Financial results for Q2 2016

Financial results
for Q2 2016
CEO Karl-Henrik Sundström
CFO Seppo Parvi
21 July 2016

Disclaimer
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.
21 July 20162
Stora Enso Q2 2016 Results

• Beihai consumer board mill in China started up in May
and is ramping up ahead of plan
• Varkaus kraftliner mill ramp-up is proceeding and
customer qualifications have progressed well
• The new production line for wooden building elements
at Varkaus Mill (LVL) started up in June 2016
• Divestments announced:
− Kabel, Suzhou and IL Recycling
• Feasibility study, cross-laminated timber (CLT)
production in Gruvön Mill in Sweden
• Sunila Mill in Finland, first customer agreement has
been signed for lignin
• Eurobond refinancing
21 July 2016
3
Accelerated transformation
High activity during the quarter

• Sales 2 526 MEUR decreased by 1.4%
− Increased by 3.6% excluding structurally declining paper
business and divested Barcelona Mill
• Operational EBIT increased by 9.2% to 226 MEUR
− Including a bad debt provision of 6 MEUR in the Paper
division
• Cash flow from operations record high 493 (489)
MEUR
• Operational ROCE 10.3% (9.4%), excluding Beihai
Mill investment 12.5% (10.9%)
• Continued strengthening of the balance sheet
− Net debt to operational EBITDA 2.3 (2.7) despite dividend
payment
21 July 2016
4
Operational EBIT increased by 9.2%
Q2 2016 year-on-year

Operational EBIT increased by 19 MEUR
driven by Paper and Wood Products
Q2 y-o-y, strong underlying business
21 July 20165
One-time items

ROCE reaching new levels
Operational ROCE 10.3%, excluding Beihai Mill investment
12.5%
21 July 2016
6
*Excluding Montes del Plata until end of 2014 and excluding Beihai Mill project in Guangxi
ROCE target of 13%

Transformation steps since 2015
21 July 2016
7
Investments Divestment and closure announcements
Murow sawmill Uetersen Mill, Germany
Sunila Biorefinery Packaging unit in Chennai, India
Imatra de-bottlenecking Barcelona Mill, Spain
Varkaus conversion Packaging plant in Komárom, Hungary
Beihai Mill Arapoti Mill, Brazil
Varkaus wooden building elements IL Recycling AB, Sweden
Virdia demo plant Ongoing Hartola production unit, Finland
Beihai PE coating line Ongoing Kabel Mill, Germany
Ala sawmill, boiler and pellets Ongoing Suzhou Mill, China
Imatra PE coating line and ARW Ongoing
Skutskär pulp mill, fluff Ongoing
Skoghall Mill, chemical plant Ongoing

• Mill started in May and is ramping up ahead of plan
• Full production expected in 18–24 months from the
start up
• New PE Coating line investment of 31 MEUR to
meet increasing demand for food service board
announced in March
• BCTMP (mechanical) mill operational in Q4 2016
− 220 000 tonnes annual capacity
• Chemical pulp sourced mainly internally
− 130 000 tonnes hardwood from Veracel
− 90 000 tonnes softwood from the market
21 July 2016
8
Transformation – Beihai Mill started in May
Estimated investment cost 800 MEUR, excluding PE coating

• Varkaus kraftliner ramp-up
proceeding
− Customer qualifications proceeding well
− Full production expected during first half
of 2017
• New production line for wooden
building elements started in Varkaus
in June as planned
− On budget and in time
− Full production expected mid-2018
21 July 2016
9
Transformation – Varkaus kraftliner and LVL
production ramping-up

• Suzhou Mill, 240 MEUR cash consideration
- Cash payments during Q3 and Q4
- Gain on EBIT 181 MEUR
• 26 MEUR positive IAC in Q2 2016, including restructuring
costs 16 MEUR
• 155 MEUR positive IAC in Q4 2016
- Total gain including costs after tax 148 MEUR
• Tax impact -30 MEUR and non-controlling interest -3 MEUR
• Kabel Mill, 23 MEUR cash consideration
- 17 MEUR pension liabilities to be transferred to new owner
- IAC in Q2 2016
 -5 MEUR on operating profit
 -10 MEUR tax impact
- Expected to be completed Q3 2016
• IL Recycling, 26 MEUR cash consideration
- Positive IAC 16 MEUR
• Hartola production unit
21 July 2016
10
Transformation - Divestments during Q2

