Hello, and welcome to Stora Ensar's Second Quarter twenty twenty five Results Presentation. My name is Jutta Mikkola. I'm the Head of Investor Relations. I'm joined by Hans Zulstrom, President and CEO of Stora Ensock and CFO, Niklas Brusenleb. The title of today's presentation is Solid Business Performance in a Volatile Demand Environment.
The agenda will begin with key highlights and strategic focus areas presented by Hans. Then, Niklas will review the company's financial performance, and then Hans will conclude with a summary of key takes and focus for 2025. Thank you for joining us today, and I will now hand over to Hans Ulstrom.
Thank you, Jotka. During the second quarter of twenty twenty five, we continued to make good progress in building a stronger and more competitive Stora Enso. While market conditions remain challenging, we focused on the areas within our control, driving efficiencies, insourcing operations, commercial excellence, working capital and fixed costs. In addition, during the second quarter, we took significant steps to strengthen our strategic focus on renewable packaging. To begin with, it's notable that all operational segments achieved positive adjusted EBIT for our second consecutive quarter despite continued weakness in board and pulp markets.
Consumer demand remained at relatively low levels and was impacted by geopolitical uncertainty. Sales at €2,400,000,000 grew 5% year on year supported by high demand for wood products and packaging solutions. Adjusted EBIT was €126,000,000 as the old ramp up had an approximately €50,000,000 negative impact on the second quarter adjusted EBIT. Our continuous dedication efforts to improve cash flow resulted in operating working capital to sales of 7%, a decrease of two percentage points year on year. During the quarter, we reached a major milestone with agreement to divest approximately 175,000 hectares of forest land, equivalent to 12.4% of our total forest land holdings in Sweden for an enterprise value of about €900,000,000.
The value is in line with our Swedish forest book value. This transaction reduces our debt and enhances our financial flexibility, as well as confirms the true market value including a long term wood supply agreement. Stora Enso will retain a 15% ownership and will enter into a fifteen year wood supply agreement with a possible additional fifteen years extension. Following this, we initiated a strategic review of our remaining 1,200,000 hectares of Swedish forest assets, reinforcing our commitment to attractive portfolio managing and shareholder value creation. As part of this review, Storanza will explore various options, including a potential separation and listing of the forest business through a demerger into a new company that would be wholly owned by all Stora Enso shareholders.
Over the past months, Stora Enso has taken decisive steps to sharpen our strategic and operational focus. These actions are not isolated. They are part of a broader transformation focusing on profit performance and portfolio with people in the center and to become a more focused renewable packaging company. These initiatives are guided by three objectives. Firstly, we are increasing strategic business and operational focus and simplifying the corporate structure.
Secondly, we are realizing synergies and improving cost competitiveness. And thirdly, we are deleveraging and unlocking asset values. These recent initiatives, the sale of 12% Swedish forest and the strategic review of the remaining Swedish forest assets, the Oulu consumer board ramp up, the acquisition of Jung Nicola, and the new leaner organizational structure mark a significant phase in Stora Enso's transformation. This puts Stora Enso in a good position to deliver sustainable value creation both operationally and financially. We are building a more agile, focused and resilient company to maximize value and deliver long term returns for our shareholders.
Let's then look more closely on the strategic rationale behind the recently initiated strategic review of the Swedish forest assets. In June, we announced that we initiate a strategic review of our Swedish forest assets. With the review, we aim to enhance business focus and unlock the full potential of both our forests and industrial assets. Initiating this strategic review highlights our commitment to maximize shareholder value. If we then have a look at the two different parts of the business, Storenso, the industrial part, is a global leading renewable packaging company with sustainability at the heart of what we do.
We have leading market positions with a customer centric offering and one of the market's broadest offerings within packaging. We have strong culture of innovation and sustainability underpinning the business. The business has a leading asset base with cost competitive integrated sites and diversified material supply including pulp. With several ongoing initiatives, are continuing to strengthen the company. If we look at the Swedish forests, we are a leading Swedish forest owner with optimally located assets in Central Sweden with proximity to strong sources of demand such as pulp and sawmills.
There are strong tailwinds when it comes to renewable materials and the forest is the raw material and this will drive market growth in both short and long term. We are a leader in biodiversity where we have a long history and culture. We have strong assets and an adaptive forest management. The Swedish forest is a source of consistent and strong cash flows and growth. We also see new emerging business opportunities within renewable energy, carbon credits and beyond.
