se-2022-12-31-en

Contents


Report of the Board of Directors (unaudited)
Stora Enso introduction
Markets and deliveries
Operational key figures, items affecting comparability and other non-IFRS measures
Financial results – Group
Financial results – Segments
Investments and capital expenditure
Innovation, research and development
Non-financial information
EU taxonomy
Environmental liabilities
Risks and risk management
Climate-related financial disclosures (TCFD)
Corporate governance
Legal proceedings
Changes in Group management
Share capital
Outlook and short-term risks
Annual General Meeting
Proposal for the distribution of dividend
Non-IFRS measures
Calculation of key figures
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)
Note 1 Accounting principles
Note 2 Critical accounting estimates and judgements
Note 3 Segment information
Note 4 Acquisitions, disposals and assets held for sale
Note 5 Other operating income and expense
Note 6 Personnel expenses
Note 7 Board and executive remuneration
Note 8 Net financial items
Note 9 Income taxes
Note 10 Depreciation, amortisation and impairment charges
Note 11 Intangible assets and property, plant and equipment
Note 12 Forest assets
Note 13 Equity accounted investments
Note 14 Equity instruments
Note 15 Emission rights and other non-current assets
Note 16 Inventories
Note 17 Operative receivables
Note 18 Shareholders' equity
Note 19 Non-controlling interests


Note 20 Post-employment benefits
Note 21 Employee variable compensation and equity incentive schemes
Note 22 Provisions
Note 23 Operative liabilities
Note 24 Financial risk management
Note 25 Fair values
Note 26 Debt
Note 27 Derivatives
Note 28 Cumulative translation adjustment and equity hedging
Note 29 Commitments and contingencies
Note 30 Principal subsidiaries and joint operations
Note 31 Related party transactions
Note 32 Earnings per share
Note 33 Events after the reporting period
Parent company Stora Enso Oyj financial statements (audited)
Notes to the parent company financial statements (audited)
Signatures for the financial statements
Auditor's Report

The official audited financial statements in Finnish and an unofficial Swedish translation 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 leading provider of renewable products in

packaging, biomaterials, and wooden construction, and one of the largest private forest owners

in the world. We believe that everything that is made from fossil-based materials today can be

made from a tree tomorrow. Sustainability and responsible business practices are deeply

embedded in our strategy. Stora Enso contributes to the transformation towards a biobased

circular economy in three areas where we have the biggest impact and opportunities: climate

change, biodiversity, and circularity.

With our low-carbon and recyclable fiber-based products, we support our customers in

meeting the demand for renewable eco-friendly products.

Stora Enso had 21,790 employees on average during 2022. Our sales in 2022 were EUR

11.7 billion, with an operational EBIT of EUR 1,891 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 in the USA as ADRs.

Markets and deliveries

Demand for cartonboard remained elevated in 2022, with some dampening towards the end of

the year. Even though the pandemic still presented challenges for certain end-use segments, it

boosted others. Demand in the Asian region is stronger than the more mature European and

North American markets but was negatively affected by the zero-tolerance policy of China.

Containerboard demand started to weaken towards the end of 2022 as the result of

normalisation in consumption patterns, inflation pressuring household budgets and large

inventory draw downs in the box and finished goods markets, especially in North America and

Europe. In China, pandemic-related disruptions continued to cut containerboard demand.

The growth of European corrugated packaging demand in Stora Enso's main markets slowed

down to 1% in 2022 mainly driven by the current economic difficulties and normalisation of e-

commerce sales to pre-pandemic levels. The ongoing war in Ukraine has made consumers to

reconsider their purchasing habits which slows down the growth of corrugated packaging

demand even more. Largest sales for Stora Enso corrugated markets are in home and garden

and in grocery and retail sectors.

Global demand for chemical market pulp rebounded to 3% in 2022. Softwood pulp deliveries

decreased by 1% reflecting the weakness in Chinese softwood pulp demand. Hardwood and

unbleached kraft pulp (UKP) deliveries increased by 5% and by 13%, respectively. Demand for

fluff pulp continued strong.

The global chemical market pulp capacity increased by 2% in 2022, the softwood capacity

declined by 1% while hardwood capacity increased by 4% and UKP capacity by 6%. The overall

shipment-to-capacity balance stood at 90%, 1 percent-point up from 2021.

Higher than expected demand and several supply side and logistics disruptions kept the pulp

market tight in Europe and North America. Chinese paper and board demand continued

subdued due to weak macro economy and strict zero-covid policy. Slowing economy, inflation

and energy availability weakened pulp demand especially in Europe towards the end of year.

Global pulp inventories were generally balanced despite imparity between grades. Softwood

pulp inventories remained elevated whereas the hardwood pulp inventories were below the 5-

year average level.

Pulp prices reached the all-time high records in summer 2022. Hardwood pulp prices have

remained resilient throughout 2022 while softwood pulp prices started to soften towards

the year end.

Global sawn wood consumption decreased by some 3% in 2022 according to EOS

(European Organization of the Sawmill Industry) estimate. The market situation continued strong

in the first part of 2022. Market supply was limited and was not able to meet the high demand,

which kept the price levels high in 2022. From early summer 2022 in the USA the market

situation started to cool down and prices reduced significantly. Prices started to go down in other

markets as well during the second half of 2022. The war in Ukraine and extremely high inflation

reduced the amount of housing starts and customer confidence which led into uncertainty in the

market. During the second half and especially in Q4 the market was focusing to run inventory

levels down which led into low demand and declining price levels. According to EOS North

American demand reduced by 2% from 2021 levels and in Europe 5%. In Australia market

remained strong longer than in USA or in Europe, but also Australian market cooled down

during Q4.

Year 2022 was eventful for the paper markets. European paper demand remained healthy

during the first half of year, but started to decline sharply during the second half as result of

macroeconomic slow down. Prices increased during the whole year and reached an all-time high

level. Price increases were driven by heavily increased costs (especially energy and paper for

recycling) and balanced supply and demand. The healthy supply-demand balance was driven by

capacity closures and machine conversions. European paper demand was 10% weaker in 2022

compared to the previous year. In North America, demand increased by 2% and in Asia declined

by 2% compared to 2021. Global paper consumption was 2% lower in 2022 than in 2021.

Estimated consumption of board, pulp, sawn softwood, and paper in 2022


Tonnes, million	Europe	North America	Asia and Oceania
Consumer board	11.2	9.6	29.4
Containerboard	35.1	33.1	89.1
Corrugated board (billion m2)1	11.0	n/a	n/a
Chemical market pulp	17.4	8.0	36.0
Sawn softwood (million m3)	78.9	99.9	n/a
Newsprint	3.6	1.4	5.8
Uncoated magazine paper	2.1	0.9	0.1
Coated magazine paper	2.7	1.2	2.2
Coated fine paper	3.2	2.7	9.2
Uncoated fine paper	5.9	6.1	28.3
1 European focus markets (Baltics, FI, PL, SE) Source: Afry Smart, ICCA, RISI, Numera, Euro-Graph, PPPC, EPIS, Hawkins Wright, Stora Enso, EOS

Unaudited 3

Production and external deliveries


	2022	2021	Change % 2022–2021
Board deliveries, 1,000 tonnes	4,294	4,258	0.9%
Board production, 1,000 tonnes	4,682	4,685	-0.1%
Corrugated packaging European deliveries, million m2	741	949	-21.9%
Corrugated packaging European production, million m2	771	1,049	-26.5%
Market pulp deliveries, 1,000 tonnes	2,374	2,495	-4.9%
Wood product deliveries, 1,000 m3	4,397	4,803	-8.5%
Wood deliveries, 1,000 m3	13,304	12,091	10.0%
Paper deliveries, 1,000 tonnes	1,924	2,872	-33.0%
Paper production, 1,000 tonnes	1,926	2,776	-30.6%

The Group’s board deliveries totalled 4,294,000 tonnes, which was 36,000 tonnes, or 0.9%

higher compared to a year ago. Corrugated packaging European deliveries decreased by 208

million m2 or 21.9% to 741 million m2 mainly due to exit from Russian operations. Market pulp

deliveries decreased by 121,000 tonnes, or 4.9%, to 2,374,000 tonnes, mainly due to higher

share of internal deliveries. Wood product deliveries decreased by 406,000 m3 or 8.5% to

4,397,000 m3, mainly due to exit from Russian operations. Wood deliveries increased by

1,213,000 m3 or 10.0% to 13,304,000 m3 supported by higher deliveries in Sweden. Paper

deliveries totalled 1,924,000 tonnes, down 948,000 tonnes, or 33.0%, from 2021, driven by the

structural changes.

Operational key figures, items affecting comparability and other non-

IFRS measures

The list of Stora Enso’s non-IFRS measures and the calculation of our key figures are presented

at the end of the Report of the Board of Directors. See also the chapter Non-IFRS measures at

the end of this report.

Financial results – Group

Group sales increased by 15% year-on-year to EUR 11,680 (10,164) million. Operational EBIT

was EUR 1,891 (1,528) million, and the operational EBIT margin was 16.2%. Earnings per share

increased by 22% to EUR 1.97 (1.61) and earnings per share excluding fair valuations increased

by 31% to EUR 1.55 (1.19).

The IFRS operating profit includes a positive net effect of EUR 195 (positive 328) 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, mainly driven

by higher market prices. There is also a positive net effect of EUR 168 (positive 84) million from

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

accounted investments. The positive impact comes mainly from the change in the valuation

method and 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 114 (149)

million. Impairment reversals amounted to EUR 7 (0) million,

The Group recorded items affecting comparability (IAC) with a negative impact of EUR 245

(negative 354) million on its IFRS operating profit and a positive impact of EUR 9 (positive 58)

million on income taxes. The IAC relate mainly to the disposal of Russian operations.

The IFRS operating profit was EUR 2,009 (1,568) million.

Segment share of operational EBIT, IAC, fair valuations and non-operational items and

operating profit/loss


	Year Ended 31 December
	Operational EBIT		IAC, Fair Valuations and Non-Operational items		Operating Profit/Loss
EUR million	2022	2021	2022	2021	2022	2021
Packaging Materials	596	556	-1	-4	595	552
Packaging Solutions	-2	26	-100	-4	-101	23
Biomaterials	687	495	-19	11	668	506
Wood Products	309	364	-56	-1	253	363
Forest	204	267	319	355	523	622
Paper	185	-124	-14	-298	172	-423
Other	-47	-48	-12	-19	-59	-67
Total	1,891	1,528	118	40	2,009	1,568
Net financial items					-151	-149
Profit before Tax					1,858	1,419
Income tax expense					-322	-151
Net Profit					1,536	1,268
Operational EBIT comprises the operating profit excluding items affecting comparability (IAC) and fair valuations from the segments and Stora Enso’s share of the operating profit of equity accounted investments (EAI), also excluding items affecting comparability and fair valuations. IAC =Items affecting comparability are exceptional transactions that are not related to recurring business operations. The most common IAC are 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. Fair valuations and non-operational items include CO2 emission rights, 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 EAI. Non-operational fair value changes of biological assets reflect changes made to valuation assumptions and parameters. Operational fair value changes of biological assets contain all other fair value changes, mainly due to inflation and differences in actual harvesting levels compared to the harvesting plan. 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 profit (biological assets) and other comprehensive income (forest land) and are included in operational EBIT only at the disposal date.

Unaudited 4

Items affecting comparability, fair valuations and non-operational items


	Year Ended 31 December
EUR million	2022	2021
Impairments and impairment reversals	-124	-141
Restructuring costs excluding impairments	-3	-227
Acquisitions and disposals	-104	11
Other	-15	4
Items affecting comparability	-245	-354
Fair valuations and non-operational items	363	394
Total	118	40

Segment share of operative assets, operative liabilities and operating capital


	Year Ended 31 December
	Operative Assets		Operative Liabilities		Operating Capital
EUR million	2022	2021	2022	2021	2022	2021
Packaging Materials	4,441	4,120	1,097	914	3,344	3,206
Packaging Solutions	381	422	146	176	235	245
Biomaterials	3,095	2,755	299	236	2,796	2,520
Wood Products	998	955	280	277	718	678
Forest	7,481	7,131	518	435	6,963	6,696
Paper	887	884	554	761	333	123
Other and eliminations	1,432	970	16	131	1,416	839
Total	18,715	17,237	2,909	2,930	15,806	14,307

Key figures


	2022	2021	2020
Sales, EUR million	11,680	10,164	8,553
Operational EBIT, EUR million	1,891	1,528	650
Operational EBIT margin	16.2%	15.0%	7.6%
Operating profit (IFRS), EUR million	2,009	1,568	922
Operating profit margin (IFRS)	17.2%	15.4%	10.8%
Return on equity (ROE)	13.3%	13.0%	7.6%
Operational ROCE	13.8%	12.4%	5.8%
Operational ROCE excl. Forest division	20.9%	17.8%	7.0%
Net debt/equity ratio	0.15	0.22	0.33
EPS (basic), EUR	1.97	1.61	0.79
EPS excluding FV, EUR	1.55	1.19	0.45
Dividend and distribution per share1, EUR	0.60	0.55	0.30
Payout ratio, excluding FV	38.6%	46.3%	66.7%
Payout ratio (IFRS)	30.5%	34.3%	38.0%
Dividend and distribution yield, (R share)	4.6%	3.4%	1.9%
Price/earnings (R share), excluding FV	8.46	13.60	34.78
Equity per share, EUR	15.89	13.55	11.17
Market capitalisation 31 Dec, EUR million	10,503	12,809	12,383
Closing price 31 Dec, A/R share, EUR	13.90/13.15	16.60/16.14	15.90/15.65
Average price, A/R share, EUR	16.58/16.12	16.68/15.70	12.06/11.52
Number of shares 31 Dec (thousands)	788,620	788,620	788,620
Trading volume A shares (thousands)	1,174	1,750	4,662
% of total number of A shares	0.7%	1.0%	2.6%
Trading volume R shares (thousands)	455,952	422,493	605,233
% of total number of R shares	74.5%	69.0%	98.8%
Average number of shares, basic (thousands)	788,620	788,620	788,620
Average number of shares, diluted (thousands)	789,391	789,126	789,182
1 See the Board of Directors' proposal for dividend distribution.

Sales and operational EBIT

Operational ROCE excl. Forest

Net debt to operational EBITDA

Unaudited 5

Net financial expenses at EUR 151 (149) million were EUR 2 million higher than a year ago. Net

interest expenses, at EUR 105 million, decreased by EUR 20 million, mainly as a result of higher

interest income on interest-bearing receivables and deposits. Other net financial expenses, at

EUR 44 million, were EUR 22 million higher, mainly due to write-down of Russia related loan

receivables and loss allowance. 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 1 (loss of EUR 2) million, mainly due to a revaluation of foreign currency net debt in

subsidiaries and joint operations located in China, Brazil, Poland and Russia.

The net tax charge totalled EUR 322 (151) million, equivalent to an effective tax rate of 17.3%

(10.7%), as described in more detail in the Note 9 (Income taxes).

The loss attributable to non-controlling interests was EUR 13 (gain EUR 3) million, leaving a

profit of EUR 1,550 (1,266) million attributable to Company shareholders.

Earnings per share excluding fair valuations were EUR 1.55 (1.19). Operational return on

capital employed was 13.8% (12.4%).

The Group capital employed was EUR 14,356 million on 31 December 2022, an increase of

EUR 1,380 million, mainly due to the increase of the fair valuation of forest assets in Sweden

and shares in Pohjolan Voima.

Breakdown of Capital Employed change


EUR million	Capital Employed
31 December 2021	12,976
Capital expenditure excluding investments in biological assets less depreciation	168
Investments in biological assets less depletion of capitalised silviculture costs	7
Impairments and reversal of impairments	-107
Fair valuation of forest assets	529
Unlisted securities (mainly PVO)	533
Equity accounted investments	254
Net liabilities in defined benefit plans	152
Operative working capital and other interest-free items, net	399
Emission rights	13
Net tax liabilities	-236
Translation difference	-314
Other changes	-18
31 December 2022	14,356

Financing

Cash flow from operations was EUR 1,873 (1,752) million and cash flow after investing activities

was EUR 1,162 (1,101) million. Working capital increased by EUR 461 (increased 25) million,

inventories increased by EUR 454 million and trade receivables by EUR 184 million. Trade

payables increased by EUR 267 million and thus had a positive impact on working capital.

Payments related to the previously recognised provisions were EUR 126 million.

Operative cash flow


EUR million	2022	2021
Operational EBITDA	2,529	2,184
IAC on operational EBITDA	-133	-213
Other adjustments	-62	-194
Change in working capital	-461	-25
Cash Flow from Operations	1,873	1,752
Cash spent on fixed and biological assets	-705	-645
Acquisitions of equity accounted investments	-7	-6
Cash Flow after Investing Activities	1,162	1,101

At the end of the year, Group net interest-bearing liabilities were EUR 1,853 (2,309) million. The

decrease in net interest-bearing liabilities was mainly driven by a strong cash flow from

operations after investments and dividend payments. Cash and cash equivalents net of bank

overdrafts increased to EUR 1,917 (1,480) million. The net debt/equity ratio at 31 December

2022 decreased to 0.15 (0.22). The ratio of net debt to the last 12 months' operational EBITDA

decreased to 0.7 (1.1) due to lower net debt and higher operational EBITDA. The average

interest rate on borrowings for the full year 2022 increased to 3.3% (3.0%) with a run-rate of

3.3% as per the end of the fourth quarter.

During 2022, altogether EUR 550 million of bilateral bank loans were arranged. Maturities of

these loans vary from 18 months to 3 years with extension options. Proceeds from these loans

are used for general corporate purposes and EUR 200 million of these loans were undrawn at

reporting date. In May 2022, Stora Enso signed a new EUR 200 million committed credit facility

with a maturity of one year and one six month extension option which was exercised in October

2022.

In December 2021, Stora Enso signed a new EUR 700 million Revolving Credit Facility (RCF)

with 12 commercial banks. The maturity of the facility is five years with two one-year extensions.

The pricing is partly linked to meeting emission targets on Scope 1&2 and Scope 3. In October

2022, the first extension option of this facility was used together with all 12 banks and therefore

maturity is now in 2027. Simultaneously, the existing EUR 600 million RCF with original maturity

in 2023 was cancelled. Additionally, Stora Enso has access to statutory pension premium loans

in Finland up to EUR 1,050 (1,000) million.

The forest land fair valuation increased the Group’s other comprehensive income in equity by

EUR 264 (195) million. The fair valuation of cash flow hedges and equity investments fair valued

through other comprehensive income increased equity by EUR 563 (decreased by EUR 474)

million. This is due to a significantly higher fair valuation of the Group’s shareholding in Pohjolan

Voima Oy (PVO), owing to higher forward electricity prices partly and also by net fair valuation

gains from outstanding cash flow hedge derivatives recorded in other comprehensive income.

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)	8 August 2018
Moody’s	Baa3 (stable) / P-3	1 November 2018

Unaudited 6

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. Addressing the needs of today’s eco-conscious

consumers, Stora Enso helps customers replace fossil-based materials with low-carbon, renewable and

recyclable alternatives for their food, beverage and transport packaging. A wide selection of base boards and

barrier coatings enables design optimisation for various demanding packaging end-uses.


EUR million	2022	2021
Sales	4,690	3,898
Operational EBITDA	900	846
Operational EBITDA margin	19.2%	21.7%
Operational EBIT	596	556
Operational EBIT margin	12.7%	14.3%
Operational ROOC	18.2%	18.0%
Cash flow from operations	756	807
Cash flow after investing activities	440	459
Board deliveries, 1,000 tonnes	4,599	4,616
Board production, 1,000 tonnes	4,682	4,685

Packaging Materials division sales were at an all-time high level of EUR 4,690 (3,898) million, an

increase of 20%, driven by higher sales prices in all business segments. Consumer board

market remained strong throughout the year, while the containerboard market turned soft during

the second half of the year, impacting the volume growth year-on-year.

An all-time high operational EBIT at EUR 596 (556) million increased by EUR 40 million

despite of heavy cost increases on all variable cost components. Record high result was driven

by extraordinarily strong Containerboard performance during first half year, partly offsetting the

variable cost escalation.

Packaging Solutions division

The Packaging Solutions division develops and sells premium fiber-based packaging products and services.

Stora Enso’s high-end eco-friendly packaging products are used by leading brands across multiple market

sectors, including the retail, e-commerce and industrial sectors. The portfolio includes converting corrugated

board and carton board, and other new materials such as formed fiber and wood foams into standard and

bespoke packaging solutions. The division also provides design and sustainability services for our customers,

as we support a shift towards circular solutions.


EUR million	2022	2021
Sales	737	723
Operational EBITDA	27	56
Operational EBITDA margin	3.6%	7.8%
Operational EBIT	-2	26
Operational EBIT margin	-0.2%	3.6%
Operational ROOC	-0.7%	10.8%
Cash flow from operations	-5	56
Cash flow after investing activities	-40	26
Corrugated packaging European deliveries, million m2	772	1,046
Corrugated packaging European production, million m2	771	1,049

Packaging Solutions division sales were at an all-time high of EUR 737 (723) million, up 2%,

driven by higher sales prices following the higher cost levels as well as higher sales for

innovation and service led businesses. The revenue from innovation and service led businesses

increased by almost 50%. Examples of these businesses are formed fiber, circular solutions,

reusable solutions and packaging automation.

Operational EBIT was EUR -2 (26) million, impacted mainly by the divestment of the Russian

units and investments in innovation and service led businesses. Operational EBIT for traditional

businesses, excluding Russia, increased.

Sales and operational EBIT

Packaging Materials

Operational ROOC

Packaging Materials

Sales and operational EBIT

Packaging Solutions

Operational ROOC

Packaging Solutions

Unaudited 7

Biomaterials division

The Biomaterials division meets the growing demand for bio-based solutions which replace fossil-based and

non-renewable materials. Stora Enso achieves this by using all fractions of biomass, like lignin, to develop

new solutions including novel applications such as bio-based anode material for batteries and bio-based

binders. Our pulp offering encompasses a wide variety of grades to meet the demands of packaging, paper,

tissue, specialities, and hygiene product producers. We also serve the biochemicals market with tall oil and

turpentine from biomass for further refining. Pulp continues to be our foundation while long-term growth is

driven by new products and innovations.


EUR million	2022	2021
Sales	2,180	1,728
Operational EBITDA	822	618
Operational EBITDA margin	37.7%	35.7%
Operational EBIT	687	495
Operational EBIT margin	31.5%	28.7%
Operational ROOC	25.8%	20.8%
Cash flow from operations	682	490
Cash flow after investing activities	536	391
Pulp deliveries, 1,000 tonnes	2,554	2,576

Biomaterials division sales were at an all time high at EUR 2,180 (1,728) million, up 26% due to

significantly higher pulp sales prices in all grades and favourable currency exchange rates. The

market was strong, supported by a good operational efficiency.

Operational EBIT, at EUR 687 (495) million increased by EUR 192 million, mainly due to

significantly higher sales prices in all grades, supported by good delivery volumes. Operational

EBIT was negatively impacted by higher costs. Foreign exchange rates had a positive impact on

operational EBIT. Side streams contributed more than in previous year.

Wood Products division

The Wood Products division is the largest sawn wood producer in Europe and a leading provider of

sustainable wood-based solutions for the global construction industry. The growing Building Solutions

business offers building concepts and a full range of products to support low-carbon construction. Stora Enso

develops services and digital tools to simplify the design and construction of buildings with wood. Additionally,

we offer applications for windows and doors, and pellets for sustainable heating solutions.


EUR million	2022	2021
Sales	2,195	1,872
Operational EBITDA	356	410
Operational EBITDA margin	16.2%	21.9%
Operational EBIT	309	364
Operational EBIT margin	14.1%	19.5%
Operational ROOC	44.2%	59.4%
Cash flow from operations	346	313
Cash flow after investing activities	264	252
Wood products deliveries, 1,000 m3	4,235	4,508

Wood Products division sales were at an all-time-high level of EUR 2,195 (1,872) million, up

17% due to favourable market, record high sales prices, and improved productivity. After a

period of strong sawn wood market, there was a rapid decline in demand after the summer. The

building solutions business continued to benefit from the favourable trend of building with wood.

Operational EBIT was the second highest result, after the all-time high in 2021, at EUR 309

(364) million. It decreased by EUR 55 million, or 15%. The positive impact of sales prices was

offset by higher costs for logs, logistics, energy, and increased fixed costs.

