Operative costs	% of costs	% of sales
Logistics and commissions	10%	10%

Manufacturing costs
Fiber	33%	32%
Chemicals and fillers	9%	8%
Energy	7%	7%
Material	10%	9%
Personnel	14%	14%
Other	11%	11%
Depreciation	6%	6%
Total costs and sales	100%	97%
Total operative costs and sales in EUR million	9,130	9,396

Associated companies, operational		76
Operational EBIT (EUR million)		342

In many areas Stora Enso is dependent on suppliers and their ability to deliver a product or a

service at the right time and of the right quality. The most important products are fiber, chemicals

and energy, and machinery and equipment in capital investment projects. Increased demand for

carbon neutral primary and secondary biomass fuels may increase energy costs. The most

important services are transport and various outsourced business support services. For some of

these inputs, the limited number of suppliers is a risk.

Mitigation measures and opportunities

Input cost volatility is closely monitored at the business unit, divisional and group level and a

consistent long-term energy risk management is applied. The price and supply risks are

mitigated through increased own generation, shareholding in competitive power assets such as

PVO/TVO, physical long-term contracts and financial derivatives. Stora Enso hedges price risks

in raw material and end-product markets and supports the development of financial hedging

markets. A wide range of suppliers are used and monitored to avoid situations that might

jeopardise continued production, business transactions or development projects.

Suppliers and subcontractors must also comply with Stora Enso’s sustainability requirements

as they are part of Stora Enso’s value chain. The sustainability requirements for suppliers and

audit schemes cover raw materials, and other goods and services procured. Suppliers are

assessed for risks related to environmental, social and business practices through our internal

risk assessment tool. Supplier code of conduct audits are conducted on high-risk suppliers and

findings from such audits are followed-up. Suppliers should have the possibility to mitigate, but

where necessary, the supplier contract would be terminated.

Stora Enso also has an opportunity to add value and bring innovation to its business globally

by building strong and measurable relationships with the best suppliers as well as enforcing

Unaudited 18

harmonised sourcing processes to increase capabilities, increase tender quality to reduce cost,

and develop sustainable suppliers.

Regulatory changes

Stora Enso's businesses may be affected by political or regulatory developments in any of the

countries and jurisdictions where it operates, including changes to forest, biodiversity,

environmental, fiscal, tax or other regulatory regimes. Potential impacts include higher costs and

capital expenditure to meet new requirements, the expropriation of assets, imposition of royalties

or other taxes targeted at the industry, and requirements for local ownership or beneficiation.

The EU Green Deal and its climate targets for 2030 and 2050 have resulted in a proliferation

of future legislation which have been further advanced in 2022 and may impact Stora Enso's

future operations. The policy initiatives from the European Commission will include policies and

legislation on areas such as EU Forest and Biodiversity strategies, the Renewable Energy

Directive, EU Emission Trading System (ETS), Sustainable products initiative, Packaging and

Packaging waste revision as well as EU taxonomy.

Political decisions on forest resources, could limit the availability of wood, increase costs and

reduce investment opportunities.

Stora Enso has been granted various investment subsidies and has given certain investment

commitments in different countries e.g. Finland, China and Sweden. If committed planning

conditions are not met, local officials may pursue administrative measures to reclaim some of

the formerly granted investment subsidies or to impose penalties on Stora Enso, and the

outcome of such a process could result in a negative financial impact on Stora Enso.

Mitigation measures and opportunities

Active monitoring of regulatory and political developments in the countries where Stora Enso

operates as well as participation in policy development mainly through industry associations and

other partnership programmes are important risk mitigation regarding regulatory changes.

Regulatory changes can also bring significant opportunities by driving market growth for

sustainable products and create competitive advantage through resource efficiency and

renewability.

Climate change – physical impacts

Long-term (25–30 years) changes in precipitation patterns, periods of drought, frequent extreme

weather events and higher average temperatures that increase the risk of forest fires and insect

outbreaks, could cause damage to operations, forests and tree plantations, affecting forests

asset values and regional wood prices. Milder winters could also have an impact on the

harvesting and transport of wood and related costs in northern regions. More frequent extreme

weather events also increase the risk of disruptions in the production, logistics and supply of raw

materials and energy.

During 2023, focus was on deep dives into specific physical risk impacts and further

developing transition scenarios. Read more in the following TCFD chapter, and in an index table

available at storaenso.com.

Mitigation measures and opportunities

Physical risks are to a great extent subject to risk transfer and thereby within the cover of Stora

Enso's property and business interruption insurance programs. With regards to forest and

plantation assets, Stora Enso benefits from strategic resilience through geographical

diversification within the asset portfolio. Diligent plantation planning is ensured to avoid frost

sensitive areas and R&D programmes are applied to increase tolerance to extreme

temperatures. Stora Enso maintains a diversity of forest types and structures and enforces

diversification in wood sourcing. Wood harvesting in soft soils involves the implementation of

best practices guidelines.

Nordic forests in Finland and Sweden could also benefit from increased heat summation and

longer growing seasons, leading to acceleration in forest growth with direct positive impact on the

value of own forest assets and an indirect impact related to market wood availability and costs.

Biodiversity

Stora Enso’s forestry and industrial sites impact on biodiversity. At the same time, Stora Enso’s

business depends on raw material natural capital inputs, such as wood and fresh water. These

raw materials are supported by soil quality alongside ecosystem services for bioremediation,

forest disease and pest control, and climate regulation, among others. Biodiversity loss can have

a negative impact on the value of Stora Enso’s forest assets, increase risks of shortages in wood

supply and damage reputation. Read more in the TNFD chapter, and in an index table available

at storaenso.com.

Mitigation measures and opportunities

Stora Enso is committed to achieving a net-positive impact on biodiversity in its own forests and

plantations by 2050. Biodiversity management is an integral part of Stora Enso’s forest

management practices, and the Group strive to do more than just to mitigate biodiversity loss.

Operations are supported by digitalisation as well as continuous research and innovation to

develop the forestry operations and to provide the best value to Stora Enso’s customers and

other stakeholders. The Group knows the origin of all the wood it uses, and 99% of the land that

it owns or manage is covered by forest certification schemes. Stora Enso engages in

collaboration with various stakeholders with the aim to protect ecosystems and safeguard

natural resources.

People and capabilities

Competition for personnel is intense and Stora Enso may, in the long term, not be successful in

attracting or retaining qualified personnel. The loss of key employees, the inability to attract new

or adequately trained employees, or a delay in hiring key personnel could seriously harm Stora

Enso’s business and impede reaching the Group's strategic objectives. Labour market

disruptions and strikes, especially in times of restructuring and redundancies due to divestments

and mill closures or during labour market negotiations, could also have adverse material effects

on Stora Enso's business, financial position and profitability.

Mitigation measures and opportunities

Stora Enso manages the risks and loss of key talents through a combination of different actions.

Some of the activities aim towards making the Stora Enso employer brand better known both

internally and externally, globalising some of the remuneration practices and intensifying the

efforts to identify and develop talents. Finally, the Group actively focuses on talent and

management assessments, including succession planning for key positions. The majority of

employees are represented by labour unions under several collective agreements in different

countries where Stora Enso operates, thus relations with unions are of high importance to

manage labour disruption risks.

Unaudited 19

Stora Enso recognises the opportunity of skilled and dedicated employees being essential for

success. Engaged high performing people enable the implementation of transformation strategy

and commercial success.

Personal safety – employees and wider workforce

Failure to maintain high levels of safety management can result in harm to Stora Enso’s

employees and contractors, and also to communities near our operations and the environment.

Impacts in addition to physical injury, health effects and environmental damage could include

liability to employees or third parties, damage to reputation, or an inability to attract and retain

skilled employees. Government authorities could additionally enforce the closure of our

operations on a temporary basis.

Personnel safety and security can never be compromised and, thus, Stora Enso must be

aware of potential safety risks and provide adequate guidelines to people for managing risks

related to, for example, travelling, working and living in countries with security or crime concerns.

Mitigation measures and opportunities

Stora Enso’s goal is to provide an accident-free workplace. Encouraging a group-wide safety

culture means that everyone is responsible for making every workday healthy and safe - from

top management and throughout the Group. The approach to safety extends to contractors,

suppliers, and on-site visitors. Everyone is encouraged to give feedback and provide ideas on

how to further improve safety. Additionally, safety is promoted among contractors and suppliers

through a dedicated e-learning. The Group also emphasise the importance of safety by asking

suppliers for information on their safety performance in the tendering process.

Stora Enso’s Health and Safety Policy defines the objectives for safety management, as well

as a governance model on how to manage health and safety topics in practice and how to

integrate them into annual planning and reporting.

Leading health and safety performance can potentially strengthen the brand as an employer,

as well as improved engagement, efficiency and productivity.

Physical assets

The installed capacity of Stora Enso's production facilities have an inherent risk of potential for

failure or off-specification operations, which could result in poor product quality, unplanned

production downtime, lower output or increased production costs. It may also impact the Group's

ability to meet delivery commitments and the business plan. In some instances, the risks are the

result of inherent design deficiencies, failures in the mode of operation or operating practices.

The most significant asset risks lie predominantly in integrated pulp and board production and

related energy generation.

Mitigation measures and opportunities

Protecting production assets and business results is a high priority for Stora Enso. This is

achieved through structured methods of identifying, measuring and controlling different types of

process risk and exposure. Divisional risk specialists manage this process together with

insurance companies and other loss prevention specialists. Each year a number of technical risk

inspections are carried out at production units. Risk improvement programmes and cost-benefit

analyses of proposed investments are managed via internal reporting and risk assessment tools.

Internal and external property loss prevention guidelines, fire loss control assessments, key

machinery risk assessments and specific loss prevention programmes are also utilised. Planned

stoppages for maintenance and other work are important to keep machinery in good order.

Preventive maintenance programmes and spare part criticality analyses are utilized to secure

the high availability and efficiency of key machinery.

Product safety and compliance

Some of our products are used for package liquids and food consumer products, so any defects

could affect health or packaging functions and result in costly product recalls. Wood products are

incorporated into buildings, and this may involve product liability resulting from failures in

structural design, product selection or installation. Failure to ensure product safety could result in

product recalls involving significant costs including compensation for indirect costs of customers,

and reputational damage.

Mitigation measures and opportunities

The mills producing food and drink contact products have established certified hygiene

management systems based on risk and hazard analysis. To ensure the safety of its products,

Stora Enso actively participates in CEPI (Confederation of European Paper Industry) working

groups on chemical and product safety. In addition, Stora Enso mills have certified relevant ISO

quality management systems. Furthermore, contractual liability limitation and insurance

protection are used to limit the risk exposure to Stora Enso.

The Group recognises the opportunity of differentiation and value creation through superior

product quality and the highest level of product conformity.

Information technology, security, and digitalisation

Stora Enso is dependent on IT systems for both internal and external communications and for

the day-to-day management of its operations. Information systems, personnel and facilities are

subject to cyber security risk, such as ransomware. In addition, accidental disclosure of

confidential information due to a failure to follow information handling guidelines or due to an

accident or criminal act may result in financial damage, penalties, disrupted or delayed launch of

new lines of business or ventures, loss of customer and market confidence, loss of research

secrets, breach of data privacy regulation and other business critical information.

Mitigation measures and opportunities

The management of risks is actively pursued in the Information Risk Management System and

best practice change management and project methodologies are applied. We actively work to

prevent cybercrime. A number of security controls have been implemented to strengthen the

protection of confidential information and to facilitate compliance with international regulations.

Opportunities may arise from efficient operations, performance optimisation, innovative

product offerings, and new customer services through digitisation and sophisticated IT systems,

as well as new technologies offering significant potential for higher level of process optimisation

and automatisation, generating new business and enhanced value propositions for customers

and consumers.

Unaudited 20

Strategic investments

To succeed with the implementation of its strategy, Stora Enso has to understand the needs of

its customers and find the best way to serve them with the right offering and with the right

production asset portfolio. Failure to complete strategic projects in accordance with the agreed

schedule, budget or specifications can, therefore, have serious impacts on the Group's financial

performance. Significant, unforeseen changes in costs or an inability to sell the envisaged

volumes or achieve planned price levels may prevent Stora Enso from achieving its business

goals.

Mitigation measures and opportunities

Risks are mitigated through profound and detailed pre-feasibility and feasibility studies which are

prepared for each large investment. Investment guidelines stipulate the process, governance,

risk assessment, management and monitoring procedures for strategic projects, including

climate related risk factors. The guidelines also require that the calculation of potential cost and

income for CO2 emissions as part of the investment proposal, Environmental and Social Impact

Assessments (ESIAs) are conducted for all new projects that could cause significant adverse

effects in local communities. Post completion audits are carried out for all significant

investments.

Mergers, acquisitions, and divestments

Failure to realise the expected benefits from an acquisition of a company or asset can have

serious financial impacts on Stora Enso. The Group can also find itself liable for past acts or

omissions of the acquired business, without any adequate right of redress. Failure to achieve

expected values from the sales of assets or deliveries beyond the expected receipt of funds may

also impact the Group's financial position. Divestments or business restructuring may involve

additional costs due to historical and unaccounted liabilities as well as reputational impacts.

Mitigation measures and opportunities

Rigorous M&A guidelines, including due diligence procedures are applied to the evaluation and

execution of all acquisitions. Structured governance and policies such as the policy for

responsible right-sizing, are followed when making restructuring decisions. A strong balance

sheet and cash flow enable value enhancing M&A, when the timing and opportunity are right.

Ethics and compliance

Stora Enso operates in a highly regulated business area and is, thereby, exposed to risks related

to breach of applicable laws and regulations associated to e.g. capital markets regulation,

company and tax laws, customs, environment, human rights, and safety, as well as areas

covered by policies such as the Stora Enso Code and Business Practice Policy, e.g. fraud, anti-

trust, corruption, conflict of interests and other misconduct. Breaches may lead to high

compliance and remediation costs including prosecution costs, fines, penalties, and contractual,

financial and reputational damage.

Mitigation measures and opportunities

Stora Enso’s Ethics and Compliance Programme, which includes policy setting, promoting

values, training, knowledge sharing and grievance mechanisms, is continuously updated and

developed. Other compliance mechanisms include Stora Enso Group’s internal control system

and Internal Audit assurance, as well as Supplier Code of Conduct in supplier contracts, risk

assessments, trainings and audits. In response to capital markets regulations, Stora Enso’s

Disclosure Policy emphasises the importance of transparency, credibility, responsibility,

proactivity and interaction.

Environmental risks are minimised through environmental management systems and

environmental due diligence for acquisitions and divestments, and indemnification agreements

where effective and appropriate remediation projects are required. Special remediation projects

related to discontinued activities and mill closures are executed based on risk assessments.

Focus on ethics in a wider sense, not mere compliance with laws and regulations, promotes a

value-driven and more successful business, fosters accountability and enhances corporate

reputation.

Climate-related financial disclosures (TCFD)

The Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures

(TCFD) recommends a framework for disclosing climate-related risks and opportunities. Stora

Enso's disclosures with reference to TCFD recommendations are listed in an index table,

available for downloading at storaenso.com, with references to those locations where these

issues are addressed in the Group's annual reporting.

Scenario analysis in 2023

Aligned with the TCFD recommendations, Stora Enso utilises scenarios to assess the impacts of

climate change.

During 2023, the focus was on deep dives to specific physical risk impacts and further

developing transition scenarios.

Scenario analysis during the previous years

In 2020, Stora Enso developed a scenario analysis with the qualitative assessment of the

physical climate impacts on the Nordic forests and the Group's business until 2050. This work

was based on the Business-As-Usual scenario by the International Panel for Climate Change

(RCP 8.5 scenario) that would deliver a temperature increase of 4–5 degrees by the end of the

century. The climate change attributes considered were pests, diseases, droughts, wildfires,

floods, periods of frost, water scarcity, changes to precipitation patterns, rise in sea level and

changing temperatures. In 2021, the work with physical climate impacts continued by a deeper

analysis of measures improving resiliency of the forests against the negative impacts of global

warming. Results showed that sustainable forest management practices as well as possibilities

to monitor and to react to events such as forest fires and diseases, play an important role in

mitigating the negative impacts of climate change.

During 2021, Stora Enso assessed a business impact scenario for 2030 according to the

global transition required to limit the global average temperature increase in line with the Paris

agreement of 1.5 degrees (RCP 1.9). The work concluded that the overall transition to a low

carbon, circular bioeconomy is well aligned with Stora Enso’s strategy. The scenario work also

showed that potential new regulations and market mechanisms motivated by the ambitions to

limit climate change and its effects on the society and environment could impact Stora Enso’s

operating costs by limiting wood harvesting volumes or forest management practices as well as

increasing greenhouse gas emission costs and energy prices. Sustainable product initiatives

and requirements may also have an impact on the Group's future market access, product

demand growth and product development requirements.

During 2022, a quantitative resilience analysis was conducted for tree plantations in South

America against three global Shared Socioeconomic Pathway (SSP) scenarios: SSP1-1.9

Unaudited 21

(Sustainability – Taking the Green Road), SSP2-4.5 (Regional Rivalry – a Rocky Road) and

SSP5-8.5 (Fossil-fuelled Development – Taking the Highway). Results show a relative resilience

of Stora Enso's tree plantations in all the three scenarios. Financial impacts are not expected to

be material in SSP1-1.9 and SSP2-4.5 scenarios but in SSP5-8.5 scenario the growth conditions

of tree plantations would be affected resulting in potentially material financial impacts.

Nature-related financial disclosures (TNFD)

The Taskforce on Nature-related Financial Disclosures (TNFD) is a market-led and science-

based initiative supported by national governments, businesses, and financial institutions

worldwide. The TNFD’s mission is to help companies responding to the global acceleration of

nature loss as an increasing source of risk to businesses and providers of financial capital. The

TNFD Recommendations and Additional Guidance are there to support organisations to report

and act on evolving nature-related issues. The recommendations support the outcomes of the

agreed Kunming-Montreal Global Biodiversity Framework and hope to support a shift in global

financial flows away from businesses and business activities that lead to nature-negative

outcomes and towards those that support nature-positive outcomes. The version 1.0 of the

TNFD recommendations, published in September 2023, build on the Taskforce on Climate-

related Financial Disclosures (TCFD) recommendations and are consistent with other standards

including the International Sustainability Standards Board (ISSB), IFRS Sustainability Disclosure

Standards, the Global Reporting Initiative (GRI) and the European Sustainability Reporting

Standards (ESRS). The TNFD includes 14 recommended disclosures that extend or add to

those included in the TCFD recommendations' disclosures which support integrated climate and

nature reporting.

Stora Enso’s business depends on several raw material natural capital inputs, such as wood

and fresh water, and are supported by soil quality, alongside ecosystem services for

bioremediation, forest disease and pest control, and climate regulation, among others. The

Group's dependency on and responsibility for nature is explored, for instance, through its

Biodiversity Leadership Programme to support the Group's commitment to achieve a net positive

impact on biodiversity in Stora Enso’s own forests and plantations through active biodiversity

management to align with the society’s expectations and goals for nature positive actions. Stora

Enso expects the TNFD’s recommendations to help the Group to further evolve current nature-

related disclosures, based on building on the Group's existing processes, over the coming years.

As part of the work, Stora Enso piloted the draft TNFD recommendations and parts of the

Locate, Evaluate, Assess and Prepare (LEAP) approach by undertaking a biodiversity screening

in the supply chain of the Biomaterials division. The pilot was undertaken to help prepare for

future disclosure requirements, and anticipated investor and market interest on the potential

biodiversity risks and opportunities across the supply chain. This pilot focused on transparency

in selected chemicals, logistics and energy sub-categories of the supply-chain. High-level

findings included that the Group’s current nature-related risks included: policy and legal risks in

relation to forestry legislation, potential reputational risks and location-based risks associated

with the functioning of underpinning natural capital assets and supply chain operations.

In addition to nature-related risks, potential nature-related opportunities were also identified

including the development of nature-based solutions and recognition of the multiple nature-

related benefits associated with different types of ecosystems. The pilot provides the starting

point for further qualitative and quantitative assessments of Stora Enso's business activities and

supply chains to prioritise areas for action across the Group by applying an adapted process to

other supply chains. For further details about the pilot, please see the case study at

littleblueresearch.com.

Stora Enso has participated in the WBCSD’s TNFD pilot project 'Roadmap to Nature Positive'

which provides an analysis for forest products value chain having high impact on nature. The

Group also contributed to the development of TNFD Additional Guidance for the Forest Sector

by the WBCSD Forest Solutions Group. Stora Enso is a member of Mistra’s research

programme BIOPATH, hosted by the Swedish University of Lund, which aims to identify

pathways for efficient alignment of the financial system with the requirements of biodiversity.

As announced by the TNFD in January 2024, after the reporting date, Stora Enso has signed

up as a ‘TNFD Early Adopter’ which means that Stora Enso intend to adopt the

recommendations and publish its first TNFD-aligned report in the financial year 2024.

Corporate governance in Stora Enso

Stora Enso complies with the Finnish Corporate Governance Code 2020 issued by the

Securities Market Association (the “Code”). The Code is available at cgfinland.fi. Stora Enso also

complies with the Swedish Corporate Governance Code (“Swedish Code”), with the exception of

the deviations listed in Appendix 1 of the Corporate Governance part of this report. The

deviations are due to differences between Swedish and Finnish legislation, governance code

rules and practices, and in these cases Stora Enso follows the practice in its domicile. The

Swedish Code is issued by the Swedish Corporate Governance Board and is available at

corporategovernanceboard.se.

Legal proceedings

Contingent liabilities

Stora Enso has undertaken significant restructuring actions in recent years which have included

the divestment of companies, sale of assets and mill closures. These transactions include a risk

of possible environmental or other obligations the existence of which would be confirmed only by

the occurrence or non-occurrence of one or more uncertain future events not wholly within the

control of the Group. A provision has been recognised for obligations for which the related

amount can be estimated reliably and for which the related future cost is considered to be at

least probable.

Stora Enso is party to legal proceedings that arise in the ordinary course of business and

which primarily involve claims arising out of commercial law. The management does not

consider that liabilities related to such proceedings before insurance recoveries, if any, are likely

to be material to the Group’s financial condition or results of operations.

Veracel

On 11 July 2008, Stora Enso announced that a federal judge in Brazil had issued a decision

claiming that the permits issued by the State of Bahia for the operations of Stora Enso’s joint

operations company Veracel were not valid. The judge also ordered Veracel to take certain

actions, including reforestation with native trees on part of Veracel’s plantations and a possible

fine of, at the time of the decision, BRL 20 (EUR 4) million. Veracel disputes the decision and

has filed an appeal against it. Veracel operates in full compliance with all Brazilian laws and has

obtained all the necessary environmental and operating licences for its industrial and forestry

activities from the relevant authorities. In November 2008, a Federal Court suspended the

effects of the decision. No provisions have been recorded in Veracel’s or Stora Enso’s accounts

for the reforestation or the possible fine.

Unaudited 22

Changes in the Group management

Micaela Thorström was appointed EVP Legal and General Counsel and a member of the Group

Leadership Team as of 1 April 2023.

René Hansen EVP, Brand and Communications and a member of the Group Leadership

Team, left his position at Stora Enso in May 2023.

Annette Stube, Executive Vice President Sustainability, and a member of the Group

Leadership Team, left her position at Stora Enso in December 2023.

Minna Björkman, Executive Vice President Sourcing and Logistics, and a member of the

Group Leadership Team (GLT), left her position in the GLT to assume a business leadership role

in Stora Enso’s Packaging Materials division in November 2023.

Ad Smit started as Executive Vice President of the Packaging Solutions division and a

member of the Group Leadership Team in December 2023. Prior to that, he led the Business

Unit Western Europe within Stora Enso’s Packaging Solutions division.

David Ekberg left his position as Executive Vice President of the Packaging Solutions division

on 30 November 2023.

Share capital

Stora Enso Oyj’s shares are divided into A and R shares. The A and R shares entitle holders to

the same dividend but different number of votes. Each A share and every ten R shares carry one

vote at a shareholders’ meeting. However, each shareholder has at least one vote. During 2023,

a total of 7,364 A shares converted into R shares were recorded in the Finnish Trade Register.

Number of shares as at 31 December 2023


	A shares	R shares	Total
Number of shares	176,230,916	612,389,071	788,619,987
Number of votes (at least)	176,230,916	61,238,907	237,469,823

Board of Directors is authorised to decide on the repurchase and on the issuance of Stora Enso

R shares. The amount of shares to be issued or repurchased shall not exceed a total of

2,000,000 R shares, corresponding to approximately 0.25% of all shares and 0.33% of all R

shares.

Major shareholders as of 31 December 2023


By voting power		A shares	R shares	% of shares	% of votes
1	Solidium Oy1	62,655,036	21,792,540	10,7 %	27,3 %
2	FAM AB2	63,123,386	17,000,000	10,2 %	27,3 %
3	Social Insurance Institution of Finland	23,825,086	—	3,0 %	10,0 %
4	Ilmarinen Mutual Pension Insurance Company	4,159,992	15,290,638	2,5 %	2,4 %
5	Varma Mutual Pension Insurance Company	5,163,018	1,140,874	0,8 %	2,2 %
6	MP-Bolagen i Vetlanda AB	4,885,000	1,000,000	0,7 %	2,1 %
7	Elo Mutual Pension Insurance Company	2,010,000	9,987,000	1,5 %	1,3 %
8	Bergslaget's Healthcare Foundation	626,269	1,609,483	0,3 %	0,3 %
9	The State Pension Fund	—	5,600,000	0,7 %	0,2 %
10	The Society of Swedish Literature in Finland	—	3,000,000	0,4 %	0,1 %
11	Avanza Pension Insurance	142,664	1,372,515	0,2 %	0,1 %
12	OP Finland Fund	—	2,549,753	0,3 %	0,1 %
13	Danske Invest Finnish Equity Fund	—	2,435,000	0,3 %	0,1 %
14	Unionen (Swedish trade union)	—	2,312,750	0,3 %	0,1 %
15	EVLI Finland Select Fund	—	1,940,000	0,2 %	0,1 %
	Total	166,590,451	87,030,553	32,2 %	73,8 %

	Nominee-registered shares3	75,045,090	487,121,848	71,3 %	52,1 %
	1 Entirely owned by the Finnish State 2 As confirmed to Stora Enso 3 According to Euroclear Finland The list has been compiled by the Company on the basis of shareholder information obtained from Euroclear Finland, Euroclear Sweden and a database managed by Citibank, N.A (Citi). This information includes only directly registered holdings, thus certain holdings (which may be substantial) of shares held in nominee or brokerage accounts are not included. The list is therefore incomplete.