The rationale of the strategic review is to look at the two parts of the business and to conclude whether it is better to have them as separate businesses or continue as is. As said, this is the start of a strategic review and we have not concluded anything yet, but we have a clear hypothesis of what creates the best business and shareholder value and we will come back with the conclusions of this review at the end of the year. As said, we are in our strategy emphasizing growth within renewable packaging. Nearly 80% of investments over the past decade have been allocated to this area. The following outlines approach and focus on enhancing synergies to support the profitability and growth of renewable packaging.
Let's start with our consumer board, the core of Stora Enso. This business includes liquid packaging board, bleached and unbleached folding box board and barrier coated board for food and beverage applications. We serve global consumer facing brands, which demand the highest standards in quality and sustainability. Storenz owns the three largest integrated consumer board mills in Europe, including the most cost competitive Oulu site ramping up. These sites combine large scale board production with integrated pulp manufacturing with efficient wood supply.
This is a critical competitive advantage and highly valued by our global customers who rely on consistent quality across multiple sites. Regarding the Oulu ramp up, customer feedback on product quality has been very encouraging. While the ramp up will continue to wait on earnings in the short term, we remain confident the Oulu board line will be very cost competitive and deliver some of the best quality products in the industry. This investment is central to our strategy of growth in renewable packaging. Then if we look at our containerboard production, we produce fresh fiber based liner in Finland and recycled fiber based test liner in Poland.
Our Langebrugge Mill in Belgium currently produces newsprint and magazine paper. We have publicly stated our intention to convert it to test liner when market conditions and financials allow. Our largest liner customer is ourselves, enabling significant synergies between liner production and box conversion. We have conversion capacity across Poland, Sweden, Finland, and The Baltics. In 2022, we acquired the Young Packaging Group in The Netherlands, now the largest and most modern conversion facility in Europe.
Conversion is a local business. Empty boxes are not economical to transport long distances. Our strategy is not to be the largest converter, but to maximize synergies especially between recycled fiber liner production and conversion. We have 2,500,000 tons of market pulp capacity split evenly between eucalyptus pulp from Latin America and Nordic production. A significant portion is virtually integrated with our board mills with flows from The Nordics and Latin America to both Europe and China.
We are increasing focus on this integration. Internal access to eucalyptus pulp reduces exposure to volatile markets and improve margins. No other European or North American packaging material producer has internal cost efficient eucalyptus pulp access at this scale, giving us greater flexibility and optionality. Coming back to wood supply, it's good to note that we have many sawmills including the recent acquisition of Jornikola in Finland around our production sites. Our sawmills produce on top of sawn products wood chips and sawdust which are cost efficient raw materials for our pulp and board mills.
This is the strategic rationale behind the Unicola acquisition. You'll notice many new orange dots around Oulu on the map. To sum things up, establishing a strong position in renewable packaging, leveraging recent investments and strengthening the focus on integration efficiency and cost competitiveness. Now I will hand over to Niklas to go through our financial performance during the second quarter.
Thank you, Hans and hello everyone. Now let's look at our second quarter financial results, which marked a solid performance given the volatile demand environment and ramping up of our new Oulu line. In the second quarter, our sales increased by 5% bringing the total to €2,400,000,000. This growth was mainly driven by stable prices and improved deliveries. Structural changes had a smaller positive impact as both the Unicol acquisition and the Oulu Consumer Board line ramp up increased the top line.
Our adjusted EBIT decreased to €126,000,000 mainly due to ongoing Oulu Consumer Board line ramp up impacting second quarter results negatively by approximately €50,000,000 Furthermore, as Hans mentioned, all segments achieved positive adjusted EBIT for the second time since the third quarter of twenty twenty two. Now let's take a closer look at the EBIT bridge. Here as you can see the main impact in the second quarter is the all ramp up weighing on earnings. Adjusted EBIT was 126,000,000, a decrease of €27,000,000 compared to last year. Price and mix had a negative impact of 6,000,000, mainly driven by biomaterials with pulp prices coming down.
This was more than offset by the positive 12,000,000 impact from higher volumes. Variable costs were flat as higher wood and paper for recycling costs were offset by lower energy, logistics, and chemicals costs. Fixed costs decreased slightly. FX had a positive €6,000,000 impact. So in summary, solid performance with the main impact coming from the all ramp up.
