2015 capital markets day presentation by rajah jayendran

Rajah Jayendran,

SVP, MD Stora Enso Integrated Project & Operations

London, 28 May 2015

Stora Enso Guangxi Project

The renewable materials company

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.


Disclaimer


Stora Enso Guangxi Milestones


2002 2012 2013 2014 2015 Mid-2016

Office relocation to Tie Shan

Gang was completed

Start of

board

production

Establishing plantations in

Guangxi

Three Joint

Ventures set up.

Received the approval

from MOFCOM and NDRC

State land use and

construction permits

Kicked off mill

construction

Announced decision to

build a world-class

consumer board and

pulp mill

Decision to split the

project to phases 1

and 2 IFC becomes owner

of the project with 5% Pending approval

for the phase 2,

pulp mill by the

Stora Enso board


Rajah Jayendran


• SVP, Managing Director Stora Enso Guangxi

Integrated Project and Operations

• Based in Asia since 2000

• Background – SVP, Head of Commercialization Asia Pacific, Linde Group,

Singapore

Leading all investments and business expansions in APAC

– SVP, Head of Strategic Projects

Lonza AG, Basel/Shanghai

Corporate restructuring and Asia expansion

– EVP, Chief Strategy and Planning Officer

ChemChina/Bluestar Beijing

Corporate restructuring and multi billion dollar expansion

and international M&A

– VP, Bayer MaterialScience AG, Shanghai

3.1 bln USD greenfield integrated site in Shanghai

establishing materials and chemicals business in China


China

Myanmar

Vietnam

Laos

Guangxi overview

• Area: 236,700 km2

• Population: 46.8 mil

• Capital: Nanning

Woodyard

Effluent Plant

Main Office

Power Plant

Pulp line

Water

treatment

Board Mill

Guangxi Project: Phase I & II

Guangxi project- two phases


Chemicals

Bleached Hardwood

Kraft Pulp (BHKP)

Pulp raw

material

(UBSKP/BSKP/

BHKP)

Pulp Board Forestry

Liquid Packaging

Board(LPB)

Folding Box Board

(FBB)

External purchase

of wood External

sales of BHKP

Internal use

of BHKP Harvested volume

Plantation area

Market

Internal use

(production for pulp)

Bleached Chemi-

Thermo Mechanical Pulp (BCTMP)

Phase I Phase II


Guangxi project first phase investment Historical and planned Capital Expenditures, 2014-16


Total investments

including plantations

for the first phase

• EUR 800 million

Capex approved to

date

390

180

230

MEUR

0

50

100

150

200

250

300

350

400

450

2014 2015 2016

390

180

230

2014 2015 2016 0

50

100

150

200

250

300

350

400

450


Mill construction underway with operations

ramp-up in mid-2016


Achieving

operational

milestones

Developing

local talent

Leveraging

SE-global

capabilities

• Currently 135 employees, ramp up to 210 by end of 2015

• Recruiting from a variety of local vocational schools

• Mill training to vocational school students ongoing

• Construction began November 2014

• Board Mill to be fully operational in mid-2016 and to

gradually ramp up to full capacity (450k t/a) in 18 months

• Extensive mentorship and knowledge sharing initiatives

• Exchange programs to European mills

• On-ground training provided for operations and technical

customer services


Overall Progress


• Overall progress at 30% completion as of May 22

• Construction progress on track at 25% completion

• Procurement progress 95% completion

• On track to meet mid-2016 operational start-up timeline

• 4.0 million working-hours free of incidents on site


Mill construction progress


Board Machine Plant Roof structure

Power generation boiler Effluent treatment plant

Forestry operations covering four territories

In Guangxi province – 1/3 social land, 2/3 state land


China

Myanmar

Vietnam

Laos

Plantation

areas

Yulin Region

Euca area: 17,000 ha

Standing volume:

2,218,000 m3

Beihai Region


Standing volume:

2,971,000 m3

Qinlian Region


Standing volume:

1,749,000 m3

Nanning Region


Standing volume:

2,950,000 m3

Guangxi Mill

14.4 0.6 Forest land

1.96 4.6 Fast

growing

Eucalyptus

23.7 0.4 Land base

Leased

by SE

% total

Total

Guangxi

m ha

Mitigating actions

– contract correction and conflicted land


Social land

contracting

Conflicted land

management

Potential risks Mitigating actions

• Conduct contract negotiations to:

– Update legacy agreements

– Reconcile conflicting document,

– Adjust rental & payment to buyout

middlemen

– Compensate local stakeholders

• Land use contracts

require correction

• Complex property

disputes and conflicting

economic interests with

villagers, local

governments

• Proactively engage with local gov’t to

align project objectives with local gov’t

intent

• Co-operate with local gov’t and police to

assess conflicts containment actions & to

address illegal wood processing mills

• Train staff in conflict avoidance and mgmt

• Land contested by locals,

causing disruption to

forestry ops (e.g., violence

against contractors, wood

theft, bribes)

61% of contracts1 have been corrected as of March 31, 2015

1 Calculated as contracts with "Major Defects" which have been corrected and no longer classified as major defects

The Guangxi Consumer Board Mill

will be operational mid-2016


World of packaging

Investor Relations

2015 capital markets day presentation by rajah jayendran