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Stora Enso's Annual General Meeting 2014, presentation

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  • 1. Headphones Kielikanavat Choose your language / Valitse kielikanava: English Svenska Suomi
  • 2. No photography or video or audio recording
  • 3. 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.
  • 4. Welcome! Gunnar Brock, Chairman of the Board of Directors
  • 5. Headphones Kielikanavat Choose your language / Valitse kielikanava: English Svenska Suomi
  • 6. Stora Enso’s Annual General Meeting 23 April 2014
  • 7. Jouko Karvinen, CEO
  • 8. Our performance
  • 9. Full year 2013 results as reported Sales EUR 10 544 million Operational EBIT EUR 578 million Operational ROCE 7.1% Cash flow from operations EUR 1 246 million EPS excl. NRI EUR 0.40 Debt/equity ratio 0.47 9
  • 10. Lower costs improved profits Q1 2014 year-on-year • Clearly higher Operational EBIT due to lower costs, lower depreciation and restructuring – Operational EBIT EUR 182 million or 7.1% (4.4%), increase EUR 64 million • Nearly all of the original cost reductions of the EUR 200 million programme visible in the financial results, earlier than anticipated • Net debt to Operational EBITDA decreased to 2.8 (3.1) • Operational ROCE 8.6% (5.1%) 10
  • 11. Operational EBIT 54% improvement year-on-year Lower costs and depreciation 11 MEUR
  • 12. Fixed cost decrease continued Fixed cost 4 quarter rolling average 12 MEUR
  • 13. Cash Printing and Reading Nordic market pulp Low cost base sawmilling Growth Renewable Packaging Plantation based pulp Building and Living 13
  • 14. Strategy in action 2013 EUR 1.25 billion cash flow and fixed costs down Ostrołęka containerboard machine Montes del Plata Pulp Mill Inpac Packaging Bulleh Shah Packaging Building Solutions Guangxi Packaging Sunila Biorefinery 14
  • 15. Bulleh Shah Packaging in Pakistan Jouko Karvinen, CEO & Ambreen Waheed, Director, Global Responsibility, Bulleh Shah Packaging
  • 16. Child labour sector distribution • 67% Agriculture • 11% Manufacturing • 22% Others - Including: Glass Bangles, Tanneries, Rag Picking (waste paper), Ship Breaking, Deep Sea Fishing and Surgical instruments Condition of children working • 70% of children are unpaid labour • 46% of children work more than 35 hours per week • 1/3 of these children are literate 7 12 13 13 14 15 16 0 5 10 15 20 Indonesia India Afghanistan Bangladesh Pakistan Sri Lanka Vietnam % Percentage of children working from age 5 to 14 (Source: UNICEF & ILO 2010) Child labour realities 16
  • 17. Bulleh Shah domestic fibre supply chain 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Bulleh Shah Direct Suppliers Collectors* Source *Includes sub-suppliers Wheat straw: 30 000 tonnes from farms, 30 direct suppliers Old corrugated containers (OCC) and Old newspapers (ONP): 64 000 tonnes from households, shops, institutions, 55 direct suppliers OCC: 12 000 tonnes directly from own manufacturing, converters & institutions Used cartonboard: 2 000 tonnes production waste, in parts directly and via 1 direct supplier Used cartonboard: 3 000 tonnes from garbage and dump sites, 3 direct suppliers
  • 18. • We do not accept child labour • We are committed to the ILO conventions on child labour • No child labour in our operations, and we prohibit it in our supplier contracts • All Bulleh Shah direct suppliers trained and committed to our code of conduct • Any violation of this commitment leads to 30 day notice and either sustainable corrective action or termination of contract We do not accept child labour and work to eliminate it Any child and his or her family will be supported by us irrespective of supplier contract or termination 18
  • 19. Actions with sustainable impact all to be reported quarterly, and externally monitored by SGS * New biomass boiler starts in 2015, biomass collection in 2014 will be about 100 000t, final volume 250 000t Fibre Source Actions Done Used Carton Board garbage & dump sites • Families identified and support started • Supplies stopped and rebuilding of an sustainable supply chain starts April 20 April 20 Old Corrugated Containers/ Old Newspapers households, shops & institutions • All direct suppliers CoC committed • Supply base audits & corrective action April 18 Since January Wheat straw/ Biomass farms • All suppliers CoC committed • Biomass collection* starts • Supply base audits & corrective action March 30 April (harvesting) April (harvesting) 19
