Stora Enso Increases the IFRS Fair Value of its Forest Assets
January 22, 2020
HELSINKI, Finland (News release) -- The IFRS fair valuations of Stora Enso's forest have increased significantly since the publication of the Group's third quarter results in October.
The forest fair value impact in the balance sheet was a positive EUR 777 million pre-tax at end of 2019. Part of the fair valuation increase has not been recognized in operating profit but as an adjustment to opening balances of purchased Swedish forest assets and liabilities.
Fair valuations and non-operational items had a positive net impact of EUR 600 million on Stora Enso's IFRS operating profit in the fourth quarter of 2019. The impact came mainly from the forest fair valuation increase in forests owned by Stora Enso in Sweden (EUR 499 million). This was mainly driven by lower discount rates, due to decreasing market interest rates, and updates to other valuation parameters. This increase is excluded from the Operational EBIT.
The fair value of productive forest land in Sweden, including the above-mentioned increase, was 3 020 euros per hectare on 31 December 2019. Using the price statistics from LRF Konsult for smaller lots in mid-Sweden in 2019, the price per hectare was 5 700 euros.
Stora Enso uses discounted cash flow (DCF) method to assess the fair value of its forest assets. Stora Enso will publish its fourth quarter and full year 2019 results on 30 January 2020.