Sales and operational EBIT

Biomaterials

Operational ROOC

Biomaterials

Sales and operational EBIT

Wood Products

Operational ROOC

Wood Products

Unaudited 8

Forest division

The Forest division creates customer value through innovative solutions, competitive wood supply and

sustainable forest management. Forests are the foundation for Stora Enso’s renewable offerings. The division

manages Stora Enso’s forest assets in Sweden and a 41% share of Tornator, whose forest assets are mainly

located in Finland. It is also responsible for wood sourcing for Stora Enso’s Nordic and Baltic operations and

B2B customers. Stora Enso is one of the biggest private forest owners in the world.


EUR million	2022	2021
Sales	2,519	2,311
Operational EBITDA	256	318
Operational EBITDA margin	10.2%	13.7%
Operational EBIT	204	267
Operational EBIT margin	8.1%	11.5%
Operational ROCE	3.7%	5.1%
Cash flow from operations	146	158
Cash flow after investing activities	91	112
Wood deliveries, 1,000 m3	38,217	39,652
Operational fair value change of biological assets	87	82

Forest division sales were EUR 2,519 (2,311) million, up 9% due to higher sales prices.

Operational EBIT at EUR 204 (267) million decreased by 24%. Excluding the large forest

area sale in Hylte in Sweden in 2021, operational EBIT improved by 6% from last year.

Paper division

At the end of 2022, Stora Enso had an established customer base and its product portfolio had offerings for

print and office use. Customers benefit from Stora Enso’s selection of paper grades made from recycled and

virgin fiber, our technical and operational expertise and sustainability know-how, and our sales and customer

service centre network.


EUR million	2022	2021
Sales	1,772	1,703
Operational EBITDA	242	-48
Operational EBITDA margin	13.7%	-2.8%
Operational EBIT	185	-124
Operational EBIT margin	10.5%	-7.3%
Operational ROOC	81.3%	-40.3%
Cash flow from operations	77	-25
Cash flow after investing activities	16	-77
Cash flow after investing activities to sales	0.9%	-4.5%
Paper deliveries, 1,000 tonnes	1,924	2,872
Paper production, 1,000 tonnes	1,926	2,776

Paper division sales increased by 4% to EUR 1,772 (1,703) million, despite lower deliveries due

to the closures of the Veitsiluoto and Kvarnsveden sites in Q3/2021. Paper prices increased

significantly throughout the year, resulting in successful turnaround of the paper business

supported by good supply-demand balance. Sales from retained business, after the closures of

Veitsiluoto and Kvarnsveden, increased by 50%.

Operational EBIT at EUR 185 (-124) million increased by EUR 310 million, due to the

significantly higher sales prices more than offsetting the increase in variable costs, especially

energy.

Cash flow after investing activities was EUR 16 (-77) million driven by improved profitability,

however impacted by the higher restructuring provision payouts during the year. Cash flow from

the retained business was EUR 94 (-8) million.

Sales and operational EBIT

Forest

Operational ROCE

Forest

Sales and operational EBITDA

Paper

Cash flow after investing

activities to sales ratio

Paper

Unaudited 9

Other

The segment Other includes Stora Enso’s shareholding in the energy company Pohjolan Voima

(PVO), and the Group’s shared services and administration.


EUR million	2022	2021
Sales	1,097	1,092
Operational EBITDA	-33	-9
Operational EBITDA margin	-3.0%	-0.8%
Operational EBIT	-47	-48
Operational EBIT margin	-4.3%	-4.4%
Cash flow from operations	-130	-48
Cash flow after investing activities	-146	-62

Sales for Segment Other at EUR 1,097 (1,092) million and operational EBIT at negative EUR 47

(48) million remained flat compared to previous year.

Investments and capital expenditure

Additions to fixed and biological assets including internal costs capitalised in 2022 totalled EUR

778 (666) million. The total amount includes additions in biological assets of EUR 77 (58) million.

In January, an investment of EUR 40 million was announced to enhance operational and

carbon footprint performance for fluff pulp production at the Skutskär site in Sweden.

In February, Stora Enso announced an investment of EUR 9 million in an automated CLT

(cross-laminated timber) coating line at the Ybbs sawmill in Austria. The solution will shorten

construction times and improve wood protection.

In April, Stora Enso decided to invest EUR 10 million to reduce annual operational CO2

emissions by 70,000 tonnes at its Enocell site, Finland, replacing fossil-based fuel oil with

renewable pitch oil made from trees. This complements the main energy source, sawdust

powder, utilising 100% bio energy.

Following the feasibility study announced in February 2022 Stora Enso announced in

October, that it will invest approximately EUR 1 billion to convert the remaining idle paper

machine at the Oulu site in Finland into a high-volume consumer board line. 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. Production on the converted machine is estimated to start in early 2025.

Stora Enso’s new production site for cross-laminated timber (CLT) in Ždírec, the Czech

Republic, was inaugurated in October. Following the EUR 79 million investment, the new CLT

site is one of the most modern in the world, supporting Stora Enso’s strategy of growth within

wooden building solutions. The estimated annual production capacity will be approximately

120,000 m³ after ramp-up.

The investment in centralising and modernising the wood handling capacity at the Imatra site

in Finland was completed in November. The investment of EUR 80 million, started in the first

quarter of 2021, reduces water usage at the site by 85% and enhances Stora Enso’s production

capabilities for premium packaging board. The project included installation of a new, third

debarking line, improvements to chip handling systems, and modifications to the existing wood

yard infrastructure.

In December, Stora Enso announced a EUR 38 million investment in unbleached kraft pulp

(UKP) production at its Enocell site in Finland and a EUR 42 million investment in fluff pulp

production improvement at its Skutskär site in Sweden to strengthen its focus on specialised

pulp grades. These investments will support the growing consumer demand for non-bleached

renewable packaging materials and hygiene products respectively.

Stora Enso is conducting a feasibility study regarding the conversion of the one of the two

paper line at its Langerbrugge site in Belgium into a high-volume recycled containerboard line.

The feasibility study is expected to be finalised in the first half of 2023. Depending on an

investment decision, the converted line is expected to be in production during 2025. The annual

capacity would be 700,000 tonnes of testliner and recycled fluting grades and would generate

annual sales of approximately EUR 350 million when run at full capacity. The total investment for

the conversion is estimated to be approximately EUR 400 million.

The Group is also evaluating its first industrial production line of lignin at the Sunila site in

Finland through a feasibility study.

The other main projects ongoing at the end of 2022 were an investment in increasing

capacity at the Skoghall board production site in Sweden, and Skutskär bleach plant upgrade in

Sweden.

Changes in the Group structure

During 2022, Stora Enso divested its three corrugated packaging plants in Lukhovitsy, Arzamas

and Balabanovo in Russia to local management. Stora Enso also divested its two sawmills in

Nebolchi and Impilahti in Russia to local management. The divestment included Stora Enso’s

Russian forest operations which supplied wood to the sawmills. Minor formalities remain to

complete the transaction for certain Russian legal entities.

In March, Stora Enso announced that it would divest four of its five paper mills. In September,

Stora Enso signed agreements to divest the Maxau paper production site in Germany to

Schwarz Produktion, part of Schwarz Group, one of the top retailers in the world, and the

Nymölla site in Sweden to Sylvamo, a US-based global producer of uncoated paper. The

divestment of the Nymölla site to Sylvamo was concluded in early January, and the divestment

of the Maxau site is expected to be finalised during the first half of 2023. The divestment of the

Hylte site in Sweden to Sweden Timber was announced in January 2023. The Group also

announced that the Anjala paper will be retained in the Group.

In September, Stora Enso announced the acquisition of De Jong Packaging Group, based in

the Netherlands, for an enterprise value of EUR 1,020 million. The acquisition advances Stora

Enso’s strategic direction, accelerates revenue growth and builds market share in renewable

packaging in Europe. De Jong Packaging Group is one of the largest corrugated packaging

producers in the Benelux countries. Its product portfolio and geographic presence complement

and enhance Stora Enso’s offering, especially in fresh produce, e-commerce and industrial

packaging. The transaction was completed in January 2023.

Innovation, research and development

Stora Enso’s total spend on innovation, research and development in 2022 was EUR 112 (133)

million, equivalent to 1.0% (1.3%) of total sales. Research and development work is a basic

element for staying relevant and competitive towards customers. The company employed

approximately 400 people in research and development. The responsibility of product

innovations and development of services is at the business divisions while long-term science

and research priorities are driven by Group Innovation and R&D.

Stora Enso's innovation and 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-

Unaudited 10

based materials and components in Building Solutions which store carbon and improve

buildings’ energy efficiency.

Intellectual property (IP) is an important tool to protect and secure Stora Enso's development

of innovative products and processes. During 2022, Stora Enso continued to strengthen its

patent portfolio by applying for patents for 83 new innovations. The focus of the new patent

filings has been within Biomaterials, Packaging Materials and Packaging Solutions. Stora Enso’s

patent portfolio amounts to over 3,800 applications and granted patents.

For more information on Stora Enso's Innovation and R&D, please see the section Our

strategy.

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 chapter

Risks and Risk Management, including Stora Enso’s reporting according to Task Force on

Climate-related Financial Disclosures (TCFD) recommendations.

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

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

contributes to the transformation towards a biobased circular economy in three areas where it

has the biggest impact and opportunities: climate change, biodiversity, and circularity. A

description of Stora Enso's business model is at the beginning of the Report of Board of

Directors.

Stora Enso acknowledges the importance of the United Nations Sustainable Development

Goals (SDGs) as part of a commonly agreed global ambition to end poverty, protect the planet

and improve the lives and prospects of everyone, everywhere. Stora Enso supports all

seventeen SDGs, and goals 12 (Responsible consumption and production), 13 (Climate action),

and 15 (Life on land) have been identified as most relevant where the Group has the largest

impact through its operations and products.

Sustainability governance

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

Directors, the CEO, and the Group Leadership Team (GLT). The CEO carries the ultimate

responsibility for the successful implementation of the sustainability strategy. Work on

sustainability is led by the Executive Vice President, Sustainability, who reports directly to the

CEO. The Board of Directors’ Sustainability and Ethics Committee oversees the implementation

of Stora Enso’s Sustainability Strategy and Ethics and Compliance Strategy. The Committee met

four times in 2022.

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

and the governance model. At the same time, the Code of Conduct and other policies,

guidelines, and statements on specific sustainability topics all 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 on Stora Enso’s approach to sustainability is included in the sections Our

Strategy and Sustainability reporting.

Environmental matters

Climate change

Key policy: Energy and Carbon Policy

Stora Enso's science-based target is to reduce absolute scope 1 and 2 greenhouse gas (GHG)

emissions from operations by 50% by 2030 from the 2019 baseline year, in line with the 1.5-

degree scenario. Stora Enso is also committed to a target to reduce scope 3 GHG emissions by

50% by 2030 from the 2019 baseline year.

In 2022, Stora Enso’s absolute GHG emissions (scope 1 and 2) were 27% lower than the

baseline level (14%1 lower in 2021). During 2022, the emissions decreased mainly due to less

use of fossil fuels in multiple production sites as well as the ceasing operations at the Veitsiluoto

mill in Finland.

Stora Enso’s estimated GHG emissions elsewhere along the value chain (scope 3) were 27%

lower than the baseline level (4%1 lower in 2021). The emissions decreased year-on-year due to

mill closures and the end of dissolving pulp production.

1 Historical figures recalculated due to divestments or additional data after the previous annual report.

Sustainable forestry and biodiversity

Key policy: Wood and Fiber Sourcing, and Land Management policies

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

plantations by 2050 through active biodiversity management. During 2022, Stora Enso launched

a Biodiversity Leadership Programme with selected projects to drive the delivery of this target.

The programme covers Stora Enso’s own forests, suppliers’ forests, and global forests, as well

as improving biodiversity beyond the forest sector.

The company 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

Company's own forests in Sweden include: application of modern 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. Stora Enso monitors and measures the state of biodiversity and

the impact of its operations on biodiversity with selected science-based indicators.

Currently, Stora Enso follows its progress in 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 2022, Stora Enso

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

2021). The majority of Stora Enso’s owned or leased lands are located in Sweden. For more

details, see the Note 12. The Group’s target is to maintain the high level of 96%, and in 2022,

the certification coverage amounted to 99% (99%1 in 2021). 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 2022.

In 2022, the total amount of wood (including roundwood and wood chips) delivered to Stora

Enso's mills was 35.1 million m3 (solid under bark) (37.6 million m3 in 2021). The proportion of

third-party certified wood in the Group's total wood supply was 80% (77%).

1 Reporting on total land area and its forest certification coverage aligned with financial reporting on forests assets. Historical figures

recalculated for comparability. For more information, see Note 12

Unaudited 11

Circularity

Key policy: Stora Enso Circular Design Guidelines

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

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

end of 2022, 94% of the Group's products were recyclable.2

2 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, such as PTS and CTP, 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.

Water

Key policy: Stora Enso Environmental Guidelines

The objective of the Group’s key performance indicators on total water withdrawal and process

water discharges is to drive a downward trend from the 2016 baseline of 59 m3 and 27 m3 per

saleable tonne of product, respectively. In 2022, total water withdrawal was 61 m3 per saleable

tonne (60 m3 in 2021) and process water discharges amounted to 31 m3 per saleable tonne

(31 m3 in 2021). Water performance normalised by tonne was partly affected by lower production

levels compared to the baseline year. From 2023, the target for process water discharge is to

reduce specific process water discharges per saleable tonne (m3/tonne) by 17% by 2030 from its

new baseline year, 2019. The amount of water required at Stora Enso’s board, pulp and paper

mills is not directly related to production volumes, and wastewater treatment, in particular,

requires a regular flow of water to function properly.

Social and employee matters

Employees

Key policies: Minimum Human Resources Requirements for labour conditions

On 31 December 2022, there were 20,879 (22,094) employees in the Group. The average

number of employees in 2022 was 21,790, which is 1,281 less than the average number in

2021. 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 1,315 (1,351) million or 11.3% of sales. Wages and

salaries were EUR 996 (1,017) million, pension costs EUR 152 (165) million and other employer

costs amounted to EUR 160 (162) million.

At the end of 2022, the Group's top four countries in respect to the number of employees

were Finland, Sweden, China, and Poland. 25% (24%) of all employees were women. As of

2022, 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 2022, 23% of managers were female.

Personnel turnover in 2022 was 13.9%(13.2%). Illness-related absenteeism amounted to

4.1% (3.8%) of total theoretical working hours.

The Group's wages in relation to local minimum wages and approach to living wages are

described in chapter Employees in the Sustainability reporting section. Remuneration to the

Board of Directors and key management is described in Note 7 of the consolidated financial

statements.

Safety

Key policy: Health and Safety Policy

In 2022, the Total Recordable Incident (TRI) rate decreased to 5.9 (6.2). The milestone of 5.3 for

2022 was not achieved. Even though Stora Enso’s safety performance has remained stable over

the past years, it is does not reflect the Group’s dedication of everybody home safe, every day.

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. By the end of 2022, 96% of Stora Enso’s total spend on materials,

goods, and services was duly covered (96% at the end of 2021), which exceeds the target to

maintain at least the level of 95%.

Respect for human rights

Key policy: Human Rights Policy and Guidelines

Stora Enso’s commitment to respect human rights covers all our 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 having the highest priority 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 preparation for the upcoming EU Corporate Sustainability Due Diligence (CSDD) directive,

Stora Enso, together with an external business and human rights consultancy, carried out three

pilot projects in 2022 focused on improving our internal controls for two high risk supply chains,

as well as the due diligence processes in our own operations. Read more in chapter Human

Rights in the Sustainability reporting section.

During 2022, Stora Enso continued to address land and natural resource rights in Guangxi,

China and Bahia, Brazil.

Guangxi, China

Stora Enso leases 73,133 hectares of land in Guangxi province China, of which 53,437 hectares

is leased from state-owned forest farms. The remaining 19,696 hectares, or 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

2022, with 6,124 hectares of land still under occupation at the end of the year. In December

2022, Stora Enso initiated a divestment process for the Beihai site and the forest operations.

Unaudited 12

Bahia, Brazil

In Bahia, Brazil, work continued on a 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 2022, 182 hectares or 0.2% of productive land owned by Veracel remained

occupied by movements not involved in the agreements.

At the end of 2022, the total land area owned by Veracel was 210,000 hectares, of which

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.

Community

Key policies: Human Rights Policy and Guidelines, Community Investment Guidelines

During 2022, Stora Enso initiated a number of large cash donations towards humanitarian

emergency relief. Two donations were directed towards the Ukraine crisis and one towards the

emergency relief following the severe flooding in Pakistan. The donations were channelled

through UNHCR.

The total monetary value of the community contribution towards Ukraine across the Group

was EUR 0.25 million. In 2022, Stora Enso’s total voluntary community investment was EUR 2.0

million.

Anti-corruption and bribery matters

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

A total of 153 (117 in 2021) potential non-compliance cases were reported in 2022. In recent

years there has been a steady increase in the number of reported cases, most likely due to more

focus on ethical conduct, compliance and whistleblowing, both internally and externally. A total of

140 (98) 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 44 (26) of the investigations. Based on the Group’s

categorisation, 12 (9) 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 of corruption, none of the proven cases had a material impact on the Company.

Furthermore, 13 (11) 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.

EU Taxonomy

Background

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

published and entered into force in 2020. In the Annual Reports for 2021, published in 2022,

large companies were obligated to report the share of Taxonomy-eligibility in their operations.

Taxonomy-eligibility describes if an economic activity is included in the scope of activities

recognised in the Taxonomy Regulation. In the Annual Reports for 2022, published in 2023,

companies are obligated to report also the share of Taxonomy-alignment in their operations.

Taxonomy-alignment describes if an economic activity is sustainable based on defined science-

based technical screening criteria specified for the activity. The criteria for ‘substantial

contribution’ determine that the economic activity either has a substantial positive environmental

impact or substantially reduces negative impacts on the environment. The criteria for ‘do no

significant harm’ determine that the economic activity does not impede on the other

environmental objectives from being reached, i.e. has no significant negative impact on them.

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

safeguards, thus sustainable activity is to respect basic human rights and follow good business

conduct rules.

During the first two reporting years of the EU Taxonomy, the focus is on activities contributing

to climate objectives, climate change mitigation and adaptation, according to the EU Climate

Delegated Act. The Taxonomy Regulation is a developing regulation and not yet covering all

sustainable activities in the market. The forest industry is not at the core of the current legislation

and therefore has only few relevant economic activities to report on. From Stora Enso’s main

products, only 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, corrugated packaging and paper, are out of the scope of the

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

anticipated to expand to four other environmental objectives during 2023 with the next delegated

act, but the amendments are not expected to bring major impact to Stora Enso's Taxonomy-

eligibility. Stora Enso supports the goals set by EU Taxonomy and welcomes the further

development of the regulation.

EU Taxonomy accounting principles

The KPI's reported in the EU Taxonomy are presented in separate tables for turnover, CapEx

and OpEx as defined in the regulation. The total turnover is Stora Enso Group’s total sales and

rental income in 2022, which respectively include the IFRS15 and the IFRS16 income according

to the EU Taxonomy turnover definition. The external sales connected to the economic activities

are correspondingly reported under Taxonomy-eligible turnover, either under Taxonomy-aligned

or not Taxonomy-aligned. The total CapEx is the Group's total capital expenditure in 2022, as

presented in the line of additions, excluding goodwill additions, in the Note 11 (Intangible assets,

property, plant and equipment and right of use assets), and the Note 12 (Forest assets). The

Taxonomy-eligible CapEx, either Taxonomy-aligned or not Taxonomy-aligned, 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 on Stora Enso Group level.

The Taxonomy-eligible OpEx include the corresponding direct non-capitalised costs associated

to the economic activities, reported either under Taxonomy-aligned or not Taxonomy-aligned.

Different to last year’s practice, the reported CapEx and OpEx are reported in full amount for

activities 1.3 Forest management and 4.20 Cogeneration of heat/cool and power from bioenergy

instead in relation to external turnover as in 2021.

Stora Enso avoids double counting by having a clear cost structure in reporting which

ensures that the profit centres and cost elements are separate for each activity.

Taxonomy eligible and aligned activities

Stora Enso has identified six eligible activities to report in the EU Taxonomy. Stora Enso has

carried out the assessments for Taxonomy-eligibility and Taxonomy-alignment based on the best

interpretation of the Taxonomy Regulation and the Climate Delegated Act and the currently

available guidelines from the European Commission. During 2022 Stora Enso formed a working

group of experts to assess if the eligible activities recognised in the EU Taxonomy are fulfilling

the criteria for Taxonomy alignment. For each economic activity, Stora Enso conducted

Unaudited 13

assessment for substantial contribution and ‘do no significant harm’ criteria to determine the

alignment. The alignment was determined for the climate change mitigation objective. Minimum

safeguards were assessed on the Group level. In the process Stora Enso used support from

external experts to provide a second opinion and the assessments and the data is covered by

external assurance.

1.3 Forest management

Stora Enso is one of the biggest private forest owners in the world and the forest assets share of

Group total assets is significant, 39% (excluding leased land). While Stora Enso owns forests

also via holdings, Taxonomy-eligible forest management includes only Stora Enso's own forest

activities in Sweden where the Company has full control over the activity. Tree plantations in

South America and China are not included in the EU Taxonomy reporting, under forest

management. 100% of Stora Enso’s Swedish forests are certified under certification systems

(PEFC or FSC) which lays the foundation for sustainable forest management. Through

assessment of the technical screening criteria for substantial contribution and ‘do no significant

harm’ defined in the EU Taxonomy for 1.3 Forest management, the activity was concluded

Taxonomy-aligned.

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

operations and hence not included in EU Taxonomy reporting. In the EU Taxonomy, the forest

management turnover includes the sale of externally sold roundwood and forest residuals. The

CapEx includes investments that support the forest management activities, such as forest land

acquisitions and investments in roads and bridges. In OpEx the silviculture costs and related

research and development costs are included.

1.4 Conservation forestry

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

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

aim is to restore each year new rainforest areas on degraded grasslands/pasture lands. The

conservation operations are included in Taxonomy-eligible conservation forestry. Conservation

forests are maintained as local habitat and species protection areas and are excluded from the

harvesting activities and plans. Through assessment of the technical screening criteria for

substantial contribution and 'do no significant harm' defined in the EU Taxonomy for 1.4

Conservation forestry, the activity was concluded Taxonomy-aligned.

There is no turnover nor CapEx connected to the conservation forestry activity. OpEx

includes the expenses related to the conservation work.

3.4 Manufacture of batteries

Graphitic carbon in lithium-ion batteries can be replaced with renewable hard carbon made from

lignin, which is a by-product in the production of cellulose fibers. Lignin is produced at Stora

Enso’s pulp production site in Sunila, where the pilot plant for refining of lignin and turning it into

hard carbon material (Lignode ®) for batteries was established. The pilot plant investment and

research and development related to hard carbon innovation are included in Taxonomy-eligibility.

Lignode offers a renewable active anode material for batteries, contributing to energy storage

applications for transportation, stationary and off-grid energy storage, and hence to climate

change mitigation. 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.

No turnover is yet connected to this activity. CapEx includes the investment in the pilot plant

in Sunila. OpEx includes the non-capitalised research and development costs of Lignode and

the maintenance material and other direct costs at the pilot plant in Sunila. External turnover for

the activity is expected within the next few years.

3.5 Manufacture of energy efficiency equipment for buildings

Stora Enso produces wood-based solutions for the construction industry. Door, window and

roofing components and external wall systems manufactured from classic sawn, CLT, LVL and

construction beams are reported eligible in the EU Taxonomy. Stora Enso manufactures

construction materials at sawmills in several countries and locations. 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. Through an assessment of the technical screening criteria for

substantial contribution and 'do-no-significant harm' defined in the EU Taxonomy for 3.5

Manufacture of energy efficiency equipment for buildings, the activity was concluded Taxonomy-

aligned.

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 allocation of the related CapEx and OpEx costs for the activity. CapEx

includes the investments related to the production of the Taxonomy-eligible products under this

activity. The largest single CapEx item is the investment in a new CLT site in Ždírec that was

inaugurated in October 2022. OpEx includes the maintenance salaries, maintenance material,

research and development and other direct costs related to the day-to-day serving of the asset.

4.15 District heating/cooling distribution

Stora Enso has invested in connecting pipeline to provide district heating for Karlsruhe area in

Germany. Industrial surplus heat produced at the Maxau site's combined heat and power plant in

Germany is fed into the pipeline. The new connection is taken into use early 2023. Through

assessment of the technical screening criteria for substantial contribution and do no significant

harm defined in EU Taxonomy for 4.15 District heating/cooling distribution, the activity was

concluded Taxonomy- aligned.