Paper
Biomaterials
Wood products business
Consumer Board
Packaging Solutions
Other and eliminations
Paper business, incl. Merchants
Wood products business
Packaging business
Other and eliminations
Transformation journey continues
Growth businesses 67% of sales and 81% of operational EBIT
21 July 2016
In 2006, all pulp used internally
2006 Sales
30% 67%
Q2/2016 Sales
2006 Operational EBIT
38%
11
2006
Q2/2016
81%
Q2/2016 Operational EBIT

Profitability and balance sheet continues to
improve
Summary financials Q2 2016
21 July 201612
EUR million Q2/16 Q2/15
Change% Change %
Q2/16 /
Q2/15 Q1/16
Q2/16 /
Q1/16
Sales 2 526 2 562 -1.4% 2 445 3.3%
Operational EBITDA 333 318 4.7% 356 -6.5%
Operational EBITDA margin 13.2% 12.4% 14.6%
Operational EBIT 226 207 9.2% 248 -8.9%
Operational EBIT margin 8.9% 8.1% 10.1%
Profit before tax excl. IAC 112 156 -28.2% 183 -38.8%
EPS excl. IAC, EUR 0.12 0.18 0.19
EPS (basic), EUR 0.16 0.17 0.15
Operational ROCE 10.3% 9.4% 11.3%
Operational ROCE excl. Beihai project 12.5% 10.9% 13.7%
Cash Flow from Operations 493 489 0.8% 289 70.6%
Net debt/last 12 months’ operational
EBITDA 2.3 2.7 2.3

Consumer Board Operational ROOC excl.
Beihai 35%
Q2 y-o-y
21 July 201613
• Sales growth 4.4% excluding the divested Barcelona Mill
− Higher sales volumes and stable prices
• Operational EBIT decreased by 2 MEUR to 76 MEUR
− Effect of Beihai Mill start up -18 MEUR
• Operational ROOC 14.8% (16.1%)
− Excluding Beihai Mill 35.2% (30.8%)
• Investment of 70 MEUR in a new PE extrusion coating
plant and an automated roll warehouse at Imatra mills in
Finland was announced
• As earlier announced, PE extrusion coating capacity
investment of 31 MEUR in Beihai Mill also in process
7678
4.4%
Sales excl. Barcelona
599
574
MEUR
MEUR Operational EBIT
-2.6%

Packaging Solutions Sales +14%
Q2 y-o-y
21 July 201614
MEUR
24
17
226
• Sales +14%
− Mainly due to the ramp up of kraftliner at Varkaus and
higher sales at Ostrołęka
• Operational EBIT excluding Varkaus and Inpac increased
by 2 MEUR
− The ramp-up of Varkaus and improvement actions in
Inpac proceeding
− Contribution to operational EBIT still negative
• Feasibility study of 500 000 tonnes containerboard machine
at the Ostrołęka Mill
− Expected to be completed by the end of 2016
14.2%
-29.2%
258
MEUR

Biomaterials Operational EBITDA margin 24.6%
Q2 y-o-y
21 July 201615
342
364
• Sales decreased due to lower sales prices
• Operational EBIT decreased slightly to 57 MEUR
− Lower pulp prices in local currencies partly offset by
positive sales FX
• Commercialisation of lignin from Sunila Mill in
Finland progresses
− The first customer agreement signed
• Investment of 26.5 MEUR in Skutskär pulp mill to
increase its fluff capacity by 160 000 tonnes
annually
MEUR
-6.0%
-3.4%59
MEUR
57

Wood Products Operational ROOC +25.6%
Q2 y-o-y
21 July 201616
• Sales -1.8%
− Slightly lower prices and a strategic reduction in external
sawn goods trading
• Operational EBIT improved by 10 MEUR
− Mainly due to higher deliveries, improved product mix,
and lower log prices
• Operational ROOC improved to 25.6%
• The new production line for wooden building
components at Varkaus Mill (LVL) started up in June
2016
− Full production is expected in mid-2018
• Feasibility study of building a CLT production at
Gruvön Saw Mill in Sweden
23
441
MEUR
33
-1.8% 433
43.5%
MEUR

