Growth Engine Mats Nordlander, EVP, Renewable Packaging
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World needs a new approach to materials Renewable packaging Recyclable packaging Packaging More from less End of waste Responsible and resource efficient choice for packaging material! Protects goods Consumer communication Efficient supply chains 3
How we will win! Customer experience Customers and Consumers Efficient supply chain Products for demanding customers 4
How likely would you recommend Stora Enso as a supplier? Net Promoter Score Source: Stora Enso Customer Experience Management System VOICE 5
Sales EBIT Renewable Packaging Sales, Operational EBIT, ROOC EUR million EUR million ROOC 2010 14.9% 2011 14.2% 6
Consumer Board performance against selected peers ROCE % EBIT 2011 EUR million 272 137 96 309 96 Mats Nordlander 22 March, 2012 7
Key challenges Too small market share in growth markets Competing materials Non-competitive containerboard capacity High cost Russian wood in Imatra Cost competitiveness Our response M&A and greenfield initiatives started to accelerate growth in growth markets Investing in R&D - MFC Investing in cost competitive RCP containerboard machine with modern lightweight product Reducing costs of Russian wood supply Debottlenecking, streamlining and cost control Skoghall Mill wood yard Imatra Mills pulp drying Restructuring in converting Restructuring and growth in balance 8
Our strategic growth areas Virgin-fibre based consumer board Global #1 Premium products Corrugated packaging Growth markets Global partner customers 9
Significant growth expected for corrugated packaging in Eastern Europe, Asia and Middle East & Africa 0.5% 1.0% 4.1% 4.4% North America Western Europe Eastern Europe 2010-2020 Million tonnes 2,7 % 4.3% Asia South America Middle East & Africa Source: Pöyry and Stora Enso 10
Ostroleka investments EUR 137 million in a new power plant to secure efficient energy supply completed EUR 285 million in a new RCP containerboard machine Planned production 455 000 t/a, net impact 370 000 t/a Focusing on modern lightweight product Majority to be consumed internally Raw material integration from 35% to 60% Inpac acquisition Acquisition of Inpac International completed in July 2011 Strengthens existing relationships with global key customers by providing packages directly in China Brings synergies with existing consumer packaging business in Europe Other actions Restructuring in Finland Quality investments Increasing capabilities in packaging design Expansion in Russia 11
Strongest growth in demand of virgin fibrebased consumer board will be in Asia 0.2 % 1.4 % 4.6 % 6.9 % North America 3.5 % Western Europe 3.3 % Eastern Europe 2010-2020 Million tonnes Middle East & Africa Asia South America Fibre-based consumer board consumption China 9% Pakistan 9% India 6% Middle East 4% Source: Pöyry and Stora Enso 12
Consumers start to buy packaged food once annual family income reaches USD 5 000 Population in households with annual disposable income USD 5 000+ (global) Population in China in households with annual disposable income USD 5000+ 2002 Annual growth 2.8% 2010-2020 Annual growth 4.7% 2010-2020 13
2010-2012 India, China and Pakistan estimated to drive growth in terms of milk volumes Consumption estimate for Liquid Dairy Products 10% 9% 8% 7% 6% 5% 9,0% Total Global LDP average growth rate: 2.4% 4% 3% 2% 1% 2,1% 2,8% 3,2% 1,5% 1,2% -1% -2% -3% -4% -5% Volume 2012 Bil Litres -0,1% 57.4 33.7 25.9 22.6-0,4%-0,3% -2,8% 12.8 11 7.7 6.7 5.6 5.1 Source: Tetra Pak Source: Dairy Index Tetra Pak 2009 14
Accelerate what works Every third beverage carton in the world is produced from Stora Enso materials! 15
Stora Enso to build world-class pulp and consumer board mill in Southern China Integrate including: Paperboard mill of 450 000 tonnes Pulp capacity of 900 000 tonnes Energy plant Auxiliary facilities Unique set-up: the pulp and board mills to be integrated with 120 000 hectares of self-managed eucalyptus plantations Target to expand the paperboard capacity to 900 000 tonnes at a later stage Operations expected to start during Q4/2014 16
Focusing on high quality segments in China Unique position Chinese platform for growth A world leading position Technologies and specifications Committed customers Unique integrate Established footprint Innovations Well prepared project to accelerate profitable growth 17
Total investment approximately EUR 1.6 billion 18
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Independent sustainability impact studies give solid platform for the project 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 20
Key takeaways Renewable packaging - Solution for the future! Focus on profitable growth Clear priorities to accelerate what works Growing by expanding in China Serving mainly global customer base Integrated low cost production from domestic self-managed tree plantations to end product Serving demanding customers proven know how 21
Growth Engine 22
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Stora Enso s Operations in China Personnel currently about 4 500 in China Beijing Dawang Mill Uncoated magazine paper (170 000 tonnes) Suzhou Mill Coated fine paper (245 000 tonnes). Customers include merchants and printing houses Shanghai Beihai Eucalyptus plantations (90 000 ha) Guangxi (since 2002) Hong Kong Two core board factories Hangzhou and Foshan 5 Sales branches Dongguan and Qian an (Inpac) 24
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 forwardlooking 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. 25