Financial Results Q4 and Full Year 2012 CEO Jouko Karvinen and CFO Karl-Henrik Sundström
5th February 2013
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 Q4 and Full Year 2012 Results 5 February 2013 2
Q4 Operational EBIT Improved due to lower costs y-on-y Cash Flow from Operations continued Strong
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 3
*Operational EBIT comprises the operating profit excluding NRI and fair valuations of the segments and Stora Enso’s share of the operating
profit excluding NRI and fair valuations of its equity accounted investments (EAI). Fair valuations include equity incentive schemes. synthetic
options net of realised and open hedges. CO2 emission rights and valuations of biological assets related to forest assets in EAI.
Q4 Performance
• Operational EBIT at EUR 155 million
• Strong cash flow from Operations at
EUR 471 million
• Strong liquidity EUR 1 845 million
• Operational ROCE 7.1%
• Stable dividend
– Dividend proposal of EUR 0.30
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 4
Printing and Reading Operational EBITDA Improved y-
on-y and q-on-q even without capacity cuts
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 5
Printing and Reading, EUR million 2009 2010 2011 2012
Operational EBITDA 497 411 548 489
Cash Flow from Operations 710 415 406 506
European paper* Demand 2007-2012 Jan/2007 = 100%
5 February 2013
*Paper: News, UMO, UMI, SC, CM, WFC & WFU
Source: EuroGraph & PPPC
SA = seasonally adjusted
Stora Enso Q4 and Full Year 2012 Results 6
-25%
-20%
-15%
-10%
-5%
0%
5%
75%
80%
85%
90%
95%
100%
105%
Jan
-07
Jul-
07
Jan
-08
Jul-
08
Jan
-09
Jul-
09
Jan
-10
Jul-
10
Jan
-11
Jul-
11
Jan
-12
Jul-
12
Euro
pe
an p
ape
r d
em
and
gro
wth
y-o
-y [
%]
Euro
pe
an p
ape
r d
em
and
[Ja
n-2
00
7 =
10
0%
]
SA European paper demand y-o-y
SA European paper demand
European paper* Demand & Forecasting Track Record
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 7
* Paper: News, UMO, UMI, SC, CM, WFC & WFU
SA = seasonally adjusted
30000
32000
34000
36000
38000
40000
42000
44000
46000
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Euro
pe
an p
ape
r d
em
and
[kt
/a]
Monthly SA demand (annualized)
RISI forecast Mar-2010
RISI forecast Feb-2011
RISI forecast Feb-2012
Reducing Capacity to meet declining Paper Demand Printing and Reading plans to shut down 475 000 tonnes
• PM 2 Hylte Mill and PM11 Kvarnsveden Mill,
Sweden
• 475 000 tonnes newsprint
– Shut down in Q2 2013
• Annual cost savings EUR 24 million
– Fixed assets and working capital write-down
of EUR 42 million in Q1 2013
– Provisions with cash impact EUR 40 million
• 300 people impacted
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 8
Building and Living
Evident Improvement needs
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 9
Building and Living, EUR million 2010 2011 2012
Operational EBITDA 111 102 59
Cash Flow from Operations 82 95 63
Adjusting Cost Structure Building and Living plans to streamline operations
• Annual cost reductions EUR 30 million
– full impact early 2014
• Provision with cash impact of EUR 6
million
• Up to 300 employees impacted
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 10
Skoghall
Investment started up on time, on 8 Nov 2012
Ostroleka
Investment started up in Jan 2013, 6 weeks ahead of schedule
Montes del Plata
Over 80% completed,
Start-up mid-year 2013
Strategic Investments Montes del Plata, Ostroleka and Skoghall
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 11
Guangxi Board and Pulp mills project
• Preparations proceeding
• The construction and production schedule will be updated when the final
approvals are given and detailed plans are in place
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 12
Business Area ROOC %, excl. and incl. Strategic Projects Impact to Group ROCE % was 1.5% in Q4 2012
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 13
%
9,27,7
13,0 13,4
0
5
10
15
20
25
30
11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4
ROCE ROCE excl. Strategic inv Q4 2012 Q4 2012 excl. Strategic inv Current WACC
Renewable Packaging Biomaterials
Stable Cash flow enabling the transformation Cash flow from operation is EUR 1 253 million in 2012
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 14
Summary financials Q4 and Full Year 2012
EUR million Q4/12 Q3/12 2012 Q4/11 2011 Change % Change %
Q4 12/Q4 11 2012/2011
Sales 2 727.0 2 694.1 10 814.8 2 681.6 10 964.9 1.7 -1.4
Operational EBITDA 272.8 299.6 1 082.6 242.9 1 308.0 12.3 -17.2
Operational EBITDA margin, % 10.0 11.1 10.0 9.1 11.9 9.9 -16.1
Operational EBIT 155.0 174.7 618.3 144.9 866.7 7.0 -28.7
Operational EBIT margin, % 5.7 6.5 5.7 5.4 7.9 5.6 -27.8
Profit before tax excl, NRI 83.5 102.2 318.5 141.4 639.1 -40.9 -50.2
EPS excl. NRI, EUR 0.11 0.10 0.33 0.10 0.63 10.0 -47.6
EPS (basic), EUR 0.33 0.10 0.61 0.12 0.43 175.0 41.9
Operational ROCE, % 7.1 8.0 7.1 6.7 10.0 6.0 -29.0
Cash Flow from Operations 471.0 312.4 1 252.7 302.3 1 034.3 55.8 21.1
Net debt/last 12 months’
operational EBITDA 2.5 2.8 2.5 2.1 2.1 19.0 19.0
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 15
