1. Sector update 2010 Q3
12 November 2010
Analyst: Einar Kilde Evensen
+47 2294 8232
einar.kilde.evensen@dnbnor.no
Company Top pick Trigger / comment
Holmen (SWE)
Norske Skog (NOR) Who dares? High debt, low margins and high exposure to newsprint. Share is not very cheap either.
SCA (SWE) Can gain materially if pulp price falls back, but is otherwise a stable (and good) 4-5% dividend yield case
b
b
Well-diversified, but share is expensive. Start-up of sawmill in 4Q could see teething problems.
TP upgraded; 2010-11 EBITDA up ~50% after blow-out 3Q
TP upgraded. Strong FCF, decent share price. Will benefit from EUR weakness. Strong balance sheet.
Stora Enso (FIN)
UPM (FIN)
Our coverage universe
Mcap Price Target Poten- EV/EBITDA ratio
Ticker Curr. Rec. (EURm) (curr.) (curr.) tial 2010e 2011e 2012e
HOLMB SS SEK SELL 1,935 213.90 190.00 -11 % 9.5x 8.1x 6.5x
NSG NO NOK SELL 269 11.45 6.00 -48 % 8.6x 5.9x 4.1x
SCA B SS SEK HOLD 7,836 103.20 110.00 7 % 7.5x 6.3x 6.1x
STERV FH EUR BUY 5,812 7.37 9.00 22 % 6.6x 5.6x 5.3x
UPM1V FH EUR BUY 6,364 12.24 15.00 23 % 7.4x 6.1x 5.5x

2. 2
Sector update
12 November 2010
PULP AND PAPER SECTOR
Paper 3Q 2010 update
What's new 2010 third quarter Pulp & Paper update
Holmen recommendation reduced to Sell (PT unchanged at SEK 190)
NSG reiterated at Sell, NOK 6.00
SCA reiterated at Hold, SEK 110.00
Stora Enso reiterated at Buy, with PT up to EUR 9.00 from EUR 7.00
UPM reiterated at Buy, with PT up to EUR 15.00 from EUR 13.00
Our assessment 1: Newsprint "bull story" of rising 2011 prices is over. It's all over.
The market already expects and has to a large extent discounted NP price
increases in Europe next year of 10%-15%.
European newsprint demand is in structural decline, implying deteriorating
market conditions for 2012 and forward
Investors should avoid NSG and also Holmen who have the highest exposure
to European newsprint (Holmen is also positively exposed to packaging).
Investment conclusion Pair trades recommended
Short Holmen: Trading near historically high multiples. Startup of new SEK 1.1bn
Braviken sawmill in 4Q may have teething problems
Short NSG (if possible): Bullish story on 2011 NP prices is discounted.
Long Stora Enso: Lowest EV/EBITDA multiple, best exposure (packaging)
Long UPM: Lowest EV/EBITDA multiple, strong balance sheet
2: Packaging is the place to be
Market is growing, but with stable prices. If the general economy and consumer
spending remain fair, packaging should be an attractive growth market.

3. 3
Sector update
12 November 2010
PULP AND PAPER SECTOR
3Q roundup: Publication paper disappointed; Pulp and packaging better
Sales EBIT
Company Reported vs DNM vs cons. Reported vs DNM vs cons.
Holmen
Holmen Paper 1,982 -4 % -3 % -129 6 % 10 % On par
Iggesund Paperboard 1,225 0 % 1 % 243 12 % 23 % Better
Holmen Timber 162 2 % - 8 -49 % n.a. Worse
Holmen Skog 1,281 8 % 7 % 212 21 % 27 % Better
Holmen Energi 419 9 % - 96 50 % n.a. Better
Norske Skog
Newsprint Europe 1,374 1 % - -174 -107 % -40 % Worse
Newsprint Ex-Europe 1,495 12 % - 153 220 % 3 % Better
Magazine 1,606 3 % - -90 n.m. -100 % Worse
SCA
Personal Care 6,125 -6 % -5 % 697 -7 % -5 % Worse
Tissue 9,924 -5 % -3 % 753 -14 % -6 % Worse
Packaging 7,392 1 % -2 % 512 47 % 20 % Better
Forest Products 4,415 3 % 2 % 685 -1 % -7 %
Publication Products 2,131 -1 % - -38 n.m. n.a. On par
Pulp, Timber & Wood 2,284 8 % - 723 8 % n.a. Better Better
Stora Enso
Newsprint and Book Paper 323 -0 % -0 % 0 n.m. n.m. On par
Magazine Paper 541 3 % -1 % 46 79 % 69 % Better
Fine Paper 563 7 % 5 % 71 38 % 16 % Better
Consumer Board 594 -2 % 3 % 78 -4 % 21 % On par
Industrial Packaging 225 -12 % -9 % 19 158 % 25 % Better
UPM
Energy 124 4 % 3 % 44 12 % 17 % Better
Pulp 489 10 % 8 % 199 38 % 24 % Better
Forest and Timber 387 5 % 7 % 68 107 % 331 % Better
Paper 1,672 7 % 2 % -64 -195 % -228 % Worse
Label 284 3 % 3 % 24 13 % 17 % Better
Better 2 of 8 3 of 4 2 of 4 2 of 2 3 of 4 2 of 2
On par 3 of 8 1 of 4 - - - -
Worse 3 of 8 - 2 of 4 - 1 of 4 -
* Note: ''On par'' if reported within +/- 5 % range of estimates
Wood &
forest Energy
Publ.
paper
Board &
pack.
Other
paper Pulp
Apart from SCA's
disappointments in
Personal Care and Tissue,
the main disappointments
came within Publication
paper
0
1
2
3
4
5
6
7
8
9
Publ.
paper
Board &
pack.
Other
paper
Pulp Wood &
forest
Worse
On par
Better

4. 4
Sector update
12 November 2010
PULP AND PAPER SECTOR
Agenda
Case: Newsprint
Other key considerations
Valuation
3Q updates and changes of estimates
Appendix

5. 5
Sector update
12 November 2010
PULP AND PAPER SECTOR
The subject of this update
The end of newsprint (as we know it)?
Newsprint is continuously losing advertising market share
Newsprint's key strengths
"Coffee table effect". Multiple readers per paper
Media choice #1 for baby boomers
Purchaser "owns" newspaper
Local
Portability
Newsprint's key weaknesses
Distribution
Heavily dependent upon advertising from real estate, employment
and autos
Declining circulation and subscription

6. 6
Sector update
12 November 2010
PULP AND PAPER SECTOR
Can you pick the choice of the future?
This? Or this?

7. 7
Sector update
12 November 2010
PULP AND PAPER SECTOR
An analogy to newspaper as media habits change: Blockbuster Inc.
Blockbuster Inc. facts
First store opened in Dallas,
TX, 1985
IPO in 1999, for USD 560m
5,000 stores in US (Jan 2010)
Peaks
Share price: April 2002, at USD
30 (Market cap: USD 5,300m)
Yearly revenues: 2004, at USD
6,053m
EBIT margin: 2003, at 8%
NIBD: 2005, at USD 882m
BUST

8. 8
Sector update
12 November 2010
PULP AND PAPER SECTOR
Blockbuster is now bust (no pun intended)
Blockbuster Inc filed for
Chapter 11 in September
2010
We believe newsprint is a structural
sunset industry, just like video rental
(with physical stores), and LPs, music
cassettes and CDs.
There will be niche markets, but market
demand is going to continue falling.

9. 9
Sector update
12 November 2010
PULP AND PAPER SECTOR
What's going on with New York Times?
Arthur Sulzberger Jr, CoB of NYT Co.
We will stop
printing the
New York Times
some time in
the future.
(Sept 2010)
Our print
product is alive
and well
(Sept 2010)
Janet Robinson, CEO of NYT
New York Times facts
Published since 1851
Has won 104 Pulitzer prizes,
more than any other media
Current circulation: 950', down
>10% from peak
First major newspaper to
launch iPod/iPhone application
in 2008
Third largest newspaper in US
after WSJ and USA Today
Question:
Will this newspaper bellwether
also be the first to stop printing
on paper?

