2015 capital markets day presentation by seppo parvi

World of packaging

Capital Markets Day, London, 28 May 2015

Financials and targets

The renewable materials company

Seppo Parvi, CFO

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

0

2 000

4 000

6 000

8 000

10 000

12 000

2010 2011 2012 2013 2014 2014/Q1 2015/Q1


Stora Enso Sales 2010–2015/Q1


Years 2010–2011 have not been restated in accordance with IFRS11 (line-by-line consolidation of joint ventures).

6% -1%

-3% -3%

-3%

MEUR

MEUR


Stora Enso growth business sales Q1/2015 sales excluding paper and divested businesses increase of 3% y-o-y


* Q1/2015 sales excluding paper and and divested businesses increased by 3% y-o-y.


0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2010 2011 2012 2013 2014 2014/Q1 2015/Q1

9% 1% 4% 1%

1*%

0

100

200

300

400

500

600

700

800

900

1 000

2010 2011 2012 2013 2014 2014/Q1 2015/Q1

MEUR


Stora Enso Operational EBIT 2010–2015/Q1


21%

9% -27%

-8%

40%

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2010 2011 2012 2013 2014

MEUR

26%

10% -4% 3%


Stora Enso Net debt 2010–2014




> New financial targets

Capex

OWC

Cash flow

Sensitivities

Today’s agenda

Stora Enso targets

Growth

ROCE

Fixed costs to sales

Debt to equity

Net debt to operational EBITDA

Target to grow faster than the relevant markets Net sales growth excluding Paper


Targets - Growth

MEUR

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

6 000

6 050

6 100

6 150

6 200

6 250

6 300

6 350

2014 2015

Annual sales excluding Paper, 12 months rolling, MEUR

Annual growth excluding Paper, 12 months rolling average, %


Stora Enso targets

ROCE > 13%


Stora Enso targets

Fixed costs to sales < 20%


Stora Enso targets

Debt to equity < 80%


Stora Enso targets

Net debt to operational EBITDA < 3


Stora Enso dividend policy

Earnings and distribution per share

Dividend of EUR 0.30 per share for 2014 totaling EUR 237 million was paid on 13 May 2015.

-1,2

-1,0

-0,8

-0,6

-0,4

-0,2

0,0

0,2

0,4

0,6

0,8

1,0

2007 2008* 2009* 2010 2011 2012 2013 2014

Earnings per share (basic) Dividend per share * Distribution of capital

• Strive to pay stable dividends linked to the long-term performance

• Half of the net income over the cycle

EUR

Consumer Board

Biomaterials

Packaging Solutions

Wood Products

Paper


Divisional targets

ROOC Free cash flow

to sales

0%

5%

10%

15%

20%

25%

30%

35%

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15

Operational ROOC, Target Operational ROOC, 4Q rolling Operational ROOC excl. GIPO, 4Q rolling


Divisional targets

Consumer Board

ROOC > 20%

0%

5%

10%

15%

20%

25%

30%

35%

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15


Divisional targets

Packaging Solutions

ROOC > 20%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15

Operational ROOC, Target Operational ROOC, 4 Q rolling Operational ROOC excl. MdP, 4Q rolling


Divisional targets

Biomaterials

ROOC > 15%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15


Divisional targets

Wood Products

ROOC > 18%


Divisional targets

Paper

Free cash flow to sales > 7.0%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15

Free cash flow to sales, Target

Free cash flow to sales, 4Q rolling


New financial targets

> Capex

OWC

Cash flow

Sensitivities

Today’s agenda


Capital Expenditure

Currently, other capex includes approximately 100 MEUR forestry capex annually

MEUR

0

200

400

600

800

1 000

1 200

2010 2011 2012 2013 2014 2015Forecast

Ostroleka

MdP

Guangxi

Other capex

Depreciation



Capex

> OWC

Cash flow

Sensitivities

Today’s agenda


Operative working capital

OWC reduction

2012–2014: 540 MEUR

MEUR



Capex

OWC

> Cash flow

Sensitivities

Today’s agenda


Cash flow generation capability by division

- EBITDA

- Profitability

improvement

- Working capital

improvement

- Supply chain

lead times

- Capex control

- Non-core asset

disposal

Cash flow

tool box

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%

18,0%

20,0%

-100

0

100

200

300

400

500

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15

Cash flow from operations

Consumer Board Packaging Solutions Biomaterials Wood Products Paper Other Cash flow to sales

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%

18,0%

20,0%

-100

0

100

200

300

400

500

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15



MEUR

-8%

-4%

0%

4%

8%

12%

16%

20%

-200

-100

0

100

200

300

400

500

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15



Cash flow generation capability by division

- EBITDA

- Profitability

improvement

- Working capital

improvement

- Supply chain

lead times

- Capex control

- Non-core asset

disposal

Cash flow

tool box

MEUR

-8%

-4%

0%

4%

8%

12%

16%

20%

-200

-100

0

100

200

300

400

500

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15

Cash flow after capex

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%

18,0%

20,0%

-100

0

100

200

300

400

500

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15



0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%

18,0%

20,0%

-100

0

100

200

300

400

500

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15





Capex

OWC

Cash flow

> Sensitivities

Today’s agenda


Sensitivity analysis

10% increase in Impact*

Softwood pulp prices +45 MEUR

Hardwood pulp prices +45 MEUR

Fluff pulp prices +20 MEUR

Dissolving pulp prices +10 MEUR

Market pulp price, total +120 MEUR

10% decrease in Impact*

Energy prices + 8 MEUR

Wood prices +173 MEUR

Chemical and filler prices +66 MEUR

10% strengthening vs EUR in

the value of Impact*

US dollar +116 MEUR

Swedish krona - 82 MEUR

British pound + 46 MEUR *Impact on operational EBIT for the next twelve months.

An increase of energy, wood or chemical and filler prices or

decrease of pulp prices, as well as weakening of the currencies

would have the opposite impact.

MEUR

Net FX Q1 2015 y-o-y

8,0

8,5

9,0

9,5

10,0

10,5

11,0

11,5

1,0

1,1

1,2

1,3

1,4

1,5

1,6

2009 2010 2011 2012 2013 2014 2015

EUR/USD EUR/SEK


Share of non-European sales By destination

EUR/USD EUR/SEK

Monthly averages

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2009 2010 2011 2012 2013 2014

Consumer Board Packaging Solutions

Biomaterials Wood Products

Paper


Loan portfolio currency and maturity structure

Currency breakdown

of non-current debt

in 2014, MEUR

EUR ~ 1 995

USD ~ 1 415

SEK ~ 695

Other currencies ~ 35

Total ~ 4 140

Prepayment of 2016 bond made in May 2015, USD 389 million

0

200

400

600

800

1 000

1 200

2015 2016 2017 2018 2019 2020 2021 2022-2035 2036

MEUR Bonds Other loans /

liabilities Commercial paper


Targets supporting the next step in our transformation • Strategic financial targets defined

– Challenging, but achievable

• Cash flow generation high

on agenda

– Capex to be reduced closer to

depreciation

– Operating working capital continues to

be in focus

• Continuous cost management

– Cost focus every day


Investor Relations

2015 capital markets day presentation by seppo parvi