Group Variance – Operational EBIT Positive impact from lower cost
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 16
• Q4 vs. Q3 • Q4 y-on-y
Efficient operative working capital management Q1 2010 – Q4 2012
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 17
Balance Sheet enabling the transformation Q1 2010 – Q4 2012
Stora Enso Q4 and Full Year 2012 Results 5 February 2013
*Last twelve months’ operational EBITDA
18
Guidance for Q1 2013
• Compared to Q4 2012:
– Sales at roughly similar level
– Operational EBIT in the order of
magnitude one-third lower due to
deterioration in European paper and
Building and Living markets
• The restructuring plans to impact the
Group’s result from H2 2013 onwards
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 19
Projected Capex and Equity Injections for 2013 Excluding China investment
Capital Expenditure, Equity injections and Depreciation Forecast 2013
EUR million Forecast 2013
Capital expenditure* 350-400
Equity injections 110-130
Total 460-530
Depreciation 600-620
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 20
* Excluding China investment
Summary
• Improved Q4 EBIT year-on-year
• Strong cash flow and liquidity
• Paper capacity reductions plans to
address declining paper markets and
adjusting Building and Living cost
structure
• Skoghall and Ostroleka investments
started up and ramping up
• Montes del Plata start up mid-year 2013
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 21
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 22
Permanent pulp, paper and board capacity reductions since 2006
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 23
Mill Date Grade Capacity reduction, t
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 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, directory paper 290 000
Maxau PM 7 Nov 2010 Newsprint 195 000
Hylte PM1 Dec 2012 Newsprint 180 000
Total 3 220 000
Permanent sawn wood capacity reductions since 2006
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 24
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
Kopparfors Sawmill End 2011 310 000
Total 1 900 000
Operational EBIT by segments
EUR million Q4/12 2012 Q4/11 2011 Change % Change %
Q4 12/ Q4 11 2012/ 2011
Printing and Reading 58.0 218.1 55.6 285.3 4.3 -23.6
% of sales 4.9 4.5 4.3 5.7 14.0 -21.1
Biomaterials 27.7 82.1 27.2 169.2 1.8 -51.5
% of sales 10.8 8.1 10.6 15.5 1.9 -47.7
Building and Living 6.8 28.8 6.0 62.8 13.3 -54.1
% of sales 1.5 1.7 1.6 3.8 -6.3 -55.3
Renewable Packaging 54.8 271.9 32.8 301.3 67.1 -9.8
% of sales 6.9 8.5 4.3 9.4 60.5 -9.6
Other 7.7 17.4 23.3 48.1 -67.0 -63.8
% of sales 1.1 0.6 3.6 1.8 -69.4 -66.7
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 25
Net Financial Items
EUR million Q4/2012 Q3/2012 Q4/2011 Change
Q412/Q411
Change
Q412/Q312
Net interest expense -47.3 -44.0 -35.1 -34.8 -7.5
Foreign exchange gains and losses -1.0 -0.4 -3.0 66.7 -150.0
Other financial items. of which 0.9 -14.7 -21.1 n/a n/a
PIK notes 2.7 2.7 2.0
Fair valuation of interest rate derivatives* -8.6 -16.4 -4.4
Fair valuation of long-term debt - -0.2 -0.4
NewPage lease provision 10.5 - -
Arktos write-off - - -10.2
Other items -3.7 -0.8 -8.1
Total net financial items -47.4 -59.1 -59.2 19.9 19.8
*Not hedge accounted interest rate derivatives.
Stora Enso Q4 and Full Year 2012 Results 5 February 2013 26
Transaction risk and hedges as at 31 December 2012
Operational EBIT: Currency strengthening of + 10 EUR million
USD 103
SEK -93
GBP 60
EUR million USD SEK GBP
Estimated annual net operating cash flow exposure 1 030 -930 600
Transaction hedges as at 31 Dec 2012 -530 470 -270
Hedging percentage as at 31 Dec 2012 for the next 12 months 51 51 45
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 13-15 months increase the hedging percentages by 3 .
Stora Enso Q4 and Full Year 2012 Results 5 February 2013 27
Softwood pulp prices Stora Enso’s market pulp is softwood
Source: FOEX
Stora Enso Q4 and Full Year 2012 Results 5 February 2013 28
Pulp wood and saw log prices Wood prices in Finland
Source: METLA
Stora Enso Q4 and Full Year 2012 Results 5 February 2013 29
Wood prices in Sweden
Pulpwood includes pine. spruce and birch.
Sawlogs include pine and spruce.
Source: SDC. Skogsstyrelsen
Stora Enso Q4 and Full Year 2012 Results 5 February 2013 30
Paper for Recycling prices
German RCP price development. free delivered
Source: Verband Deutscher Papierfabriken/Stora Enso
Stora Enso Q4 and Full Year 2012 Results 5 February 2013 31
Maturity profile Q4 2012
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 32
Energy balance* Q4 2012
Impact** on operating profit from
10 change in: EUR million p.a.
Electricity market price ~5
Fossil fuel price ~15
Self sufficiency 47 Self sufficiency 63
Total energy self
sufficiency 59
**) Remaining impact on non-hedged volume
5 February 2013 Stora Enso Q4 and Full Year 2012 Results 33
*) Pulp. paper and board mills. Europe and overseas
Stora Enso Electricity procurement* Q4 2012
5 February 2013 Stora Enso Q4 and Full Year 2012 Results
*) Pulp. paper and board mills. Europe and overseas
34