10. 10
Sector update
12 November 2010
PULP AND PAPER SECTOR
Newsprint demand is falling – North America leads
US demand is now less
than half what it was in
2000.
-51%
-10%

11. 11
Sector update
12 November 2010
PULP AND PAPER SECTOR
Which are the companies most exposed to Newsprint?
Norske Skog most exposed
Newsprint: >50% of revenue (but ~50/50 split Europe vs ex-Europe)
Magazine: ~40% (all in Europe, and ~50/50 split SC/LWC)
Holmen
Significant SC exposure
Note: Magazine grades: SC = ''Un-coated''; LWC = ''Light-weight''; CWF = ''Heavy''
Implicit revenue exposure to paper grades
-
10%
20%
30%
40%
50%
60%
Un-coated Light-weight Heavy
Newsprint Magazine Office paper
Holmen NSG SCA Stora Enso UPM

12. 12
Sector update
12 November 2010
PULP AND PAPER SECTOR
What does this exposure mean in terms of EBITDA and EPS
EBITDA sensitivities if NP
price rises 10%:
• NSG: +60%
• Holmen: +12%
EPS sensitivities vs last
share price if NP price
rises 10%:
• NSG: +34%
• Others: +1% or lower
Pulp <------- Graphic paper -------> Packaging Other
Magazine paper Corrugating
Company Mkt pulp NP SC LWC CWF UWF Fluting Liner FBB Tissue Other
Global exposure ('000 tonnes/year)
Holmen -80 825 1,045 170 - - - - 580 - -
NSG -220 2,945 815 675 - - - - - - 6
SCA -1,000 375 505 470 - - 665 1,655 - 2,555 45
Stora Enso 900 2,650 1,405 1,630 1,780 1,215 375 115 2,313 - 645
UPM 600 2,090 2,010 3,000 1,630 1,785 - - - - 550
Delta revenues if price +10% (fixed f/x)
Holmen (SEKm) -52 331 550 103 - - - - 270 - -
NSG (NOKm) -124 1,025 373 355 - - - - - - 2
SCA (SEKm) -650 150 266 285 - - 235 728 - 2,143 21
Stora Enso (EURm) 63 114 79 106 126 104 14 5 116 - 32
UPM (EURm) 42 90 114 195 116 154 - - - - 28
Delta EBITDA, % of 2011 estimate
Holmen (SEK 2,830m) -2% 12% 19% 4% - - - - 10% - -
NSG (NOK 1,716m) -7% 60% 22% 21% - - - - - - 0%
SCA (SEK 17,385m) -4% 1% 2% 2% - - 1% 4% - 12% 0%
Stora Enso (EUR 1,392m) 5% 8% 6% 8% 9% 8% 1% 0% 8% - 2%
UPM (EUR 1,572m) 3% 6% 7% 12% 7% 10% - - - - 2%
Delta EPS, assuming 28% tax
Holmen (SEK) -0.45 2.83 4.72 0.88 - - - - 2.32 - -
NSG (NOK) -0.47 3.89 1.41 1.35 - - - - - - 0.01
SCA (SEK) -0.66 0.15 0.27 0.29 - - 0.24 0.74 - 2.19 0.02
Stora Enso (EUR) 0.06 0.10 0.07 0.10 0.12 0.10 0.01 0.00 0.11 - 0.03
UPM (EUR) 0.06 0.12 0.16 0.27 0.16 0.21 - - - - 0.04
Delta EPS, assuming 28% tax, % of 2011 estimate
Holmen (SEK 11.59) -4% 24% 41% 8% - - - - 20% - -
NSG (NOK -4.24) n.m. n.m. n.m. n.m. - - - - - - n.m.
SCA (SEK 10.07) -7% 2% 3% 3% - - 2% 7% - 22% 0%
Stora Enso (EUR 0.70) 8% 15% 10% 14% 16% 14% 2% 1% 15% - 4%
UPM (EUR 1.04) 6% 12% 15% 26% 15% 21% - - - - 4%
Delta EPS, % of last price
Holmen (SEK 213.90) -0% 1% 2% 0% - - - - 1% - -
NSG (NOK 11.45) -4% 34% 12% 12% - - - - - - 0%
SCA (SEK 103.20) -1% 0% 0% 0% - - 0% 1% - 2% 0%
Stora Enso (EUR 7.37) 1% 1% 1% 1% 2% 1% 0% 0% 1% - 0%
UPM (EUR 12.24) 0% 1% 1% 2% 1% 2% - - - - 0%

13. 13
Sector update
12 November 2010
PULP AND PAPER SECTOR
0
20
40
60
80
100
120
140
160
180
02.01.2007
02.04.2007
02.07.2007
02.10.2007
02.01.2008
02.04.2008
02.07.2008
02.10.2008
02.01.2009
02.04.2009
02.07.2009
02.10.2009
02.01.2010
02.04.2010
02.07.2010
02.10.2010
EUR/tonne
OCC
ONP/OMG
But lower RP prices are a positive trigger
Recovered paper prices
-€20?
-€40?
-€60?
-€80??
NSG's 2011 EBITDA to
gain 12% if RP price falls
by EUR 20/tonne (year
average).
We currently do not
model major shifts in the
RP price, which to a large
extent is pulled by strong
demand from China/Asia
Implications from EUR -20/tonne lower RP price:
Exposure: NP RP Chg. cost Revenue Impact EBITDA EBITDA
Long (short) prod. exposure @ €-20/t 2011e (margin 2011e gain
Company (kt/year) (kt/year) (EUR m) (EUR m) impr.) (EUR m)
Holmen 825 -750 -15 1,833 0.8 % 304 5 %
NSG 2,945 -1,300 -26 2,336 1.1 % 213 12 %
SCA 375 -3,800 -76 11,800 0.6 % 1,867 4 %
Stora Enso 2,650 -2,400 -48 10,197 0.5 % 1,451 3 %
UPM 2,090 -3,000 -60 8,900 0.7 % 1,572 4 %

14. 14
Sector update
12 November 2010
PULP AND PAPER SECTOR
Agenda
Case: Newsprint
Other key considerations
Valuation
3Q updates and changes of estimates
Appendix

15. 15
Sector update
12 November 2010
PULP AND PAPER SECTOR
Debt levelsAGENDA
Key considerations
Market update
Valuation and estimates
Appendix
Best:
• Holmen, SCA
Worst:
• Norske Skog
EURm Revenues EBITDA
Company 2009 2010e 2011e 2012e 2009 2010e 2011e 2012e
Holmen 1,946 1,838 1,946 2,035 315 271 305 353
Norske Skog 2,519 2,332 2,412 2,460 270 160 212 265
SCA 11,938 11,834 12,222 12,408 1,771 1,715 1,872 1,876
Stora Enso 8,945 10,211 9,703 9,618 434 1,256 1,392 1,400
UPM 7,719 8,900 8,904 8,923 1,062 1,411 1,572 1,587
percent Revenue growth EBITDA %
Company 2009 2010e 2011e 2012e 2009 2010e 2011e 2012e
Holmen -7 % -6 % 6 % 5 % 16 % 15 % 16 % 17 %
Norske Skog -23 % -7 % 3 % 2 % 11 % 7 % 9 % 11 %
SCA 0 % -1 % 3 % 2 % 15 % 14 % 15 % 15 %
Stora Enso -22 % 14 % -5 % -1 % 5 % 12 % 14 % 15 %
UPM -18 % 15 % 0 % 0 % 14 % 16 % 18 % 18 %
EURm Net interest bearing debt (EoP) NIBD/12m tr. EBITDA
Company 3Q 2010 2010e 2011e 2012e 3Q 2010 2010e 2011e 2012e
Holmen 670 629 523 372 2.3x 2.3x 1.7x 1.1x
Norske Skog 1,101 1,116 982 812 5.4x 7.0x 4.6x 3.1x
SCA 4,288 4,254 3,910 3,550 2.5x 2.5x 2.1x 1.9x
Stora Enso 2,559 2,693 2,256 1,839 2.7x 2.1x 1.6x 1.3x
UPM 3,306 3,554 2,849 2,081 2.5x 2.5x 1.8x 1.3x
NIBD/EBITDA ratios
-
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
Holmen Norske
Skog
SCA Stora Enso UPM
3Q 2010 2010e 2011e 2012e

