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Stora Enso’s Renewable Packaging is growing

Mats Nordlander, EVP, Renewable Packaging

19 September 2012

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.

Mats Nordlander 19 September 2012 2

Stora Enso portfolio FY 2011

Group Sales, EUR 10 964.9 million

46%

10% 15%

29% 0%

Printing and Reading Biomaterials Building and Living Renewable Packaging Other

Operational EBIT, 866.7 EUR million

19 September 2012 Mats Nordlander 3

32,9 %

19,5 % 6,0 %

34,8 %

5,5 %

Transformation from a European

pulp and paper company to a value

creating, growth markets renewable

materials company


Strategy

Stora Enso’s engines

19 September 2012 Mats Nordlander

Growth engines

Renewable Packaging

Plantation based pulp

Building and living

Cash engines

Printing and Reading

Nordic market pulp

Low cost base saw milling

5

6 19 September 2012 Mats Nordlander

How we will win!


Customers

and

Consumers

Customer experience

Products for demanding customers

Efficient supply chain

Strategic growth areas Renewable Packaging

• Global #1 • Premium products Virgin-fibre based

consumer board

• Growth markets

• Global partner customers Corrugated packaging



Our response

• M&A and greenfield initiatives

started to accelerate growth in

growth markets

• Investing in R&D - MFC

• Cost competitive new Ostroleka

containerboard machine

• 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

• Cost competitiveness –

aggressive competitors

Restructuring and growth in balance

Challenges and response

Project On target Status

Montes del Plata

pulp mill, Uruguay Start up approximately

mid-year 2013

Ostroleka

containerboard machine,

Poland

Proceeding as planned

Guangxi, China

Proceeding as planned

Skoghall

investment Support wood handling in

Sweden and further

develop Skoghall mill

Stora Enso Inpac

Q3 2011

Bulleh Shah Packaging

Limited

Q1 2013

Implementing strategy High return growth businesses


Accelerate what works


Every third beverage

carton in the world

is produced from

Stora Enso materials!

Strongest growth will be in Asia - Increasing demand of virgin fibre-based consumer board

12

6,2 6,3

CAGR

0,2 % 1,1 1,5

CAGR

3,5 %

3,8 4,4

CAGR

1,4 %

0.9 1.5

CAGR

4,6 %

0,5 0,7

CAGR

3,3 %

6,0

11,6

CAGR

6,9 %

Asia

Middle East

& Africa

Eastern

Europe

Western

Europe North

America

South

America

Fibre-based consumer

board consumption

CAGR

China 9%

Pakistan 9%

India 6%

Middle East 4%

2010-2020

Million tonnes

Source: Pöyry and Stora Enso

Pakistan 9%


Pakistan is an attractive growing consumer market Stora Enso partners in customers expansion into new growth markets

• Pakistan the 4’th biggest dairy

market globally

• The market for our products is

growing 5 – 15 percent per

year

• Stora Enso global customers

are expanding in Pakistan


Key facts about the investment

• 50/50 JV with Packages Ltd. of Pakistan.

– Kasur Mill, under development (paperboard and

corrugated packaging)

– Karachi Plant (corrugated packaging) currently owned

by Packages Ltd.

• Liquid packaging board, folding boxboard and

corrugated packaging, to key local and international

companies in the fast-growing market of Pakistan.

• About 950 people

• Annual capacity 360 000 tonnes when the

investments completed.


Our financial commitment Maximum USD 130 million

15

• Enterprise value of JV is up to USD 125 million

– Investment made in two steps; 35 % of the JV now and additional 15 % later,

subject to certain conditions being met.

– Including an additional maximum performance compensation, based on the

financial results of the second half of 2012 and the first half of 2013

• Both partners are committed to further investment programme of total

USD 135 million during 2013 and 2014 including:

– a new biomass power plant

– a rebuild of current board machines

• In total, maximum Stora Enso capital commitment of USD 130 million

• Investment is EPS accretive and exceeds Stora Enso’s ROCE target of

13%


New investment in Pakistan

• In line with strategy

• Expands in growth market

• Attractive investment

• Long tradition of cooperation

16

We are committed to growth and this

investment is the newest proof point in

that process.


Stora Enso to build world-class pulp and consumer

board mill in Southern China


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

Key takeaways


Renewable packaging - Solution for the future!

Focus on profitable growth

Clear priorities to accelerate what

works

Growing by expanding in growth markets like

China and Pakistan

19 September 2012 Mats Nordlander 20 20

Independent sustainability impact studies give solid

platform for the projects


• 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

Managed in accordance with Stora Enso policies

22

• A strong sustainability agenda is

established in Pakistan.

• Already there is advanced processes

established at Packages.

• In addition, Stora Enso will have its own

expertise organization in place.

• Main activities are training, monitoring,

auditing and follow up in reference to

Stora Enso code of conduct



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

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

Two core factories

Hangzhou and Foshan

Eucalyptus plantations ( 90 000 ha)

Guangxi (since 2002) Dongguan and Qian’an ( (Inpac)

Beihai

Facts about the joint venture and Packages Ltd

24

Packages Ltd. is the largest packaging and

board producer and converter in Pakistan.

It has 3 000 employees. The main assets

are located in Lahore and Kasur in the

province of Punjab.

The shares of Packages Ltd. are listed on

the Karachi, Islamabad and Lahore stock

exchanges.


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Stora Enso’s Renewable Packaging is growingassets.storaenso.com/se/com/DownloadCenter... · Stora Enso’s Renewable Packaging is growing ... markets or fluctuations in exchange