E result q3_2012_web

Financial Results Q3 2012 CEO Jouko Karvinen and CFO Karl-Henrik Sundström

23 October 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.

Financial Results Q3 2012 23 October 2012 2

Stable Performance in weak Europe

• Q3 performance as promised and little more

– Operational EBIT EUR 175 million driven by

lower costs

• Robust cash flow and liquidity

– Cash flow from operations EUR 312 million

and liquidity EUR 1 700 million

• Continuing with new profitability improvement

plans

23 October 2012 Financial Results Q3 2012 3

Third quarter earnings as promised and little more -not enough


• Capacity reductions (Ruovesi, PM1 Hylte) – Capacity 180 000 tonnes std

NewsPrint

• Specific cost reduction and efficiency improvements plans across all BA’s

• Impact:

– Annualised cost savings of EUR 36 million

– Fixed asset and working capital write-downs of EUR 14 million

– Provisions with cash impact EUR 28 million

– Employee reduction of 520 people

New profitability improvement plans Annualized cost savings EUR 36 million


Examining the Possibility of selling Corbehem mill

• Examining the possibility of selling

Corbehem Paper Mill in France.

• The capacity 330 000 tonnes LWC


Transforming to value creating growth


Skoghall. Sweden, woodyard

logistics, start-up end Q4 2012 Ostroleka. Poland

Container board

machine start-up Q1

2013

Montes del Plata.

Uruguay

Pulp mill, start-up mid-

year 2013, over 70%

completed

Guangxi. China

Pulp and Board

mills, start-up Q4

2014

Bulleh Shah

Packaging Limited.

Pakistan

JV, Q1 2013

Montes del Plata


Board and Pulp mills project in Guangxi, China

• Resource build up

• Detailed planning - preparing and mitigating

risk of implementation

• Final permits still pending

• Confirmed project time plan when permits

received


Summary financials Q3 2012

EUR million Q3/12 Q2/12 Q3/11 Change %

Q3 12/Q3 11

Change %

Q3 12/Q2 12

Sales 2 694.1 2 720.4 2 739.3 -1.7 -1.0

Operational EBITDA 299.6 248.1 339.2 -11.7 20.8

Operational EBIT 174.7 141.2 224.4 -22.1 23.7

Profit before tax excl. NRI 102.2 31.8 113.4 -9.9 221.4

Profit/loss before tax 102.2 85.9 -14.8 n/m 19.0

EPS excl. NRI, EUR 0.10 0.02 0.10 0.0 n/m

EPS (basic), EUR 0.10 0.09 -0.06 266.7 11.1

Operational ROCE, % 8.0 6.5 10.3 -22.3 23.1

Cash flow from operations 312.4 245.6 361.9 -13.7 27.2

Cash flow after investing activities 120.4 74.5 219.8 -45.2 61.6

Net debt/operational EBITDA* 2.8 2.7 2.0 40.0 3.7

Liquidity 1 700 1 240 1 181 43.9 37.1


*Last 12 months’ operational EBITDA

Cash flow enabling the transformation The average cash flow from operation is EUR 270 million


Focusing on Balance Sheet Q1 2010 - Q3 2012


*Last 12 months operational EBITDA

Renewable Packaging and Biomaterials in value creation


Financing the Transformation Cash Flow 1-9/2012


Cash Focus

Guidance for Q4 2012

• Sales roughly similar level than

Q3 2012

• Operational EBIT in line or

slightly lower than Q3 2012

• Mill maintenance will have a

negative impact on Renewable

Packaging and Biomaterials

during the quarter.


• Q3 performance as promised and little more

• Robust liquidity – prepared for the future

• We are the masters of our destiny - new profitability

improvements planned

• Transforming to value creating growth- proof points:

– Three projects soon finalized

– JV in Pakistan Q1 2013

– Guangxi, China proceeding

Transforming to value-creating growth



Segment

Annual

sales

reduction

Annual cost

savings from

Q4 2013

onwards

Fixed asset

write-downs in

Q4/2012

Provisions with

cash impact in

Q4/2012

Employee

reduction

plan

Printing and Reading No impact EUR 16 million EUR 10 million EUR 17 million 140

Biomaterials No impact EUR 6 million - EUR 6 million 60

Building and Living No impact EUR 1 million - - 25

Renewable Packaging No impact EUR 13 million EUR 4 million EUR 5 million 295

Total No impact EUR 36 million EUR 14 million EUR 28 million 520

New profitability action plans (2) Annual cost savings from the plans EUR 36 million