16. 16
Sector update
12 November 2010
PULP AND PAPER SECTOR
FCF
Best:
• UPM, SCA, Holmen
Worst:
• Stora Enso (NSG FCF
needed for debt)
Last Market NIBD EV Free cash flow *
Company Crncy price cap. (m) (m) (m) 2009 2010e 2011e 2012e
Holmen SEK 213.90 17,967 6,257 24,224 1,430 1,205 2,054 2,545
Norske Skog NOK 11.45 2,175 8,925 11,100 686 -21 402 1,035
SCA SEK 103.20 72,766 40,048 112,815 7,733 7,246 8,405 8,554
Stora Enso EUR 7.37 5,812 2,559 8,371 -133 615 758 792
UPM EUR 12.24 6,364 3,306 9,670 590 937 1,123 1,157
* FCF: 1)
EBITDA, less 2)
Capex, less 3)
net interest costs (see tables below)
FCF / Market cap. FCF / EV
Company 2009 2010e 2011e 2012e 2009 2010e 2011e 2012e
Holmen pct. 8 % 7 % 11 % 14 % 6 % 5 % 8 % 11 %
Norske Skog pct. 32 % -1 % 18 % 48 % 6 % 0 % 4 % 9 %
SCA pct. 11 % 10 % 12 % 12 % 7 % 6 % 7 % 8 %
Stora Enso pct. -2 % 11 % 13 % 14 % -2 % 7 % 9 % 9 %
UPM pct. 9 % 15 % 18 % 18 % 6 % 10 % 12 % 12 %
Compound FCFs FCF / Market cap. FCF / EV
Company 2010e 2011e 2012e 2010e 2011e 2012e
Holmen pct. 7 % 18 % 32 % 5 % 13 % 24 %
Norske Skog pct. -1 % 18 % 65 % 0 % 3 % 13 %
SCA pct. 10 % 22 % 33 % 6 % 14 % 21 %
Stora Enso pct. 11 % 24 % 37 % 7 % 16 % 26 %
UPM pct. 15 % 32 % 51 % 10 % 21 % 33 %
FCF / Market cap.
-10 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
Holmen Norske
Skog
SCA Stora
Enso
UPM
2009 2010e
2011e 2012e
FCF / EV
-2 %
0 %
2 %
4 %
6 %
8 %
10 %
12 %
14 %
Holmen Norske
Skog
SCA Stora
Enso
UPM
2009 2010e 2011e 2012e

17. 17
Sector update
12 November 2010
PULP AND PAPER SECTOR
Per end-3Q 2010
EURm Undrawn Funds* / Maturities Average
Company Cash facilites debts 2010e 2011e 2012e Later maturity
Holmen 12 792 117 % 210 63 44 368 2.4
Norske Skog 552 - 33 % 12 266 483 896 5.1
SCA - 3,306 77 % 1,007 972 175 2,155 2.8
Stora Enso 1,121 1,400 69 % 190 650 140 2,700 5.6
UPM 484 1,200 44 % 180 400 1,030 2,180 5.4
Exchange rates used: EURSEK 9.295, EURNOK 8.078
Assuming even spread of maturities over each calendar year
* Cash + undrawn facilities
Maturities: Holmen and SCA have the most solid balances; Stora Enso
and UPM the longest maturities
x
!b
Best:
• Holmen, Stora Enso
Worst:
• Norske Skog – critical
for 2012
x

18. 18
Sector update
12 November 2010
PULP AND PAPER SECTOR
Pulp price seems to have peaked, at 66% over the trough in April 2009
Lower pulp price will help
Norske Skog through
lower costs on magazine
paper production (not
newsprint).
NBSK Europe is down 2%
from the peak in July
2010, which was 7%
above the previous peak
in June 2008
Pulp markets remain
tight due to the absence
of shipments from Chile
and Indonesia as well as
the gradual improvement
in paper demand and
production in Europe
Stora Enso and UPM are
net producers of pulp,
while the rest are net
buyers, SCA being the
largest
0
200
400
600
800
1,000
1,200
03.12.1996
03.12.1997
03.12.1998
03.12.1999
03.12.2000
03.12.2001
03.12.2002
03.12.2003
03.12.2004
03.12.2005
03.12.2006
03.12.2007
03.12.2008
03.12.2009
USD/tonne
-
10
20
30
40
50
60
days
Inventories (right)
NBSK US
NBSK Europe

19. 19
Sector update
12 November 2010
PULP AND PAPER SECTOR
NP prices are higher in US than in Europe by a margin of 7%
It costs EUR 40-50/tonne
to ship newsprint across
the Atlantic
Jan-Apr 2010 European
shipments are up 4% YoY
Announced NP closures in
Europe for 2010 amount
to 295kt or ~2.3% of
total capacity (~13mt),
while demand is up 4.1%
YoY first nine months.
Lower recovered paper
prices (ONP/OMG) will
help P&Ls (9% of NSG's
costs are RP!)
European shipments YTD
-800
-600
-400
-200
0
200
400
600
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2006 2007 2008 2009 2010 2011
'000tonnes(yearlycapacity)
Volga JSC
UPM
Stora Enso
Solikamsky Pulp & Paper JSC
SCA
Perlen Papier
Papierfabrik Palm
Papeteries de Turckheim
Osnova
Norske Skog Industries
Matussière & Forest
Investlesprom Group
Holmen
Fabryka Papieru Myszków
Burgo Group
Belarus Government
AbitibiBowater
Category Graphic Grade NEWS Region Europe
Sum_Change
Year Q
Parent
European capacity closures 2006-2010
200
300
400
500
600
700
800
06-2001
12-2001
06-2002
12-2002
06-2003
12-2003
06-2004
12-2004
06-2005
12-2005
06-2006
12-2006
06-2007
12-2007
06-2008
12-2008
06-2009
12-2009
06-2010
EUR/tonne
300
350
400
450
500
550
600
650
700
750
800
USD/tonne
NP Europe (EUR)
NP N.Am (EUR)
NP N.Am (USD)
Diff: EUR 31 / ton
(7%)
-8,000
-4,000
0
4,000
8,000
12,000
jmmjsnjmmjsnjmmjsnjmmjsnjmmjsnjmmjsnjmmjsnjmmjs
2003 2004 2005 2006 2007 2008 20092010
'000tonnes
-20 %
-10 %
0 %
10 %
20 %
30 %
growth
YTD Shipments
Acc. YoY Growth

20. 20
Sector update
12 November 2010
PULP AND PAPER SECTOR
-300
-200
-100
0
100
200
300
400
500
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2006 2007 2008 2009 2010
'000tonnes(yearlycapacity)
Vertaris
UPM
Stora Enso
Saber Paper
Papierfabrik Golzern
Papierfabrik am Neckar
Papeteries des Deux-Guiers
Papeteries des Alpes
Norske Skog Industries
Myllykoski
Matussière & Forest
JIP-Papirny
Holmen
Cartiere Paolo Pigna
Burgo Group
Arctic Paper
Category Graphic Grade UM Region Europe
Sum_Change
Year Q
Parent
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2006 2007 2008 2009 2010
'000tonnes(yearlycapacity)
UPM
Stora Enso
Sappi Limited
Perlen Papier
Papierfabrik am Neckar
Myllykoski
Matussière & Forest
Kübler & Niethammer
Investlesprom Group
Holmen
Burgo Group
Category Graphic Grade CM Region Europe
Sum_Change
Year Q
Parent
Magazine paper: Picking up … slowly
Jan-Sept 2010 shipments
• SC: +2.0% YoY
• CM: +8.7% YoY
• CWF: +12.1% YoY
Announced 2010 capacity
growth:
• UM: -1.2% of cap.
• CM: +0.3% of cap.
• CWF: none
Largest exposures:
• UM: Holmen, NSG
• CM: NSG, UPM
• CWF: STERV, UPM
European UM capacity closures 2006-2010 European CM capacity closures 2006-2010
400
500
600
700
800
900
1,000
06-2001
11-2001
04-2002
09-2002
02-2003
07-2003
12-2003
05-2004
10-2004
03-2005
08-2005
01-2006
06-2006
11-2006
04-2007
09-2007
02-2008
07-2008
12-2008
05-2009
10-2009
03-2010
08-2010
EUR/tonne
CWF (heavy, coated mag. paper)
LWC (lightweight coated mag. paper)

