European Forestry Pulse #85 🌲

Hello,

Last Thursday we set five questions for Stora Enso's Q1 print. The numbers landed about the time we sent the issue.

Today we close the loop.

The short answer: the Nordic cycle did not bottom. But that is not the most interesting thing in the report.

Here's what's moving European forestry this week:

Stora Enso published Q1 2026 on May 7 at 08:30 EET. President and CEO Hans Sohlström titled the release: "Focus on our own actions drives results."

Read that title again. It is the whole story.

The gap between the −9.5% adjusted EBIT and the −50.5% IFRS operating result tells you most of what you need to know. Items affecting comparability hit €−56 million in Q1, against €−11 million a year ago. Restructuring is showing up on the line.

Both. Sort of.

The clean recovery from −€57 million Q4 to −€4 million Q1 was Metsä-specific. Stora Enso's pattern is different. Sales are stable. Adjusted EBIT is down moderately. But the IFRS operating result halved, driven by restructuring and fair-value adjustments.

The three Nordic giants are now telling three different stories. SCA is paying for the cycle. Metsä is recovering through cost cuts and pulp pricing recovery. Stora Enso is restructuring through it.

The cycle has not found a clean floor. It has found three different management responses.

Read the cash flow line.

Cash flow from operations: €125 million, down 35% from €192M.

Net debt to LTM EBITDA: 3.1x, slightly better than 3.2x.

Combine those two. Operations are generating less cash. Leverage is holding steady. The €1 billion hybrid issued in April reads less like growth funding and less like routine refinancing. It reads like balance-sheet ballast for the Bergslagets Skogar separation in 2027.

The Q1 release supports this reading. A dedicated Bergslagets Skogar management team is now in place. The Capital Markets Day is set for November 3, 2026 in Stockholm. The hybrid bonds carry IFRS equity treatment, which protects the parent's leverage metrics through the demerger.

Stora Enso has not labelled the hybrid as "separation funding." But the timing, the structure, and the cash flow line all point the same way.

Sohlström's exact phrasing: "pricing pressure persisted in some business segments, while prices firmed up and increased in others."

Translate: mixed. Not a clean recovery. Some grades up, some grades flat or down.

This is the language of a market that has stopped falling but is not climbing yet.

This is where the meta-note belongs.

The question was wrong by the time we asked it.

Stora Enso changed its reporting structure on January 1, 2026. The Forest segment is discontinued. Northern Europe Wood Products is folded into Consumer Packaging, Integrated Packaging, and Biomaterials. Central European Wood Products sits in "Other," under strategic review. Tornator (Finland) and SESOM 2 (Sweden) are now reported by proportional wood consumption inside the packaging segments.

The new reportable segments are: Consumer Packaging, Integrated Packaging, Biomaterials, Other.

Stora Enso announced this on March 25, 2026 and restated comparatives. We should have caught it before writing the question.

For readers who care about the substance — Sohlström noted that the new structure introduces P&L responsibility across 6 Business Areas and 23 Business Units. The decentralised structure is itself a restructuring move, designed to drive performance through individual leaders rather than through cycle-following.

The structural news landed three ways.

First, Bergslagets Skogar. Naming announced May 7. 1.2 million hectares Swedish forest land. Dedicated management team in place. Separation completion targeted for H1 2027. This will be Europe's largest listed pure-play forest company once listed.

Second, Central European sawmills strategic review continues. No verdict yet. This affects seven mills and the Building Solutions operations.

Third, the Oulu ramp-up. The new consumer board line is now expected to reach full capacity during 2027, not 2026. The Q1 ramp-up cost was the largest single drag on adjusted EBIT. Q2 will look the same. This is a year of paying for a multi-year investment.

One paragraph deep in the outlook section deserves attention.

Stora Enso's operating income from emission rights in 2025 was about €72 million. For 2026, the company expects this to fall to €10–20 million.

The reason: several sites lose their free CO₂ allowance allocations from 2026 onward, because their emissions are now more than 95% biogenic. Stora Enso frames this as a success of long-term emission-reduction work. It is. It is also a structural EBIT headwind that any biomass-heavy mill operator across Europe will face on a similar timeline.

If you run a biomass-fuelled mill in the EU, calendar this. The ETS income line in your P&L will move the same way over the next two years.

Three messages depending on where you sit.

If you sell timber to Stora Enso: wood costs were lower in Q1 than a year ago, and that helped adjusted EBIT. The negative was foreign exchange and Oulu ramp-up. There is no signal that log buyers will absorb more pain on your behalf. The 2026 outlook still treats wood as a stable input, not a margin lever.

If you hold European forest assets in a fund: the €8.5 billion forest valuation translates to €10.76 per share. The 8.4% year-on-year decline reflects the 175,000 hectare divestment in Sweden last year, not a market-wide write-down. Bergslagets Skogar is the structural play. The November 3 Capital Markets Day in Stockholm will be the moment to read the pure-play forestry equity case.

If you process wood downstream: watch the Q2 print for Oulu progress and the Central European sawmills decision. Both shape capacity utilisation across Europe for 2027.

The cycle did not bottom in Q1 2026. But Stora Enso is not waiting for it. Sources: Stora Enso Q1 2026 Interim Report — full release | Stora Enso Bergslagets Skogar press release | Stora Enso segment reporting changes

The Swedish Forest Agency (Skogsstyrelsen) published Q1 2026 roundwood price statistics on May 5.

Sveaskog's Q1 2026 corroborates. Net sales were MSEK 2,122, down 9% year-on-year. Timber prices fell by an average of 7%. Delivery volumes were down 2%. Operating profit was MSEK 678, down 19%.