Share distribution as at 31 December 2023


By size of holding, A share1)	Shareholders	% of shareholders	Shares	% of shares
1–100	7,111	59.83%	273,712	0.16%
101–1,000	4,211	35.43%	1,474,615	0.84%
1,001–10,000	529	4.45%	1,222,373	0.69%
10,001–100,000	24	0.20%	559,602	0.32%
100,001–1,000,000	2	0.02%	347,113	0.20%
1,000,001–	8	0.07%	172,353,501	97.80%
Total	11,885	100.00%	176,230,916	100.00%

By size of holding, R share1)	Shareholders	% of shareholders	Shares	% of shares
1–100	17,659	37.87%	840,387	0.14%
101–1,000	22,681	48.64%	8,919,537	1.45%
1,001–10,000	5,813	12.47%	15,389,391	2.51%
10,001–100,000	408	0.88%	10,699,825	1.75%
100,001–1,000,000	47	0.10%	16,081,788	2.63%
1,000,001–	23	0.05%	560,458,143	91.53%
Total	46,631	100.00%	612,389,071	100.00%
1) According to Euroclear Finland. This list includes only directly registered shares in Euroclear Finland. E.g. Stora Enso's Swedish shareholders are listed under their nominee bank in this list. Therefore, this listing is not comparable with the table Major shareholders as of 31 December 2023

Unaudited 23

Ownership distribution as at 31 December 2023


	% of shares	% of votes
Solidium Oy1	10.7%	27.3%
FAM AB2	10.2%	27.3%
Social Insurance Institution of Finland (KELA)	3.0%	10.0%
Finnish institutions (excl. Solidium and KELA)	11.0%	8.1%
Swedish institutions (excl. FAM)	1.1%	0.9%
Finnish private shareholders	3.9%	2.4%
Swedish private shareholders	3.0%	2.2%
ADR holders	1.6%	0.5%
Under nominee names (non-Finnish/non-Swedish shareholders)	55.4%	21.3%
1 Entirely owned by the Finnish State 2 As confirmed to Stora Enso

Short-term outlook

Stora Enso expects market conditions to remain uncertain in 2024, with ongoing pressure on

demand, prices and margins. However, there are some positive signs such as increasing pulp

prices, declining global pulp inventories, less customer destocking, and lower inflation and

interest rates.

The first quarter is not expected to show a significant market improvement following a

historical low fourth quarter in 2023 and a slow recovery. All variable costs continued to ease in

the fourth quarter, except for wood, which are expected to follow similar trends also in the first

quarter this year. The potential risk of logistical challenges from the Red Sea area could disrupt

the flow of goods and increase costs.

During the second half of 2023, Stora Enso implemented significant restructuring measures

to enhance its financial performance going forward. These included the closure of sites and

production lines, the sale of assets, the adoption of a more decentralised operating model, and a

reduction of employees by approximately 1,150. These actions are expected to improve the

Group's cost competitiveness and streamline its organisation, leading to a stronger financial

performance in the years to come.

Guidance

Stora Enso's full year 2024 operational EBIT is expected to be higher than for the full year 2023,

EUR 342 million.

Short-term risks and uncertainties

Risk is characterised by both threats and opportunities, which may affect future performance and

the financial results of Stora Enso, reputation, as well as its ability to meet certain social and

environmental objectives.

The geopolitical unrest could have an adverse impact on the Group. Retaliatory measures,

conflict-related risks to people, operations, trade credit, cyber security, supply, and demand,

could also affect the Group negatively.

The risk of a prolonged global economic downturn and recession, continued high inflation, as

well as sudden interest rate increases, currency fluctuations, trade union strike actions, and

logistical chain disruptions could all adversely affect the Group’s profits, cash flow and financial

position, as well as access to material, flow of goods and transport.

The challenging and rapidly changing macroeconomic and geopolitical disruption may

increase cost, add complexity and lower short-term visibility. A slow market recovery might

further impact market demand, prices, profit margin and volumes of the Group's products. New

capacity and volume entering the market might distort demand, volumes, inventories and pricing,

with the risk of a deepening margin squeeze. Moreover, forced capacity cuts might further

impact on profitability.

There is a risk of continued high interest rates along with increased price volatility for raw

materials such as wood, chemicals, other components and energy in Europe. The continued

tight wood market could cause increased costs, limit harvesting and cause disruptions such as

delays and/or lack of wood supply to the Group's production sites.

Stora Enso has been granted various investment subsidies and has given certain investment

commitments in several countries e.g., Finland, China and Sweden. If commitments to planning

conditions are not met, local officials may pursue administrative measures to reclaim some of

the formerly granted investment subsidies or to impose penalties on Stora Enso, the outcome of

such a process could result in adverse financial impact on Stora Enso.

Sensitivity analysis

Energy sensitivity analysis: the direct effect of a 10% change in electricity and fossil fuel market

prices would have an impact of approximately EUR 5 million on operational EBIT for the next 12

months.

Wood sensitivity analysis: the direct effect of a 10% change in wood prices would have an

impact of approximately EUR 200 million on operational EBIT for the next 12 months.

Pulp sensitivity analysis: the direct effect of a 10% change in pulp market prices would have

an impact of approximately EUR 120 million on operational EBIT for the next 12 months.

Chemical and filler sensitivity analysis: the direct effect of a 10% change in chemical and filler

prices would have an impact of approximately EUR 54 million on operational EBIT for the next

12 months.

Foreign exchange rates transaction risk sensitivity analysis for the next twelve months: the

direct effect on operational EBIT of a 10% strengthening in the value of the US dollar, Swedish

krona and British pound would be approximately positive EUR 81 million, negative EUR 9 million

and positive EUR 9 million annual impact, respectively. Weakening of the currencies would have

the opposite impact. These numbers are net of hedges and assuming no changes occur other

than a single currency exchange rate movement in an exposure currency.

The Group's consolidated income statement on operational EBIT level is exposed to a

foreign-currency translation risk worth approximately EUR 179 million expense exposure in

Brazilian real (BRL) and approximately EUR 67 million income exposure in Chinese Renminbi

(CNY). These exposures arise from the foreign subsidiaries and joint operations located in Brazil

and China, respectively. For these exposures a 10% strengthening in the value of a foreign

currency would have a negative EUR 18 million and a positive EUR 7 million impact on

operational EBIT, respectively.

Annual General Meeting

Stora Enso Oyj's Annual General Meeting (AGM) will be held on Wednesday 20 March 2024 at

16:00 EET at the Marina Congress Center in Helsinki, Finland. More information is available at

storaenso.com/agm

Proposal for the distribution of dividend

The Board of Directors proposes to the AGM that a dividend of EUR 0.10 per share be

distributed on the basis of the balance sheet adopted for the year 2023. In addition, the Board of

Directors proposes that the AGM would authorise the Board of Directors to decide at its

Unaudited 24

discretion on the payment of an additional dividend up to a maximum of EUR 0.20 per share.

The authorisation would be valid until 31 December 2024.

The Board of Directors has assessed the Company’s financial situation and liquidity before

making the proposal. There have been no material changes in the parent company’s financial

position since 31 December 2023, the liquidity of the parent company remains good and the

proposed dividend does not risk the solvency of the Company. Stora Enso's policy is to distribute

50% of earnings per share (EPS) excluding fair valuation over the cycle. In 2023, EPS excluding

fair valuation was EUR -0.73.

The Parent company distributable shareholders’ equity on 31 December 2023 amounted to

EUR 1,542,290,968.57 including the profit for the period of EUR 44,769,653.04. The Board of

Directors proposes to the Annual General Meeting of the Company that the distributable funds

be used as follows: A dividend of EUR 0.10 per share from the distributable shareholders’ equity

to be distributed on 788,619,987 shares, not to exceed EUR 78,861,998.70, which would leave

EUR 1,463,428,969.87 in distributable shareholders’ equity.

It is proposed that the Board may at its discretion decide on a second dividend instalment of a

maximum of EUR 0.20 latest during the fourth quarter of 2024, which would lead to a further

decrease in distributable shareholders’ equity of EUR 157,723,997.40, leaving EUR

1,305,704,972.47 in distributable shareholders’ equity.

The first dividend instalment would be paid to shareholders who on the record date of the

dividend payment, 22 March 2024, are recorded in the shareholders’ register maintained by

Euroclear Finland Oy or in the separate register of shareholders maintained by Euroclear

Sweden AB for Euroclear Sweden registered shares. Dividends payable to Euroclear Sweden

registered shares will be forwarded by Euroclear Sweden AB and paid in Swedish crowns.

Dividends payable to ADR holders will be forwarded by Citibank N.A. and paid in US dollars.

The Board of Directors proposes to the AGM that the first instalment of the dividend be paid

on or about 4 April 2024.

Unaudited 25

Alternative performance measures

According to the European Securities and Markets Authority (ESMA) Guidelines, an alternative performance measure is understood as a financial measure of historical or future financial performance,

financial position, or cash flows, not defined under IFRS. Used together with the IFRS measures, alternative performance measures provide meaningful supplemental information to the management,

investors, analysts and other parties with regards to the financial development of the business operations.


Alternative performance measures	Definition	Purpose
Operating result (IFRS)	Net result for the period excluding income tax and net financial items (finance costs).	Used in combination with below measures to determine the profitability of the Group.
Operational EBIT	Operating result (IFRS) excluding items affecting comparability (IAC) and fair valuations and non-operational items (FV) of the line-by-line consolidated entities and Stora Enso’s share of operating result excluding IAC and FV of its associated companies.	The Group’s key non-IFRS performance metric, which is used to evaluate the performance of operating segments and, in combination with below ratios, to steer allocation of resources to them.
Operational EBITDA	Operating result (IFRS) excluding silviculture costs and damage to forests, fixed asset depreciation and impairment, IACs and FV. The definition includes the respective items of subsidiaries, joint arrangements and associated companies.	Used by management to analyse the business and, from time-to-time, for short term and long-term target setting.
Operational return on capital employed, operational ROCE, LTM3 (%)	Operational EBIT3 x 100 Capital employed1	Used for long-term Group financial targets setting.
Operational return on operating capital, operational ROOC, LTM3 (%)	Operational EBIT3 x 100 Operating capital 1	Used for long-term divisional financial targets setting.
Return on equity, ROE, LTM3 (%)	Net result for the period x 100 Total equity1	A measure of the profitability in relation to equity.
Net debt	Interest-bearing liabilities – interest-bearing assets, marked with “I” in the statement of financial position.	Used for long-term Group financial targets setting.
Net debt/equity ratio	Net debt Equity2	Used for long-term Group financial targets setting.
Net debt/last 12 months’ operational EBITDA ratio	Net debt LTM operational EBITDA	Used for long-term Group financial targets setting.
Earnings per share (EPS) excluding FV	Net result for the period excluding fair valuations and non-operational items after tax divided by the weighted average number of shares	Stora Enso's dividend policy is to distribute 50% of earnings per share (EPS) excluding fair valuation over the cycle.
Operating capital and capital employed	Operating capital is comprised of items marked with “O” in the statement of financial position. Capital employed = Operating capital – Net tax liabilities. Net tax liabilities are marked with "T" in the statement of financial position.	Used for long-term Group financial targets setting.
Items affecting comparability (IAC)	The most common IAC are significant capital gains and losses, impairments or impairment reversals, disposal gains and losses relating to Group companies, provisions for planned restructurings, environmental provisions, changes in depreciation due to restructuring and penalties. Items affecting comparability are normally disclosed individually if they exceed one cent per share.	Represent certain significant items, identified by the management, considered not indicative of the operating business performance due to their nature and/or frequency.
Fair valuations and non-operational items (FV)	Fair valuations and non-operational items include non-cash income and expenses related to CO2 emission rights and liabilities, non-operational fair valuation changes of biological assets, adjustments for differences between fair value and acquisition cost of forest assets upon disposal and the Group’s share of income tax and net financial items of associated companies. Non-operational fair value changes of biological assets reflect changes made to valuation assumptions and parameters. The adjustments for differences between fair value and acquisition cost of forest assets upon disposal are a result of the fact that the cumulative non-operational fair valuation changes of disposed forest assets were included in previous periods in IFRS operating result (biological assets) and other comprehensive income (forest land) and are included in operational EBIT only at the disposal date (for non-strategic forest assets disposals).	Represent adjustments for certain items considered by the management less relevant for understanding operating business performance. These adjustments result in differences in the recognition and measurement principles applicable under IFRS.
Operational fair value change of biological assets	Operational fair value changes of biological assets contain all other fair value changes (see above about non-operational fair value changes of biological assets), mainly due to inflation and differences in actual harvesting levels compared to the harvesting plan.	The long-term value change of the growing forests is an important component of the forestry business profitability.
Cash flow from operations (non-IFRS) and Cash flow after investing activities (non-IFRS)	Cash flow from operations (non-IFRS) is equal to Net cash provided by operating activities (IFRS) before cash flows related to financial items and income taxes. Cash flow after investing activities (non-IFRS) is equal to Cash flow from operations (non-IFRS) minus cash spent on intangible assets, property, plant and equipment, and biological assets and acquisitions of associated companies.	These are measures of cash generation, working capital efficiency and capital expenditure outflows.
Capital expenditure	Capital expenditure on fixed assets includes investments in and acquisitions of tangible and intangible assets as well as internally generated assets and capitalised borrowing costs, net of any related subsidies. Capital expenditure on leased assets includes new capitalised leasing contracts. Capital expenditure on biological assets consists of acquisitions of biological assets and capitalisation of costs directly linked to growing trees in plantation forests. The cash flow impact of capital expenditure is presented in cash flow from investing activities, excluding lease capex, where the cash flow impact is based on paid lease liabilities and presented in cash flow from financing and operating activities.	A measure of the operating business investments capitalised as tangible and intangibles assets.
Fixed costs	Maintenance, personnel and other administration type of costs, excluding IAC and FV.	A measure of the costs that are less variable in nature.

1 Average for the last five quarter ends 2 Attributable to the owners of the Parent 3 Last 12 months prior to the end of reporting period

Changes in the calculation of operational ROCE and ROOC

Presenting return measures based on the last 12 months is an effective way to analyse the most

recent financial data on an annualised basis and is considered more suitable for tracking the

development of long-term targets.

From Q1/2023 onwards, Stora Enso presents the operational return on capital employed

(operational ROCE) based on the last 12 months prior to the end of the reporting period. This is

calculated by dividing the operational EBIT of the last 12 months with the average capital

employed. The average capital employed for the last 12 months is determined as the average of

the published capital employed of the last five quarter-ends.

Similarly, the return on operating capital (operational ROOC) for the divisions and the return

on equity (ROE) for the Group will be based on the last 12 months prior to the end of the

reporting period.

The presentation of operational ROCE, operational ROOC and ROE based on quarter or

year-to-date figures has been discontinued.

Reconciliation of key figures


EUR million	2023	2022	2021

Operational EBIT	342	1,891	1,528
Capital employed, average	14,230	13,795	12,243
Operational ROCE	2.4%	13.7%	12.5%

Operational EBIT excl. Forest division	89	1,687	1,262
Capital employed excl. Forest division, average	8,490	8,276	7,120
Operational ROCE excl. Forest division	1.0%	20.4%	17.7%

Net result for the period	-431	1,536	1,268
Total equity, average	11,413	11,532	9,730
Return on equity (ROE)	-3.8%	13.3%	13,0 %

Net debt	3,167	1,853	2,309
Operational EBITDA	989	2,529	2,184
Net debt to operational EBITDA ratio	3.2	0.7	1.1

Earnings per share (EPS) excl. fair valuation


EUR million	2023	2022	2021
Earnings per share (EPS) excl. FV EUR
Net result for the period attributable to owners of the Parent	-357	1,550	1,266
FV on net result for the period attributable to owners of the Parent	218	324	330
Net result for the period attributable to owners of the parent excl. FV	-575	1,225	936

Average number of shares	789	789	789

Earnings per share (EPS) excl. FV EUR	-0.73	1.55	1.19

Reconciliation of operational profitability


EUR million	2023	2022	2021
Operational EBITDA	989	2,529	2,184
Depreciation and silviculture costs of associated companies	-11	-11	-11
Silviculture costs1	-102	-100	-89
Depreciation and impairment excl. IAC	-534	-527	-555
Operational EBIT	342	1,891	1,528
Fair valuations and non-operational items	231	363	394
Items affecting comparability (IAC)	-895	-245	-354
Operating result (IFRS)	-322	2,009	1,568

1 Including damages to forests

Segment share of operational EBIT, IAC, fair valuations and non-operational items and

operating profit/loss


	Operational EBIT		IAC, fair valuations and non-operational items		Operating profit/loss
EUR million	2023	2022	2023	2022	2023	2022
Packaging Materials	-57	655	-585	-2	-642	653
Packaging Solutions	43	16	-27	-98	17	-81
Biomaterials	118	687	-199	-19	-81	668
Wood Products	-64	309	-22	-56	-86	253
Forest	253	204	208	319	461	523
Other	1	63	-42	-27	-41	36
Total	342	1,891	-664	118	-322	2,009
Net financial items					-173	-151
Profit before Tax					-495	1,858
Income tax expense					64	-322
Net Profit					-431	1,536

Items affecting comparability in 2023


EUR million	2023
Impairments - Packaging Materials	-468
Impairments - Biomaterials	-103
Impairments - Wood Products	-16
Impairments - Segment Other	-14
Impairment reversal - Forest	5
Disposal of Nymölla	-30
Disposal of Hylte	-45
Disposal of Maxau	52
Disposal of biocomposite business	-15
Disposal of Wood Products DIY unit	-4
Disposals related transaction costs	-6
Acquisition of De Jong Packaging Group	-16
Closure of Sunila pulp mill	-116
Closure of De Hoop	-79
Restructuring - Anjala	-26
Restructuring - Packaging Materials	-21
Restructuring - Packaging Solutions	-10
Restructuring - Wood Products	-5
Restructuring - Biomaterials	-4
Restructuring - Group functions	-15
Restructuring (2021 announced) - Kvarnsveden	29
Restructuring (2021 announced) - Veitsiluoto	9
Updates in environmental provisions	-5
Other items	-2
Total	-895

Items affecting comparability in 2022


EUR million	2022
Disposal of Russian operations - Packaging Solutions	-93
Disposal of Russian operations - Wood Products	-56
Disposal of Russian operations - Forest	-43
Disposal of Russian operations - other divisions	-6
Impairments, transaction costs and other items related to the upcoming paper site disposals (Nymölla, Hylte and Maxau)	-28
Disposal of Kvarnsveden site	8
Impairments - Forest	-5
Impairments - Segment Other	-2
Restructuring (2021 announced) - Kvarnsveden	13
Restructuring (2021 announced) - Veitsiluoto	-10
Restructuring - Packaging Materials	-4
Restructuring - Packaging Solutions	-5
Restructuring - Biomaterials	-4
Updates in environmental provisions (mainly closed Finnish sites	-13
Other items	-3
Total	-245

Fair valuations and non-operational items in 2023 and 2022


EUR million	2023	2022
Non-operational fair valuation changes of biological assets, Packaging Materials	12	7
Non-operational fair valuation changes of biological assets, Biomaterials	25	-17
Non-operational fair valuation changes of biological assets, Forest	156	201
Non-cash income and expenses related to CO2 emission rights and liabilities, Other	-13	6
Non-operational items of associated companies, Forest	56	169
Adjustments for differences between fair value and acquisition cost of forest assets upon disposal, Forest	-5	-3
Total	231	363

Calculation of net debt


EUR million	31 Dec 2023	31 Dec 2022
Listed securities	9	8
Non-current interest-bearing receivables	76	120
Current interest-bearing receivables	64	77
Cash and cash equivalents	2,464	1,917
Interest-bearing assets	2,613	2,122

Non-current interest-bearing liabilities	4,446	2,792
Current portion of non-current debt	286	667
Current interest-bearing liabilities	476	513
Interest-bearing liabilities held-for-sale	571	4
Interest-bearing liabilities	5,780	3,976

Net debt	3,167	1,853

Consolidated financial statements

Consolidated income statement


		Year ended 31 December
EUR million	Note	2023	2022
Sales	2.1	9,396	11,680

Other operating income	2.2	378	326
Changes in inventories of finished goods and work in progress		-209	258
Materials and services		-6,133	-6,979
Freight and sales commissions		-883	-1,148
Personnel expenses	3.1	-1,275	-1,315
Other operating expenses	2.2	-638	-594
Share of results of associated companies	4.3	136	221
Change in net value of biological assets	4.2	209	195
Depreciation, amortisation and impairment charges	2.3	-1,303	-635
Operating result	2.1	-322	2,009
Financial income	2.4	91	40
Financial expense	2.4	-264	-191
Result before Tax		-495	1,858
Income tax	2.5	64	-322
Net result for the year		-431	1,536

Attributable to
Owners of the Parent	5.5	-357	1,550
Non-controlling Interests	5.7	-74	-13
Net result for the year		-431	1,536

Earnings per share
Basic earnings per share, EUR	2.6	-0.45	1.97
Diluted earnings per share, EUR	2.6	-0.45	1.96

Consolidated statement of comprehensive income


		Year ended 31 December
EUR million	Note	2023	2022
Net result for the year		-431	1,536

Other Comprehensive Income (OCI)

Items that will not be reclassified to profit and loss
Equity instruments at fair value through OCI	4.4	-645	519
Actuarial gains and losses on defined benefit plans	3.3	-52	147
Revaluation of forest land	4.2	-49	259
Share of OCI of associated companies	4.3	-23	58
Income tax relating to items that will not be reclassified	2.5	22	-77
		-748	906

Items that may be reclassified subsequently to profit and loss
Cumulative translation adjustment (CTA)	5.6	56	-197
Net investment hedges and loans	5.6	-15	-27
Cash flow hedges and cost of hedging	5.4	-1	52
Share of OCI of non-controlling interests (NCI)	5.7	5	0
Income tax relating to items that may be reclassified	2.5	-1	-6
		44	-177

Total comprehensive income		-1,135	2,265

Attributable to
Owners of the Parent		-1,066	2,278
Non-controlling interests	5.7	-69	-13
Total comprehensive income		-1,135	2,265
The accompanying Notes are an integral part of these consolidated financial statements.

Consolidated statement of financial position


			As at 31 December
EUR million		Note	2023	2022

Assets

Goodwill	O	4.1	505	244
Other intangible assets	O	4.1	283	121
Property, plant and equipment	O	4.1	4,544	4,860
Right-of-use assets	O	4.1	323	418
			5,656	5,643
Forest assets	O	4.2	6,921	6,846
Biological assets	O	4.2	4,652	4,531
Forest land	O	4.2	2,269	2,315
Emission rights	O	4.5	108	123
Investments in associated companies	O	4.3	926	832
Listed securities	I	4.4	9	8
Unlisted securities	O	4.4	810	1,437
Non-current interest-bearing receivables	I	5.3	76	120
Deferred tax assets	T	2.5	134	74
Other non-current assets	O	4.5	58	38
Non-current assets			14,699	15,120

Inventories	O	4.6	1,466	1,810
Tax receivables	T		31	11
Operative receivables	O	4.7	1,191	1,473
Interest-bearing receivables	I	5.3	64	77
Cash and cash equivalents	I		2,464	1,917
Current assets			5,216	5,287

Assets held for sale		6.1	839	514

Total assets			20,754	20,922


			As at 31 December
EUR million		Note	2023	2022

Equity and liabilities

Share capital		5.5	1,342	1,342
Share premium			77	77
Invested non-restricted equity fund			633	633
Fair value reserve			2,293	3,002
Cumulative translation adjustment		5.6	-375	-415
Retained earnings			7,015	7,893
Equity attributable to owners of the Parent			10,985	12,532
Non-controlling Interests		5.7	-97	-30
Total equity			10,889	12,502
Post-employment benefit obligations	O	3.3	217	159
Provisions	O	4.9	83	81
Deferred tax liabilities	T	2.5	1,433	1,443
Non-current interest-bearing liabilities	I	5.3	4,446	2,792
Non-current operative liabilities	O	4.8	11	11
Non-current liabilities			6,190	4,486

Current portion of non-current debt	I	5.3	286	667
Interest-bearing liabilities	I	5.3	476	513
Provisions	O	4.9	85	43
Operative liabilities	O	4.8	2,112	2,410
Tax liabilities	T	2.5	45	64
Current liabilities			3,004	3,697

Liabilities related to assets held for sale		6.1	671	237

Total liabilities			9,865	8,419

Total equity and liabilities			20,754	20,922
Items designated "O" comprise Operating Capital, items designated "I" comprise Interest-bearing Net Liabilities, items designated "T" comprise Net Tax Liabilities. The accompanying Notes are an integral part of these consolidated financial statements.

Consolidated cash flow statement


		Year ended 31 December
EUR million	Note	2023	2022
Cash flow from operating activities
Net result for the year		-431	1,536

Adjustments and reversal of non-cash items:
Taxes	2.5	-64	322
Depreciation and impairment charges	2.3	1,303	635
Change in value of biological assets	4.2	-209	-195
Change in fair value of share awards		-2	7
Share of results of associated companies	4.3	-136	-221
CTA and profits and losses on sale of fixed assets and investments1	2.2	-20	52
Net financial items	2.4	173	151
Other adjustments		16	22
Dividends received from associated companies	4.3	25	25
Interest received		64	13
Interest paid		-149	-119
Other financial items, net		-31	-7
Income taxes paid	2.5	-85	-178
Change in net working capital, net of businesses acquired or sold		300	-461
Net cash provided by operating activities		752	1,582

Cash flow from investing activities
Acquisition of subsidiary shares and business operations, net of acquired cash	6.1	-584	0
Acquisition of shares in associated companies	4.3	-5	-7
Acquisition of unlisted securities	4.4	-18	-11
Cash flow on disposal of subsidiary shares and business operations, net of disposed cash	6.1	237	-77
Cash flow on disposal of shares in associated companies	4.3	0	10
Cash flow on disposal of intangible assets and property, plant and equipment	4.1	47	17
Capital expenditure	2.1, 4.1	-897	-603
Investment in biological assets	4.2	-92	-101
Proceeds from/payment of non-current receivables, net		-1	31
Net cash used in investing activities		-1,313	-742


		Year ended 31 December
EUR million	Note	2023	2022
Cash flow from financing activities
Proceeds from issue of new long-term debt	5.3	2,006	366
Repayment of long-term debt and lease liabilities	5.3	-716	-390
Change in short-term interest-bearing liabilities	5.3	272	9
Dividends paid		-472	-434
Purchase of own shares		-6	-1
Net cash used in financing activities		1,084	-450

Net change in cash and cash equivalents		523	389
Translation adjustment		24	48
Net cash and cash equivalents at beginning of year		1,917	1,480
Net cash and cash equivalents at year end		2,464	1,917

Cash and cash equivalents at year end2		2,464	1,917
Bank overdrafts at year end		0	0
Net cash and cash equivalents at year end		2,464	1,917
1 CTA = Cumulative Translation Adjustment 2 Cash and cash equivalents comprise cash-in-hand, deposits held at call with banks and other liquid investments with original maturity of less than three months. Bank overdrafts are included in current liabilities. The accompanying Notes are an integral part of these consolidated financial statements.