If we then turn the focus to cash flow, the cash flow from operations was positive 145,000,000 and after investing activities negative 37. This was as expected driven by the final investments at the Olo site. When looking at EBITDA, you can see that it has been gradually improving since 2023. Even though market conditions have been and still are challenging, we have focused on the areas within our control being enhancing sourcing, operational efficiency, commercial excellence, working capital and reducing fixed costs. During the previous year, cash flow from operations has benefited from the significant operating working capital reduction actions that were in focus throughout 2024.
This focus on reducing operating working capital continues, but naturally the amount of decrease isn't as large as we saw in 2024. On the other hand, when it comes to CapEx investments, the heavy investment phase related to Oulu is now coming to an end and we expect CapEx to come down from the high levels of '24 and '23. If we then turn to net debt, the ratio of net debt to the last twelve months adjusted EBITDA improved to 3.3 times from 3.5 in the same period last year. Net debt increased slightly to 4,000,000,000 as we are finalizing the old project. As the intensive strategic CapEx phase of the last two years nears finalization and profitability gradually improves, net debt levels and the ratio are expected to improve.
In addition, when completing the divestment of the 12% of Swedish forest asset, which as Hans mentioned has an enterprise value of approximately 900,000,000 being in line with the Swedish forest book value, our net debt will go down further, which improves our financial flexibility. Operating working capital to sales was 6.9%, which is an improvement of 1.8 percentage points year on year. The operating working capital reduction is stabilizing and we intend to keep it at this level and further decrease when possible. So with that, let's move on to the segment performance. Starting with Packaging Materials, sales increased slightly driven by higher prices for containerboard and a slight increase for consumer board.
Packaging Materials profitability declined primarily due to the ramp up of Oulu. Adjusted EBIT was 29,000,000 with Oulu accounting for a negative impact of 50,000,000 on adjusted EBIT. Deliveries excluding the new machine in Oulu decreased slightly driven by weak market conditions in China. Fiber costs remained persistently at the high level offset by lower other variable costs. Packaging Solutions had a positive result for the second quarter in a row.
Adjusted EBIT increased by €4,000,000 driven by actions taken to improve the business as well as higher prices and reduced depreciation following the previously announced impairments. In general, markets continued to be challenging with both overcapacity and oversupply. Moving from packaging to biomaterials. Biomaterials is navigating in challenging market conditions with the weaker pulp demand, a weaker dollar and lower prices. Sales decreased due to lower sales prices and a negative currency rate impact partly offset by higher volumes.
Adjusted EBIT decreased mainly due to lower sales prices. This was partly offset by lower costs as we continue to work on making the operations more efficient. Wood costs remained high. On the other hand, Wood Products had a positive adjusted EBIT for the second quarter in a row. This was driven by higher prices and volumes partly offset by increased raw material and fixed costs.
Forest had another record high quarterly adjusted EBIT reflecting strong operational performance and high prices. The Forest assets fair value is €9,000,000,000 equivalent to 11.4 per share. With that, I hand back to you Hans for the key takeaways and our focus areas for 2025.
Well, thank you, Nicolas. We are confidently navigating through volatile markets, building a stronger, better, more resilient and more profitable store and so by focusing on what we can control. We continue to work across the whole company to improve profitability, cash flow and cost competitiveness through a focus on sourcing, operational efficiency, commercial excellence, working capital and fixed costs. We are focusing on completing the sale of 12.4% of Swedish forest assets while also conducting a strategic review of the remaining Swedish forest assets, including the assessment of a potential separation and public listing of the forest assets through a demerger. We focus on the ramp up of production in the new packaging board line at the integrated mill in Oulu to strengthen Stora Enso's competitive position.
I am proud of the resilience and dedication shown by our teams across the company. We are navigating through a volatile world with determination and discipline, and we remain firmly on track to deliver long term sustainable value. Thank you for your continued support. With that said, we are now ready to take your questions.
If you would like to ask a question, please use the raise hand function at the bottom of your Zoom screen. When it is your turn, you will receive a prompt to be promoted as a panelist. Please accept, wait a moment, and once you've been introduced, you may unmute yourself, turn your video on, and ask your question. Please only ask Max two questions at a time. Our first question comes from Robin Santaverta at D and B Carnegie.
Please, you may unmute your audio, turn your video on, and ask your question.