21. 21
Sector update
12 November 2010
PULP AND PAPER SECTOR
Packaging prices – peaking out already??
Largest exposures:
• Liner: SCA
• Fluting: only minor
• FBB: STERV, Holmen
0
100
200
300
400
500
600
700
13.01.2004
13.06.2004
13.11.2004
13.04.2005
13.09.2005
13.02.2006
13.07.2006
13.12.2006
13.05.2007
13.10.2007
13.03.2008
13.08.2008
13.01.2009
13.06.2009
13.11.2009
13.04.2010
13.09.2010
EUR/tonne
Testliner P
Kraftliner
RB fluting

22. 22
Sector update
12 November 2010
PULP AND PAPER SECTOR
Agenda
Case: Newsprint
Other key considerations
Valuation
3Q updates and changes of estimates
Appendix

23. 23
Sector update
12 November 2010
PULP AND PAPER SECTOR
STERV and UPM have the lowest EV/EBITDAs in the group*, and are also
the cheapest vs own history
Holmen vs rebased peers from jan 1999
Rebased to price per 15.01.1999
#REF!
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
jan99
jul99
jan00
jul00
jan01
jul01
jan02
jul02
jan03
jul03
jan04
jul04
jan05
jul05
jan06
jul06
jan07
jul07
jan08
jul08
jan09
jul09
jan10
jul10
EV/EBITDA
Holmen Norske Skog SCA Stora Enso UPM
EV/EBITDA observation summary
Last, Average
Company 10.11.10 2 year 5 year
Holmen 7.5x 8.3x 7.9x
Norske Skog 5.7x 6.2x 6.4x
SCA 6.1x 6.4x 6.6x
Stora Enso 5.9x 7.3x 6.9x
UPM 5.9x 6.7x 6.8x
Median 5.9x 6.7x 6.8x
Last vs average
Company 2 year 5 year
Holmen 91 % 95 %
Norske Skog 93 % 89 %
SCA 95 % 92 %
Stora Enso 81 % 86 %
UPM 87 % 86 %
Median 91 % 89 %
* Except Norske Skog

24. 24
Sector update
12 November 2010
PULP AND PAPER SECTOR
Prices as of close 10.11.10 Local Shrs EV / EBITDA EV / EBIT P/E adj. Price / book
Name price (m) 2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012
Diversified Groups
Billerud SE SEK 58.00 106.7 666 4.1x 4.5x 4.3x 6.4x 7.9x 7.6x 8.7x 11.3x 10.9x 1.30x 1.22x 1.15x
Holmen AB SE SEK 213.90 62.1 1,947 9.5x 7.2x 6.9x 18.9x 12.2x 11.1x 25.6x 15.0x 13.8x 1.09x 1.04x 1.01x
International Paper Co. US USD 25.96 437.5 8,290 5.6x 4.7x 4.0x 10.0x 7.5x 5.9x 12.8x 9.4x 8.0x 1.75x 1.51x 1.39x
M-Real Oyj FI EUR 2.57 291.8 864 5.3x 4.8x 4.1x 8.6x 8.0x 6.6x 12.2x 7.9x 7.1x 0.86x 0.78x 0.71x
Mondi PLC UK GBP 510 367.2 2,189 4.2x 3.4x 2.8x 7.5x 5.5x 4.4x 14.2x 9.9x 8.9x 1.20x 1.12x 1.03x
Nippon Paper Group Inc. JP JPY 2,017 116.3 2,068 8.6x 8.4x 8.4x 26.4x 23.0x 22.4x 14.0x 11.7x 10.9x 0.52x 0.51x 0.50x
Oji Paper Co. Ltd. JP JPY 375 1,064.4 3,520 7.8x 7.5x 7.4x 16.3x 16.1x 13.8x 11.5x 10.6x 8.8x 0.79x 0.75x 0.70x
Stora Enso Oyj FI EUR 7.37 612.4 5,837 6.6x 5.8x 5.3x 11.1x 9.2x 8.3x 10.1x 9.6x 9.1x 1.05x 0.99x 0.93x
UPM FI EUR 12.24 520.0 6,364 6.7x 5.7x 5.1x 13.8x 11.2x 9.7x 12.9x 11.8x 10.5x 0.93x 0.89x 0.85x
Plantations, Wood & Pulp
CMPC CL CLP 27,798 220.0 9,284 13.5x 12.5x 11.5x 20.9x 18.0x 16.2x 23.9x 21.8x 19.7x 1.70x 1.59x 1.52x
Fibria Celulose S.A. ADS BR USD 17.93 390.2 5,384 7.9x 7.6x 7.0x 15.9x 13.5x 13.2x 23.5x 27.8x 17.7x 0.96x 0.90x 0.87x
Rottneros AB SE SEK 4.98 153.4 82 3.0x 3.6x 7.6x 5.2x 8.0x 76.5x 6.1x 10.8x 32.1x 0.63x 0.62x 0.67x
Weyerhaeuser Co. US USD 17.63 535.9 6,898 13.1x 10.5x 7.8x 25.7x 17.7x 11.7x 44.1x 35.3x 16.6x 1.23x 2.04x 1.13x
Graphic Paper
Boise Inc. US USD 7.94 84.8 491 4.2x 3.6x 3.6x 7.2x 6.0x 6.1x 8.6x 7.2x 7.0x 0.98x 0.89x 0.78x
Domtar Corp. US USD 82.00 41.6 2,490 3.7x 3.8x 3.0x 5.8x 6.6x 5.2x 7.2x 10.3x 10.8x 1.29x 1.13x 1.01x
Norske Skog NO NOK 11.45 189.9 269 9.5x 5.3x 4.3x n.a. n.a. 36.7x n.a. n.a. n.a. 0.22x 0.24x 0.25x
Sappi Ltd. SA ZAR 3,767 537.1 2,142 6.9x 5.1x 4.2x 15.3x 9.7x 6.9x 58.4x 14.7x 9.1x 1.51x 1.35x 1.18x
Packaging
Cascades Inc. CA CAD 6.84 96.6 480 5.3x 4.5x n.a. 11.4x 8.2x n.a. 8.9x 7.5x 7.1x 0.52x 0.48x 0.45x
Lee & Man Paper Manuf. HK HKD 6.35 4,556.3 2,725 12.0x 10.3x 8.7x 14.4x 11.7x 9.7x 14.9x 11.8x 9.5x 2.49x 2.22x 1.96x
Mayr-Melnhof Karton AG AT EUR 77.00 20.0 1,540 5.3x 4.6x 4.1x 8.1x 6.9x 6.2x 14.1x 12.6x 12.0x 1.63x 1.53x 1.39x
MeadWestvaco Corp. US USD 26.43 168.3 3,246 6.2x 5.5x 5.4x 11.4x 9.6x 9.2x 17.9x 14.7x 13.2x 1.39x 1.31x 1.25x
Packaging Corp of Am. US HKD 12.60 4,654.1 5,523 16.0x 12.4x 9.5x 20.7x 15.3x 11.2x 22.5x 16.3x 12.5x 2.60x 2.31x 2.01x
DS Smith PLC UK USD 25.38 102.6 1,900 6.8x 5.4x 4.7x 10.2x 7.5x 6.4x 15.6x 11.8x 9.7x 2.66x 2.10x 1.64x
Smurfit Kappa Group PLC EI GBP 182.70 433.4 926 5.9x 5.0x 4.5x 9.5x 7.8x 6.9x 11.7x 9.0x 8.0x 1.40x 1.27x 1.15x
Nine Dragons Paper HldgsHK EUR 7.78 218.7 1,701 5.3x 4.0x 3.4x 9.6x 6.2x 5.3x 14.4x 5.2x 4.2x 0.99x 0.85x 0.75x
Temple-Inland Inc. US USD 20.89 107.8 1,644 7.0x 4.5x 3.9x 13.4x 6.6x 5.2x 23.2x 11.6x 8.2x 2.59x 2.10x 2.40x
Tissue & Other Paper
Kimberly-Clark Corp. US USD 61.86 407.8 18,415 8.1x 7.7x 7.3x 10.4x 9.9x 9.2x 13.5x 12.3x 11.4x 4.74x 4.42x 4.17x
Procter & Gamble Co. US USD 64.57 2,799.2 131,944 10.7x 10.2x 9.6x 12.8x 12.0x 11.3x 15.7x 16.1x 14.8x 3.20x 3.06x 2.90x
SCA SE SEK 103.20 603.6 7,840 7.0x 6.0x 5.5x 11.6x 9.4x 8.4x 11.7x 9.9x 9.0x 1.03x 0.97x 0.91x
Schweitzer-Mauduit Intern US USD 65.06 18.0 856 7.6x 6.5x 4.4x 10.2x 8.5x 5.5x 15.2x 13.3x 8.8x 2.48x n.a. n.a.
Wausau Paper Corp. US USD 8.49 49.0 304 n.a. n.a. n.a. n.a. n.a. n.a. 19.3x 14.2x 10.6x 1.74x n.a. n.a.
Median, Diversified Groups 2,189 6.6x 5.7x 5.1x 11.1x 9.2x 8.3x 12.8x 10.6x 9.1x 1.05x 0.99x 0.93x
Median, Plantations, Wood & Pulp 6,141 10.5x 9.0x 7.7x 18.4x 15.6x 14.7x 23.7x 24.8x 18.7x 1.10x 1.25x 1.00x
Median, Graphic Paper 1,316 5.5x 4.4x 3.9x 7.2x 6.6x 6.5x 8.6x 10.3x 9.1x 1.13x 1.01x 0.90x
Median, Packaging 1,701 6.2x 5.0x 4.6x 11.4x 7.8x 6.6x 14.9x 11.8x 9.5x 1.63x 1.53x 1.39x
Median, Tissue & Other Paper 7,840 7.8x 7.1x 6.4x 11.0x 9.6x 8.8x 15.2x 13.3x 10.6x 2.48x 3.06x 2.90x
Source: Factset, DnB NOR Markets estimates
Data as of 10.11.2010
Coun-
try Curr.
MCap.
(EURm)
Trading multiples (consensus estimates)