Two official Swedish sources. Same story. The supply shock from Storm Dave (EFP #79) showed up in the Q1 print exactly where we expected.

The takeaway: Forest owners in Sweden bought a 4–6% stumpage haircut for a windthrow that left them with extra volume to sell. The cycle is now visible in primary data, not just earnings calls. Sources: Skogsstyrelsen — Lower prices on roundwood during first quarter of 2026 | Sveaskog financial reports — Q1 2026 interim report

On May 7, the same morning as Stora Enso's Q1, Raute Corporation announced change negotiations covering approximately 140 employees across all Finnish locations. The scope: functions and the Services business unit, excluding the installation team already covered by earlier negotiations.

The reason, in Raute's own words: "global economic and geopolitical uncertainty has further intensified during the first quarter, leading to continued postponement of customers' investment decisions and delayed recovery of Raute's order intake."

Potential temporary layoffs of up to 90 days during 2026.

Raute is the partner to the veneer, plywood, and LVL industry. The September 2024 round covered 416 people. The May 2025 round covered 400. This May 2026 round is smaller — 140 — but it confirms a pattern.

Two weeks ago, Valmet announced change negotiations covering 2,400 staff (EFP #83 QH3). Now Raute. The supplier base is feeling the pulp cycle on a six-to-twelve-month lag from the mills.

The takeaway: Order intake at the equipment makers — Valmet, Andritz, Voith, Raute — is the leading indicator. Watch Q2 order books, not Q2 sales. Source: Raute Corporation — Inside information

Coillte's 2025 annual results landed on May 1.

The numbers:

Coillte CEO Imelda Hurley framed it directly: 2025 was "one of the most challenging years on record for the organisation." Chair Vivienne Jupp said the effects of Storm Éowyn "will continue to impact the business for the next two years."

Storm Éowyn hit Ireland in January 2025. We covered the gov.ie €55 million state reconstruction package in EFP #70. That was the state's bill. This is the company's bill.

Two distinct numbers. Same storm. Sixteen months apart.

This pattern matters beyond Ireland. Storm Dave hit Sweden in April 2026 and dumped 2 million cubic metres on southern Swedish forest owners (EFP #79). The Coillte timeline says: expect the financial impact to land on annual results 12 months later, not in the quarter the storm hits.

The takeaway: Storm economics run on an extended accounting cycle. Sweden's Storm Dave bill will land in Nordic annual results around Q1 2027. Plan capacity, salvage logistics, and insurance now. Sources: Coillte — 2025 results announcement | The Irish Times — Coillte takes €80m hit from Storm Éowyn

On May 7, Timber Development UK (TDUK) and One Click LCA announced a strategic partnership to help the UK timber supply chain measure, manage, and communicate carbon performance.

In Charlie Law's words — TDUK sustainability director — "While in the past, timber's sustainability credentials were primarily focused on certification and sourcing. Now it is important that the rigorous approach is carried through the supply chain to demonstrate their performance as construction products."

That sentence is the whole story.

Certification was sourcing. Whole-life carbon assessment is procurement.

The partnership comes with concrete plumbing. Programmed activities include, among others, an EPD masterclass for manufacturers on June 16, an LCA masterclass for architects and engineers on September 9, a Carbon Experts Summit in London on June 3, and the UK Timber Design Conference on July 2. Several events are free or heavily discounted for TDUK members.

Why this matters beyond the UK: across Europe, the EU Construction Products Regulation will require verified carbon data in digital product passports for several product categories starting in 2026. The EU Ecodesign for Sustainable Products Regulation expands the same logic. CBAM adds carbon pricing on imports.

In other words: every European timber business will need to make this transition. The UK is just first.

This is also where the Forestry Communication Playbook comes in. Chapter 6 covers how to translate technical product data — embodied carbon, biogenic uptake, A1-A3 modules — into language a client, a journalist, or a council planner can actually use. The transition Charlie Law describes is operational at the LCA tool level. But it is a communication failure waiting to happen at the customer level. Foresters and timber suppliers who can answer the carbon question in plain language will close more orders than those with better numbers and worse explanations.

The takeaway: If your business sells timber into UK construction in 2026, this partnership is structural. If you sell elsewhere in Europe, it is the early warning signal. Source: TDUK — New partnership to accelerate carbon transparency

Write the three-sentence read on a print you have not seen yet.

Last Thursday we asked you to write three sentences about Stora Enso Q1 before reading the report. Most readers did not.

That is fine. Do it now, in reverse. Pick a print you have not read — Tornator's eventual Q1, Sveaskog's full report, Coillte's annual review — and write three sentences before you open the document:

Sentence 1. What you expect the headline operating result to look like, based on what you already know about the company and the cycle.

Sentence 2. What one segment, one geography, or one cost line will surprise you.

Sentence 3. What you would tell a forest-owner client, in plain language, about what this means for their stumpage prices.

Then read the actual document.

The exercise is not about being right. It is about catching the gap between your assumptions and the data. That gap is the difference between an opinion you can defend and an opinion you cannot.

Chapter 4 of the Forestry Communication Playbook calls this discipline "writing the brief before you read the brief." It is the smallest, most useful habit in this market. Five minutes. Three sentences. Repeat for the next 14 prints between now and the end of July.

The next time a journalist asks what Q1 results mean for European forest owners, you'll have thirty seconds to answer.

Right now — what do you say?

If the answer isn't ready, you need this Playbook.

The brief is free. The briefing is not.

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Until Thursday!

Wish you all the best: Peter

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