results q4 2015 press slides

Financial results for Q4 and full year 2015 CEO Karl-Henrik Sundström CFO Seppo Parvi 4 February 2016

4 February 2016 1

Stora Enso in brief

• A leading provider of renewable solutions

• Some 26 000 employees in 35 countries

• Sales in 2015: EUR 10.0 billion

• Operational EBIT EUR 915 million; 2nd year in a row with clear improvement

• Shares listed on Nasdaq in Helsinki and Stockholm

2

26 000

35

Stora Enso Q4 and Full Year 2015 Results 4 February 2016

• Sales declined moderately, but increased excluding declining paper business, divestments and closure

• Operational EBIT improved clearly due to Montes del Plata pulp volumes, favourable FX and lower variable costs

• Cash flow continues strong − Before investments EUR 412 million − After investments EUR 75 million despite

peaking investments • Net debt to operational EBITDA reduced to 2.4

(2.6)

• Annual EPS 1.02 EUR (0.13 EUR) supported by Bergvik forest valuation gain

4 February 2016 3

Continued solid performance in Q4 Proposal to increase dividend to 0.33 EUR

Stora Enso Q4 and Full Year 2015 Results

Quarterly sales up by 5.4% excluding paper and divested businesses

4 February 2016 4

2 552 10 213 2 487

1 539

6 147

10 040

1 622

6 428

-2.5%

5.4% 4.6%

-1.7%

Reported group sales, EUR million

Sales excluding paper, Corenso and Barcelona, EUR million


0

100

200

300

400

500

600

700

800

900

1000

Q414 Q415 2014 2015

Operational EBIT increased by 15.8% in Q4 y-o-y and by 13.0% in 2015 y-o-y

4 February 2016 5

EUR million

915

810

242 209 15.8%

13.0%


4 February 2016 6

ROCE reaching new levels

*Excluding Montes del Plata until end of 2014 and excluding Beihai Mill project in Guangxi

ROCE target of 13%

*Excluding Montes del Plata until end of 2014 and excluding Beihai Mill project in Guangxi


Transformation steps completed

2014 Q1

2015 Q2

2015 Q3

2015 Q4

2015 Montes del Plata pulp mill - Performed at the nominal capacity level in June - Annual capacity of 1.3 Mt of which Stora Enso’s share 50%

Murow sawmill - Started in Q2 2015 as planned. - Capacity increase to 140 000 m³/shift/year

Sunila Biorefinery - Investment completed in Q1 2015 - First volumes of lignin are expected to be commercialised in

early 2016

Virdia acquisition - Acquired in June 2014 - Extraction and separation technologies for conversion of

cellulosic biomass into highly refined sugars and lignin

Imatra de-bottlenecking - The investment at the Imatra mill in Finland in quality, cost-

competitiveness and an increase in capacity was completed according to plan.

Varkaus conversion - The conversion of the fine paper machine to kraftliner is

proceeding and the production started in October

7 4 February 2016 Stora Enso Q4 and Full Year 2015 Results

• Non-core asset divestments −Uetersen Mill Q1 2015 − Barcelona Mill Q4 2015 − Komárom Mill Q3 2015 − Arapoti Mill, closing expected in Q1

2016

• Closures −Corrugated packaging converting

unit in Chennai, India 2015 − Pälkäne production unit Q2 2015

4 February 2016 8

Non-core asset divestments and closures in 2015


Transformation in progress – Beihai Mill expected to be operational during Q2

Division Investment Investment value

To be completed

Consumer Board

Beihai consumer board mill

EUR 800 million Q2 2016

Wood Products

Varkaus wooden building elements

EUR 43 million Q2 2016

Biomaterials

Xylose demonstration and market development plant

EUR 32 million Early 2017

4 February 2016 9 Stora Enso Q4 and Full Year 2015 Results

• Co-operation with NXP on intelligent packaging solutions announced in Q2 2015 −Customer project ongoing

• Commercial phase for MFC announced in Q2 2015 −Customer deliveries started

• Innovation Centre for packaging in Helsinki inaugurated in November

• Innovation Centre for biomaterials in Stockholm inaugurated in December

4 February 2016 10

Innovation steps in 2015


Transformation journey continues Growth businesses with 64% of sales and 83% of operational EBIT

2006 Sales

64%

83%

30%

38%

In 2006, all pulp used internally

Q4/2015 Operational EBIT

Q4/2015 Sales

2006 Operational EBIT 4 February 2016

Stora Enso Q4 and Full Year 2015 Results 11

Record high annual Operational EBITDA % Summary financials Q4 2015 and 2015

4 February 2016 12

EUR million

Q4/15

Q4/14

Change%

Change %

2015

2014

Change Q4/15- Q4/14 Q3/15

Q4/15- Q3/15

% 15/14

Sales 2 487 2 552 -2.5% 2 500 -0.5% 10 040 10 213 -1.7% Operational EBITDA 341 308 10.7% 353 -3.4% 1 352 1 269 6.5% Operational EBITDA margin 13.7% 12.1% 14.1% 13.5% 12.4% Operational EBIT 242 209 15.8% 246 -1.6% 915 810 13.0% Operational EBIT margin 9.7% 8.2% 9.8% 9.1% 7.9% Profit before tax excl. NRI 610 32 n/m 128 n/m 1 048 399 162.7% EPS excl. NRI, EUR 0.78 0.06 0.13 1.24 0.40 EPS (basic), EUR 0.53 -0.15 0.16 1.02 0.13 Operational ROCE 11.3% 9.7% 11.6% 10.6% 9.5% Operational ROCE excl. Beihai project 13.3% 13.1%* 13.1% 12.2% 12.7%*

