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Jump the Curve
     Jouko Karvinen
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.
Q3 2011
Scorecard    Q3 2011   Q3 2010


EBIT excl.
             €204m     €255m
one times


Cash after
             €282m     €230m
 CAPEX


Liquidity    €1,181m   €1,121m
Scorecard   Q3 2011   Q3 2010


Working
             19%       17%
capital %


Personnel   28 771    27 785


 Debt to
             0.45      0.43
 equity
Outlook
Demand        Price
                                            development   development
                                            Q4/11 vs      Q4/11 vs
•   Production                              Q4/10         Q3/11

    curtailments           Consumer Board


    increased in Q3
       Industrial
                           Packaging

•   will continue in Q4
   Newsprint and
                           Book Paper

                          Coated

•   Q4 EBIT excl. NRI      Magazine Paper

                           Uncoated
    and FV
                Magazine Paper


•   somewhat lower         Coated Fine
                           Paper

    year on year           Uncoated Fine
                           Paper
                           Wood Products

                                                                   11
Next
Competition
Future that
already happened
digital      TV   radio      print

  100


    75


    50


    25


     0
                  ad spend      time spent
Western Europe 2010
Five years
telephone
             PC
mobilephone
              TV
          radio
           DVD
      youtube
   Facebook
                 0%         10%          20%   30%   40%   50%
US population use 5 years after launch
50 %
Magazine
Flexibility
• From
                    • To
    
                          
•   Minimum cost at        •   Lowest delivered cost
    full operating rate
       at real operating rates
    
                          
•   Sharing                •   Focus curtailments to
    curtailments
              highest cost units 
    
                          
•   Machine                •   Asset base
    specialisation             optimisation
Stora Enso                 comp   comp     rest

  250%

  200%

  150%

  100%

    50%

      0%
                   Newsprint                   SC          CMR
                Capacity reduction to market share 2005-2011
Announced and completed permanent closures
Restructuring


        Free Cash Flow

                                            Investments




Use of cash flow from operations 2006-2010
0.30
Fixed cost to revenue




                        0.28


                        0.26


                        0.24


                        0.22
                               2007   2008   2009   2010 YTD 2011
Jump
Margin vs. Operating Rate
         10%

         8%
EBIT %




         6%

         4%

         2%

         0%
           90%   91%   92%   93%   94%   95%   96%
                        Operating Rate
Margin vs. Operating Rate
         10%

         8%
EBIT %




         6%

         4%

         2%

         0%
           90%   91%   92%   93%   94%   95%   96%
                        Operating Rate
Renew
Recycle
Re-use
Competition
100 million tons
25 %
Wood is good
manufacturing CO2             Carbon sink



                     1000


                      500
grams per kilogram




                        0


                      -500


                     -1000


                     -1500


                     -2000
                             steel frame   concrete block   brick   concrete      wood
Prepared
• Good inventory levels
• Flexibility up
• Strong liquidity
• Executing on strategic growth
So much more to do!
Flexibility
Working Capital to Sales
25%
20%
15%
10%
5%
0%
      Q



               no

                     be




                                    2n


                                          3r
      32




                                            d
                 w




                                     d
                      st
          00




                          se
           8




                           gm
                               en
                                t
Less is more
MFC for 7 billion in 2012
  


• Lighter
• Stronger
• Less energy
50%

40%

30%

20%

10%

0%
      Promoters   Passives   Retractors
            Net Promoter Score
positives   neutral    negative

80%


60%


40%


20%


0%
           2010             2011
        Customer response on Rethink
1
Deutsche Bank, Paper Seminar. Presentation by CEO Jouko Karvinen

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Deutsche Bank, Paper Seminar. Presentation by CEO Jouko Karvinen

  • 1. Jump the Curve Jouko Karvinen
  • 2. 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.
  • 4. Scorecard Q3 2011 Q3 2010 EBIT excl. €204m €255m one times Cash after €282m €230m CAPEX Liquidity €1,181m €1,121m
  • 5. Scorecard Q3 2011 Q3 2010 Working 19% 17% capital % Personnel 28 771 27 785 Debt to 0.45 0.43 equity
  • 7. Demand Price development development Q4/11 vs Q4/11 vs • Production Q4/10 Q3/11 curtailments Consumer Board increased in Q3 Industrial Packaging • will continue in Q4 Newsprint and Book Paper Coated • Q4 EBIT excl. NRI Magazine Paper Uncoated and FV Magazine Paper • somewhat lower Coated Fine Paper year on year Uncoated Fine Paper Wood Products 11
  • 11. digital TV radio print 100 75 50 25 0 ad spend time spent Western Europe 2010
  • 13. telephone PC mobilephone TV radio DVD youtube Facebook 0% 10% 20% 30% 40% 50% US population use 5 years after launch
  • 14. 50 %
  • 17. • From • To • Minimum cost at • Lowest delivered cost full operating rate at real operating rates • Sharing • Focus curtailments to curtailments highest cost units • Machine • Asset base specialisation optimisation
  • 18. Stora Enso comp comp rest 250% 200% 150% 100% 50% 0% Newsprint SC CMR Capacity reduction to market share 2005-2011 Announced and completed permanent closures
  • 19. Restructuring Free Cash Flow Investments Use of cash flow from operations 2006-2010
  • 20. 0.30 Fixed cost to revenue 0.28 0.26 0.24 0.22 2007 2008 2009 2010 YTD 2011
  • 21. Jump
  • 22. Margin vs. Operating Rate 10% 8% EBIT % 6% 4% 2% 0% 90% 91% 92% 93% 94% 95% 96% Operating Rate
  • 23. Margin vs. Operating Rate 10% 8% EBIT % 6% 4% 2% 0% 90% 91% 92% 93% 94% 95% 96% Operating Rate
  • 27. 25 %
  • 29. manufacturing CO2 Carbon sink 1000 500 grams per kilogram 0 -500 -1000 -1500 -2000 steel frame concrete block brick concrete wood
  • 31. • Good inventory levels • Flexibility up • Strong liquidity • Executing on strategic growth
  • 32. So much more to do!
  • 34. Working Capital to Sales 25% 20% 15% 10% 5% 0% Q no be 2n 3r 32 d w d st 00 se 8 gm en t
  • 36. MFC for 7 billion in 2012 • Lighter • Stronger • Less energy
  • 37. 50% 40% 30% 20% 10% 0% Promoters Passives Retractors Net Promoter Score
  • 38. positives neutral negative 80% 60% 40% 20% 0% 2010 2011 Customer response on Rethink
  • 39. 1