Yes. Hello, gentlemen, and thank you for, the presentation. I had couple of questions. First of all, related to the packaging materials segment, when I look at Q2 earnings, the adjusted EBITDA of 29,000,000. And then if I add the 50,000,000 sort of negative from, the old start up, you know, the adjusted EBIT would anyway, the underlying adjusted EBIT would be some €80,000,000.
Actually, the best, you know, performance, since, q three twenty twenty two. What is driving? We know market environment is quite difficult. We can see Metzabor. We can see Belarus performing quite weakly in comparison to couple of of past years.
And and now in a way, underlying paperboard business is is clearly, better than you have reported in a couple of years. So what are the key sort of elements driving that performance compared to Pearson? And, yeah, that
Yeah. Thank you, Robby, for the question. So, well, first of all, as we said in the presentation, we have cost efficient integrated board mills with big scale board production and then also integrated pulp production on-site as well as then sawmills on-site or close by to support the cost efficiency and wood supply. And so it's really about cost efficiency and then also high quality products and long very good customer relationships. I can I can say openly that I have never seen any company with this good continuously good customer satisfaction feedback come in?
And I met now with about 50 of the largest customers, CEOs, and this customer satisfaction is is strongly confirmed by also the top management of our customers. So so doing the basics right and good in a cost efficient way, that's, I think, the reason.
Would you say that the operational efficiency or the sourcing efficiency is now clearly better compared to two, three years ago. Is that one element? And if so, is sort of the work done on on on that part, or are there still sort of things to to to come to drive up the underlying, performance?
Yeah. To answer your first question, yes, we are much more efficient internally than we were three years ago, absolutely. We have made clear progress there, but there is much more to come. This is not a project. This is this is our new way of working, you know, continuous improvement, and and it's really boiled down to our performance culture that we are we have strongly been developing and introducing into the company.
We have thousands of initiatives identified to further improve our efficiency, and we have hundreds of initiative owners working on this initiative across the board. I'm truly proud of all the Stora Enso employees, how we have improvement actions ongoing in all mills, in all units, all sites. And that's the way how you can truly make a shift in competitiveness and performance.
Thanks. And the other question I have is related to Oulu. Do you have the deliveries in Q2? What do you expect for the remainder of the year in terms of deliveries? And what segments are you producing and selling at the moment?
Well, we provide more precise guidance. We have in our report repeated the roughly 100 or slightly above total negative EBIT impact from the ramp up. And we have guided before that we expect EBITDA breakeven in the fourth quarter, so we stick to that guidance. And I said also in the report, feedback on quality, both folded boxboard, CKB has been really encouraging and good from our customers. So we are aiming for the best product quality in the market.
Thank you.
Our next question comes from Efrem Ravy at Citi.
Two quick questions. Firstly, on the forest options that you are exploring. Does the Swedish forest, include the stake in Tornator? And also, what is the thinking on either leaving out or putting in, the Baltic Forest also into that that that entity, in terms of, you know, this way you are thinking about it strategically? And secondly, on Oulu, it is, I mean, the the previous guidance, I think, was for 800,000,000 of revenues from that mill, over the medium term.
Given the current market conditions, what kind of profitability would you expecting it from that business over the medium term? Just for us to get a sense of the return on invested capital that could be expected from that investment. Thank you.
Yeah. Thank you for the question. So the the Swedish forest does not include, you know, Tornator, where we have a 41% stake in the in the Finnish Tornator forest company and nor Baltic forest assets. So it's purely Swedish forest what remains 1,200,000 hectare after the divestment of the 12.4% of our assets in forest assets in Sweden. The book value of this remaining part is roughly €6,000,000,000.
And when it comes to the Oulu ramp up, we have guided before that when fully ramped up in 2027, we're going to it go it is going to add about €800,000,000 sales to the group, and and that's what we that's what we stick to when it comes to profitability. We don't have any more exact guidance on that. So
And just kind of if I can push you on the first point, any rationale why Baltic Forest are not part of that entity? If if it was if it was released the book value of that of that assets to the market, I mean, that would be a logical conclusion.
Yeah. We we we want to keep this as a very clear, pure, you know, Swedish forest company, 1,200,000 hectares. It's a it's a huge forest company. And as said, you know, rough book value about €6,000,000,000. So it's a it's a very, you know, concentrated focused in the in the Mid Of Sweden entity and and therefore also very, very manageable and and clear also for investors from an equity equity and investment perspective.
