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.
Financial results Q2 2011 21 July 2011 2
3. Continued solid performance year on year
year-on-year
• EUR 228 million quarterly
illi t l
operating profit excl. NRI and FV
• Up by 7% year-on-year
– significantly higher sales prices
– offset by cost inflation and
y
unfavourable exchange rates
• Balance sheet (debt/equity 0.41)
and liquidity (EUR 996 million)
remained strong
Financial results Q2 2011 21 July 2011 3
4. Good quarter in increasingly uncertain environment
EBIT excl NRI and fair valuation EBIT margin*, % 4 Q avg
300 10 %
240 8%
EUR million
180 6%
120 4%
60 2%
0 0%
*excluding NRI and fair valuation
g
Financial results Q2 2011 21 July 2011 4
5. Demand of the Group’s products was mixed
Group s
Folding boxboard Std Newsprint Uncoated magazine Coated fine paper
115
2007 Q avg = 100
100
INDEX
X
85
70
European demand
Source: CEPI PPPC, CEPIFINE
CEPI, PPPC
Financial results Q2 2011 21 July 2011 5
7. Outlook – Uncertainty in European markets increasing
• Cost inflation
C t i fl ti unchanged at
h d t Demand Price
approximately 4% development development
Q3/11 vs Q3/11 vs
Q3/10 Q2/11
• Actions continue to mitigate cost
Consumer Board
inflation
Industrial
• FX rates to have a negative Packaging
impact on the Q3 results Newsprint and
Book Paper
Coated
• Geographic mix changes Magazine Paper
Uncoated
Magazine P
M i Paper
• EBIT excl. NRI and FV in Q3
forecasted to be approximately in Fine Paper
the same range as Q2 2011
Wood Products
Financial results Q2 2011 21 July 2011 7
8. Productivity increased
y
Pricing over volumes
120 000
oyee, EUR
100 000
Sales per emplo
80 000
s
60 000
40 000
07Q2 08Q2 09Q2 10Q2 11Q2
Financial results Q2 2011 21 July 2011 8
9. Flexibility increased
y
Fixed costs developing to the right direction
0,30
0,28
ts/Sales
Fixed Cost
0,26
0,24
0,22
FY2007 FY2008 FY2009 FY2010 H12011
Financial results Q2 2011 21 July 2011 9
10. Net Debt to EBITDA improved strongly year on year
year-on-year
Net Debt Net Debt/EBITDA excl NRI and fair valuations
5 000 6,0
4 500 5,0
4 000 4,0
lion
EUR mill
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
Financial results Q2 2011 21 July 2011 10
11. Variable cost development
Realised
R li d Realised
R li d
Q2/11 vs Q2/11 vs
Q2/10 Q1/11
Pulp wood
Sawlogs
RCP
Pulp
Chemicals
Energy
Financial results Q2 2011 21 July 2011 11
12. Softwood pulp p
p p prices record high
g
Stora Enso’s market pulp is softwood
1 100
1 000
900
nne
800 Bleached softwood
USD/ton
kraft pulp
700
Bleached hardwood
600 kraft l
k ft pulp
500
400
07Q1
07Q2
07Q3
07Q4
08Q1
08Q2
08Q3
08Q4
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
Source: FOEX
11Q2
Financial results Q2 2011 21 July 2011 12
13. Rethink – create and renew
Progress
Earlier announced strategic investments
Montes del Plata Pulp Mill
Ostroleka Light Weight Containerboard Machine As planned
Ybbs, Wood Based Construction Elements
Skoghall, Liquid Packaging Board
Competitiveness I
C titi Improvementt
A significant step forward in renewable
materials Q1 2012
A pre-commercial plant at I t in Finland t
i l l t t Imatra i Fi l d to
produce microfibrillated cellulose (MFC)
Renewable energy
Investment to Zdírec Sawmill in the Czech Q1 2013
