stora enso cmd - presentation by juan bueno, evp, biomaterials

Growth

Engine Juan Bueno, EVP, Biomaterials

Biomaterials

March 22, 2012 Juan Bueno 2

Why?


Population Growth

Growing Environmental Pressures

Doing more with less


5

Sustainability

Pulp market outlook


Global Market Pulp demand by end use: 46mt


Source: Hawkins Wright, 2010 figures


What does that mean in terms of market pulp?

8

63

46

Paper US-WE-JP

7

2010 2025 Integrated Capacity

9

Fluff

2

Packaging

8

Tissue

15

Paper

Growth Countries

9

46

63

2

Ok. Tissue is growing. But where?


Forecast tissue demand (M Tons)

While online advertising in China is growing, there is still

room for growth in all types of media, including commercial

print


Advertising revenue is

~450€/capita in US

A large growth potential remains for advertising spend,

including direct mail

~75% of total population

Paper consumption clearly declining in Western

Europe and North America, but what about China?


Some growth expected,

but China will leapfrog

to Digital Life.

China household

broadband penetration

Strongest growth in demand of fibre-based

consumer board will be in Asia

12 12

2010-2020

Million tonnes

Source: China Ministry Of Industry

and Information Technology;

Chinese Telecom company

publications; PwC ; Bain analysis

Asia

CAGR

6.9 %

Eastern

Europe

CAGR

4.6 %

Western

Europe

CAGR

1.4 %

Middle East &

Africa

CAGR

3.3 %

South

America

CAGR

3.5 %

North

America

CAGR

0.2 %

Fibre-based

consumer board

consumption

CAGR

China 9%

Pakistan 9%

India 6%

Middle East 4%

March 22, 2012 Juan Bueno

Go where the growth is


BA Biomaterials


BA Biomaterials


BA Biomaterials Capacities Ktons

Sunila 370

Enocel 480

Skutskär 540

Total Own Mills 1,390

Veracel 550

Montes del Plata * 650

Total with JV's 2,590

* start up in 2013

Oulu

Kaukopää

Enocell

Sunila

Nymölla

50%

Veracel

50% Montes

del Plata -

2013

Stand alone mills

Integrated mills with dried pulp

Skutskär

Total Chemical Pulp Balance at Stora Enso

March 22, 2012 Juan Bueno 16 16

Market Pulp

incl MdP

1 825

700

80 260

785

MdP

650

Market

pulp

1 175

50 80 260

785

Internal

Consumption

3 430

1 775

1 655

External

Purchases

220

120 100

Dried and

wet pulp

production

4 385

1 705

80 260

2 340

Hardwood

Dissolving pulp

Fluff

Softwood

MdP = + 55%

Market Pulp

BA Biomaterials compared with competition

EBIT % (quarterly Ebit)


Source: Quarterly financial reports

-10%

0%

10%

20%

30%

40%

50%

60%

Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11

Stora Enso

BA Biomaterials capacity cost competitiveness


BSKP All Dried

Source: Poyry and Stora Enso Experts

BHKP All Dried (incl. MdP)

BSKP: Stable position since cost curve not likely to change significantly.

BHKP: Cost curve will flatten and we are driving ourselves into a strong position.

For the 4th quartile mills, we are looking into other products (I.e Dissolving, Fluff etc.)

EUR/t

2nd

quartile

79%

3rd

quartile

21%

BA Biomaterials capacity - % in each quartile BA Biomaterials capacity - % in each quartile

1st

quartile

77%

4th

quartile

23%

Costs delivered to Frankfurt Costs delivered to Frankfurt EUR/t EUR/t


Montes del Plata Pulp Mill 1.3 M Tons of BHKP

1.4 B euro Investment

Top 20 market pulp producers


Source: Hawkins Wright

- 1 000 2 000 3 000 4 000 5 000 6 000

Cenibra

Canfor

West Fraser

Ence

IP

Mercer

Ilim

Domtar

UPM-Kymmene

Paper Excellence

Botnia/M-Real

Suzano

Weyenhaeuser

Stora Enso

Sodra

CMPC

Georgia Pacific

Arauco

April

Fibria

BSKP

UKP

MEC

BHKP

- 1 000 2 000 3 000 4 000 5 000 6 000

Cenibra

Canfor

West Fraser

Ence

IP

Mercer

Ilim

Domtar

UPM-Kymmene

Paper Excellence

Botnia/M-Real

Suzano

Weyenhaeuser

Stora Enso

Sodra

CMPC

Georgia Pacific

Arauco

April

Fibria

BSKP

UKP

MEC

BHKP

Mdp

How do we win


Innovation

Customer

Focus

Financial

Discipline and

Growth

Tall Oil

Bio-Methanol

Turpentine

Lignoboost

BIOREFINERY

Innovation

Increase value added to current process

MFC

Bio-Tech

Carbon Fibre

RESEARCH

&

DEVELOPMENT

Innovation

Explore new markets

Customer Focus


Stora Enso

Other key supplier

Promoters

Neutrals

Detractors

Financial Discipline Our Cash Engines


Enocell Sunila Skutskär

Maximize results with cash engines (Nordic Pulp mills) • Operational efficiency.

• Add value through by products (talloil, Lignoboost etc.)

• Improve energy efficiency.

• Lean and focused capital expenditure model.

• Optimal working capital management.

• Adjust product mix as there is fit (Dissolving Pulp, Fluff).

Financial Discipline Our Growth Engines


Montes del Plata Existing Plantations

Projects

Value Adding

Partnerships

Sustainable growth • Environmental & Social responsibility

• Certified plantations

• Time to market

• Low production cost : only 1st quartile interests us

• Close to growing markets is key

• Value added partnerships

• Short term with a state of the art pulp mill in Uruguay

• Medium term with pulp from Tiger

• Long term via strong focus on innovation, new technologies

development and strategic partnerships. Option to do Veracel II

• Strong customer focus

• Strong financial discipline balancing cash engines that can

help fund profitable growth opportunities

• Clear respect for the highest sustainability standards

Biomaterials offers an attractive growth platform


Biomaterials


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.


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