Our next question comes from Charlie Moritz Sands of BNP Paribas.
I think the first one you'd actually already answered, which is to reconfirm the EBITDA breakeven target for Q4. I had a couple of others. So firstly, you cite continued high input costs and and mentioned higher wood costs offsetting some falls elsewhere in q two. I think some other people have started to talk about seeing on a look forward basis, perhaps signs of pulpwood at least, if not sawlogs perhaps falling in price as we go into the second half. I just wondered if you're seeing any similar signs on that yourself, which could clearly help your industrial business, but perhaps also though offset on the forest side? Thank you.
Yes. Thank you, Charlie. Yes, we see some signs. We see some early signs, but we think it's too early to draw any conclusions here.
So any quantification at all as to what what you might be seeing so far?
Well, I mean, we when when it comes to wood costs and wood prices, we we have we have seen some decline in in The Nordics, in all the Nordic countries, in the areas where we buy wood. But as I said before, I mean, we we want to have a more fundamental change and to really be able to talk about the trend change. So it remains to be seen.
Understood. And then just one slightly technical question. Your depreciation guidance for the year is still $610,000,000 to $660,000,000 You only booked $118,000,000 in Q1 and 123,000,000 Q2, that kind of suggests a big step up into the second half, unless I'm missing a different moving part. I just wondered if that's the case, if there should be a big step in depreciation as we move into the third and fourth quarters. Thank you.
Let's that's a good point. And I mean, the let us come back to that offline. I don't have a, honestly, a good answer to that.
Thank you.
Thanks.
Our next question comes from Lars Kjellberg at Stifel. Please unmute your audio, turn your video on, and ask your question.
Thank you for taking my question. So I just want to come back a bit to what you spoke to, Hans, about accelerating synergies. As much as underlying earnings are starting to improve, your earnings still remain very low appreciating with a challenged cyclical market, but at the same time, there seem to be a need for structural change. You call out yourself, exit the supply. I keep harping on about the need for you to do something on your more structural, but obviously in the light of today's presentation, you talk about synergies.
So if you can sort of help us think a bit about what sort of opportunity you are seeing for that in synergies to generate that further integration and what hasn't already been done because you've owned these assets for quite some time. So that's that's my first question.
Yeah. Thank you, Lars. Well, you know, first of all, all our businesses made a positive result for the second consecutive quarter. And even if, you know, on a low level, so of course, our profitability targets are are much, much higher, but it shows that, you know, the work, the hard work we have been doing on improve improving our cost efficiency, reducing costs, and improving productivity pays off. And when it comes to the internal synergies, so we launched a new organization where one element is that we are organizing the the the we are organizing operational activities around integrates.
So, basically, the sawmills close to Oulu, which is the Weitzelotto sawmill, the three Jonnikala sawmills, they are part of the Oulu business unit. So the integrate forms a business unit. So we optimize the totality there. And the same thing we have done in our other mills so that we integrate the nearby sawmills and wood products units with the local board and and pulp manufacturing and forming them into p and l responsible business units. So so these business unit leaders, they are then in charge of maximizing the EBIT for those integrates taking into account, you know, wood supply, wood products, so saw milling, pulp production, board production, so the whole totality.
And here, we see that there is potential to to find further synergies. Then as a part of the organizational change, we we basically took out one management layer completely. So previously, between me as the CEO and the and the mills and the heads of sales, there were two management layers. Now there is one, the business area leaders. Then we have also moved functional staff on a group level in order to be able to streamline and and to do more with with less also in this in this area.
And this is a process ongoing. So so there is there is more to do here also when it comes to addressing synergies and addressing fixed costs in our company.
I'll push you a bit on that. Can you share with us what sort of margin opportunity or absolute number you're seeing? And and just one more question. In terms of a potential spin off of the forest assets, would that require bondholder consent?
Well, on the on the first question, we we don't disclose any any targeted numbers here, but I can assure you assure you, Lars, that, you know, we are doing our utmost to continue to to streamline the company, to improve our cost position, to reduce both variable and fixed costs. So so we don't give a a guidance number on that. And perhaps, would you like Nicolas to comment on that?
Yeah. Yeah. On the on the kind of strategic review, Lars, no no further comment on on that. I mean, we are in the midst, as as you know, of the strategic review, so we'll come back by the end of the year with with conclusions, including bond topics, but don't wanna don't wanna comment on it as we are
I appreciate that, but this is a factual comment. Suppose bond order consent needed or not needed for a a, you know, hypothetical.