Republic to optimise energy production and usage
13
14. Productivity and flexibility
• Continued solid performance i Q2
C ti d lid f in
• Multiple cost and p
p productivity
y
improvements to compensate
inflation
• Fixed costs continued to decrease
excluding maintenance impact
• Strategic investments proceeding
according to plan
• Productivity and flexibility decisive in
uncertain environment
Financial results Q2 2011 21 July 2011 14
17. Summary financials Q2 2011
Change % Change %
EUR million II/2011 I/2011 II/2010
Q211/Q210 Q211/Q111
Sales 2 817 2 727 2 692 4.6 3.3
EBITDA,
EBITDA excl. NRI and f i valuations
l d fair l i 358
3 8 368 330 8.5
8 -2.7
2
Operating profit, excl. NRI and fair valuations 228 248 213 7.0 -8.1
Profit before tax, excl. NRI 182 213 202 -9.9 -14.6
Earnings per share, excl. NRI (EUR) 0.21 0.22 0.22 -4.5 -4.5
ROCE, excl. NRI and fair valuations (%) 10.4 11.4 10.5 -1.0 -8.8
Cash flow from operations 207 163 305 -32.1 27.0
Cash flow after investing activities 122 106 229 -46 7
46.7 15.1
15 1
Debt/equity 0.41 0.38 0.49 -16.3 7.9
NRI = Non-recurring items
Fair valuations include synthetic options net of realised and open hedges,
y p p g
CO2 emission rights, and valuations of biological assets related to forest assets in equity accounted investments
Financial results Q2 2011 21 July 2011 17
18. Operating profit by segments
Change % Change %
EUR million II/2011 I/2011 II/2010
Q211/Q210 Q211/Q111
Consumer Board 85 96 77 10.4 -11.5
% of sales 12.8
12 8 14.8
14 8 13.1
13 1 -2.3
23 -13.5
13 5
Industrial Packaging 20 19 17 17.6 5.3
% of sales 8.1 8.0 6.6 22.7 1.3
Newsprint and Book Paper 28 26 -7 n/m 7.7
% of sales 8.2 8.3 -2.0 n/m -1.2
Magazine Paper 34 28 22 54.5 21.4
% of sales 6.6 5.9 4.1 61.0 11.9
Fine Paper 49 80 79 -38.0 -38.8
% of sales 9.2 14.2 14.3 -35.7
35.7 -35.2
35.2
Wood Products 35 12 30 16.7 191.7
% of sales 7.6 2.9 7.1 7.0 162.1
excluding non-recurring items
Financial results Q2 2011 21 July 2011 18
19. Capital expenditure and depreciation
p p p
Q1 2008 – Q2 2011
250 10 %
Forecast:
Capex FY 2011
200 approximately 8%
EUR 500 m
EUR m illion
150 6%
100 4%
50 2%
0 0%
Capex Depreciation and impairment excl NRI Capex % of sales
Total operations
Financial results Q2 2011 21 July 2011 19
20. Operative working capital
p g p
Q1 2008 – Q2 2011
2 800 28,0
28 0 %
2 600 26,0 %
2 400 24,0 %
2 200 22,0 %
EUR million
2 000 20,0 %
R
1 800 18,0 %
1 600 16,0 %
1 400 14,0
14 0 %
1 200 12,0 %
1 000 10,0 %
08Q108Q208Q308Q409Q109Q209Q309Q410Q110Q210Q310Q4 11Q1 11Q2
Operative Working Capital at the end of Q Working Capital per Sales ratio
Operative W/Cap = inventories + trade receivables – trade payables
p p p y
Financial results Q2 2011 21 July 2011 20
22. Net Financial Items
Change %
Ch Change %
Ch
EUR million II/2011 I/2011 II/2010
Q211/Q210 Q211/Q111
Net interest expense -28.3 -23.0 -24.3 -16.5 -23.0
Foreign exchange gains and losses -0.7 -11.9 6.2 n/a 94.1
Other financial items, of which -5.6 -16.3 -4.5 -24.4 65.6
PIK notes 1.9 1.5 1.5
Fair valuation of interest rate derivates*
derivates -3.3
33 13.9
13 9 -4.0
40
Fair valuation of long-term debt 0.4 -0.5 0.9
Other items -4.6 -31.2 -2.9
Total net financial items -34.6 -51.2 -22.6 -53.1 32.4
*Not hedge accounted interest rate derivatives.
