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

Cash Engine Juha Vanhainen, EVP, Printing and Reading

Business Area Printing & Reading

March 22, 2012 Juha Vanhainen 2

Publishing and

commercial printing

We inspire

the world with

paper

iPad’s take-off has been a great success


Source: KPCB; Apple; Morgan Stanley

Apple iPad

Apple iPhone +

iTouch

Nintendo Wii

Nintendo DS

Sony PSP

Apple iPod

RIM Blackberry

West European advertising spend is still

at the pre-crisis level

(calculated in 2010 euro)


0

10

20

30

40

50

60

70

80

90

100

2006 2007 2008 2009 2010 2011e

Ad

Sp

en

d [

billi

ion

€ ]

43 42 39 32 31 30

28 28 27 24 25 25

8 10 12

13 14 15

Print

TV

Radio

Other

Internet

Source: Zenith Dec-2011

The development has caused a structural change to

West Europe paper demand development


Business Area Printing and Reading


Production capacities, million t/a

• Newsprint 2.5

• Super calendered 1.4

• Coated paper 3.0

• Office paper 1.3

Total paper 8.2

Dawang

Arapoti

Veitsiluoto

Sachsen

Kabel

Corbehem

Langerbrugge

Maxau

Kvarnsveden

Oulu

Hylte

Anjala

Uetersen

Nymölla

Suzhou

Varkaus Office

Newsprint

SC

Coated

BA Printing and Reading sales and EBITDA


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

BA Printing and Reading will improve cost position to

keep average below median at all times


60

80

100

120

140

160

180

0 10000 20000 30000 40000 50000

1st quartile

35%

2nd quartile

30%

3rd quartile

30%

4th quartile

5%

BA Printing and Reading capacity-% in each quartile:

Cumulative European paper capacity, 1000 t/a

BA will target at keeping the average cost level

below median at all times

Delivered cash cost to Frankfurt

Source: Pöyry, Stora Enso

excluding specialties & book

Q4/2011

Cost in

de

x, 1

00

equ

als

to

me

dia

n o

f e

ach

gra

de

Concept for winning in a declining market


Focus on end-uses

• Paper for all print end-uses

• New products expanding offering

• Supply chain efficiency priority

Not growth, but low-cost

• Delivered cost

• Targeted investments

• Energy efficiency and bio fuels

• Asset restructuring

Input

Action

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

We inspire the world with paper

From selling paper grades to jointly selecting

best paper for end-use applications



PrimaPress – an uncoated paper for

traditional end-uses of coated paper

• Brilliant gloss never seen before for LWU

• End uses: magazines, catalogues

• Production: Kvarnsveden PM12

Product development – reinventing boundaries

between paper grades

BA Printing and Reading

– 2011 Net Promoter Score Compared to most frequently mentioned competitors


BA Printing & Reading n=1384;

All competitors n=1297

Concept for winning in a declining market


Focus on end-uses

• Paper for all print end-uses

• New products expanding offering

• Supply chain efficiency priority

Not growth, but low-cost

• Delivered cost

• Targeted investments

• Energy efficiency and bio fuels

• Asset restructuring

Input

Action

Fine paper cost competitiveness improvement

• Annual cost reduction 20 M€

• Cash provision 16 M€

• Full impact after Q2/2012

Coated magazine paper operations’ restructuring

• Annual cost reduction 48 M€

• Investments 18 M€ and cash provision 5 M€

• Full impact from Q3/2013 onwards

Ongoing restructuring measures


Sales value per employee


Product development

• New products

• Cost structure improvement

• Source reduction

From mill specialization

to operational flexibility

• “Lowest delivered to customer cost asset

gets the orders”

Printing & Reading operational

development targets


Lean and focused capital expenditure model


Average at

~2.5% of sales

Competitiveness

Capex of sales

Top assets with low cost; efficiency and energy

investments

Assets to be kept on current technical level

Assets for divestment or closure during the next 10 years

Energy efficiency

• Energy generation towards bio

• Latest 5 year investments 300 M€

• Specific energy consumption

improvement work continues

Energy investments


Oulu paper mill is the largest coated paper

production unit in Europe


Integrated

Benchmark paper quality

Located in a seaport


Wood procurement from

an area with 200 km radius

Kvarnsveden PM12 in Sweden

Langerbrugge houses the largest

newsprint paper machine in Europe


80 million people live

within a 300 km radius

100% recycled fiber

Excellent energy solution

based on non-fossil/renewable

London

Cologne

Amsterdam

Düsseldorf

Langerbrugge

Paris

• 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

Ready for all future demand scenarios


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.


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

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