Stora Enso CMD - Presentation by Juan Bueno, EVP, Biomaterials

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Stora Enso's Capital Markets Day on 22 March 2012

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Stora Enso CMD - Presentation by Juan Bueno, EVP, Biomaterials

  1. 1. GrowthEngineJuan Bueno, EVP, Biomaterials
  2. 2. Biomaterials Juan Bueno March 22, 2012 2
  3. 3. Why? Juan Bueno March 22, 2012 3
  4. 4. Population GrowthGrowing Environmental Pressures Doing more with less Juan Bueno March 22, 2012 4
  5. 5. Sustainability 5
  6. 6. Pulp market outlook Juan Bueno March 22, 2012 6
  7. 7. Global Market Pulp demand by end use: 46mt Source: Hawkins Wright, 2010 figures Juan Bueno March 22, 2012 7
  8. 8. What does that mean in terms of market pulp? 2 8 9 63 2 15 46 7 9 63462010 Paper US- Paper Tissue Packaging Fluff Integrated 2025 WE-JP Growth Capacity Countries Juan Bueno March 22, 2012 8
  9. 9. Ok. Tissue is growing. But where?Forecast tissue demand (M Tons) Juan Bueno March 22, 2012 9
  10. 10. While online advertising in China is growing, there is stillroom for growth in all types of media, including commercial print Advertising revenue is ~450€/capita in US ~75% of total population A large growth potential remains for advertising spend, including direct mail Juan Bueno March 22, 2012 10
  11. 11. Paper consumption clearly declining in WesternEurope and North America, but what about China? China household broadband penetration Some growth expected, but China will leapfrog to Digital Life. Juan Bueno March 22, 2012 11
  12. 12. Strongest growth in demand of fibre-based consumer board will be in Asia CAGR CAGR CAGR 1.4 % 4.6 % 0.2 % CAGR 6.9 % Western Eastern Europe Europe North CAGR America 3.3 % CAGR 3.5 %2010-2020 Middle East & AsiaMillion tonnes Africa South Fibre-based CAGR consumer board America consumption China 9% Source: China Ministry Of Industry Pakistan 9% and Information Technology; India 6% Chinese Telecom company publications; PwC ; Bain analysis Middle East 4% Juan Bueno March 22, 2012 12
  13. 13. Go where the growth is Juan Bueno March 22, 2012 13
  14. 14. BA Biomaterials Juan Bueno March 22, 2012 14
  15. 15. BA Biomaterials SkutskärBA Biomaterials Capacities KtonsSunila 370 EnocellEnocel 480 OuluSkutskär 540Total Own Mills 1,390 Kaukopää NymöllaVeracel 550Montes del Plata * 650Total with JVs 2,590 Sunila* start up in 2013 50% Stand alone mills Veracel Integrated mills with dried pulp 50% Montes del Plata - 2013 Juan Bueno March 22, 2012 15
  16. 16. Total Chemical Pulp Balance at Stora Enso 220 3 430 4 385 100 Softwood 120 Hardwood 1 655 Fluff Dissolving pulp 2 340 MdP = + 55% Market Pulp 1 775 260 1 825 80 650 785 1 175 1 705 260 785 80 260 700 50 80Dried and External Internal Market MdP Market Pulp wet pulp Purchases Consumption pulp incl MdPproduction Juan Bueno March 22, 2012 16
  17. 17. BA Biomaterials compared with competition EBIT % (quarterly Ebit)60%50%40%30%20%10% 0%-10% Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Stora Enso Source: Quarterly financial reports Juan Bueno March 22, 2012 17
  18. 18. BA Biomaterials capacity cost competitiveness BSKP All Dried BHKP All Dried (incl. MdP)EUR/tEUR/t Costs delivered to Frankfurt Costs delivered to Frankfurt EUR/t BA Biomaterials capacity - % in each quartile BA Biomaterials capacity - % in each quartile 2nd 3rd 1st 4th quartile quartile quartile quartile 79% 21% 77% 23% BSKP: Stable position since cost curve not likely to change significantly. BHKP: Cost curve will flatten and we are driving ourselves into a strong position. For the 4th quartile mills, we are looking into other products (I.e Dissolving, Fluff etc.) Source: Poyry and Stora Enso Experts Juan Bueno March 22, 2012 18
  19. 19. Montes del Plata Pulp Mill 1.3 M Tons of BHKP 1.4 B euro Investment Juan Bueno March 22, 2012 19
  20. 20. Top 20 market pulp producers Fibria April Arauco Georgia Pacific CMPC Sodra Stora Enso Weyenhaeuser Mdp Suzano BSKP Botnia/M-Real UKPPaper Excellence UPM-Kymmene MEC Domtar BHKP Ilim Mercer IP Ence West Fraser Canfor Cenibra - 1 000 2 000 3 000 4 000 5 000 6 000 Source: Hawkins Wright Juan Bueno March 22, 2012 20
  21. 21. How do we win Juan Bueno March 22, 2012 21
  22. 22. InnovationCustomer Financial Discipline and Focus Growth
  23. 23. InnovationIncrease value added to current process BIOREFINERY Tall Oil Turpentine Bio-Methanol Lignoboost
  24. 24. Innovation Explore new markets MFC RESEARCH & Bio-TechDEVELOPMENT Carbon Fibre
  25. 25. Customer Focus Promoters Neutrals Detractors Stora Enso Other key supplier Juan Bueno March 22, 2012 25
  26. 26. Financial Discipline Our Cash Engines Enocell Sunila SkutskärMaximize results with cash engines (Nordic Pulp mills) • Operational efficiency. • Add value through by products (talloil, Lignoboost etc.) • Improve energy efficiency. • Lean and focused capital expenditure model. • Optimal working capital management. • Adjust product mix as there is fit (Dissolving Pulp, Fluff). Juan Bueno March 22, 2012 26
  27. 27. Financial Discipline Our Growth Engines Existing Plantations Value AddingMontes del Plata Projects Partnerships Sustainable growth • Environmental & Social responsibility • Certified plantations • Time to market • Low production cost : only 1st quartile interests us • Close to growing markets is key • Value added partnerships Juan Bueno March 22, 2012 27
  28. 28. Biomaterials offers an attractive growth platform • Short term with a state of the art pulp mill in Uruguay • Medium term with pulp from Tiger • Long term via strong focus on innovation, new technologies development and strategic partnerships. Option to do Veracel II • Strong customer focus • Strong financial discipline balancing cash engines that can help fund profitable growth opportunities • Clear respect for the highest sustainability standards Juan Bueno March 22, 2012 28
  29. 29. Biomaterials Juan Bueno March 22, 2012 29
  30. 30. Juan Bueno March 22, 2012 30
  31. 31. It should be noted that certain statements herein which are not historical facts. including. without limitationthose 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 anduncertainties which may cause actual results to materially differ from those expressed in such forward-lookingstatements. Such factors include. but are not limited to: (1) operating factors such as continued success ofmanufacturing activities and the achievement of efficiencies therein. continued success of productdevelopment. acceptance of new products or services by the Group’s targeted customers. success of theexisting 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. theavailability of capital on acceptable terms; (2) industry conditions. such as strength of product demand. intensityof competition. prevailing and future global market prices for the Group’s products and the pricing pressuresthereto. price fluctuations in raw materials. financial condition of the customers and the competitors of theGroup. the potential introduction of competing products and technologies by competitors; and (3) generaleconomic conditions. such as rates of economic growth in the Group’s principal geographic markets orfluctuations in exchange and interest rates. Juan Bueno March 22, 2012 31

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