The investment in the district heating pipeline at Maxau is reported in the EU Taxonomy in

2022. The turnover and OpEx are expected to start generating during 2023. Stora Enso has

signed an agreement to divest the Maxau paper production site and all related assets to

Schwarz Produktion. The ownership is assumed to change in the beginning of 2023.

The turnover, CapEx and OpEx from other Stora Enso mills, that produce eligible bioenergy

and are connected to local district heating systems, are reported under activity 4.20

Cogeneration of heat/cool and power from bioenergy.

4.20 Cogeneration of heat/cool and power from bioenergy

At Stora Enso, wood residuals like bark, saw dust powder, harvesting residuals and by-products

from the pulp process like black liquor are used for energy production. Most of the produced

bioenergy is consumed internally, but energy is also sold to external markets. The bioenergy that

uses solely biobased feedstock in normal operations (excluding the usage of start-up fuel), is

considered eligible in the EU Taxonomy reporting. Eligible bioenergy is produced in several

Stora Enso sites. Through assessment of the technical screening criteria for substantial

contribution and 'do no significant harm' defined in the EU Taxonomy for 4.20 Cogeneration of

heat/cool and power from bioenergy, the majority of the activity was concluded Taxonomy-

aligned. The few boilers that did not meet all the thresholds defined in 'do no significant harm'

criteria for pollution, are reported as Taxonomy-eligible but not Taxonomy-aligned.

Unaudited 14

In the EU Taxonomy, the turnover includes the external sales of the excess electricity and

heat which is not consumed internally. CapEx includes the investments in the bioenergy

production at different sites. OpEx includes the maintenance salaries, maintenance material and

other direct costs related to the day-to-day serving of the asset.

Minimum safeguards

The Taxonomy Regulation specifies that in addition to substantial contribution and 'do no-

significant harm' criteria, an economic activity can be considered environmentally sustainable

only if it is carried out in compliance with the minimum safeguards. The minimum safeguards

prevent activities from being labelled sustainable if they for example violate human or labour

rights, engage in corrupt, anti-competitive or non-compliant taxation practices. The compliance

can be assessed from two angles according to the published guidance from Platform on

Sustainable Finance: there are adequate processes and controls in place in the areas of human

rights, corruption, taxation and fair competition and there are no breaches or violations existing.

Stora Enso has assessed the compliance with minimum safeguards by reviewing the

company processes for human rights, corruption, taxation and fair competition and investigated

possible cases of violations by the parent company, its subsidiaries or senior management.

While Stora Enso acknowledges the importance of continuous improvement of the processes in

these areas, the Company considers its processes to be on 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's tax footprint.

Proportion of Turnover from products or services associated with Taxonomy-aligned economic activities 2022

EUR million

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic Activities

Code(s)

Absolute turnover

Proportion of turnover

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy-

aligned

proportion

of turnover,

year N

Category

(enabling

activity)

Category

(transitional

activity)

EUR

y/n

A TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Forest management

1.3

111

0.9%

100%

N/A

100.0%

Manufacture of energy efficiency equipment for buildings

3.5

595

5.1%

100%

N/A

100.0%

Cogeneration of heat/cool and power from bioenergy

4.20

0.5%

100%

N/A

96.6%

Turnover of environmentally sustainable activities (Taxonomy-

aligned) A.1

760

6.5%

99.7%

A.2 Taxonomy-eligible but not environmentally sustainable

activities (not Taxonomy-aligned activities)

Cogeneration of heat/cool and power from bioenergy

4.20

0.0%

Turnover of Taxonomy-eligible but not environmentally

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

0.0%

Total (A.1+A.2)

762

6.5%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible activities (B)

10,932

93.5%

Total (A+B)1

11,694

100%

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

Unaudited 15

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities 2022

Capital Expenditure

EUR million

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic Activities

Code(s)

Absolute CapEx

Proportion of CapEx

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy-

aligned

proportion

of capex,

year N

Category

(enabling

activity)

Category

(transitional

activity)

EUR

y/n

A TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities

(Taxonomy-aligned)

Forest management

1.3

1.6%

100%

N/A

100%

Manufacture of batteries

3.4

0.3%

100%

N/A

100%

Manufacture of energy efficiency equipment for

buildings

3.5

3.0%

100%

N/A

100%

District heating/cooling distribution

4.15

0.3%

100%

N/A

100%

Cogeneration of heat/cool and power from bioenergy

4.20

0.8%

100%

N/A

70.1%

CapEx of environmentally sustainable activities

(Taxonomy-aligned) A.1

6.0%

94.3%

A.2 Taxonomy-eligible but not environmentally

sustainable activities (not Taxonomy-aligned

activities)

Cogeneration of heat/cool and power from bioenergy

4.20

0.4%

CapEx of Taxonomy-eligible but not environmentally

sustainable activities (not Taxonomy-aligned

activities) (A.2)

0.4%

Total (A.1+A.2)

6.4%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-eligible activities (B)

728

93.6%

Total (A+B)

778

100.0%

Unaudited 16

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities 2022

EUR million

Substantial contribution criteria

DNSH criteria

('Does Not Significantly Harm')

Economic Activities

Code(s)

Absolute OpEx

Proportion of OpEx

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy-

aligned

proportion

of OpEx,

year N

Category

(enabling

activity)

Category

(transitional

activity)

EUR

y/n

A TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Forest management

1.3

3.2%

100%

N/A

100%

Conservation forestry

1.4

0.1%

100%

N/A

100%

Manufacture of batteries

3.4

1.6%

100%

N/A

100%

Manufacture of energy efficiency equipment for buildings

3.5

3.0%

100%

N/A

100%

Cogeneration of heat/cool and power from bioenergy

4.20

2.4%

100%

N/A

52.9%

OpEx of environmentally sustainable activities (Taxonomy-

aligned) A.1

10.3%

82.9%

A.2 Taxonomy-eligible but not environmentally sustainable

activities (not Taxonomy-aligned activites)

Cogeneration of heat/cool and power from bioenergy

4.20

2.1%

OpEx of Taxonomy-eligible but not environmentally sustainable

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

2.1%

Total (A.1+A.2)

104

12.5%

B. TAXONOMY-NON-ELIGIBLE ACTIVITES

OpEx of Taxonomy-non-eligible activites (B)

733

87.5%

Total (A+B)

837

100%

Environmental investments and liabilities

In 2022 Stora Enso’s environmental investments amounted to EUR 82 (50) 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 2022 excluding interest and including depreciation

totalled EUR 243 (191) 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. The reporting scope was changed in 2022 to exclude the payments related to

provisions from environmental remediation projects. Due to this, the total costs for 2021 have

been restated.

Provisions for environmental remediation amounted to EUR 73 (75) million at 31 December

2022, details of which are in Note 22. There are currently no active or pending legal claims

concerning environmental issues that could have a material adverse effect on Stora Enso’s

financial.

Unaudited 17

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, we enhance opportunities

and manage risk in order to reduce threats which may prevent us from reaching our business

goals.

Risk governance

Stora Enso defines risk as the effect of uncertainty on our 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

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 24, Financial risk management.

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.

Unaudited 18

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

volume for different segments based on figures for 2022.

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


Segments	Price	Volume
Packaging Materials	447	125
Packaging Solutions	72	19
Biomaterials	205	101
Wood Products	215	67
Forest	249	11
Paper	163	43

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 2022


Operative costs	% of costs	% of sales
Logistics and commissions	12%	10%

Manufacturing costs
Fiber	33%	27%
Chemicals and fillers	10%	9%
Energy	9%	8%
Material	11%	9%
Personnel	13%	11%
Other	7%	6%
Depreciation	5%	5%
Total costs and sales	100%	85%
Total operative costs and sales in EUR million	9,847	11,680

Equity accounted investments (EAI), operational		58
Operational EBIT (EUR million)		1,891

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

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.

Unaudited 19

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 2022, a quantitative analysis regarding climate resilience was conducted in the South

American plantations based on three scenarios: SSP1-1.9 (~1.5⁰C and net-zero CO₂ emissions),

SSP2-4.5 (~2.7⁰C and CO₂ emissions are similar to current) and SSP5-8.5 (~4.4⁰C and CO₂

emissions are double that of the current). Results show a relative resilience of the plantations.

Financial consequences are not expected to be material in SSP1-1.9 and SSP2-4.5 scenarios,

but could be material in SSP5-8.5. Read more in the following chapter TCFD, 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.

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.

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 company-wide safety

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

top management and throughout the company. 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

company'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.

Unaudited 20

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.

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 company'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

Unaudited 21

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 online index table,

available at storaenso.com, with references to those locations where these issues are

addressed in the Group's annual reporting.

Scenario analysis in 2022

Aligned with the TCFD recommendations, Stora Enso utilises scenarios to assess the impacts of

climate change.

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

(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.

Scenario analysis the during 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.

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.

European Commission inspection

As announced in Stora Enso’s stock exchange release on 12 October 2021, the European

Commission has conducted unannounced inspections in locations at several member states at

the premises of companies active in the wood pulp sector. Stora Enso was included in the

European Commission’s inspection at its headquarters in Helsinki, Finland.

Stora Enso is cooperating fully with the authorities. As stated by the Commission, the fact that

they carry out such inspections does not mean that the companies are guilty of anti-competitive

behaviour nor does it prejudge the outcome of the investigation itself.

Stora Enso is under strict confidentiality rules regarding the details of the ongoing European

Commission investigation and cannot pre-empt or speculate regarding the next steps or

eventual outcome of the investigation.

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

Unaudited 22

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.

Changes in the Group management

René Hansen joined Stora Enso as EVP, Brand and Communications and a member of the

Group Leadership Team in February 2022.

Teemu Salmi, CIO, Head of IT & Digitalisation and a member of the Group Leadership Team

left his position at Stora Enso in May. Seppo Parvi, CFO, assumed the responsibility for the IT &

Digitalisation organisation.

Kati ter Horst, EVP Paper division and a member of the Group Leadership Team, left her

position at Stora Enso in July. Seppo Parvi, CFO, assumed the responsibility for the Paper

division.

Jari Suominen, EVP Forest division and a member of the Group Leadership Team, left his

position at Stora Enso in December.

Per Lyrvall, previously EVP Legal, was appointed as new EVP Forest division. He continues

as a member of the Group Leadership Team and as Stora Enso's country head for Sweden. The

search for a new General Counsel is ongoing. In the interim period, Christian Swartling, SVP

Group Legal, assumes the acting role in the position.

Minna Björkman was appointed EVP Sourcing and Logistics and a member of the Group

Leadership Team as of January 2023. Minna Björkman joined Stora Enso in 2019 as Senior Vice

President, Supply Chain and Operational Excellence for Packaging Solutions. Prior to joining

Stora Enso, she held several senior level positions at Finnish companies such as Nokia, Fazer

and Kemira.

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 voting rights. Each A share and each ten R shares carry one vote

at a shareholders’ meeting. However, each shareholder has at least one vote. During 2022, a

total of 5,769 A shares converted into R shares were recorded in the Finnish Trade Register.

Number of shares as at 31 December 2022


	A shares	R shares	Total
Number of shares	176,238,280	612,381,707	788,619,987
Number of votes (at least)	176,238,280	61,238,171	237,476,451

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 2022


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	4,172,492	14,900,000	2.4%	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	2,000,000	7,601,000	1.2%	1.2%
8	Bergslaget's Healthcare Foundation	626,269	1,609,483	0.3%	0.3%
9	SEB Investment Management	—	6,976,453	0.9%	0.3%
10	The State Pension Fund	—	5,000,000	0.6%	0.2%
11	The Society of Swedish Literature in Finland	—	3,000,000	0.4%	0.1%
12	Avanza Pension Insurance	146,285	1,268,398	0.2%	0.1%
13	Unionen (Swedish trade union)	—	2,612,750	0.3%	0.1%
14	Afa Insurance	—	2,381,676	0.3%	0.1%
15	SEB AB, Luxembourg Branch	2,177	1,785,231	0.2%	0.1%
	Total	166,598,749	88,068,405	32.3%	73.9%

	Nominee-registered shares3	75,058,822	496,088,402	72.4%	52.5%
	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 2022


By size of holding, A share	Shareholders	% of shareholders	Shares	% of shares
1–100	6,834	59.28%	264,473	0.15%
101–1,000	4,120	35.74%	1,463,504	0.83%
1,001–10,000	542	4.70%	1,257,741	0.71%
10,001–100,000	22	0.19%	473,102	0.27%
100,001–1,000,000	2	0.02%	284,687	0.16%
1,000,001–	8	0.07%	172,494,773	97.88%
Total	11,528	100.00%	176,238,280	100.00%

By size of holding, R share	Shareholders	% of shareholders	Shares	% of shares
1–100	16,974	36.76%	821,972	0.13%
101–1,000	22,825	49.43%	9,047,232	1.48%
1,001–10,000	5,868	12.71%	15,492,151	2.53%
10,001–100,000	435	0.94%	11,584,478	1.89%
100,001–1,000,000	58	0.13%	20,922,126	3.42%
1,000,001–	17	0.04%	554,513,748	90.55%
Total	46,177	100.00%	612,381,707	100.00%
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.

Unaudited 23

Ownership distribution as at 31 December 2022


	% 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)	9.8%	7.7%
Swedish institutions (excl. FAM)	1.9%	1.1%
Finnish private shareholders	3.9%	2.4%
Swedish private shareholders	3.1%	2.3%
ADR holders	1.7%	0.6%
Under nominee names (non-Finnish/non-Swedish shareholders)	55.7%	21.3%
1 Entirely owned by the Finnish State. 2 As confirmed to Stora Enso.

Outlook

Stora Enso remains vigilant against persisting market disruptions and uncertainties,

macroeconomic environment and inflationary pressures. Stora Enso enters the new year with

market softness and variable cost pressures which are expected to be more challenging in 2023

than in 2022 weighing on our results this year. The high macroeconomic uncertainty and

continued weak consumer confidence resulting in lower private consumption will continue to

impact negatively, especially on containerboard demand. Lower demand in the construction

sector remains challenging and is expected to especially impact on the demand for traditional

sawn wood. Compared to 2022, Group margins are expected to be squeezed by increasing

costs, particularly in relation to energy, wood, chemicals and logistics.

To manage volatility, variable costs are continually reviewed, and preparatory actions are

taken to be prepared to respond to fluctuations in demand with reinforced cost control. Other

measures such as pricing, flexibility in product mix, capacity and inventory management, and

sourcing and logistics are in place. Stora Enso in Finland has completed negotiations on

potential furloughs at its Wood Products division, and this year started negotiations on potential

furloughs at its Packaging Materials division’s production sites. Activities on adjusting capacity to

respond to fluctuations in demand have also been put in place for the Wood Products division’s

sites in other countries. Stora Enso also benefits from its high self-sufficiency in energy of 72%

as well as hedging, and from its ~30% self-sufficiency of wood.

The Group has made extensive changes to reshape the business over the past three years

under its new leadership and disciplined capital allocation is firmly integrated to the Group's day

to day operations. Stora Enso is now financially, operationally and strategically in better shape to

handle market fluctuations and at the same time, invest for growth in renewable packaging,

sustainable building solutions and biomaterials innovations.

Guidance

Stora Enso's full-year 2023 operational EBIT is expected to be lower than for the full-year 2022

(EUR 1,891 million).

Short-term risks and uncertainties

Risk 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.

The rapidly changing macroeconomic and geopolitical disruption is increasing complexity.

The sanctions on Russia, retaliatory measures as well as conflict-related risks to people,

operations, trade credit, cyber security, supply, and demand, could all have an adverse impact

on the Group.

There is a risk of continued higher cost inflation in general and in components such as

chemicals, and increased price volatility for raw materials such as wood, components and

energy in Europe, as well as continued logistical disruptions across the markets. The high

market demand for wood could cause disruptions such as delays and/or lack of wood supply to

the Group's production sites. The increased risk of a global economic downturn and recession,

as well as sudden interest rate increases and currency fluctuations, could all affect the Group’s

profits, cash flow and financial position negatively.

Other risks and uncertainties include, but are not limited to; general industry conditions,

unanticipated expenditures related to the cost of compliance with existing and new

environmental and other governmental regulations, and related to actual or potential litigation;

material process disruption at one of Stora Enso's manufacturing facilities with operational or

environmental impacts; risks inherent in conducting business through joint ventures; and other

factors that can be found in Stora Enso’s press releases and disclosures.

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, and 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 EUR40 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 236 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 165 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 64 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 114 million, negative EUR 12

million and positive EUR 18 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 164 million expense exposure in

Brazilian real (BRL) and approximately EUR 77 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 16 million and a positive EUR 8 million impact on

operational EBIT, respectively.

Unaudited 24

Annual General Meeting

Stora Enso Oyj's Annual General Meeting (AGM) will be held on Thursday 16 March 2023 at

4 p.m. Finnish time 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 0.60 per share be

distributed on the basis of the balance sheet adopted for the year 2022. 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

2022, 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 2022, EPS excluding fair valuation was EUR

1.55.

The Parent Company distributable shareholders’ equity on 31 December 2022 amounted to

EUR 1,970,697,938.32, including the profit for the period of EUR 415,641,225.97. 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 0.60 per share from the distributable shareholders’ equity to be distributed

on 788,619,987 shares, not to exceed EUR 473,171,992.20, which would leave EUR

1,497,525,946.12 in distributable shareholders’ equity.

The dividend would be paid to shareholders who on the record date of the dividend payment,

20 March 2023, 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 dividend be paid on or about 27 March

2023.

Events after the reporting period

Divestment of paper sites

The divestment of the Nymölla paper site in Sweden to Sylvamo was completed in early

January. The divestments of the Maxau site in Germany to Schwarz Produktion and the Hylte

site in Sweden to Sweden Timber are expected to be completed during H1/2023. The

divestment process for the Anjala paper site was discontinued and the site will be retained in

Stora Enso.

Changes in segment reporting

Stora Enso's segment reporting changed as of 1 January 2023. The Paper division was

discontinued as of 1 January 2023, and it is not reported as a separate segment going forward.

From 1 January 2023 onwards, the Maxau and Hylte paper sites are reported in Segment Other

until the completion of the divestments. The Langerbrugge and Anjala sites, which are retained

in Stora Enso are reported as part of the Packaging Materials division.

From 1 January 2023, the reporting of emerging businesses, including Formed Fiber, Circular

Solutions (biocomposites), and Selfly Stores, was transferred from the Packaging Solutions

division to Segment Other.

The comparative figures will be restated accordingly.

Acquisition of De Jong Packaging Group

In January, Stora Enso finalised the acquisition of the Dutch De Jong Packaging Group for an

enterprise value of approx. EUR 1,020 million. The acquisition will advance Stora Enso’s

strategic direction, accelerate revenue growth and build market share in renewable packaging in

Europe, and provide an entry into the corrugated packaging market in the Netherlands, Belgium,

Germany and the UK. De Jong Packaging Group’s full year 2022 sales is estimated at

approximately EUR 1 billion. Its product portfolio complements and enhances Stora Enso’s

offering, especially in fresh produce, e-commerce and industrial packaging.

Unaudited 25

Calculation of key figures


Operational return on capital employed, operational ROCE (%)	100 x	Annualised operational EBIT
	100 x	Capital employed1, 2

Operational return on operating capital, operational ROOC (%)	100 x	Annualised operational EBIT
	100 x	Operating capital2

Return on equity, ROE (%)	100 x	Net profit/loss for the period
Return on equity, ROE (%)	100 x	Total equity2

Net interest-bearing liabilities		Interest-bearing liabilities – interest-bearing assets

Net debt/equity ratio		Net interest-bearing liabilities
Net debt/equity ratio		Equity3

Earnings per share (EPS)		Net profit/loss for the period3
Earnings per share (EPS)		Average number of shares

Payout ratio, excl. FV, %	100 x	Dividend distribution / share
Payout ratio, excl. FV, %	100 x	EPS excl. FV

Dividend and distribution yield, %	100 x	Dividend distribution / share
Dividend and distribution yield, %	100 x	Closing price of share

Price/earnings ratio (P/E), excl. FV		Closing price of share
Price/earnings ratio (P/E), excl. FV		EPS excl. FV

Operational EBIT		Operating profit/loss excluding items affecting comparability (IAC) and fair valuations (FV) of the segments and Stora Enso’s share of operating profit/loss excluding IAC and fair valuations of its equity accounted investments (EAI)

Operational EBITDA		Operating profit/loss excluding silviculture costs and damage to forests, fixed asset depreciation and impairment, IACs and fair valuations. The definition includes the respective items of subsidiaries, joint arrangements and equity accounted investments.

Net debt/last 12 months’ operational EBITDA ratio		Net interest-bearing liabilities
Net debt/last 12 months’ operational EBITDA ratio		LTM operational EBITDA

Fixed costs		Maintenance, personnel and other administrative type of costs, excluding IAC and fair valuations

Last 12 months (LTM)		12 months prior to the end of reporting period


1 Capital employed = Operating capital – Net tax liabilities 2 Average for the financial period 3 Attributable to owners of the Parent

Non-IFRS measures

The Group’s key non-IFRS performance metric is operational EBIT, which is used to evaluate

the performance of its operating segments and to steer allocation of resources to them.

Operational EBIT comprises the operating profit excluding items affecting comparability (IAC)

and fair valuations from the segments and Stora Enso’s share of the operating profit of equity

accounted investments (EAI), also excluding items affecting comparability and fair valuations.

Items affecting comparability are exceptional transactions that are not related to recurring

business operations. The most common IAC are 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.

Fair valuations and non-operational items include CO2 emission rights, 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 EAI. Non-operational fair value changes of biological assets reflect changes

made to valuation assumptions and parameters. Operational fair value changes of biological

assets contain all other fair value changes, mainly due to inflation and differences in actual

harvesting levels compared to the harvesting plan. 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 profit (biological assets) and other comprehensive income

(forest land) and are included in operational EBIT only at the disposal date.

Cash flow after investing activities (non-IFRS) is calculated as follows: cash flow from

operations (non-IFRS) excluding cash spent on intangible assets, property, plant and equipment,

and biological assets and acquisitions of EAIs.

List of non-IFRS measures


Operational EBITDA Operational EBITDA margin Operational EBIT Operational EBIT margin Profit before tax excl. IAC and FV Capital expenditure Capital expenditure excl. investments in biological assets Capital employed	Depreciation and impairment charges excl. IAC Operational ROCE Earnings per share (EPS), excl. FV Operational ROOC Net debt/last 12 months' operational EBITDA ratio Cash flow after investing activities

Consolidated financial statements

Consolidated income statement


		Year ended 31 December
EUR million	Note	2022	2021
Sales	3	11,680	10,164

Other operating income	5	326	345
Changes in inventories of finished goods and work in progress		258	122
Materials and services		-6,979	-5,936
Freight and sales commissions		-1,148	-939
Personnel expenses	6	-1,315	-1,351
Other operating expenses	5	-594	-610
Share of results of equity accounted investments	13	221	143
Change in net value of biological assets	12	195	328
Depreciation, amortisation and impairment charges	10	-635	-697
Operating profit	3	2,009	1,568
Financial income	8	40	42
Financial expense	8	-191	-190
Profit before Tax		1,858	1,419
Income tax	9	-322	-151
Net profit for the year		1,536	1,268

Attributable to
Owners of the Parent	18	1,550	1,266
Non-controlling Interests	19	-13	3
Net profit for the year		1,536	1,268

Earnings per share
Basic earnings per share, EUR	32	1.97	1.61
Diluted earnings per share, EUR	32	1.96	1.60

Consolidated statement of comprehensive income


		Year ended 31 December
EUR million	Note	2022	2021
Net profit for the year		1,536	1,268

Other Comprehensive Income (OCI)

Items that will not be reclassified to profit and loss
Equity instruments at fair value through OCI	14	519	501
Actuarial gains and losses on defined benefit plans	20	147	126
Revaluation of forest land	12	259	225
Share of OCI of equity accounted investments (EAI)	13	58	16
Income tax relating to items that will not be reclassified	9	-77	-68
		906	800

Items that may be reclassified subsequently to profit and loss
Cumulative translation adjustment (CTA)	28	-197	56
Net investment hedges and loans	28	-27	14
Cash flow hedges and cost of hedging	27	52	-35
Share of OCI of non-controlling interests (NCI)	19	0	-3
Income tax relating to items that may be reclassified	9	-6	9
		-177	42

Total comprehensive income		2,265	2,110

Attributable to
Owners of the Parent		2,278	2,110
Non-controlling interests	19	-13	0
Total comprehensive income		2,265	2,110
The accompanying Notes are an integral part of these consolidated financial statements.