Consolidated cash flow statement

Supplemental cash flow information


		Year ended 31 December
EUR million	Note	2023	2022
Change in net working capital consists of:
Change in inventories		328	-454
Change in interest-free receivables:
Current		347	-165
Non-current		-19	-1
Change in interest-free liabilities:
Current		-355	163
Non-current		-2	-3
Change in net working capital, net of businesses acquired or sold		300	-461

Cash and cash equivalents consist of:
Cash on hand and at banks		825	1,272
Cash equivalents		1,639	646
Cash and cash equivalents		2,464	1,917

Non-cash investing activities
Total capital expenditure excluding right-of-use assets		946	656
Amounts paid		-897	-603
Non-cash part of additions to intangible assets and property, plant and equipment		49	53

Cash flow on acquisitions of subsidiaries and business operations
Purchase consideration on acquisitions, cash part	6.1	-612	0
Cash and cash equivalents in acquired companies, net of bank overdraft	6.1	27	0
Net cash flow on acquisition		-584	0

Cash flow on disposals of subsidiaries and business operations
Cash part of the consideration	6.1	266	13
Cash and cash equivalents in divested companies	6.1	-29	-90
Net cash flow from disposal		237	-77
The accompanying Notes are an integral part of these consolidated financial statements.

Statement of changes in equity


					Fair value reserve
EUR million	Share capital	Share premium and reserve fund	Invested non- restricted equity fund	Treasury shares	Equity instruments through OCI	Cash flow hedges	Revaluation reserve	OCI of associated companies	CTA and net investment hedges and loans	Retained earnings	Attributable to owners of the parent	Non- controlling interests	Total
Balance at 1 January 2022	1,342	77	633	—	778	-4	1,373	29	-195	6,650	10,683	-16	10,666
Net result for the year	—	—	—	—	—	—	—	—	—	1,550	1,550	-13	1,536
OCI before tax	—	—	—	—	519	52	259	58	-224	147	812	—	812
Income tax relating to OCI	—	—	—	—	1	-9	-53	—	3	-25	-83	—	-83
Total Comprehensive Income	—	—	—	—	520	43	206	58	-220	1,672	2,278	-13	2,265
Dividend	—	—	—	—	—	—	—	—	—	-434	-434	—	-434
Acquisitions and disposals	—	—	—	—	—	—	—	—	—	—	—	—	—
Purchase of treasury shares	—	—	—	-1	—	—	—	—	—	—	-1	—	-1
Share-based payments	—	—	—	1	—	—	—	—	—	5	6	—	6
Balance at 31 December 2022	1,342	77	633	—	1,298	39	1,579	87	-415	7,893	12,532	-30	12,502
Net result for the year	—	—	—	—	—	—	—	—	—	-357	-357	-74	-431
OCI before tax	—	—	—	—	-645	-1	-49	-23	41	-52	-730	5	-726
Income tax relating to OCI	—	—	—	—	—	—	10	—	—	12	22	—	22
Total Comprehensive Income	—	—	—	—	-645	-1	-39	-23	41	-397	-1,066	-69	-1,135
Dividend	—	—	—	—	—	—	—	—	—	-473	-473	—	-473
Acquisitions and disposals	—	—	—	—	—	—	—	—	—	—	—	2	2
Purchase of treasury shares	—	—	—	-6	—	—	—	—	—	—	-6	—	-6
Share-based payments	—	—	—	6	—	—	—	—	—	-8	-2	—	-2
Balance at 31 December 2023	1,342	77	633	—	653	38	1,540	63	-375	7,015	10,985	-97	10,889
CTA = Cumulative Translation Adjustment, NCI = Non-controlling Interests, OCI = Other Comprehensive Income

Notes to the consolidated financial statements

1 Basis for reporting

1.1 Accounting principles

Principal activities

Stora Enso Oyj (“the Company”) is a Finnish

public limited liability company organised

under the laws of the Republic of Finland

and with its registered address at

Salmisaarenaukio 2, 00180 Helsinki. Its

shares are currently listed on Nasdaq

Helsinki and Stockholm. The operations of

Stora Enso Oyj and its subsidiaries (together

“Stora Enso” or “the Group”) are organised

into the following reportable segments:

Packaging Materials, Packaging Solutions,

Biomaterials, Wood Products, Forest and

segment Other. The Group’s main market is

Europe.

The Financial Statements were

authorised for issue by the Board of

Directors on 31 January 2024.

Basis of preparation

The consolidated financial statements of

Stora Enso have been prepared in

accordance with IFRS Accounting Standards

as adopted by the European Union. The

consolidated financial statements of Stora

Enso have been prepared according to the

historical cost convention, except as

disclosed in the accounting policies. The

detailed accounting principles are explained

in the related notes with a few exceptions

where the accounting principles are

presented in this note. The consolidated

financial statements are presented in euros,

which is the parent company’s functional

currency.

All figures in these consolidated financial

statements have been rounded to the

nearest million, unless otherwise stated.

Therefore, figures in this report may not add

up precisely to the totals presented and may

vary from previously published financial

information.

New and amended standards and

interpretations adopted in 2023

The Group has applied the following new

and amended standards and interpretations

which are effective from 1 January 2023:

• Amendments to IAS 1 Presentation of

Financial Statements: Disclosure of

Accounting policies. The amendment

requires entities to disclose their material

accounting policy information rather than

their significant accounting policies. The

effective date is 1 January 2023. The

amendment had a minor impact on the

disclosures.

• Amendments to IAS 8 Accounting

policies, Changes in Accounting

Estimates and Errors: Definition of

Accounting Estimates. The amendments

introduce the definition of accounting

estimates and includes other

amendments to IAS 8 to help entities

distinguish changes in accounting

estimates from changes in accounting

policies. The effective date is 1 January

2023. The amendment did not have a

significant impact on the Group.

• Amendments to IAS 12 Income Taxes:

Deferred Tax related to Assets and

Liabilities arising from a Single

Transaction. The amendments clarify how

entities account for deferred tax on

transactions such as leases and

decommissioning obligations. The main

change is related to the initial recognition

exemption and is in accordance with the

amendment; the initial recognition

exemption does not apply to transactions

in which equal amounts of deductible and

taxable temporary differences arise on

initial recognition. The effective date is 1

January 2023. The amendment did not

have a significant impact on the Group.

• Amendment to IAS 12 Income taxes:

Pillar Two rules. The amendment includes

1) a mandatory temporary exception to

IAS 12 meaning that an entity does not

recognise or disclose information about

deferred tax assets and liabilities related

to Pillar Two, and a requirement to

disclose that the exception has been

applied; 2) a requirement to disclose

separately the current tax expense

(income) related to Pillar Two; and 3) for

periods in which Pillar Two legislation is

enacted or substantively enacted, but not

yet in effect, a requirement to disclose the

known or reasonably estimable

information about the entity’s exposure to

Pillar Two income taxes. The effective

date is 1 January 2023. The Group has

applied the exception and provides an

estimate of the impact of Pillar Two in

note 2.5 Income taxes.

• Other standards, standard amendments

and interpretations did not have any

significant impact on the Group's

consolidated financial statements or

disclosures.

Changes in segment reporting

Due to the divestments and reorganisation of

retained Paper division operations, Stora

Enso's segment reporting was changed as of

1 January 2023. The Paper division was

discontinued and not reported as a separate

segment from 1 January 2023 onwards. The

paper sites divested in 2023 (Maxau,

Nymölla and Hylte) together with all

previously sold and closed sites are reported

as part of the segment Other. The retained

sites Langerbrugge and Anjala are reported

as part of the Packaging Materials division.

As of 1 January 2023, emerging business

related units in the Packaging Solutions

division were moved to the segment Other.

These units include Formed Fiber, Circular

Solutions (biocomposites) and Selfly Store.

The comparative figures have been

restated accordingly. As of 1 January 2023,

the reportable segments are Packaging

Materials, Packaging Solutions, Biomaterials,

Wood Products, Forest, and segment Other.

Consolidation principles

The consolidated financial statements

include the parent company, Stora Enso Oyj,

and all companies controlled by the Group.

Control is defined as when the Group:

• has power over the investee,

• is exposed, or has rights, to variable

returns from its involvement with the

investee; and

• has the ability to use its power to affect its

returns.

If facts and circumstances indicate that there

are changes to the three elements of control

listed above the Group reassess whether or

not it controls an investee. Acquired

companies are accounted for under the

acquisition method whereby they are

included in the consolidated financial

statements from the date the control over the

subsidiary is obtained, whereas, conversely,

disposed companies are included up to the

date when the control is lost. The

subsidiaries and joint operations are listed in

note 6.2 Group companies.

All intercompany transactions,

receivables, liabilities and unrealised profits,

as well as intragroup profit distributions, are

eliminated. Accounting policies for

subsidiaries, joint arrangements and

associated companies are adjusted where

necessary to ensure consistency with the

policies adopted by Stora Enso.

Associated companies over which Stora

Enso exercises significant influence are

accounted for by using the equity method.

These companies are investments in which

the Group has significant influence, but

which it does not control. Significant

influence means the power to participate in

the financial and operating policy decisions

of the company without control or joint

control over those policies. More detailed

information is presented in note 4.3

Associates.

Joint control is the contractually agreed

sharing of control of the joint arrangement,

which exists only when decisions on relevant

activities require the unanimous consent of

the parties sharing control. Joint operations

are joint arrangements, whereby the partners

who have joint control of the arrangement

have rights to the assets, and obligations for

the liabilities, relating to the arrangement.

Joint ventures are joint arrangements,

whereby the partners who have joint control

of the arrangement have rights to the net

assets of the joint arrangement.

The Group has two joint operations,

Veracel and Montes del Plata. In both

companies, Stora Enso’s ownership is 50%.

The arrangements are based on

shareholders’ agreements, which give Stora

Enso rights to a share of returns and make

the Group indirectly liable for the liabilities,

as its ability to pay for the pulp is used to

finance debts. In relation to its interest in joint

operations, the Group recognises its share of

assets, liabilities, revenues, expenses and

cash flows of the joint operation. The share is

determined based on rights to the assets and

obligations for the liabilities of each joint

operator.

• Veracel is a jointly owned company of

Stora Enso and Suzano located in Brazil.

The pulp mill produces 1.2 million tonnes

of bleached eucalyptus hard wood pulp

per year and both owners are entitled to

half of the mill’s output. The eucalyptus is

sourced mostly from the company’s own

forest plantations. The mill commenced

production in 2005.

• Montes del Plata is a jointly owned

company of Stora Enso and Arauco

located in Uruguay. The Montes del Plata

Pulp Mill’s annual capacity is 1.4 million

tonnes of bleached eucalyptus hard wood

pulp and Stora Enso’s part, 0.7 million

tonnes, is sold entirely as market pulp.

The eucalyptus is sourced mostly from

the company’s own forest plantations. The

mill commenced production in 2014.

Revenue recognition

Sales comprise products, raw materials and

services less indirect sales tax and

discounts, and are adjusted for cash flow

hedging result on sales in foreign currencies.

Sales are recognised after Stora Enso has

transferred the control of goods and services

to a customer and the Group retains neither

a continuing right to dispose of the goods,

nor effective control of those goods; usually,

this means that sales are recorded upon the

delivery of goods to customers in

accordance with the agreed terms of

delivery.

Stora Enso’s terms of delivery are based

on Incoterms 2020, which are the official

rules for the interpretation of trade terms as

issued by the International Chamber of

Commerce (ICC). The main categories of the

terms covering Group sales are:

• “D” terms, under which the group is

obliged to deliver the goods to the buyer

at the agreed place in the manner

specified in the chosen rule, in which case

the point of sale is the moment of delivery

to the buyer.

• “C” terms, whereby the Group arranges

and pays for the external carriage and

certain other costs, though the Group

ceases to be responsible for the goods

once they have been handed over to the

carrier in accordance with the relevant

term. The point of sale is thus the handing

over of the goods to the carrier contracted

by the seller for the carriage to the agreed

destination.

• “F” terms, being where the buyer

arranges and pays for the carriage, thus

the point of sale is the handing over of the

goods to the carrier contracted by the

buyer at the agreed point.

Where local rules may result in invoices

being raised in advance of the above, the

effect of this revenue advancement is

quantified, and an adjustment is made

accordingly. Stora Enso’s sales mainly

comprise sales of products and the revenue

is typically recognised at a point in time when

Stora Enso transfers control of these

products to a customer. Revenues from

services are recognised over time once the

service has been performed. More detailed

information regarding Stora Enso's principal

activities from which the Group generates its

revenue and disaggregation of revenue is

presented in note 2.1 Segment information.

Foreign currency transactions

Transactions in foreign currencies are

recorded at the rate of exchange prevailing

at the transaction date, but at the end of the

month foreign-currency-denominated

receivables and liabilities are translated

using the month-end exchange rate. Foreign

exchange differences for operating items are

presented in the appropriate income

statement line in the operating profit, and, for

financial assets and liabilities, they are

presented in the financial items in the

consolidated income statement, except when

deferred in equity as qualifying cash flow

hedges, net investment hedges or net

investment loans. Translation differences on

non-monetary financial assets, such as

equities classified at fair value through other

comprehensive income (FVTOCI), are

included in equity.

Foreign currency translations

The income statements of Group companies

with functional and presentational currencies

other than the euro are translated into the

Group reporting currency using the average

exchange rates of the year, whereas the

statements of the financial position of these

companies are translated using the

exchange rates at the reporting date. The

Group is exposed to currency risks arising

from exchange rate fluctuations on the value

of its net investment in non-euro foreign

entities. Exchange differences arising from

the retranslation of net investments in foreign

entities that are non-euro foreign

subsidiaries, joint operations or associated

companies and of financial instruments that

are designated to hedge such investments,

are recorded directly in equity as cumulative

translation adjustment (CTA). See note 5.6

Cumulative translation adjustment and equity

hedging for more details.

Future standard changes endorsed

by the EU but not yet effective in

2023

• Amendments to IAS 1 Presentation of

Financial Statements: Information about

long-term debt with covenants. IAS 1

requires a company to classify debt as

non-current only if the company can avoid

settling the debt in the 12 months after the

reporting date. However, a company’s

ability to do so is often subject to

complying with covenants. The

amendments specify that covenants to be

complied with after the reporting date do

not affect the classification of debt as

current or non-current at the reporting

date. Instead, the amendments require a

company to disclose information about

these covenants in the notes to the

financial statements. The effective date is

1 January 2024. The Group is evaluating

the impact of the amendments and

expects that the amendment does not

have significant impact.

• Amendments to IAS 1 Presentation of

Financial Statements: Classification of

liabilities as current or non-current. The

amendments clarify a criterion for

classifying a liability as non-current. The

amendments specify that an entity’s right

to defer settlement must exist at the end

of the reporting period; clarify that

classification is unaffected by

management’s intentions or expectations

about whether the entity will exercise its

right to defer settlement; clarify how

lending conditions affect classification;

and clarify requirements for classifying

liabilities an entity will or may settle by

issuing its own equity instruments. The

effective date is 1 January 2024. The

Group is evaluating the impact of the

amendment and expects that the

amendment does not have significant

impact.

• Amendments to IFRS 16 Leases: Lease

Liability in Sale and Leaseback.

Amendment requires a seller-lessee to

subsequently measure lease liabilities

arising from a leaseback in a way that it

does not recognise any amount of the

gain or loss that relates to the right of use

it retains. The new requirements do not

prevent a seller-lessee from recognising

in profit or loss any gain or loss relating to

the partial or full termination of a lease.

The effective date is 1 January 2024. The

Group expects that the amendment does

not have a significant impact.

• No other published standards, standard

amendments or interpretations which

would be expected to have any significant

impact on the Group’s consolidated

financial statements or disclosures.

Future standard changes not yet

effective and not yet endorsed by the

EU in 2023

• Amendments to IAS 7 Statement of Cash

Flows and IFRS 7 Financial Instruments:

Disclosures: Supplier Finance

Arrangements. The amendments require

entities to add disclosure requirements,

and ‘signposts’ within existing disclosure

requirements that ask entities to provide

qualitative and quantitative information

about supplier finance arrangements. The

effective date is 1 January 2024. The

Group is engaged in supply chain

financing and is evaluating the impact of

the amendment and expects that the

amendment will result in additional

disclosures in the notes of the

consolidated financial statements.

• Amendments to IAS 21 The Effects of

Changes in Foreign Exchange Rates:

Lack of Exchangeability. The amendment

contains guidance to specify when a

currency is exchangeable and how to

determine the exchange rate when it is

not. The effective date is 1 January 2025.

The Group expects that the amendment

does not have a significant impact.

• Other published standards, standard

amendments or interpretations are not

expected to have any significant impact

on the Group’s consolidated financial

statements or disclosures.

1.2 Critical accounting

estimates and judgements

The preparation of consolidated financial

statements in accordance with IFRS requires

management to make estimates, judgements

and assumptions that affect the reported

assets and liabilities, as well as the

disclosure of contingent assets and liabilities

at the reporting date and the reported

revenues and expenses during the period.

These estimates, judgments and

assumptions might have a significant impact

on the amounts recognised in the

consolidated financial statements. The

estimates are based on historical experience

and various other assumptions that are

believed to be reasonable and reflect

management's best estimates, though actual

result and timing could differ from these. The

estimates, judgements and assumptions are

reviewed regularly and updated if there are

changes in circumstances or as a result of

new information. The accounting items

presented below represent those matters

which include the most estimation

uncertainty and exercise of judgement.

Property, plant and equipment,

intangible assets and right-of-use

assets

The carrying amounts of property, plant and

equipment and intangible assets and right-of-

use assets are assessed at each reporting

date to determine whether there is any

indication that an asset may be impaired. If

an indicator of impairment exists, the asset's

recoverable amount is determined and

compared with its carrying amount. The

recoverable amount of an asset is estimated

as the higher of fair value less the cost of

disposal and the value in use, and an

impairment charge is recognised whenever

the carrying amount exceeds the recoverable

amount. The value in use is calculated using

a discounted cash flow method which is most

sensitive to the discount rate as well as the

expected future cash flows. The key

assumptions used in the impairment testing,

are explained further in note 2.3

Depreciation, amortisation and impairment

charges.

Management believes that the assigned

values and useful lives, as well as the

underlying assumptions, are reasonable,

though different assumptions and assigned

useful lives could have a significant impact

on the reported amounts. For material

intangible assets and property, plant and

equipment in an acquisition, an external

advisor makes a fair valuation of the

acquired intangible assets and property,

plant and equipment and assists in

determining their remaining useful life.

Goodwill

Goodwill is tested per cash generating unit

(CGU) or by a group of CGUs at least on an

annual basis and recoverable amount is

determined as the higher of fair value less

cost to sell and their value in use (discounted

cash flow method). Impairment is recognised

if the carrying amount exceeds the

recoverable amount. The discounted cash

flow method uses future projections of cash

flows from each of the reporting units in a

CGU or a group of CGUs and includes,

among other estimates, projections of future

product pricing, production levels, product

costs, market supply and demand, projected

capital expenditures and an assumption of

the weighted average cost of capital. The

discount rates used reflect the best estimate

of the weighted average cost of capital.

The Group has evaluated the most

sensitive estimates and assumptions, which,

when changed, could have a material impact

on the valuation of the assets including

goodwill and, therefore, could lead to an

impairment. These estimates and

assumptions are expected sales prices,

expected operating costs and the discount

rate. The key assumptions used in the

impairment testing are presented in note 2.3

Depreciation, amortisation and impairment

charges.

Leases

When assessing the lease term and if an

extension or renewal options are included or

not, the Group considers all relevant facts,

circumstances and incentives that might

have an impact on the assessment. Options

to extend or renew the lease are included in

the lease term only if it is reasonably certain

that Stora Enso will exercise the option. The

Group will do a reassessment, for example

upon changes in circumstances, receiving

new information or an occurrence of a

significant event that is within the control of

the lessee and might have an impact on the

assessment. See note 4.1 Intangible assets,

property, plant and equipment and right-of-

use assets for more details about right-of-

use assets and note 5.3 Interest-bearing

assets and liabilities for more details about

lease liabilities.

Biological assets

The Group has biological assets in

subsidiaries, joint operations and associated

company. Biological assets, in the form of

standing trees, are measured at fair value

less the costs to sell. Fair value is

determined by using discounted cash flows

from continuous operations based on

sustainable forest management plans taking

into account the growth potential of one

cycle. These discounted cash flows require

estimates of growth, harvesting, sales price,

costs and discount rate. In determining the

fair value of biological assets, the

management needs to make estimates of

future price levels and trends for sales and

costs, and to undertake regular surveys of

the forest to establish the volumes of wood

available for harvesting and their current

growth rates.

See next chapter for estimates and

judgement applied in valuation of Nordic

forest assets and note 4.2 Forest assets for

more detailed information about Nordic and

plantation forest assets.

Nordic forest assets

The fair value of forest assets in the Nordics

is determined using a market approach,

which is based on the forest market

transactions in the areas where Stora Enso’s

forests are located. Market prices between

areas vary significantly and judgement is

applied to define relevant areas for market

transactions used in valuation. The valuation

of the forest assets is based on detailed

transaction data and price statistics as

provided by market data suppliers. Market

transaction data is adjusted to consider

characteristics and nature of Stora Enso's

forest assets and to exclude certain non-

forest assets and transactions considered as

outliers compared to other transactions. The

valuation takes into account where the forest

land is located, price levels and volume of

standing stock. The value of the forest

assets will be affected by changes in

transaction prices and by how the volume of

standing stock develops. Stora Enso is

applying weighted three-year average

market transaction prices and this is

considered to include a sufficient amount of

transactions and estimated to represent

market conditions at the reporting date.

The value of the forest assets is allocated

to biological assets and forest land.

Allocation of the combined fair value of forest

assets is based on the income approach

where separate present values of expected

net cash flows are calculated for both

biological assets and forest land. The

discount rate is determined as the rate at

which the valuation based on market

transaction prices matches the total forest

assets combined cash flows for biological

assets and forest land. The total net cash

flows for each of the components include

estimates in respect of future harvesting

volumes, sales price levels, and cost

development. See note 4.2 Forest assets for

more information.

Fair value of financial instruments

Where the fair value of financial assets and

liabilities cannot be derived directly from

publicly quoted market prices, other

valuation techniques, such as discounted

cash flow models, transaction multiples, the

Black and Scholes model and the Gordon

model, are applied. The key judgements

include future cash flows, credit risk, volatility

and changes in assumptions about these

factors which could affect the reported fair

value of the financial instruments.

Investments in debt and equity instruments

of unlisted entities, such as Pohjolan Voima

Oyj (PVO), represent a significant portion of

the Group’s assets and require management

judgement, as explained in more detail in

notes 4.4 Equity instruments and 5.1

Financial risk management.

Income taxes

Tax assets and liabilities are reviewed on a

regular basis and balances are adjusted

appropriately. The deferred tax assets,

whether arising from temporary differences

or from tax losses, are recognised only to the

extent that it is probable that future taxable

profits will be available against which the

assets can be utilised. Management

considers that adequate provision has been

made for future tax consequences based on

the current facts, circumstances and tax

laws. However, should any tax positions be

challenged and not prevail, different

outcomes could result and have a significant

impact on the amounts reported in the

consolidated financial statements. See note

2.5 Income taxes for more detailed

information.

Post-employment benefits

The determination of the Group pension

obligation and expense is subject to the

selection of certain assumptions used by

actuaries in calculating such amounts,

including, among others, the discount rate,

the annual rate of increase in future

compensation levels and estimated

lifespans. Amounts charged in the income

statement are determined by independent

actuaries; however, where actual results

differ from the initial estimates, together with

the effect of any change in assumptions or

other factors, these differences are

recognised directly in equity, as disclosed in

the statement of comprehensive income.

See note 3.3 Post-employment benefit

obligations for detailed information on the

assumptions used in the pension obligation

calculations.

Provisions

The Group has recognised provisions for

known environmental, restructuring and

other obligations, where legal or constructive

obligation exist as a result of past events.

The amounts recognised as provisions are

based on the management’s best estimate of

the costs required to settle the obligation.

Due to uncertainty regarding the timing and

amount of these costs, the actual costs might

differ significantly from the original estimate.

The carrying amounts of provisions are

reviewed regularly and adjusted when

needed to consider changes in cost

estimates, regulations, applied technologies

and conditions. See note 4.9 Provisions for

more detailed information.

2 Financial performance

2.1 Segment information

Accounting principles

Stora Enso’s reportable segments are Packaging Materials, Packaging Solutions, Biomaterials, Wood

Products, Forest and the segment Other. Operating segments reflect the Group’s management structure and

the way financial information is regularly reviewed by Stora Enso’s President and CEO who is responsible for

allocating resources and assessing the performance of the operating segments. Costs, revenues, assets and

liabilities are allocated to operating segments on a consistent basis. Transactions between operating

segments are based on arm’s length terms, and they are eliminated on consolidation. The activities of the

reportable segments are:

Packaging Materials

The Packaging Materials division is a global leader and expert in circular packaging providing

premium packaging materials based on virgin and recycled fiber. Stora Enso helps customers

replace fossil-based materials with low-carbon, renewable and recyclable alternatives for their

food, beverage and transport packaging with a wide selection of base boards and barrier

coatings.

Packaging Solutions

The Packaging Solutions division is a packaging converter that provides premium fiber-based

packaging products and services used by leading brands across multiple market areas, including

retail, e-commerce, fresh produce, and industrial applications. The division also provides design

and sustainability services for customers to optimise material use, logistics and to reduce CO2

emissions.

Biomaterials

The Biomaterials division’s business opportunities are strongly driven by the need to replace

fossil-based and other non-renewable materials. Stora Enso uses all fractions of a tree to

develop new biobased solutions for various applications. The division’s long-term growth is

driven by new products and innovations, while pulp continues to be the foundation.

Wood Products

The Wood Products division is Europe’s largest sawn timber producer and a leading provider of

sustainable wood-based solutions for the global construction industry. Additionally, it offers

window and door components, and co-products such as pellets made from wood residuals.

