Stora Enso secures research loan as ratings outlook improves
It is the third loan that the Finland-based company has signed for research and development projects with the EIB – the long-term lending bank of the European Union. The latest loan agreement is part of a broader commitment by EIB to lend €230m to Stora Enso.
Jukka Kilpeläinen, senior vice president, group R&D, said the research loan would be directed to the three R&D centres at Stora Enso: Imatra in Finland, Karlstad in Sweden and Mönchengladbach in Germany.
Research focus
In the packaging arena, Kilpeläinen added that R&D efforts are focused on the development of sustainable fibre-based packaging materials and solutions.
Stora Enso claims that these efforts are bearing fruit. Last week the company announced various improvements to its biopolymer-coated paperboard - to read about them, please click here.
On a financial level, Christian Hendker, an analyst at Moody’s, welcomed news of the loan agreement with EIB, saying the deal underscores the ability of Stora Enso to tap different sources of funding.
Improved rating
Hendker said it was this financial flexibility and improvements in operating performance that led Moody’s to change its outlook on the ratings of the company from ‘negative’ to ‘stable’ at the end of April.
Performance trends are beginning to look up for Stora Enso after its EBITDA margin almost halved from a high of 12 per cent in 2007 to 7 per cent in 2009 as a result of lower demand and restructuring charges. Operating profit in Q1 this year rose to €119.4m from only €3m in the equivalent period in 2009.
Hendker said: “As we assume that this trend will continue on the back of implemented price increases especially for packaging products and a moderate demand recovery for paper and forest products in addition to benefits to be achieved through implemented restructuring measures, this should enable Stora Enso to achieve credit metrics more in line with the current rating in a reasonable time frame.”
Debt at 31 December 2009 amounted to €3 713.2m and debt/EBITDA stood at 7.9x.
