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Stora Enso's Capital Markets Day on 22 March 2012
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Growth Engine Mats Nordlander, EVP, Renewable Packaging
22 March 2012 Mats Nordlander 2
World needs a new approach to materials
22 March 2012 Mats Nordlander 3
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!
22 March 2012 Mats Nordlander 4
Customers
and
Consumers
Customer experience
Products for demanding customers
Efficient supply chain
”How likely would you recommend
Stora Enso as a supplier?”
22 March 2012 Mats Nordlander 5
Source: Stora Enso Customer Experience Management System VOICE
Net Promoter Score
Renewable Packaging
Sales, Operational EBIT, ROOC
22 March 2012 Mats Nordlander 6
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
22 March 2012 Mats Nordlander 8
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
22 March 2012 Mats Nordlander 9
Significant growth expected for corrugated packaging
in Eastern Europe, Asia and Middle East & Africa
22 March 2012 Mats Nordlander 10
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
22 March 2012 Mats Nordlander 11
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
22 March 2012 Mats Nordlander 12
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
22 March 2012 Mats Nordlander 13
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
22 March 2012 Mats Nordlander 14
-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
22 March 2012 Mats Nordlander 15
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
22 March 2012 Mats Nordlander 16
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
22 March 2012 Mats Nordlander 17
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
22 March 2012 Mats Nordlander 18
Total investment approximately EUR 1.6 billion
22 March 2012 Mats Nordlander 19
22 March 2012 Mats Nordlander 20
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
22 March 2012 Mats Nordlander 21
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
22 March 2012 Mats Nordlander 22
22 March 2012 Mats Nordlander 23
Stora Enso’s Operations in China Personnel currently about 4 500 in China
22 March 2012 Mats Nordlander 24
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
22 March 2012 Mats Nordlander 25
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.