Stora Enso’s Renewable Packaging is growing
Mats Nordlander, EVP, Renewable Packaging
19 September 2012
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.
Mats Nordlander 19 September 2012 2
Stora Enso portfolio FY 2011
Group Sales, EUR 10 964.9 million
46%
10% 15%
29% 0%
Printing and Reading Biomaterials Building and Living Renewable Packaging Other
Operational EBIT, 866.7 EUR million
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32,9 %
19,5 % 6,0 %
34,8 %
5,5 %
Transformation from a European
pulp and paper company to a value
creating, growth markets renewable
materials company
19 September 2012 Mats Nordlander 4
Strategy
Stora Enso’s engines
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Growth engines
Renewable Packaging
Plantation based pulp
Building and living
Cash engines
Printing and Reading
Nordic market pulp
Low cost base saw milling
5
How we will win!
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Customers
and
Consumers
Customer experience
Products for demanding customers
Efficient supply chain
Strategic growth areas Renewable Packaging
• Global #1 • Premium products Virgin-fibre based
consumer board
• Growth markets
• Global partner customers Corrugated packaging
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Our response
• M&A and greenfield initiatives
started to accelerate growth in
growth markets
• Investing in R&D - MFC
• Cost competitive new Ostroleka
containerboard machine
• Debottlenecking, streamlining
and cost control
• Skoghall Mill wood yard
• Imatra Mills’ pulp drying
• Restructuring in converting
Key challenges
• Too small market share in
growth markets
• Competing materials
• Non-competitive
containerboard capacity
• Cost competitiveness –
aggressive competitors
Restructuring and growth in balance
Challenges and response
Project On target Status
Montes del Plata
pulp mill, Uruguay Start up approximately
mid-year 2013
Ostroleka
containerboard machine,
Poland
Proceeding as planned
Guangxi, China
Proceeding as planned
Skoghall
investment Support wood handling in
Sweden and further
develop Skoghall mill
Stora Enso Inpac
Q3 2011
Bulleh Shah Packaging
Limited
Q1 2013
Implementing strategy High return growth businesses
10 19 September 2012 Mats Nordlander
Accelerate what works
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Every third beverage
carton in the world
is produced from
Stora Enso materials!
Strongest growth will be in Asia - Increasing demand of virgin fibre-based consumer board
12
6,2 6,3
CAGR
0,2 % 1,1 1,5
CAGR
3,5 %
3,8 4,4
CAGR
1,4 %
0.9 1.5
CAGR
4,6 %
0,5 0,7
CAGR
3,3 %
6,0
11,6
CAGR
6,9 %
Asia
Middle East
& Africa
Eastern
Europe
Western
Europe North
America
South
America
Fibre-based consumer
board consumption
CAGR
China 9%
Pakistan 9%
India 6%
Middle East 4%
2010-2020
Million tonnes
Source: Pöyry and Stora Enso
Pakistan 9%
19 September 2012 Mats Nordlander
Pakistan is an attractive growing consumer market Stora Enso partners in customers expansion into new growth markets
• Pakistan the 4’th biggest dairy
market globally
• The market for our products is
growing 5 – 15 percent per
year
• Stora Enso global customers
are expanding in Pakistan
13 19 September 2012 Mats Nordlander
Key facts about the investment
• 50/50 JV with Packages Ltd. of Pakistan.
– Kasur Mill, under development (paperboard and
corrugated packaging)
– Karachi Plant (corrugated packaging) currently owned
by Packages Ltd.
• Liquid packaging board, folding boxboard and
corrugated packaging, to key local and international
companies in the fast-growing market of Pakistan.
• About 950 people
• Annual capacity 360 000 tonnes when the
investments completed.
14 19 September 2012 Mats Nordlander
Our financial commitment Maximum USD 130 million
15
• Enterprise value of JV is up to USD 125 million
– Investment made in two steps; 35 % of the JV now and additional 15 % later,
subject to certain conditions being met.
– Including an additional maximum performance compensation, based on the
financial results of the second half of 2012 and the first half of 2013
• Both partners are committed to further investment programme of total
USD 135 million during 2013 and 2014 including:
– a new biomass power plant
– a rebuild of current board machines
• In total, maximum Stora Enso capital commitment of USD 130 million
• Investment is EPS accretive and exceeds Stora Enso’s ROCE target of
13%
19 September 2012 Mats Nordlander
New investment in Pakistan
• In line with strategy
• Expands in growth market
• Attractive investment
• Long tradition of cooperation
16
We are committed to growth and this
investment is the newest proof point in
that process.
19 September 2012 Mats Nordlander
Stora Enso to build world-class pulp and consumer
board mill in Southern China
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Focusing on high quality segments in China
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Chinese platform
for growth
Unique
position
• A world leading position
• Technologies and
specifications
• Committed customers
• Unique integrate
• Established footprint
• Innovations
Well prepared project to accelerate profitable growth
Key takeaways
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Renewable packaging - Solution for the future!
Focus on profitable growth
Clear priorities to accelerate what
works
Growing by expanding in growth markets like
China and Pakistan
Independent sustainability impact studies give solid
platform for the projects
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• UNDP’s Environmental and
Social Impact Analysis (ESIA) in
2006
• Additional integrated ESIA in
2012
• Occupational Health and Safety
Certificate ISO 18001
• Environmental Management
System ISO 14001
• Quality Management System
ISO 9001
Managed in accordance with Stora Enso policies
22
• A strong sustainability agenda is
established in Pakistan.
• Already there is advanced processes
established at Packages.
• In addition, Stora Enso will have its own
expertise organization in place.
• Main activities are training, monitoring,
auditing and follow up in reference to
Stora Enso code of conduct
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Stora Enso’s Operations in China Personnel currently about 4 500 in China
Hong Kong
Shanghai
Dawang Mill Uncoated magazine paper (170 000 tonnes)
Suzhou Mill Coated fine paper (245 000 tonnes). Customers include
merchants and printing houses
5 Sales branches
Beijing
Two core factories
Hangzhou and Foshan
Eucalyptus plantations ( 90 000 ha)
Guangxi (since 2002) Dongguan and Qian’an ( (Inpac)
Beihai
Facts about the joint venture and Packages Ltd
24
Packages Ltd. is the largest packaging and
board producer and converter in Pakistan.
It has 3 000 employees. The main assets
are located in Lahore and Kasur in the
province of Punjab.
The shares of Packages Ltd. are listed on
the Karachi, Islamabad and Lahore stock
exchanges.
19 September 2012 Mats Nordlander