Paper Operational EBITDA improved 42%
Q2 y-o-y
21 July 201617
• Sales increased by 4 MEUR excluding divestments and
conversions
• Operational EBIT improved by 31 MEUR to 43 MEUR
− Better sales prices, lower variable costs
− Negative impact of 6 MEUR provision for bad debt
− Negative impact of 1 MEUR from incident at Veitsiluoto Mill
• Cash flow after investing activities to sales increased to
5.8%
− Excluding one-time restructuring cash flow impacts of 17
MEUR related to the divestments of the Kabel and Suzhou Mill
sites, the ratio reached 7.9%
• Stora Enso is reviewing how to create the best
conditions for the Paper division to compete under
increasing cost pressures and declining market demand
− Project has been initiated to plan for the most efficient way to
manage the paper business going forward
MEUR
74
52
915
-8.3%
42.3%
839
MEUR

Successful Eurobond refinancing
• Stora Enso issued a new seven year, 300 MEUR Eurobond under
the EMTN program
• The coupon of the new issue was 2.125% which is the lowest
coupon ever priced in Stora Enso’s rating category for a seven-
year bond
• Stora Enso used the proceeds from the bonds to repurchase the
2018 and 2019 outstanding bonds for a total nominal amount of
352 MEUR
• In addition to these Stora Enso fully repurchased 50 MEUR of
2018 maturing Eurobond
• With the above successful transactions Stora Enso was able to
reduce its running interest rate cost and extend its debt maturity
profile
21 July 2016
18

Divisional targets Q2 15 Q2 16 Status
Consumer Board Operational ROOC > 20% 16.1% 14.8%
Consumer Board excl. Beihai 30.8% 35.2%
Packaging Solutions Operational ROOC > 20% 11.7% 7.7%
Biomaterials Operational ROOC > 15% 8.9% 8.9%
Wood Products Operational ROOC > 18% 17.9% 25.6%
Paper Cash flow after investing activities to sales > 7% 5.1% 5.8%
Strategic targets ambitious, but reachable
Group targets Q2 15 Q2 16 Status
Dividend To distribute 50% of net income over the cycle
Growth* To grow faster than the relevant market 4.8% (YoY) 3.6% (YoY)
Net debt to operational EBITDA <3.0x 2.7 2.3
Fixed costs to sales <20% 25.5% 25.4%
Debt to equity <80% 70% 58%
Operational ROCE >13% 9.4% 10.3%
Operational ROCE excl. Beihai 10.9% 12.5%
*Excluding Paper and Barcelona Mill
21 July 2016
19

• Sales are estimated to be similar or
slightly lower than the amount of 2 526
MEUR recorded in Q2/2016
• Operational EBIT is expected to be in
line with or somewhat lower than the
226 MEUR recorded in Q2/2016
• These estimates include the negative
impacts of the scheduled annual
maintenance shutdowns and Beihai
Mill start-up, which are estimated to be
approximately 30 MEUR and
approximately 16 MEUR higher in
Q3/2016 than in Q2/2016 respectively
21 July 201620
Guidance for Q3 2016
Compared to Q2 2016

• Successful transformation journey
• Strong focus on customers and innovation
• Faster profitable growth than relevant
markets*
• Strong cash generation
• Strengthened balance sheet
• Sustainability in business focus
21 July 2016
21
Stora Enso offers
*Excluding Paper and Barcelona Mill

Welcome to Stora Enso CMD
on 17 November 2016 in London
21 July 2016
22

Operational EBIT by segments
EUR million Q216 Q215
Change%
Q216/Q215 Q116
Change %
Q216/Q116
Consumer Board 76 78 -2.6% 73 4.1%
% of sales 12.7% 12.9% 12.9%
Packaging Solutions 17 24 -29.2% 7 142.9%
% of sales 6.6% 10.6% 2.9%
Biomaterials 57 59 -3.4% 84 -32.1%
% of sales 16.7% 16.2% 23.9%
Wood Products 33 23 43.5% 16 106.3%
% of sales 7.6% 5.2% 4.2%
Paper 43 12 258.3% 51 -15.7%
% of sales 5.1% 1.3% 6.0%
Other 0 11 -100.0% 17 -100.0%
% of sales 0.0% 1.7% 2.6%
21 July 201624