Again, we we are in the midst of the review, so let's let's go through that first. And when we concluded the review, we then come back.
Alright. Thank you.
Our next question comes from Cole Hathorn at Jefferies.
I'd like to start with the demand trends. We've seen a lot of commentary around kind of order books weakening and it being a bit softer in June. And I'd like a little bit of color what you're seeing from your customers and order books, particularly in packaging materials. And if you could differentiate between the containerboard and consumer board side, any trends that you'd like to call out as well as comment on the weakness that you were calling out in Asia? Thank you.
Yes. Thank you, Cole. So first of all, containerboard market is quite stable and solid. You know that there has been several price increases implemented throughout the beginning of this year. Also, order books are are good in containerboard.
In consumer board, prices are stable on a somewhat higher level than than last year and also somewhat higher than end of last year. And I would say order books are satisfactory, but it is absolutely clear that if we look at our packaging business, the demand is driven by consumer spending. And we know that consumer confidence, consumer spending due to the macroeconomic environment, geopolitical uncertainties is on a relatively low level. So, therefore, we can't speak about a, you know, really strong demand environment. So that's how I would how I how I how I would put it.
But I I would say that it's a stable situation, but still on a relatively low level.
And then if I look at your EBIT bridge, your variable costs year on year, you talk about higher wood costs offset by some other lower variable costs and your profit improvement actions. But I'd like to push you a little bit more to try and quantify how material those profit improvement actions are and how visible they are to the numbers because we would have thought that the wood cost, just on a year on year basis, would still be a material drag. I mean is it relief from the other cost buckets that is helping you get basically stable year on year variable costs? Or is it really those profit improvement actions that are starting to come through? Because you've talked about it, but from the outside in, it's very difficult to put a number on those actions.
And are those actions the kind of the wood sourcing, what would you identify as those kind of profit improvement actions that's really offsetting those variable cost increases in wood?
Yeah. No. If I if I take that one, I mean, you you are right. I mean, if we dissect that variable cost flat kind of bucket, wood and paper for recycling is a significant or was a significant drag in q two, kind of similar to to to what we what we saw earlier. And then as an offsetting and and we talk about a relatively significant amount, tens of millions.
And then offsetting that, we had the others coming down. And, of course, there's there's certain kind of market movements. I mean, we talk about energy, chemicals, logistics, and and and so on. But as you rightly point out, there's there's a diligent day in, day out work related to I mean, we mentioned Hans has mentioned before about the the so called value capture program, and that continues very actively. So in each mill, in each site, we have a number of activities addressing, for instance, chemical usage, how we source it, and and so on.
So that's something that we is seen in in the costs as a positive, and and there's there's more to work on. We clearly have a a a good pipeline there also.
But And then
Yeah. I don't wanna give an exact number because, again, it's it's it's a it's a post of activities. Hans mentioned thousands of activities affecting that. And then, of course, we have the market movements up and down in those logistics, for instance.
And then maybe I'd follow-up on the new organizational structure, which has been from, let's say, the July 1. But how are the divisional management team incentivized protect pricing in kind of a softer demand environment? And how are they incentivized to manage capacity to demand? And maybe following up on Lars' point, does this new organizational structure allow faster decisions? If you do come to the conclusion that improving your mix and operating rates by trimming capacity to make way for Olu is the right decision, you know, will your divisional team be able to act faster? Thank you.
I I would say on the latter part of your question, I would say yes. I mean, that's one of the objectives with this structure, you know, a leaner, flatter organization, which is more agile. And the business area leaders and management teams are incentivized among others based on the EBIT generation. That's that's the part with the highest weight in their incentives. And let's remember that, you know, in this new organization, we have actually pushed down p and l responsibility even further into the organization.
So we have now 22 new p and l responsible business units, which are formed by the pulp board and sawmill integrates. So also the former mill directors are now p and l responsible business unit leaders in charge of that whole integrate. And also they are incentivized based on EBIT. So to maximize the EBIT of those integrate and thus contribute to maximizing the EBIT of the business area, that's the main driver. If we look into sales, we have introduced also there, you know, margin steered sales incentives.
So also our Salesforce incentivized based on margin maximization. And we all know that that maximizing the margins, it's a it's a function of price and volume. And the best way is really to have a total profitability margin steering of that so that that that's the way how we are driving also profitability and results in in our sales action. So optimizing price, volume, product, customer mix, there is a lot that we can capture in terms of value from these areas.