  • 20. Action Year 13 14 15 16 Quarter 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Train direct suppliers Commit direct suppliers Audit all tiers of supply base Correct violations Monitoring by SGS Train, commit, audit and follow-up – supply base 1 Train direct suppliers and commit them to code of conduct 2 Audit, correction and monitoring cover all tiers of supply 3 Follow-up and correction = 30 day notice for correction or termination of contract 4 Children or vulnerable supported by Bulleh Shah Packaging even if contract terminated 100% signed Code of Conduct 95% of tier 1 recycled fibre audited* * audit of wheat straw chain possible only now as harvesting starts20
  • 21. • We can simply terminate the risky supply agreements immediately and import the necessary fibre – then we would have no child labour. As a concequence thousands of people would lose their livelihood. OR • We will do everything we can to help the children taking into consideration local circumstances – identify the children in our supply chain and support them to get education We ask for your support and welcome you to join us in taking small steps towards a better future for children through livelihood for their parents and education and health for all. The choice we must make 22
  • 22. Our messages today on Responsibility • We do not accept child labour • But we will not just walk away and let the children down • We have shown today real results, based on a one year effort • We will be transparent • We have started a global external human rights assessment to be completed 2014 23
  • 23. More transparent Global Responsibility
  • 24. Our Lead Areas Corner stones of our Global Responsibility strategy Forests and Land Use Environment and Efficiency People and Ethics 25
  • 25. Global Responsibility integrated in all our processes and strategy Group Global Responsibility Code of Conduct, Business Practise Policies and Ethical Supply Chain Environmental Performance, Responsible Forestry and Land Use Occupational Health and Safety, Human and Labour Rights Renewable packaging Printing and Living Biomaterials
  • 26. Human Rights Assessment 2014 In Dec 2013, our Global Responsibility Council approved a public target to: • By the end of 2014, perform human rights assessments covering: – All industrial operations – All countries where we own or manage forests/plantations/land • By the end of 2015, to have action plans in place based on results of the assessments. • In China we are moving faster and carrying out a thorough human rights investigation with the Danish Institute for Human Rights – Results to be published before the end of 2014 27
  • 27. Human Rights Assessment 2014 Overall timeline • Pre-assessment information material • Training plans • Pre-assessment workshops and trainings • Finalise external partners for audits • Self-assessments • External audits • Stakeholder interviews • Stakeholder and human rights risks mapping • Internal and external communications Timeline Project phase External assessments in China, Pakistan, South America and Laos follow their own individual timelines Scope and plan Build up capacity Act and assess Compile results and communicate Q1 Q1 – Q2 Q2 – Q3 Q3 – Q4 & After 28
  • 28. Adoption of the annual accounts
  • 29. 31
  • 30. Dividend
  • 31. • The Parent Company distributable shareholders’ equity on 31 December 2013 amounted to EUR 1 329 281 064.43, including the profit for the period of EUR 37 396 834.18. • The Board of Directors proposes to the Annual General Meeting of the Company that it pays to its shareholders a dividend of EUR 0.30 per share, total of EUR 236 585 996.10 • Record date 28 April 2014 • Payment date 15 May 2014 Dividend 33
  • 32. Discharge of the members of the Board of Directors and the CEO from liability
  • 33. Nomination Board Report
  • 34. Board remuneration EUR ’000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Chairman 135 135 135 135 135 135 67.5 135 135 170 170 Vice Chairman 85 85 85 85 85 85 42.5 85 85 100 100 Member 60 60 60 60 60 60 30 60 60 70 70 In 2013, 40% of the above mentioned annual remuneration was used for purchasing Stora Enso R shares from the market.