25. 25
Sector update
12 November 2010
PULP AND PAPER SECTOR
Consensus EPS revisions
Price MCap. # of Share Target prices 2010 EPS 2011 EPS
(local (EUR ana- change (local curr.) Rev's since… Rev's since…
Name Curr. curr.) mill.) lysts 1 w 1 m 6 m Min Mean Max Min Mean Max 6 m 1 m 1 w Min Mean Max 6 m 1 m 1 w
Diversified Groups
Billerud SEK 58.00 666 8 4 % 13 % 16 % 55 61 65 6.35 6.65 6.99 17% 13% - 4.18 5.27 6.78 8% 10% -
Holmen AB SEK 213.90 1,947 15 0 % 2 % 20 % 150 218 250 6.87 8.61 10.40 28% 8% - 11.23 14.69 19.45 32% 9% 2%
International Paper Co. USD 25.96 8,290 14 3 % 17 % 5 % 27 33 44 1.92 2.02 2.06 18% 8% - 1.05 2.61 3.37 13% 7% -
M real EUR 2.57 864 18 8 % -11 % 0 % 2.50 3.34 4.50 0.14 0.22 0.28 20% -9% - 0.21 0.32 0.45 83% -4% -
Mondi GBP 510 2,189 7 -2 % -5 % 19 % 544 606 681 34.19 37.54 42.74 31% 1% -2% 46.10 53.25 67.53 24% -2% -2%
Nippon Paper JPY 2,017 2,068 6 1 % -8 % -25 % 2,100 2,463 2,850 118.3 148.3 181.0 -12% -14% - 114.8 170.2 224.0 -8% -7% -
Oji Paper JPY 375 3,520 5 2 % -3 % -15 % 430 498 600 29.30 31.73 33.40 7% -2% -1% 29.74 34.85 38.00 2% -4% -0%
Stora Enso EUR 7.37 5,837 21 2 % -1 % 29 % 6.0 8.3 9.4 0.65 0.73 0.82 83% 18% - 0.56 0.77 1.02 57% 13% 0%
UPM EUR 12.24 6,364 24 1 % -5 % 19 % 9.0 13.5 15.3 0.70 0.93 1.10 pos. 7% - 0.76 1.04 1.42 49% -3% -
Plantations, Wood & Pulp
CMPC CLP 27,798 9,284 5 3 % 12 % 26 % 22.1k 25.1k 28.1k 967 1,168 1,375 6% -0% -1% 1,167 1,336 1,620 -17% -6% -1%
Fibria Celulose USD 17.93 5,384 12 -5 % 3 % -4 % 12 19 23 0.26 0.77 1.11 -32% -10% - 0.35 0.75 1.31 -48% -8% -
Rottneros AB SEK 4.98 82 2 8 % -5 % -28 % 5.40 5.73 6.05 0.70 0.81 0.92 -11% 3% - 0.30 0.46 0.62 -19% -14% -
Weyerhaeuser Co. (US ListiUSD 17.63 6,898 16 7 % 11 % -6 % 14 20 33 0.20 0.40 0.56 pos. 90% 3% 0.25 0.59 1.13 9% -17% -
Graphic Paper
Boise Inc. USD 7.94 491 4 3 % 22 % 24 % 8.5 9.4 10.0 0.87 0.91 0.94 15% 21% - 1.05 1.12 1.20 6% 6% -
Domtar USD 82.00 2,490 15 4 % 21 % 23 % 60 94 125 9.63 11.32 11.85 75% 23% - 3.45 7.94 11.60 50% 28% -
Norske Skog NOK 11.45 269 18 -1 % -7 % 35 % 6.0 12.0 20.0 -13.24 -7.20 -2.54 neg. neg. - -5.58 -2.74 -0.50 pos. pos. pos.
Sappi ZAR 3,767 2,142 10 12 % 10 % 28 % 2,807 3,662 4,452 26 63 105 pos. -1% -2% 127 266 424 14% 4% 3%
Packaging
Cascades Inc. CAD 6.84 480 8 3 % 7 % -8 % 9 10 13 0.51 0.77 1.13 2% - - 0.51 0.91 1.24 -16% - -
Lee & Man Paper ManufactuHKD 6.35 2,725 11 -8 % -8 % -1 % 5 8 10 0.39 0.44 0.57 -6% -7% -6% 0.46 0.53 0.61 0% -3% -1%
Mayr-Melnhof Karton AG (A EUR 77.00 1,540 8 -2 % 0 % 10 % 76 85 103 4.97 5.40 5.69 -2% - - 5.63 6.13 6.81 2% - -
MeadWestvaco Corp. USD 26.43 3,246 12 2 % 7 % 4 % 28 30 32 1.39 1.48 1.57 7% 5% - 1.50 1.77 1.98 18% 3% -
Nine Dragons Paper HoldingHKD 12.60 5,523 12 -4 % -8 % 3 % 9 16 20 0.55 0.57 0.61 -7% 0% 1% 0.71 0.77 0.83 -4% 0% 1%
Packaging Corp. of AmericaUSD 25.38 1,900 11 2 % 11 % 12 % 26 30 40 1.59 1.63 1.66 11% 2% - 1.95 2.17 2.75 13% 3% -
DS Smith PLC GBP 182.70 926 5 3 % 13 % 44 % 169 185 200 15.03 15.88 17.32 14% -0% - 20.00 20.27 20.58 12% -0% -
Smurfit Kappa Group PLC (IEUR 7.78 1,701 8 -4 % 3 % 8 % 9 10 11 0.26 0.53 0.83 31% -5% -5% 1.15 1.46 1.69 17% - -2%
Temple-Inland Inc. USD 20.89 1,644 10 1 % 14 % -2 % 23 26 33 0.85 0.90 0.93 -28% -8% - 1.35 1.79 2.30 -11% -9% -
Tissue & Other Paper
Kimberly-Clark Corp. USD 61.86 18,415 15 -2 % -7 % -2 % 60 67 74 4.36 4.55 4.78 -1% -2% - 4.90 5.06 5.27 -4% -4% -
Procter & Gamble Co. USD 64.57 131,944 25 0 % 4 % 3 % 62 71 76 4.11 4.11 4.11 -0% - - 3.95 3.99 4.04 -1% 1% -
SCA SEK 103.20 7,840 19 1 % 1 % 14 % 107 120 135 7.58 8.72 9.35 8% 4% - 8.77 10.43 11.48 2% -2% -
Schweitzer-Mauduit InternatUSD 65.06 856 5 2 % 7 % 14 % 65 78 96 4.25 4.29 4.35 -7% - - 4.75 5.22 6.00 -4% - -
Wausau Paper Corp. USD 8.49 304 4 2 % -1 % -4 % 9 11 13 0.42 0.43 0.44 -23% -9% - 0.55 0.60 0.65 -17% -12% -
Median, Diversified Groups 2,189 14 2 % -3 % 16 % 19% 7% - 24% -2% -
Median, Plantations, Wood & Pulp 6,141 9 5 % 7 % -5 % -11% 1% - -18% -11% -
Median, Graphic Paper 1,316 13 4 % 15 % 26 % 45% 21% - 14% 6% -
Median, Packaging 1,701 10 1 % 7 % 4 % 2% - - 2% - -
Median, Tissue & Other Paper 7,840 15 1 % 1 % 3 % -1% - - -4% -2% -
Source: Factset
Data as of 10.11.2010

