Deutsche Bank 15th Annual European Leveraged Finance Conference in London

rethink. Stora EnsoQ1 2011 Strong – Earnings more than doubled

CFO Markus Rauramo

It h ld b t d th t t i t t t h i hi h t hi t i l f t i l di ith tIt should be noted that certain statements herein which are not historical facts, including, withoutlimitation those regarding expectations for market growth and developments; expectations for growthand profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or similarexpressions, are forward-looking statements within the meaning of the United States Private SecuritiesLiti ti R f A t f 1995 Si th t t t b d t l ti t dLitigation Reform Act of 1995. Since these statements are based on current plans, estimates andprojections, they involve risks and uncertainties which may cause actual results to materially differ fromthose expressed in such forward-looking statements. Such factors include, but are not limited to: (1)operating factors such as continued success of manufacturing activities and the achievement of

ffi i i th i ti d f d t d l t t f d t iefficiencies therein, continued success of product development, acceptance of new products or servicesby the Group’s targeted customers, success of the existing and future collaboration arrangements,changes in business strategy or development plans or targets, changes in the degree of protectioncreated by the Group’s patents and other intellectual property rights, the availability of capital onacceptable terms (2) ind str conditions s ch as strength of prod ct demand intensit of competitionacceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition,prevailing and future global market prices for the Group’s products and the pricing pressures thereto,price fluctuations in raw materials, financial condition of the customers and the competitors of theGroup, the potential introduction of competing products and technologies by competitors; and (3)general economic conditions such as rates of economic growth in the Group’s principal geographicgeneral economic conditions, such as rates of economic growth in the Group’s principal geographicmarkets or fluctuations in exchange and interest rates.

9 June 2011rethink. Stora Enso 2

Stora Enso sustainable competitive differentiationStora Enso – sustainable, competitive differentiation

9 June 2011 3

rethink businessrethink innovation rethink customer servicerethink our attituderethink productsrethink processes

thi k t i lrethink materialsrethink the future

4

World needs a new approach to materialsWorld needs a new approach to materials

9 June 2011rethink. Stora Enso 5Source: www.cartonawards.com

Q1 2011 Strong Earnings more than doubledQ1 2011 Strong – Earnings more than doubled

Sales up 19%

EBIT excl NRI and fair valuations up 108%

EPS excl NRI up 47%

Q1 2011 compared to Q1 2010Q1 2011 compared to Q1 2010


Earnings improvingg p gHigher prices and continued productivity improvement

12 %300EBIT excl NRI and fair valuation EBIT margin*, % 4 Q avg ROCE* , % 4 Q avg

8 %

10 %

200

250

on

4 %

6 %

100

150

EU

R m

illio

2 %

4 %

50

100

0 %0


*excluding NRI and fair valuation

Almost a billion cash from working capitalg pQ1 2011 increase – preparing for Q2

24 0 %

26,0 %

28,0 %

2 400

2 600

2 800

20,0 %

22,0 %

24,0 %

2 000

2 200

2 400

illio

n

16,0 %

18,0 %

1 600

1 800

EU

R m

i

10 0 %

12,0 %

14,0 %

1 000

1 200

1 400

10,0 %1 00008Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1

Operative Working Capital at the end of Q Working Capital per Sales ratioOperative W/Cap = inventories + trade receivables – trade payables


Capital expenditure following the policyp p g p yBelow depreciation over the business cycle

8 %

10 %

200

250 Forecast FY 2011:Capex approximately

EUR 550 million. The equity injection

6 %

8 %

150

200

illio

n

The equity injection approximately EUR 120 million.

4 %100EU

R m

i

0 %

2 %

0

50

0 %0

Capex Depreciation and impairment excl NRI Capex % of salesTotal operations


N t d bt d 15%Net debt down 15% y-o-y

6,05 000

Net Debt Net Debt/EBITDA excl NRI and fair valuations

4,0

5,0

4 000

4 500

ion

2,0

3,0

3 000

3 500

EU

R m

illi

0 0

1,0

2 000

2 500

EBITDA: Continuing operationsSENA divestment closed in Q4 2007

0,02 000


g pNet debt: Total operations

SENA divestment closed in Q4 2007Merchants divestment closed in Q2 2008

Maturity profiley p31 March 2011

800

900

1 000 SEK 500m 3.5% 2015SEK 1.4 bn S+3.7% 2015SEK 2.4 bn 5.75% 2015

500

600

700

mill

ion

EUR 750m 5.125% 2014

EUR 390m E+4.21% 2016USD 507m 6.404% 2016

200

300

400

500

EU

R m Other loans/liabilities

BondsCommercial paper

USD 300m 7.25% 2036

0

100

200

Revolving Credit Facility € 700 million matures in January 2014 and is fully undrawn.