Forest

The Forest division is responsible for wood sourcing for Stora Enso’s Nordic and Baltic

operations and B2B customers. It manages the Group’s forest assets in Sweden and a 41%

share of Tornator, whose forests are mainly located in Finland. The division’s operations are

based on sustainable forest management from planning and logistics to harvesting and forest

regeneration.

Segment Other

The segment Other includes the divested paper sites until the completion of the divestments, the

reporting of the emerging businesses (including Formed Fiber and Selfly Stores), as well as

Stora Enso’s shareholding in the energy company Pohjolan Voima (PVO), and the Group’s

shared services and administration.

Read more about the changes in segment reporting in 2023 in the note 1.1 Accounting

principles. The comparative figures for 2022 have been restated accordingly.

Operating segments 2023


EUR million	Packaging Materials	Packaging Solutions	Biomaterials	Wood Products	Forest	Other	Eliminations	Group
External sales	4,362	1,066	1,363	1,453	989	162	0	9,396
Internal sales	195	11	223	127	1,501	801	-2,859	0
Sales total	4,557	1,077	1,587	1,580	2,490	964	-2,859	9,396

Product sales								9,317
Service sales								79
Sales total								9,396

Operating result	-642	17	-81	-86	461	-41	49	-322
Net financial expense								-173
Income taxes								64
Result for the period								-431

Operative assets	3,562	1,223	2,772	855	7,906	1,189	-371	17,136
Tax receivables								166
Interest-bearing receivables								2,613
Assets held for sale								839
Total assets								20,754

Operative liabilities	1,059	195	321	238	549	505	-358	2,508
Tax liabilities								1,478
Interest-bearing liabilities								5,209
Liabilities related to assets held for sale								671
Total liabilities								9,865

Other items
Depreciations/impairments/impairment reversals	-805	-74	-297	-67	-21	-38	0	-1,303
Capital expenditures	636	161	162	51	29	15	0	1,054
Operating capital1	3,243	1,028	2,451	617	7,358	684	-13	15,368
Average personnel	7,269	4,389	2,196	4,079	1,434	1,455	0	20,822

1 Including assets held for sale and related liabilities.

Operating segments 2022


EUR million	Packaging Materials	Packaging Solutions	Biomaterials	Wood Products	Forest	Other	Eliminations	Group
External sales	5,257	704	1,798	2,058	848	1,014	0	11,680
Internal sales	239	23	382	137	1,671	1,136	-3,589	0
Sales total	5,496	727	2,180	2,195	2,519	2,150	-3,589	11,680

Product sales								11,521
Service sales								159
Sales total								11,680

Operating result	653	-81	668	253	523	36	-42	2,009
Net financial expense								-151
Income taxes								-322
Result for the period								1,536

Operative assets	4,792	351	3,095	998	7,481	1,924	-440	18,201
Tax receivables								85
Interest-bearing receivables								2,122
Assets held for sale								514
Total assets								20,922

Operative liabilities	1,265	146	299	280	518	574	-377	2,704
Tax liabilities								1,507
Interest-bearing liabilities								3,972
Liabilities related to assets held for sale								237
Total liabilities								8,419

Other items
Depreciations/impairments/impairment reversals	-287	-62	-110	-59	-50	-67	0	-635
Capital expenditures	363	36	121	87	35	59	0	701
Operating capital1	3,527	205	2,796	718	6,963	1,660	-63	15,806
Average personnel	7,113	3,865	2,135	4,445	1,412	2,822	0	21,790

1 Including assets held for sale and related liabilities.

Comparative figures have been restated as described in the Group's release from 29 March 2023.

Geographical information


	External sales by destination		Non-current assets by country1		Capital expenditure by country2
EUR million	2023	2022	2023	2022	2023	2022
Austria	347	450	134	128	15	16
Baltic States	271	377	66	74	9	12
Czech Republic	189	231	193	198	8	41
Finland	664	759	2,872	2,729	587	311
France	299	449	2	2	0	0
Germany	862	1,208	34	53	9	10
Italy	453	650	0	0	1	0
Netherlands	597	317	797	9	131	7
Poland	511	733	407	379	30	35
Sweden	1,111	1,071	7,127	6,837	174	173
UK	344	444	8	0	0	0
Other Europe	901	1,245	126	135	12	16
Total Europe	6,548	7,934	11,767	10,543	975	623
China (incl. Hong Kong)	991	1,125	43	1,044	15	25
Japan	242	417	0	0	0	0
Uruguay	33	31	1,543	1,580	35	31
USA	302	397	0	32	0	0
Other countries	1,279	1,776	316	282	29	22
Total	9,396	11,680	13,669	13,481	1,054	701
1 Non-current assets excluding assets held for sale, financial instruments and deferred tax assets. 2 Excluding biological asset capital expenditure

2.2 Other operating income and expense

Accounting principles

Research and development

Research costs are expensed as incurred in other operating expenses in the consolidated income statement.

Development costs are also expensed as incurred unless they meet the criteria to be recognised as

intangible assets in accordance with IAS 38, in which case they are capitalised as intangible assets and

amortised over their expected useful lives.

Government grants

Government grants relating to the purchase of property, plant and equipment are deducted from the carrying

value of the asset, while the net cost is capitalised. Other government grants are recognised as income on a

systematic basis over the periods necessary to match them with the related costs which they were intended

to compensate.

Green certificates

Stora Enso is part of the local green energy production system which entitles selected mills in Europe to

receive green certificates based on megawatt hours of green energy produced. Green certificates received

are recognised at grant date market value only in the balance sheet. As such, subsequent changes in market

prices do not have an impact on the income statement and the income is recognised only when certificates

are sold.

Other operating income and expense


EUR million	2023	2022
Other operating income
Emission rights allocated and disposal gains	145	177
Sale of green certificates	12	10
Gains on disposal of fixed assets	44	4
Gains on disposal of Group companies and business operations	52	18
Dividend and gain on sale of unlisted shares	1	1
Insurance compensation	8	10
CTA release	0	5
Government grants	40	16
Other1	76	85
Total	378	326

1 Including rent income, fair value changes for non-hedge accounted derivatives and other items. Derivatives are discussed in more detail

in note 5.4 Derivatives.


EUR million	2023	2022
Other operating expenses
Lease expenses	43	40
Credit losses, net of reversals	9	13
Losses on disposal of fixed assets	4	0
Losses on disposal of Group companies and business operations	19	26
CTA release	56	52
Provision changes in income statement	94	31
Other1	414	431
Total	638	594
1 Including expenses related to, among others, consultancy and other services, IT and telecommunications, properties and administration, audit, training, travelling, insurance, penalties, and currency translation differences on operative payables.

Materials and services include	2023	2022
Emissions rights to be delivered	82	112

The Group has recorded an other operating income of EUR 145 (177) million related to emission

rights. Actual realised profits amounted to EUR 75 (59) million on the disposal of surplus rights.

Under Materials and Services an expense of EUR 82 (112) million has been booked related to

the cost of CO2 emissions from production. See note 4.5 Emission rights and other non-current

assets for more details related to emission rights. The income from the sale of green certificates

amounted to EUR 12 (10) million.

Lease expenses include expenses relating to short-term leases of EUR 12 (12) million, low-

value assets of EUR 26 (21) million and variable lease payments not included in the

measurement of lease liabilities of EUR 2 (2) million. Lease expenses also include service

payments included in lease contracts, which are not included in the measurement of lease

liabilities.

In 2023, research and development expenses of EUR 98 (89) million were recorded.

Auditor's fees and services


EUR million	2023	2022
Audit fees	4	4
Audit-related fees	0	0
Tax fees	0	0
Other fees	0	0
Total	5	4

Aggregate fees for professional services rendered to the Group principal auditor PwC amounted

to EUR 5 (4) million. Audit fees relate to the auditing of the annual financial statements or

ancillary services normally provided in connection with statutory and regulatory filings. Audit-

related fees are incurred for assurance and associated services that are reasonably related to

the performance of the audit or for the review of financial statements.

2.3 Depreciation, amortisation and impairment charges

Accounting principles

Depreciation, amortisation and impairment charges

Depreciation or amortisation of an asset begins when it is available for use in the location and condition

necessary for it to be operated in the manner intended by management. Depreciation or amortisation ceases

when the asset is derecognised or classified as held for sale. Depreciation or amortisation does not cease

when the asset becomes idle. Tangible and intangible assets are depreciated and amortised on a straight-line

basis during their useful lives. Useful lives are reviewed annually. If an asset is disposed and the asset’s book

value is higher than the disposal proceeds, the difference is recognised as an impairment in the period when

reliable estimate of disposal loss is available, at the latest when a binding sales contract is signed. Right-of-

use (ROU) assets are depreciated using the straight line method from the commencement date of the

contract to the earlier of the end of the lease term or the end of the useful life of the ROU assets.

The carrying amounts of intangible assets, property, plant and equipment and ROU assets are reviewed

at each reporting date to determine whether there is any indication of impairment, whereas goodwill is tested

annually. If any such indication exists, the recoverable amount is estimated as the higher of the fair value less

costs of disposal and the value in use, with an impairment loss being recognised whenever the carrying

amount exceeds the recoverable amount.

A previously recognised impairment loss is reversed if there has been a change in the estimates used to

determine the recoverable amount, however, not to an extent higher than the carrying amount that would

have existed had no impairment loss been recognised in prior years. For goodwill, however, a recognised

impairment loss is not reversed.

Whilst intangible assets, property, plant and equipment and ROU assets are subject to impairment testing

at the cash generating unit (CGU) level, goodwill is subject to impairment testing at the CGU level for groups

of CGUs, which represents the lowest level within the Group at which goodwill is monitored for internal

management purposes.

Depreciation, amortisation and impairment charges


EUR million	2023	2022
Depreciation and amortisation
Intangible assets	41	24
Buildings and structures	76	81
Plant and equipment	349	371
Right-of-use assets	59	50
Other tangible assets	8	8
Total	533	533
Impairment
Goodwill	85	11
Intangible assets	24	1
Buildings and structures	134	25
Plant and equipment	494	75
Right-of-use assets	33	0
Other tangible assets	6	2
Total	776	114
Reversal of impairment
Plant and equipment	-6	-7
Total	-6	-7
Disposal gains/losses
Gain on sale of assets	0	-10
Loss on sale of assets	0	4
Total	0	-5
Depreciation, amortisation and impairment charges	1,303	635

Impairment testing

The recoverable amount for the cash generating units (CGUs) has been determined as the

higher of fair value less cost to sell and their value in use. Value in use is determined by using

cash flow projections from financial estimates approved by the Board of Directors and

management. The pre-tax discount rates are calculated for each CGU, taking into account the

business environment of the CGU and the tax and risk profile of the country in which the cash

flow is generated. The table in the goodwill impairment testing section below sets out the pre-tax

discount rates used for goodwill impairment testing, which are similar to those used in the

impairment testing of other intangible assets, property, plant and equipment, and ROU assets.

The following assumptions were used in calculating value in use for each CGU:

• Sales price estimates in accordance with internal and external specialist analysis;

• Cash flows and discount rates were prepared in nominal terms;

• Current cost structure to remain unchanged;

• For goodwill testing, a five-year future period was used, after which the perpetuity value was

determined using inflation based growth rates;

• For intangible assets, property, plant and equipment, and ROU assets testing period was the

remaining expected economic life of the assets.

Property, plant and equipment, other intangible assets and ROU assets

impairments

The total impairment charges on property, plant and equipment, other intangible assets and

ROU assets in 2023 amounted to EUR 691 (103) million and resulted from business

restructuring, Group company disposals and predictions of a weaker outlook compared to

previous estimates.

In 2023, impairments were mainly related to Biomaterials and Packaging Materials divisions.

Biomaterials related impairments of EUR 146 million concerned Nordic Mills CGU and are

mainly related to Sunila due to the closure of pulp production site Finland and Uimaharju site

due to predictions of a weaker outlook compared to previous estimates. Packaging Materials

related impairments of EUR 490 million concerned mainly Containerboard Oulu CGU of EUR

228 million due to predictions of a weaker outlook compared to previous estimates, Consumer

Board China CGU of EUR 202 million in connection to potential disposal transaction and based

on fair value less cost to sell, and CGU De Hoop of EUR 42 million due to the closure of the site

in the Netherlands.

In 2022, impairments were mainly related to Group company disposals in Russia and

disposals in the Paper division. Russia related impairments of EUR 75 million concerned Wood

Products Baltic and Russia CGU, Packaging Solutions Corrugated Nordics, and CEE CGU and

Forest operations CGU. Paper related impairments of EUR 22 million concerned News and

Office CGUs. Due to disposals, Wood Products Baltic and Russia CGU no longer exists as its

own CGU. Due to segment changes in 2023, News and Office CGUs, previously part of Paper,

are presented as part of the segment Other.

Goodwill impairments

In 2023, a goodwill impairment of EUR 28 million was recognised in Anjala Mill CGU and EUR

13 million in De Hoop mill CGU mainly due to restructurings in the Packaging Materials division.

Additionally, a goodwill impairment of EUR 44 million was recognised in the Biomaterials

division's CGU Nordic Mills, due to predictions of a weaker outlook compared to previous

estimates.

Due to disposals in 2022 in the Paper division, a goodwill impairment of EUR 11 million was

recognised in News and Office CGUs. Due to segment changes in 2023, News and Office

CGUs, previously part of Paper, are presented as part of the segment Other.

The most material groups of CGUs containing goodwill


	2023		2022
EUR million	Goodwill at year end	Pre-tax discount rate	Goodwill at year end1	Pre-tax discount rate
Packaging Solutions - Western Europe	277	9.3%	0	—
Wood Products - Southern Europe	110	11.8%	111	9.9%
Biomaterials - Nordic Mills	0	10.1%	45	8.2%
Other CGUs	119		88
Total	505		244
1 Goodwill excluding assets held for sale

The calculation of value in use is highly sensitive to discount rates, sales prices and costs.

Sensitivity analysis are conducted to calculate the amounts by which the value assigned to the

key assumption must change in order for the unit’s recoverable amount to be equal to its

carrying amount for the CGUs for which a reasonably possible change in an assumption could

result in an impairment. In 2023, any reasonably possible change in key assumptions would not

cause carrying amount to exceed its recoverable amount.

Summary of impairments and impairment reversals per division


EUR million	2023	2022
Packaging Materials	530	0
Packaging Solutions	5	36
Biomaterials	190	0
Wood Products	20	10
Forest	1	31
Other	23	28
Total (impairment +) / (Impairment reversal -)	770	107

2.4 Net financial items

Accounting principles

Net financial items comprise net interest expenses, foreign exchange gains and losses and other financial

income and expenses mainly arising from interest-bearing assets and liabilities.

Financial income and expense


EUR million	2023	2022
Net financial expense in the income statement
Financial income	91	40
Financial expense	-264	-191
Total	-173	-151

Represented by
Interest expense
Interest expense from borrowings measured at amortised cost	-167	-96
Interest component of the effective hedges under cash flow hedge	9	-12
Interest expense on leases	-23	-17
Interest capitalised	7	0
Interest income on loans and receivables measured at amortised cost	61	20
Net interest expense	-113	-105

Foreign exchange gains and losses
Currency derivatives	-12	8
Borrowings, cash equivalents, lease liabilities and other	-10	-10
Net foreign exchange gains and losses	-22	-1

Other financial income	6	2
Other financial expense
Financial fees	-28	-8
Fair valuation losses	0	-4
Impairments of interest-bearing assets	-11	-30
Net interest on net defined benefit liabilities	-5	-3
Net other financial expense	-38	-45

Total	-173	-151
Gains and losses on derivative financial instruments are shown in note 5.4 Derivatives.

In 2023, the net interest expense increased mainly as a result of higher interest rates on

borrowings and higher amount of gross debt. The negative impact was partly offset by higher

interest income on loans and receivables.

The amount of interest costs capitalised during the year amounted to EUR 7 (EUR 0) million,

and were mainly related to the Oulu site conversion project in Finland. The average interest rate

used for capitalisation was 3.6% (-). Costs on long-term debt issues capitalised as part of non-

current debt amounted to EUR 9 (6) million in the statement of financial position. During the

year, EUR 2 (2) million was amortised through interest expense by using the effective interest

rate method.

Exchange gains and losses for currency derivatives mainly relate to non-hedge accounted

instruments fair valued in the income statement. In 2023, the amount reported as other financial

income mainly consists of fair valuation gains, while other financial expense in the table above

relates to net financial fees for unused committed credit facilities, guarantees, and factoring and

supply chain financing programmes. Impairments of interest-bearing assets relate to receivables

originating from the sale of the Russia operations in 2022 and are discussed in more detail in

note 5.3 Interest-bearing assets and liabilities.

2.5 Income taxes

Accounting principles

The Group income tax expense/benefit includes taxes of Group companies based on taxable profit/loss for

the period, together with tax adjustments for previous periods and the change in deferred taxes. Tax assets

and liabilities reflect uncertainty related to income taxes, if any.

Deferred taxes are provided using the liability method, as measured with enacted, or substantially enacted,

tax rates, to reflect the net tax effects of all temporary differences between the tax bases and the accounting

bases of assets and liabilities. No deferred tax is recognised for the initial recognition of goodwill and the

initial recognition of an asset or liability in a transaction which is not a business combination, and at the time

of the transaction this affects neither accounting profit nor taxable profit. Deferred tax is recognised on

transactions in which equal amounts of deductible and taxable temporary differences arise on initial

recognition. Deferred tax assets reduce income taxes payable on taxable income in future years. The

deferred tax assets, whether arising from temporary differences or from tax losses, are recognised only to the

extent that it is probable that future taxable profits will be available against which the assets can be utilised.

Tax expense


EUR million	2023	2022
Current tax	-54	-196
Deferred tax	119	-126
Total income tax	64	-322

Income tax rate reconciliation


EUR million	2023	2022
Profit before tax	-495	1,858
Tax at statutory rates applicable to profits in the country concerned1	121	-337
Non-deductible expenses and tax exempt income2	-10	-15
Valuation of deferred tax assets	-60	15
Taxes from prior years	-3	2
Changes in tax rates and tax laws	-1	0
Results from associated companies	27	44
Other	-10	-31
Total income taxes	64	-322
Effective tax rate	13.0%	17.3%
Statutory tax rate (blended)	24.5%	18.2%
1 Includes a EUR 22 million impact from countries with tax holidays and tax benefits in 2023 and a EUR 55 million impact from tax holidays and other tax benefits in 2022. 2 The tax value of non-deductible expenses of EUR 12 million has been netted against tax exempt income of 3 EUR million in 2023, and tax value of non-deductible expenses of EUR 16 million has been netted against tax exempt income of EUR 1 million in 2022.

The statutory tax rate is a weighted average of the statutory tax rates prevailing in jurisdictions

where Stora Enso operates.

Change in deferred taxes in 2023


EUR million	Value at 1 Jan 2023	Income statement	OCI	Acquisitions / disposals	Translation difference	Value at 31 Dec 2023
Forest assets	-1,267	-54	9	0	-4	-1,315
Fixed assets	-123	58	0	-60	-3	-128
Financial instruments	-10	-2	-1	0	0	-12
Untaxed reserves	-85	77	0	0	2	-6
Pensions and provisions	26	-3	9	0	1	34
Tax losses and tax credits carried forward	74	40	0	0	-2	112
Other deferred taxes	15	2	0	-2	1	17
Total	-1,370	119	18	-62	-4	-1,299
Equity hedges and net investment loans (CTA)		0	0
Cash flow hedging		0	0
Change in deferred tax		119	18	-62	-4
Assets1	74					134
Liabilities1	-1,443					-1,433
1 Deferred tax assets and liabilities have been offset in accordance with IAS 12. OCI = Other Comprehensive income, CTA = Cumulative Translation Adjustment

Change in deferred taxes in 2022


EUR million	Value at 1 Jan 2022	Income statement	OCI	Acquisitions / disposals1	Translation difference	Value at 31 Dec 2022
Forest assets	-1,268	-43	-53	0	97	-1,267
Fixed assets	-103	-44	0	17	7	-123
Financial instruments	1	-3	-8	0	0	-10
Untaxed reserves	-80	-16	0	4	7	-85
Pensions and provisions	58	-1	-25	-4	-2	26
Tax losses and tax credits carried forward	107	-34	0	0	1	74
Other deferred taxes	-2	19	0	-2	0	15
Total	-1,287	-122	-86	15	110	-1,370
Equity hedges and net investment loans (CTA)		-3	3
Change in deferred tax		-125	-83	15	110
Assets2	143					74
Liabilities2	-1,430					-1,443
1 Includes assets held for sale. 2 Deferred tax assets and liabilities have been offset in accordance with IAS 12. OCI = Other Comprehensive income, CTA = Cumulative Translation Adjustment

The recognition of deferred tax assets is based on the Group’s estimations of future taxable

profits available against which the Group can utilise the benefits.

Non-recognised deferred tax assets on deductible temporary differences amounted to EUR 50

(50) million. There is no expiry date for these differences. Taxable temporary differences in

respect of investments in subsidiaries, branches and associates and interests in joint operations,

for which deferred tax liabilities have not been recognised amounted to EUR 428 (367) million.

Tax losses


	Tax losses carried forward		Recognised tax values		Unrecognised tax values
EUR million	2023	2022	2023	2022	2023	2022
Expiry within five years	88	359	9	5	13	72
Expiry after five years	326	100	60	9	6	14
No expiry	1,213	1,173	42	58	219	198
Total	1,626	1,633	111	73	237	283

At the end of 2023 tax losses of EUR 259 million related to Finland and a deferred tax asset of

EUR 52 million was recognized of these tax losses. At the end of 2022, there were no material

tax losses related to Finland.

Uncertain tax positions

At balance sheet date there were on-going tax audits in several jurisdictions. It is not expected

that any significant additional taxes in excess of those already recorded for will arise as a result

of these audits.

Impact of OECD Pillar Two model rules

The Group is within the scope of the OECD Pillar Two model rules as from 1 January 2024. The

Group has no related current tax exposure for the financial year 2023. The Group applies the

exception to recognising and disclosing information about deferred tax assets and liabilities

related to Pillar Two income taxes, as provided in the amendments to IAS 12.

The Group has initially assessed its exposure to the legislation. Part of the Group's operation

in Uruguay may become subject to the Pillar Two minimum tax. The impact of the legislation to

the Group’s average effective tax rate is expected to vary from year to year, and the Group

estimates the tax impact in the short term to be between 0–15 million EUR per year. Estimates

are based on the current understanding of the interpretation of the new rules.

2.6 Earnings per share

Accounting principles

Basic earnings per share, attributable to the owners of the parent company, are calculated by dividing the net

result attributable to shareholders by the weighted average number of ordinary shares in issue during the

year, excluding ordinary shares purchased by the group and held as treasury shares. Diluted earnings per

share are calculated by adjusting the weighted average number of ordinary shares plus the diluted effect of

all potential dilutive ordinary shares, such as shares from share-based payments.

Earnings per share


	2023	2022
Net result for the period attributable to the owners of the parent, EUR million	-357	1,550

Weighted average number of A and R shares	788,619,987	788,619,987
Weighted average number of share awards	1,094,121	771,150
Weighted diluted number of shares	789,714,108	789,391,137

Basic earnings per share, EUR	-0.45	1.97
Diluted earnings per share, EUR	-0.45	1.96

3 Employee remuneration

3.1 Personnel expenses

Personnel expenses


EUR million	2023	2022
Wages and salaries	962	996
Pension expenses	147	152
Share-based remuneration	4	8
Other statutory employer costs	139	140
Other voluntary costs	23	20
Total	1,275	1,315

Pension expenses


EUR million	2023	2022
Defined benefit plans	7	5
Defined contribution plans	140	146
Total	147	152

The average number of employees in 2023 amounted to 20,822 (21,790). Pension costs are

discussed further in note 3.3 Post-employment benefit obligations.

In 2023, the expense of the share-based remuneration was EUR 4 (8) million. Share-based

remuneration comprising of share awards is described in more detail in note 3.4 Employee

variable compensation and equity incentive schemes. Remuneration of the Group Leadership

Team and Board are described in note 3.2 Board and executive remuneration.

3.2 Board and executive remuneration

Board and committee remuneration


	2023			2022
EUR thousand (before taxes)	Cash	Value of shares1	Total4	Total	Committee memberships
Board members at 31 December 2023
Kari Jordan, Chair	135	85	220	86	People and Culture, Nomination2,3
Håkan Buskhe, Vice Chair	77	48	125	122	People and Culture, Nomination2,3
Elisabeth Fleuriot	64	33	97	94	Financial and Audit
Helena Hedblom	55	33	88	86	Sustainability and Ethics
Astrid Hermann	64	33	97	—	Financial and Audit
Christiane Kuehne	60	33	93	90	Sustainability and Ethics
Antti Mäkinen	55	33	88	214	People and Culture
Richard Nilsson	71	33	104	101	Financial and Audit
Former Board members
Hock Goh (until 16 March, 2023)	—	—	—	94	Financial and Audit
Hans Sohlström (until 18 September, 2023)	55	33	88	86	Sustainability and Ethics
Total remuneration as Directors1	636	364	1,000	972
140% of the Board remuneration, excluding Committee remuneration, in 2023 was paid in Stora Enso R shares purchased from the market and distributed as follows: to Chair 7,326 R shares, Vice Chair 4,136 R shares, and members 2,839 R shares each. The Company has no formal policy requirements for the Board members to retain shares received as remuneration. 2 Stora Enso’s Shareholders’ Nomination Board has been appointed by the AGM in 2016 to exist until otherwise decided. The Shareholders’ Nomination Board according to its Charter as approved by the AGM comprises of four members: the Chair and Vice Chair of the Board of Directors, as well as two members appointed by the two largest shareholders (one each) as of 31 August each year. No separate remuneration is paid to members of the Nomination Board. 3 Marcus Wallenberg, appointed by FAM AB, is Chair of the Nomination Board. Jouko Karvinen is the member of the Shareholders’ Nomination Board appointed by Solidium Oy. Kari Jordan and Håkan Buskhe were appointed as members of the Shareholders’ Nomination Board in their roles as Chair and Vice Chair of the Board of Directors. 4 The Company additionally pays the transfer tax for share purchases for each member, in line with AGM decision, which amount is considered also taxable income for each member.

Shareholders at the Annual General Meeting (AGM) have established a Shareholders’

Nomination Board to exist until otherwise decided and to annually prepare proposals for the

AGM's approval concerning the number of members of the Board of Directors, the Chair, Vice

Chair and other members of the Board, as well as the remuneration for the Chair, Vice Chair and

members of the Board and its committees.