Cash Flow from Operations 412 442 -6.8% 484 -14.9% 1 556 1 139 36.6% Net debt/last 12 months’ operational EBITDA 2.4 2.6 2.5 2.4 2.6

*Excluding Beihai and Montes del Plata investments


Divisional performance Q4 15 / Q4 14

Consumer Board • Sales +1.1%

• Sales +6.5% excluding the divested Barcelona Mill

• Operational EBIT EUR 53 million +20.5% driven by higher deliveries and FX

• Operational ROOC 10.6% (10.0%) − Excluding Beihai Mill 24.0% (18.7%)

• Beihai Mill operational during Q2 − Costs per quarter EUR 10–15 million during H1

Packaging Solutions • Sales -8.7% due to the Corenso divestment

• Sales +5% excluding the divested Corenso − Mainly due to the ramp up of kraftliner

production at Varkaus Mill

• Operational EBIT excluding the impact of the divested Corenso decreased by EUR 4 million − Varkaus kraftliner start-up impact of

EUR - 9 million − Prices higher for containerboard and

corrugated boxes

• Varkaus kraftliner production ramping-up − Quality good and customer qualification

proceeding according to plan − Full production expected early 2017



Biomaterials • Sales increased by 19.1%

− Higher volumes from Montes del Plata ramp-up and the positive foreign exchange impact

• Operational EBIT up by 47 MEUR, 138.2%

− Higher hardwood pulp prices, Montes del Plata volumes, positive FX impact and lower wood costs for the Nordic mills

Wood Products • Sales declined 4.8%

− Lower sawn good prices in local currencies, and lower sales volumes in traditional sawn goods, compensated by focusing on higher margin products

• Operational EBIT +110% − Lower wood costs and positive foreign

exchange impact. • Recent announcements: − EUR 16 million investment in pellet

production and in a new boiler at Ala Sawmill in Sweden − Pellet production completed by Q2 2017 − New boiler completed by Q4 2016

− EUR 10 million investment in the renewal of the boiler at Honkalahti Sawmill in Finland − Boiler renewal completed by Q3 2017


Paper • Sales -9.6% − Due to the disposal of Uetersen Mill and

conversion of Varkaus Mill, lower sales prices in local currencies

− Excluding divestments, closures and conversion, volumes remained flat

• Operational EBITDA decreased to EUR 74 million − Lower sales prices, higher costs for chemical

pulp decrease EBITDA − Favourable FX improved EBITDA

• Weak cash flow − Cash payment of EUR 25 million related to

renegotiated long-term supply agreement and restructuring payments. Seasonally high CAPEX.

4 February 2016 15



EPS improved significantly to 1.02 EUR from 2014 to 2015

• Positive impacts: − Improvement of operational result,

13% − Bergvik Skog fair valuations of

approximately EUR 430 million on Q4

− Lower Net Financials and taxes

• Negative impact: −Q4 non-recurring items with

negative impact of approximately EUR 250 million

4 February 2016 16

-0,2

0

0,2

0,4

0,6

0,8

1

1,2

2010 2011 2012 2013 2014 2015

Earnings per share

Earnings per share (basic)


Forecast for capex in 2016

MEUR Forecast 2016 Capital expenditure 680–720 Depreciation 520–540

4 February 2016 17

The capital expenditure forecast includes approximately EUR 100 million for group’s biological assets and approximately EUR 160 million for the Beihai Mill in China.


• Q1/2016 sales are estimated to be similar to the amount of EUR 2 487 million

• Operational EBIT is expected to be in line with the EUR 242 million recorded in Q4/2015

• No major scheduled annual maintenance shutdowns during Q1/2016

4 February 2016 18

Guidance


Dividend proposal

• Dividend policy: − Strive to pay stable dividends

linked to the long-term performance −One half of net profits over a

business cycle

• Dividend proposal of 0.33 EUR per share for 2015 totaling EUR 260 million


*Dividend proposal

• Solid performance, EBIT increase 15.8% y-o-y

• Positive annual cash flow of EUR 599 million despite peaking investments in 2015

• CAPEX level going down from EUR 989 million in 2015 to EUR 680–720 million in 2016

• EPS improved significantly

• Dividend increased to 0.33

• Board mill investment in Beihai moving ahead

• Transformation towards a Renewable Materials Company continues 4 February 2016 20

Summary


Thank you!

results q4 2015 press slides

Economy & Finance