Financial Results Q4 and Full Year 2012CEO Jouko Karvinen and CFO Karl-Henrik Sundström5th February 2013
It should be noted that certain statements herein which are not historical facts. including. withoutlimitation those regar...
Q4 Operational EBIT Improved due to lower costs y-on-yCash Flow from Operations continued Strong        *Operational EBIT ...
Q4 Performance•    Operational EBIT at EUR 155 million•    Strong cash flow from Operations at     EUR 471 million•    Str...
Printing and Reading Operational EBITDA Improved y-on-y and q-on-q even without capacity cuts      Printing and Reading, E...
European paper* Demand 2007-2012                          Jan/2007 = 100%                                          105%   ...
European paper* Demand & Forecasting Track Record                               46000                               44000 ...
Reducing Capacity to meet declining Paper Demand    Printing and Reading plans to shut down 475 000 tonnes•     PM 2 Hylte...
Building and LivingEvident Improvement needs         Building and Living, EUR million                                     ...
Adjusting Cost StructureBuilding and Living plans to streamline operations•   Annual cost reductions EUR 30 million     – ...
Strategic InvestmentsMontes del Plata, Ostroleka and Skoghall                                                             ...
Guangxi Board and Pulp mills project•   Preparations proceeding•   The construction and production schedule will be update...
Business Area ROOC %, excl. and incl. Strategic ProjectsImpact to Group ROCE % was 1.5% in Q4 2012                        ...
Stable Cash flow enabling the transformationCash flow from operation is EUR 1 253 million in 2012                      Sto...
Summary financials   Q4 and Full Year 2012                                                                                ...
Group Variance – Operational EBIT    Positive impact from lower cost•   Q4 vs. Q3                                         ...
Efficient operative working capital managementQ1 2010 – Q4 2012                    Stora Enso Q4 and Full Year 2012 Result...
Balance Sheet enabling the transformationQ1 2010 – Q4 2012                                                                ...
Guidance for Q1 2013•   Compared to Q4 2012:     – Sales at roughly similar level     – Operational EBIT in the order of  ...
Projected Capex and Equity Injections for 2013Excluding China investmentCapital Expenditure, Equity injections and Depreci...
Summary• Improved Q4 EBIT year-on-year•   Strong cash flow and liquidity•   Paper capacity reductions plans to    address ...
Stora Enso Q4 and Full Year 2012 Results   5 February 2013   22
Permanent pulp, paper and board capacity reductionssince 2006Mill                          Date                         Gr...
Permanent sawn wood capacity reductionssince 2006Mill                                      Date                           ...
Operational EBIT by segments                                                                                              ...
Net Financial Items                                                                                                       ...
Transaction risk and hedgesas at 31 December 2012 EUR million                                                             ...
Softwood pulp pricesStora Enso’s market pulp is softwood                                                                  ...
Pulp wood and saw log pricesWood prices in Finland                                                                        ...
Wood prices in Sweden                                                                           Pulpwood includes pine. sp...
Paper for Recycling prices                                                                                   German RCP pr...
Maturity profile Q4 2012               Stora Enso Q4 and Full Year 2012 Results   5 February 2013   32
Energy balance* Q4 2012     Total energy self      sufficiency 59  Self sufficiency 47                  Self sufficiency 6...
Stora Enso Electricity procurement* Q4 2012    *) Pulp. paper and board mills. Europe and overseas                        ...