Net Financials
25
EUR million
Q2
2016
Q2
2015
Change
MEUR
Q216/
Q215
Q1
2016
Change
MEUR
Q216/
Q116
Net interest expense -34 -47 13 -31 -3
Average interest rate* 4.1% 4.8% 3.9%
Foreign exchange gains and losses -28 - -28 2 -30
Other financial items. of which -37 -19 -18 -10 -27
Fair valuation of interest rate derivatives** -1 4 -5 -3 2
Fair valuation of long-term debt - 1 -1 - -
Pension costs (IAS 19R) -1 -2 1 -2 1
Other items -35 -22 -13 -5 -30
Total net financial items -99 -66 -33 -39 -60
* Quarterly gross interest expense divided by average gross debt
** Not hedge accounted interest rate derivatives.
21 July 2016

Strong cash flow and strengthening
balance sheet
21 July 2016
26

Cash flow by divisions in Q2
21 July 201627

Net FX by division
21 July 201628

29
21 July 2016
Capex and Depreciation

Transaction risk and hedges Q2 2016
21 July 201630
€ million USD SEK GBP
Estimated annual net operating cash flow exposure 1140 -970 350
Transaction hedges -570 480 -170
Hedging percentage for the next 12 months 50% 50% 49%
Operating Profit: Currency effect +/- 10%*
Based on estimated 12 month net
operating cash flow exposure
€ million
USD 114
SEK -97
GBP 35
*Before currency hedges assuming no
other changes other than a single
currency rate movement occurs

31
Global bleached chemical market pulp inventories
by grade in tonnes and days of supply
Source: EPIS
21 July 2016

Stora Enso energy balance*
Q2 2016
21 July 201632
Impact on non-hedged volume
on operating profit from 10%
change in:
EUR million p.a.
Electricity market price ~5.2
Fossil fuel price ~3.3
*) Pulp, paper and board mills in Europe and overseas, excl. Beihai

Stora Enso electricity procurement*
Q2 2016
21 July 201633
*) Pulp, paper and board mills in Europe and overseas, excl. Beihai

Sensitivity analysis
Impact on operational EBIT
10% decrease in Impact*
Energy prices Positive 9 MEUR
Wood Prices Positive 168 MEUR
Chemical and filler prices Positive 42 MEUR
21 July 201634
10% increase in Impact*
Market pulp price, total Positive 115 MEUR
10% strengthening against Euro in the
value of**
Impact*
US dollar Positive 114 MEUR
Swedish krona Negative 97 MEUR
British pound Positive 35 MEUR
Brazilian real Negative 13 MEUR
*Impact on operational EBIT for the next twelve months.
** Before FX hedges
An increase of energy, wood or chemical and filler prices or decrease of pulp prices, as well as weakening of
the currencies would have the opposite impact

Pulp sensitivity analysis
10% change in prices, impact on operational EBIT
10% increase in Impact*
Hardwood pulp** prices Positive 45 MEUR
Softwood pulp prices Positive 45 MEUR
Fluff pulp prices Positive 15 MEUR
Dissolving pulp prices Positive 10 MEUR
Market pulp price, total Positive 115 MEUR
21 July 201635
* Impact on operational EBIT for the next twelve months. A decrease of pulp prices would have the opposite impact.
** Includes 600 000 tonnes from Montes del Plata

Debt maturity profile Q2 2016
21 July 2016
36
Revolving Credit Facility € 700 million matures in January 2019 and is fully undrawn
€ million
Other loans / liabilitiesBonds Commercial papers

Permanent pulp, paper and board capacity reductions
since 2006
37
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
Ostroleka PM2 Jan 2013 Containerboard 85 000
Hylte PM2 May 2013 Newsprint 205 000
Kvarnsveden PM11 May 2013 Newsprint 270 000
Veitsiluoto PM1 Apr 2014 Coated magazine 190 000
Corbehem Mill July 2014 LWC 330 000
Varkaus Aug 2015 WFU 280 000
Suzhou Jun 2016 WFU 240 000
Total 4 820 000
21 July 2016

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
Sollenau Sawmill Jul 2014 400 000
Total 2 300 000
21 July 2016
38

Pulp price development
21 July 2016
39
Source: FOEX

Pulp wood and saw log prices
Wood prices in Finland
21 July 2016
40

Paper for recycling prices
21 July 2016
41
German RCP price development. free delivered
Source: Verband Deutscher Papierfabriken/Stora Enso

Financial results for Q2 2016

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Financial results for Q2 2016