  • 35. Board of Directors Chairman EUR 170 000 Deputy Chairman EUR 100 000 Members EUR 70 000 The Nomination Board also proposes that the members of the Board of Directors, based on the AGM’s decision, use 40% of the above mentioned annual remuneration for purchasing Stora Enso R shares from the market and that the purchases will be carried out within two weeks from the AGM. In addition, annual remuneration shall be paid to members of the Board Committees as follows: Financial and Audit Committee Chairman EUR 20 000 Members EUR 14 000 Remuneration Committee Chairman EUR 10 000 Members EUR 6 000 Global Responsibility and Ethics Committee Chairman EUR 7 500 Members EUR 4 000 Remuneration shall be paid only to non-executive Board members. Annual remuneration 39
  • 36. Composition of the Board of Directors The Nomination Board proposes to the AGM that the Board of Directors shall have nine (9) members. Gunnar Brock Anne Brunila Elisabeth Fleuriot Hock Goh Birgitta Kantola Mikael Mäkinen Juha Rantanen Hans Stråberg Richard Nilsson 40
  • 37. Richard Nilsson • Born 1970, Swedish citizen • B.Sc. (Business Administration and Economics) • Investment Manager at Foundation Asset Management (FAM) • Member of the Board of Directors of Bergvik Skog AB, Boston-Power Inc. and Cellutech AB • Earlier positions include: – pulp & paper research analyst at SEB Enskilda (2000–2008), Alfred Berg (1995–2000) and Handelsbanken (1994–1995) 41
  • 38. Appointment of Nomination Board Duties The Nomination Board proposes that the AGM appoint a Nomination Board to prepare proposals concerning (a) the number of members of the Board of Directors (b) The election of members of the Board of Directors (c) the remuneration for the Chairman, Vice Chairman and members of the Board of Directors (d) the remuneration for the Chairman and members of the committees of the Board of Directors Members • The Chairman of the Board of Directors • The Vice Chairman of the Board of Directors • Two members appointed by the two largest shareholders (one each) as of 30 September 2014 Remuneration • Members of the Nomination Board shall not receive separate compensation. 42
  • 39. Board of Directors Chairman EUR 170 000 Deputy Chairman EUR 100 000 Members EUR 70 000 The Nomination Board also proposes that 40% of the remuneration be paid in Stora Enso R shares purchased from the market. In addition, annual remuneration shall be paid to members of the Board Committees as follows: Financial and Audit Committee Chairman EUR 20 000 Members EUR 14 000 Remuneration Committee Chairman EUR 10 000 Members EUR 6 000 Global Responsibility and Ethics Committee Chairman EUR 7 500 Members EUR 4 000 Remuneration shall be paid only to non-executive Board members. Annual remuneration 44
  • 40. Number of members in the Board of Directors
  • 41. Composition of the Board of Directors The Nomination Board proposes to the AGM that the Board of Directors shall have nine (9) members. Gunnar Brock Anne Brunila Elisabeth Fleuriot Hock Goh Birgitta Kantola Mikael Mäkinen Juha Rantanen Hans Stråberg Richard Nilsson 48
  • 42. Auditor’s fees
  • 43. Election of Auditors • The Board of Directors proposes to the AGM that Authorised Public Accountants Deloitte & Touche Oy continue as the statutory auditor of the Company until the end of the following AGM. 52
  • 44. Appointment of Nomination Board Duties The Nomination Board proposes that the AGM appoint a Nomination Board to prepare proposals concerning (a) the number of members of the Board of Directors (b) The election of members of the Board of Directors (c) the remuneration for the Chairman, Vice Chairman and members of the Board of Directors (d) the remuneration for the Chairman and members of the committees of the Board of Directors Members • The Chairman of the Board of Directors • The Vice Chairman of the Board of Directors • Two members appointed by the two largest shareholders (one each) as of 30 September 2014 Remuneration • Members of the Nomination Board shall not receive separate compensation. 54
  • 45. Swedish shareholder association Sveriges Aktiesparares Riksförbund’s request for a resolution on a special examination concerning acquisition of Consolidated Papers
  • 46. Thank You