Board share interests at 31 December 2023


	Shares held (direct and indirect ownership)
	A	R
Board members at 31 December 2023
Kari Jordan, Chair		9,012
Håkan Buskhe, Vice Chair		12,069
Elisabeth Fleuriot		32,868
Helena Hedblom		6,356
Astrid Hermann		2,839
Christiane Kuehne		17,429
Antti Mäkinen		19,415
Richard Nilsson1	127	30,207
Total shares held	127	130,195
1 Spouse holds 127 of A shares and 236 of R shares

The following Board members also served in 2023


	Shares held when Board membership ended (direct and indirect)	Effective date of Board membership ending
Hock Goh	34,782	16 March 2023
Hans Sohlström1	16,535	18 September 2023
1 Spouse holds 179 of the shares

Group Leadership Team (GLT) remuneration and share interests

The table below includes the remuneration earned by GLT members during the year, including

those shares with performance conditions that have ended and are due to vest in the coming

year. The Company recommends and expects the CEO and GLT members to hold Stora Enso

shares at a value corresponding to at least one annual base salary. Stora Enso shares received

as remuneration are therefore recommended not to be sold until this level has been reached.

The aggregate cost of earned remuneration for GLT in 2023 amounted to EUR 12 (15)

million. The total number of GLT members was 11 (11) at the year end in 2023.

In accordance with their respective pension arrangements, GLT members may retire at sixty-

five years of age with pensions consistent with local practices in their respective home countries.

Contracts of employment provide for six months’ notice prior to termination with severance

compensation of twelve months basic salary if the termination is at the Company’s request.

The outcome of the financial targets relating to the Short term incentive programmes for the

performance year 2023, and Long term incentive programmes for the performance years 2021

to 2023 were reviewed and confirmed by the People and Culture Committee, and approved by

the Board of Directors in January 2024.

Note 3.4 Employee variable compensation and equity incentive schemes includes details of

incentive schemes and share opportunity programmes for the management and staff of Stora

Enso.

Group Leadership Team remuneration


	2023				2022
EUR thousand	CEO2	Former CEO2	Others3,6	GLT Total	CEO	Others	GLT Total
Remuneration1,5
Annual salary	290	669	3,656	4,615	953	4,802	5,755
Local housing (actual costs)	—	—	3	3	0	2	2
Other benefits	—	26	263	289	32	272	304
Termination benefits	—	933	300	1,233	0	0	0
Short Term Incentive programme4	—	157	1,024	1,181	845	2,167	3,012
Long Term Incentive programme4	—	912	1,652	2,564	987	2,848	3,835
	290	2,697	6,898	9,885	2,817	10,091	12,908
Pension costs
Mandatory plans	48	428	920	1,396	477	1,154	1,631
Stora Enso voluntary plans	—	—	730	730	0	933	933
	48	428	1,650	2,126	477	2,087	2,564
Total compensation	338	3,125	8,548	12,011	3,294	12,178	15,472
1 The Finnish Corporate Governance code requires companies to report remuneration that is paid or due, and due to this the figures presented in the above table do not directly reconcile with the amounts recognised as personnel expenses in the Income statement as presented in the below table Group Leadership Team remuneration in Income statement. 2 CEO remuneration consists of remuneration delivered to Hans Sohlström as of 18 September 2023 and Annica Bresky until 18 September 2023. 3 Includes earnings related to René Hansen until 4 May 2023, Minna Björkman until 30 September 2023 and David Ekberg until 30 November 2023. And Micaela Thorström as of 1 April 2023 and Ad Smit as of 1 December 2023. 4 Related to amounts due at year end, which will be paid in 2024. LTI value is calculated using the 29 December 2023 closing price of EUR 12.53. The final value of the vested shares will depend on the share price on vesting date 1 March 2024. 5 Remuneration for executives is disclosed only for the period during which they were GLT members. 6 Remuneration of GLT members decreased in 2023 compared to 2022 mainly due to the performance outcome of variable pay programmes. The average number of GLT members during 2023 was 10.40.

Group Leadership Team remuneration in Income statement


	2023				2022
EUR thousand	CEO	Former CEO	Others	GLT Total	CEO	Others	GLT Total
Salaries and other short-term employee benefits	290	852	4,946	6,088	1,830	7,243	9,073
Long Term Incentive programme1	137	432	1,245	1,814	714	1,581	2,295
Post-employment benefits	48	428	1,650	2,126	477	2,087	2,564
Total recognised in Income statement	475	1,712	7,841	10,028	3,021	10,911	13,932
1 The costs of long-term incentive (LTI) programmes are recognised as costs over the three year vesting period based on the share price at grant date and the estimate of equity instruments that will eventually vest.

Executives other than CEO

Short term incentive (STI) programmes for management

In 2023, GLT members have STI programmes with up to a maximum of 70% or 80% of their

annual fixed salary, payable the year after the performance period. 80–100% of the STI for 2023

was based on financial measures and 0–20% on individual strategic key targets.

Long term incentive (LTI) programmes for management

The 2021 programme has three one-year performance periods which are accumulated after

three years. The 2022 and 2023 programmes feature performance metrics with one-year

performance periods, which are accumulated after three years, as well as three-year

performance periods. All three programmes will be settled in only one portion after three years,

and the absolute maximum vesting level is 100% of the number of shares granted. The 2021

programme is related to performance period 2021–2023, the 2022 programme is related to

performance period 2022–2024 and the 2023 programme is related to performance periods

2023–2025. The opportunity under the programmes is in Performance Shares, where the shares

are vested in accordance with performance criteria proposed by the People and Culture

Committee and approved by the Board of Directors.

During the year the 2023 programme was launched, in which the GLT members (in GLT at

year end) can potentially receive a value corresponding to 227,130 shares before taxes,

assuming the maximum vesting level during the three-year vesting period (2023–2025) is

achieved. The total number of shares actually transferred will be lower because a portion of

shares corresponding to the tax obligation will be withheld to cover income tax.

The fair value of employee services received in exchange for share-based compensation

payments is accounted for in a manner that is consistent with the method of settlement and is

either cash or equity settled as described in more detail in note 3.4 Employee variable

compensation and equity incentive schemes. For the equity settled part, it is possible that the

actual cash cost does not agree with the accounting charges because the share price is not

updated at the time of the vesting. The figures in the Group Leadership Team Remuneration

table refer to individuals who were executives at year end or during part of the year.

At the end of the year, the performance period for the 2021 programme ended, and will be

settled in one portion after three years in March 2024, dependent on Economic Value Added

(EVA) for the Stora Enso Group and Earnings Per Share (EPS) for the Stora Enso Group. The

Performance Share programme resulted in a 89 % performance outcome. The number of shares

due for executives (GLT members at year end) from programmes that ended during 2023

amounted to 115,580 shares. The total number of shares actually transferred will be lower

because a portion of shares corresponding to the tax obligation will be withheld to cover income

tax.

CEO

President & Chief Executive Officer – Hans Sohlström

The CEO has been employed by Stora Enso and assumed the position of CEO on 18

September 2023. He has a notice period of six months with a severance payment of twelve

months salary on termination by the Company but with no contractual payments on any change

of control. The CEO’s pension plan and retirement age is according to the Finnish statutory TyEL

plan.

Short term incentive (STI) programme for CEO

As of 18 September 2023, for the next 12+12 months, the CEO is entitled to an STI programme

with a maximum opportunity of 100% of the annual fixed salary for each 12 month period.

Long term incentive (LTI) programme for CEO

As of 18 September 2023, there is a two-year CEO Performance Plan initiated with a vesting

date in Q4/2025. The CEO has the potential to receive a value corresponding to a maximum of

169,420 shares before taxes. The performance targets are related to balance sheet, capital

expenditure, strategy and sustainability. The CEO is not eligible to participate in LTI 2023–25 or

other potential LTI programmes starting during 2024.

Former President & Chief Executive Officer – Annica Bresky

Annica Bresky was employed by Stora Enso since 1 May 2017 and assumed the position of

CEO on 1 December 2019 until 18 September 2023. She had a notice period of six months with

a severance payment of twelve months salary on termination by the Company. The severance

payment is due to be paid in 2024. In 2023, the former CEO was entitled to an STI programme

decided by the Board giving a maximum opportunity of 100% of the annual fixed salary. The

payout is prorated to employment during Jan–Sep, 2023. The former CEO participated in the

2021, 2022 and 2023 share based LTI programmes. Each programme has cliff vesting after

three years. At the payout, the actual value of these plans is prorated according to active

employment in the Company.

Group Leadership Team share interests


Executives in office at the year end	R shares held1	Shares due 20242	Performance share opportunity 2025–20265	Restricted share opportunity 2024–20255
Hans Sohlström 6	100,799	—	169,420	—
Seppo Parvi	63,162	16,457	61,160	—
Tobias Bäärnman	4,196	9,892	25,980	—
Johanna Hagelberg	35,645	12,047	43,520	—
Hannu Kasurinen	52,736	19,961	57,810	—
Katariina Kravi	10,383	11,945	33,600	—
Per Lyrvall 3	84,143	15,074	47,840	—
Annette Stube	9,054	11,218	31,570	—
Ad Smit	—	—	8,168	22,722
Micaela Thorström	—	1,677	12,858	302
Lars Völkel	16,477	17,309	51,280	—
Total, serving officers4	376,595	115,580	543,206	23,024
1 Direct and indirect ownership. None of the GLT members holds A shares. 2 Shares due to GLT member are gross of taxes for the LTI programmes with performance periods that ended in 2023 and are due to be paid 2024. The Performance Share programme resulted in a 89% performance outcome due to be paid in 2024 partly in shares and cash. Some GLT members hold restricted shares in the Restricted Shares programme that ended in 2023 and those shares are due to be paid 2024. 3 Spouse holds 1,257 of the shares. 4 The Company recommends and expects GLT members to hold Stora Enso shares at a value corresponding to at least one annual base salary. Stora Enso shares received as remuneration are therefore recommended not to be sold until this level has been reached. 5 Potential shares to GLT members are gross of taxes for LTI programmes with performance periods that end in 2024–2025 and are due to be paid 2025–2026. 6 Spouse holds 179 of the shares.


The following Executive Officers also served in 2023	R shares held when GLT membership ended	Performance Share Awards when GLT membership ended	Restricted Share Awards when GLT membership ended	Effective date of GLT membership ending
Annica Bresky	52,594	79,197		17 September 2023
Minna Björkman	2,344	16,508	1,122	30 September 2023
David Ekberg 1	8,830	37,820		30 November 2023
René Hansen 1	1,462	27,100	3,400	4 May 2023
1 Unvested shares are forfeited at end of employment

3.3 Post-employment benefit obligations

Accounting principles

Employee benefits

The Group operates a number of defined benefit and contribution plans throughout the world, the assets of

which are generally held in separate trustee administered funds. Such pension and post-retirement plans are

generally funded by payments from employees and by the relevant Group companies, taking into account the

recommendations of independent qualified actuaries. Employer contributions to the defined contribution

pension plans are charged to the consolidated income statement in the year they relate to.

For defined benefit plans, accounting values are assessed using the projected unit credit method. Under

this method, the cost of providing pensions is charged to the consolidated income statement to spread the

regular cost over the service lives of employees in accordance with the advice of qualified actuaries who

carry out a full valuation of the plan every year in all major pension countries. The pension obligation is

measured as the present value of the estimated future cash outflows using interest rates of highly rated

corporate bonds or government securities, as appropriate, that match the currency and expected duration of

the related liability.

The Group recognises all actuarial gains and losses arising from defined benefit plans directly in equity,

as disclosed in its consolidated statement of comprehensive income. Past service costs are identified at the

time of any amendments to the plans and are recognised immediately in the consolidated income statement

regardless of vesting requirements. In the Group’s consolidated statement of financial position, the full liability

for all plan deficits is recorded.

The Group's pension expenses amounted to EUR 147 (152) million in 2023, as shown in note

3.1 Personnel expenses. Pensions are classified as defined contribution plans and defined

benefit plans. The majority of the Group's pensions plans are defined contribution plans for

which the charge amounted to EUR 140 (146) million. The priority of the Group is to provide

defined contribution plans as its post-employment benefits.

Net defined benefit obligation reconciliation


	Defined benefit obligation		Fair value of plan assets		Net defined benefit obligation / (asset)
EUR million	2023	2022	2023	2022	2023	2022
At 1 January	736	1,108	-577	-762	159	347

Current service cost	7	12	0	0	7	12
Past service cost	0	-6	0	0	0	-6
Settlements	0	-7	0	7	0	0
Interest expense (+) income (-)	27	13	-22	-10	5	3
Total included in income statement	34	11	-22	-3	12	9

Actuarial changes in demographic assumptions	1	-13	0	0	1	-13
Actuarial changes in financial assumptions	31	-306	0	0	31	-306
Actuarial changes from experience adjustments	19	63	0	0	19	63
Return on plan assets1	0	0	-1	105	-1	105
Asset ceiling impact1	0	0	2	5	2	5
Total remeasurement gains (-) / losses (+) included in OCI	52	-256	0	109	52	-147

Benefit payments	-56	-54	45	41	-12	-13
Employer contributions and refunds	0	0	-20	4	-20	4
Translation difference	3	-38	-3	33	0	-5
Disposals and classification as held for sale	6	-35	-1	0	5	-35
At 31 December	775	736	-578	-577	197	159

1 Excluding amounts included in interest expense (+) income (-)

In 2024, contributions of EUR 22 (19) million are expected to be paid to Group's defined benefit

plans.

Significant actuarial assumptions used in the valuation of defined benefit obligations


	Finland		Germany		Sweden
	2023	2022	2023	2022	2023	2022
Discount rate %	3.1	3.6	3.3	3.6	3.1	4.0
Future salary increase %	3.0	3.0	2.5	2.5	2.9	2.9
Future pension increase %	2.2	2.2	2.0	2.0	2.0	2.0
Duration of pension plans	8.0	8.0	8.8	10.2	12.7	13.1

Sensitivity of the defined benefit obligation


	Impact on defined benefit obligation
	Change in assumption	Increase in assumption	Decrease in assumption
Discount rate	0.50%	Decrease by 4.9%	Increase by 5.5%
Salary growth rate	0.50%	Increase by 1.1%	Decrease by 1.0%
Pension growth rate	0.50%	Increase by 4.1%	Decrease by 3.7%
Life expectancy	1 year	Increase by 3.6%	Decrease by 3.5%

The Group defines following actuarial risks associated with defined benefit plans:

Interest risk

The obligations are assessed using market rates of high-quality corporate or government bonds

to discount the obligations and are therefore subject to any volatility in the movement of the

market rate. The net interest income or expense recognised in profit and loss are also calculated

using the market rate of interest.

Life expectancy

In the event that members live longer than assumed, the obligations may be understated

originally and a deficit may emerge if funding has not adequately provided for the increased life

expectancy.

Defined benefit plan summary by country as at 31 December 2023


EUR million	Finland	Germany	Sweden	Other	Total
Present value of funded obligations	167	5	277	151	600
Present value of unfunded obligations	0	131	20	23	174
Defined benefit obligations (DBO)	167	136	297	174	775
Fair value of plan assets	-160	-5	-271	-142	-578
Net obligation in the balance sheet	7	131	26	32	197

Represented by
Defined benefit pension plans	7	131	26	9	174
Other post-employment benefits	0	0	0	23	23
Net obligation in the balance sheet	7	131	26	32	197

Defined benefit plan summary by country as at 31 December 2022


EUR million	Finland	Germany	Sweden	Other	Total
Present value of funded obligations	172	3	226	163	563
Present value of unfunded obligations	0	134	15	24	173
Defined benefit obligations (DBO)	172	137	241	187	736
Fair value of plan assets	-157	-4	-266	-150	-577
Net obligation in the balance sheet	15	134	-26	36	159

Represented by
Defined benefit pension plans	15	134	-26	13	136
Other post-employment benefits	0	0	0	23	23
Net obligation in the balance sheet	15	134	-26	36	159

Finland

In Finland the employees are entitled to a statutory pensions benefit determined by Employee's

pension Act (TyEL). These benefits are defined as contribution benefits. They are insured with

an insurance company and provide coverage for old age, disability and death. Charge in the

income statement from contribution benefits is EUR 62 (64) million.

In addition, the Group has additional defined benefit plans which resulted in a charge of EUR

0 (0) million excluding finance costs. Defined benefit plans and plan assets are managed by

insurance companies. Details of the exact structure and investment strategy surrounding plan

assets are not available to participating employers, as the assets actually belong to the

insurance companies themselves. The assets are managed in accordance with EU regulations,

and also national requirements, under which there is an obligation to pay guaranteed benefits

irrespective of market conditions.

Germany

German pension costs amounted to EUR 3 (6) million, of which EUR 3 (6) million related to

defined contribution plans and EUR 0 (1) million to defined benefits excluding finance costs. The

net defined benefit obligation amounted to EUR 131 (134) million.

Defined benefit pension plans are mainly accounted for in the statement of financial position

through book reserves with some minor plans using insurance companies or independent

trustees. Retirement benefits are based on years worked and salaries received during the

pensionable service and the commencement of pension payments are linked to the national

pension scheme’s retirement age. Pensions are paid directly by the companies themselves to

their former employees. The security for the pensioners is provided by the legal requirement that

the book reserves held in the statement of financial position are insured up to certain limits.

Sweden

In Sweden, all blue-collar staff and part of white-collar staff are covered by defined contribution

plans, the charge in the Income statement being EUR 53 (54) million. Defined benefit plans are

covering the remaining white-collar staff and resulted in a charge of EUR 3 (1) million excluding

finance costs. The net defined benefit obligation amounted to EUR 26 (net asset EUR -26)

million. The increase in net obligation arose mainly from changes in actuarial assumptions,

especially from an decrease in discount rate. Stora Enso has undertaken to pay all local legal

pension obligation for the main ITP scheme to the foundation, thus the remaining obligation

relates to other small plans. The long-term investment return target for the foundation is a 3%

real return after tax.

Other countries

The net defined benefit obligation in the remaining countries amounted to EUR 32 (EUR 36)

million. The change in net obligation arose mainly from changes in actuarial assumptions.

Plan assets


	2023				2022
EUR million	Quoted	Unquoted	Total	% of total	Quoted	Unquoted	Total	% of total
Equity	89	7	96	17%	88	12	101	17%
Debt	41	51	92	16%	46	44	90	16%
Property	0	62	62	11%	0	55	55	9%
Cash	5	0	5	1%	10	0	10	2%
Assets held by insurance companies	0	228	228	39%	0	226	226	39%
Others	7	89	96	17%	0	96	96	17%
Total pension fund assets	142	436	578	100%	144	433	577	100%
Plan assets do not include any real estate or other assets occupied by the group or the Company's own financial instruments.

The two main financial factors affecting Group's pension obligation are changes in interest rates

and inflation expectations. The aim of asset investment allocations is to neutralise these effects,

secure solvency for benefit payments and maximise returns.

3.4 Employee variable compensation and equity incentive schemes

Accounting principles

Share awards

The costs of all employee-related share-based payments are charged to the consolidated income statement

as personnel expenses over the vesting period.

All share-based payment transactions are classified as equity-settled share awards. The equity-settled

share awards (net of tax), are measured at the fair value of the equity instruments on the grant date, and are

adjusted for the present value of expected dividends. The fair value of the equity-settled share-based

payments determined on the grant date is expensed on a straight-line basis over the vesting period, based on

the estimate of equity instruments that will eventually vest, with a corresponding increase in equity.

Short term incentive (STI) programmes

Salaries for senior management are negotiated individually. Stora Enso has incentive plans that

take into account the performance, development and results of both business units and

individual employees. This performance-based variable compensation system is based on

profitability as well as on attaining key business targets.

Group Executives, as well as division and business unit management have STI programmes

in which the payment is calculated as a percentage of the annual base salary with a maximum

level ranging from 7% to 100%. Non-management employees participate in an STI programme

with a maximum incentive level of 7%. All incentives are discretionary. These performance-

based programmes cover most employees globally, where allowed by local practice and

regulations. For the performance year 2023, the annual incentive programmes were based on

financial measures as well as targets related to operational efficiency, emission reduction, safety

and individual targets. The financial success metrics in the STI programme 2023 are Sales

growth and EBITDA.

Long term incentive (LTI) programmes

Since 2005, new share based programmes for executives have been launched every year. The

2021 programme, ending in 2023 and settled in 2024 has a three one-year performance periods

which are accumulated after three years. The 2022 and 2023 programmes, features

performance metrics with one-year performance periods which are accumulated after three

years as well as three-years performance periods. All outstanding programmes will be settled in

one portion after three years.

For the vast majority of awarded employees, three quarters (75%) of the opportunity under

the programmes are in performance shares, where shares will vest in accordance with

performance criteria proposed by the People and Culture Committee and approved by the Board

of Directors. The financial performance metrics are 3-year Economic Value Added (EVA) and

Earnings Per Share (EPS) for the Stora Enso Group for the 2021 programme and EPS and

Relative Total Shareholder Return for the 2022 and 2023 programme, which in addition feature

ESG metrics (emissions reduction and diversity). One quarter (25%) of the opportunity under the

programmes are in Restricted Shares, for which vesting is only subject to continued

employment. Members of the GLT have been awarded performance shares only.

Outstanding restricted and performance share opportunities before taxes are shown in the

table below. The total number of shares actually transferred will be less than that shown below

because a portion of shares corresponding to employees' tax obligation will be withheld to cover

income tax.

Share awards at 31 December 2023


	Outstanding restricted and performance share awards at year end
Number of shares	2024	2025	2026	Total
2021 programme	649,329			649,329
2022 programme		719,101		719,101
2023 programme			1,060,720	1,060,720
Total	649,329	719,101	1,060,720	2,429,150

The costs of the Stora Enso share-based programmes are recognised as costs over the vesting

period, which is the period between the grant and vesting. The total impact of share-based

programmes in the income statement amounted to an expense of EUR 4 (EUR 8) million, all of

which were related to restricted and performance share awards.

4 Operating capital

4.1 Intangible assets, property, plant and equipment and right-of-use

assets

Accounting principles

Goodwill

Goodwill represents future economic benefits arising from assets that are not capable of being individually

identified and separately recognised by the Group on an acquisition. Goodwill is computed as the excess of

the cost of an acquisition over the fair value of the Group’s share of the fair value of net assets of the

acquired subsidiary at the acquisition date and is allocated to those groups of cash generating units expected

to benefit from the acquisition. Goodwill arising on the acquisition of non-euro foreign entities is treated as an

asset of the foreign entity denominated in the local currency and translated at the closing rate.

Goodwill is not amortised but tested for impairment on an annual basis, or more frequently if there is an

indication of impairment.

Other intangible assets

Intangible assets are stated at their historical cost and amortised on a straight-line basis over their expected

useful lives, which usually varies from 3 to 10 years and up to 20 years for patents. An adjustment is made for

any impairment. Intangible items acquired must be recognised as assets separately from goodwill if they

meet the definition of an asset, are either separable or arise from contractual or other legal rights, and their

fair value can be measured reliably.

The cost of development or acquisition of new software clearly associated with an identifiable asset that

will be controlled by the Group and has a probable benefit exceeding its cost beyond one year is recognised

as an intangible asset and will be amortised over the expected useful life of the software between 3 to 10

years.

Intangible assets recognised separately from goodwill in acquisitions consist of marketing and customer-

related or contract and technology-based intangible assets. Typical marketing and customer-related assets

include trademarks, trade names, service marks, collective marks, certification marks, customer lists, order or

production backlogs, customer contracts and the related customer relationships. Contract and technology-

based intangible assets are normally licensing and royalty agreements or patented technology and trade

secrets, such as confidential formulas, processes or recipes. The initial fair value of customer contracts and

related relationships is derived from expected retention rates and cash flow over the customers’ remaining

estimated lifetime using excess earnings method. The initial fair value of trademarks is derived from a

discounted cash flow analysis using the relief from royalty method.

Property, plant and equipment

Property, plant and equipment acquired by Group companies are stated at their historical cost, which are

augmented where appropriate by asset retirement costs. Assets arising on the acquisition of a new subsidiary

are stated at fair value at the date of acquisition. Depreciation is computed on a straight-line basis and

adjusted for any impairment and disposal charges. The carrying amount represents the cost deducted by

received grants and subsidies and less the accumulated depreciation and any impairment charges. Interest

costs on borrowings to finance the construction of assets are capitalised as part of the cost during the

construction period when the requirements are fulfilled.

Land and water areas are not depreciated, as these are deemed to have an indefinite life, but otherwise

depreciation is based on the following expected useful lives:


Asset class	Depreciation years
Buildings, industrial	10-50
Buildings, office & residential	20-50
Groundwood mills	15-20
Hydroelectric power	40
Paper, board and pulp mills, main machines	20-30
Heavy machinery	10-20
Converting factories	10-15
Sawmills	10-15
Computers	3-5
Vehicles	5
Office equipment	3-5
Railway, harbours	20-25
Forest roads	10-15
Roads, fields, bridges	15-20

Ordinary maintenance and repair charges are written as expensed when incurred, but the costs of significant

renewals and improvements are capitalised and depreciated over the remaining useful lives of the related

assets. Retirements, sales and disposals of property, plant and equipment are recorded by deducting the cost

and accumulated depreciation from the accounting records with any resulting terminal depreciation

adjustments reflected in impairment charges in the consolidated income statement. Capital gains are shown

in other operating income.

Spare parts are accounted for as property, plant and equipment if they are major and used over more than

one period, or if they are used only in connection with an item of property, plant and equipment. In all other

cases, spare parts are carried as part of the inventory and recognised in profit or loss as consumed items.

Right-of-use (ROU) assets

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or

contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time

in exchange for consideration. ROU assets are initially measured at cost, which comprises the initial amount

of the lease liability adjusted mainly for lease payments made at or before the commencement date. The

Group allocates the consideration in the contract to each lease component and will separate non-lease

components if these are identifiable. Lease terms are negotiated on an individual basis and contain a wide

range of different terms and conditions.

The ROU assets are subsequently depreciated using the straight line method from the commencement

date to the earlier of the end of the lease term or the end of the useful life of the ROU asset. In addition, the

ROU asset is adjusted for certain remeasurements of the lease liability.

