stora enso cmd - presentation by mats nordlander, evp, renewable packaging

Growth Engine Mats Nordlander, EVP, Renewable Packaging

22 March 2012 Mats Nordlander 2

World needs a new approach to materials


Renewable packaging

• Responsible and resource

efficient choice for

packaging material!

Recyclable packaging

• More from less

• End of waste

Packaging

• Protects goods

• Consumer communication

• Efficient supply chains

How we will win!


Customers

and

Consumers

Customer experience

Products for demanding customers

Efficient supply chain

”How likely would you recommend

Stora Enso as a supplier?”


Source: Stora Enso Customer Experience Management System VOICE

Net Promoter Score

Renewable Packaging

Sales, Operational EBIT, ROOC


EUR million EUR million

2010 14.9%

2011 14.2% ROOC

Sa

les

EB

IT

Consumer Board performance

against selected peers

22 March, 2012 Mats Nordlander 7

ROCE % EBIT 2011 EUR million

272

137

96

309

96


Our response

•M&A and greenfield initiatives

started to accelerate growth in

growth markets •Investing in R&D - MFC •Investing in cost competitive RCP

containerboard machine with

modern lightweight product •Reducing costs of Russian wood

supply •Debottlenecking, streamlining

and cost control

• Skoghall Mill wood yard

• Imatra Mills’ pulp drying

• Restructuring in

converting

Key challenges

• Too small market share in

growth markets

• Competing materials

• Non-competitive containerboard

capacity

• High cost Russian wood in

Imatra

• Cost competitiveness

Restructuring and growth in balance

• Global #1 • Premium

products

Virgin-fibre based

consumer board

• Growth markets

• Global partner customers

Corrugated packaging

Our strategic growth areas


Significant growth expected for corrugated packaging

in Eastern Europe, Asia and Middle East & Africa


2010-2020

Million tonnes

Asia

CAGR

4.4%

Eastern

Europe

CAGR

4.1%

Western

Europe

CAGR

1.0%

Middle East &

Africa

CAGR

4.3%

South

America

CAGR

2,7 %

North

America

CAGR

0.5%

Source: Pöyry and Stora Enso


Ostroleka investments

Inpac acquisition

Other

actions

• EUR 137 million in a new power plant to secure efficient

energy supply completed

• EUR 285 million in a new RCP containerboard machine

• Planned production 455 000 t/a, net impact 370 000 t/a

• Focusing on modern lightweight product

• Majority to be consumed internally

• Raw material integration from 35% to 60%

• Acquisition of Inpac International completed in July 2011

• Strengthens existing relationships with global key

customers by providing packages directly in China

• Brings synergies with existing consumer packaging

business in Europe

• Restructuring in Finland

• Quality investments

• Increasing capabilities in packaging design

• Expansion in Russia


Strongest growth in demand of virgin fibre-

based consumer board will be in Asia

2010-2020

Million tonnes

Source: Pöyry and Stora Enso

Asia

CAGR

6.9 %

Eastern

Europe

CAGR

4.6 %

Western

Europe

CAGR

1.4 %

Middle East &

Africa

CAGR

3.3 %

South

America

CAGR

3.5 %

North

America

CAGR

0.2 %

Fibre-based

consumer board

consumption

CAGR

China 9%

Pakistan 9%

India 6%

Middle East 4%

Consumers start to buy packaged food once

annual family income reaches USD 5 000


Population in China in households with

annual disposable income USD 5000+

Population in households with annual

disposable income USD 5 000+ (global)

Annual growth 2.8% CAGR 2010-2020 Annual growth 4.7% CAGR 2010-2020

2002

India, China and Pakistan estimated to drive

growth in terms of milk volumes


-5%

-2,8%

-0,3%

2%

3%

1%

-1%

-2%

-3%

-4%

9%

10%

8%

7%

6%

5%

4%

1,2%

-0,4%

1,5%

3,2% 2,8%

-0,1%

9,0%

2,1%

Total Global LDP

average

growth rate:

2.4%

57.4 33.7 25.9 22.6

CA

GR

201

0 -

2012

Volume

2012

Bil Litres

12.8 11 7.7 6.7 5.6 5.1

Source: Tetra Pak Source: Tetra Pak Dairy Index 2009

Consumption estimate for Liquid Dairy Products


Accelerate what works

Every third beverage

carton in the world

is produced from

Stora Enso materials!

Stora Enso to build world-class pulp and

consumer board mill in Southern China


Integrate including:

•Paperboard mill of 450 000 tonnes

•Pulp capacity of 900 000 tonnes

•Energy plant

•Auxiliary facilities

Unique set-up: the pulp and board mills to be integrated

with 120 000 hectares of self-managed eucalyptus

plantations

Target to expand the paperboard capacity to 900 000 tonnes

at a later stage

Operations expected to start during Q4/2014

Focusing on high quality segments in China


Chinese platform

for growth

Unique

position

• A world leading position

• Technologies and

specifications

• Committed customers

• Unique integrate

• Established footprint

• Innovations

Well prepared project to accelerate profitable growth


Total investment approximately EUR 1.6 billion


Independent sustainability impact studies give

solid platform for the project

• UNDP’s Environmental and

Social Impact Analysis (ESIA)

in 2006

• Additional integrated ESIA in

2012

• Occupational Health and Safety

Certificate ISO 18001

• Environmental Management

System ISO 14001

• Quality Management System

ISO 9001


Key takeaways

Renewable packaging - Solution for the future!

Focus on profitable growth

Clear priorities to accelerate what works

Growing by expanding in China

•Serving mainly global customer base

•Integrated low cost production from domestic self-managed tree plantations to end product

•Serving demanding customers’ proven know how

Growth Engine


Stora Enso’s Operations in China Personnel currently about 4 500 in China


Two core board factories

Hangzhou and Foshan Hong Kong

Shanghai

Dawang Mill Uncoated magazine paper (170 000 tonnes)

Suzhou Mill Coated fine paper (245 000 tonnes). Customers

include merchants and printing houses

5 Sales branches

Beijing

Eucalyptus plantations

(90 000 ha)

Guangxi (since 2002)

Dongguan and Qian’an

(Inpac)

Beihai


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.

stora enso cmd - presentation by mats nordlander, evp, renewable packaging

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