Consolidated statement of financial position


			As at 31 December
EUR million		Note	2022	2021

Assets

Goodwill	O	11	244	282
Other intangible assets	O	11	121	124
Property, plant and equipment	O	11	4,860	5,060
Right-of-use assets	O	11	418	441
			5,643	5,907
Forest assets	O	12	6,846	6,747
Biological assets	O	12	4,531	4,547
Forest land	O	12	2,315	2,201
Emission rights	O	15	123	137
Equity accounted investments	O	13	832	580
Listed securities	I	14	8	13
Unlisted securities	O	14	1,437	905
Non-current interest-bearing receivables	I	26	120	51
Deferred tax assets	T	9	74	143
Other non-current assets	O	15	38	34
Non-current assets			15,120	14,517

Inventories	O	16	1,810	1,478
Tax receivables	T		11	17
Operative receivables	O	17	1,473	1,449
Interest-bearing receivables	I	26	77	84
Cash and cash equivalents	I		1,917	1,481
Current assets			5,287	4,509

Assets held for sale		4	514	0

Total assets			20,922	19,026


			As at 31 December
EUR million		Note	2022	2021

Equity and liabilities

Share capital		18	1,342	1,342
Share premium			77	77
Invested non-restricted equity fund			633	633
Fair value reserve			3,002	2,175
Cumulative translation adjustment		28	-415	-195
Retained earnings			7,893	6,650
Equity attributable to owners of the Parent			12,532	10,683
Non-controlling Interests		19	-30	-16
Total equity			12,502	10,666
Post-employment benefit obligations	O	20	159	347
Provisions	O	22	81	91
Deferred tax liabilities	T	9	1,443	1,430
Non-current interest-bearing liabilities	I	26	2,792	3,313
Non-current operative liabilities	O	23	11	13
Non-current liabilities			4,486	5,195

Current portion of non-current debt	I	26	667	180
Interest-bearing liabilities	I	26	513	444
Bank overdrafts	I	26	0	1
Provisions	O	22	43	139
Operative liabilities	O	23	2,410	2,339
Tax liabilities	T	9	64	61
Current liabilities			3,697	3,165

Liabilities related to assets held for sale		4	237	0

Total liabilities			8,419	8,360

Total equity and liabilities			20,922	19,026
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	2022	2021
Cash flow from operating activities
Net profit for the year		1,536	1,268

Adjustments and reversal of non-cash items:
Taxes	9	322	151
Depreciation and impairment charges	10	635	697
Change in value of biological assets	12	-195	-328
Change in fair value of share awards		7	3
Share of results of equity accounted investments	13	-221	-143
CTA and profits and losses on sale of fixed assets and investments1	5	52	-54
Net financial items	8	151	149
Other adjustments		22	17
Dividends received from equity accounted investments	13	25	16
Interest received		13	2
Interest paid		-119	-123
Other financial items, net		-7	-19
Income taxes paid	9	-178	-136
Change in net working capital, net of businesses acquired or sold		-461	-25
Net cash provided by operating activities		1,582	1,476

Cash flow from investing activities
Acquisition of shares in equity accounted investments	13	-7	-6
Acquisition of unlisted securities	14	-11	-1
Cash flow on disposal of subsidiary shares and business operations, net of disposed cash	4	-77	55
Cash flow on disposal of shares in equity accounted investments	13	10	47
Cash flow on disposal of intangible assets and property, plant and equipment	11	17	105
Capital expenditure	3, 11	-603	-565
Investment in biological assets	12	-101	-79
Proceeds from/payment of non-current receivables, net		31	-4
Net cash used in investing activities		-742	-449


		Year ended 31 December
EUR million	Note	2022	2021
Cash flow from financing activities
Proceeds from issue of new long-term debt	26	366	19
Repayment of long-term debt and lease liabilities	26	-390	-940
Change in short-term interest-bearing liabilities	26	9	-59
Dividends paid		-434	-237
Purchase of own shares		-1	-3
Net cash used in financing activities		-450	-1,220

Net change in cash and cash equivalents		389	-193
Translation adjustment		48	18
Net cash and cash equivalents at beginning of year		1,480	1,655
Net cash and cash equivalents at year end		1,917	1,480

Cash and cash equivalents at year end2		1,917	1,481
Bank overdrafts at year end		0	-1
Net cash and cash equivalents at year end		1,917	1,480
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	2022	2021
Change in net working capital consists of:
Change in inventories		-454	-196
Change in interest-free receivables:
Current		-165	-305
Non-current		-1	-7
Change in interest-free liabilities:
Current		163	491
Non-current		-3	-7
Change in net working capital, net of businesses acquired or sold		-461	-25

Cash and cash equivalents consist of:
Cash on hand and at banks		1,272	946
Cash equivalents		646	535
Cash and cash equivalents		1,917	1,481

Non-cash investing activities
Total capital expenditure excluding right-of-use assets		656	576
Amounts paid		-603	-565
Non-cash part of additions to intangible assets and property, plant and equipment		53	11

Cash flow on disposals of subsidiaries and business operations
Cash part of the consideration	4	13	67
Cash and cash equivalents in divested companies	4	-90	-12
Net cash flow from disposal		-77	55
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 Equity Accounted Investments	CTA and net investment hedges and loans	Retained earnings	Attributable to owners of the parent	Non- controlling interests	Total
Balance at 1 January 2021	1,342	77	633	—	277	23	1,195	12	-267	5,518	8,809	-16	8,793
Net profit for the year	—	—	—	—	—	—	—	—	—	1,266	1,266	3	1,268
OCI before tax	—	—	—	—	501	-35	225	16	70	126	903	-3	900
Income tax relating to OCI	—	—	—	—	1	8	-46	—	2	-22	-59	—	-59
Total Comprehensive Income	—	—	—	—	501	-27	179	16	72	1,369	2,110	—	2,110
Dividend	—	—	—	—	—	—	—	—	—	-237	-237	—	-237
Acquisitions and disposals	—	—	—	—	—	—	—	—	—	—	—	—	—
Purchase of treasury shares	—	—	—	-3	—	—	—	—	—	—	-3	—	-3
Share-based payments	—	—	—	3	—	—	—	—	—	—	3	—	3
Balance at 31 December 2021	1,342	77	633	—	778	-4	1,373	29	-195	6,650	10,683	-16	10,666
Net profit 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
CTA = Cumulative Translation Adjustment, NCI = Non-controlling Interests, OCI = Other Comprehensive Income, EAI = Equity Accounted Investments

Notes to the consolidated financial statements

Note 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, Paper

and segment Other. The Group’s main

market is Europe.

The Financial Statements were

authorised for issue by the Board of

Directors on 30 January 2023.

Basis of preparation

The consolidated financial statements of

Stora Enso Oyj have been prepared in

accordance with International Financial

Reporting Standards (IFRS), as adopted by

the European Union, including International

Accounting Standards (IAS) and

interpretations issued by the IFRS

Interpretations Committee (IFRIC). The

consolidated financial statements of Stora

Enso Oyj 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 this Annual Report 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 2022

The Group has applied the following new

and amended standards and interpretations

which are effective from 1 January 2022:

•Amendments to IFRS 3 Business

Combinations, IAS 16 Property, Plant and

Equipment, IAS 37 Provisions, Contingent

Liabilities and Contingent Assets and

Annual Improvements 2018-2020. The

amendments in IFRS 3 relate to

identifying the liabilities assumed in a

business combination and that an

acquirer does not recognise contingent

assets acquired in a business

combination. The amendment in IAS 16

prohibits deducting from the cost of a

fixed asset any proceeds from selling

items produced while bringing that asset

in use. Instead, proceeds from selling

such items and the cost of producing

those items are recognised in profit or

loss. The amendments in IAS 37 specify

that the cost of fulfilling a contract

includes the costs that relate directly to

the contract (examples include direct

labour, materials, and allocation of the

depreciation for an asset used in fulfilling

the contract). Annual Improvements to

IFRS Standards 2018–2020 include minor

amendments in IFRS 9 Financial

Instruments, IFRS 16 Leases and IAS 41

Agriculture. The effective date is 1

January 2022. The amendments did not

have a significant impact on the Group.

•Amendments to IFRS 16 Leases:

COVID-19 Related Rent Concessions.

The amendments extend the availability

of the practical expedient and provide

lessees with an exemption from

assessing whether a COVID-19-related

rent concession is a lease modification.

The effective date is annual reporting

periods beginning on or after 1 April 2021.

The amendments did not have a

significant impact on the Group.

•Other standards standard amendments

and interpretations did not have any

significant impact on the Group's

consolidated financial statements or

disclosures.

Changes in accounting principles

Valuation of Finnish forest assets

Stora Enso changed the valuation method

for its forest assets in Finland at the end of

2022 to correspond to the valuation method

applied with Swedish forest assets. Forest

assets in Finland are owned through Group's

41% shareholding in equity accounted

investment Tornator. Forest assets are

defined as biological assets (standing

growing trees) and the related forest land. As

a result of the valuation method change, the

forest assets in Finland are valued using a

market approach.

Forest assets in Finland are valued by

using a market approach method based on

the forest market transactions in those areas

where Stora Enso’s forests are located. In

Finland reliable market transaction data is

considered to be available and also

considered to provide a more transparent

and observable valuation basis. The total

forest assets net cash flows consist of cash

flows related to standing trees (biological

assets) and separate cash flows regarding

forest land. The standing trees valuation is

computed based on a discounted cash flow

(DCF) method and using a discount rate

implied by the market transactions in

accordance with the IAS 41 Agriculture

standard. The discount rate is determined as

the rate at which the market transaction

prices match the total forest assets cash

flows. The discount rate is the same for

biological assets and forest land.

Previously, the discounted cash flow

method was used for valuation of biological

assets and forest land, where the discount

rate applied was determined using the

weighted average cost of capital method.

There are no changes in applied accounting

principles and the change in the valuation

method concerns only forest assets in

Finland, while there are no changes in the

valuation method with Tornator's minor forest

holdings in Estonia and Romania.

Changes in the valuation method with

Finnish forest assets increased Stora Enso's

share of the carrying amount of forest assets

by approximately EUR 240 million, divided

between an increase in biological assets of

EUR 170 million and an increase in forest

land of EUR 70 million. Net of taxes, the

change resulted in about EUR 190 million

increase in investments in equity accounted

investments.

The increase in forest land assets is

recognised in the OCI net of deferred taxes

and does not have an impact on the income

statement. The fair value changes in

biological assets is recognised in the income

statement. The comparative periods have

not been restated. See Note 12 Forest

assets for more details.

Accounting considerations relating

to Russia

As announced in March 2022, all import and

export activities from and to Russia were

halted, and operations in Russia were

stopped. In May and July 2022, Stora Enso

sold all of its operations in Russia. Related to

one forest operations unit, the disposal will

be completed in 2023, upon finalisation of

certain formalities. More details about

disposed Packaging Solutions, Wood

Products and Forest operations are

presented in Note 4 Acquisitions disposals

and assets held for sale. More information

about valuation of remaining Russia related

receivables see Note 26 Interest-bearing

assets and liabilities.

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 30 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 equity

accounted investments 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 13 Equity

accounted investments.

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

forestry plantations. The mill commenced

production in May 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 forestry plantations.

The mill commenced production in June

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 3 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 area foreign

entities. Exchange differences arising from

the retranslation of net investments in foreign

entities that are non-euro foreign

subsidiaries, joint operations or equity

accounted investments, and of financial

instruments that are designated to hedge

such investments, are recorded directly in

equity as cumulative translation adjustment

(CTA). See Note 28 Cumulative translation

adjustments and equity hedging for more

details.

Future standard changes endorsed

by the EU but not yet effective in

2022

•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

Group will consider the amendment in

disclosures and expects that the impact

will not be significant.

•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 Group expects that the

amendment does not have a significant

impact.

•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 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 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 2022

•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 is evaluating the impact of the

amendments.

•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

amendments and expects that the

amendment does not have significant

impact.

•Other published standards, standard

amendments or interpretations are not

expected to have any significant on the

Group’s consolidated financial statements

or disclosures.

Note 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

results and timings 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 10

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

calculated using the discounted cash flow

method (value in use). 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 10

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 11 Intangible assets,

property, plant and equipment and right-of-

use assets for more details about right-of-

use assets and Note 26 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 accounted in accordance

with the IAS 41 Agriculture standard, which

requires that the assets 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

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 12 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

method, 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 12 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

Oy (PVO), represent a significant portion of

the Group’s assets and require management

judgement, as explained in more detail in

Notes 14 Equity instruments and 24

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

9 Income taxes for more detailed

information.

Post-retirement 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 20 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 22 Provisions for

more detailed information.

Note 3 Segment information

Accounting principles

Stora Enso’s reportable segments are Packaging Materials, Packaging Solutions, Biomaterials,

Wood Products, Forest, and Paper 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

business 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. Addressing the needs of

today’s eco-conscious consumers, Stora Enso helps customers replace fossil-based materials

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

packaging. A wide selection of base boards and barrier coatings enables design optimisation for

various demanding packaging end-uses.

Packaging Solutions

The Packaging Solutions division develops and sells premium fiber-based packaging products

and services. Stora Enso’s high-end eco-friendly packaging products are used by leading brands

across multiple market sectors, including the retail, e-commerce and industrial sectors. The

portfolio includes converting corrugated board and carton board, and other new materials such

as formed fiber and wood foams into standard and bespoke packaging solutions. The division

also provides design and sustainability services for our customers, as we support a shift towards

circular solutions.

Biomaterials

The Biomaterials division meets the growing demand for bio-based solutions which replace

fossil-based and non-renewable materials. Stora Enso achieves this by using all fractions of

biomass, like lignin, to develop new solutions including novel applications such as bio-based

anode material for batteries and bio-based binders. Our pulp offering encompasses a wide

variety of grades to meet the demands of packaging, paper, tissue, specialities, and hygiene

product producers. We also serve the biochemicals market with tall oil and turpentine from

biomass for further refining. Pulp continues to be our foundation while long-term growth is driven

by new products and innovations.

Wood Products

The Wood Products division is the largest sawn wood producer in Europe and a leading provider

of sustainable wood-based solutions for the global construction industry. The growing Building

Solutions business offers building concepts and a full range of products to support low-carbon

construction. Stora Enso develops services and digital tools to simplify the design and

construction of buildings with wood. Additionally, we offer applications for windows and doors,

and pellets for sustainable heating solutions.

Forest

The Forest division creates customer value through innovative solutions, competitive wood

supply and sustainable forest management. Forests are the foundation for Stora Enso’s

renewable offerings. The division manages Stora Enso’s forest assets in Sweden and a 41%

share of Tornator, whose forest assets are mainly located in Finland. It is also responsible for

wood sourcing for Stora Enso’s Nordic and Baltic operations and B2B customers. Stora Enso is

one of the biggest private forest owners in the world.

Paper

At the end of 2022, Stora Enso had an established customer base and its product portfolio had

offerings for print and office use. Customers benefit from Stora Enso’s selection of paper grades

made from recycled and virgin fiber, our technical and operational expertise and sustainability

know-how, and our sales and customer service centre network.

Segment Other

The segment Other includes 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 33 (Events after the

reporting period).

Sales by segment


	External	Internal	Total	External	Internal	Total
EUR million	2022			2021
Packaging Materials	4,473	218	4,690	3,715	183	3,898
Packaging Solutions	714	23	737	704	19	723
Biomaterials	1,798	382	2,180	1,499	229	1,728
Wood Products	2,058	137	2,195	1,766	106	1,872
Forest	848	1,671	2,519	781	1,530	2,311
Paper	1,691	81	1,772	1,644	59	1,703
Other	97	1,000	1,097	55	1,037	1,092
Elimination of internal sales		-3,512	-3,512		-3,163	-3,163
Total	11,680	0	11,680	10,164	0	10,164

Disaggregation of revenue


EUR million	2022	2021
Product sales	11,521	10,047
Service sales	159	117
Total	11,680	10,164

Segment share of operating profit/loss


	Year Ended 31 December
	Operating Profit/Loss
EUR million	2022	2021
Packaging Materials	595	552
Packaging Solutions	-101	23
Biomaterials	668	506
Wood Products	253	363
Forest	523	622
Paper	172	-423
Other	-59	-67
Eliminations	-41	-8
Total	2,009	1,568
Net financial items	-151	-149
Profit before Tax	1,858	1,419
Income tax expense	-322	-151
Net Profit	1,536	1,268

Operating capital, depreciation, impairments and impairment reversals, disposal gains

and losses, and capital expenditure by segment


	Year Ended 31 December
	Operating capital		Depreciation/ impairments/ impairment reversals/ disposal gains and losses		Capital expenditure1
EUR million	2022	2021	2022	2021	2022	2021
Packaging Materials	3,344	3,206	253	255	342	330
Packaging Solutions	235	245	66	32	46	34
Biomaterials	2,796	2,520	110	99	121	88
Wood Products	718	678	59	46	87	66
Forest	6,963	6,696	50	20	35	25
Paper	333	123	88	207	60	55
Other	1,477	860	9	37	10	11
Eliminations	-61	-21	0	0	0	0
Total	15,806	14,307	635	697	701	609
1 Excluding biological asset capex Operating capital (“O” items) is designated thus in the balance sheet and represents the sum of intangible asset and property, plant and equipment, right-of-use assets, forest assets, emission rights, unlisted shares, other non-current assets, inventories, current operative receivables and liabilities, provisions and other non-current operative liabilities. Operating capital includes assets held for sale and liabilities related to assets held for sale.

Goodwill by segment


	Year Ended 31 December
	Goodwill1
EUR million	2022	2021
Packaging Materials	24	25
Packaging Solutions	6	6
Biomaterials	45	45
Wood Products	117	116
Forest	0	0
Paper	51	90
Other	0	0
Total	244	282
1 Goodwill excluding assets held for sale

See Note 10 Depreciation, amortisation and impairment charges for more details related to

recognised impairments and impairment testing.

Average personnel


	Year Ended 31 December
Segment	2022	2021
Packaging Materials	6,274	5,801
Packaging Solutions	3,966	4,361
Biomaterials	2,135	1,865
Wood Products	4,445	4,177
Forest	1,412	1,476
Paper	2,298	3,292
Other	1,261	2,098
Total	21,790	23,071


	Year Ended 31 December
Location	2022	2021
Austria	1,067	1,028
Baltic States	1,512	1,459
Belgium	506	506
Czech Republic	1,118	1,039
Finland	5,666	6,003
Germany	598	734
Poland	1,994	1,976
Russia	585	1,132
Sweden	4,659	5,023
Other Europe	230	236
Total Europe	17,934	19,137
Brazil	527	477
China (incl. Hong Kong)	2,894	3,006
USA	33	43
Uruguay	313	310
Other countries	89	98
Total	21,790	23,071


	As at 31 December
	2022	2021
Year-End Personnel	20,879	22,094

External sales by destination


	Sales by Destination
EUR million	2022	2021
Austria	450	403
Baltic States	377	315
Belgium	117	102
Czech Republic	231	188
Denmark	128	108
Finland	759	610
France	449	357
Germany	1,208	1,049
Italy	650	450
Netherlands	317	207
Poland	733	548
Russia	112	307
Spain	311	246
Sweden	1,071	975
UK	444	395
Other Europe	577	837
Total Europe	7,934	7,096
Australia / New Zealand	202	146
Brazil	50	41
China (incl. Hong Kong)	1,125	1,183
Japan	417	316
Middle East	275	252
Uruguay	31	28
USA	397	320
Other countries	1,250	782
Total	11,680	10,164

Reconciliation of operating capital to total assets


	As at 31 December
EUR million	2022	2021
Operating capital	15,806	14,307
Operative liabilities	2,909	2,930
Interest-bearing receivables	2,122	1,629
Tax receivables	85	160
Total assets	20,922	19,026

Operating capital, non-current assets and capital expenditure by location


	Year Ended 31 December
	Operating capital		Non-current assets1		Capital expenditure2
EUR million	2022	2021	2022	2021	2022	2021
Austria	125	107	128	120	16	8
Baltic States	163	151	74	72	12	9
Belgium	99	123	135	153	13	21
Czech Republic	196	162	198	158	41	39
Finland	4,543	3,358	2,729	2,382	311	296
Germany	44	-68	53	216	10	5
Poland	413	406	379	378	35	36
Russia	-2	112	0	73	3	12
Sweden	7,021	6,777	6,837	6,951	173	129
Other Europe	66	92	11	6	8	1
Total Europe	12,668	11,219	10,543	10,508	623	556
Brazil	303	261	278	231	21	16
China (incl. Hong Kong)	1,093	1,173	1,044	1,116	25	18
Uruguay	1,722	1,636	1,580	1,514	31	18
USA	41	47	32	30	0	0
Other countries	-22	-29	4	6	1	1
Total	15,806	14,307	13,481	13,405	701	609
1 Non-current assets excluding assets held for sale, financial instruments and deferred tax assets. 2 Excluding biological asset capex

Note 4 Acquisitions, disposals and assets held for sale

Accounting principles

Acquired companies are accounted in accordance with the acquisition method whereby these

companies are included in the consolidated financial statements from the date the control is

obtained. Accordingly, the consideration transferred (including contingent consideration) and the

acquired company's identifiable net assets are measured at fair value at the date of the

acquisition. Transaction costs related to acquisition are expensed as incurred. The

measurement type of non-controlling interest is decided separately for each acquisition, and

measured either at fair value or non-controlling interest's proportionate share of the net assets.

The excess of the consideration transferred, non-controlling interest and possible previously held

equity interest over the fair value of net assets of the acquired company is recognised as

goodwill, which is tested for impairment at least annually.

The disposed companies are included in the consolidated financial statements up to the date

when the control is lost. The gain or loss on disposal together with cumulative translation

adjustments (CTA) related to disposed companies are recognised in the consolidated income

statement at the date control is lost. Gains and losses on the disposal of a Group entity include

any goodwill relating to the entity sold.

Assets are classified as held for sale, if their carrying amounts will be recovered mainly

through a sale transaction rather than through continuing use. The assets must be available for

immediate sale in their present condition subject only to terms that are usual and customary for

sale of such assets. Also, the sale must be highly probable and expected to be completed within

one year from the date of classification. These assets and related liabilities are presented

separately in the consolidated statement of financial position and measured at the lower of the

carrying amount and fair value less costs to sell. Comparative information is not restated when

classification is made. Assets classified as held for sale are not depreciated.

Acquisition of Group companies

Stora Enso did not complete any company or business acquisitions in 2022 or 2021.

In September 2022, Stora Enso signed an agreement to acquire De Jong Packaging Group

and the transaction was completed on 6th January 2023, presented as non-adjusting event after

the reporting period. Following the completion of the transaction, purchase accounting for the

acquisition has been initiated, including the preparation of a purchase price allocation. As of the

date of authorisation for issuance of these financial statements, given the size, complexity and

timing of the acquisition, the provisional purchase price allocation is incomplete. Accordingly,

assets acquired, liabilities assumed, and the resulting non-controlling interest and goodwill to be

recognised have not yet been estimated on a preliminary basis and therefore not presented.

The goodwill will represent the expected synergies, mainly through sourcing, containerboard

integration optimisation and commercial opportunities. The goodwill will be allocated to Divisions

benefiting from the acquisition, Packaging Solutions and Packaging Materials. None of the

goodwill recognised is expected to be deductible for tax purposes. The shares of the acquired

companies are mainly 100% owned, with certain units having minor non-controlling interests.

The non-controlling interest will be measured based on the proportionate share of the identifiable

net assets.

The preliminary cash purchase consideration was EUR 612 million, excluding contingent

earn-out component. The earn-out component will be settled in cash in 2024 and is subject to

De Jong Packaging Group achieving certain earnings thresholds. The contingent consideration

is measured at its fair value at the date of acquisition and the maximum amount of earn-out is

EUR 45 million. The final purchase price is subject to customary purchase price adjustments.

De Jong Packaging Group is based in the Netherlands and is one of the largest corrugated

packaging producers in the Benelux countries. De Jong Packaging Group is also active in

containerboard production through the acquisition of the De Hoop mill in the Netherlands in

2021. De Jong Packaging Group has 17 sites in the Netherlands, Belgium, Germany and the UK

and it employs approximately 1,300 people. With the acquisition, Stora Enso’s Packaging

Solutions division will increase its corrugated packaging capacity by approximately 1,200 million

m2 to more than 2,000 million m2, including De Jong Packaging Group’s ongoing expansion

projects.