May maybe just to add what Hart was saying because this is this is quite a powerful change, actually. And, of course, we then also are making adjustments to the kind of management cadence, how we go through things monthly. We can clearly see from the group level down to these 22 BUs how things are are progressing and developing. We set clear targets also on the BU level and then also on the BA level and and and group level and so on. Naturally, as as there's as Hans was saying, 22 new P and L owners here, it will take a bit of time to to to see the results, but we are quite quite excited actually and and confident that this over time will will bring good things along.
Thank you.
Our next question comes from Linus Larsen at SEB. You may unmute your audio, turn your video on and ask your question.
Thanks a lot, and good morning, gents. It seems to me that you're increasingly focusing on your packaging businesses, and you also mentioned integration, the internal synergies and that the Europe map that you showed gave a very good overview, by the way. I just wonder how we should look at the the parts of the business which are not necessarily or directly supporting the packaging businesses. On that map of yours, for instance, there are a number of sawmills which aren't adjacent to any packaging materials, units, and and you also have a couple of, stand alone pulp mills, which aren't necessarily supporting the the packaging businesses. I I'm just trying to sense if if there there's any change in any way in your strategy when it comes to your nonpackaging related businesses.
Yes. Well, thank you, Linus, for the question. So yes, you are absolutely right. I mean, the strategic focus is very much on renewable packaging, representing today about 60% of our total sales. And if we look at the last ten years, about 80% of our investments have gone into this area.
So that's really the area where we have been investing for growth and will continue to invest for growth. We see that there is opportunities develop and to create even more value, especially in this area of renewable packaging. You're also right that there are, for instance, some sawmills in Central Europe that are not directly synergistic with the packaging material business that is also visible in our new organization as from the July 1. They have been organized into what we call business unit wood products south. So it's it's basically the sawmills in in Central Europe, which are which are not then a part of the pulp and board mill integrates.
And so so all in all, as we mentioned in our presentation, you know, we will continue focusing on on profit performance and portfolio, streamlining the you know, and focusing the the portfolio even further, but that's, I think, what we can what we can now say at this time.
So today in Europe, you are one of the the biggest, if not the biggest, sawmill operator. I'm not sure. Is that a position that you find desirable? Is that in line with your your long term strategy, or or is that something that you're also contemplating? I mean, you've been clear that you will leave no stone unturned, and you're really reviewing all aspects of the group. So how do you look at that part of the business?
Yes. I mean, repeating what we have said before, our strategic focus is on renewable packaging and growth within the area of renewable packaging. You are right. We are one of the largest sawmillers today in in Europe, but the our strategic focus is on renewable packaging growth moving moving forward. But then, of course, many of the sawmills, especially in the Nordic region, are very synergistic in supporting the cost efficiency of our renewable packaging, and that's also the strategic rationale for the Unical acquisition.
We we bought three sawmills, one of them being brand new, top efficient, close to very close to our old mill, and therefore, also supporting, you know, to reduce the raw material costs in our old integrate.
Okay. Great. And then just one follow-up on what you previously said on on order books in packaging materials. Are you seeing some trends during the quarter? I mean, the end of the quarter compared to the beginning of the quarter.
What what the sort of order inflow trends are you looking at right now?
Well, I would say in general, you know, US President Trump's Liberation Day in the April, you know, caused uncertainty in general to the market and probably that, you know, could be seen as a as a somewhat weakening the outlook, the the confidence in in the marketplace and among consumers and also customers partly going into more like a wait and see mode. So as we all know, uncertainty is not good for economy and and development in and demand development in general. So so I think that has that has caused some, you know, subdued outlook. But we are focusing on controlling what we can control. So we we do our utmost to improve our competitiveness, cost efficiency, serving our customers better than ever before.
That's and producing top quality. That's that's what we are focusing on.
Sounds wise. Thank you very much.
Our next question comes from Pallav Mitel at Barclays. Hello. If you would like to ask your question, you are unmuted.
Hi. Can you hear me?
Yes.
Hi. Good morning. So a couple of questions. Following up on a question asked earlier, given the weak demand conditions and weakening of order books, could we expect some potential closures in the near term in board or, say, the pulp side of things? Or because you're focused on the Swedish forest review, these closures are not a focus right now? So that's the first question.
