Nordea Forestry Industry Seminar

Björn Hägglund, Deputy CEOHelsinki 5 June 2003

2

It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations for market growth and developments; expectations for growth and profitability; and statements preceded by “believes”, “expects”, “anticipates”, “foresees”, or similar expressions, are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Since these statements are based on current plans, estimates and projections, they involve risks and uncertainties which may cause actual results to materially differ from those 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 efficiencies therein, continued success of product development, acceptance of new products or services by 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 protection created by the Group’s patents and other intellectual property rights, the availability of capital on acceptable 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 the Group, 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 geographic markets or fluctuations in exchange and interest rates.

Company Overview

4

Stora Enso In Brief

• A world leader– 15 million tonnes of paper and board – 6.7 million m3 of sawn products

• Three core product areas – Paper, Packaging and Forest Products

• Sales EUR 12.8 billion • Approximately 43 000 employees in 40 countries• Market capitalisation: EUR 8 billion • Shares listed on Helsinki, Stockholm and New York stock exchanges• Senior debt rating BBB+ (Standard & Poor’s)

Paper Packaging Forest Products

5

Leading ProducersPaper and Board, II/2003

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

Metsä Group

Abitibi-Consolidated

Nippon Unipac Holding

Smurfit-Stone Container Corp.

Weyerhaeuser Corp.

Georgia-Pacific Corp.

Oji Corporate

UPM-Kymmene

International Paper

Stora Enso

Capacity in 1 000 tonnesSource: Jaakko Pöyry Consulting

6

Leading ProducersSawn timber, II/2003

0 2,000 4,000 6,000 8,000 10,000 12,000

Slocan Forest Product

UPM-Kymmene

Abitibi-Consolidated

West Fraser Timber

Georgia-Pacific

Finnforest

Canfor

International Paper

Stora Enso

Weyerhaeuser

Capacity in 1 000 m3

Source: Company reports

7

Core Business Drivers

Stora Enso, Sales 2002

PublicationPaper37%

Fine Paper,27%

Packaging21%

Timber 10%

Other 5%

EUR 12.8 billion

Core Business Drivers

Construction9%

Industrial Production 5%/

Non-durable Goods15%

GDP / Office IT

14%

Other4%

Advertising53%

8

Group Strategy

Key principles and targets:

• Grow profits, mainly through M&As, asset restructuring and continual improvement programmes

• ROCE target: ≥ 13% over the cycle; current WACC: 9.5%

• Debt/Equity ratio: ≤ 0.8

• Capex: ≤ annual depreciation over the cycle

• Dividend policy: stable payout of at least one third of net profit over the cycle

• Strive to achieve top quartile asset quality

9

New Organisation Chart - effective 1st May 2003

CEO

DCEO

Corporate SupportHuman Resources

EnergyIT

Finance Strategy & Investments

Market ServicesCommunications

Investor Relations

Paper Publication Papers

Fine Paper North America

Merchants

PackagingConsumer Boards

Corrugated PackagingIndustrial Papers

Cores and Coreboards

Forest ProductsTimber Forest

Pulp competence

Asia Pacific Latin America

First Quarter 2003 Results

11

Highlights

IV/2002 I/2003Sales, EUR million 3 212 3 099Operating Profit1), EUR million 206.9 211.1EPS, EUR 0.54 0.10EPS1), EUR 0.12 0.10Cash EPS1), EUR 0.44 0.43Debt/Equity 0.37 0.46

1) excluding non-recurring items

• Operating profit increased to EUR 211.1 (EUR 206.9) million • Cash flow remained strong; cash EPS EUR 0.43 (0.44)• EPS EUR 0.10 (0.12)• Geopolitical situation affected advertising-driven paper grades• Consumer-driven products performed well

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EUR million I/02 II/02 III/02 IV/02 I/03

Net interest -72.5 -54.8 -53.0 -49.3 -34.6Foreign exchange profit/loss 20.4 10.9 13.2 0.4 2.9Valuation of financial instruments (non cash) -1.3 -16.1 -20.0 -11.0 -44.1Other financing items 8.2 16.0 3.6 -0.9 -5.5Total -45.2 -44.0 -56.2 -60.8 -81.3

Net Financial Items

13

Change in EPS IV/2002 vs I/2003

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

GROUP TOTALIV/02

Sales prices Sales volumeand mix

Energy Fixed Costs Financing cost GROUP TOTALI/03

EUR

0.12

0.01 -0.01

-0.01

0.10

0.05

-0.06

14

Operating Profit by Quarter

0

100

200

300

400

500

600

I/00 II/00 III/00 IV/00 I/01 II/01 III/01 IV/01 I/02 II/02 III/02 IV/02 I/03

EUR million

excluding non-recurring items

15

ROCE by Quarter

0

5

10

15

20

25

I/00 II/00 III/00 IV/00 I/01 II/01 III/01 IV/01 I/02 II/02 III/02 IV/02 I/03

%

WACC 9.5%before tax

Target > 13% over the cycle

excluding non-recurring items

16

Debt/Equity

0.20

0.25

0.30

0.35

0.40

0.45

0.50

0.55

0.60

0.65

I/01 II/01 III/01 IV/01 I/02 II/02 III/02 IV/02 I/03

Target < 0.8

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Capital Expenditure and Depreciation