26. 26
Sector update
12 November 2010
PULP AND PAPER SECTOR
Trading multiples (DnB NOR Markets estimates)
Prices as of close 10.11.10 Local Shrs EV / EBITDA EV / EBIT P/E adj. Price / book
Name Rec. price (m) 2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012
Holmen SELL
…on last price SEK 213.90 62.1 1,947 7.6x 6.4x 5.1x 14.6x 12.5x 8.7x 25.4x 18.6x 13.4x 0.91x 0.90x 0.86x
...on DNM target SEK 190.00 1,729 7.0x 5.9x 4.6x 13.4x 11.5x 7.9x 22.6x 16.5x 11.9x 0.82x 0.81x 0.78x
Norske Skog SELL
…on last price NOK 11.45 189.9 269 8.6x 5.9x 4.1x n.m. n.m. 27.9x n.m. n.m. 7.6x 0.28x 0.31x 0.31x
...on DNM target NOK 6.00 141 7.8x 5.3x 3.6x n.m. n.m. 24.6x n.m. n.m. 4.0x 0.16x 0.18x 0.17x
SCA HOLD
…on last price SEK 103.20 603.6 7,840 6.4x 5.7x 5.5x 11.9x 9.1x 9.0x 11.3x 10.2x 10.9x 0.90x 0.85x 0.82x
...on DNM target SEK 110.00 8,356 6.6x 5.9x 5.7x 12.4x 9.5x 9.4x 12.0x 10.9x 11.6x 0.96x 0.91x 0.87x
Stora Enso BUY
…on last price EUR 7.37 612.4 5,837 5.7x 4.9x 4.5x 9.9x 8.1x 7.5x 9.1x 9.7x 9.3x 1.09x 1.02x 0.96x
...on DNM target EUR 9.00 7,128 6.5x 5.6x 5.3x 11.3x 9.3x 8.7x 11.1x 11.8x 11.4x 1.26x 1.19x 1.12x
UPM BUY
…on last price EUR 12.24 520.0 6,364 7.0x 5.9x 5.3x 14.0x 11.3x 10.0x 14.4x 12.1x 11.3x 1.10x 1.05x 1.00x
...on DNM target EUR 15.00 7,800 8.0x 6.8x 6.2x 16.0x 13.1x 11.7x 17.7x 14.8x 13.9x 1.30x 1.26x 1.20x
Median on last price 7.1x 5.7x 4.9x 12.6x 10.3x 12.6x 15.1x 12.6x 10.5x 0.85x 0.83x 0.79x
Median on DNM target 7.2x 5.9x 5.1x 13.3x 10.9x 12.5x 15.8x 13.5x 10.5x 0.90x 0.87x 0.83x
MCap.
(EURm)Curr.

27. 27
Sector update
12 November 2010
PULP AND PAPER SECTOR
Agenda
Case: Newsprint
Key considerations
Valuation
3Q updates and changes of estimates
Appendix

28. 28
Sector update
12 November 2010
PULP AND PAPER SECTOR
Changes to estimates and recommendations
Main changes
• Norske Skog PT down
from NOK 8 to NOK 7
• Stora Enso PT down
from EUR 5.00 to EUR
4.60, recommendation
changed from Sell to
Hold
Revenue
(million) New estimates Old estimates Change
Company Curr. 2010 2011 2012 2010 2011 2012 2010 2011 2012
Holmen SEK 17,067 18,067 18,894 17,200 18,317 19,199 -133 -250 -305
Norske Skog NOK 18,848 19,493 19,884 18,382 18,491 18,777 466 1,002 1,107
SCA NOK 109,891 113,489 115,217 110,993 114,207 115,984 -1,102 -718 -767
Stora Enso € 10,211 9,703 9,618 9,106 8,647 8,536 1,105 1,056 1,081
UPM € 8,900 8,904 8,923 8,791 8,766 8,787 109 138 136
EBITDA
(million) New estimates Old estimates Change
Company Curr. 2010 2011 2012 2010 2011 2012 2010 2011 2012
Holmen SEK 2,516 2,830 3,283 2,395 2,825 3,146 121 5 137
Norske Skog NOK 1,295 1,716 2,141 1,461 1,801 2,227 -166 -85 -86
SCA SEK 15,926 17,385 17,422 15,330 17,119 17,226 595 266 195
Stora Enso € 1,256 1,392 1,400 808 992 980 447 400 420
UPM € 1,411 1,572 1,587 1,268 1,357 1,792 143 215 -205
EPS adj.
New estimates Old estimates Change
Company Curr. 2010 2011 2012 2010 2011 2012 2010 2011 2012
Holmen SEK 8.42 11.50 15.98 7.58 11.28 14.66 0.84 0.22 1.32
Norske Skog NOK -3.21 -3.53 1.50 -2.54 -2.99 1.86 -0.67 -0.54 -0.36
SCA SEK 9.16 10.11 9.45 8.19 9.48 9.17 0.97 0.63 0.28
Stora Enso € 0.81 0.76 0.79 0.37 0.40 0.40 0.44 0.36 0.39
UPM € 0.85 1.01 1.08 0.70 0.81 1.34 0.15 0.20 -0.26
Recommendation changes
New Old Change
Company Rec. PT Rec. PT Rec. PT
Holmen SELL 190 HOLD 185 Downgrade + 5.00
Norske Skog SELL 6.00 SELL 6.00 - -
SCA HOLD 110 BUY 110 Downgrade -
Stora Enso BUY 9.00 BUY 7.00 - + 2.00
UPM BUY 15.00 BUY 13.00 - + 2.00