The acquisition will advance Stora Enso’s strategic direction, accelerate revenue growth and

build the market share in renewable packaging in Europe. De Jong Packaging Group's product

portfolio and geographic presence will complement and enhance Stora Enso’s offering. The

acquisition is also expected to generate synergies over the cycle, mainly through sourcing,

containerboard integration optimisation and commercial opportunities. The acquired units will be

reported in Packaging Solutions and Packaging Materials divisions.

Disposal of Group companies


	Year Ended 31 December
EUR million	2022	2021
Net assets sold
Cash and cash equivalents	90	12
Property, plant and equipment	8	32
Intangible assets	0	1
Working capital	-1	10
Tax assets and liabilities	6	9
Interest-bearing assets and liabilities	-19	-1
Net assets in disposed companies	85	62

Total disposal consideration	70	67
CTA release	-47	1
Asset writedowns1	-155	-20
Loan impairments	-23	0
Transaction costs	-4	-2
Total net gain/loss	-244	-16
1 2022 mainly related to writedowns in connection to Russia operations and including also writedowns related to assets held for sale.

2022

Kvarnsveden site

In December 2022, Stora Enso divested its 100% owned Kvarnsveden site in Sweden to

Northvolt, a European supplier of sustainable battery cells. Due to structural decline in demand

for graphical paper, in April 2021 Stora Enso announced a plan to close its Kvarnsveden paper

site and the production was ended in September 2021. The site will be developed into a battery

manufacturing plant, reusing and refurbishing the existing facilities and site infrastructure. The

sold unit was part of segment Other at the time of disposal. The transaction did not have a

significant impact on the Group.

Russia operations - Wood Products and Forest

In July 2022, Stora Enso divested its two Nebolchi and Impilahti sawmills in Russia to local

management. In addition, the divestment included Russian forest operations which supplies

wood to the sawmills. The disposed sawmill sites are located in Novgorod and Karelia and have

a total annual capacity of 350,000 m3 of sawn timber, including 55,000 m3 of processed timber

and 65,000 tonnes of pellets. Russian forest operations managed long-term harvesting rights for

around 370,000 hectares. The divested seven legal entities were mainly 100% owned, with

exception of one unit that was 99.48% owned. Related to one forest operations unit, the disposal

will be completed in 2023, upon finalisation of certain formalities. This does not have any

significant impact on the Group. During 2022, the Group recognised asset write-downs of EUR

74 million (mainly fixed assets, inventories and trade receivables) related to the transaction.

About two thirds of the sale consideration is to be received in instalments at future dates. The

loss on disposal was EUR 24 million, including cumulative translation adjustments (CTA) being

released from equity to income statement. In addition, there were impairments of loan

receivables of EUR 23 million related to the transaction. The sold units were part of the Wood

Products and Forest divisions.

Russia operations - Packaging Solutions

In May 2022, Stora Enso divested its three 100% owned corrugated packaging plants in Russia

to local management. The divested three packaging plants are located in Lukhovitsy, Arzamas

and Balabanovo and have a total annual capacity of 395 million m² of corrugated packaging. The

sites primarily produce corrugated packaging in the domestic Russian market. During 2022, the

Group recognised asset write-downs of EUR 42 million (mainly fixed assets, inventories and

trade receivables) related to the transaction. The sale consideration is to be received in

instalments at future dates. The loss on disposal was approximately EUR 49 million, consisting

mainly of cumulative translation adjustments (CTA) being released from equity to income

statement. The sold units were part of the Packaging Solutions division.

Vlar Papier

In February 2022, Stora Enso divested its 100% shareholdings in Vlar Papier NV in Belgium.

The sold company was part of the Paper division. The transaction did not have a significant

impact on the Group.

2021

Laos

In September 2021, Stora Enso divested its 100% shareholdings in Stora Enso Laos Plantation

AB and Stora Enso Lao Co Ltd to SilviCarbon. Stora Enso operated plantations in Laos since

2007, with approximately 3 800 hectares of land use rights. After the transaction, Stora Enso

does not own any forest assets in Laos. The sold companies were part of the Forest division.

The transaction did not have a significant impact on the Group.

ECO RFID

In September 2021, Stora Enso divested its ECO RFID technology business to Group CCRR.

The sold business was part of the segment Other. The transaction did not have a significant

impact on the Group.

Sachsen

In May 2021, Stora Enso signed an agreement to divest its 100% shareholding in the Sachsen

Mill to Model Group. The mill is located in Eilenburg, Germany and has an annual production

capacity of 310 000 tonnes of newsprint specialty paper based on recycled paper. The disposal

was completed in August 2021 and Stora Enso will continue to sell and distribute Sachsen’s

products under a contract manufacturing agreement for a period of 18 months after the closing.

During the second quarter of 2021, the Group recognised asset impairments of EUR 20 million

related to the transaction. The consideration received by Stora Enso for the divestment of the

shares was EUR 53 million. The final disposal loss was not significant. Sachsen Mill was part of

the Paper division.

Forest division units

In March and June 2021, Stora Enso divested its 100% shareholdings in several wind turbine

project and real estate related companies. These companies were mainly acquired in May 2019

in connection to Bergvik Skog AB restructuring. The sold companies were part of Forest division.

The transactions did not have a significant impact on the Group.

Assets held for sale


	Year Ended 31 December
EUR million	2022	2021
Property, plant and equipment	264	0
Intangible assets	55	0
Inventories	91	0
Current operative receivables	104	0
Tax assets	0	0
Assets held for sale	514	0

Non-current operative liabilities	42	0
Current operative liabilities	163	0
Tax liabilities	28	0
Interest-bearing liabilities	4	0
Liabilities related to assets held for sale	237	0

Assets held for sale at the end of 2022 include the Maxau, Nymölla and Hylte sites.

In September 2022, Stora Enso signed an agreement to divest its 100% owned Maxau paper

production site in Germany and all related assets to Schwarz Produktion (part of Schwarz

Group) with an enterprise value of approximately EUR 210 million. The transaction is expected

to be completed during the first half of 2023. The mill has an annual supercalendered paper (SC

paper) capacity of 530,000 tonnes. Maxau mill is part of the Paper division.

In September 2022, Stora Enso signed an agreement to divest its 100% owned Nymölla

paper production site in Sweden and all related assets to Sylvamo, a US-based global producer

of uncoated paper, with an enterprise value of approximately EUR 150 million. Transaction was

completed in the beginning of 2023. The Nymölla site’s annual capacity is 485,000 metric tonnes

of wood free uncoated office papers. In 2022 and in connection to the transaction, the Group

recognised approximately EUR 14 million of asset writedowns. Nymölla mill is part of the Paper

division.

In January 2023, Stora Enso signed an agreement to divest its 100% owned Hylte paper

production site in Sweden to Sweden Timber with an enterprise value of approximately EUR 18

million. The transaction is expected to be completed during the first half of 2023. The Hylte site's

annual capacity is 245,000 tonnes of newsprint paper. In 2022 and in connection to the

transaction, the Group recognised approximately EUR 19 million of asset writedowns in the unit.

Hylte mill is part of the Paper division.

Note 5 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 depreciated 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


	Year Ended 31 December
EUR million	2022	2021
Other operating income
Emission rights allocated and disposal gains	177	154
Sale of green certificates	10	20
Gains on disposal of fixed assets	4	31
Gains on disposal of Group companies and business operations	18	34
Dividend and gain on sale of unlisted shares	1	0
Insurance compensation	10	7
Other1	85	83
Government grants	16	14
CTA release	5	2
Total	326	345

1 Including rent income, fair value changes for non-hedge accounted derivatives and other items. Derivatives are discussed in more detail

in Note 27 Derivatives.


	Year Ended 31 December
EUR million	2022	2021
Other operating expenses
Lease expenses	40	38
Research and development	89	82
Credit losses, net of reversals	13	3
Losses on disposal of Group companies and business operations	26	3
CTA release	52	16
Provision changes in income statement	31	184
Other1	342	284
Total	594	610
1 Including expenses related to, among others, consultancy and other services, IT and telecommunications, properties and administration, audit, training, travelling, insurance, penalties, currency translation differences on operative payables.

	Year Ended 31 December
Materials and services include	2022	2021
Emissions rights to be delivered	112	99

The Group has recorded an other operating income of EUR 177 (EUR 154) million related to

Emissions. Under Materials and Services an expense of EUR 112 (EUR 99) million has been

booked related to the cost of CO2 emissions from production. Actual realised profits amounted to

EUR 59 (EUR 22) million on the disposal of surplus rights. See Note 15 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 10 (EUR 20) million.

Lease expenses include expenses relating to short-term leases of EUR 12 (EUR 10) million,

low-value assets of EUR 21 (EUR 20) million and variable lease payments not included in the

measurement of lease liabilities of EUR 2 (EUR 3) million. Lease expenses also include service

payments included in lease contracts, which are not included in the measurement of lease

liabilities.

Auditor's fees and services


	Year Ended 31 December
EUR million	2022	2021
Audit fees	4	4
Audit-related	0	0
Tax fees	0	0
Other fees	0	0
Total	4	4

Aggregate fees for professional services rendered to the Group principal auditor PwC amounted

to EUR 4 (EUR 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.

Note 6 Personnel expenses

Personnel expenses


	Year Ended 31 December
EUR million	2022	2021
Wages and salaries	996	1,017
Pension expenses	152	165
Share-based remuneration	8	7
Other statutory employer costs	140	143
Other voluntary costs	20	19
Total	1,315	1,351

Pension expenses


	Year Ended 31 December
EUR million	2022	2021
Defined benefit plans	5	12
Defined contribution plans	146	153
Total	152	165

The average number of employees in 2022 amounted to 21,790 compared with 23,071 in 2021.

Pension costs are discussed further in Note 20 Post-employment benefit obligations.

In 2022, the expense of the share-based remuneration was EUR 8 (EUR 7) million. Share-

based remuneration comprising of share awards is described in more detail in Note 21

Employee variable compensation and equity incentive schemes. Remuneration of the Group

Leadership Team and Board are described in Note 7 Board and executive remuneration.

Note 7 Board and executive remuneration

Board and committee remuneration


	Year Ended 31 December
	2022			2021
EUR thousand (before taxes)	Cash	Value of shares1	Total4	Total	Committee memberships
Board members at 31 December 2022
Antti Mäkinen, Chair	133	81	214	208	People and Culture, Nomination2,3
Håkan Buskhe, Vice Chair	76	46	122	118	People and Culture, Nomination2,3
Elisabeth Fleuriot	63	32	94	91	Financial and Audit
Hock Goh	63	32	94	91	Financial and Audit
Helena Hedblom	54	32	86	82	Sustainability and Ethics
Kari Jordan	54	32	86		People and Culture
Christiane Kuehne	58	32	90	87	Sustainability and Ethics
Richard Nilsson	69	32	101	97	Financial and Audit
Hans Sohlström	54	32	86	82	Sustainability and Ethics
Former Board members
Mikko Helander (until 15 March 2022)	0	0	0	82

Total remuneration as Directors1	624	348	972	939
140% of the Board remuneration, excluding Committee remuneration, in 2022 was paid in Stora Enso R shares purchased from the market and distributed as follows: to Chair 4 332 R shares, Vice Chair 2 454 R shares, and members 1 686 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. Reima Rytsölä is the member of the Shareholders’ Nomination Board appointed by Solidium Oy. Antti Mäkinen 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 2022


	Shares held
	A	R
Board members at 31 December 2022
Antti Mäkinen, Chair		16,576
Håkan Buskhe, Vice Chair		7,933
Elisabeth Fleuriot		30,029
Hock Goh		34,782
Helena Hedblom		3,517
Kari Jordan		1,686
Christiane Kuehne		14,590
Richard Nilsson1	127	27,132
Hans Sohlström2		13,517
Total shares held	127	149,762
1 Spouse holds 127 of A shares and 236 of R shares 2 Spouse holds 179 of the shares

The following Board members also served in 2022


	Shares held when Board membership ended	Effective date of Board membership ending
Mikko Helander	8,910	15 March 2022

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 2022 amounted to EUR 15 (EUR 11)

million. The total number of GLT members was eleven (thirteen) at the year end in 2022.

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 2022, and Long term incentive programmes for the performance years 2020

to 2022 were reviewed and confirmed by the People and Culture Committee, and approved by

the Board of Directors in January 2023.

Note 21 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


	Year Ended 31 December
	2022			2021
EUR thousand	CEO	Others2,5	GLT Total	CEO	Others	GLT Total
Remuneration1,4
Annual salary	953	4,802	5,755	981	4,695	5,676
Local housing (actual costs)	0	2	2	0	1	1
Other benefits	32	272	304	33	342	375
Termination benefits	0	0	0	0	0	0
Short Term Incentive programme3	845	2,167	3,012	672	2,053	2,725
Long Term Incentive programme3	987	2,848	3,835	0	137	137
	2,817	10,091	12,908	1,686	7,228	8,914
Pension Costs
Mandatory plans	477	1,154	1,631	341	1,226	1,567
Stora Enso voluntary plans	0	933	933	0	735	735
	477	2,087	2,564	341	1,961	2,302
Total Compensation	3,294	12,178	15,472	2,027	9,189	11,216
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 Include earnings related to Teemu Salmi until 20 May 2022 and Kati ter Horst until 30 June 2022 and Jari Suominen until 30 November 2022. 3 Relate to amounts due at year end, which will be paid in 2023. LTI value is calculated using the 30 December 2022 closing price of EUR 13.15. The final value of the vested shares will depend on the share price on vesting date 1 March 2023. 4 Remuneration for executives is disclosed only for the period during which they were GLT members. 5 Remuneration of GLT members increased in 2022 compared to 2021 mainly due to the performance outcome of variable pay programmes. The average number of GLT members during 2022 was 11.71.

Group Leadership Team remuneration in Income statement


	Year ended 31 December
	2022			2021
EUR thousand	CEO	Others	GLT Total	CEO	Others	GLT Total
Salaries and other short-term employee benefits	1,830	7,243	9,073	1,686	7,091	8,777
Long Term Incentive programme1, 2	714	1,581	2,295	468	1,638	2,106
Post-employment benefits	477	2,087	2,564	341	1,961	2,302
Total recognised in Income statement	3,021	10,911	13,932	2,495	10,690	13,185
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. 2 Year 2021 figures have been restated.

Executives other than CEO

Short term incentive (STI) programmes for management

In 2022, 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. 70% of the STI for 2022 was

based on financial measures and 30% on individual key targets.

Long term incentive (LTI) programmes for management

The 2020 LTI programme has a three-year performance period. The 2021 programme has three

one-year performance periods which are accumulated after three years. The 2022 programme

features performance metrics with one-year performance periods, which are accumulated after

three years, as well as three-years 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 2020 programme is related to performance period 2020–2022,

the 2021 programme is related to performance period 2021–2023 and the 2022 programme is

related to performance periods 2022–2024. 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 2022 programme was launched, in which the GLT members (in GLT at

year end) can potentially receive a value corresponding to 242,650 shares before taxes,

assuming the maximum vesting level during the three-year vesting period (2022–2024) 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 21. 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 2020 programme ended, and will be

settled in one portion after three years in March 2023, 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 100% performance outcome. The number of

shares due for executives (GLT members at year end) from programmes that ended during 2022

amounted to 265,340 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.

President & Chief Executive Officer – Annica Bresky

The CEO has been employed by Stora Enso since 1 May 2017 and assumed the position as

CEO on 1 December 2019. She 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 benefits include pension provisions. The CEO’s pension plan has

contributions equal to the collectively agreed pension plan in Sweden (ITP1), with a pensionable

salary consisting of annual base salary, vacation pay, and actual paid STI. The retirement age is

sixty-five years.

Short term incentive (STI) programme for CEO

In 2022, the CEO is entitled to an STI programme decided by the Board each year giving a

maximum of 100% of the annual fixed salary. The STI for 2022 was 70% based on financial

measures, and 30% based on ESG-, operational- and individual key measures.

Long term incentive (LTI) programmes for CEO

The CEO participates in 2020, 2021 and 2022 share based LTI programmes. The 2020

programme has a three-year performance period. The 2021 programme has three one-year

performance periods which are accumulated after three years. The 2022 programme features

performance metrics with one-year performance periods which are accumulated after three

years as well as performance metrics with three-years performance periods. All three

programmes will be settled in only one portion after three years. The 2020 programme is related

to performance period 2020–2022, the 2021 programme is related to performance period 2021–

2023 and the 2022 programme is related to performance periods 2022–2024. The opportunity in

the programmes is in performance shares, where shares vest in accordance with performance

criteria proposed by the People and Culture Committee and approved by the Board of Directors.

During the year the 2022 LTI programme was launched in which the CEO has the potential to

receive a value corresponding to a maximum of 65,430 shares before taxes. The grant value of

EUR 1,154,251 is based on the share price at the grant date, assuming a maximum vesting level

during the three-year vesting period (2022–2024) 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.

At the end of the year, the performance period for the 2020 programme ended and will be

settled in one portion after three years in March 2023, dependent on Economic Value Added

(EVA) and Earnings Per Share (EPS) for the Stora Enso Group. 75,080 shares are due for the

CEO from Performance Share programmes that ended during 2022 due to a 100% performance

outcome.

Group Leadership Team share interests


Executives in office at the year end	R shares held1	Shares due 20232	Performance share opportunity 2024–20255
Annica Bresky	19,763	75,080	122,817
Seppo Parvi	50,924	25,340	43,484
Tobias Bäärnman	1,960	5,200	22,629
David Ekberg	1,245	17,640	32,481
Johanna Hagelberg	28,146	17,440	32,803
Rene Hansen	—	3,400	12,000
Hannu Kasurinen	38,421	29,640	47,406
Katariina Kravi	—	21,500	27,938
Per Lyrvall3	73,383	22,100	34,459
Annette Stube	—	20,000	26,271
Lars Völkel	—	28,000	41,623
Total, serving officers4	213,842	265,340	443,911
1 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 2022 and are due to be paid 2023. The Performance Share programme resulted in a 100% performance outcome due to be paid in 2023. Some GLT members hold restricted shares in the Restricted Shares programme that ended in 2022 and those shares are due to be paid 2023. 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 2023-2024 and are due to be paid 2024-2025.


The following Executive Officers also served in 2022	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
Teemu Salmi1	10,150	32,380	2,335	20 May 2022
Kati ter Horst1	61,996	86,556	—	30 June 2022
Jari Suominen1	53,168	65,331	—	30 November 2022
1 Unvested shares are forfeited at end of employment

Note 8 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


	Year Ended 31 December
EUR million	2022	2021
Net financial expense in the income statement
Financial income	40	42
Financial expense	-191	-190
Total	-151	-149

Represented by
Interest expense
Interest expense from borrowings measured at amortised cost	-96	-95
Interest component of the effective hedges under cash flow hedge	-12	-15
Interest expense on leases	-17	-17
Interest capitalised	0	1
Interest income on loans and receivables measured at amortised cost	20	2
Net interest expense	-105	-124

Foreign exchange gains and losses
Currency derivatives	8	-39
Borrowings, cash equivalents. lease liabilities and other	-10	37
Net foreign exchange gains and losses	-1	-2

Other financial income	2	1
Other financial expense
Financial fees	-8	-17
Fair valuation losses	-4	-3
Impairments of interest-bearing assets	-30	0
Net interest on net defined benefit liabilities	-3	-3
Net other financial expense	-45	-22

Total	-151	-149
Gains and losses on derivative financial instruments are shown in Note 27 Derivatives.

In 2022, the net interest expense decreased mainly as a result of higher interest income rate on

loans and receivables. Costs on long-term debt issues capitalised as part of non-current debt

amounted to EUR 6 (EUR 7) million in the statement of financial position. During the year, EUR

2 (EUR 4) 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. 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 negative interest on

deposits. Impairments of interest-bearing assets relate to divestment of Russia operations and

are discussed in more detail in Note 4 Acquisitions and disposals.

Note 9 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 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


	Year Ended 31 December
EUR million	2022	2021
Current tax	-196	-118
Deferred tax	-126	-34
Total income tax	-322	-151

Income tax rate reconciliation


	Year Ended 31 December
EUR million	2022	2021
Profit before tax	1,858	1,419
Tax at statutory rates applicable to profits in the country concerned1	-337	-263
Non-deductible expenses and tax exempt income2	-15	49
Valuation of deferred tax assets	15	-7
Taxes from prior years	2	39
Changes in tax rates and tax laws	0	1
Profits from equity accounted investments	44	29
Other3	-31	1
Total income taxes	-322	-151
Effective tax rate	17.3%	10.7%
Statutory tax rate (blended)	18.2%	18.5%
1 Includes a EUR 55 million impact from countries with tax holidays and tax benefits in 2022 and a EUR 37 million impact from tax holidays and other tax benefits in 2021. 2 The tax value of non-deductible expenses of EUR 16 million has been netted against tax exempt income of 1 EUR million in 2022, and tax value of non-deductible expenses of EUR 30 million has been netted against tax exempt income of EUR 79 million in 2021. 3 Includes a EUR 34 million negative impact from disposal of Russian operations 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 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
Cash flow hedging		0	0
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

Change in deferred taxes in 2021


EUR million	Value at 1 Jan 2021	Income statement	OCI	Acquisitions / disposals	Translation difference	Value at 31 Dec 2021
Forest assets	-1,175	-70	-40	0	16	-1,268
Fixed assets	-173	75	0	-8	3	-103
Financial instruments	-11	3	8	0	1	1
Untaxed reserves	-39	-43	0	0	2	-80
Pensions and provisions	56	27	-23	0	-2	58
Tax losses and tax credits carried forward	104	1	0	0	2	107
Other deferred taxes	23	-26	0	-1	2	-2
Total	-1,215	-33	-55	-9	24	-1,287
Equity hedges and net investment loans (CTA)		-2	2
Change in deferred tax		-35	-53	-9	24
Assets1	117					143
Liabilities1	-1,332					-1,430
1 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

(EUR 58) 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 367 (EUR 339)

million.

Tax losses


	As at 31 December
	Tax losses carried forward		Recognised tax values		Unrecognised tax values
EUR million	2022	2021	2022	2021	2022	2021
Expiry within five years	359	417	5	7	72	79
Expiry after five years	100	343	9	60	14	11
No expiry	1,173	1,137	58	38	198	210
Total	1,633	1,897	73	106	283	300

At the end of 2022, there were no material tax losses related to Finland. At the end of 2021 tax

losses of EUR 274 million related to Finland and a deferred tax asset of EUR 55 million was

recognized relating to these tax losses.

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.

Note 10 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 of, proceeds exceeding the carrying

value of the asset up to its historical cost are netted against depreciation, amortisation and

impairment charges. Only disposal proceeds exceeding the historical cost of an asset are

presented as other operating income (Note 5). If 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


	Year ended 31 December
EUR million	2022	2021
Depreciation and amortisation
Intangible assets	24	26
Buildings and structures	81	79
Plant and equipment	371	373
Right-of-use assets	50	62
Other tangible assets	8	9
Total	533	549
Impairment
Goodwill	11	4
Intangible assets	1	7
Buildings and structures	25	10
Plant and equipment	75	126
Right-of-use assets	0	1
Other tangible assets	2	2
Total	114	149
Reversal of impairment
Plant and equipment	-7	0
Total	-7	0
Disposal gains/losses
Gain on sale of assets	-10	-4
Loss on sale of assets	4	3
Total	-5	0
Depreciation, amortisation and impairment charges	635	697

Impairment testing

The recoverable amount for the cash generating units (CGUs) has been determined based on a

value in use calculation 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.

Impairments were tested using a value in use method for each CGU based on the following

main assumptions:

•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, except for Paper division for which the testing

period used was the remaining expected economic life

•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 2022 amounted to EUR 103 (EUR 145) million and resulted from business

restructuring and Group company disposals. In 2022, impairments were mainly related to Group

company disposals in Russia and upcoming disposals in the Paper division. Russia related

impairments of EUR 75 million concerned Wood Products Baltic and Russia CGU, Packaging

Solutions Europe CGU and Forest operations CGU. Paper related impairments of EUR 22

million concerned News and Office CGUs. In 2021, mainly due to restructuring, Group company

disposal, impairment testing and further deterioration of certain paper-grade market due to

Covid-19 pandemic, total impairment charge of EUR 127 million was recognised in News,

Uncoated Mechanical and Office CGUs in the Paper division.

