Stora Enso CMD - Presentation by Juha Vanhainen, EVP, Printing and Reading

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Stora Enso Capital Markets Day on 22 March 2012

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Stora Enso CMD - Presentation by Juha Vanhainen, EVP, Printing and Reading

  1. 1. Cash Engine Juha Vanhainen, EVP, Printing and Reading
  2. 2. Business Area Printing & Reading Publishing and commercial printing We inspire the world with paper Juha Vanhainen March 22, 2012 2
  3. 3. iPad’s take-off has been a great success Apple iPhone + iTouch Apple iPad Nintendo Wii Nintendo DS Sony PSP Apple iPod RIM Blackberry Source: KPCB; Apple; Morgan Stanley Juha Vanhainen March 22, 2012 3
  4. 4. West European advertising spend is still at the pre-crisis level (calculated in 2010 euro) 100 90 8 10 80 12 InternetAdSpend [ billiion € ] 70 13 14 15 Other 60 Radio 50 28 28 27 40 24 25 25 TV 30 20 43 42 39 32 31 30 Print 10 0 2006 2007 2008 2009 2010 2011e Source: Zenith Dec-2011 Juha Vanhainen March 22, 2012 4
  5. 5. The development has caused a structural change to West Europe paper demand development Juha Vanhainen March 22, 2012 5
  6. 6. Business Area Printing and ReadingProduction capacities, million t/a Newsprint• Newsprint 2.5 SC Veitsiluoto• Super calendered 1.4 Oulu Coated• Coated paper 3.0 Office Varkaus• Office paper 1.3 Kvarnsveden AnjalaTotal paper 8.2 Hylte Nymölla Kabel Uetersen Langerbrugge Corbehem Sachsen Maxau Dawang Suzhou Arapoti Juha Vanhainen March 22, 2012 6
  7. 7. BA Printing and Reading sales and EBITDA Juha Vanhainen March 22, 2012 7
  8. 8. BA Printing & Reading profits are better than the ones of main competitors, EBITDA-% (sliding average of latest four quarters) Strora Enso purchased pulp at market price; energy procurement at market conditions Juha Vanhainen March 22, 2012 8
  9. 9. BA Printing and Reading will improve cost position to keep average below median at all times Delivered cash cost to Frankfurt Cost index, 100 equals to median of each grade 180 160 140 BA will target at keeping the average cost level 120 below median at all times 100 BA Printing and Reading capacity-% in each quartile: 80 1st quartile 2nd quartile 3rd quartile 4th quartile 35% 30% 30% 5% 60 0 10000 20000 30000 40000 50000 Cumulative European paper capacity, 1000 t/a Source: Pöyry, Stora Enso excluding specialties & book Q4/2011 Juha Vanhainen March 22, 2012 9
  10. 10. Concept for winning in a declining market Input Focus on Not growth, end-uses but low-cost• Paper for all print • Delivered cost end-uses • Targeted investments• New products expanding offering • Energy efficiency and bio fuels• Supply chain efficiency priority • Asset restructuring Action Juha Vanhainen March 22, 2012 10
  11. 11. Our value proposition to our customers Your peace of mind comes first • from sourcing raw materials to creating renewable reading experiences Added value to customers • Reliability and availability • Cost efficiency • Good reputation • Offering fit for purpose Juha Vanhainen March 22, 2012 11
  12. 12. We inspire the world with paper From selling paper grades to jointly selecting best paper for end-use applications Juha Vanhainen March 22, 2012 12
  13. 13. Product development – reinventing boundaries between paper gradesPrimaPress – an uncoated paper fortraditional end-uses of coated paper• Brilliant gloss never seen before for LWU• End uses: magazines, catalogues• Production: Kvarnsveden PM12 Juha Vanhainen March 22, 2012 13
  14. 14. BA Printing and Reading – 2011 Net Promoter ScoreCompared to most frequently mentioned competitors BA Printing & Reading n=1384; All competitors n=1297 Juha Vanhainen March 22, 2012 14
  15. 15. Concept for winning in a declining market Input Focus on Not growth, end-uses but low-cost• Paper for all print • Delivered cost end-uses • Targeted investments• New products expanding offering • Energy efficiency and bio fuels• Supply chain efficiency priority • Asset restructuring Action Juha Vanhainen March 22, 2012 15
  16. 16. Juha Vanhainen March 22, 2012 16
  17. 17. Ongoing restructuring measuresFine paper cost competitiveness improvement • Annual cost reduction 20 M€ • Cash provision 16 M€ • Full impact after Q2/2012Coated magazine paper operations’ restructuring • Annual cost reduction 48 M€ • Investments 18 M€ and cash provision 5 M€ • Full impact from Q3/2013 onwards Juha Vanhainen March 22, 2012 17
  18. 18. Sales value per employee Juha Vanhainen March 22, 2012 18
  19. 19. Juha Vanhainen March 22, 2012 19
  20. 20. Printing & Reading operational development targets Product development • New products • Cost structure improvement • Source reduction From mill specialization to operational flexibility • “Lowest delivered to customer cost asset gets the orders” Juha Vanhainen March 22, 2012 20
  21. 21. Lean and focused capital expenditure model Top assets with low cost; Capex of sales efficiency and energy investments Assets to be kept on current technical level Average at~2.5% of sales Assets for divestment or closure during the next 10 years Competitiveness Juha Vanhainen March 22, 2012 21
  22. 22. Energy investmentsEnergy efficiency• Energy generation towards bio• Latest 5 year investments 300 M€• Specific energy consumption improvement work continues Juha Vanhainen March 22, 2012 22
  23. 23. Located in a seaport Oulu paper mill is the largest coated paper production unit in Europe IntegratedBenchmark paper quality Juha Vanhainen March 22, 2012 23
  24. 24. Kvarnsveden PM12 in Sweden Wood procurement from an area with 200 km radius Juha Vanhainen March 22, 2012 24
  25. 25. 80 million people live within a 300 km radius Excellent energy solution based on non-fossil/renewable Langerbrugge houses the largest Amsterdamnewsprint paper machine in Europe London Düsseldorf Langerbrugge Cologne Paris 100% recycled fiber Juha Vanhainen March 22, 2012 25
  26. 26. Ready for all future demand scenarios• New setup with all paper business in one business area• Serving consumers’ continuously developing media needs with new paper applications• Performance over size and market share• Focus on making top assets even stronger Juha Vanhainen March 22, 2012 26
  27. 27. Juha Vanhainen March 22, 2012 27
  28. 28. 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. Juha Vanhainen March 22, 2012 28

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