Deutsche Bank 15th Annual European Leveraged Finance Conference in London. Presentation by CFO Markus Rauramo. (9 June 2011)

1. rethink. Stora Enso
Q1 2011 Strong – Earnings more than doubled
CFO Markus Rauramo

2. It should b noted th t certain statements h i which are not hi t i l f t i l di
h ld be t d that t i t t t herein hi h t historical facts, including, without
ith t
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 R f
Liti ti Reform A t of 1995 Si
Act f 1995. Since th these statements are b
t t t based on current plans, estimates and
d t l ti t d
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 th i continued success of product d
ffi i i therein, ti d f d t development, acceptance of new products or services
l t t f d t i
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) ind str conditions s ch as strength of prod ct demand intensit of competition
terms; industry conditions, such product demand, intensity 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
conditions,
markets or fluctuations in exchange and interest rates.
rethink. Stora Enso 9 June 2011 2

3. Stora Enso – sustainable competitive differentiation
sustainable,
9 June 2011 3

4. rethink business
rethink innovation
rethink customer service
rethink our attitude
rethink products
rethink processes
rethink materials
thi k t i l
rethink the future
4

5. World needs a new approach to materials
rethink. Stora Enso 9 June 2011
Source: www.cartonawards.com
5

6. rethink. Stora Enso 9 June 2011 6

7. Q1 2011 Strong – Earnings more than doubled
Sales up 19%
EBIT excl NRI and fair valuations up 108%
EPS excl NRI up 47%
Q1 2011 compared to Q1 2010
rethink. Stora Enso 9 June 2011 7

8. Earnings improving
g p g
Higher prices and continued productivity improvement
EBIT excl NRI and fair valuation EBIT margin*, % 4 Q avg ROCE* , % 4 Q avg
300 12 %
250 10 %
200 8%
on
EUR millio
150 6%
100 4%
50 2%
0 0%
*excluding NRI and fair valuation
rethink. Stora Enso 9 June 2011 8

9. Almost a billion cash from working capital
g p
Q1 2011 increase – preparing for Q2
2 800 28,0 %
2 600 26,0 %
2 400 24,0
24 0 %
2 200 22,0 %
illion
2 000 20,0 %
EUR mi
1 800 18,0 %
1 600 16,0 %
1 400 14,0 %
1 200 12,0 %
1 000 10,0
10 0 %
08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1
Operative Working Capital at the end of Q Working Capital per Sales ratio
Operative W/Cap = inventories + trade receivables – trade payables
rethink. Stora Enso 9 June 2011 9

10. Capital expenditure following the p
p p g policy
y
Below depreciation over the business cycle
250 Forecast FY 2011: 10 %
Capex approximately
EUR 550 million.
200 The equity injection 8%
approximately EUR 120 million.
illion
150 6%
EUR mi
100 4%
50 2%
0 0%
Capex Depreciation and impairment excl NRI Capex % of sales
Total operations
rethink. Stora Enso 9 June 2011 10

11. Net debt down 15% y-o-y
t d bt d
Net Debt Net Debt/EBITDA excl NRI and fair valuations
5 000 6,0
4 500 5,0
4 000 4,0
ion
EUR milli
3 500 3,0
3 000 2,0
2 500 1,0
2 000 0,0
00
SENA divestment closed in Q4 2007 EBITDA: Continuing operations
g p
Merchants divestment closed in Q2 2008 Net debt: Total operations
rethink. Stora Enso 9 June 2011 11

12. Maturity p
y profile
31 March 2011
1 000 SEK 500m 3.5% 2015
SEK 1.4 bn S+3.7% 2015
900 SEK 2.4 bn 5.75% 2015
800
EUR 750m 5.125% 2014
700
EUR million
600 EUR 390m E+4.21% 2016
USD 507m 6.404% 2016
m
500
Other loans/liabilities
400
USD 300m 7.25% 2036 Bonds
300
Commercial paper
200
100
0
Revolving Credit Facility € 700 million matures in January 2014 and is fully undrawn.
rethink. Stora Enso 9 June 2011 12

13. 13

14. Stora Enso leading industry restructuring
g y g
Capacity closures since 2006
Paper Pulp Board Wood
18% 9% 8% Products
20%
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15. Productivity increased
y
Pricing over volumes, managing assets
120 000
100 000
EUR
80 000
Sales per employee
60 000
40 000
07Q1 08Q1 09Q1 10Q1 11Q1
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16. Latest action: Fine Paper re-evaluating its working methods
p g g
Building a new business model to increase cost competitiveness
• The l is to
Th plan i t restructure operations at:
t t ti t
– Nymölla Mill, Sweden
– Uetersen Mill, Germany
– Oulu Mill, Finland
– Sheeting plants in Belgium and UK
• Reduce annual costs by approximately EUR 20 million
– Starting during 2011 and being completed by the end of Q2 2012
• The proposed measures would affect up to 285 employees
• Cash
C h provision of approximately EUR 16 million to b recorded as NRI i Q2
i i f i l illi be d d in
2011 operating profit
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17. 17

18. This is not about reading newspapers on tablets but
how the consumers spend their time ?
Social
S i l media adopted faster than
di d t d f t th • F
Facebook
b k
any other device / media
– 3rd largest population after China
and India
ce
% of U.S. populatio using technology/servic
– Half of UK mobile web traffic
– Fastest growing segment 55-65
year old f
ld females
l
– 1 out of 8 US couples married met
on it
on
• Let’s ask the people driving this
change!
U
– N the ones who are afraid of i
Not h h f id f it
(and tell us what we want to hear)
rethink. Stora Enso 9 June 2011 18

19. Proof points of action
p
Our direction
• Growth markets
G th k t
• Growth markets
Proof points:
• Inpac acquisition
• •Plantation based pulp
Plantation-based d iinvestment
Ostroleka
O t l k containerboard
t i b t t
• Investment to Montes del Plata
• • Plantation-based pulp
Fibre-based packaging
Proof point:
P f i t
• Investment to Montes del Plata
• Selected paper grades
• Fibre-based packaging
Maintain and develop global
leadership position
Proof points:
• Inpac acquisition
• Ostroleka containerboard investment
• Selected paper grades
9 June 2011 19

20. Implementing strategy
p g gy
High return growth businesses
Project
oject O ta get Ot e p og ess
On target Other progress
Montes del Plata Machinery and port
pulp mill, Uruguay suppliers selected and
contracted for MdP
Ostroleka Proceeding as planned
containerboard machine,
Poland
CLT All permits received, main
investment, Ybbs, Austria machine supplier selected
Skoghall Support wood handling in
investment Sweden and further
develop Skoghall mill
Inpac Integration planning strong
packaging company in
China and India
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21. 21

22. Outlook - increasing concerns on cost inflation
• Inflation d
I fl ti and maintenance li it Q2
i t limit Demand Price
earnings improvement y-o-y development development
Q2/11 vs Q2/11 vs
Q2/10 Q1/11
• Inflation estimate increased to
Consumer Board
~4% for the full year 2011
compared to 2010
Industrial
Packaging
• Actions to fight inflation continue Newsprint and
Book Paper
to be even more important
p
Coated
Magazine Paper
Uncoated
Magazine P
M i Paper
Fine Paper
Wood Products
W dP d t
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23. 23

24. Summary
• Strong quarter
St t
• Inflation pressure
p
• 80% of CAPEX for strategic high
return growth areas in 2011
• Investments in strategic high-
return growth areas
– Montes del Plata
– Ostroleka
– Ybbs
Ybb
– Skoghall
rethink. Stora Enso 9 June 2011 24

25. Rethinking continues!