Goodwill impairments

In 2022 or 2021, the goodwill impairment testing did not result in any impairment. In 2022 and

due to upcoming disposals in the Paper division, goodwill impairment of EUR 11 million was

recognised in News and Office CGUs. In 2021 and due to Sachsen Mill disposal, goodwill

impairment of EUR 4 million was recognised in Paper - News CGU.

The most material groups of CGUs containing goodwill


	Year ended 31 December
	2022		2021
EUR million	Goodwill at year end2	Pre-tax discount rate	Goodwill at year end	Pre-tax discount rate
Wood Products - Central Europe	111	9.9%	109	8.7%
Paper - Book Paper	28	8.4%	28	7.2%
Paper - Uncoated Mechanical	12	8.4%	40	7.2%
Biomaterials - Nordic and Innovation	45	8.2%	45	7.2%
Other CGUs1	47		60
Total	244		282
1 Other CGUs is including Packaging Solutions - Europe, Packaging Materials operations in Sweden, Packaging Materials - Containerboards, Wood Products - Northern Europe, Paper - News and Paper - Office cash generating units. 2 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 2022 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


	Year ended 31 December
EUR million	2022	2021
Packaging Materials	0	10
Packaging Solutions	36	2
Biomaterials	0	0
Wood Products	10	0
Forest	31	1
Paper	33	131
Other	-4	4
Total (impairment +) / (Impairment reversal -)	107	149

Note 11 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

and unique product 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 fair value determination of customer contracts and related

relationships is derived from expected retention rates and cash flow over the customers’

remaining estimated lifetime. The 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. ROU assets are tested for impairment in accordance with IAS 36.

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 (Note 5).

Intangible assets


	Year ended 31 December
EUR million	Computer software	Other intangible assets	Assets in progress	Goodwill	Total
Acquisition cost
At 1 January 2021	233	98	17	695	1,044
Translation difference	2	6	0	8	16
Reclassifications	8	12	-16	0	4
Additions	6	5	6	0	17
Disposals	-23	-19	0	-171	-213
At 31 December 2021	226	103	7	532	867
Translation difference	0	-1	0	-2	-4
Reclassifications	5	2	-4	0	3
Additions	3	2	16	0	21
Disposals and classification as held for sale1	-11	-6	0	-28	-46
At 31 December 2022	222	100	18	502	842

Accumulated amortisation and impairment
At 1 January 2021	176	38	0	414	629
Translation difference	1	4	0	3	8
Disposals	-22	-19	0	-171	-212
Amortisation	18	9	0	0	26
Impairment	5	2	0	4	11
At 31 December 2021	178	34	0	250	462
Translation difference	0	0	0	-3	-3
Disposals and classification as held for sale1	-11	-6	0	0	-17
Amortisation	17	8	0	0	24
Impairment	1	0	0	11	12
At 31 December 2022	185	35	0	258	478

Net Book Value at 31 December 2022	38	65	18	244	364

Net Book Value at 31 December 2021	48	69	7	282	405
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 4 Acquisitions, disposals and assets held for sale.

Property, plant and equipment


	Year ended 31 December
EUR million	Land and water	Buildings and structures	Plant and equipment	Other tangible assets	Assets in progress	Total
Acquisition cost
At 1 January 2021	128	3,301	13,256	455	549	17,690
Translation difference	0	64	48	0	1	114
Reclassifications	2	58	405	11	-480	-4
Reclassifications to biological assets	0	-1	-1	0	0	-2
Additions	0	15	214	1	328	558
Disposals	-13	-82	-503	-19	-4	-620
At 31 December 2021	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
Disposals and classification as held for sale1	-19	-390	-2,668	-58	-27	-3,162
At 31 December 2022	103	3,041	10,909	393	454	14,900

Accumulated depreciation and impairment
At 1 January 2021	3	2,096	10,186	386	11	12,683
Translation difference	0	9	-30	0	1	-20
Disposals	-1	-79	-487	-19	0	-586
Depreciation	0	77	373	11	0	461
Impairments and reversals	0	10	125	2	0	137
At 31 December 2021	3	2,113	10,164	380	14	12,674
Translation difference	0	-30	-262	-9	0	-302
Disposals and classification as held for sale1	-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

Net Book Value at 31 December 2022	101	1,237	3,027	57	437	4,860

Net Book Value at 31 December 2021	114	1,242	3,256	68	380	5,060
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 4 Acquisitions, disposals and assets held for sale.

Right-of-use assets


	Year ended 31 December
EUR million	Land and water	Forest land	Buildings and structures	Plant and equipment and other	Total
Acquisition cost
At 1 January 2021	99	233	97	148	577
Translation difference	9	26	1	1	37
Reclassifications to biological assets	0	-15	0	0	-15
Additions	0	9	9	15	33
Disposals	-1	0	-4	-37	-42
Other changes	0	0	1	0	1
At 31 December 2021	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
Disposals and classification as held for sale1	-2	0	-23	-36	-62
Other changes	1	2	0	4	6
At 31 December 2022	105	243	96	113	556

Accumulated depreciation and impairment
At 1 January 2021	6	12	38	70	125
Translation difference	1	2	1	0	3
Disposals	-1	0	-4	-36	-41
Depreciation	3	5	20	34	62
Impairment	0	0	0	1	1
At 31 December 2021	8	18	55	69	150
Translation difference	0	-1	-2	-1	-4
Disposals and classification as held for sale1	-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

Net Book Value at 31 December 2022	95	221	47	57	418

Net Book Value at 31 December 2021	99	235	49	59	441
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 4 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 Note 26 Interest-bearing assets and liabilities for more details about lease liabilities and

Note 5 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 701 (EUR 609) million. Details of ongoing projects and future plans are discussed in more

detail in the Report of the Board of Directors.

Note 12 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 11 Intangible assets, property, plant and equipment, and right-of-use assets. The Group

changed its valuation method related to Finnish forest asset valuation at the end of 2022 to

correspond to the valuation method applied with Swedish forest assets, as explained in Note 1

Accounting principles.

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 equity accounted investment in Finland. Stora Enso also ensures that the Group’s share of the

valuation of forest holdings in equity accounted investments 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. 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 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 6,846 (EUR 6,747) million as shown

below. The Group’s indirect share of forest assets held by associated company amounts to EUR

1,271 (EUR 985) million. The total forest asset value, excluding leased forest land, amounts to

EUR 8,117 (EUR 7,732) million.

Forest assets


	Biological assets		Forest land2		Forest assets total
	Year Ended 31 December		Year Ended 31 December		Year Ended 31 December
EUR million	2022	2021	2022	2021	2022	2021
Subsidiaries and joint operations
Value at 1 January	4,547	4,250	2,201	2,005	6,747	6,256
Translation differences	-305	-43	-145	-26	-449	-68
Unrealized change in fair value1	336	471	259	225	596	696
Additions	77	58	2	1	78	59
Disposals	-2	-64	-2	-5	-4	-69
Change due to harvesting1	-141	-127	0	0	-141	-127
Other operative changes1	-1	-17	0	0	-1	-17
Reclassification from PPE	20	17	0	0	20	17
Value at 31 December	4,531	4,547	2,315	2,201	6,846	6,747

Associated company
Tornator Oyj (41%)	1,122	906	149	78	1,271	985
Value at 31 December	1,122	906	149	78	1,271	985

Total	5,653	5,453	2,464	2,279	8,117	7,732
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.

Valuation and standing stock of forest assets


			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


			As at 31 December 2021
			Swedish forests	Guangxi	Veracel (50%)	MdP (50%)	Tornator (41%)	Total
Total area		Thousand ha	1,389	77	113	136	295	2,009
- of which owned		Thousand ha	1,389	—	106	95	295	1,884
- of which leased		Thousand ha	—	77	7	41	—	125
Productive area		Thousand ha	1,141	68	47	90	271	1,617
Total area	Standing stock	million m3 fo.1	152.6	5.0	5.0	13.9	33.0	209.5
Productive area	Standing stock	million m3 fo.1	150.5	4.9	5.0	13.9	32.7	207.1
	Estimated growth	million m3 fo.1	5.8	1.6	1.8	2.6	1.4	13.2
	Harvesting	million m3 fo.1	4.4	1.3	1.2	1.6	1.3	9.9
	Other changes	million m3 fo.1	6.2	0.4	0.0	-0.1	1.2	7.7
	Harvesting	million m3 u.b.2	3.7	1.0	1.0	1.3	1.2	8.2
Biological assets		EUR million	4,005	200	81	260	906	5,453
Biological assets	Productive area	EUR/ha	3,511	2,950	1,713	2,900	3,342	3,372
Forest land		EUR million	2,012	—	26	163	78	2,279
Total forest assets		EUR million	6,017	200	107	423	985	7,732
Leased forest land		EUR million	—	187	2	45	—	235
1Forest cubic meters 2Solid under bark (sub) cubic meters

Subsidiaries and joint operations

At the end of 2022, forest assets (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 1,713

(1,715) thousand hectares of which 7% (7%) is leased and under 1% (1%) is restricted. From

Stora Enso's total forest holdings 1,345 (1,346) 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 2022, the value of the biological assets in Swedish forests amounted to EUR 3,963

(EUR 4,005) million, related forest land amounted to EUR 2,113 (EUR 2,012) million and the

total forest assets amounted to EUR 6,076 (EUR 6,017) million. The value increase in the forest

assets value is mainly driven by higher market prices, whereas foreign exchange impact netted

the impact of price increases and decreased the value with approximately EUR 485 million.

Deferred tax liabilities related to forest assets amounted to EUR 1,250 (EUR 1,237) million. The

discount rate of 3.6% (3.5%) was applied in the valuation.

The productive area in Swedish forests amounted to 1,142 (1,141) thousand hectares with a

standing stock of 150.5 (150.5) million forest m3. The weighted three-year average market

transaction price applied in the valuation for Swedish forests assets in 2022 is EUR 40 (EUR 40)

per forest m3. The forest asset value corresponds to an average of EUR 5,320 (EUR 5,270) 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 2 for

information related estimates and judgment applied in the valuation.

Forest asset location and volume


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%


2021		North	Middle	South	Total
Productive area	Thousand ha	191	950	0	1,141
Percentage of total	%	17%	83%	0%	100%
Standing stock	million m3 fo.	17.1	133.3	0.0	150.5
Percentage of total	%	11%	89%	—%	100%

Guangxi

At the end of 2022, the value of the biological assets in Guangxi, China, amounted to EUR 196

(EUR 200) million. All the forest land in China is leased. The value decrease is mainly driven by

foreign exchange impact and increased discount rate, whereas higher prices increased the

value. The biological assets included young standing timber with a value of EUR 27 (EUR 33)

million. The discount rate of 10.2% (8.6%) used in the discounted cash flows (DCF) increased in

2022. The productive forest area in Guangxi totals to 64 (68) thousand hectares with a standing

stock of 4.1 (4.9) million forest m3.

Veracel

Veracel is a 50% joint operation in Brazil. Stora Enso’s share of the biological assets was EUR

103 (EUR 81) million. The increase is mainly driven by increased prices and foreign exchange

impact, whereas increased discount rate and higher costs decreased the value. The biological

assets included young standing timber with a value of EUR 31 (EUR 21) million. The discount

rate of 7.9% (6.9%) used in the DCF increased in 2022. The related forest land is measured at

cost. Stora Enso’s share of the productive forest area totals to 47 (47) thousand hectares with a

standing stock of 5.2 (5.0) million forest m3.

Montes del Plata

Montes del Plata (MdP) is a 50% joint operation in Uruguay. Stora Enso’s share of the biological

assets was EUR 269 (EUR 260) million. The movement is mainly driven by foreign exchange

impact and discount rate change. The biological assets included young standing timber with a

value of EUR 50 (EUR 46) million. The discount rate of 9.0% (6.5%) used in the DCF increased

in 2022. The related forest land is measured at cost. Stora Enso’s share of the productive forest

area totals to 92 (90) thousand hectares with a standing stock of 15.5 (13.9) million forest m3.

Associated company

Tornator

Tornator Oyj is a 41% owned Finnish associate company. Stora Enso’s share of the biological

assets was EUR 1,122 (EUR 906) million, related forest land amounted to EUR 149 (EUR 78)

million, and total forest assets equalled to EUR 1,271 (EUR 985) million. The increase in the

value of forest assets is mainly driven by moving to market transaction based valuation method

from discounted cash flow based method concerning forest assets in Finland. Acquisitions also

increased the forest asset value. See Note 1 for more details related to changes in the valuation

method.

Stora Enso’s share of the productive forest area totals to 277 (271) thousand hectares with a

standing stock of 32.8 (32.7) million forest m3. The weighted three-year average market

transaction price applied in the valuation for forest assets located in Finland in 2022 is EUR 42

per forest m3. The forest asset value in Finland corresponds to an average of EUR 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	+/-28	+/-1	+/-4
Veracel	+/-10	+/-10	+/-2
Montes del Plata	+/-30	+/-30	+11/-10

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 151 (EUR 150) million. A change in the volume

of standing stock of 1 million forest m3 would impact the value of forest assets by EUR 40 (EUR

40) million.

Note 13 Equity accounted investments

Accounting principles

Associated companies over which Stora Enso exercises significant influence are accounted for

using the equity method. Stora Enso does not control associate companies alone or jointly with

other parties, but has significant influence. The Group’s share of the equity accounted

investment 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 equity accounted investment 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 equity accounted investments.

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 equity accounted investments is reported in the operating

profit to reflect the operational nature of these investments. Similarly, dividends received from

equity accounted investments are presented in the net cash provided by operating activities in

the consolidated cash flow statement.

Principal equity accounted investments


			As at 31 December
			Ownership interest %		EUR million
Company	Reportable segment	Domicile and principal place of operations	2022	2021	2022	2021
Tornator Oyj	Forest	Finland	41.00	41.00	800	545
Others					32	35
Carrying amount					832	580

In 2022, Stora Enso divested its 30.41% participation in Encore Ympäristöpalvelut Oy. The

transaction did not have a material impact on the Group.

In 2021 Stora Enso's 20% ownership in Arauco Florestal Arapoti S.A. was divested. The

transaction did not have a material impact on the Group. Also in 2021, Bergvik Skog AB was

liquidated, there were no operations remaining in the company after Bergvik Skog AB

restructuring in 2019.

Group share of equity accounted investments income statements


	Year Ended 31 December
EUR million	2022	2021
Sales	147	142
Net operating expenses	-103	-97
Biological asset valuation	189	120
Operating profit	233	166
Net financial items	40	10
Net profit before tax	273	176
Income tax	-52	-34
Net profit for the year	221	143

The average number of personnel in the equity accounted investments was 1,043 in 2022,

compared with 1,193 in 2021.

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

equity accounted investments.

Tornator Oyj


EUR million	2022	2021
Forest Assets	3,101	2,401
Other non-current assets	70	39
Current assets	73	53

Non-current liabilities	752	821
Current liabilities	120	43
Tax liabilities	420	300

Sales	176	155
Net profit for the year	542	349
Other comprehensive income	141	39
Total comprehensive income	683	388

Dividends received during the financial year	25	16

Net assets of the associate	1,952	1,329
Ownership interest	41.00%	41.00%
Carrying amount of the Group's interest in Tornator Oyj	800	545

The Group’s current 41% ownership is valued at EUR 800 (EUR 545) million at the year-end of

2022. The Group’s share of Tornator’s net profit was EUR 222 (EUR 143) million, including a

biological asset valuation gain net of taxes of EUR 152 (EUR 96) million.

Aggregate information of equity accounted investments that are not individually material


	As at 31 December
EUR million	2022	2021
Non-current assets	35	30
Current assets	12	22

Non-current liabilities	3	2
Current liabilities	12	15

Sales	74	78
Net profit for the year	-2	0
Dividends received during the financial year	1	0

Net assets of the associates	32	35

Equity accounting value	32	35

Equity accounting value for Tornator Oyj	800	545
Total equity accounting value	832	580

Equity accounted investment balances


	As at 31 December
EUR million	2022	2021
Receivables from equity accounted investments
Non-current loan receivables	2	2
Trade receivables	1	1
Other receivables	0	10

Liabilities due to equity accounted investments
Trade payables	101	55

Equity accounted investment transactions


	Year Ended 31 December
EUR million	2022	2021
Sales to equity accounted investments	19	19
Interest on loan receivables from equity accounted investments	0	1
Purchases from equity accounted investments	163	109

The Group engages in transactions with equity accounted investments 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.

Note 14 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.

Summary of values


	Year Ended 31 December
EUR million	2022	2021
Acquisition cost at 1 January
Listed securities	3	3
Unlisted securities	135	135
Investments classified as equity instruments	139	138
OCI in opening balance	779	279
Equity Instruments at 1 January	918	417
Translation difference and other	-2	0
Additions	10	1
Change in fair values accounted for as OCI	519	501
Carrying amount at 31 December	1,445	918

Unrealised gains and losses on listed and unlisted securities


	Year Ended 31 December
EUR million	2022	2021
Net unrealised holding gains (OCI)	1,299	780
Cost	147	139
Fair value	1,445	918

Net unrealised holding gains (OCI)	1,299	780
Deferred tax	-1	-2
Net unrealised holding gains shown in equity as OCI	1,297	778

Change in net unrealised holding gains shown in equity as OCI	519	501

PVO shares

The Group holds a 15.6% (15.6%) 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 2022. The holding is fair

valued quarterly using the discounted cash flow method. During the last quarter of 2022 the

Group refined the valuation method to be based on discounted cash flow analysis only, while

previously, also market multiples were used. Trading multiples are considered to be less reliable

under current market conditions. The valuation is categorised at level 3 in the fair value

hierarchy according to IFRS 13; levels are explained in Note 25 Fair values.

The electricity prices used in the valuation are based on market future derivative prices for

the first three 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 7.99% 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 +127 million

and -127 million, respectively. A +/- percentage point change in the discount rate would change

the valuation by EUR -158 million and +200 million, respectively..

Stora Enso holds an indirect share of approximately 8.9% of the capacity of Olkiluoto 3

nuclear plant unit through its PVO B2 shares. The Olkiluoto 3 plant unit has been running test

production during 2022. During the test production, in October 2022, damages were identified in

the plant unit's feedwater pumps. After an investigation into the damages, Teollisuuden Voima

Oyj announced in December 2022 that the regular electricity production is expected to start in

March 2023.

PVO shareholding on 31 December 2022


EUR million	Share Series	% Holding	Asset Category	Fair Value 2022	Fair Value 2021
PVO-Vesivoima Oy	A	20.6	Hydro	307	302
Teollisuuden Voima Oyj	B	15.7	Nuclear	735	540
Teollisuuden Voima Oyj	B2	14.8	Nuclear	377	54
Other	C,C2,V,M	Various	Various	4	4
Total				1,423	900

The valuation in 2022 amounted to EUR 1,423 (EUR 900) million against a cost value of EUR

130 (EUR 130) million, with the revaluation of EUR 1,293 (EUR 770) million presented in equity

as part of the fair value reserve. The change in PVO’s value is mainly caused by the increase in

electricity market prices during the year. No deferred tax is recognized, as under Finnish tax

regulations holdings above 10% are exempt from tax on disposal proceeds.

Principal equity instruments


	31 December 2022
EUR million	Holding %	Number of Shares	Acquisition Cost	Fair Value
Packages Ltd, Pakistan - listed shares	6.0	5,396,650	3	8
Total listed securities			3	8
Pohjolan Voima Oy - unlisted shares	15.6	5,073,972	130	1,423
Others - unlisted securities			14	14
Total unlisted securities			144	1,437
Total Equity instruments at 31 December 2022			147	1,445
Total Equity instruments at 31 December 2021			139	918

Note 15 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


	Year Ended 31 December
EUR million	2022	2021
Value on 1 January	137	36
Emission allowances allocated	160	167
Sales	-62	-35
Settlement with the government	-85	-31
Classification as held for sale	-27	0
Value on 31 December	123	137

The liability to deliver allowances is presented in the consolidated statement of financial position

in line other operative liabilities. As of 31 December 2022, the liability to deliver allowances

amounted to EUR 91 (EUR 99) million as presented in Note 23 Other liabilities. The excess

emission rights held at the year end were valued at EUR 32 (EUR 38) million.

Other non-current assets


	As at 31 December
EUR million	2022	2021
Prepaid expenses and accrued income	22	15
Tax credit	4	3
Other non-current operative assets	12	15
Total	38	34

Note 16 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.


	As at 31 December
EUR million	2022	2021
Materials and supplies	501	422
Work in progress	84	97
Finished goods	962	689
Spare parts and consumables	337	331
Other inventories	25	23
Advance payments and cutting rights	63	55
Obsolescence allowance - spare parts and consumables	-103	-125
Obsolescence allowance - finished goods	-19	-9
Net realisable value allowance	-40	-5
Total	1,810	1,478

EUR 6,576 (EUR 5,740) million of inventories in total have been expensed during the year. EUR

78 (EUR 29) million of inventory write-downs have been recognised as an expense. EUR 9

(EUR 16) million have been recognised as a reversal of previous write-downs.

Note 17 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 25 Fair values for further details.

Current operative receivables


	As at 31 December
EUR million	2022	2021
Trade receivables - gross carrying amount before amount held for sale	1,329	1,175
Trade receivables - gross carrying amount held for sale	-92	0
Trade receivables - gross carrying amount	1,236	1,175
Loss allowance	-32	-26
Prepaid expenses and accrued income	68	82
Other receivables	200	218
Total	1,473	1,449

Age analysis of trade receivables


	As at 31 December
EUR million	2022	2021
Not overdue	1,213	1,093
Less than 30 days overdue	55	38
31 to 60 days overdue	10	7
61 to 90 days overdue	2	0
91 to 180 days overdue	3	0
Over 180 days overdue	47	37
Total	1,329	1,175

As at 31 December 2022, a gross amount of EUR 116 (EUR 82) 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 2022, lifetime expected credit losses for trade

receivables amounted to EUR 32 (EUR 26) 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 74 (EUR

90) million. Please refer to Note 24 Financial risk management for details of customer credit risk

management.

Age analysis of loss allowance


	As at 31 December
EUR million	2022	2021
Not overdue and less than 90 days overdue	5	1
91 to 365 days overdue	7	0
Over 365 days overdue	21	25
Total	32	26

Reconciliation of loss allowance


	As at 31 December
EUR million	2022	2021
Opening balance at 1 January	26	35
Change in loss allowance booked through income statement	13	3
Write-offs	-6	-12
Closing Balance at 31 December	32	26

The actual credit losses during 2022 amounted to EUR 6 (EUR 12) 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 174 (EUR 184) 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.

Note 18 Shareholders' equity

Accounting principles

Dividend and capital repayments

Any dividend or capital repayment proposed by the Board is not deducted from distributable

shareholders’ equity until approved by the shareholders at the Annual General Meeting.

At 31 December 2022, shareholders’ equity amounted to EUR 12,532 (EUR 10,683) million,

compared to the market capitalisation on Nasdaq Helsinki of EUR 10,503 (EUR 12,809) million.

The market values of the shares were EUR 13.90 (EUR 16.60) for A shares and EUR 13.15

(EUR 16.14) for R shares. In 2022, EUR 434 (237) million of dividend was paid, corresponding

to EUR 0.55 (0.30) per share.

The A shares entitle the holder to one vote per share, whereas R shares entitle the holder to

one vote per ten shares with a minimum of one vote, though the accountable par of both shares

is the same. A shares may be converted into R shares at any time at the request of a

shareholder. At 31 December 2022, the company’s fully paid-up share capital, as entered in the

Finnish Trade Register, was EUR 1,342 million (EUR 1,342 million). The current accountable par

of each issued share is EUR 1.70 (EUR 1.70).

At 31 December 2022, Directors and Group Leadership Team members owned 127 (0) A

shares and 363,604 (475,519) R shares representing 0.02% of the total voting rights of the

company. Full details of Director and Executive interests are shown in Note 7 Board and

executive remuneration. A full description of company share award programmes is shown in

Note 21 Employee variable compensation and equity incentive schemes. However, none of

these have any impact on the issued share capital.