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Stora Enso Fourth Quarter and Full Year Results 2012

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Stora Enso Fourth Quarter and Full Year Results 2012

  1. 1. Financial Results Q4 and Full Year 2012CEO Jouko Karvinen and CFO Karl-Henrik Sundström5th February 2013
  2. 2. It should be noted that certain statements herein which are not historical facts. including. withoutlimitation those regarding expectations for market growth and developments; expectations for growthand profitability; and statements preceded by “believes”. “expects”. “anticipates”. “foresees”. or similarexpressions. are forward-looking statements within the meaning of the United States Private SecuritiesLitigation Reform Act of 1995. Since these statements are based on current plans. estimates andprojections. they involve risks and uncertainties which may cause actual results to materially differ fromthose 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 ofefficiencies therein. continued success of product development. acceptance of new products or servicesby 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 protectioncreated by the Group’s patents and other intellectual property rights. the availability of capital onacceptable 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 theGroup. 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 geographicmarkets or fluctuations in exchange and interest rates. Stora Enso Q4 and Full Year 2012 Results 5 February 2013 2
  3. 3. Q4 Operational EBIT Improved due to lower costs y-on-yCash Flow from Operations continued Strong *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. Stora Enso Q4 and Full Year 2012 Results 5 February 2013 3
  4. 4. 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 4
  5. 5. 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 5
  6. 6. European paper* Demand 2007-2012 Jan/2007 = 100% 105% 5% European paper demand growth y-o-y [%]European paper demand [Jan-2007 = 100%] 100% 0% 95% -5% 90% -10% 85% -15% 80% SA European paper demand y-o-y -20% SA European paper demand 75% -25% Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 *Paper: News, UMO, UMI, SC, CM, WFC & WFU Source: EuroGraph & PPPC SA = seasonally adjusted Stora Enso Q4 and Full Year 2012 Results 5 February 2013 6
  7. 7. European paper* Demand & Forecasting Track Record 46000 44000 42000European paper demand [kt/a] 40000 38000 36000 Monthly SA demand (annualized) 34000 RISI forecast Mar-2010 RISI forecast Feb-2011 32000 RISI forecast Feb-2012 30000 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 * Paper: News, UMO, UMI, SC, CM, WFC & WFU SA = seasonally adjusted Stora Enso Q4 and Full Year 2012 Results 5 February 2013 7
  8. 8. 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 8
  9. 9. Building and LivingEvident Improvement needs Building and Living, EUR million 2010 2011 2012 Operational EBITDA 111 102 59 Cash Flow from Operations 82 95 63 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 9
  10. 10. Adjusting Cost StructureBuilding 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 10
  11. 11. Strategic InvestmentsMontes del Plata, Ostroleka and Skoghall Montes del Plata Over 80% completed, Start-up mid-year 2013 Ostroleka Investment started up in Jan 2013, 6 weeks ahead of schedule Skoghall Investment started up on time, on 8 Nov 2012 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 11
  12. 12. 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 12
  13. 13. Business Area ROOC %, excl. and incl. Strategic ProjectsImpact to Group ROCE % was 1.5% in Q4 2012 Renewable Packaging Biomaterials 30 25 20 15 % 13,0 13,4 10 9,2 7,7 5 0 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 13
  14. 14. Stable Cash flow enabling the transformationCash flow from operation is EUR 1 253 million in 2012 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 14
  15. 15. Summary financials Q4 and Full Year 2012 Change % Change %EUR million Q4/12 Q3/12 2012 Q4/11 2011 Q4 12/Q4 11 2012/2011Sales 2 727.0 2 694.1 10 814.8 2 681.6 10 964.9 1.7 -1.4Operational EBITDA 272.8 299.6 1 082.6 242.9 1 308.0 12.3 -17.2Operational EBITDA margin, % 10.0 11.1 10.0 9.1 11.9 9.9 -16.1Operational EBIT 155.0 174.7 618.3 144.9 866.7 7.0 -28.7Operational EBIT margin, % 5.7 6.5 5.7 5.4 7.9 5.6 -27.8Profit before tax excl, NRI 83.5 102.2 318.5 141.4 639.1 -40.9 -50.2EPS excl. NRI, EUR 0.11 0.10 0.33 0.10 0.63 10.0 -47.6EPS (basic), EUR 0.33 0.10 0.61 0.12 0.43 175.0 41.9Operational ROCE, % 7.1 8.0 7.1 6.7 10.0 6.0 -29.0Cash Flow from Operations 471.0 312.4 1 252.7 302.3 1 034.3 55.8 21.1Net debt/last 12 months’ 2.5 2.8 2.5 2.1 2.1 19.0 19.0operational EBITDA Stora Enso Q4 and Full Year 2012 Results 5 February 2013 15
  16. 16. Group Variance – Operational EBIT Positive impact from lower cost• Q4 vs. Q3 • Q4 y-on-y Stora Enso Q4 and Full Year 2012 Results 5 February 2013 16