The Group has elected not to recognise ROU assets for short-term leases that have a lease term of 12

months or less and leases of low value assets. Leases of low value assets mainly include IT and office

equipment, certain vehicles and machinery and other low value items. The Group recognises the lease

payments associated with these leases as an expense on a straight-line basis over the lease term, see note

2.2 Other operating income and expense, for more information.

Intangible assets


EUR million	Computer software	Customer relationships and trademarks	Other intangible assets	Assets in progress	Goodwill	Total
Acquisition cost
At 1 January 2022	226	0	103	7	532	867
Translation difference	0	0	-1	0	-2	-4
Reclassifications	5	0	2	-4	0	3
Additions	3	0	2	16	0	21
Disposals1	-11	0	-6	0	-28	-46
At 31 December 2022	222	0	100	18	502	842
Translation difference	-1	0	-3	0	-3	-7
Reclassifications	5	0	0	0	0	5
Additions	15	206	6	18	349	594
Disposals and classification as held for sale1	-13	0	77	0	0	64
At 31 December 2023	229	206	179	36	848	1,498

Accumulated amortisation and impairment
At 1 January 2022	178	0	34	0	250	462
Translation difference	0	0	0	0	-3	-3
Disposals1	-11	0	-6	0	0	-17
Amortisation	17	0	8	0	0	24
Impairment	1	0	0	0	11	12
At 31 December 2022	185	0	35	0	258	478
Translation difference	-1	0	-2	0	-1	-3
Disposals and classification as held for sale1	-9	0	93	0	0	85
Amortisation	17	16	8	0	0	41
Impairment	6	0	14	3	85	109
At 31 December 2023	198	16	149	3	343	709

Net Book Value at 31 December 2023	31	190	30	32	505	789

Net Book Value at 31 December 2022	38	0	65	18	244	364
1 Company disposals are included in Disposals line. Company disposals and classification of assets as held for sale are discussed in more detail in note 6.1 Acquisitions, disposals and assets held for sale.

Included in Customer relationships and trademarks, as part of the acquisition of De Jong

Packaging Group, are customer related intangibles purchased with a carrying amount of EUR

156 million and a remaining amortisation period of 14 years and marketing related intangibles of

EUR 34 million with remaining amortisation periods of between 4–19 years.

Property, plant and equipment


EUR million	Land and water	Buildings and structures	Plant and equipment	Other tangible assets	Assets in progress	Total
Acquisition cost
At 1 January 2022	117	3,355	13,421	448	394	17,735
Translation difference	-1	-12	-266	-11	-10	-300
Reclassifications	0	57	207	10	-277	-3
Reclassifications to biological assets	0	-2	-1	0	0	-3
Additions	6	33	217	4	373	634
Disposals1	-19	-390	-2,668	-58	-27	-3,162
At 31 December 2022	103	3,041	10,909	393	454	14,900
Translation difference	1	-22	-17	-2	7	-32
Reclassifications	0	25	260	8	-298	-5
Reclassifications to biological assets	0	-2	-1	0	0	-3
Additions	5	77	434	14	583	1,113
Disposals and classification as held for sale1	-1	-286	-956	-10	-6	-1,259
At 31 December 2023	109	2,833	10,629	404	739	14,714

Accumulated depreciation and impairment
At 1 January 2022	3	2,113	10,164	380	14	12,674
Translation difference	0	-30	-262	-9	0	-302
Disposals1	-1	-378	-2,458	-49	0	-2,886
Depreciation	0	78	371	10	1	460
Impairments and reversals	0	21	68	4	2	95
At 31 December 2022	2	1,804	7,882	336	16	10,040
Translation difference	0	-4	7	-1	0	1
Disposals and classification as held for sale1	0	-180	-742	-9	0	-931
Depreciation	0	74	349	10	0	433
Impairments and reversals	0	133	488	5	1	628
At 31 December 2023	2	1,827	7,984	340	17	10,170

Net Book Value at 31 December 2023	107	1,006	2,644	64	722	4,544

Net Book Value at 31 December 2022	101	1,237	3,027	57	437	4,860
1 Company disposals are included in the Disposals line. Company disposals and classification of assets as held for sale are discussed in more detail in note 6.1 Acquisitions, disposals and assets held for sale.

Right-of-use assets


EUR million	Land and water	Forest land	Buildings and structures	Plant and equipment and other	Total
Acquisition cost
At 1 January 2022	107	253	104	127	591
Translation difference	-2	-2	-3	-1	-7
Reclassifications to biological assets	0	-17	0	0	-17
Additions	1	6	20	18	45
Disposals1	-2	0	-23	-36	-62
Other changes	1	2	0	4	6
At 31 December 2022	105	243	96	113	556
Translation difference	-5	-14	-1	0	-19
Reclassifications to biological assets	0	-16	0	0	-16
Additions	0	5	188	14	207
Disposals and classification as held for sale1	-75	-181	-26	-21	-303
Other changes	1	15	7	3	26
At 31 December 2023	25	52	264	109	451

Accumulated depreciation and impairment
At 1 January 2022	8	18	55	69	150
Translation difference	0	-1	-2	-2	-4
Disposals1	-1	0	-23	-34	-58
Depreciation	3	5	19	23	50
Impairment	0	0	1	0	0
At 31 December 2022	10	22	49	56	138
Translation difference	-1	-1	0	0	-3
Disposals and classification as held for sale1	-36	-24	-20	-20	-100
Depreciation	3	3	32	21	59
Impairment	28	0	3	2	33
At 31 December 2023	4	0	64	60	128

Net Book Value at 31 December 2023	21	52	201	49	323

Net Book Value at 31 December 2022	95	221	47	57	418
1 Company disposals are included in the Disposals line. Company disposals and classification of assets as held for sale are discussed in more detail in note 6.1 Acquisitions, disposals and assets held for sale.

Stora Enso’s most material right-of-use assets capitalised consist of land areas used in forestry

and industrial operations, various machinery and equipment leases including operative

machinery and logistic equipment, as well as properties including offices, warehouses and other

operative properties. Some of the leases contain renewal options and extension options that are

considered in the lease term if the Group is reasonably certain to exercise the option.

See notes 5.3 Interest-bearing assets and liabilities for more details about lease liabilities and

2.2 Other operating income and expense for details about lease expenses included in the

income statement.

Intangible assets and property, plant and equipment, and right-of-use asset

additions

The total capital expenditure excluding investments in biological assets for the year amounted to

EUR 1,054 (701) million. Details of ongoing projects and future plans are discussed in more

detail in the Report of the Board of Directors.

4.2 Forest assets

Accounting principles

The forest assets of Stora Enso are defined as standing growing trees, classified as biological assets, and

related forest land. The biological assets of Stora Enso consist of standing trees to be used as raw material in

pulp and mechanical wood production and as biofuels.

Forest asset valuation is based on continuous operations and sustainable forest management, also taking

into consideration environmental restrictions and other reservations. Biological assets are recognised and

valued in accordance with the IAS 41 Agriculture standard at fair value and forest land assets are recognised

in accordance with the IAS 16 Property, plant and equipment standard. Leased forest land assets are

presented as part of right-of-use assets in note 4.1 Intangible assets, property, plant and equipment and right-

of-use assets.

Nordic and plantation forest assets are classified as different classes of assets due to different nature,

usage and characteristics of the assets. The main difference is the short-term growing cycle of 6–12 years in

plantations versus the long-term growing cycle of 60-100 years in Nordic forests. There are also differences

in regeneration methods, forest management, and the use of the assets for other purposes.

Nordic forest assets include holdings in Sweden and Finland and plantation forest assets include holdings

in China, Brazil and Uruguay. Accounting policies for the different class of forest assets are presented

separately below. In addition the Group has minor forest asset holdings in Estonia and Romania through

associate company Tornator. The Group has forest assets in its own subsidiaries in Sweden and China as

well as in joint operations in Brazil and Uruguay, and in associate company in Finland. Stora Enso also

ensures that the Group’s share of the valuation of forest holdings in associated companies and joint

operations are consistent with Group accounting policies. At harvesting, biological assets are transferred to

the inventory.

Nordic forest assets

Forest assets in Sweden and Finland are recognised at fair value and valued by using a market approach

method on the basis of the forest market transactions in the areas where Stora Enso’s forests are located.

Stora Enso’s forest assets create value by securing wood supply, increasing long-term yield, optimising land

use and securing financial flexibility. They play an important role in mitigating climate change impacts, as

growing trees absorb CO2. The forests also offer opportunities for future value streams, such as wind power.

The total forest assets value is calculated with verified inventory data and regional standing stock prices,

considering among others:

• regional market transaction data based on the forest assets' geographical locations,

• standing stock prices by forest cubic meter (m3 fo) combined from traded forest estates and

• regional standing stock inventory.

Information relating to forest asset transactions are available from market data suppliers. Stora Enso is

applying three-year weighted average market transaction prices and this is considered to include a sufficient

amount of transactions and is estimated to represent market conditions at the reporting date. The market

transaction information can be viewed as market-corroborated inputs. Certain adjustments are made to refine

the market-corroborated inputs using unobservable inputs, therefore inputs are categorised to fair value

hierarchy measurement level 3. The judgements are further explained in note 1.2 Critical accounting

estimates and judgements.

The total value of the forest assets in Nordics is allocated across biological assets and forest land.

Allocation of the combined fair value of forest assets is based on the income approach where separate

present values of expected net cash flows are calculated for both biological assets and forest land. The

discount rate is determined as the rate at which the valuation based on market transaction prices matches

the total forest assets combined cash flows for biological assets and forest land. The discount rate is

estimated to be the same for biological assets and forest land as the nature and timing of the cash flows are

similar.

Biological assets are measured at fair value in accordance IAS 41. The fair value is based on the income

approach and the discounted cash flow method whereby the fair value of the biological assets is calculated

using cash flows from continuous operations, taking into account the growth potential of one cycle. Forest

land is measured at fair value using the revaluation method as defined in the IAS 16 standard. Fair value of

forest land is measured based on income approach, including net cash flows related to trees to-be-planted in

the future as well as other land related income, such as hunting rights, wind power leases and soil material

sales.

Changes in the fair value of biological assets are recognised in the income statement. Changes in the fair

value of forest land, net of deferred taxes, are recognised in other comprehensive income (OCI) and

accumulated in a revaluation reserve in equity. Revaluation reserve is not recycled to the income statement

upon disposal. If the fair value of forest land were to be less than cost, the difference would be recognised in

the income statement as an impairment loss.

Plantation forest assets

In plantation forest areas, biological assets are recognised at fair value in accordance with the IAS 41

standard and based on the income approach in those areas where the Group has forest land. Fair value

measurement is based on fair value hierarchy measurement level 3. Forest land is measured initially and

subsequently at cost, using the cost model as defined in IAS 16 standard.

The valuation of biological assets is based on the discounted cash flow method calculated using cash

flows from continuous operations and based on sustainable forest management, taking into account growth

potential of one cycle. The fair value of the biological assets is based on the productive forest land. The

yearly harvest from the forecasted tree growth is multiplied by wood prices and the cost of silviculture and

harvesting is deducted. The fair value of the biological assets is measured as the present value of the harvest

from one growth cycle, taking into consideration environmental restrictions and other reservations. The

discount rate applied is determined using the weighted average cost of capital method.

Young standing timber less than two years old (less than three years in Montes del Plata) is considered to

be an immature asset and accounted at cost. Fair value is deemed to approximate the cost when little

biological transformation has taken place or the impact of the transformation on the price is not expected to

be significant, which varies according to the location and species of the assets.

Changes in the fair value of biological assets are recognised in the income statement. The forest land is

measured at cost and not depreciated.

The value of forest assets disclosed in the consolidated statement of financial position from

subsidiary companies and joint operations amounts to EUR 6,921 (6,846) million as shown

below. The Group’s indirect share of forest assets held by associated company amounts to EUR

1,417 (1,271) million. The total forest asset value, excluding leased forest land and including

forest assets classified as held for sale, amounts to EUR 8,522 (8,117) million.

Forest assets


	Biological assets		Forest land2		Forest assets total
EUR million	2023	2022	2023	2022	2023	2022
Subsidiaries and joint operations
Value at 1 January	4,531	4,547	2,315	2,201	6,846	6,747
Translation differences	2	-305	0	-145	2	-449
Unrealized change in fair value 1	385	336	-49	259	335	596
Additions	71	77	1	2	72	78
Disposals and classification as held for sale3	-181	-2	2	-2	-178	-4
Change due to harvesting1	-168	-141	0	0	-168	-141
Other operative changes1	-7	-1	0	0	-7	-1
Reclassification from PPE	20	20	0	0	20	20
Value at 31 December	4,652	4,531	2,269	2,315	6,921	6,846

Classified as held for sale	184	0	0	0	184	0

Associated company
Tornator Oyj (41%)	1,287	1,122	130	149	1,417	1,271
Value at 31 December	1,287	1,122	130	149	1,417	1,271

Total	6,123	5,653	2,399	2,464	8,522	8,117
1 For biological assets, changes are presented in the profit and loss. For forest land, changes in fair value are recognised directly in equity. 2 Not including leased forest land. 3 Assets held for sale are discussed in more detail in note 6.1 Acquisitions, disposals and assets held for sale.

Valuation and standing stock of forest assets


			As at 31 December 2023
			Swedish forests	Guangxi 3	Veracel (50%)	MdP (50%)	Tornato r (41%)	Total
Total area		Thousand ha	1,383	70	116	138	310	2,016
- of which owned		Thousand ha	1,383	—	104	95	310	1,892
- of which leased		Thousand ha	—	70	12	43	—	125
Productive area		Thousand ha	1,139	61	49	92	285	1,627
Total area	Standing stock	million m3 fo.1	151.9	4.3	6.1	15.0	33.7	210.8
Productive area	Standing stock	million m3 fo.1	149.7	4.3	6.1	15.0	33.4	208.4
	Estimated growth	million m3 fo.1	5.8	1.3	2.2	2.0	1.5	12.8
	Harvesting	million m3 fo.1	-4.2	-1.2	-1.3	-2.3	-1.4	-10.5
	Other changes	million m3 fo.1	-2.5	0.0	0.0	-0.3	0.6	-2.1
	Harvesting	million m3 u.b.2	-3.5	-1.0	-1.1	-1.9	-1.1	-8.6
Biological assets		EUR million	4,239	184	124	288	1,287	6,123
Biological assets	Productive area	EUR/ha	3,723	3,010	2,531	3,121	4,509	3,764
Forest land		EUR million	2,072	—	30	167	130	2,399
Total forest assets		EUR million	6,312	184	154	455	1,417	8,522
Leased forest land		EUR million	—	157	4	48	—	209
1Forest cubic meters 2Solid under bark (sub) cubic meters 3 Classified as held for sale


			As at 31 December 2022
			Swedish forests	Guangxi	Veracel (50%)	MdP (50%)	Tornator (41%)	Total
Total area		Thousand ha	1,389	73	113	138	301	2,014
- of which owned		Thousand ha	1,389	—	105	95	300	1,890
- of which leased		Thousand ha	—	73	8	43	—	124
Productive area		Thousand ha	1,142	64	47	92	277	1,622
Total area	Standing stock	million m3 fo.1	152.7	4.2	5.2	15.5	33.2	210.8
Productive area	Standing stock	million m3 fo.1	150.5	4.1	5.2	15.5	32.8	208.1
	Estimated growth	million m3 fo.1	5.8	1.3	1.8	3.2	1.5	13.6
	Harvesting	million m3 fo.1	-4.6	-1.2	-1.7	-1.8	-1.3	-10.7
	Other changes	million m3 fo.1	-1.1	-0.8	0.0	0.2	-0.1	-1.8
	Harvesting	million m3 u.b.2	-3.8	-1.0	-1.4	-1.5	-1.2	-8.9
Biological assets		EUR million	3,963	196	103	269	1,122	5,653
Biological assets	Productive area	EUR/ha	3,471	3,062	2,162	2,922	4,054	3,485
Forest land		EUR million	2,113	—	29	173	149	2,464
Total forest assets		EUR million	6,076	196	131	441	1,271	8,117
Leased forest land		EUR million	—	166	3	52	—	221
1Forest cubic meters 2Solid under bark (sub) cubic meters

Subsidiaries and joint operations

At the end of 2023, forest assets, including assets held for sale in China (excluding leases),

were located by value, in Sweden 89% (89%), China 3% (3%), Brazil 2% (2%) and Uruguay 6%

(6%). The total area amounts to 1,706 (1,713) thousand hectares of which 7% (7%) is leased

and under 0% (1%) is restricted. From Stora Enso's total forest holdings 1,341 (1,345) thousand

hectares is productive forest area. The Montes del Plata and Veracel amounts take into account

the ownership share.

Swedish forests

At the end of 2023, the value of the biological assets in Swedish forests amounted to EUR 4,239

(3,963) million, related forest land amounted to EUR 2,072 (2,113) million and the total forest

assets amounted to EUR 6,312 (6,076) million. The increase in the forest assets value is mainly

driven by higher market prices. Foreign exchange impact increased the value slightly. Deferred

tax liabilities related to forest assets amounted to EUR 1,297 (1,250) million. The discount rate of

3.8% (3.6%) was applied in the valuation.

The productive area in Swedish forests amounted to 1,139 (1,142) thousand hectares with a

standing stock of 149.7 (150.5) million forest m3. The weighted three-year average market

transaction price applied in the valuation for Swedish forests assets in 2023 is EUR 42 (40) per

forest m3. The forest asset value corresponds to an average of EUR 5,540 (5,320) per ha of

productive forest area.

The valuation of the forest assets is based on detailed transaction data and price statistics as

provided by different market data suppliers. Market transaction data is adjusted to consider the

characteristics and nature of Stora Enso's forest assets and to exclude certain non-forest assets

and outliers. The valuation takes into account where the forest land is located, price levels and

volume of standing stock. Market prices between areas varies significantly. Future changes in

value of Swedish forest assets are impacted by changes in market transaction prices and

changes in volume of standing stock, considering growth and other changes. See also note 1.2

Critical accounting estimates and judgements for information related estimates and judgment

applied in the valuation.

Forest asset location and volume


2023		North	Middle	South	Total
Productive area	Thousand ha	186	953	0	1,139
Percentage of total	%	16%	84%	0%	100%
Standing stock	million m3 fo.	16.9	132.8	0.0	149.7
Percentage of total	%	11%	89%	0%	100%


2022		North	Middle	South	Total
Productive area	Thousand ha	190	951	0	1,142
Percentage of total	%	17%	83%	0%	100%
Standing stock	million m3 fo.	17.5	133.0	0.0	150.5
Percentage of total	%	12%	88%	0%	100%

Guangxi

At the end of 2023, the value of the biological assets in Guangxi, China, amounted to EUR 184

(196) million. All the forest land in China is leased. The value decrease is mainly driven by

harvesting depletion and foreign exchange impact, whereas capital expenditure and higher

volume increased the value. The biological assets included young standing timber with a value

of EUR 24 (27) million. The discount rate of 9.7% (10.2%) used in the discounted cash flows

(DCF) decreased in 2023. These forestry operations were classified as held for sale at the end

of 2023. See note 6.1 Acquisitions, disposals and assets held for sale for more details.

Veracel

Veracel is a 50% joint operation in Brazil. Stora Enso’s share of the biological assets was EUR

124 (103) million. The increase is mainly driven by increased prices, volume and planting,

whereas increased discount rate decreased the value. The biological assets included young

standing timber with a value of EUR 40 (31) million. The discount rate of 10.2% (7.9%) used in

the DCF increased in 2023. The related forest land is measured at cost.

Montes del Plata

Montes del Plata (MdP) is a 50% joint operation in Uruguay. Stora Enso’s share of the biological

assets was EUR 288 (269) million. The slight increase is mainly driven by higher wood price,

harvesting volume estimates and additions, whereas foreign exchange impact decreased the

value. During 2023 there were severe drought periods in Uruguay causing decreased annual

forest growth estimate compared to the previous years. The biological assets included young

standing timber with a value of EUR 48 (50) million. The discount rate of 9.0% (9.0%) is used in

the DCF in 2023. The related forest land is measured at cost.

Associated company

Tornator

Tornator Oyj is a 41% owned Finnish associate company. Stora Enso’s share of the biological

assets was EUR 1,287 (EUR 1,122) million, related forest land amounted to EUR 130 (149)

million, and total forest assets equalled to EUR 1,417 (1,271) million. The increase in the value

of forest assets is mainly driven by higher market prices and acquisitions.

Stora Enso’s share of the productive forest area totals to 285 (277) thousand hectares with a

standing stock of 33.4 (32.8) million forest m3. The weighted three-year average market

transaction price applied in the valuation for forest assets located in Finland in 2023 is EUR 42

(42) per forest m3. The forest asset value in Finland corresponds to an average of EUR 4,960

(4,750) per ha of productive forest area.

Valuation sensitivities of significant assumptions of a +/- 10% movement


EUR million	Wood market prices	Growth rate	Discount rate
Guangxi	+/-26	+/-1	+/-3
Veracel	+/-11	+/-11	+/-2
Montes del Plata	+/-32	+/-32	+12/-11

Swedish forest asset valuation is sensitive for changes in market transaction prices and volume

of standing stock. A change in the average market price of forest assets of EUR 1 per forest m3

would impact the value of forest assets by EUR 150 (151) million. A change in the volume of

standing stock of 1 million forest m3 would impact the value of forest assets by EUR 42 (40)

million.

4.3 Associates

Accounting principles

Associated companies over which Stora Enso exercises significant influence are accounted for using the

equity method. Stora Enso does not control associated companies alone or jointly with other parties, but has

significant influence. The Group’s share of the associated companies profit or loss is recognised in the

consolidated income statement. The Group’s interest in an associated company is carried in the consolidated

statement of financial position at an amount that reflects its share of the net assets of the associate together

with goodwill. Goodwill arising from the acquisition of an associated companies is included in the carrying

amount of the investment and is assessed for impairment as part of that investment. There is no material

goodwill in the carrying amount of associated companies.

When the Group share of losses exceeds the carrying amount of an investment, the carrying amount is

reduced to zero and any recognition of further losses ceases unless the Group is obliged to satisfy

obligations of the investee that it has guaranteed or which it is otherwise committed to.

The Group’s share of results in associated companies is reported in the operating result to reflect the

operational nature of these investments. Similarly, dividends received from associated companies are

presented in the net cash provided by operating activities in the consolidated cash flow statement.

Principal associated company investments


			Ownership interest %		EUR million
Company	Reportable segment	Domicile and principal place of operations	2023	2022	2023	2022
Tornator Oyj	Forest	Finland	41.00	41.00	892	800
Others					35	32
Carrying amount					926	832

In 2022, Stora Enso divested its 30.41% participation in Encore Ympäristöpalvelut Oy. The

transaction did not have a material impact on the Group.

Group share of associated companies income statements


EUR million	2023	2022
Sales	126	147
Net operating expenses	-69	-103
Biological asset valuation	121	189
Operating result	178	233
Net financial items	-12	40
Net result before tax	166	273
Income tax	-30	-52
Net result for the year	136	221

The average number of personnel in the associated companies was 1,046 in 2023, compared

with 1,043 in 2022.

A summary of the financial information, prepared in accordance IFRS, in respect of the

Group’s material associate, Tornator Oyj is set out below. The Group’s share of Tornator Oyj is

reported in the Forest division and covers the majority of the Group’s total carrying amount of

associated companies.

Tornator Oyj


EUR million	2023	2022
Forest Assets	3,456	3,101
Other non-current assets	73	70
Current assets	102	73

Non-current liabilities	851	752
Current liabilities	146	120
Tax liabilities	459	420

Sales	194	176
Net result for the year	341	542
Other comprehensive income	-57	141
Total comprehensive income	284	683

Dividends received during the financial year	60	25

Net assets of the associate	2,175	1,952
Ownership interest	41.00%	41.00%
Carrying amount of the Group's interest in Tornator Oyj	892	800

The Group’s current 41% ownership is valued at EUR 892 (800) million at the year-end of 2023.

The Group’s share of Tornator’s net profit was EUR 140 (222) million, including a biological

asset valuation gain net of taxes of EUR 97 (152) million.

Aggregate information of associated companies that are not individually material


EUR million	2023	2022
Non-current assets	33	35
Current assets	13	12

Non-current liabilities	0	3
Current liabilities	11	12

Sales	47	74
Net result for the year	-4	-2
Dividends received during the financial year	0	1

Net assets of the associates	35	32

Associate company value	35	32

Associate company value for Tornator Oyj	892	800
Total associate company value	926	832

Associated company balances


EUR million	2023	2022
Receivables from associated companies
Non-current loan receivables	2	2
Trade receivables	2	1

Liabilities to associated companies
Trade payables	128	101

Associated company transactions


EUR million	2023	2022
Sales to associated companies	16	19
Purchases from associated companies	181	163

The Group engages in transactions with associated companies such as sales and purchases of

wood. All agreements are negotiated at arm’s length and are conducted on terms that the Group

considers customary in the industry and generally no less favourable than would be available

from independent third parties.

4.4 Equity instruments

Accounting principles

The Group has elected to classify its equity investments in Pohjolan Voima shares and certain listed shares

held by the Group at fair value through other comprehensive income (FVTOCI) under IFRS 9 by applying the

irrevocable election for equity instruments under the standard due to the long-term nature of the ownership.

The gains and losses resulting from changes in the fair value of equity investments under FVTOCI are not

recycled to the income statement upon impairment or disposal, only the dividend income is recognised in the

income statement. In addition, the Group also has certain equity investments in unlisted securities that are

classified as fair value through income statement. The majority of the Group's equity instruments consist of

investments in Pohjolan Voima Oyj (PVO).

Equity instruments


EUR million	2023	2022

Carrying amount at 1 January	1,445	918
Change in fair value - OCI	-645	519
Change in fair value - Income statement	0	0
Additions	18	10
Disposals	0	0
Translation difference and other changes	0	-2
Carrying amount at 31 December	819	1,445

PVO shares

The Group holds a 15.7% (15.7%) interest in Pohjolan Voima Oyj (PVO), a public limited

company in the energy sector that produces electricity and heat for its shareholders in Finland at

cost-based and non-profit making principle (Mankala-principle). Each subsidiary of the PVO

group has its own class of shares that, instead of dividends, entitle the shareholder to the energy

produced in proportion to its ownership of that class of share. Also, the shareholders then have

an obligation to cover the costs of production, which are generally lower than market prices.

Stora Enso did not receive actual dividend payments from PVO during 2023. The holding is fair

valued quarterly using the discounted cash flow method. The valuation is categorised at level 3

in the fair value hierarchy according to IFRS 13; levels are explained in 5.2 Fair values.

The electricity prices used in the valuation are based on market future derivative prices for

the first two years and on long-term electricity price estimates for the years thereafter. The

historical financial statements provide the basis for the cost structure for each power asset and

for future periods, estimates from PVO shareholder information is used when available and

these are adjusted by inflation factor in future years. The discount rate of 6.93% used in the

valuation model is determined using the weighted average cost of capital method. A +/- 5%

change in the electricity price used in the DCF would change the valuation by EUR +92 million

and -92 million, respectively. A +/- percentage point change in the discount rate would change

the valuation by EUR -140 million and +183 million, respectively.

