Stora Enso Fourth Quarter and Full Year Results 2012

Financial Results Q4 and Full Year 2012 CEO Jouko Karvinen and CFO Karl-Henrik Sundström

5th February 2013

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 Q4 and Full Year 2012 Results 5 February 2013 2

Q4 Operational EBIT Improved due to lower costs y-on-y Cash Flow from Operations continued Strong

5 February 2013 Stora Enso Q4 and Full Year 2012 Results 3

*Operational EBIT comprises the operating profit excluding NRI and fair valuations of the segments and Stora Enso’s share of the operating

profit excluding NRI and fair valuations of its equity accounted investments (EAI). Fair valuations include equity incentive schemes. synthetic

options net of realised and open hedges. CO2 emission rights and valuations of biological assets related to forest assets in EAI.

Q4 Performance

• Operational EBIT at EUR 155 million

• Strong cash flow from Operations at

EUR 471 million

• Strong liquidity EUR 1 845 million

• Operational ROCE 7.1%

• Stable dividend

– Dividend proposal of EUR 0.30


Printing and Reading Operational EBITDA Improved y-

on-y and q-on-q even without capacity cuts


Printing and Reading, EUR million 2009 2010 2011 2012

Operational EBITDA 497 411 548 489

Cash Flow from Operations 710 415 406 506

European paper* Demand 2007-2012 Jan/2007 = 100%

5 February 2013

*Paper: News, UMO, UMI, SC, CM, WFC & WFU

Source: EuroGraph & PPPC

SA = seasonally adjusted

Stora Enso Q4 and Full Year 2012 Results 6

-25%

-20%

-15%

-10%

-5%

0%

5%

75%

80%

85%

90%

95%

100%

105%

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Euro

pe

an p

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and

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wth

y-o

-y [

%]

Euro

pe

an p

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7 =

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0%

]

SA European paper demand y-o-y

SA European paper demand

European paper* Demand & Forecasting Track Record


* Paper: News, UMO, UMI, SC, CM, WFC & WFU

SA = seasonally adjusted

30000

32000

34000

36000

38000

40000

42000

44000

46000

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

Euro

pe

an p

ape

r d

em

and

[kt

/a]

Monthly SA demand (annualized)

RISI forecast Mar-2010

RISI forecast Feb-2011

RISI forecast Feb-2012

Reducing Capacity to meet declining Paper Demand Printing and Reading plans to shut down 475 000 tonnes

• PM 2 Hylte Mill and PM11 Kvarnsveden Mill,

Sweden

• 475 000 tonnes newsprint

– Shut down in Q2 2013

• Annual cost savings EUR 24 million

– Fixed assets and working capital write-down

of EUR 42 million in Q1 2013

– Provisions with cash impact EUR 40 million

• 300 people impacted


Building and Living

Evident Improvement needs


Building and Living, EUR million 2010 2011 2012

Operational EBITDA 111 102 59

Cash Flow from Operations 82 95 63

Adjusting Cost Structure Building and Living plans to streamline operations

• Annual cost reductions EUR 30 million

– full impact early 2014

• Provision with cash impact of EUR 6

million

• Up to 300 employees impacted


Skoghall

Investment started up on time, on 8 Nov 2012

Ostroleka

Investment started up in Jan 2013, 6 weeks ahead of schedule

Montes del Plata

Over 80% completed,

Start-up mid-year 2013

Strategic Investments Montes del Plata, Ostroleka and Skoghall


Guangxi Board and Pulp mills project

• Preparations proceeding

• The construction and production schedule will be updated when the final

approvals are given and detailed plans are in place


Business Area ROOC %, excl. and incl. Strategic Projects Impact to Group ROCE % was 1.5% in Q4 2012


%

9,27,7

13,0 13,4

0

5

10

15

20

25

30

11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4

ROCE ROCE excl. Strategic inv Q4 2012 Q4 2012 excl. Strategic inv Current WACC

Renewable Packaging Biomaterials

Stable Cash flow enabling the transformation Cash flow from operation is EUR 1 253 million in 2012


