Cash Engine Juha Vanhainen, EVP, Printing and Reading
Business Area Printing & Reading Publishing and commercial printing We inspire the world with paper 2
ipad s take-off has been a great success Apple ipad Apple iphone + itouch Nintendo Wii Nintendo DS Sony PSP Apple ipod RIM Blackberry Source: KPCB; Apple; Morgan Stanley 3
AdSpend [ billiion ] West European advertising spend is still at the pre-crisis level (calculated in 2010 euro) 100 90 80 70 60 50 40 8 10 12 28 28 27 13 14 15 24 25 25 Internet Other Radio TV 30 20 10 43 42 39 32 31 30 Print 0 2006 2007 2008 2009 2010 2011e Source: Zenith Dec-2011 4
The development has caused a structural change to West Europe paper demand development 5
Business Area Printing and Reading Production capacities, million t/a Newsprint 2.5 Super calendered 1.4 Coated paper 3.0 Office paper 1.3 Total paper 8.2 Kvarnsveden Hylte Veitsiluoto Oulu Varkaus Anjala Nymölla Newsprint SC Coated Office Langerbrugge Corbehem Kabel Uetersen Sachsen Maxau Dawang Suzhou Arapoti 6
BA Printing and Reading sales and EBITDA 7
BA Printing & Reading profits are better than the ones of main competitors, EBITDA-% (sliding average of latest four quarters) Strora Enso purchased pulp at market price; energy procurement at market conditions 8
Cost index, 100 equals to median of each grade BA Printing and Reading will improve cost position to keep average below median at all times 180 Delivered cash cost to Frankfurt 160 140 120 BA will target at keeping the average cost level below median at all times 100 80 60 1 st quartile 35% BA Printing and Reading capacity-% in each quartile: 2 nd quartile 30% 3 rd quartile 30% 4 th quartile 5% 0 10000 20000 30000 40000 50000 Cumulative European paper capacity, 1000 t/a Source: Pöyry, Stora Enso excluding specialties & book Q4/2011 9
Concept for winning in a declining market Input Focus on end-uses Paper for all print end-uses New products expanding offering Supply chain efficiency priority Not growth, but low-cost Delivered cost Targeted investments Energy efficiency and bio fuels Asset restructuring Action 10
Our value proposition to our customers Your peace of mind comes first from sourcing raw materials to creating renewable reading experiences Added value to customers Reliability and availability Cost efficiency Good reputation Offering fit for purpose 11
We inspire the world with paper From selling paper grades to jointly selecting best paper for end-use applications 12
Product development reinventing boundaries between paper grades PrimaPress an uncoated paper for traditional end-uses of coated paper Brilliant gloss never seen before for LWU End uses: magazines, catalogues Production: Kvarnsveden PM12 13
BA Printing and Reading 2011 Net Promoter Score Compared to most frequently mentioned competitors BA Printing & Reading n=1384; All competitors n=1297 14
Concept for winning in a declining market Input Focus on end-uses Paper for all print end-uses New products expanding offering Supply chain efficiency priority Not growth, but low-cost Delivered cost Targeted investments Energy efficiency and bio fuels Asset restructuring Action 15
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Ongoing restructuring measures Fine paper cost competitiveness improvement Annual cost reduction 20 M Cash provision 16 M Full impact after Q2/2012 Coated magazine paper operations restructuring Annual cost reduction 48 M Investments 18 M and cash provision 5 M Full impact from Q3/2013 onwards 17
Sales value per employee 18
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Printing & Reading operational development targets Product development New products Cost structure improvement Source reduction From mill specialization to operational flexibility Lowest delivered to customer cost asset gets the orders 20
Lean and focused capital expenditure model Capex of sales Top assets with low cost; efficiency and energy investments Assets to be kept on current technical level Average at ~2.5% of sales Assets for divestment or closure during the next 10 years Competitiveness 21
Energy investments Energy efficiency Energy generation towards bio Latest 5 year investments 300 M Specific energy consumption improvement work continues 22
Located in a seaport Oulu paper mill is the largest coated paper production unit in Europe Benchmark paper quality Integrated 23
Kvarnsveden PM12 in Sweden Wood procurement from an area with 200 km radius 24
80 million people live within a 300 km radius Excellent energy solution based on non-fossil/renewable Langerbrugge Amsterdam houses the largest newsprint London paper machine Düsseldorf in Europe Langerbrugge Cologne Paris 100% recycled fiber 25
Ready for all future demand scenarios New setup with all paper business in one business area Serving consumers continuously developing media needs with new paper applications Performance over size and market share Focus on making top assets even stronger 26
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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. 28