29. 29
Sector update
12 November 2010
PULP AND PAPER SECTOR
Changes to estimates
Main changes
• Only minor adjustments
PAPER SECTOR - HOLMEN
New estimates Old estimates Change
SEKm 2010E 2011E 2012E 2010E 2011E 2012E 2010E 2011E 2012E
Revenues 17,067 18,067 18,894 17,200 18,317 19,199 -133 -250 -305
EBIT (ex ass.co's) 1,314 1,449 1,923 1,125 1,438 1,755 189 12 167
Pre-tax profit 1,129 1,334 1,895 933 1,298 1,704 195 36 191
Net profit 758 974 1,371 637 948 1,231 121 26 140
EBITDA margin 14.7% 15.7% 17.4% 13.9% 15.4% 16.4% -1 %p -0 %p -1 %p
EBIT margin 7.7% 8.0% 10.2% 6.5% 7.8% 9.1% -1 %p -0 %p -1 %p
Pre-tax margin 6.6% 7.4% 10.0% 5.4% 7.1% 8.9% -1 %p -0 %p -1 %p
EPS 9.02 11.59 16.33 7.58 11.28 14.66 1.44 0.31 1.67
EPS adjusted 8.42 11.50 15.98 7.54 11.23 14.61 0.88 0.26 1.37
Revenue by segment
Holmen Paper 8,004 8,204 8,292 8,070 8,153 8,290 -66 51 1
Iggesund Paperboard 4,766 4,649 4,850 4,686 4,693 4,896 81 -44 -47
Holmen Skog 5,400 5,553 5,940 5,309 5,553 5,940 92 - -
Holmen Energi 1,860 1,864 1,930 1,864 1,928 1,995 -3 -64 -65
EBIT by segment 11.11.10 12.08.10
Holmen Paper -560 -336 -150 -606 -436 -409 47 99 259
Iggesund Paperboard 793 710 800 699 775 867 94 -65 -67
Holmen Skog 796 788 844 759 787 843 36 1 1
Holmen Energi 489 470 508 477 503 542 12 -33 -34
EBIT margin by segment
Holmen Paper -7% -4% -2% -8% -5% -5% 1 %p 1 %p 3 %p
Iggesund Paperboard 17% 15% 16% 15% 17% 18% 2 %p -1 %p -1 %p
Holmen Skog 15% 14% 14% 14% 14% 14% 0 %p 0 %p 0 %p
Holmen Energi 26% 25% 26% 26% 26% 27% 1 %p -1 %p -1 %p
Source: DnB NOR Markets

30. 30
Sector update
12 November 2010
PULP AND PAPER SECTOR
Changes to estimates: 2011 EBITDA up 10%, 2012 up 7%
PAPER SECTOR - NORSKE SKOG
New estimates Old estimates Change
NOKm 2010E 2011E 2012E 2010E 2011E 2012E 2010E 2011E 2012E
Revenues 18,848 19,493 19,884 18,382 18,491 18,777 467 1,002 1,107
EBITDA 1,295 1,716 2,141 1,461 1,801 2,227 -166 -85 -86
EBIT -3,618 -425 313 -3,245 -344 398 -374 -81 -85
Pre-tax profit -4,542 -1,189 -232 -4,412 -1,043 -122 -130 -146 -111
Net profit -3,589 -805 165 -3,496 -709 227 -93 -96 -62
EBITDA margin 6.9% 8.8% 10.8% 7.9% 9.7% 11.9% 1 %p 1 %p 1 %p
EBIT margin -19.2% -2.2% 1.6% -17.7% -1.9% 2.1% 2 %p 0 %p 1 %p
Pre-tax margin -24.1% -6.1% -1.2% -24.0% -5.6% -0.6% 0 %p 0 %p 1 %p
EPS -18.89 -4.24 0.87 -18.41 -3.73 1.20 -0.49 -0.50 -0.33
EPS adjusted -3.21 -3.53 1.50 -2.54 -2.99 1.86 -0.67 -0.54 -0.36
Revenue by segment
Newsprint Europe 5,590 5,921 6,107 5,469 5,521 5,749 121 400 358
Newsprint Ex-Europe 5,570 5,657 5,487 5,338 5,357 5,196 232 300 291
Magazine 6,218 6,045 6,306 6,041 5,849 6,106 177 196 200
EBIT by segment 40493 40396
Newsprint Europe -633 -452 -457 -515 -386 -362 -117 -66 -95
Newsprint Ex-Europe 248 455 638 127 387 595 122 68 43
Magazine -295 -144 221 -127 -69 288 -168 -75 -67
EBIT margin by segment
Newsprint Europe -11.3% -7.6% -7.5% -9.4% -7.0% -6.3% -2 %p -1 %p -1 %p
Newsprint Ex-Europe 4.5% 8.1% 11.6% 2.4% 7.2% 11.4% 2 %p 1 %p 0 %p
Magazine -4.7% -2.4% 3.5% -2.1% -1.2% 4.7% -3 %p -1 %p -1 %p
Key figures 40493 40032
NIBD -9,022 -7,936 -6,563 -8,479 -7,242 -5,793 -544 -694 -770
Net interest cost -789 -768 -550 -773 -714 -535 -16 -54 -15
Capex (net) -528 -546 -557 -515 -518 -526 -13 -28 -31
Change, W orking Cap. 381 -35 -62 -40 -75 -61 421 40 -1
Source: DnB NOR Markets

31. 31
Sector update
12 November 2010
PULP AND PAPER SECTOR
Changes to estimates: 2011 and 2012 EBIT up 3%
PAPER SECTOR - SCA
New estimates Old estimates Change
SEKm 2010E 2011E 2012E 2010E 2011E 2012E 2010E 2011E 2012E
Revenues 109,891 113,489 115,217 110,993 114,207 115,984 -1,102 -718 -767
EBITDA 15,926 17,385 17,422 15,440 17,119 17,226 486 266 195
EBIT 8,550 10,779 10,601 8,100 10,513 10,406 450 266 195
Pre-tax profit 7,538 9,824 9,236 6,895 9,323 9,076 643 501 160
Net profit 5,500 7,100 6,656 4,945 6,701 6,506 555 398 151
EBIT margin 7.8% 9.5% 9.2% 7.3% 9.2% 9.0% 0 %p 0 %p 0 %p
Pre-tax margin 6.9% 8.7% 8.0% 6.2% 8.2% 7.8% 1 %p 0 %p 0 %p
EPS 7.83 10.11 9.48 7.04 9.54 9.26 0.79 0.57 0.21
EPS adjusted 9.16 10.11 9.45 8.19 9.48 9.17 0.96 0.63 0.28
Revenue by segment
Personal Care 25,365 26,887 27,424 26,311 27,890 28,447 -946 -1,003 -1,023
Tissue 40,312 42,086 42,928 41,461 43,285 44,151 -1,149 -1,199 -1,223
Packaging 29,712 30,694 31,645 28,540 28,704 29,593 1,172 1,990 2,052
Forest Products 16,854 16,185 15,765 16,433 16,273 15,849 421 -88 -85
EBIT by segment 11.11.10 27.04.10
Personal Care 2,974 3,509 3,563 3,144 3,777 3,788 -170 -269 -224
Tissue 3,098 3,221 3,193 3,200 3,933 3,775 -102 -712 -582
Packaging 1,505 2,277 2,342 1,040 1,571 1,708 465 706 634
Forest Products 2,383 2,288 2,028 1,922 1,721 1,623 461 567 406
Publication Products -101 335 275 60 396 343 -160 -61 -68
Pulp, Timber & Wood 2,484 1,953 1,753 1,863 1,325 1,280 621 628 474
Other -1,410 -515 -525 -1,205 -489 -486 -205 -27 -38
EBIT margin by segment
Personal Care 11.7% 13.0% 13.0% 11.9% 13.5% 13.3% -0 %p -0 %p -0 %p
Tissue 7.7% 7.7% 7.4% 7.7% 9.1% 8.5% -0 %p -1 %p -1 %p
Packaging 5.1% 7.4% 7.4% 3.6% 5.5% 5.8% 1 %p 2 %p 2 %p
Forest Products 14.1% 14.1% 12.9% 11.7% 10.6% 10.2% 2 %p 4 %p 3 %p
Source: DnB NOR Markets