  17. 17. Efficient operative working capital managementQ1 2010 – Q4 2012 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 17
  18. 18. Balance Sheet enabling the transformationQ1 2010 – Q4 2012 *Last twelve months’ operational EBITDA Stora Enso Q4 and Full Year 2012 Results 5 February 2013 18
  19. 19. 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 19
  20. 20. Projected Capex and Equity Injections for 2013Excluding China investmentCapital Expenditure, Equity injections and Depreciation Forecast 2013EUR million Forecast 2013 350-400Capital expenditure* 110-130Equity injections 460-530Total 600-620Depreciation * Excluding China investment Stora Enso Q4 and Full Year 2012 Results 5 February 2013 20
  21. 21. 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 21
  22. 22. Stora Enso Q4 and Full Year 2012 Results 5 February 2013 22
  23. 23. Permanent pulp, paper and board capacity reductionssince 2006Mill Date Grade Capacity reduction, tCorbehem PM 3 and PM 4 Jun 2006 LWC 250 000Varkaus PM 1 End 2006 WFC 95 000Berghuizer Mill Oct 2007 WFU 235 000Reisholz Mill End 2007 SC 215 000Summa Mill Jan 2008 Newsprint, uncoated mag, book paper 415 000Anjala Mill PM1 Feb 2008 Coated magazine paper 155 000Baienfurt Mill End 2008 FBB 190 000Kabel Mill PM 3 End 2008 Coated magazine 140 000Kemijärvi Pulp Mill April 2008 Long-fibre (SW) pulp 250 000Norrsundet Pulp Mill Dec 2008 Long-fibre (SW), pulp 300 000Varkaus Mill coreboard machine Dec 2008 Coreboard 100 000Imatra PM 8 Mar 2010 WFU 210 000Varkaus PM 2 and PM 4 Sep 2010 Newsprint, directory paper 290 000Maxau PM 7 Nov 2010 Newsprint 195 000Hylte PM1 Dec 2012 Newsprint 180 000Total 3 220 000 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 23
  24. 24. Permanent sawn wood capacity reductionssince 2006Mill Date Capacity reduction, m3Veitsiluoto Sawmill 2006 100 000Honkalahti Sawmill 2006 90 000Sauga Sawmill Jun 2007 130 000Sollenau Sawmill 2007 110 000Näpi Sawmill 2007-2008 100 000Kotka Sawmill 2007-2008 70 000Paikuse Sawmill End 2008 220 000Zdirec Sawmill 2008 120 000Ybbs Sawmill 2008 & Jun 2009 200 000Kitee Sawmill 2008 & Jun 2009 130 000Varkaus Sawmill Jun 2009 60 000Tolkkinen Sawmill End 2009 260 000Kopparfors Sawmill End 2011 310 000Total 1 900 000 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 24
  25. 25. Operational EBIT by segments Change % Change %EUR million Q4/12 2012 Q4/11 2011 Q4 12/ Q4 11 2012/ 2011Printing 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 -21.1Biomaterials 27.7 82.1 27.2 169.2 1.8 -51.5 % of sales 10.8 8.1 10.6 15.5 1.9 -47.7Building 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 -55.3Renewable 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 -9.6Other 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 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 25
  26. 26. Net Financial Items Change ChangeEUR million Q4/2012 Q3/2012 Q4/2011 Q412/Q411 Q412/Q312Net interest expense -47.3 -44.0 -35.1 -34.8 -7.5Foreign exchange gains and losses -1.0 -0.4 -3.0 66.7 -150.0Other 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 -8.1Total net financial items -47.4 -59.1 -59.2 19.9 19.8 *Not hedge accounted interest rate derivatives. Stora Enso Q4 and Full Year 2012 Results 5 February 2013 26
  27. 27. Transaction risk and hedgesas at 31 December 2012 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 Additional GBP hedges for 13-15 months increase the hedging percentages by 3 . Operational EBIT: Currency strengthening of + 10 EUR million USD 103 SEK -93 GBP 60 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. Stora Enso Q4 and Full Year 2012 Results 5 February 2013 27
  28. 28. Softwood pulp pricesStora Enso’s market pulp is softwood Source: FOEX Stora Enso Q4 and Full Year 2012 Results 5 February 2013 28
  29. 29. Pulp wood and saw log pricesWood prices in Finland Source: METLA Stora Enso Q4 and Full Year 2012 Results 5 February 2013 29
  30. 30. Wood prices in Sweden Pulpwood includes pine. spruce and birch. Sawlogs include pine and spruce. Source: SDC. Skogsstyrelsen Stora Enso Q4 and Full Year 2012 Results 5 February 2013 30
  31. 31. Paper for Recycling prices German RCP price development. free delivered Source: Verband Deutscher Papierfabriken/Stora Enso Stora Enso Q4 and Full Year 2012 Results 5 February 2013 31
  32. 32. Maturity profile Q4 2012 Stora Enso Q4 and Full Year 2012 Results 5 February 2013 32
  33. 33. Energy balance* Q4 2012 Total energy self sufficiency 59 Self sufficiency 47 Self sufficiency 63 Impact** on operating profit from EUR million p.a. 10 change in: Electricity market price ~5 Fossil fuel price ~15 *) Pulp. paper and board mills. Europe and overseas **) Remaining impact on non-hedged volume Stora Enso Q4 and Full Year 2012 Results 5 February 2013 33
  34. 34. Stora Enso Electricity procurement* Q4 2012 *) Pulp. paper and board mills. Europe and overseas Stora Enso Q4 and Full Year 2012 Results 5 February 2013 34

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