Change in share capital and number of shares


	A shares	R shares	Total
At 1 January 2021	176,254,415	612,365,572	788,619,987
Conversion of A shares to R shares	-10,366	10,366	—
At 31 December 2021	176,244,049	612,375,938	788,619,987
Conversion of A shares to R shares	-5,769	5,769	—
At 31 December 2022	176,238,280	612,381,707	788,619,987

Number of votes as at 31 December 20221	176,238,280	61,238,171	237,476,451

Share capital at 31 December 2022, EUR million	300	1,042	1,342

Share capital at 31 December 2021, EUR million	300	1,042	1,342
1 R share votes are calculated by dividing the number of R shares by 10. The issued shares by 6 March 2023 will represent the total shares eligible to vote at the forthcoming Annual General Meeting.

Note 19 Non-controlling interests

Accounting principles

Non-controlling interests are presented as a separate component within the equity of the Group

in the consolidated statement of financial position. The proportionate shares of profit or loss

attributable to non-controlling interests and to owners of the parent company are presented in

the consolidated income statement after the profit for the period. Transactions between non-

controlling interests and Group shareholders are transactions within equity and are thus shown

in the statement of changes in equity. The measurement type of non-controlling interest is

decided separately for each acquisition.

Non-controlling interests


	Year Ended 31 December
EUR million	2022	2021
At 1 January	-16	-16
Disposals	0	0
Share of profit for the period	-13	3
Share of other comprehensive income	0	-3
Dividends	0	0
At 31 December	-30	-16

Principal non-controlling interests


		As at 31 December
		2022	2022	2021
Company	Principal place of business	Proportion of ownership interests held by non- controlling Interests, %	EUR million
Stora Enso Pulp and Paper Asia AB Group	Sweden and China	See separate table below	-31	-18
Others	-		1	1
Total			-30	-16

Non-controlling interests in Stora Enso Pulp and Paper Asia AB Group


		31 December 2022			31 December 2021
Company	Principal place of business	Direct-% of NCI	Indirect- % of NCI	Total-% of NCI	Direct-% of NCI	Indirect- % of NCI	Total-% of NCI
Stora Enso Pulp and Paper Asia AB	Sweden and China	5.79	—	5.79	5.79	—	5.79
Guangxi Stora Enso Forestry Co Ltd	China	5.00	5.50	10.50	5.00	5.50	10.50
Stora Enso (Guangxi) Packaging Company Ltd	China	15.00	4.92	19.92	15.00	4.92	19.92
Stora Enso (Guangxi) Forestry Company Ltd	China	15.00	4.92	19.92	15.00	4.92	19.92

Summarised financial information in respect of the subsidiaries that have material non-

controlling interests is set out below.

Stora Enso Pulp and Paper Asia AB Group


EUR million	2022	2021
Assets	1,235	1,282

Equity attributable to the owners of the parent	-165	-115
Non-controlling interests1	-31	-18
Total equity	-196	-133

Liabilities	1,430	1,414

Net profit or loss for the period	-74	7

Attributable to
Owners of the parent	-61	4
Non-controlling interests	-13	3
Net profit or loss for the period	-74	7

Net cash flow from operating activities	64	90
Net cash flow from investing activities	-41	-37
Net cash flow from financing activities	4	-26
Net cash flow	27	27
1 No dividends were paid to non-controlling interests in 2022 or 2021.

Note 20 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 152 (EUR 165) million in 2022, as shown in

Note 6 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 146 (EUR 153) 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 liability / (asset)
EUR million	2022	2021	2022	2021	2022	2021
At 1 January	1,108	1,210	-762	-737	347	473

Current service cost	12	14			12	14
Past service cost	-6	-2	0	0	-6	-2
Settlements	-7	-5	7	5	0	0
Interest expense (+) income (-)	13	9	-10	-6	3	3
Total included in income statement	11	17	-3	-1	9	15

Actuarial changes in demographic assumptions	-13	3			-13	3
Actuarial changes in financial assumptions	-306	-21			-306	-21
Actuarial changes from experience adjustments	63	-42			63	-42
Return on plan assets1			105	-65	105	-65
Asset ceiling impact1			5	0	5	0
Total remeasurement gains (-) / losses (+) included in OCI	-256	-61	109	-65	-147	-126

Benefit payments	-54	-58	41	44	-13	-14
Employer contributions and refunds			4	1	4	1
Translation difference	-38	1	33	-3	-5	-3
Disposals and classification as held for sale	-35	0	0	0	-35	0
At 31 December	736	1,108	-577	-762	159	347

1 Excluding amounts included in interest expense (+) income (-)

In 2023, contributions of EUR 19 (EUR 17) million are expected to be paid to Group's defined

benefit plans.

Significant actuarial assumptions used in the valuation of defined benefit obligations


	Year ended 31 December
	Finland		Germany		Sweden
	2022	2021	2022	2021	2022	2021
Discount rate %	3.6	0.7	3.6	0.8	4.0	1.7
Future salary increase %	3.0	3.2	2.5	2.5	2.9	2.9
Future pension increase %	2.2	2.3	2.0	1.8	2.0	2.0
Duration of pension plans	8.0	10.0	10.2	13.0	13.1	16.5

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 5.8%	Increase by 6.4%
Salary growth rate	0.50%	Increase by 1.2%	Decrease by 1.1%
Pension growth rate	0.50%	Increase by 4.8%	Decrease by 4.4%
Life expectancy	1 year	Increase by 4.2%	Decrease by 4.1%

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 2022


	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 liability 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 liability in the balance sheet	15	134	-26	36	159

Defined benefit plan summary by country as at 31 December 2021


	31 December 2021
EUR million	Finland	Germany	Sweden	Other	Total
Present value of funded obligations	238	5	359	236	838
Present value of unfunded obligations	0	224	20	27	270
Defined benefit obligations (DBO)	238	229	379	263	1,108
Fair value of plan assets	-208	-4	-324	-226	-762
Net liability in the balance sheet	29	225	55	37	347

Represented by
Defined benefit pension plans	29	225	55	12	321
Other post-employment benefits	0	0	0	25	25
Net liability in the balance sheet	29	225	55	37	347

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 64 (EUR 71) million.

In addition, the Group has additional defined benefit plans which resulted in a charge of EUR

0 (EUR 1) 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 6 (EUR 7) million, of which EUR 6 (EUR 6) million

related to defined contribution plans and EUR 1 (EUR 1) million to defined benefits excluding

finance costs. The net defined benefit liability amounted to EUR 134 (EUR 225) million. The

decrease in net liability arose mainly from changes in actuarial assumptions, especially from an

increase in discount rate.

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 54 (EUR 56) million. Defined benefit plans

are covering the remaining white-collar staff and resulted in a charge of EUR 1 (EUR 8) million

excluding finance costs. The net defined benefit asset amounted to EUR 26 (liability EUR 55)

million. The decrease in net liability arose mainly from changes in actuarial assumptions,

especially from an increase in discount rate. Stora Enso has undertaken to pay all local legal

pension liabilities for the main ITP scheme to the foundation, thus the remaining liability 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 liability in the remaining countries amounted to EUR 36 (EUR 37) million.

The most material change in liability was recognised for United Kingdom. The decrease in net

liability arose mainly from changes in actuarial assumptions.

Plan assets


	As at 31 December
	2022				2021
EUR million	Quoted	Unquoted	Total	% of total	Quoted	Unquoted	Total	% of total
Equity	88	12	101	17%	122	37	159	21%
Debt	46	44	90	16%	58	55	112	15%
Property	0	55	55	9%	0	50	50	7%
Cash	10	0	10	2%	25	0	25	3%
Assets held by insurance companies	0	226	226	39%	0	308	308	40%
Others	0	96	96	17%	7	101	108	14%
Total pension fund assets	144	433	577	100%	211	551	762	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 liabilities 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.

Note 21 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 8% 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 2022, 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 2022 are Sales

growth and EBITDA.

Long term incentive (LTI) programmes

Since 2005, new share based programmes for executives have been launched every year. The

2020 programme, ending in 2022 and settled in 2023 has a three-year performance period. The

2021 programme, ending in 2023 and settled in 2024, has three one-year performance periods

which are accumulated after three years. The 2022 programme 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 2020 and 2021 programme and EPS

and Relative Total Shareholder Return for the 2022 programme, which in addition features 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 2022


	Outstanding restricted and performance share awards at year end
Number of shares	2023	2024	2025	Total
2020 programme	903,289			903,289
2021 programme		716,460		716,460
2022 programme			822,240	822,240
Total	903,289	716,460	822,240	2,441,989

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 8 (EUR 7) million, all of

which were related to restricted and performance share awards.

Note 22 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 liabilities 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

onerous contracts, guarantees to customers, ongoing lawsuits, claims, or similar.

Provisions


EUR million	Environmental provisions	Restructuring provisions	Other provisions	Total provisions
Carrying Value at 1 January 2021	91	28	30	149
Translation difference	0	-1	0	-1
Charge in Income Statement
New provisions	6	107	72	185
Increase in existing provisions	13	1	0	14
Reversal of existing provisions	-6	-4	-5	-15
Payments	-29	-44	-29	-101
Carrying Value at 31 December 2021	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
At 31 December 2022	73	21	30	124

Allocation between current and non- current provisions

Current provisions: Payable within 12 months	10	20	14	43
Non-current provisions: Payable after 12 months	64	2	16	81
Total at 31 December 2022	73	21	30	124

Provisions for environmental remediation amounted to EUR 73 (75) million at 31 December

2022. 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 31 (EUR

37) million.

The Group has undergone major restructuring in recent years, from divestments to mill

closures and administrative cost-saving programmes. The obligation at the end of 2022

amounted to EUR 21 (EUR 88) million for restructuring provisions and EUR 30 (EUR 67) million

with respect to other provisions. Material payments in 2022 in restructuring and other provisions

are mainly related to closing down pulp and paper production at Kvarnsveden Mill in Sweden

and Veitsiluoto Mill in Finland as announced in 2021.

Note 23 Operative liabilities

Non-current operative liabilities


	As at 31 December
EUR million	2022	2021
Share-based payments	2	1
Other payables	9	12
Total	11	13

Current operative liabilities


	As at 31 December
EUR million	2022	2021
Trade payables	1,831	1,704
Payroll and staff-related accruals	245	256
Accrued liabilities and deferred income	130	155
Emission liabilities	91	99
Advances received	18	18
Other payables1	94	107
Total	2,410	2,339
1 Other payables consist especially of taxes payable to government, such as VAT and payroll taxes.

Note 24 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:

Floating and fixed interest-rate position


	As at 31 December 2022		As at 31 December 2021
EUR million	Floating rate	Fixed rate	Floating rate	Fixed rate
Non-current interest-bearing receivables1	11	80	5	40
Current interest-bearing receivables	1	—	—	49
Cash and cash equivalents	1,917		1,481
Interest-bearing liabilities2	-1,074	-2,818	-974	-2,863
Interest-bearing assets and liabilities excluding derivatives	855	-2,738	512	-2,774
Interest-rate and cross-currency swaps	650	-650	682	-682
Interest-bearing assets and liabilities, net of derivatives	1,506	-3,388	1,194	-3,456
1 Excluding interest receivable and listed securities 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 3.3 (4.6) years.

As of 31 December 2022, one percentage point increase in interest rates would increase

annual net interest expenses by approximately EUR 4 (EUR 2) million and a similar decrease in

interest rates would decrease net interest expenses by EUR 4 (EUR 1) 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 10 (EUR 16) million before taxes in the cash flow hedge

reserve in OCI regarding interest rate swaps under cash flow hedge accounting. A one

percentage point parallel change up or down in interest rate would result in fair valuation gains

or losses of EUR 1 (EUR 3) million in net financial items related to cross currency swaps fair

valued through profit and loss. Note 27 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 2022						As at 31 December 2021
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	960	-238	1,983	240	83	-48	995	-191	1,712	346	138	-41
Cash flow hedges for the next 12 months	-525	119	-843	-59	-26	26	-553	89	-740	-78	-38	23
Estimated annual net cash flow exposure, net of hedges	435	-119	1,139	181	57	-22	442	-101	971	268	100	-18
Hedging percentage as at 31 December for next 12 months	55%	50%	43%	24%	31%	54%	56%	47%	43%	22%	27%	57%
Weighted-average hedged rate against EUR2		10.63	1.09	0.87	1.52	45.20	—	10.21	1.20	0.85	1.60	52.63

Operative receivables and payables net exposure	-22	8	284	30	49	-5	-42	5	233	32	58	-2
Net receivable currency hedges	-18	-3	-186	-16	-51	—	16	—	-200	-26	-26	—
Net operative receivables exposure, net of hedges	-39	5	98	14	-2	-5	-26	5	34	5	31	-2

Estimated annual net transaction risk exposure after hedges	396	-113	1,238	195	55	-27	416	-97	1,005	274	131	-20
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 profit 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 2022						As at 31 December 2021
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	-48	12	-99	-12	-4	5	-50	10	-86	-17	-7	4
Effect on cash flow hedging OCI reserve before taxes as at year end2	26	-6	42	3	1	-3	28	-4	37	4	2	-2
Effect on net operative receivables and payables after hedges3	2	—	-5	-1	—	—	1	—	-2	—	-2	—
Estimated annual EBIT impact4	-20	6	-62	-10	-3	3	-21	5	-50	-14	-7	2
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, and PLN. 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 2022					As at 31 December 2021
EUR million	SEK	USD	CNY	PLN	CZK	SEK	USD	CNY	PLN
Foreign-currency net debt1	-418	-101	355	-6	-62	-30	-95	462	-1
Currency hedges	-3	-46	-211	-7	62	7	-31	-272	-16
Net exposure after hedges	-422	-146	144	-12	—	-23	-125	190	-18
Internal transaction exposure				138	45
Currency hedges				-124	-41
Net non-operative exposure	—	—	—	14	3
Exposure currency change by	-5%	-5%	-5%	-5%	-5%	-5%	-5%	-5%	-5%
Effect in the Income Statement2	21	7	-7	—	6	1	6	-10	1
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 398 (EUR 348) 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, equity accounted investments 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 2022					As at 31 December 2021
EUR million	SEK	USD	BRL	CZK	CNY	SEK	USD	BRL	CZK	CNY
Translation exposure in Income Statement	-147	-192	-164	-38	77	-196	-129	-111	11	83
Exposure currency change by	-5%	-5%	-10%	-5%	-5%	-5%	-5%	-10%	-5%	-5%
Effect on EBIT from translation risk exposure	7	10	16	2	-4	10	6	11	-1	-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 28

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	2022	2021
Translation exposure on equity in USD area1	1,686	1,502
EUR/USD equity hedges2	-281	-265
Translation exposure after hedges	1,405	1,237
Sensitivity before hedges - EUR strengthening 5%	-84	-75
Sensitivity after hedges - EUR strengthening 5%	-70	-62
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 funding 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 2022, undrawn committed credit facilities and undrawn loans were at EUR

1,100 (EUR 700) million. During 2022, altogether EUR 550 million of bilateral bank loans were

arranged. EUR 200 million of these loans were undrawn at reporting date. The EUR 700 million

committed credit facility agreement with a syndicate of 12 banks had originally a maturity of five

years with two one-year extensions. In October 2022, the first extension option of this facility

was used together with all 12 banks and the new maturity is in 2027. In May 2022, the Group

signed a new EUR 200 million committed credit facility with a maturity of one year and one six

month extension option. The extension option was exercised in October 2022 and therefore the

new maturity is during the last quarter of 2023. The credit facilities are used as a backup for

general corporate purposes and are both fully undrawn. Additionally, Stora Enso has access to

various additional long-term sources of funding up to EUR 1,050 (EUR 1,000) million. These

mainly relate to available funding sources from Finnish pension funds.

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.

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
Current 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

Contractual maturity repayments of financial liabilities, settlement net: 2021


EUR million	2022	2023	2024	2025	2026	2027+	Total
Bond loans	0	300	293	427	98	1,390	2,508
Loans from credit institutions	117	253	41	165	4	0	578
Lease liabilities	64	50	43	35	31	165	387
Other non-current financial liabilities	0	4	0	0	0	0	4
Non-current borrowings including current portion	180	606	376	627	132	1,555	3,476
Estimated contractual finance charges	73	72	63	55	39	218	521
Estimated contractual lease charges	16	14	13	12	11	61	126
Contractual repayments on non- current borrowings	269	693	452	693	182	1,834	4,123
Short-term borrowings, carrying amounts	372	0	0	0	0	0	372
Gross-settled derivative liabilities - receipts	-1,797	0	0	0	0	0	-1,797
Gross-settled derivative liabilities - payments	1,769	0	0	0	0	0	1,769
Net-settled derivative liabilities	16	10	1	0	0	0	27
Trade payables	1,705	0	0	0	0	0	1,705
Bank overdrafts	1	0	0	0	0	0	1
Estimated contractual finance charges	5	0	0	0	0	0	5
Total Contractual Repayments at 31 December 2021	2,339	703	453	693	182	1,834	6,205

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 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 2022, 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 41 (EUR 22) 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 17 Operative receivables.

Commodity price risk

Outstanding commodity hedges


	As at 31 December 2022				As at 31 December 2021
	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	175,200 MWh	EUR 29.1	5	18	438,000 MWh	EUR 29.02	13	15
- Central Europe					87,600 MWh	EUR 43.06	4	12
Oil purchases	200,474 barrels	USD 73.5	14	—	189,808 barrels	USD 58.06	10	2

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 15.6% 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 1,423

(EUR 900) 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 14 Equity instruments.

A 10% movement in energy and raw material prices would result in a EUR 6 (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 2022, the maturities of the energy and commodity contracts, including both financial

hedges and fixed-price physical purchase agreements, ranged between 2023 and 2024. In

2021, the maturities ranged between 2022 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

equity accounted investment and discussed in more detail in Note 13 Equity accounted

investments. The Group's forest assets are discussed in more detail in Note 12 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 8

(EUR 13) 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.

Detailed discussion regarding the publicly traded securities can be found from Note 14 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	2022	2021
Interest-bearing liabilities	3,972	3,938
Interest-bearing assets	2,122	1,629
Net debt	1,850	2,309
Equity attributable to owners of the parent	12,532	10,683
Operational EBITDA1	2,529	2,184
Net debt to equity ratio	0.15	0.22
Net debt to operational EBITDA	0.73	1.06
1 Operational EBITDA definition is included in the "Non-IFRS 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.

Note 25 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 27 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 27

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 2022 and 2021. See Note 14 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: 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	—	—	14
Unlisted securities	—	1,423	14	1,437	1,437	—	—	1,437	14
Non-current interest-bearing receivables	92	28	—	120	120	—	28	—	26
Derivative assets	—	28	—	28	28	—	28	—
Loan receivables	92	—	—	92	92	—	—	—
Trade and other operative receivables	1,138	66	—	1,204	1,204	—	66	—	17
Current interest-bearing receivables	10	50	16	77	77	—	67	—	26
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	—	—	—	26
Derivative liabilities	—	—	—	0	0	—	—	—
Non-current debt	2,792	—	—	2,792	2,748	—	—	—
Current portion of non-current debt	667	—	—	667	667	—	—	—	26
Current interest-bearing liabilities	462	30	20	513	513	—	50	—	26
Derivative liabilities	—	30	20	50	50	—	50	—
Current debt	462	—	—	462	462	—	—	—
Trade and other operative payables	2,076	—	—	2,076	2,076	—	—	—	23
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.

Carrying amounts of financial assets and liabilities by measurement and fair value categories: 2021


						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	—	13	—	13	13	13	—	—	14
Unlisted securities	—	900	5	905	905	—	—	905	14
Non-current interest-bearing receivables	45	6	—	51	51	—	6	—	26
Derivative assets	—	6	—	6	6	—	6	—
Loan receivables	45	—	—	45	45	—	—	—
Trade and other operative receivables	1,110	39	—	1,149	1,149	—	39	—	17
Current interest-bearing receivables	52	31	1	84	84	—	32	—	26
Derivative assets	—	31	1	32	32	—	32	—
Other short-term receivables	52	—	—	52	52	—	—	—
Cash and cash equivalents	1,481	—	—	1,481	1,481	—	—	—
Total	2,687	990	6	3,683	3,683	13	77	905


						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	3,284	7	23	3,313	3,618	—	30	—	26
Derivative liabilities	—	7	23	30	30	—	30	—
Non-current debt	3,284	—	—	3,284	3,589	—	—	—
Current portion of non-current debt	180	—	—	180	180	—	—	—	26
Current interest-bearing liabilities	403	35	7	444	444	—	42	—	26
Derivative liabilities	—	35	7	42	42	—	42	—
Current debt	403	—	—	403	403	—	—	—
Trade and other operative payables	1,960	—	—	1,960	1,960	—	—	—	23
Bank overdrafts	1	—	—	1	1	—	—	—
Total	5,827	42	29	5,899	6,204	—	71	—
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	2022	2021
Financial assets
Opening balance at 1 January	905	401
Reclassifications	-1	0
Gains/losses recognised in other comprehensive income	523	504
Additions	10	1
Closing balance at 31 December	1,437	905

The Group did not have level 3 financial liabilities as at 31 December 2022.

Note 26 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

A global reform on interest reference rates is underway as existing IBOR reference rates are

being replaced by alternative risk-free rates. The impact of the transition is expected to be

limited for the Group's external contracts. The Group has exposure to IBORs on its financial

instruments that will be replaced or reformed as part of these market-wide initiatives. The

Group's main IBOR exposure at 31 December 2022 was indexed to US dollar LIBOR and

related amount of interest bearing liabilities outstanding at 31 December 2022 was EUR 211

(EUR 189) million. The publication of USD LIBORs will cease after June 2023.

The Group monitors the process of 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 expected impact is limited and relates mainly to external long-term debt. The Group's

financial instruments are mainly indexed to Euribor and Stibor reference rates and these are

expected to continue to exist for now.

Interest-bearing assets


	As at 31 December
EUR million	2022	2021
Listed securities	8	13
Long-term derivative assets	28	6
Long-term deposits	48	42
Long-term loans to equity accounted investments	2	2
Other long-term loan receivables	41	1
Total non-current interest-bearing assets	128	64
Short-term derivative assets	66	32
Short-term deposits	0	49
Other short-term loan receivables	11	3
Cash and cash equivalents	1,917	1,481
Total current interest-bearing assets	1,994	1,565
Total interest-bearing assets	2,122	1,629

The annual average interest income rate for deposits and loan receivables during 2022 was

approximately 1.0% (0.1%). Current interest-bearing receivables included EUR 10 (EUR 3)

million accrued interest at 31 December 2022. 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.

As part of Other long-term loan receivables balances, EUR 41 million represent receivables,

net of impairment allowance, originating from sale of Russia operations, to be received in

instalments in future periods. 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 financial statement of

position at amortised cost. At reporting date, loss allowance of EUR 7 million, based on 12-

month expected credit losses was recognised in profit and loss. The fair valuation of these

receivables and evaluation of their credit risk and collectability involves a significant degree of

judgement.

Interest-bearing liabilities


	As at 31 December
EUR million	2022	2021
Bond loans	2,460	2,497
Loans from credit institutions	623	577
Lease liabilities	375	387
Long-term derivative financial liabilities (see Note 25)	0	30
Other non-current liabilities	2	4
Non-current interest-bearing liabilities including current portion	3,459	3,493
Short-term borrowings	429	372
Interest payable	35	34
Short-term derivative financial liabilities (see Note 25)	49	38
Bank overdrafts	0	1
Total Interest-bearing Liabilities	3,972	3,938

EUR million	2022	2021
Carrying Value at 1 January 1	3,938	4,756
Translation differences on opening balance	-4	120
Proceeds of new long-term debt	366	19
Repayment of long-term debt	-351	-862
Additions in lease liabilities	45	33
Repayment of lease liabilities and interest	-73	-88
Proceeds/repayments of short-term borrowings	75	-73
Change in interest payable	19	16
Change in derivative financial liabilities	-19	38
Disposals and classification as held for sale	-5	-1
Other	8	2
Translation differences during the year	-28	-22
Total Interest-bearing Liabilities	3,972	3,938

1 The table format has been updated to better present changes in liabilities arising from cash flow activities and non-cash activities. The

comparison figures have been restated accordingly.

Events during 2022 and 2021

During 2022, altogether EUR 550 million of bilateral bank loans were arranged. Maturities of

these loans vary from 18 months to 3 years with extension options. Proceeds from these loans

are used for general corporate purposes and EUR 200 million of these loans were undrawn at

reporting date. Stora Enso repaid credit institution loans, according to maturity schedule,

amounted to a nominal of EUR 289 million during 2022.

In May 2022, Stora Enso signed a new EUR 200 million committed credit facility with a

maturity of one year and one six month extension option which was exercised in October 2022.