32. 32
Sector update
12 November 2010
PULP AND PAPER SECTOR
Changes to estimates
PAPER SECTOR - STORA ENSO
New estimates Old estimates Change
EURm 2010E 2011E 2012E 2010E 2011E 2012E 2010E 2011E 2012E
Revenues 10,211 9,703 9,618 9,106 8,647 8,536 1,105 1,056 1,081
EBITDA 1,256 1,392 1,400 808 992 980 447 400 420
EBIT (ex NRI) 711 889 900 302 495 490 408 394 410
EBIT 728 837 848 301 419 414 426 418 435
Pre-tax profit 701 767 800 262 331 334 439 436 466
Net profit 571 549 573 205 238 240 366 312 333
Net profit adj. 640 601 624 295 314 316 345 287 308
EBITDA margin 12.3% 14.3% 14.6% 8.9% 11.5% 11.5% 3 %p 3 %p 3 %p
EBIT ex NRI margin 7.0% 9.2% 9.4% 3.3% 5.7% 5.7% 4 %p 3 %p 4 %p
Pre-tax margin 6.9% 7.9% 8.3% 2.9% 3.8% 3.9% 4 %p 4 %p 4 %p
EPS 0.73 0.70 0.73 0.26 0.30 0.31 0.47 0.40 0.43
EPS adjusted 0.81 0.76 0.79 0.37 0.40 0.40 0.44 0.36 0.39
Dividend per share 0.20 0.20 0.20 0.20 0.20 0.09 - - 0.11
NRI -69 -52 -52 -90 -76 -76 21 24 24
Revenue by segment
Newsprint and Book Paper 1,238 1,307 1,281 1,048 1,043 1,022 190 264 259
Magazine Paper 2,042 2,092 2,118 1,816 1,850 1,873 226 242 245
Fine Paper 2,147 2,205 2,236 1,689 1,748 1,773 458 457 464
Consumer Board 2,270 2,330 2,376 2,250 2,356 2,403 20 -27 -27
Industrial Packaging 948 971 991 861 908 927 87 63 64
EBIT by segment (ex NRI) 11.11.10 21.05.10
Newsprint and Book Paper -2 60 25 -68 -83 -113 66 143 138
Magazine Paper 117 210 258 74 148 169 43 62 89
Fine Paper 234 248 301 48 84 105 186 165 196
Consumer Board 290 267 236 334 425 397 -44 -157 -161
Industrial Packaging 64 66 71 24 85 115 39 -18 -45
EBIT margin by segment
Newsprint and Book Paper -0.2% 4.6% 2.0% -6.5% -8.0% -11.1% 6 %p 13 %p 13 %p
Magazine Paper 5.7% 10.1% 12.2% 4.1% 8.0% 9.0% 2 %p 2 %p 3 %p
Fine Paper 10.9% 11.3% 13.4% 2.8% 4.8% 5.9% 8 %p 6 %p 8 %p
Consumer Board 12.8% 11.5% 9.9% 14.8% 18.0% 16.5% -2 %p -7 %p -7 %p
Industrial Packaging 6.7% 6.8% 7.1% 2.8% 9.3% 12.4% 4 %p -2 %p -5 %p
Source: DnB NOR Markets

33. 33
Sector update
12 November 2010
PULP AND PAPER SECTOR
Changes to estimates
PAPER SECTOR - UPM
New estimates Old estimates Change
EURm 2010E 2011E 2012E 2010E 2011E 2012E 2010E 2011E 2012E
Revenues 8,900 8,904 8,923 8,791 8,766 8,787 108 139 135
EBITDA 1,411 1,572 1,587 1,268 1,357 1,792 143 214 -205
EBIT 710 813 845 613 689 1,051 97 124 -206
Pre-tax profit 610 742 804 539 638 998 71 105 -194
Net profit 518 538 583 440 459 719 78 79 -136
EBITDA margin 15.9% 17.6% 17.8% 14.4% 15.5% 20.4% -1 %p -2 %p 3 %p
EBIT margin 8.0% 9.1% 9.5% 7.0% 7.9% 12.0% -1 %p -1 %p 2 %p
Pre-tax margin 6.9% 8.3% 9.0% 6.1% 7.3% 11.4% -1 %p -1 %p 2 %p
EPS 1.00 1.04 1.12 0.85 0.88 1.38 0.15 0.15 -0.26
EPS adjusted 0.85 1.01 1.08 0.70 0.81 1.34 0.15 0.21 -0.26
Dividend per share 0.50 0.50 0.41 0.50 0.50 0.41 - - -0.00
Revenue by segment
Energy 545 535 664 518 506 526 27 28 138
Pulp 1,743 1,178 995 1,598 1,140 1,153 145 38 -158
Forest and Timber 1,502 1,628 1,673 1,465 1,541 1,545 37 88 128
Paper 6,289 6,743 6,745 6,084 6,342 6,344 205 401 401
Label 1,114 1,157 1,174 1,089 1,096 1,069 25 61 105
EBIT by segment 11.11.10 04.08.10
Energy 215 195 276 190 177 184 25 18 92
Pulp 592 269 186 449 270 271 144 -1 -85
Forest and Timber 183 177 212 139 129 130 44 48 82
Paper -255 91 119 -155 100 12 -100 -9 107
Label 108 140 124 87 62 28 21 79 96
EBIT margin by segment
Energy 39.5% 36.5% 41.6% 36.7% 34.9% 35.0% 3 %p 2 %p 7 %p
Pulp 34.0% 22.9% 18.7% 28.1% 23.7% 23.5% 6 %p -1 %p -5 %p
Forest and Timber 12.2% 10.9% 12.7% 9.5% 8.4% 8.4% 3 %p 2 %p 4 %p
Paper -4.1% 1.4% 1.8% -2.5% 1.6% 0.2% -2 %p -0 %p 2 %p
Label 9.7% 12.1% 10.6% 8.0% 5.6% 2.7% 2 %p 7 %p 8 %p
Source: DnB NOR Markets

34. 34
Sector update
12 November 2010
PULP AND PAPER SECTOR
Agenda
Case: Newsprint
Key considerations
Valuation
3Q updates and changes of estimates
Appendix

35. 35
Sector update
12 November 2010
PULP AND PAPER SECTOR
P/B: Except NSG, the shares trade very close around 0.90-1.05x
Holmen vs rebased peers from nov 1994
Rebased to price per 18.11.1994
#REF!
-
0.25x
0.50x
0.75x
1.00x
1.25x
1.50x
1.75x
2.00x
nov94
nov95
nov96
nov97
nov98
nov99
nov00
nov01
nov02
nov03
nov04
nov05
nov06
nov07
nov08
nov09
P/B
Holmen Norske Skog SCA Stora Enso UPM
Average
Company
Last,
10.11.10 1 year
nov 94 -
nov 10
Holmen 1.05x 0.98x 1.17x
Norske Skog 0.24x 0.18x 0.77x
SCA 0.98x 0.97x 1.17x
Stora Enso 0.99x 0.88x 1.05x
UPM 0.90x 0.81x 1.10x
Average 0.83x 0.76x 1.05x
Last vs average
Company 1 year
nov 94 -
nov 10
Holmen 107 % 90 %
Norske Skog 134 % 31 %
SCA 101 % 84 %
Stora Enso 114 % 95 %
UPM 111 % 81 %
Average 113 % 76 %

36. 36
Sector update
12 November 2010
PULP AND PAPER SECTOR
5-yr CDS: NSG still considered most risky
0
200
400
600
800
1,000
1,200
1,400
1,600
12-2006
03-2007
06-2007
09-2007
12-2007
03-2008
06-2008
09-2008
12-2008
03-2009
06-2009
09-2009
12-2009
03-2010
06-2010
09-2010
basispoints
NSG
Stora Enso
UPM
SCA
M-real
Last, Average
Comp. 05.11.10 1 yr 5 yr
M-real 451 733 1,129
NSG 790 1,065 712
SCA 72 84 86
STERV 257 321 250
UPM 257 280 209

37. 37
Sector update
12 November 2010
PULP AND PAPER SECTOR
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