Financial results Q2 2011 21 July 2011 22
23. Transaction risk and hedges
g
as at 30 June 2011
EUR million USD GBP SEK
Estimated annual net operating cash flow exposure 1 070 540 -820
Transaction hedges as at 30 June 2011 -500 -250 550
Hedging percentage as at 30 June 2011 for the next 12 months
g gp g 47% 46% 67%
Operating Profit: Currency strengthening of + 10%
Based on estimated next 12 months net operating EUR million
cash flow exposure.
USD 107
SEK -82
GBP 54
The calculation does not take into account currency hedges, and assumes no changes occur other
than a single currency exchange rate movement. Weakening would have the opposite impact.
Financial results Q2 2011 21 July 2011 23
24. Maturity p
y profile
30 June 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 390m E+4.21% 2016
USD 507m 6.404% 2016
EUR million
600
m
500
400 USD 300m 7.25% 2036
300
200
100
0
Revolving Credit Facility EUR 700 million matures in January 2014 and is fully undrawn
g y y y
Financial results Q2 2011 21 July 2011 24
25. Energy balance Q2 2011
TWh/a
Total energy self Self sufficiency 62%
50 Impact
Impact* on operating
sufficiency 60%
40 profit from 10% change EUR million p.a.
30 in:
Self sufficiency 53%
20
10
Electricity market price ~11
11
0 Fossil fuel price ~15
‐10 Electricity Fuels
*) Remaining impact on non hedged volume
non-hedged
Internal External (hedged) External (non-hedged)
Financial results Q2 2011 21 July 2011 25
26. Stora Enso electricity procurement
GWh/a
18 000
16 000
Sales to market
14 000
Open position
12 000
Local tariff
10 000 Financial contracts
8 000 Physical contracts
6 000 PVO production
4 000 Own production
2 000
0
-2 000
2011 2012 2013 2014
Financial results Q2 2011 21 July 2011 26
27. Permanent pulp, p p and board capacity reductions
p p, paper p y
since 2006
Mill Date
D t Grade
G d Capacity reduction, t
C it d ti
Corbehem PM 3 and PM 4 Jun 2006 LWC 250 000
Varkaus PM 1 End 2006 WFC 95 000
Berghuizer Mill Oct 2007 WFU 235 000
Reisholz Mill End 2007 SC 215 000
Summa Mill Jan 2008 Newsprint, uncoated mag, book paper 415 000
Anjala Mill PM1 Feb 2008 Coated magazine paper 155 000
Baienfurt Mill End 2008 FBB 190 000
Kabel Mill PM 3 End 2008 Coated magazine 140 000
Kemijärvi Pulp Mill April 2008 Long-fibre (SW) pulp 250 000
Norrsundet Pulp Mill Dec 2008 Long-fibre (SW), pulp
f (S ) 300 000
Varkaus Mill coreboard machine Dec 2008 Coreboard 100 000
Imatra PM 8 Mar 2010 WFU 210 000
Varkaus PM 2 and PM 4 Sep 2010 Newsprint,
Newsprint directory paper 290 000
Maxau PM 7 Nov 2010 Newsprint 195 000
Totals % of capacity as at end 2005
(adjusted for disposals)
Paper and board
P db d 2 490 000 t/a
t/ 15%
Pulp 550 000 t/a 9%
Financial results Q2 2011 21 July 2011 27
28. Permanent sawn wood capacity reductions
p y
since 2006
Mill Date Capacity reduction, m3
Veitsiluoto Sawmill 2006 100 000
Honkalahti Sawmill 2006 90 000
Sauga Sawmill Jun 2007 130 000
Sollenau Sawmill 2007 110 000
Näpi Sawmill 2007-2008 100 000
Kotka Sawmill 2007-2008 70 000
Paikuse Sawmill End 2008 220 000
Zdirec Sawmill 2008 120 000
Ybbs Sawmill 2008 & Jun 2009 200 000
Kitee Sawmill 2008 & Jun 2009 130 000
Varkaus Sawmill Jun 2009 60 000
Tolkkinen Sawmill End 2009 260 000
Total 1 590 000
Reductions equal 20% of capacity as at end 2005 (adjusted for disposals)
Financial results Q2 2011 21 July 2011 28