Summary financials Q4 and Full Year 2012

EUR million Q4/12 Q3/12 2012 Q4/11 2011 Change % Change %

Q4 12/Q4 11 2012/2011

Sales 2 727.0 2 694.1 10 814.8 2 681.6 10 964.9 1.7 -1.4

Operational EBITDA 272.8 299.6 1 082.6 242.9 1 308.0 12.3 -17.2

Operational EBITDA margin, % 10.0 11.1 10.0 9.1 11.9 9.9 -16.1

Operational EBIT 155.0 174.7 618.3 144.9 866.7 7.0 -28.7

Operational EBIT margin, % 5.7 6.5 5.7 5.4 7.9 5.6 -27.8

Profit before tax excl, NRI 83.5 102.2 318.5 141.4 639.1 -40.9 -50.2

EPS excl. NRI, EUR 0.11 0.10 0.33 0.10 0.63 10.0 -47.6

EPS (basic), EUR 0.33 0.10 0.61 0.12 0.43 175.0 41.9

Operational ROCE, % 7.1 8.0 7.1 6.7 10.0 6.0 -29.0

Cash Flow from Operations 471.0 312.4 1 252.7 302.3 1 034.3 55.8 21.1

Net debt/last 12 months’

operational EBITDA 2.5 2.8 2.5 2.1 2.1 19.0 19.0


Group Variance – Operational EBIT Positive impact from lower cost


• Q4 vs. Q3 • Q4 y-on-y

Efficient operative working capital management Q1 2010 – Q4 2012


Balance Sheet enabling the transformation Q1 2010 – Q4 2012

Stora Enso Q4 and Full Year 2012 Results 5 February 2013

*Last twelve months’ operational EBITDA

18

Guidance for Q1 2013

• Compared to Q4 2012:

– Sales at roughly similar level

– Operational EBIT in the order of

magnitude one-third lower due to

deterioration in European paper and

Building and Living markets

• The restructuring plans to impact the

Group’s result from H2 2013 onwards


Projected Capex and Equity Injections for 2013 Excluding China investment

Capital Expenditure, Equity injections and Depreciation Forecast 2013

EUR million Forecast 2013

Capital expenditure* 350-400

Equity injections 110-130

Total 460-530

Depreciation 600-620


* Excluding China investment

Summary

• Improved Q4 EBIT year-on-year

• Strong cash flow and liquidity

• Paper capacity reductions plans to

address declining paper markets and

adjusting Building and Living cost

structure

• Skoghall and Ostroleka investments

started up and ramping up

• Montes del Plata start up mid-year 2013



Permanent pulp, paper and board capacity reductions since 2006


Mill Date Grade Capacity reduction, t

Corbehem PM 3 and PM 4 Jun 2006 LWC 250 000

Varkaus PM 1 End 2006 WFC 95 000

Berghuizer Mill Oct 2007 WFU 235 000

Reisholz Mill End 2007 SC 215 000

Summa Mill Jan 2008 Newsprint, uncoated mag, book paper 415 000

Anjala Mill PM1 Feb 2008 Coated magazine paper 155 000

Baienfurt Mill End 2008 FBB 190 000

Kabel Mill PM 3 End 2008 Coated magazine 140 000

Kemijärvi Pulp Mill April 2008 Long-fibre (SW) pulp 250 000

Norrsundet Pulp Mill Dec 2008 Long-fibre (SW), pulp 300 000

Varkaus Mill coreboard machine Dec 2008 Coreboard 100 000

Imatra PM 8 Mar 2010 WFU 210 000

Varkaus PM 2 and PM 4 Sep 2010 Newsprint, directory paper 290 000

Maxau PM 7 Nov 2010 Newsprint 195 000

Hylte PM1 Dec 2012 Newsprint 180 000

Total 3 220 000

Permanent sawn wood capacity reductions since 2006


Mill Date Capacity reduction, m3

Veitsiluoto Sawmill 2006 100 000

Honkalahti Sawmill 2006 90 000

Sauga Sawmill Jun 2007 130 000

Sollenau Sawmill 2007 110 000

Näpi Sawmill 2007-2008 100 000

Kotka Sawmill 2007-2008 70 000

Paikuse Sawmill End 2008 220 000

Zdirec Sawmill 2008 120 000

Ybbs Sawmill 2008 & Jun 2009 200 000

Kitee Sawmill 2008 & Jun 2009 130 000

Varkaus Sawmill Jun 2009 60 000

Tolkkinen Sawmill End 2009 260 000

Kopparfors Sawmill End 2011 310 000

Total 1 900 000

Operational EBIT by segments

EUR million Q4/12 2012 Q4/11 2011 Change % Change %

Q4 12/ Q4 11 2012/ 2011

Printing and Reading 58.0 218.1 55.6 285.3 4.3 -23.6

% of sales 4.9 4.5 4.3 5.7 14.0 -21.1

Biomaterials 27.7 82.1 27.2 169.2 1.8 -51.5

% of sales 10.8 8.1 10.6 15.5 1.9 -47.7

Building and Living 6.8 28.8 6.0 62.8 13.3 -54.1

% of sales 1.5 1.7 1.6 3.8 -6.3 -55.3

Renewable Packaging 54.8 271.9 32.8 301.3 67.1 -9.8

% of sales 6.9 8.5 4.3 9.4 60.5 -9.6

Other 7.7 17.4 23.3 48.1 -67.0 -63.8

% of sales 1.1 0.6 3.6 1.8 -69.4 -66.7


Net Financial Items

EUR million Q4/2012 Q3/2012 Q4/2011 Change

Q412/Q411

Change

Q412/Q312

Net interest expense -47.3 -44.0 -35.1 -34.8 -7.5

Foreign exchange gains and losses -1.0 -0.4 -3.0 66.7 -150.0

Other financial items. of which 0.9 -14.7 -21.1 n/a n/a

PIK notes 2.7 2.7 2.0

Fair valuation of interest rate derivatives* -8.6 -16.4 -4.4

Fair valuation of long-term debt - -0.2 -0.4

NewPage lease provision 10.5 - -

Arktos write-off - - -10.2

Other items -3.7 -0.8 -8.1

Total net financial items -47.4 -59.1 -59.2 19.9 19.8

*Not hedge accounted interest rate derivatives.


Transaction risk and hedges as at 31 December 2012

Operational EBIT: Currency strengthening of + 10 EUR million

USD 103

SEK -93

GBP 60

EUR million USD SEK GBP

Estimated annual net operating cash flow exposure 1 030 -930 600

Transaction hedges as at 31 Dec 2012 -530 470 -270

Hedging percentage as at 31 Dec 2012 for the next 12 months 51 51 45

The sensitivity is based on estimated next 12 months net operating cash flow. The

calculation does not take into account currency hedges. and assumes no changes occur

other than a single currency exchange rate movement. Weakening would have the

opposite impact.

Additional GBP hedges for 13-15 months increase the hedging percentages by 3 .


Softwood pulp prices Stora Enso’s market pulp is softwood

Source: FOEX


Pulp wood and saw log prices Wood prices in Finland

Source: METLA


Wood prices in Sweden

Pulpwood includes pine. spruce and birch.

Sawlogs include pine and spruce.

Source: SDC. Skogsstyrelsen


Paper for Recycling prices

German RCP price development. free delivered

Source: Verband Deutscher Papierfabriken/Stora Enso


Maturity profile Q4 2012


Energy balance* Q4 2012

Impact** on operating profit from

10 change in: EUR million p.a.

Electricity market price ~5

Fossil fuel price ~15

Self sufficiency 47 Self sufficiency 63

Total energy self

sufficiency 59

**) Remaining impact on non-hedged volume


*) Pulp. paper and board mills. Europe and overseas

Stora Enso Electricity procurement* Q4 2012

5 February 2013 Stora Enso Q4 and Full Year 2012 Results

*) Pulp. paper and board mills. Europe and overseas

34

Investor Relations

Stora Enso Fourth Quarter and Full Year Results 2012