Goldman Sachs Basic Materials Conference in New York. Presentation by CFO Markus Rauramo (25 May...

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.

25 May 2011rethink. Stora Enso 2

Stora Enso’s businessStora Enso s business

What we do

Publication paper Fine paper Packaging Wood products

Operating profit, EUR 248 million*Sales, EUR 2 727 million24 %24 %

18 %

21 %

15 %

39 %

32 %

9 %12 %

8 %10 % 11 %

5 %

Consumer Board

Industrial Packaging

Newsprint and Book

P

Magazine Paper

Fine Paper Wood Products

5 %

Consumer Board


Newsprint and Book

Paper

Magazine Paper

Fine Paper Wood Products

25 May 2011 3

*excluding non-recurring items and fair valuations

Paper Paper

rethink. Stora Enso

Employees and capacityEmployees and capacity

Employees by country 2010* Paper and board capacity by country 2011


*Continuing operations

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

n

4 %

6 %

100

150

EU

R m

illio

n

2 %

4 %

50

100

0 %0


*excluding NRI and fair valuation

RCP continued to drive inflationRCP continued to drive inflation

160

200

120

tonn

e Mixed

80EU

R/t OCC

De-inking

0

40

German RCP price development, free deliveredS V b d D t h P i f b ik /St E


Source: Verband Deutscher Papierfabriken/Stora Enso

Higher pulp prices positive g p p p pDue to 1 million tonnes net market pulp position

1 000

1 200

600

800

tonn

e

Bleached softwood kraft pulp

400

600

US

D/t Bleached softwood kraft pulp

Bleached hardwood kraft pulp

0

200

Source: FOEX


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

Stora Enso leading industry restructuringg y gCapacity closures since 2006

Paper18%

Pulp9%

Wood Products

Board8%

20%


Personnel reduced by 33%Personnel reduced by 33%

40 000

35 000

30 000

Average personnel

25 0002005 2006 2007 2008 2009 2010 2011 Q1


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


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

25 May 2011 16

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

17

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


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!

Goldman Sachs Basic Materials Conference in New York. Presentation by CFO Markus Rauramo (25 May...

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