" This rating action recognises a further strengthening of Stora Enso's business profile and its balance sheet during 2017, with an increasing likelihood that over the next 18 months the company will reach credit metrics sustainably commensurate with an investment grade rating", says Moody.

Today's rating action recognises a further strengthening of Stora Enso's business profile during 2017 and continuation of successful business diversification beyond the traditional graphic grade paper, which is in structural decline in mature markets.

In the past couple of years Stora Enso has invested sizeable amounts into businesses with underlying growth, such as paper packaging, well in excess of depreciation and maintenance capex levels.

In 2017 these growth businesses represented already over 80% of the group's operating income, as defined by Stora Enso, which compares to around one third in 2006. The last year also marks the first year in the past five years when Stora Enso's growth businesses outpaced the decline in paper business in topline -- a trend that Moody's expects to continue into 2018 and 2019.

Given that growth activities generally also enjoy structurally higher profitability than the paper operations, the continuous shift in the business mix has led to a sustained improvement of Stora Enso's credit metrics that is now fully in line with a Ba1 rating.

Moody's estimates that Stora Enso's EBITDA margin, as adjusted by the rating agency, reached around 15% and retained cash flow (RCF) to debt roughly 22% in 2017.

Even when Moody's considers a pro-forma impact of the Bergvik Skog transaction announced in November last year, which would reduce the RCF/debt to around 18%, this would still position Stora Enso solidly in the Ba1 rating category.

The upgrade also recognises the return of a meaningful positive free cash flow generation, with a Moody's adjusted (RCF-capex)/debt in mid-single digit in % terms, driven by a normalisation of capital investments following number of years of extraordinary growth.

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