Capital expenditure

Capital expenditure as % of salesEUR million Depreciation

Goodwill amortisation

0

200

400

600

800

1,000

1,200

1,400

1,600

1998 1999 2000 2001 2002 1-3/20030%

1%

2%

3%

4%

5%

6%

7%

8%

9%

18

USD GBP

Net operating cash flow after hedges 480 349Depreciation and amortisation 270 5After depreciation and amortisation 210 344

± 5% change in currency value

- Cash flow impact ± 24 ± 17

- EBIT impact ± 10 ± 17

Currency Effect Risk Million Euro*

* Calculated using 2002 currency flows

Market Outlook

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Tonnes 2002 I/2002 II/2002 III/2002 IV/2002 I/2003

Magazine Paper

Europe 416 000 110 000 107 000 121 000 78 000 69 000North America 153 000 62 000 75 000 13 000 3 000 7 000

Newsprint

Europe 298 000 77 000 61 000 54 000 106 000 47 000North America 7 000 7 000

Fine Paper

Europe 190 000 20 000 30 000 60 000 80 000 57 000North America 60 000 24 000 26 000 10 000

Packaging Boards 133 000 42 000 20 000 13 000 58 000 22 000Total 1 257 000 335 000 326 000 271 000 325 000 202 000

Market-related Production Curtailments

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Near-term Market OutlookWestern Europe

Price Demand Comments

Magazine Paper

SC

CMR

Newsprint

Fine Papers

WFC

WFU

Packaging Boards

Timber

SC is expected to be stable at the best. Increased inventories.

No strong sign of improvement in demand; inventories increased.

Order books short, price pressure; producer stock will remain high

Demand will seasonally be slow;order books goodStable order block; minor market related downtime in some gradesOversupply, limited price and volume increases in some areas

Demand improving; D/S ratio imbalance puts pressure on prices

22

Near-term Market OutlookNorth America

Price Demand Comments

Magazine Paper

SC

CMR

Newsprint

Fine Papers

WFC

Timber

Price increases expected in July

Some signs of improvement in demand, $50 price increase partially implemented

Demand leveling off, price increases achieved last year

Price increases expected in July

Housing activity continues, prices stable

Fibre Strategy in Process

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Veracel Overview (1)

• Stora Enso and Aracruz Celulose S.A. are joint shareholders, each with a 50 % stake

• New eucalyptus pulp mill in Bahia, Brazil with a production capacity of 900 000 tonnes per annum

• Construction budget: USD 870 million, plus USD 70 million for infrastructure

• USD 300 million has been invested to date in forestry operations and infrastructure

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Veracel Overview (2)

• Financing: 45% equity and 55% loans provided by the Brazilian Development Bank, European Investment Bank and Nordic Investment Bank, guarantees pro-rata by the owners

• Construction to start immediately; first pulp prod. in mid 2005

• Veracel has 70 000 hectares of privately owned eucalyptus plantations

• The yield per hectare in Veracel is 50 cubic metres per annum.(Finnish forests in economic use, yield approx. 3-4 cubic metres)

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Location of Veracel

BRAZIL

Rio de JaneiroSao Paolo

Aracruz

Veracel

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Rationale for Stora Enso’s involvement

• The plantations provide:– wood at an extremely competitive cost– suitable land structure, and– superior logistic position

• Improve cost competitiveness and quality of Stora Enso’s pulping assets

• Reduce fibre costs in Fine Paper Division

• Stora Enso’s share of pulp; captive

• Secure access to high-growth wood fibre

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Stora Enso’sAcquisition of Sylvester

• Stora Enso Timber acquired 66% of the sawmilling operations and 100% of the wood procurement operations of AS Sylvester, the largest sawmilling and wood procurement company in the Baltic Countries

• Rationale for the acquisition:– Profitable modern assets– Supports the expansion of Stora Enso’s wood procurement in the

Baltic Countries– Strengthens Stora Enso Timber’s position in wood products market– Earnings accretive to the Group from 2003 onwards – Significant cost advantages and synergies– Platform for further expansion in the region

• Transaction completed, with effect from 1 March, 2003

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Significant Cost Advantages Through a Competitive Manufacturing Base

Key opportunities:

– low raw material costs

– low manufacturing costs

– securing the Group’s fibre access

– paving way for the Group’s expansion

Baltic Countries and Russia provide one of the most cost competitive sawmilling

platforms globally

0

20

40

60

80

100

Raw Material Cost Production Cost

- Nordic & Central Europe = 100 -

Nordic &Central Europe

Baltic Countries

Russia

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Stora Enso’s Sawmills Including Baltics

• The largest solid wood products company in Europe, among the top three globally

• The leading sawmill company in the Baltic Countries

• Competitive and comprehensive product portfolio for construction and joinery industries and wood products trade

• Global market presence

Central Europe Production Group Nordic Production Group Stand-alone further-processing sites Baltic sawmills Planned Baltic sawmills

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Stora Enso’s Russian Sawmill Investments

Pitkäranta

Nebolchi

Objectives• Secure strategic position in Russia - competitive

sawmilling and wood procurement• Support the Group’s wood procurement to the Finnish mills

in preparation for the decreasing wood availability after 2005

• Create conditions for further expansion

Concept and Timetable • Start-up with flexible, small-log mobile saw concepts• Expansion to full-scale sawmilling when feasible• Further expansion possibilities in Russia investigated

Sawn wood capacity, 1 000 m3

Investment, € million

Planned start-up

100

8.0

Q3 2003

Pitkäranta, Karelia

Nebolchi, Novgorod

100

4.5

Q1 2004

Mergers & Acquisitions

33

13 %

30 %

10 %

Creating value through divestment and acquisition

1986 Tervakoski,Kitee acquisition 1987 Ahlström,

Varkaus Mills

1990 Soustre,acquisition

1990 Sale of Veneerindustry

1993 TampellaForest acquisition

1993 Sale of Eurocan

1995-6 Veitsiluoto acquisition

1997 Holtzmann acquisition

1998 Schweighofer acquisition

1984 Billerud acquisition

1986 Kopparkraftsales and leaseback

1987 Papyrusacquisition

1990 Feldmühle acquisition

1998 Suzhou acquisition

1998 Stora Enso merger

1999 Sale of various non-core assets;office buildings, shipping line etc.

1999 Sale of technical office papers

1999 Sale of Dalum mill, fine papers

2000 Gruvön mill Billerud

1999 Sale of Tervakoski mill, speciality papers

2000 Close down of Newton Kyme mill, packaging2001 Dissolving Pulp division

2000 Sale of power assets outside mill2000 Consolidated Papers Inc. acquisition

2002 Divestment of Northern forests2002 Sylvester acquisition, Timber

2002 Divestment of Mölndal Mill

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Merger & Acquisition Criteria

• Support group financial targets; EPS + CEPS accretive

• Focus on core products - globally

• Strive for top quartile assets

• Strengthen Stora Enso’s market position

• Account for asset restructuring opportunities, customer relationships and synergies

• Proceed with discipline and patience

Enhancing Shareholder Value

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Share Buy-Back Programme

Current programme approved by 2003 AGM to continue through 19 March 2004. Allows repurchase up to:A shares 9 100 000R shares 34 000 000

Status through 02 June 2003:

Number of Average % of Shares shares purchased: purchase price: authorisation

A shares 3 300 EUR 9.14 0R shares 14 628 300 EUR 9.21 43.0

2001 2002 31 March, 2003

Total shares in issue: 906 753 299 899 778 299 864 187 499

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Earnings Per Share and Dividend

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1998 1999 2000 2001 20020%

10%

20%

30%

40%

50%

60%

70%

80%

90%EPS, excluding non-recurring itemsEUR Payout ratio %Dividend

*

*

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Cost Efficiency Drive Continues

Existing programmes are realising results and being further intensified• Asset Restructuring Programme• “Excellence 2005” – the Stora Enso version of

Total Quality Management• Profit Enhancement Programme for North America• Mill-by-mill continuous productivity improvements

Summary

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Stora Enso – a long-term performer

• A balanced forest products portfolio with high market shares

• Cash flow remains strong despite difficult market conditions

• Balance sheet is strongest in the industry

• Senior debt rating BBB+

• Active share repurchase programme to boost EPS

• Robust and stable dividend policy

• Exposure to North America offers early recovery

• Committed to both supply and pricing discipline

• Asset restructuring and M&A’s will continue as strategic tools

Appendix

42

EUR million 2002 I/02 IV/02 I/03

Sales 12 783 3 229 3 212 3 099EBITDA 1) 2 172 603 474 501Operating profit 1) 926 274 207 211Profit before tax -343 241 243 129Net profit -222 161 478 85EPS, EUR 1) 0.57 0.18 0.12 0.10EPS, basic, EUR -0.25 0.18 0.54 0.10CEPS, EUR 1) 1.97 0.55 0.44 0.43ROCE, % 1) 7.1 7.8 7.1 7.1Debt/Equity 0.37 0.59 0.37 0.46