PVO's shares are divided in different share series. The B and B2 series relate to PVO's

shareholdings in Teollisuuden Voima Oyj (TVO), which operates three nuclear plants in Finland

(Olkiluoto 1–3).Stora Enso holds an indirect share of approximately 8.9% of the capacity of the

Olkiluoto 3 nuclear plant unit through its PVO B2 shares. The Olkiluoto 3 plant related test

production was completed in April 2023 and regular electricity production was started. Olkiluoto

3 electricity production capacity is approximately 1,600 megawatt, which corresponds to about

15% of electricity demand in Finland. As the largest nuclear power plant in Europe, Olkiluoto in

total will produce about 30% of Finland's electricity. The production of Olkiluoto 3 plays a key

role in Finland's green transition, and accelerates the move towards a carbon-neutral society

and electricity self-sufficiency.

PVO shareholding on 31 December 2023


EUR million	Share Series	% Holding	Asset Category	Fair value 2023	Fair value 2022
Pohjolan Voima Oyj	A	20.6	Hydro	226	307
Pohjolan Voima Oyj	B, B2	15.7, 14.8	Nuclear	546	1,113
Pohjolan Voima Oyj	C,C2,V,M	Various	Various	7	4
Total				778	1,423

The valuation in 2023 amounted to EUR 778 (1,423) million. The decrease in PVO’s valuation is

mainly caused by a decrease in the electricity price estimates. No deferred tax is recognised, as

under Finnish tax regulations holdings above 10% are exempt from tax on disposal proceeds.

Principal equity instruments


EUR million	Holding %	Number of shares	Acquisition cost	Fair value
Packages Ltd, Pakistan - listed shares	6.4	5,396,650	3	9
Total listed securities			3	9
Pohjolan Voima Oyj	15.7	5,073,972	131	778
Other unlisted securities			32	32
Total unlisted securities			163	810
Total Equity instruments at 31 December 2023			166	819
Total Equity instruments at 31 December 2022			147	1,445

4.5 Emission rights and other non-current assets

Accounting principles

The Group participates in the European Emissions Trading Scheme, with the aim of reducing greenhouse

gas emissions. The Group has been allocated allowances to emit a fixed tonnage of carbon dioxide (CO2)

over a fixed period of time, which are recognised as intangible assets, government grants and as liabilities for

the obligation to deliver allowances equal to those emissions that have been made during the compliance

period.

Intangible assets related to emission allowances are measured at level 1 fair value at the date of initial

recognition. The liabilities to deliver allowances are recognised based on actual emissions and are settled

using allowances on hand and measured at the carrying amount of those allowances. At the reporting date, if

the market value for the emission allowances is less than the carrying amount, any surplus allowances that

are not required to cover emissions made are impaired to the market value.

The Group expenses emissions made at the grant date fair value, under materials and services, together

with purchased emission rights at their purchase price. Such costs will be offset under other operating income

by the income from the original rights used at their grant date fair value. The consolidated income statement

will, thus, be neutral in respect to all the rights consumed that were within the original grant of rights. Sales of

excess emission allowances are recognised as income on the delivery date. Any net effect represents the

costs of purchasing additional rights to cover excess emissions, or the sale of unused rights in case that the

realised emissions are below the allowances received free of charge or the impairment of allowances that are

not required for own use.

Emission rights


EUR million	2023	2022
Value at 1 January	123	137
Emission allowances allocated	146	160
Sales	-64	-62
Settlement with the government	-98	-85
Disposals and classification as held for sale	—	-27
Value at 31 December	108	123

The liability to deliver allowances is presented in the consolidated statement of financial position

in line other operative liabilities. As of 31 December 2023, the liability to deliver allowances

amounted to EUR 79 (91) million as presented in note 4.8 Operative liabilities. The excess

emission rights held at the year end were valued at EUR 28 (32) million.

Other non-current assets


EUR million	2023	2022
Prepaid expenses and accrued income	25	22
Tax credit	4	4
Other non-current operative assets	29	12
Total	58	38

4.6 Inventories

Accounting principles

Inventories are reported at lower of cost and net realisable value with the cost determined by the first-in first-

out (FIFO) method or, alternatively, by the weighted average cost where it approximates FIFO. The same cost

formula is used for all inventories having a similar nature and use to the Group. The cost of finished goods

and work in progress comprises raw material, direct labour, depreciation, other direct costs and related

production overheads, but excludes interest expenses. Net realisable value is the estimated selling price in

the ordinary course of business, less the costs of completion and sale.

Where market conditions result in the manufacturing costs of a product exceeding its net realisable value,

a valuation allowance is made. Valuation allowances are also made for old, slow moving and obsolete

finished goods and spare parts when needed. Such valuation allowances are deducted from the carrying

value of the inventories in the consolidated statement of financial position.


EUR million	2023	2022
Materials and supplies	384	501
Work in progress	62	84
Finished goods	774	962
Spare parts and consumables	307	337
Other inventories	29	25
Advance payments and cutting rights	52	63
Obsolescence allowance - spare parts and consumables	-100	-103
Obsolescence allowance - finished goods	-18	-19
Net realisable value allowance	-25	-40
Total	1,466	1,810

EUR 6,271 (6,576) million of inventories in total have been expensed during the year. EUR 35

(78) million of inventory write-downs have been recognised as an expense. EUR 55 (9) million

have been recognised as a reversal of previous write-downs.

4.7 Operative receivables

Accounting principles

Trade receivables

Trade receivables are recognised initially at fair value and subsequently at their anticipated realisable value

with an estimate made for loss allowance on expected credit losses based on a forward-looking and objective

review of all outstanding amounts at period end. A simplified approach under IFRS 9 has been implemented

for trade receivables and loss allowances are recognised based on expected lifetime credit losses in the

consolidated income statement within other operating expenses. For non-defaulted receivables, expected

credit losses are estimated based on externally generated customer level probability of default data that is

used in the forward-looking loss allowance calculation model. The loss allowance model for non-defaulted

receivables also takes into account a macroeconomic indicator that considers the macroeconomic

developments and further incorporates forward-looking data to the calculation model. The rebuttable

presumption that default does not occur later than when a financial asset is 90 days past due has been

applied in the calculation model and a default is normally estimated to occur when trade receivables are at

least 90 days overdue or there is otherwise objective evidence supporting the conclusion that a default has

occurred. Trade receivables will be written off and booked as a credit loss only with the court's decision of

bankruptcy or in some other cases when there is objective evidence supporting the write-off. Trade

receivables are presented in current assets under operative receivables in the consolidated statement of

financial position.

Trade receivables under factoring arrangements

Stora Enso uses factoring arrangements as one of the working capital management tools. Sold trade

receivables are derecognised once significant related risks and rewards of ownership have been transferred

to the buyer. Outstanding balances for trade receivables that were not yet sold at period end but qualify to be

sold under factoring programmes in the next period, are classified as trade receivables fair valued through

other comprehensive income in accordance with the business model and contractual cash flow

characteristics tests under IFRS 9. Please refer to note 5.2 Fair values for further details.

Current operative receivables


EUR million	2023	2022
Trade receivables - gross carrying amount including amount held for sale	939	1,329
Trade receivables - gross carrying amount held for sale	-46	-92
Trade receivables - gross carrying amount	893	1,236
Loss allowance	-27	-32
Prepaid expenses and accrued income	80	68
Other receivables	245	200
Total	1,191	1,473

Age analysis of trade receivables


EUR million	2023	2022
Not overdue	841	1,213
Less than 30 days overdue	57	55
31 to 60 days overdue	1	10
61 to 90 days overdue	3	2
91 to 180 days overdue	1	3
Over 180 days overdue	36	47
Total	939	1,329

As at 31 December 2023, a gross amount of EUR 98 (116) million of trade receivables were

overdue. These relate to a number of countries and unrelated customers that have no recent

history of default. At 31 December 2023, lifetime expected credit losses for trade receivables

amounted to EUR 27 (32) million. Loss allowances for trade receivables are estimated on an

individual basis based on a forward-looking model where estimated probabilities of customer

default are used in the calculation model. If the Group has concerns regarding the financial

status of a customer, an advance payment or an irrevocable letter of credit drawn from a bank is

required. At the year end, the letters of credit awaiting maturity totalled EUR 54 (74) million.

Please refer to note 5.1 Financial risk management for details of customer credit risk

management.

Age analysis of loss allowance


EUR million	2023	2022
Not overdue and less than 90 days overdue	2	5
91 to 365 days overdue	2	7
Over 365 days overdue	23	21
Total	27	32

Reconciliation of loss allowance


EUR million	2023	2022
Opening balance at 1 January	32	26
Change in loss allowance booked through income statement	9	13
Write-offs	-15	-6
Other	1	0
Closing balance at 31 December	27	32

The actual credit losses during 2023 amounted to EUR 15 (6) million of trade receivables being

written-off from the Group's balance sheet.

Stora Enso has entered into factoring agreements to sell trade receivables in order to

accelerate cash conversion. These agreements resulted in full derecognition of trade receivables

amounting to a nominal value of EUR 178 (174) million at the end of the year. The continuing

involvement of Stora Enso in the sold receivables was estimated as being insignificant due to

the non-recourse nature of the factoring arrangements involved.

4.8 Operative liabilities

Non-current operative liabilities


EUR million	2023	2022
Share-based payments	2	2
Other payables	9	9
Total	11	11

Current operative liabilities


EUR million	2023	2022
Trade payables	1,582	1,831
Payroll and staff-related accruals	224	245
Accrued liabilities and deferred income	112	130
Emission liabilities	79	91
Advances received	18	18
Other payables1	96	94
Total	2,112	2,410
1 Other payables consist especially of taxes payable to government, such as VAT and payroll taxes.

4.9 Provisions

Accounting principles

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past

events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable

estimate of the amount of the obligation can be made. Provisions are measured at the management’s best

estimate and there is some uncertainty regarding the timing and amount of the costs. Provisions for

obligations to dismantle, remove or restore assets after their use are added to the carrying amount of the

assets at acquisition date and depreciated over the useful life of the asset. Provisions are discounted to their

current net present value if the effect of the time value of money is material.

Environmental provisions

Environmental expenditures resulting from the remediation of an existing condition caused by past

operations, and which do not contribute to current or future revenues, are recognised as provisions.

Environmental provisions are recorded when it is probable, based on current interpretations of environmental

laws and regulations, that a present obligation has arisen and the amount of such liability can be reliably

estimated.

Restructuring provisions

A restructuring provision is recognised in the period in which the Group becomes legally or constructively

committed to the plan. The relevant costs are those that are incremental to, or incurred as a direct result of,

the exit plan, or are the result of a continuing contractual obligation with no ongoing economic benefit, or

represent a penalty incurred to cancel the obligation.

Other provisions

Other provisions are recognised regarding different legal or constructive obligations, such as reforestation,

onerous contracts, ongoing lawsuits, claims, or similar.

Provisions


EUR million	Environmental provisions	Restructuring provisions	Other provisions	Total provisions
Carrying Value at 1 January 2022	75	88	67	231
Translation difference	-4	-3	-2	-9
Disposals and classification as held for sale	-3	-1	0	-4
Charge in Income Statement
New provisions	14	8	19	40
Increase in existing provisions	1	12	2	15
Reversal of existing provisions	-1	-16	-8	-25
Payments	-9	-66	-50	-124
Carrying Value at 31 December 2022	73	21	30	124
Translation difference	0	0	1	1
Disposals and classification as held for sale	3	0	0	3
Charge in Income Statement
New provisions	7	89	12	107
Increase in existing provisions	4	4	1	8
Reversal of existing provisions	-16	-7	0	-22
Payments	-9	-31	-14	-54
At 31 December 2023	63	77	28	168

Allocation between current and non- current provisions

Current provisions: Payable within 12 months	1	72	12	85
Non-current provisions: Payable after 12 months	61	5	16	83
Total at 31 December 2023	63	77	28	168

The Group has undergone major restructuring in recent years, from divestments to mill closures

and administrative cost-saving programmes. The most material restructuring provision included

in the ending balance of 2023 is EUR 35 million related to closing down the De Hoop

containerboard site in the Netherlands. Other restructuring provisions relate mainly to

permanently closing down Sunila pulp production in Finland and restructuring programmes to

reduce the number of office employees in Group functions and the Packaging Materials division.

Material payments in 2022 in restructuring and other provisions are mainly related to closing

down pulp and paper production at the Kvarnsveden site in Sweden and the Veitsiluoto site in

Finland.

The most material environmental provision is based on an agreement between Stora Enso

and the City of Falun that obligates the Group to purify runoff from the Kopparberg mine before

releasing the water into the environment. The provision at year end amounted to EUR 27 (EUR

31) million. The most material case in other provisions is related to an obligation in some Nordic

countries to take care of reforestation within a specified time after final harvesting.

5 Capital structure and financing

5.1 Financial risk management

Risk management principles and process

Stora Enso is exposed to several financial market risks that the Group is managing under the

policies approved by the Board of Directors. The objective is to ensure cost-effective funding of

Group companies and manage financial risks effectively. The Stora Enso Group Financial Risk

Policy governs all financial transactions in Stora Enso. This policy and any future amendments

take effect once they are approved by the Board of Directors and all policies covering the use of

financial instruments must comply with it. The Group’s joint operations companies operate under

their own financial risk policies, which may not be fully similar to the Group’s policies.

The major financial market risks are detailed below with the main exposures for the Group being

interest rate risk, currency risk, liquidity risk, refinancing risk, and commodity price risk,

especially for fiber, pulp, and energy.

Interest rate risk

The Group is exposed to an interest rate risk that is the risk of fluctuating interest rates affecting

the interest expense of the Group and value of its assets and liabilities. Stora Enso is exposed to

the interest rate risk through interest-bearing assets and liabilities, such as loans, financial

instruments and lease liabilities, but also through commercial agreements and operative assets

and liabilities such as biological assets. The Group’s aim is to keep interest costs stable. The

Group’s aggregate duration should not exceed the average loan maturity, but should aim

towards a long duration. A duration above the average loan maturity is approved by the Board of

Directors.

The Group may use interest-rate swaps and cross-currency swaps to manage the interest-

rate risk by synthetically converting floating-rate loans into fixed-rate loans through the use of

derivatives. The Group's floating and fixed rate interest-rate position as per the year-end is

presented in the following table. The table includes the respective assets and liabilities classified

as held for sale.

Floating and fixed interest-rate position


	As at 31 December 2023		As at 31 December 2022
EUR million	Floating rate	Fixed rate	Floating rate	Fixed rate
Non-current interest-bearing receivables1	11	51	11	80
Current interest-bearing receivables1	1	14	1	—
Cash and cash equivalents	2,464		1,917
Interest-bearing liabilities2	-1,422	-4,293	-1,074	-2,818
Interest-bearing assets and liabilities excluding interest rate derivatives	1,053	-4,229	855	-2,738
Interest-rate and cross-currency swaps	488	-488	650	-650
Interest-bearing assets and liabilities, net of interest rate derivatives	1,541	-4,717	1,506	-3,388
1 Excluding interest receivable, listed securities, and derivative assets 2 Non-current interest-bearing liabilities, current portion of non-current debt, short-term interest bearing liabilities and bank overdrafts excluding derivative liabilities and interest payable

The average interest duration for the Group's net interest-bearing liabilities, including all interest

rate derivatives but excluding cash and cash equivalents, is 2.7 (3.3) years.

As of 31 December 2023, one percentage point increase in interest rates would increase

annual net interest expenses by approximately EUR 10 (EUR 4) million and a similar decrease

in interest rates would decrease net interest expenses by EUR 10 (EUR 4) million. This assumes

that the duration and the funding structure of the Group remain constant throughout the year.

This simulation calculates the interest effect of a 100 basis point parallel shift in interest rates on

all floating rate instruments excluding cash equivalents from their next reset date to the end of

the year. In addition, all short-term loans maturing during the year are assumed to be rolled over

on maturity to year end using the new higher or lower interest rate.

A one percentage point parallel change up or down in interest rates would also result in fair

valuation gains or losses of EUR 6 (EUR 10) million before taxes in the cash flow hedge reserve

in OCI regarding interest rate swaps under cash flow hedge accounting. Note 5.4 Derivatives

summarises the nominal and fair values of the outstanding interest rate derivative contracts.

Foreign exchange risk - transaction risk

The Group operates globally and is exposed to a foreign-currency transaction risk arising from

exchange rate fluctuations. Foreign exchange transaction risk exposure comprises both the

geographical location of Stora Enso production facilities around the world, sourcing of raw

materials and sales of end products in foreign currencies, mainly denominated in US dollars,

British pounds and Swedish crowns. Stora Enso Group companies with functional currency other

than euro are also exposed to a foreign-currency transaction risk arising from EUR denominated

net cash flows. These EUR exposures mainly arise from Stora Enso subsidiaries located in

Sweden, Czech Republic and Poland.

The currency transaction risk is the impact of exchange rate fluctuations on the Group's

Income statement, which is the effect of currency rates on expected future cash flows and

subsequent trade receivables or payables. The Group's standard policy to mitigate the risk is to

hedge 15–60% of the highly probable forecast cash flows in major currencies for the next 12

months by using derivative financial instruments, such as foreign exchange forwards and foreign

exchange options. The Group may also hedge periods between 12 months and 36 months, or

change the above mentioned hedging ratio for the next 12 months upon the discretion of the

Group's management.

For operative receivables and payables in foreign currencies, the objective is to hedge 50–

100% of the outstanding net receivable balance in major currency pairs.

The table below presents the estimated net operative foreign currency transaction risk

exposures for the main currencies for the next 12 months and the related foreign-currency

hedges in place as at 31 December, retranslated using year-end exchange rates. The net

operative receivables and payable exposures, representing the balances as at 31 December,

include foreign currency exposures generated by external and intercompany transactions in line

with the requirements of IFRS 7. A positive amount of exposure in the table below represents an

estimated future inflow or receivable of a foreign currency amount.

Operative foreign currency transaction risk exposure


	As at 31 December 2023						As at 31 December 2022
EUR million	EUR	SEK	USD	GBP	AUD	UYU	EUR	SEK	USD	GBP	AUD	UYU
Estimated annual net cash flow exposure in hedged foreign-currency flows1	674	-278	1,446	126	63	-48	960	-238	1,983	240	83	-48
Cash flow hedges for the next 12 months	-394	188	-632	-34	-15	27	-525	119	-843	-59	-26	26
Estimated annual net cash flow exposure, net of hedges	280	-90	814	93	47	-21	435	-119	1,139	181	57	-22
Hedging percentage as at 31 December for next 12 months	58%	68%	44%	27%	25%	57%	55%	50%	43%	24%	31%	54%
Weighted-average hedged rate against EUR2		11.57	1.10	0.87	1.66	45.07		10.63	1.09	0.87	1.52	45.20

Operative receivables and payables net exposure	-38	-23	181	18	18	-5	-22	8	284	30	49	-5
Net receivable currency hedges	-7	7	-119	-15	-20	—	-18	-3	-186	-16	-51	—
Net operative receivables exposure, net of hedges	-45	-15	62	3	-2	-5	-39	5	98	14	-2	-5

Estimated annual net transaction risk exposure after hedges	235	-105	876	96	46	-26	396	-113	1,238	195	55	-27
1 Cash flows are forecasted highly probable net operating foreign-currency cash flows in hedged currencies. The exposure presented in the EUR column relates to operative transaction risk exposure from EUR denominated cash flows in Group companies located in Sweden, Czech Republic and Poland with functional currency other than EUR. 2 The weighted-average exchange rate against EUR is calculated based on bought leg of option collar structure and forward contracts' forward rate and therefore represents the weighted-average hedged rate based on the least favourable hedged rate from the Group's point-of-view.

The following table includes the estimated effect on the annual operating result of a weakening

of an exposure currency against the functional currencies of exposed subsidiaries. The

sensitivities have been calculated based on a 5% movement in EUR, SEK, USD, GBP and AUD

while 10% movement in UYU. These changes are estimated as reasonably possible changes in

exchange rates, measured against year-end closing rates. A corresponding strengthening of the

exposure currency would have an approximately equal opposite impact. A negative amount in

the table reflects a potential net loss in the income statement or equity and, conversely, a

positive amount reflects a potential net gain. In practice, the actual foreign currency results may

differ from the sensitivity analysis presented below, since the income statements of subsidiaries

with functional currencies other than the euro are translated into the Group reporting currency

using the average exchange rates for the year, whereas the statements of the financial position

of such subsidiaries, including currency hedges, trade receivables and payable, are translated

using the exchange rates at the reporting date. The translation risk exposures are discussed

more in detail under the Translation risk chapter below.

The calculation includes currency hedges and assumes that there are no changes in other

underlying currencies. The currency effects are based on estimated operative foreign currency

flows for the next twelve months, hedging levels at the year end, and the assumption that the

currency cash flow hedging levels and all other variables will remain constant during the next

twelve months. Hedging instruments include foreign exchange forward contracts and foreign

exchange options. Indirect currency effects with an impact on prices and product flows, such as

a product becoming cheaper to produce in a different geographical location, have not been

considered in this calculation.

Sensitivity analysis of operative foreign currency transaction risk exposure


	As at 31 December 2023						As at 31 December 2022
EUR million	EUR	SEK	USD	GBP	AUD	UYU	EUR	SEK	USD	GBP	AUD	UYU
Exposure currency change by1	-5%	-5%	-5%	-5%	-5%	-10%	-5%	-5%	-5%	-5%	-5%	-10%
Effect on estimated annual net cash flows in hedged flows	-34	14	-72	-6	-3	5	-48	12	-99	-12	-4	5
Effect on cash flow hedging OCI reserve before taxes as at year end 2	20	-9	32	2	1	-3	26	-6	42	3	1	-3
Effect on net operative receivables and payables after hedges3	2	1	-3	—	—	1	2	—	-5	-1	—	—
Estimated annual EBIT impact4	-12	5	-44	-5	-2	3	-20	6	-62	-10	-3	3
1 The sensitivity analysis for EUR denominated annual net cash flows, operative net receivables and related hedges refer to the EUR denominated transaction risk arising from EUR denominated foreign-currency cash flows in Sweden, Czech Republic and Poland with functional currency other than EUR. 2 The effect on OCI cash flow hedging reserve before taxes at year end is related to the fair value change in derivative contracts qualifying as cash flow hedges of highly probable forecast transactions under IFRS 9. Amount effecting OCI will be recycled to operative result when the transaction realises. 3 Currency effect related to net operative receivables or payables and related hedges. 4 The estimated annual EBIT impact includes currency effects in respect of operative exposures in the Statement of Financial Position, forecast cash flows and the related hedges.

The following table presents the financial foreign currency exposure and the related hedges in

place as at 31 December for the main currencies. Net debt includes foreign-currency external

loan payables and receivables, foreign-currency internal loan payables and loan receivables and

cash equivalents. Loans designated as net investment loans under IAS 21 are excluded from the

table as they reduce the foreign-currency exposures on a Group level. Internal transaction

exposure includes foreign-currency payables and receivables outstanding within the Group at

reporting date. The currency derivatives mainly hedge financial exposures in the statement of

financial position. A negative amount of exposure in the table represents a net payable of a

foreign currency amount.

Additionally, the table includes the estimated effect on the income statement of a currency

weakening of an exposure currency against EUR. The sensitivities have been calculated based

on a 5% movement in SEK, USD, CNY, PLN, and CZK. These changes are estimated as

reasonably possible changes in exchange rates, measured against year-end closing rates. A

corresponding strengthening of the exposure currency would have an approximately equal

opposite impact. A negative amount in the table reflects a potential net loss in the Income

statement and, conversely, a positive amount reflects a net potential gain. In practice, the actual

foreign currency results may differ from the sensitivity analysis below as the exposure amounts

may change during the year.

Financial foreign currency exposure and estimated currency effects in income statement


	As at 31 December 2023					As at 31 December 2022
EUR million	SEK	USD	CNY	PLN	CZK	SEK	USD	CNY	PLN	CZK
Foreign-currency net debt1	140	-121	185	-3	24	-418	-101	355	-6	-62
Currency hedges	-158	-5	—	-5	-21	-3	-46	-211	-7	62
Net exposure after hedges	-18	-126	185	-8	3	-422	-146	144	-12	—
Internal transaction exposure	137			13					138	45
Currency hedges	—			—					-124	-41
Net non-operative exposure	137	—	—	13	—	—	—	—	14	3
Exposure currency change by	-5%	-5%	-5%	-5%	-5%	-5%	-5%	-5%	-5%	-5%
Effect in the Income Statement2	-6	6	-9	-1	—	21	7	-7	—	6
1 The Group has designated certain internal loans to Chinese subsidiaries as net investment loans under IAS 21. The loans are denominated in EUR, USD, and CNY. The underlying foreign currency gain or loss will be posted as part of CTA in Equity. The nominal amount of net investment loans amounted to EUR 591 (EUR 398) million as per the year end and reduces the currency exposure for relevant currencies in the above table. 2 Gains and losses are recognised as part of Net financial items in the Income Statement

Foreign exchange risk – translation risk

Translation risk results from fluctuations in exchange rates affecting the value of Stora Enso’s

consolidated net foreign currency denominated assets, liabilities, and income. Translation risk is

reduced by funding assets, whenever economically possible, in the same currency as the asset

itself. The Group may also enter into foreign exchange forwards, foreign exchange options or

foreign currency denominated loans to hedge its net investments in foreign entities with different

functional currencies than the Group.

The balance sheets of foreign subsidiaries, associated companies and foreign currency

denominated equity instruments in the scope of IFRS 9 are translated into euros using exchange

rates prevailing on the reporting date, thus exposing consolidated Group equity to fluctuations in

currency rates. The resulting translation differences, along with other movements such as the

translation rate difference in the income statement, are recorded directly in shareholders’ equity.

These cumulative differences materialise through the Income statement on the disposal, in

whole or in part, of the foreign entity.

The following table presents the translation risk exposure in the Group's Income statement

arising from the translation of subsidiaries' and joint operations' foreign-currency income

statements into the presentation currency of the Group in the consolidated financial statements.

Translation exposure in Income statement


	As at 31 December 2023					As at 31 December 2022
EUR million	SEK	USD	BRL	CZK	CNY	SEK	USD	BRL	CZK	CNY
Translation exposure in Income Statement	-357	-196	-179	-65	67	-147	-192	-164	-38	77
Exposure currency change by	-5%	-5%	-10%	-5%	-5%	-5%	-5%	-10%	-5%	-5%
Effect on EBIT from translation risk exposure	18	10	18	3	-3	7	10	16	2	-4

The next table presents the translation exposure for geographical areas for which the Group has

applied net investment hedging techniques to reduce the foreign-currency translation exposure

in the consolidated equity. In practise, the Group also incurs material unhedged translation risk

exposures in other geographical areas such as Sweden and China. The exposures used in the

calculations are based on the foreign currency denominated equity and the hedging levels as at

31 December. Full details of actual CTA movements and hedging results are given in note 5.6

Cumulative translation adjustment and equity hedging. The sensitivity analysis includes the

effects of currency hedges of net investments in foreign entities and assumes that no changes

take place other than a single currency exchange rate movement on 31 December each year.