So thank you, Pallav, for the question. So all our businesses made positive results. Yes. We are far away from our long term financial targets, so we have a lot of work to be done there. And I think that's that's how we can conclude on the on the first question.
So we are we are even if we are operating in a in a high cost high wood cost environment in The Nordics, I mean, we are producing the highest added value forest industry product mainly, so consumer board, where the price point is about twice higher than pulp and paper. And and thus also the added value is higher, and that's that's also the the impact of the of the wood cost is lower on the total cost structure. So so the the way to to be able to be profitable and and to deliver good margins in a high good cost environment is to produce the highest added value, the most expensive product, which is consumer board, inefficient big integrates. And that is exactly what we are pride what we are doing in The Nordics.
Sure. And the second question I have is related to the strategic review. So of the 300,000,000 EBIT that you have done more or less in the first half, the forest segment is generating almost 60% of that total EBIT. So when you think about separating the forest assets, essentially, the remaining business will probably be a very lower margin business based on the numbers that I just highlighted. So when you are evaluating various decisions or various options, so how are you thinking about, the split between your forest and the remaining industrial asset?
Yes. So, yeah, first of all, I mean, if you look at our forest division today, I think it's important to remember that the forest division EBIT includes also our 41% share of Tonator in Finland. There is also the whole wood trading part, which is a part of wood sourcing, which is also generating EBIT through sales, significant sales to external third party. It's a part of our good sourcing organization. So so out of that 300,000,000 EBIT, it's it's only a part which would be part of the of the Swedish forest company if if we would move forward after after our strategic review in that direction.
Yeah. And I the these are the things that we we are looking into as as part of the strategic review and, of course, commit to to come back when we have a conclusion on that clarifying, for instance, as you say, EBIT structures, how much would move or not move. So I would caution a bit and not draw too many conclusions yet based on how we report today.
Sure. Thank you.
Our next question comes from Detlev Winkelmann at JPMorgan. You may unmute your audio, turn your video on and ask your question.
Morning, team. Just two ones quickly from me, very technical. Just on your maintenance costs, if I go back, let's say, 2022 to 2024, on average, you were talking kind of between 500 and $5.50, somewhere there. And if I take, you know, your current up to h one, then your kinda q three guidance, we're tracking quite far below that. Is that purely cyclical, I e, lower profit profitability at the moment, and therefore, we should expect it to go up again as your profitability improves?
Or is this something that we should be your maintenance costs coming through more in q four this year? Is it a timing thing, basically? That's my first question, please.
Yeah. If if I take that one, to some degree, it is a timing thing. So as we said, we will have slightly higher maintenance costs now in q three compared to q two, 10,000,000 we said. And then typically, we also have quite significant maintenance plans for Q4. So in that sense, you'll see more in second half.
And we've we've disclosed some of those plans also in our reporting, how it goes, you know, by quarter or which sites at least. But then, of course, goes without saying that maintenance is a pretty significant cost as you say. It's also an investment, but that's part of what we are looking into as well. Can we get more efficient? Can we keep our mills sites running with high quality at a lower cost?
So of course, that is part of what we are looking into as well.
Okay. That's perfect. Thank you. And then keeping with maintenance, if we just go more specifically to q two, I know we had a 20,000,000 roughly headwind from quarter on quarter. Are you able to split that between, roughly speaking, between kind of packaging materials and biomaterials?
Let's same answers previously. Let let me come back or let us come back to that. I don't have it in my in the back of my head.
That's perfect. Thanks very much. That's all for me.
Our next question comes from Joni Sandville at Nordea. Please unmute your audio, turn your video on, and ask your question.
Think you're on mute.
Nope. Cannot hear you. We can't hear you. I still not hear you. I there seems to be a technical problem here somewhere.
We still have the operator with us.
We will conclude our questions for today. I shall now hand back to Hans Scholstrom and CFO, Niklas Rosenleu, for closing remarks.
Yes. Thank you very much for participation. As you can see, we are moving forward with determination and speed to build a stronger, more competitive, and better, more valuable Stora Enso for the benefit of all our shareholders. Shareholder value maximization is our guiding guiding star, and I also want to draw your attention to the fact that we are preparing for a Capital Market Days Day on the November 25 taking place in London. So hope to see as many as possible of you also there.
But until the next meeting. So thank you very much, and have a good day. Take care. Bye bye.