Stora Enso leading industry restructuringg y gCapacity closures since 2006

Paper18%

Pulp9%

Wood Products

Board8%

20%


Productivity increasedyPricing over volumes, managing assets

120 000

100 000

80 000

EU

R

Sales per employee

60 000

40 00007Q1 08Q1 09Q1 10Q1 11Q1


Latest action: Fine Paper re-evaluating its working methods

Th l i t t t ti t

p g gBuilding a new business model to increase cost competitiveness

• The plan is to restructure operations at:– Nymölla Mill, Sweden– Uetersen Mill, Germany– Oulu Mill, Finland– Sheeting plants in Belgium and UK

• Reduce annual costs by approximately EUR 20 million– Starting during 2011 and being completed by the end of Q2 2012

• The proposed measures would affect up to 285 employees

C h i i f i l EUR 16 illi b d d NRI i Q2• Cash provision of approximately EUR 16 million to be recorded as NRI in Q2 2011 operating profit


This is not about reading newspapers on tablets but how the consumers spend their time ?

F b kS i l di d t d f t th • Facebook

– 3rd largest population after China and India

Social media adopted faster than any other device / media

ce

– Half of UK mobile web traffic

– Fastest growing segment 55-65 ld f lno

logy

/ser

vic

year old females

– 1 out of 8 US couples married met on it

on u

sing

tech

• Let’s ask the people driving this change!

N h h f id f iU.S

. pop

ulat

io

– Not the ones who are afraid of it (and tell us what we want to hear)%

of U


Proof points of actionpOur direction

G th k t• Growth marketsProof points: • Inpac acquisition

O t l k t i b d i t t

• Growth markets

• Plantation based pulp• Ostroleka containerboard investment• Investment to Montes del Plata

• Plantation-based pulpP f i t

• Plantation-based pulp

• Fibre-based packagingProof point: • Investment to Montes del Plata

• Fibre-based packaging• Selected paper grades

Maintain and develop globalleadership positionProof points: • Inpac acquisition• Ostroleka containerboard investment

• Selected paper grades

9 June 2011 19

Implementing strategy

Project On target Other progress

p g gyHigh return growth businesses

oject O ta get Ot e p og essMontes del Platapulp mill, Uruguay

Machinery and portsuppliers selected and contracted for MdP

Ostrolekacontainerboard machine, Poland

Proceeding as planned

Poland

CLTinvestment, Ybbs, Austria

All permits received, main machine supplier selected

Skoghallinvestment

Support wood handling in Sweden and furtherinvestment Sweden and further develop Skoghall mill

Inpac Integration planning strongpackaging company in China and India

20

Outlook increasing concerns on cost inflationOutlook - increasing concerns on cost inflation

I fl ti d i t li it Q2• Inflation and maintenance limit Q2 earnings improvement y-o-y

Demand development Q2/11 vsQ2/10

Price development Q2/11 vsQ1/11

• Inflation estimate increased to ~4% for the full year 2011 compared to 2010

Consumer Board

Industrial

• Actions to fight inflation continue to be even more important

Industrial Packaging

Newsprint and Book PaperpCoated Magazine Paper

UncoatedM i PMagazine Paper

Fine Paper

W d P d t


Wood Products

SummarySummary

St t• Strong quarter

• Inflation pressure p

• 80% of CAPEX for strategic high return growth areas in 2011return growth areas in 2011

• Investments in strategic high-return growth areasreturn growth areas

– Montes del Plata– Ostroleka

Ybb– Ybbs– Skoghall


Rethinking continues!Rethinking continues!

Deutsche Bank 15th Annual European Leveraged Finance Conference in London

Investor Relations

Transcript of Deutsche Bank 15th Annual European Leveraged Finance Conference in London