db_jh_291100ppt

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Jukka HärmäläCEO, Stora Enso Deutsche Bank Alex.
Brown 2000 Basic Industries ConferenceNovember
29, 2000
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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
  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 Groups 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 Groups
  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 Groups 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 Groups principal geographic
  markets or fluctuations in exchange and interest
  rates.

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Contents

• 1. Financial results
• 2. Stora Enso today
• 3. Market outlook

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Financial Results
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Sales and operating margin
MEUR

Sales
Operating margin
) Before non-recurring items
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Profit before tax and minority interests
MEUR
Before non-recurring items
Including non-recurring items
902
447
501
436
229
-378
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Return on capital employed

17.7
11.5
10.2
Target gt 13 over the cycle
) Before non-recurring items
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Debt/equity
Target 0.8 in year 2000
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Capital expenditure and depreciation
EUR million
Capital expenditure
Depreciation
)260
Target Should not exceed the level of
depreciation
) Non-recurring write-downs
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Stora Enso Today
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Stora Enso

• Sales about EUR 13 billion
• Production capacity 15 million tonnes of
  paperand board annually
• 5 million m3 of sawn goods
• About 45,000 employees
• Listed on the Helsinki, New York and Stockholm
  stock exchanges

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Industrial strategy

• Product and customer focus
• Focus on core areas publication papers, fine
  papers and packaging boards
• The global marketing network will enhance the
  level of service provided and enable Stora Enso
  to build long-term customer relationships
• Productivity and cost competitiveness
• Realisation of synergies
• Current productivity programmes
• Profitable growth
• Continue to play active role in industry
  consolidation
• While Europe remains the home market, the Group
  will increasingly pursue global opportunities
• Finance growth using primarily with cash flow and
  divestiture proceeds

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Strong restructuring story

• Sale of power assets
• Shut down 40,000 tonnes carton board mill
  inNewton Kyme, UK
• Shut down permanently two coated fine
  papermachines in the USA with a capacity
  of80,000 tonnes
• Established a forestry joint venture withAracruz
  in Brazil
• Established a 50/50 joint venture with Assi
  Domänfor packaging boards, divesting the Gruvön
  mill(600,000 tonnes)
• Bought back 14 million shares (about 50/R, 2/A
  shares)

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Stora Enso North America

• Division Stora Enso
• Sales, MEUR 2,540 12,920
• Capacity, Million tonnes 2,600 15,360
• Operating Capital, MEUR 5,595 15,034
• No. of Employees 7,260 46,700
• ) includes Gruvön mill (630 000 tonnes)

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Estimated Financial Synergies2001 - 2002

• USD million 2001 2002
• Best practices 50 60
• production efficiency
• cost savings
• Optimization of sales and logistics 30 40
• access to best distribution channels in USA
• European imports and Port Hawkesbury
• Purchasing 10 10
• Total 90 110
• Based on initial estimates and due diligence

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Cost-saving programme started by CPI
EstimatedUSD million Impact 2000 Material
substitution and reductions 33 Improved
productivity 20 Staffing 17 Price reductions
(purchased materials) 12 Energy and effluent
reductions 10 Other 8 Total 100 ) compared
with 1998
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North American Strategy

• First
• Integration process to be completed successfully
• Cash flow strong but increased depreciation will
  be a burden in next few years
• Second
• Due to strong platform, even acquiring mills and
  asset swaps would be possible
• Main interest in coated papers and packaging
  boards
• Third
• Name recognition
• status of local producer to customers
• investment alternative

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Future Outlook

• South America
• Joint venture with Aracruz strengthens presence
  and increases future opportunities
• Europe
• Consolidation will continue, especially in fine
  paper
• Growth opportunities in magazine paper and
  newsprint limited
• Russia
• Small step strategy to be realized by investing
  in sawmilling and corrugated board
• Asia
• Coated fine paper mill in Suzhou in China and
  19.9 shareholding in Advanced Agro in Thailand
  are our first steps in Asia

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e-Commerce

• e-Commerce is to come
• will lower marketing costs
• increased sales office focus on customer
  relations
• speed up delivery times
• working capital management
• But,
• importance of quality, product identity and
  efficient logistics cannot be replaced
• partnership with key account customers will
  continue
• e-Dialogue

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Summary

• Internal integration process will continue
• Various synergy and cost-efficiency programmes
  will benefit financial performance
• Consolidation will continue and Stora Enso
  intends to play active role in the process
• Target is to grow profitably and meet the
  financial targets
• Shareholder value

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Market Outlook
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Market Outlook

• Pulp
• Norscan inventories were at the end of
  October1,5 million tonnes.
• List price for long-fibre pulp in USD 710 and for
  eucalyptus EUR 790 and birch pulp EUR 780
• There is slight oversupply in pulp market due to
  the weakness in some fine paper grades. This
  could weaken the market unless capacity
  utilization levels are adjusted to demand.
• Sawn timber
• Demand is expected to remain strong
• Supply is expected to increase, pressing the
  market
• Prices have declined but marginally

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Magazine Papers

• Western Europe
• Market remains tight with 10 growth in
  January-October 9 in SC and 11 in CMR
• Current order backlog is very strong
• Prices are mainly stable with some gains,
  especially in offset
• European prices are more than 30 below North
  American prices
• Strong demand expected for the rest of the year
  and early 2001,despite of slowing but still
  strong economy
• North America
• Market remains tight with about 8 growth in the
  period January-July 13 in SC and 6 in CMR
• European imports surging due to weak euro
  
  
  
  
• Consumer inventories highest since September
  1998,while producer inventories remain flat
• Further price announcements as from October 1st,
  although LWC price rise implementation will be
  delayed until January

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Newsprint

• Western Europe
• Strong growth in advertising expenditure has
  boosted newsprint demand, and deliveries grew by
  5 in Jan-Oct
• Prices are over 40 higher in the USA than in
  Europe
• Producer inventories are at lowest level since
  December 1997
• Tight market situation is supporting planned
  price increasesfor Jan 1, 2001
• North America
• The market is firm, but the growth has been
  decelerating
• The North American demand in Jan-Sept increased
  by about 2
• The price went up by 50/ton in September, the
  third hike in the last 12 months
• Both producer and publisher inventories went down
  in September and the producer inventories are
  lowest since November 1998

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Fine Papers

• Europe
• Order inflow sluggish, especially in coated
  woodfree
• Merchant inventories high, but decreasing
• Uncoated woodfree price increases were
  implemented in September and October
• Mills are planning downtime to support coated
  woodfree pricing
• Recovery expected in spring 2001
• North America
• Short term outlook weak - long term positive
• Uncoated woodfree demand appears picking up,
  coated woodfree market dim
• Mills are planning downtime to support coated
  woodfree pricing
• High imports (e.g. CWF 31 through August)
  holding back markets
• Due to healthy demand and very modest capacity
  increase the outlook for2001 is optimistic
• Capacity closures will make worldwide uncoated
  woodfree demand/supplybalance attractive in 2001
  and 2002
• Asia
• Fine paper market plagued by over capacity -
  underlying demand healthy
• Prices continued to drop in September and October
  due to over supply andfight for market shares
• Exports to Europe expected to stay on rather low
  level due to weak euro andhigh shipping costs

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