Hedged translation exposure in Equity


	As at 31 December
EUR million	2023	2022
Translation exposure on equity in USD area1	1,625	1,686
EUR/USD equity hedges2	-271	-281
Translation exposure after hedges	1,354	1,405
Sensitivity before hedges - EUR strengthening 5%	-81	-84
Sensitivity after hedges - EUR strengthening 5%	-68	-70
1 Includes the joint operation Montes del Plata in Uruguay, which has USD as its functional currency. 2 USD denominated bonds classified as hedges of net investments in foreign assets.

Liquidity and refinancing risk

Liquidity risk arises from the difficulty of obtaining finance for operations at a given point in time.

Stora Enso’s financial risk policy states that the average maturity of outstanding loans and

committed credit facilities covering short-term borrowings should be at least four years. The

policy further states that the Group must have cash equivalents and undrawn committed credit

facilities to cover all debt maturing within the next 12 months, including supply chain financing

and factoring. At 31 December 2023, undrawn committed credit facilities and undrawn loans

were at EUR 800 (EUR 1,100) million. The credit facilities are used as a backup for general

corporate purposes and are fully undrawn. Additionally, Stora Enso has access to various

additional long-term sources of funding up to EUR 1,100 (EUR 1,050) million. These mainly

relate to available funding sources from Finnish pension funds.

During 2023, Stora Enso issued or refinanced altogether EUR 2,006 million of long-term debt,

including both bonds and bilateral bank loans. Funding events from during 2023 are described in

more detail in note 5.3 Interest-bearing assets and liabilities

Refinancing risk, or the risk that maturing debt is not refinanced in the markets, is mitigated

by Stora Enso’s target of maintaining an even maturity profile of outstanding debt. The table

below shows maturity analysis for the Group's contractual financial liabilities classified under

principal headings based on the remaining period to contractual maturity at the reporting date.

Forward interest rates as at the year-end were used for estimating contractual finance charges

for the upcoming years. The table includes the respective assets and liabilities classified as held

for sale.

Contractual maturity repayments of financial liabilities, settlement net: 2023


EUR million	2024	2025	2026	2027	2028	2029+	Total
Bond loans	136	440	590	591	548	1,310	3,615
Loans from credit institutions	140	717	105	5	5	27	998
Lease liabilities	71	57	48	43	39	263	520
Other non-current financial liabilities	0	2	0	0	0	0	2
Non-current borrowings including current portion	347	1,217	742	639	592	1,600	5,137
Estimated contractual finance charges	193	152	113	82	69	194	802
Estimated contractual lease charges	29	26	25	23	22	225	350
Contractual repayments on non- current borrowings	569	1,395	880	744	683	2,018	6,289
Current borrowings, carrying amounts	595	0	0	0	0	0	595
Gross-settled derivative liabilities - receipts	-2,154	0	0	0	0	0	-2,154
Gross-settled derivative liabilities - payments	2,132	0	0	0	0	0	2,132
Trade payables	1,666	0	0	0	0	0	1,666
Estimated contractual finance charges	9	0	0	0	0	0	9
Total contractual repayments at 31 December 2023	2,817	1,395	880	744	683	2,018	8,537

Contractual maturity repayments of financial liabilities, settlement net: 2022


EUR million	2023	2024	2025	2026	2027	2028+	Total
Bond loans	300	270	404	90	325	1,081	2,470
Loans from credit institutions	306	40	273	5	0	0	624
Lease liabilities	63	49	44	33	30	159	377
Other non-current financial liabilities	0	2	0	0	0	0	2
Non-current borrowings including current portion	668	361	721	128	355	1,240	3,472
Estimated contractual finance charges	108	90	74	43	40	190	545
Estimated contractual lease charges	16	14	13	11	10	58	123
Contractual repayments on non- current borrowings	792	465	807	182	405	1,489	4,140
Short-term borrowings, carrying amounts	429	0	0	0	0	0	429
Gross-settled derivative liabilities - receipts	-2,405	0	0	0	0	0	-2,405
Gross-settled derivative liabilities - payments	2,401	0	0	0	0	0	2,401
Net-settled derivative liabilities	-4	0	0	0	0	0	-5
Trade payables	1,831	0	0	0	0	0	1,831
Bank overdrafts	0	0	0	0	0	0	0
Estimated contractual finance charges	6	0	0	0	0	0	6
Total contractual repayments at 31 December 2022	3,050	464	807	182	405	1,489	6,398

Financial transactions counterparty credit risk

Financial counterparty risk is the risk of fluctuations in the value of the Group’s assets as a result

of counterparties being unable to meet their obligations arising from financial contracts. The

exposure to a financial counterparty risk is measured as the maximum loss that Stora Enso can

suffer directly in the event of a single counterparty’s credit default. This risk is minimised by:

• entering into transactions only with leading financial institutions and with industrial companies

that have a good credit rating;

• only investing in liquid funds and deposits with financial institutions or companies that have a

minimum credit rating of A-3 or BBB-.

• at least the higher of 50% of cash equivalents, or EUR 150 million, of cash equivalents to be

held at counterparties with a minimum rating of A- or equivalent using credit ratings from main

rating agencies;

• investing at least EUR 75 million of the Group's cash and cash equivalents at counterparties

other than the counterparty at which most of Stora Enso's cash and cash equivalents are

held;

• requiring parent company guarantees when dealing with any subsidiary of a rated company.

The Group Financial Risk Policy defines the limits for accepted counterparty risk, based on the

tenor of financial contract and counterparty’s credit rating.

At the year end 2023, there were no significant concentrations of risk with respect to

counterparties of derivative contracts, with the highest counterparty mark-to-market exposure

being at EUR 13 (41) million and credit rating of A+ (A+) using Standard and Poor’s credit rating

symbols.

Customer credit risk

Customer credit risk is Stora Enso’s exposure to contracts arising from deterioration in the

financial health of its customers. The Group uses various measures to reduce customer credit

risks, including, but not limited to, letters of credit, prepayments and bank guarantees. The

Group has also obtained export guarantees, covering both political and commercial risks, which

are used in connection with individual customers outside the OECD area. Management

considers that no significant concentration of credit risk with any individual customer,

counterparty or geographical region exists for Stora Enso. The ageing information of trade

receivables and related loss allowances are given in note 4.7 Operative receivables.

Commodity price risk

Outstanding commodity hedges


	As at 31 December 2023				As at 31 December 2022
	Underlying amount of commodity hedged	Average hedged commodity price	Nominal amount hedged in EUR million	Fair value EUR million	Underlying amount of commodity hedged	Average hedged commodity price	Nominal amount hedged in EUR million	Fair value EUR million
Electricity purchases
- Nordic region	245,712 MWh	EUR 55.6	14	-1	175,200 MWh	EUR 29.1	5	18
Oil purchases	205,058 barrels	USD 75.9	14	-1	200,474 barrels	USD 73.5	14	0

The Group is exposed to commodity and energy price volatility that will have an impact on the

Group's profitability. Electricity, natural gas and oil hedge derivatives are part of energy price risk

management in the Group, whilst other commodity risks are measured and hedged if

economically possible. In addition to electricity hedge derivatives, the Group also manages

energy price risk by entering into long-term physical fixed price purchase agreements, and by

holding a 15.7% stake in Pohjolan Voima Oy (PVO), which is a privately owned Group of

companies in the energy sector in Finland. The fair value of the shares amounted to EUR 778

(EUR 1,423) million as per the year-end. The fair value of these shares is dependent on

electricity market prices and discussed in more detail in note 4.4 Equity instruments.

A 10% movement in energy and raw material prices would result in a EUR 5 (EUR 6) million

change in the fair value of commodity financial hedges described in the above table. The

majority of these fair value changes, after taxes, are recorded directly in Equity under Hedging

Reserves, until the contracts mature and the result is entered in the Income statement. These

estimates only represent the sensitivity of commodity financial instruments to market risk and not

the Group's full exposure to raw material and energy price risks as a whole, since the actual

underlying purchases are not financial instruments within the scope of the IFRS 7 standard. At

the end of 2023, the maturities of the energy and commodity contracts, including both financial

hedges and fixed-price physical purchase agreements, ranged between 2024 and 2025. In

2022, the maturities ranged between 2023 and 2024.

In an effort to mitigate other commodity price risk exposures in relation to wood fiber price

risk, the Group is a significant owner of forest assets in the Nordic region. In Sweden the Group

owns 1.4 million hectares of forest land. In addition, Stora Enso holds 41% share in Tornator Oyj,

which is a significant forest owner in Finland. The Group's share in Tornator is reported as an

associate company and discussed in more detail in note 4.3 Associates. The Group's forest

assets are discussed in more detail in note 4.2 Forest assets.

Equity price risk

The Group has certain investments in publicly traded securities. Currently these relate to

Packages Ltd shares in Pakistan. The market value of these equity investments was EUR 9

(EUR 8) million at the year end. Market value changes in these investments are recorded, after

taxes, directly under Shareholders’ Equity in the Equity instruments through OCI reserve. More

details on the publicly traded securities can be found from note 4.4 Equity instruments.

Capital risk management

Stora Enso’s debt structure is focused on capital markets and commercial banks. Group

objectives when managing capital are to safeguard the ability to continue as a going concern in

order to provide returns for shareholders and benefits for other stakeholders, as well as to

maintain an optimal capital structure to maintain reasonable cost of capital. In order to maintain

or adjust the capital structure, the Group may, subject to shareholder approval as appropriate,

vary the dividends paid to shareholders, buy its own shares on financial markets, return capital

to shareholders, issue new shares or sell assets to reduce debt. The Group strives to pay stable

dividends linked to the long-term performance with the aim of distributing 50% of Earnings per

share (EPS) excluding fair valuations over the cycle.

The Group monitors its capital on the basis of a target net debt-to-equity ratio of 0.60 or less,

and aiming that the Net-debt-to-Operational EBITDA ratio remains below 2.0, indicating a solid

financial position and financial flexibility.

Capital structure


	As at 31 December
EUR million	2023	2022
Interest-bearing liabilities1	5,780	3,976
Interest-bearing assets1	2,613	2,122
Net debt	3,167	1,853
Equity attributable to owners of the parent	10,985	12,532
Operational EBITDA2	989	2,529
Net debt to equity ratio	0.29	0.15
Net debt to operational EBITDA	3.2	0.7
1 Interest-bearing liabilities and assets in the table include the respective amounts classified as held for sale. More detailed reconciliation of net debt is included in the "Alternative performance measures" chapter in the Report of the Board of Directors. 2 Operational EBITDA definition is included in the "Alternative performance measures" chapter in the Report of the Board of Directors.

Montes del Plata, a joint operation of Stora Enso, and the Group's subsidiary Stora Enso

(Guangxi) Packaging and Forestry Company Ltd have complied with financial covenants related

to debt-to-assets ratio during the reported periods. There are no other covenants in the Group's

financing contracts.

5.2 Fair values

Accounting principles

Financial assets

The Group classifies its financial assets into three categories, which are amortised cost, fair value through

other comprehensive income and fair value through profit and loss. The classification is made according to

the IFRS 9 standard and management determines the classification of investments at the time of initial

recognition.

With investments in debt instruments, the classification is made based on the business model and

contractual cash flow characteristics of debt instruments. Investments in debt instruments, for which the

business model objective is to hold the financial instruments to collect contractual cash flows and those cash

flows are solely payments of principal and interest, are classified as amortised cost and presented under

current or non-current assets in the consolidated statement of financial position. Investments in debt

instruments, for which the business model objective is to hold the financial instruments for both to collect

contractual cash flows and sell financial instruments and the cash flows are solely payments of principal and

interest, are classified as fair value through other comprehensive income and presented under current or

non-current assets in the consolidated statement of financial position.

The Group's investments into equity instruments, such as listed and unlisted securities, are classified as

fair value through profit and loss unless the Group has at inception decided to apply the irrevocable election

under IFRS 9 to classify the investments as fair value through other comprehensive income with only

dividend income from the investments being recognised in the income statement.

Investments that are not measured at amortised cost or at fair value through other comprehensive income

are classified as fair value through profit and loss and are therefore fair valued through the consolidated

income statement and presented under current or non-current assets in the consolidated statement of

financial position.

Financial liabilities

The Group's financial liabilities are classified into amortised cost or fair value through profit and loss

categories. Financial liabilities are measured at amortised cost unless the Group has decided to apply a fair

value option to designate a financial liability to be measured at fair value through profit and loss.

Derivatives

Derivative financial assets and liabilities are measured at fair value and classified as fair value through profit

and loss or, if the Group has applied hedge accounting, at fair value through other comprehensive income

according to the IFRS 9 standard. Derivative financial instruments and hedge accounting are discussed in

more detail in note 5.4 Derivatives.

Fair value of financial instruments

The fair values of publicly traded derivatives and listed securities, are based on quoted market prices at the

reporting date; the fair values of interest rate swaps are calculated as the present value of the estimated

future cash flows, and the fair values of foreign exchange forward contracts are determined using forward

exchange rates at the reporting date. The valuation principles for derivative financial instruments have been

described in more detail in note 5.4 Derivatives.

In assessing the fair values of non-traded derivatives and other financial instruments, the Group uses a

variety of methods and makes assumptions based on the market conditions at each reporting date. Quoted

market prices or dealer quotes for identical or similar instruments are used for non-current debt. Other

techniques, such as option pricing models and estimated discounted value of future cash flows, are used to

determine fair values for the remaining financial instruments. The face values, less any estimated credit

adjustments, for financial assets and liabilities with a maturity of less than one year are assumed to

approximate their fair values. The fair values of financial liabilities for disclosure purposes are estimated by

discounting the future contractual cash flows at the current market interest rates available to the Group for

similar financial instruments.

Purchases and sales of financial instruments are recognised based on trade date accounting, which is the

date on which the Group commits to purchasing or selling the financial instrument. Financial instruments are

derecognised when the rights to receive or the cash flows from the financial instruments have expired or have

been transferred and the Group has substantially transferred all risks, rewards and obligations of the

ownership of the financial asset or liability.

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments

by valuation technique:

• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

• Level 2: other techniques, for which all inputs which have a significant effect on the recorded fair value are

observable, either directly or indirectly;

• Level 3: techniques which use inputs which have a significant effect on the recorded fair values that are

not based on observable market data.

The Group evaluates the categorisation of its fair value measurements within the fair value hierarchy on a

regular basis at the end of the reporting period. There were no transfers recognised in the fair value hierarchy

between Levels 1 and 2 and no transfers into or out of Level 3 fair value measurements during 2023 and

2022. See note 4.4 Equity instruments for more information on Level 3 fair value measurement of listed and

unlisted securities.

Carrying amounts of financial assets and liabilities by measurement and fair value categories: 2023


						Fair value hierarchy
EUR million	Amortised cost	Fair value through OCI	Fair value through income statement	Total carrying amount	Fair value	Level 1	Level 2	Level 3	Note
Financial assets
Listed securities	—	9	—	9	9	9	—	—	4.4
Unlisted securities	—	794	15	810	810	—	—	810	4.4
Non-current interest-bearing receivables	62	14	—	76	76	—	15	—	5.3
Derivative assets	—	14	—	15	15	—	15	—
Loan receivables	62	—	—	62	62	—	—	—
Trade and other operative receivables	835	30	—	865	865	—	30	—	4.7
Current interest-bearing receivables	21	39	4	64	64	—	43	—	5.3
Derivative assets	—	39	4	43	43	—	43	—
Other short-term receivables	21	—	—	21	21	—	—	—
Cash and cash equivalents	2,464	—	—	2,464	2,464	—	—	—
Total	3,382	887	19	4,288	4,288	9	87	810


						Fair value hierarchy
EUR million	Amortised cost	Fair value through OCI	Fair value through income statement	Total carrying amount	Fair value	Level 1	Level 2	Level 3	Note
Financial liabilities
Non-current interest-bearing liabilities	4,445	1	—	4,446	5,071	—	1	—	5.3
Derivative liabilities	—	1	—	1	1	—	1	—
Non-current debt	4,445	—	—	4,445	5,069	—	—	—
Current portion of non-current debt	286	—	—	286	286	—	—	—	5.3
Current interest-bearing liabilities	469	4	2	476	476	—	6	—	5.3
Derivative liabilities	—	4	2	6	6	—	6	—
Current debt	469	—	—	469	469	—	—	—
Trade and other operative payables	1,806	—	—	1,806	1,806	—	—	—	4.8
Bank overdrafts	—	—	—	—	—	—	—	—
Total	7,006	6	2	7,014	7,639	—	8	—
In accordance with IFRS, derivatives are classified as fair value through income statement. In the above tables for financial assets and liabilities the cash flow hedge accounted derivatives are however presented as fair value through OCI, in line with how they are booked for the effective portion.

Carrying amounts of financial assets and liabilities by measurement and fair value categories: 2022


						Fair value hierarchy
EUR million	Amortised cost	Fair value through OCI	Fair value through income statement	Total carrying amount	Fair value	Level 1	Level 2	Level 3	Note
Financial assets
Listed securities	—	8	—	8	8	8	—	—	4.4
Unlisted securities	—	1,423	14	1,437	1,437	—	—	1,437	4.4
Non-current interest-bearing receivables	92	28	—	120	120	—	28	—	5.3
Derivative assets	—	28	—	28	28	—	28	—
Loan receivables	92	—	—	92	92	—	—	—
Trade and other operative receivables	1,138	66	—	1,204	1,204	—	66	—	4.7
Current interest-bearing receivables	10	50	16	77	77	—	67	—	5.3
Derivative assets	—	50	16	67	67	—	67	—
Other short-term receivables	10	—	—	10	10	—	—	—
Cash and cash equivalents	1,917	—	—	1,917	1,917	—	—	—
Total	3,157	1,576	30	4,763	4,763	8	161	1,437


						Fair value hierarchy
EUR million	Amortised cost	Fair value through OCI	Fair value through income statement	Total carrying amount	Fair value	Level 1	Level 2	Level 3	Note
Financial liabilities
Non-current interest-bearing liabilities	2,792	—	—	2,792	2,749	—	—	—	5.3
Derivative liabilities	—	—	—	0	0	—	—	—
Non-current debt	2,792	—	—	2,792	2,748	—	—	—
Current portion of non-current debt	667	—	—	667	667	—	—	—	5.3
Current interest-bearing liabilities	462	30	20	513	513	—	50	—	5.3
Derivative liabilities	—	30	20	50	50	—	50	—
Current debt	462	—	—	462	462	—	—	—
Trade and other operative payables	2,076	—	—	2,076	2,076	—	—	—	4.8
Bank overdrafts	—	—	—	0	0	—	—	—
Total	5,998	30	20	6,048	6,005	—	51	—
In accordance with IFRS, derivatives are classified as fair value through income statement. In the above tables for financial assets and liabilities the cash flow hedge accounted derivatives are however presented as fair value through OCI, in line with how they are booked for the effective portion.

In the previous tables, the fair value is estimated to be equal to the carrying amount for current

financial assets and financial liabilities, such as trade receivables and payables due to their short

time to maturity and limited credit risk. The fair value of non-current loan receivables, considered

as a level 2 fair value measurement, is based on the discounted cash flow analysis. The fair

value of non-derivative interest-bearing liabilities, considered as a level 2 fair value

measurement, is estimated based on a discounted cash flow analysis in which the yield curves

observable at commonly quoted intervals are used as a discount factor in the model.

Reconciliation of level 3 fair value measurement of financial assets and liabilities


EUR million	2023	2022
Financial assets
Opening balance at 1 January	1,437	905
Reclassifications	0	-1
Gains/losses recognised in other comprehensive income	-646	523
Additions	18	10
Closing balance at 31 December	810	1,437

The Group did not have level 3 financial liabilities as at 31 December 2023.

5.3 Interest-bearing assets and liabilities

Accounting principles

Interest-bearing assets - loan receivables

Loan receivables are debt instruments with fixed or determinable payments that are not quoted on an active

market. They are recorded initially at fair value and subsequently measured at an amortised cost. Loss

allowance for expected credit losses is calculated based on the general approach under IFRS 9, where loss

allowance is recognised based on 12-month expected credit losses if there has not been a significant

increase in credit risk since the initial recognition. A significant increase in the credit risk will be evaluated

based on a comparison of the risk of a default occurring on the financial instrument as at the reporting date

with the risk of default occurring on the financial instrument as at the date of initial recognition. The Group

may use, for example, rates of credit default swaps (CDS) observable on financial markets to produce the

risk assessment.

Interest income on loan receivables is included in financial income and expense. Loan receivables with a

maturity less than 12 months are included in current assets under interest-bearing receivables, and those

with maturities greater than 12 months, in non-current interest-bearing receivables.

Interest-bearing liabilities

Interest-bearing liabilities are recognised initially at fair value, net of transaction costs incurred. In subsequent

periods, interest-bearing liabilities are measured at amortised cost using the effective interest method. Any

difference between the proceeds net of transaction costs and redemption value is recognised in the

consolidated income statement over the maturity period of the borrowings. Interest expenses are accrued for

and recorded in the consolidated Income statement for each period.

Interest-bearing liabilities with an original maturity greater than 12 months are classified as non-current

interest-bearing liabilities in the consolidated statement of financial position, though repayments falling due

within 12 months are presented in current liabilities under the current portion of non-current debt. Short-term

commercial paper, bank and other interest-bearing liabilities, for which the original maturity is less than 12

months, are presented in current liabilities under interest-bearing liabilities.

Lease liabilities

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or

contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time

in exchange for consideration. Lease liabilities are initially capitalised at the commencement of the lease and

measured at the present value of the lease payments that are not paid at the commencement date,

discounted using the Group’s incremental borrowing rate. The lease term applied corresponds to the non-

cancellable period except in cases where the Group is reasonably certain to exercise renewal option or

prolong the contract. The Group allocates the consideration in the contract to each lease component and

separates non-lease components if these are identifiable. Lease terms are negotiated on an individual basis

and contain a wide range of different terms and conditions.

The lease liabilities are subsequently measured at amortised cost using the effective interest method.

Lease payment is allocated between the capital liability and finance charges to achieve a constant interest

rate on the outstanding liability balance. Lease liabilities are remeasured mainly when there is a change in

future lease payments arising from a change in an index or rate, or if there is a change in the Group’s

assessment whether it will exercise an extension option. When lease liability is remeasured, a corresponding

adjustment is generally made to the carrying amount of the right-of-use asset.

The Group has elected not to recognise lease liabilities for short-term leases that have a lease term of 12

months or less and leases of low value assets. Leases of low value assets mainly include IT and office

equipment, certain vehicles and machinery and other low value items. The Group recognises the lease

payments associated with these leases as an expense on a straight-line basis over the lease term.

Managing Interest Rate Benchmark Reform and associated risks

The Group monitors the process of the transition from IBORs to new benchmark rates by

reviewing the total amounts of contracts that have yet to transition to an alternative benchmark

rate. The impact of any ongoing changes is expected to be limited. The Group's financial

instruments are mainly indexed to Euribor and Stibor reference rates which are expected to

continue to exist for now.

At the end of 2022 the Group had EUR 211 million of outstanding interest-bearing liabilities

that were indexed to US dollar LIBOR of which publication ceased after June 2023. During the

year, these interest-bearing liabilities have been transitioned to follow new benchmark rates.

There has been no significant impact on the Group from the change.

Interest-bearing assets


EUR million	2023	2022
Listed securities	9	8
Long-term derivative assets	15	28
Long-term deposits	48	48
Long-term loans to associated companies	2	2
Other long-term loan receivables	12	41
Total non-current interest-bearing assets	85	128
Short-term derivative assets	42	66
Other short-term loan receivables	22	11
Cash and cash equivalents	2,464	1,917
Total current interest-bearing assets	2,528	1,994
Total interest-bearing assets	2,613	2,122

The annual average interest income rate for deposits and loan receivables during the year was

approximately 3.0% (1.0%). Current interest-bearing receivables included EUR 8 (EUR 10)

million accrued interest at 31 December 2023. The Group has evaluated that there has not

been a significant increase in credit risk related to interest-bearing deposits and investments

after the initial recognition. Accordingly, the loss allowance is recognised based on 12-month

expected credit losses.

Of the other long-term loan receivables EUR 10 (41) million and of the other short-term loan

receivables EUR 14 (0) million represent receivables originating from the sale of the Russia

operations in 2022. These receivables were recognised at inception at their fair value (EUR 58

million) using a discount rate of 27.1% and are carried in the statement of financial position at

amortised cost. In 2023, an impairment of EUR 11 million was recognised on the receivables.

The fair valuation of these receivables and evaluation of their credit risk and collectability

involves a significant degree of judgement.

Interest-bearing liabilities


EUR million	2023	2022
Bond loans	3,601	2,460
Loans from credit institutions	794	623
Lease liabilities	334	375
Long-term derivative financial liabilities	1	0
Other non-current liabilities	2	2
Non-current interest-bearing liabilities including current portion	4,733	3,459
Short-term borrowings	418	429
Interest payable	52	35
Short-term derivative financial liabilities	6	49
Total Interest-bearing Liabilities	5,209	3,972

EUR million	2023	2022
Carrying value at 1 January	3,972	3,938
Additions in long-term debt, companies acquired	131	0
Proceeds of new long-term debt	2,006	366
Repayment of long-term debt	-619	-351
Additions in lease liabilities, companies acquired	99	0
Additions in lease liabilities	109	45
Repayment of lease liabilities and interest	-87	-73
Change in short-term borrowings	177	75
Change in interest payable	40	19
Change in derivative financial liabilities	-41	-19
Disposals and classification as held for sale	-575	-5
Other	26	8
Translation differences	-29	-32
Total Interest-bearing Liabilities	5,209	3,972

Events during 2023 and 2022

Stora Enso published a new framework for green and sustainability-linked financing in May

2023. The combined Green and Sustainability-Linked Financing Framework allows Stora Enso

to issue both green and sustainability-linked financing instruments, as well as a combination of

the two.

In May 2023, Stora Enso issued two EUR 500 million green bonds with 3- and 6.25-year

maturities. In November 2023, Stora Enso issued new SEK green bonds with nominal value of

SEK 6,100 million, equal to EUR proceeds of 524 million at the transaction date FX rate. The

SEK green bonds feature several tranches, with the maturities ranging from 2025 to 2028. Later