18

Announced Cash cost

Meur

Impairments

Meur

Employee

reduction plan

Annual cost

savings Meur

Saving fully

visible in P&L

starting

Kopparfors closure Q1 2011 20 9 104 10 Q1 2012

Kabel restructuring Q1 2011 4 - 42 3 Q4 2011

Fine Paper restructuring Q2 2011 16 - 270 20 Q2 2012

Logistics restructuring Q2 2011 9 - - 16 Q1 2011

Packaging restructuring Q4 2011 4 - 140 6 Q3 2012

Building and Living Q4 2011 3 1 39 3 Q3 2012

Coated Magazine Q1 2012 5 1 110 48 Q3 2013

Swedish maintenance Q1 2012 10 - 130 21 gradually from

late 2012 onwards

Packaging restructuring Q1 2012 7 2 155 7 gradually from

Q4 2012 onwards

Printing and Reading Q2 2012 8 - 140 6 Q1 2013

Total 86 13 1130 140

Earlier announced cost savings programmes

Operational EBIT by segments


Q3 12/ Q3 11

Change %

Q3 12/ Q2 12

Printing and Reading 51.1 41.7 72.3 -29.3 22.5

% of sales 4.2 3.5 5.6 -25.0 20.0

Biomaterials 32.5 14.7 57.3 -43.3 121.1

% of sales 12.1 6.0 20.7 -41.5 101.7

Building and Living 0.7 11.5 9.8 -92.9 -93.9

% of sales 0.2 2.6 2.4 -91.7 -92.3

Renewable Packaging 82.9 72.5 73.6 12.6 14.3

% of sales 10.2 8.8 9.2 10.9 15.9

Other 7.5 0.8 11.4 -34.2 n/m

% of sales 1.2 0.1 1.8 -33.3 n/m


Operational EBIT by segments

EUR million Q3/ 12 Q2/ 12

Change %

Q3 12/ Q2 12

Printing and Reading 51.1 41.7 22.5

Biomaterials 32.5 14.7 121.1

Building and Living 0.7 11.5 -93.9

Renewable Packaging 82.9 72.5 14.3

Other 7.5 0.8 n/m

Group 174.7 141.2 23.7


Transforming the Company

Q1-Q3 2012


Curtailments % of capacity


Working capital Q2 2010 – Q3 2012

*Operative working capital = trade receivables + inventories – trade payables


Net Financial Items


Q312/Q311

Change %

Q312/Q212

Net interest expense -44.0 -42.0 -35.9 -22.6 -4.7

Foreign exchange gains and losses -0.4 -18.2 -11.4 96.5 97.8

Other financial items. of which -14.7 -6.6 -146.1 89.9 -122.7

PIK notes 2.7 2.5 2.1

Fair valuation of interest rate derivatives* -16.4 -14.3 -16.4

Fair valuation of long-term debt -0.2 -0.3 -1.1

NewPage lease provision - 9.5 -128.2

Other items -0.8 -4.0 -2.5

Total net financial items -59.1 -66.8 -193.4 69.4 11.5

*Not hedge accounted interest rate derivatives.


Transaction risk and hedges as at 30 September 2012

Operational EBIT: Currency strengthening of + 10% EUR million

USD 115

SEK -95

GBP 62

EUR million USD GBP SEK

Estimated annual net operating cash flow exposure 1 150 620 -950

Transaction hedges as at 30 Sep 2012 -580 -280 380

Hedging percentage as at 30 June 2012 for the next 12 months 50% 45% 40%

The sensitivity is based on estimated next 12 months net operating cash flow. 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.

Additional GBP hedges for 13-16 months increase the hedging percentages by 6 %.


Softwood pulp prices Stora Enso’s market pulp is softwood

Source: FOEX


Pulp wood and saw log prices Wood prices in Finland

Source: METLA


Wood prices in Sweden

Pulpwood includes pine. spruce and birch.

Sawlogs include pine and spruce.

Source: SDC. Skogsstyrelsen

Financial Results Q3 2012 29 23 October 2012

RCP prices

German RCP price development. free delivered

Source: Verband Deutscher Papierfabriken/Stora Enso


Capital expenditure and depreciation Q1 2008 – Q3 2012


Debt/equity ratio 2009 – Q3 2012


Energy balance* Q3 2012

Impact** on operating profit from

10% change in: EUR million p.a.

Electricity market price ~4

Fossil fuel price ~17

Self sufficiency 46% Self sufficiency 63%

Total energy self

sufficiency 59%

**) Remaining impact on non-hedged volume


*) Pulp. paper and board mills. Europe and overseas

35

Stora Enso Electricity procurement* Q3 2012

23 October 2012 Financial Results Q3 2012

*) Pulp. paper and board mills. Europe and overseas

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