In December 2021, Stora Enso signed a new EUR 700 million Revolving Credit Facility (RCF)

with 12 commercial banks. The maturity of the facility is five years with two one-year extensions.

The pricing is partly linked to meeting emission targets on Scope 1&2 and Scope 3. In October

2022, the first extension option of this facility was used together with all 12 banks and therefore

maturity is now in 2027. Simultaneously, the existing EUR 600 million RCF with original maturity

in 2023 was cancelled.

Stora Enso has a Green Bond Framework as part of its Sustainable Finance approach. The

ambition is to offer a loan-format to support sustainability-focused fixed income investors and to

report the direct environmental impacts of some investments and business activities.

During 2021, Stora Enso repaid multiple credit institution loans ahead of final maturity, the

total repayments of loans and bond notes amounted to a nominal of EUR 911 million. This

resulted in a EUR 7 million initial modification net loss being recognised in the Income

Statement.

Interest-bearing liabilities - maturities, interest rates and currency breakdown

Stora Enso's borrowings maturities range from 2023 to the longest borrowing maturing in 2036.

Borrowings have either fixed or floating interest rates ranging from 0.5% (0.5%) to 7.3% (7.3%).

The average interest rate on borrowings for the full year amounted to 3.2% (3.0%) with a run-

rate of 3.3% as per the year end. Part of Stora Enso's borrowings have been fixed through

floating-to-fixed interest rate swaps and cross-currency swaps. The majority of Group loans are

denominated in euros, US dollars, Swedish crowns or Chinese renminbis. Detailed maturity

analysis of the Group's borrowings are set out in Note 24 Financial risk management.

Net debt

In 2022 net interest-bearing liabilities, including held for sale related assets, decreased by EUR

456 (decreased by EUR 611) million to EUR 1,854 (EUR 2,309) million. Net interest-bearing

liabilities are equal to total interest-bearing liabilities less total interest-bearing assets such as

cash equivalents and deposits. Cash and cash equivalents net of overdrafts increased by EUR

437 (decreased by EUR 175) million to EUR 1,917 (EUR 1,480) million as at 31 December

2022. In 2022, the total cash outflow for leases was EUR 73 (EUR 88) million including interest

component of EUR 17 (EUR 17) million.

The ratio of net debt to the last 12 months' operational EBITDA was 0.7 (1.1). The net debt/

equity ratio was 0.15 (0.22) as per the year-end.

Bond loans


Issue/ Maturity Dates	Description of Bond	Interest Rate %	Currency of Bond	Nominal Value Issued	Outstanding As at 31 December		Carrying Value As at 31 December
				Nominal Value Issued	2022	2021	2022	2021
All Liabilities are Held by the Parent Company				Currency million			EUR million
Fixed Rate
2006-2036	Global 7.250% Notes 2036	7.25	USD	300	300	300	278	262
2016-2023	Euro Medium Term Note	2.125	EUR	300	300	300	300	300
2017-2027	Euro Medium Term Note	2.5	EUR	300	300	300	299	299
2018-2028	Euro Medium Term Note	2.5	EUR	300	300	300	299	298
2019-2024	Euro Medium Term Note (Green Bond)	1.875	SEK	1,750	1,750	1,750	157	171
2020-2025	Euro Medium Term Note (Green Bond)	2.375	SEK	1,550	1,550	1,550	140	152
2020-2030	Euro Medium Term Note (Green Bond)	0.625	EUR	500	500	500	495	495
Total Fixed Rate Bond Loans							1,968	1,976
Floating Rate
2015-2025	Euro Medium Term Note	Euribor+2.25	EUR	125	125	125	125	125
2015-2027	Euro Medium Term Note	Euribor+2.35	EUR	25	25	25	25	25
2019-2024	Euro Medium Term Note (Green Bond)	Stibor+1.45	SEK	1,250	1,250	1,250	112	122
2019-2026	Euro Medium Term Note (Green Bond)	Stibor+1.60	SEK	1,000	1,000	1,000	90	97
2020-2025	Euro Medium Term Note (Green Bond)	Stibor+2.20	SEK	1,550	1,550	1,550	140	152
Total Floating Rate Bond Loans							492	521
Total Bond Loans							2,460	2,497

Note 27 Derivatives

Accounting principles

Derivative financial instruments and hedge accounting

Derivative financial instruments are initially recognised in the consolidated statement of financial

position at fair value and subsequently measured at their fair value at each reporting date

according to valuation methods described in this note. Derivative contracts with maturity greater

than 12 months are classified as non-current interest-bearing receivables and liabilities, and

contracts maturing within 12 months are presented under current interest-bearing receivables

and liabilities.

When derivative contracts are entered into, the Group designates them as either hedges of

highly probable forecast transactions or firm commitments (cash flow hedges), hedges of the

exposure to changes in the fair value of recognised assets or liabilities (fair value hedges),

hedges of net investments in foreign entities, or derivative financial instruments not meeting the

hedge accounting criteria in accordance with IFRS 9. The method of recognising the resulting

gains or losses on derivative instruments is dependent on the nature of the item being hedged.

At the inception of a hedge, the Group documents the relationship between the hedging

instrument and the hedged item, as well as its risk management objective and strategy for

undertaking various hedging transactions. This process includes linking all financial instruments

designated under hedge accounting to specific assets and liabilities or to specific firm

commitments or highly probable forecast transactions in order to verify and document the hedge

relationship between the hedged item and the hedging instrument as required by IFRS 9. The

Group also documents its qualitative prospective assessment at the hedge inception of whether

the derivatives used in a hedge relationship are highly effective in offsetting changes in fair value

or cash flows of hedged items. Hedge effectiveness will be assessed in accordance with IFRS 9

requirements.

The hedge ratio used for hedging relationships is usually 1:1. For currency and commodity

hedging purposes, the Group uses a hedge designation where the critical terms of the hedging

instrument and the hedged item will coincide in terms of the notional amount and timing. In

respect of interest rate hedging, the interest rate basis between swap contracts and underlying

debt will coincide. Since the critical terms of the hedges and underlying risks match, the hedging

instruments are considered to offset any changes related to the anticipated transactions.

Potential sources of ineffectiveness that may be expected to occur in relation to currency and

commodity hedges are mainly related to the forecasted transaction not occurring in the amount

or at the time expected. For interest rate hedges, cross-currency basis spread or initial fair value

of the hedging instrument at the date of hedge designation may result in ineffectiveness being

recognised in the income statement. Potential sources of ineffectiveness for all the

aforementioned hedges also include possible effects of credit risk dominating fair value changes

arising from the hedging instrument and the hedged item designated under the hedging

relationship.

Cash flow hedges

Derivatives used in currency cash flow hedges are mainly forward contracts and options, with

swaps mainly used for commodity and interest rate hedging purposes. During 2022 and 2021,

the Group did not enter into new interest rate swap contracts.

Changes in the fair value of derivatives designated and qualifying as cash flow hedges, and

which are effective, are recognised in a separate equity category of OCI cash flow hedges

reserve, the movements of which are disclosed in the consolidated statement of comprehensive

income. For foreign exchange forwards, both the spot element and forward points have been

included to the hedge designation. In case of foreign exchange options, the time value of an

option is excluded from the hedge designation and only the intrinsic value component of an

option is designated as the hedging instrument. The changes in option time value are

recognised in a cost of hedging reserve within OCI. The cumulative gain or loss of a derivative

deferred in equity is transferred to the consolidated income statement and classified as an

income or expense in the same period in which the hedged item affects the consolidated income

statement. The unrealised gains and losses related to cash flow hedges are expected to be

recycled through the income statement within one to five years with the longest hedging contract

maturing in 2027 (2027). However, the majority of the contracts are expected to mature in 2023.

Realised results of hedge accounted derivative instruments hedging foreign currency sales

transactions or purchases are booked as adjustments to sales or materials and services,

depending on the nature of the underlying hedged item. In respect of hedges of exposures to

foreign currency risk of future transactions resulting in the recognition of non-financial assets, the

gains and losses deferred to the cash flow hedges reserve within OCI are transferred from

equity to be included in the initial acquisition cost of the non-financial asset at the time of

recognition. The Group may hedge foreign-currency risk of external or internal foreign-currency

purchases where the underlying amount purchased in a foreign-currency impacts the value of

inventory in a local currency. In such cases the gains and losses are initially booked as an

adjustment to raw material inventory and recycled further to finished goods inventory with being

ultimately recognised in the consolidated income statement at the time when the hedged items

are sold to an external customer. In case of non-current assets, the deferred amounts are

ultimately recognised in the income statement through depreciation over the lifetime of the non-

financial assets.

When a hedging instrument expires or is sold, terminated or exercised or no longer meets the

hedge accounting criteria under IFRS 9, any cumulative gain or loss deferred in equity at that

time remains in equity and is accounted for as an adjustment to income or expense when the

committed or forecast transaction is ultimately recognised in the consolidated income statement.

However, if the underlying forecasted transaction is no longer expected to occur, the cumulative

gain or loss reported in equity from the period when the hedge was effective is immediately

recognised in the consolidated income statement.

Fair value hedges

In case of fair value hedges, the Group uses either derivatives or borrowings as a hedging

instrument to manage the risk associated with the fair value of a hedged item. The gains and

losses on hedging instruments designated and qualifying as fair value hedges, and which are

highly effective, are recorded in the consolidated income statement, along with any changes in

the fair value of the hedged assets or liabilities attributable to the hedged risk. As at the end of

2022, the Group did not have fair value hedges.

Net investment hedges

For hedges of net investments in foreign entities, the Group uses either derivatives or foreign-

currency borrowings for this purpose. If the hedging instrument is a derivative, any gain or loss

thereon relating to the effective portion of the hedge is recognised in equity in CTA as disclosed

in the consolidated statement of comprehensive income; the gain or loss relating to the

ineffective portion is immediately recognised in the consolidated income statement. In addition,

exchange gains and losses arising on the translation of a foreign-currency borrowing that

hedges net investment in a foreign operation are also recognised in CTA, with any ineffective

portion being immediately recognised in the consolidated income statement. The gains and

losses recognised in CTA are recycled from equity to the consolidated income statement at the

time when the underlying hedged net investment is disposed.

Non-hedge accounted derivatives

Certain derivative transactions, while providing effective economic hedges under Group risk

management policies, do not qualify for hedge accounting under the specific rules in IFRS 9 and

therefore changes in the fair value of such non-qualifying hedges are accounted for at fair value

in the consolidated income statement. For non-hedge accounted derivatives economically

hedging foreign-currency risk of net of operative receivables and payables, the fair value

changes are recognised in operating profit under other operating income and expense. For other

non-hedge accounted derivatives, the fair value changes are recognised in the consolidated

income statement under financial income and expense.

Valuation of derivatives

Derivative financial instruments are recorded in the statement of financial position at their fair

values defined as the amount at which the instrument could be exchanged in an orderly

transaction between market participants at the measurement date. The fair values of such

financial items have been estimated on the following basis:

•Foreign exchange forward contract fair values are calculated using forward exchange rates at

the reporting date.

•Foreign exchange option contract fair values are calculated using reporting date market rates

together with common option pricing models.

•Commodity contract fair values are computed with reference to quoted market prices on

futures exchanges or other reliable market sources.

•Interest rate swaps fair values are calculated using a discounted cash flow method.

•Cross-currency swaps fair values are calculated by using a discounted cash flow method with

the exchange of notional also included in the valuation model.

Total foreign exchange gains and losses in the income statement excluding hedges


	Year ended 31 December
EUR million	2022	2021
Other operating income	42	31
Other operating expense	-21	-14
Borrowings, cash equivalents. lease liabilities and other	-10	37
Total	11	54

Hedge gains and losses in operating profit


	Year ended 31 December
EUR million	2022	2021
Cash flow hedge accounted derivatives
Currency hedges	-105	9
Commodity hedges	43	34
Total	-62	43
As adjustments to sales	-103	6
As adjustments to materials and services	41	37
Realised from OCI through income statement	-62	43
Currency hedges ineffectiveness	-2	-1
Net losses from cash flow hedges	-65	42

Non-hedge accounted derivatives
Net receivable hedges	-12	-17
Commodity contract hedges	9	0
Net gains/losses on non-hedge accounted derivatives	-3	-17

Net hedge losses in operating profit	-67	26

In 2022, certain forecasted future transactions were no longer expected to occur, and due to this

hedge accounting was ceased for those transactions. This resulted in a loss of EUR 2 (EUR 1)

million being booked in the Group's operating profit and the loss being presented in the table

above as ineffectiveness from cash flow hedges.

Hedge gains and losses in financial items


	Year ended 31 December
EUR million	2022	2021
Cash flow hedge accounted derivatives
Interest rate hedges ineffectiveness	0	-2
Net gains/losses from cash flow hedges	0	-2

Non-hedge accounted derivatives
Currency derivatives	8	-40
Interest rate derivatives	-4	0
Net gains on non-hedge accounted derivatives	4	-40

Net gains/losses in financial items	4	-42

Nominal and fair values of derivative instruments


	As at 31 December
EUR million	Nominal values	Positive fair values	Negative fair values	Net fair values	Nominal values	Positive fair values	Negative fair values	Net fair values
	2022				2021
Currency derivatives
Forwards: Operational cash flow hedging	902	19	-13	6	1,104	4	-19	-16
Options: Operational cash flow hedging	1,700	12	-16	-4	980	2	-13	-10
Total cash flow hedge accounted	2,603	32	-30	2	2,084	6	-32	-26
Forwards: Trade and loan receivables hedging	1,151	7	-5	2	469	1	-6	-5
Total non-hedge accounted	1,151	7	-5	2	469	1	-6	-5
Total currency derivatives	3,754	39	-35	4	2,553	7	-38	-32

Commodity derivatives
Electricity swaps: Costs hedging	5	18	0	18	16	27	0	27
Oil swaps: Costs hedging	14	1	-1	0	10	3	0	2
Total cash flow hedge accounted	19	18	-1	18	27	29	0	29
Electricity swaps: Closed contracts	11	9	0	9	0	0	0	0
Total non-hedge accounted	11	9	0	9	0	0	0	0
Total commodity derivatives	30	27	-1	27	27	29	0	29

Interest rate derivatives
Interest rate swaps: Financial expenses hedging	450	28	0	28	482	1	-8	-7
Total cash flow hedge accounted	450	28	0	28	482	1	-8	-7
Cross-currency swaps: Financial expenses hedging	200	0	-15	-15	200	0	-25	-25
Total non-hedge accounted	200	0	-15	-15	200	0	-25	-25
Total interest rate derivatives	650	28	-15	13	682	1	-32	-31

Total cash flow hedge accounted	3,072	78	-30	48	2,593	36	-40	-4
Total non-hedge accounted	1,363	16	-20	-4	669	1	-31	-30
Total derivatives	4,435	95	-51	44	3,261	37	-71	-34

Positive and negative fair values of financial derivative instruments are shown under interest-

bearing receivables and liabilities, and non-current interest-bearing receivables and liabilities.

The presented fair values in the table include accrued interest and option premiums.

Changes in fair values of hedged items and hedging instruments 2022


EUR million	Change in value of hedged item to determine hedge effectiveness	Change in value of outstanding hedging instruments	Ineffectiveness
Foreign exchange risk - Forward and option contracts (excluding option time value)1	77	-79	-2
Foreign exchange risk - Net investment hedges	-16	16	0
Commodity price risk - Commodity swaps	-31	31	0
Interest rate risk - Interest rate swaps	-34	34	0
1 Ineffectiveness booked in Operating profit.

Changes in fair values of hedged items and hedging instruments 2021


EUR million	Change in value of hedged item to determine hedge effectiveness	Change in value of outstanding hedging instruments	Ineffectiveness
Foreign exchange risk - Forward and option contracts (excluding option time value)	65	-66	-1
Foreign exchange risk - Net investment hedges	21	-21	0
Commodity price risk - Commodity swaps1	-60	60	0
Interest rate risk - Interest rate swaps	-11	11	0
Interest rate and foreign exchange risk - Cross- currency swaps2	15	-18	-3
1 Ineffectiveness booked in Operating profit. 2 Ineffectiveness booked in Net financial items.

Breakdown of cash flow hedging reserve and net investment hedges in equity 2022


EUR million	At 1 Jan 2022	Change in fair value recognised in OCI/CTA	Reclassified from OCI to profit and loss	Reclassified to non- financial assets	Tax impact	At 31 Dec 2022
Foreign exchange risk - Operational cash flow hedging	-21	-82	107	3	-5	2
Commodity price risk - Commodity swaps	23	41	-52	0	3	15
Interest rate risk - Interest rate swaps	-4	33	0	0	-7	23
Interest rate and foreign exchange risk - Cross-currency swaps	-1	0	2	0	0	1
Cost of hedging reserve	-1	0	0	0	0	-1
Total cash flow hedge reserve in OCI	-4	-8	57	3	-9	39
Foreign exchange risk - Net investment hedges	14	-16	0	0	3	1
Total net investment hedges in CTA	14	-16	0	0	3	1
Total hedging reserves	10	-24	57	3	-6	40

Breakdown of cash flow hedging reserve and net investment hedges in equity 2021


EUR million	At 1 Jan 2021	Change in fair value recognised in OCI/CTA	Reclassified from OCI to profit and loss	Tax impact	At 31 Dec 2021
Foreign exchange risk - Operational cash flow hedging	39	-66	-10	15	-21
Commodity price risk - Commodity swaps	3	60	-34	-6	23
Interest rate risk - Interest rate swaps	-13	11	0	-2	-4
Interest rate and foreign exchange risk - Cross-currency swaps	-9	33	-25	0	-1
Cost of hedging reserve	0	-2	0	0	-1
Total cash flow hedge reserve in OCI	20	37	-69	8	-4
Foreign exchange risk - Net investment hedges	30	-20	0	4	14
Total net investment hedges in CTA	30	-20	0	4	14
Total hedging reserves	51	17	-69	12	10

Financial impact of netting for instruments subject to an enforceable master netting

agreement 2022


	Not offset in the statement of financial position
EUR million	Gross amount of recognised financial instruments	Related liabilities (-) or assets (+) subject to master netting agreements	Collateral received (-) or given (+)	Net exposure
Derivative assets	95	-30	0	65
Derivative liabilities	-51	30	0	-21

Financial impact of netting for instruments subject to an enforceable master netting

agreement 2021


	Not offset in the statement of financial position
EUR million	Gross amount of recognised financial instruments	Related liabilities (-) or assets (+) subject to master netting agreements	Collateral received (-) or given (+)	Net exposure
Derivative assets	38	-16	0	22
Derivative liabilities	-71	16	0	-56

The Group enters into derivative transactions under master netting agreements agreed with

each counterparty. In case of an unlikely credit event, such as default, all outstanding

transactions under the agreements are terminated, and only a single net amount per

counterparty is payable for settlement of all transactions. The agreements do not meet the

criteria for offsetting in the statement of financial position, because offsetting is enforceable only

in the occurrence of certain future events.

Note 28 Cumulative translation adjustment and equity hedging

Accounting principles

The Group operates internationally and is thus exposed to currency risks arising from exchange

rate fluctuations on the value of its net investment in non-euro entities. Exchange rate

differences arising from the retranslation of net investments in foreign non-euro entities, and

financial instruments that are designated as hedges of such investments, are recognised directly

in equity in the cumulative translation adjustment (CTA). Movements in CTA (including related

hedges) are shown in the consolidated statement of comprehensive income.

The cumulative translation adjustments related to disposed and liquidated entities are

combined with their gain or loss on disposal. The CTA is recycled in the consolidated income

statement upon disposal and liquidation.

The Group policy for translation risk exposure is to minimise this by funding assets in the

same currency whenever economically viable, but if matching the assets and liabilities in the

same currency is not possible, hedging of the remaining translation risk may take place. The

Group has also applied net investment loan accounting for certain intragroup loans for which

settlement is neither planned nor likely to occur in the foreseeable future. These are in

substance, a part of the entity’s net investment in the foreign operation.

Cumulative translation adjustment - movement


	Year ended 31 December
EUR million	2022	2021
At 1 January
CTA on net investments	-235	-292
Net investment hedges and loans	48	34
Income tax related to hedges and loans	-8	-10
Net CTA in equity	-195	-267

CTA movement OCI
CTA movement	-244	42
CTA release through income statement	47	14
Net investment hedges and loans	-27	14
Income tax related to hedges and loans	3	2
CTA movement OCI total	-220	72

At 31 December
CTA on net investments	-432	-235
Net investment hedges and loans	21	48
Income tax related to hedges and loans	-5	-8
Net CTA in equity	-415	-195

In 2022 the release of cumulative translation adjustments to the income statement amounted to

a loss of EUR 47 million and was related to disposal of Russian Packaging Solutions, Wood

Products and Forest operations. After the release, there is no CTA remaining related to Russian

ruble. In 2021 the release to the income statement amounted to a loss of EUR 14 million and

was mainly related to the divestment of 20% ownership in Arauco Florestal Arapoti S.A.

Cumulative translation adjustment - financial position


	As at 31 December
	Cumulative Translation Adjustments (CTA)		Net investment hedges and loans		Net CTA in the statement of financial position
EUR million	2022	2021	2022	2021	2022	2021
Brazil	-255	-281	0	0	-255	-281
China	131	83	10	28	141	111
Czech Republic	43	38	-9	-9	34	29
Poland	-59	-52	17	17	-42	-35
Russia	0	-81	0	0	0	-81
Sweden	-543	-97	47	47	-497	-50
Uruguay (USD)	248	154	-44	-34	204	119
USA	8	4	0	0	8	4
Others	-4	-3	0	0	-4	-3
CTA before Tax	-432	-235	21	48	-411	-187
Taxes	0	0	-5	-8	-5	-8
Net CTA in Equity	-432	-235	17	40	-415	-195

The main movements in CTA in 2022 were a gain of EUR 98 (gain of EUR 116) million related to

the US dollar, a loss of EUR 446 (loss of EUR 103) million related to the Swedish crown and a

gain of EUR 48 (gain of EUR 9) million related to Chinese renminbi. The net amount of hedging

loss included in the CTA during the period amounted to EUR 24 (gain EUR 16) million.

Hedging instruments and unrealised hedge losses


	As at 31 December
	Nominal amount (Currency)		Nominal amount (EUR)		Unrealised losses (EUR)
EUR million	2022	2021	2022	2021	2022	2021
Borrowings
USD area	300	300	281	265	-41	-28
Total hedging			281	265	-41	-28

The Group is currently only hedging its equity exposure to the US dollar arising from its joint

operation located in Uruguay with USD functional currency.

Note 29 Commitments and contingencies

Accounting principles

Guarantees

The guarantees entered into with financial institutions and other credit guarantors generally

oblige the group to make payment in the event of default by the borrower. The guarantees have

an off-balance sheet credit risk representing the accounting loss that would be recognised at the

reporting date if the counterparties fail to perform completely as contracted. The credit risk

amounts are equal to the contract sums, assuming the amounts are not paid in full and are

irrecoverable from other parties.

Commitments


	As at 31 December
EUR million	2022	2021
On own behalf
Guarantees	14	15
On behalf of equity accounted investments
Guarantees	5	0
On behalf of others
Guarantees	5	6
Other commitments	36	36
Total	60	57

Guarantees1	24	21
Other commitments1	36	36
Total	60	57

1The comparative figures have been restated due to a reclassification from other commitments to guarantees.

In 2022, the Group’s commitments amounted to EUR 60 (EUR 57) million. In addition, the parent

company Stora Enso Oyj has guaranteed the liabilities of many of its subsidiaries and joint

operations up to 826 EUR (EUR 1,126) million as of 31 December 2022.

Capital commitments


	As at 31 December
EUR million	2022	2021
Total	593	220

Capital expenditure commitments are not recognised in the balance sheet and these include the

Group’s share of direct capital expenditure contracts in joint operations. The largest

commitments in relation to capital expenditure relate to the mill conversion at Oulu site in

Finland, the board production expansion at Skoghall site in Sweden and the wood handling

upgrade at Imatra site in Finland.

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 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, and the

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

The Group announced its intention in December 2022 to divest its consumer board

production and forest operations sites in Beihai, China. As previously disclosed, Stora Enso has

been granted investment subsidies and has given certain investment commitments in China.

There is a risk that the majority owned local Chinese company may be subject to a claim based

on alleged costs resulting from certain uncompleted investment commitments. Given the specific

mitigating circumstances surrounding the investment case as a whole, Stora Enso does not

consider it to be probable that this situation would result in an outflow of economic benefits that

would be material to the Group. The Company continues to monitor the situation as the

divestment process proceeds.