Summary Financials

1) excluding non-recurring items

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Sustainability Indices

• Listed fourth year in a row

• Ranked as leading forest products industry company

• Listed continuously since inception in 2001

44

Paper and Board Capacity by Country

Capacity 15 million tonnes

Other European countries 8%

Finland 37%Sweden 21%

Germany 15%

Asia 1%

North America 18%

45

Breakdown by Segments for Q1–pro forma figures according to reorganised reporting structure effective 1 May 2003

38%

42%

17%

Packaging Boards

Publication PaperFine Paper

Timber Products

24%

29%

36%

Operating profit EUR 211 millionSales EUR 3 099 million

11% 3%

46

Operating Profit of Main Business Areas

EUR million I/02 II/02 III/02 IV/02 I/03

Magazine Paper 32 2 20 26 9% sales 4 0 3 3 1

Newsprint 73 61 65 42 28% sales 18 15 16 10 8

Fine Paper 93 73 70 56 80% sales 11 9 9 8 11

Packaging Boards 101 71 116 78 92% sales 13 9 15 11 12

Timber Products 11 14 10 12 7% sales 4 4 3 4 2

excluding non-recurring items

47

Change in EPS I/2003 vs I/2002

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

0.20

GROUP TOTALI/02

Sales prices Sales volume Energy Fixed Costs Financing cost Other GROUP TOTALI/03

EUR

0.18

0.04 -0.01

0.04 0.10-0.01

-0.10

-0.04

48

ROCE

0

2

4

6

8

10

12

14

16

18

20

1998 1999 2000 2001 2002 I/2003

%

Target > 13% over the cycle excluding non-recurring items

49

Adoption Effects of IAS 41

• Stora Enso has adopted IAS 41 for the evaluation of its biological assets

• This resulted an initial adjustment as of 1 January 2003:– Assets increased by EUR 866.2 million– Equity increased by EUR 622.9 million

• The effect on January - March figures is as follows:– Operating profit increased by EUR 6.5 million (non cash)

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Uncoated magazine (SC) paper - Europe

Stora Enso’s SC business:Strong market position in a highly consolidated business

Restructuring programme:To improve competitiveness and sustain market position

Projects:

High-quality SC papers:− New paper machine in Kvarnsveden− Shut down of Langerbrugge PM 2− Divestiture of Wolfsheck

SC-B / Improved News:− Conversion of Langerbrugge PM 3 to SC-B− Rebuild of Maxau PM 6− Shut-down of Kvarnsveden PM 9

51

Net capacity change

Mill Machine Time frame High-quality SC-B andSC improved news

Langerbrugge PM2 2003 -115 000

Langerbrugge PM3 2002 165 000

Kvarnsveden PM12 2005-2010 400 000

Kvarnsveden PM9 2005 -135 000

Maxau PM6 2004 120 000

Wolfsheck PM4-5 2005 -90 000

Langerbrugge PM3 2006-2008 -165 000 165 000

NET CHANGE 195 000 150 000

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Office paper asset restructuringRebuilding Veitsiluoto PM3

The main features of Veitsiluoto PM3 rebuild:

- Production: increase of 115,000 up to 290,000

- Grade: uncoated fine paper (A4 –copy)

- Capex: EUR 124 million

- Project timing: completion November 2003

53

Office paper asset restructuringRebuilding Nymölla PM1

The main features of Nymölla PM3 rebuild:

- Production: increase of 10,000 up to 220,000

- Grade: uncoated fine paper (A4 copy)

- Capex: EUR 23 million

- Project timing: completion October 2003

54

Office paper – mill specialisation

Mill 2001 2005

Veitsiluoto (FIN) Cutsize Cutsize

Envelope

Imatra (FIN) Cutsize Business Forms

Business Forms

Copier Reels

Varkaus (FIN) Scholastic Envelope

Business Forms

Nymölla (SWE) Cutsize Cutsize

Digi & Hires & Envelope

Berghuizer (NL) Cutsize Specialisation

Sheeting Digi & Hires & Envelope

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Summary: North America Profit Enhancement ProgrammeA decisive plan to improve Stora Enso North America:

• Increased asset quality

• Increased cost competitiveness

• Improved product profile and quality

• Impairment charges and other provisions of EUR 1 230 million (USD 1 156 million) taken in Q3/1002

• EPS improvement of EUR 0.08 due to the decreased amortisations and depreciations

• An additional EUR 0.05 increase in EPS from 2005 onwards due to the enhancement plan

• Group’s strategy for development in North America remains unchanged

Visit www.storaenso.com for more information.