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Magazine Paper Capital Markets Day 2002

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Capital Markets Day 2002 Bernd Rettig Senior Executive Vice President, Magazine Paper Net capacity change Mill Machine Time frame High-quality SC-B and SC improved ... – PowerPoint PPT presentation

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Title: Magazine Paper Capital Markets Day 2002


1
Magazine PaperCapital Markets Day 2002
  • Bernd Rettig
  • Senior Executive Vice President,
  • Magazine Paper

2
IntroductionMagazine paper product range
End use products Magazines Catalogues
Direct Mail
WFC
MWC
LWC
MFC
SC
MF
NEWS
3
Introduction World market for magazine papers
2001
CMR Total 14.3 million tonnes
SC Total 6.4 million tonnes
4
Introduction Stora Enso Magazine Paper Mills
Biron, Wisconsin Kimberly, Wisconsin Niagara,
Wisconsin Whiting, Wisconsin
Veitsiluoto
Norrsundet
Anjala
Kvarnsveden
Duluth, Minnesota
Kotka
Port Hawkesbury
Summa
Langerbrugge
Kabel
Corbehem
Reisholz
Maxau-Wolfsheck
Coated Magazine Paper 2 945 000
Uncoated Magazine Paper 1 625 000
Wallpaper base 65 000
Pulp mill
Total capacity 4.6 million tonnes
5
Business driversImportance of advertising
  • Main driving force for the consumption of
    publication papers is advertising
  • Newspaper revenues depend up to 87 and magazines
    up to 70 on advertising
  • The macro-economic mechanism
  • economy drives consumer confidence
  • consumer confidence drives consumption
  • consumption drives advertising
  • advertising drives paper consumption
  • Magazine paper is a late cyclical business

6
Business driversGDP growth forecast
2000
2001
2002
2003
3.0
North America
4.1
0.4
2.5
2.0
Western Europe
3.3
1.6
1.0
Asia Pacific
3.9
1.2
1.5
2.6
Latin America
3.8
0.1
-1.5
2.7
Eastern Europe
6.3
1.7
3.4
3.9
Total
3.8
1.0
1.6
2.6
Source Stora Enso estimate based on consensus
economic forecasts - October 2002
7
Business driversAdvertising expenditures
Development by media in USD billion
Europe North
America Asia Pacific
Newspapers Magazines TV
Direct Mail Internet
Source Zenith ad spend forecasts - July 2002
8
Business driversWorldwide advertising
expenditure development
in USD billion at current prices
10.0
- 4.3
1.1
2.9
4.5
Source Zenith ad spend forecasts - July 2002
9
MarketSC-paper market size and forecast growth
Global SC-paper demand 2002 6.4 million tonnes
5.8
North America
5.1
2002 - 2006 average annual growth rates
O t h e r E u r o p e
3.1
Western Europe
1.6
Rest of World
New Amec market study W. Europe Average annual
growth 2002-2007 SC-paper 3.9
2002 demand (million tonnes)
2.7 0.2
3.2 0.4
Source Cepiprint / PPPC / EMGE - SE estimates
10
MarketCoated Mechanical Paper market size and
forecast growth
4.3
4.3
Global Coated Mechanical Paper demand 2002 14.3
million tonnes
Western Europe
O t h e r E u r o p e
2002 - 2006 average annual growth rates
3.2
3.1
3.0
Rest of World
L. A m e r I c a
North America
2002 demand (million tonnes)
6.2 0.3 2.1 0.5
5.2
Source Cepiprint / PPPC / EMGE - SE estimates
11
CMR market development Europe
Source Cepiprint / SE estimates
12
Industry structure market positionTop
producers magazine paper (SC CMR)
North America
W. Europe
Top 5 65 of capacity
Top 5 80 of capacity
  • Attractive structure
  • Leading position

Source Jaakko Pöyry, October 2002 / Stora Enso
official capacities 2002
13
Key success factorsMagazine Paper Division
  • Leading market position
  • Strong strategic position in the magazine paper
    business
  • Quality products and services
  • Broad product portfolio
  • Competitiveness
  • Competitive asset structure
  • Cost efficiency and high productivity
  • Access to competitive fibre combined with own
    mechanical pulp production
  • HR development
  • Qualified and motivated personnel

14
Main strategic initiativesMagazine Paper Division
  • Improve asset quality and competitiveness by
    restructuring
  • Strengthen sales marketing
  • HR development
  • Set the benchmark in best practice

15
Asset restructuring Uncoated Magazine Paper
Europe
  • Stora Ensos SC business today
  • SC-A Strong market position with moderate
    competitiveness
  • SC-B Minor market position in a fast-growing
    market
  • Objectives of asset restructuring plan
  • SC-A Sustain market position and improve
    competitiveness
  • SC-B Improve market position and maintain
    competitiveness

16
Asset Restructuring Uncoated Magazine Paper
Europe
Project step Langerbrugge PM2 shut Langerbrugge
PM3 rebuild to SC New SC-A() Kvarnsveden
PM12 Closure of Kvarnsveden PM9 Rebuild Maxau
PM6 for more SC-B Divestiture of Wolfsheck
PM45 Switch Langerbrugge PM3 to SC-B
  • Time frame
  • 2003
  • 2002
  • 2005-2010
  • 2005
  • 2004
  • 2005
  • 2006-2008

17
Net capacity change
  • Mill Machine Time frame High-quality SC-B and
  • SC improved news
  • Langerbrugge PM2 2003 -115 000
  • Langerbrugge PM3 2002 165 000
  • Kvarnsveden PM12 2005-2010 400 000
  • Kvarnsveden PM9 2005 -135 000
  • Maxau PM6 2004 120 000
  • Wolfsheck PM4-5 2005 -90 000
  • Langerbrugge PM3 2006-2008 -165 000 165 000
  • NET CHANGE 195 000 150 000

18
SC market development Europe

SC-A
Source Cepiprint / SE estimates
including Improved Newsprint
19
Demand/Supply developmentSC paper - WE supply
1 000 mt
Source 1985 - 2006 Cepiprint, 2007 - 2008 SE
estimates
20
Asset qualityEuropean SC producers
Today 2007
- Weighted average PM capacity, 1 000 t/a -
- Weighted average PM capacity, 1 000 t/a -
400
400
Weighted average technical age 10
Weighted average technical age 12
STRONG
STRONG
350
350
Stora Enso
300
300
250
250
Weighted average capacity 207 000 t/a
Weighted average capacity 234 000 t/a
200
200
150
150
Stora Enso
100
100
50
50
WEAK
WEAK
0
0
0
5
10
15
20
25
30
0
5
10
15
20
25
30
- Technical age, years -
- Technical age, years -
Source Jaakko Pöyry
21
Market outlookSummary
  • Autumn 2002 shows an improvement in demand
    compared with first half
  • For 2003 a moderate recovery of magazine paper
    demand is expected
  • Despite solid demand growth in 2003 and 2004,
    existing capacity expansions will keep operating
    rates low in CMR
  • In 2003, market balance will lead to a
    competitive situation
  • Within the next four years, world demand for
    magazine paper is expected to grow by 3.8 million
    tonnes to 25 million tonnes ( 4.8 av/yr), while
    capacity will increase by 2.7 million tonnes to
    reach 26.5 million tonnes ( 2 av/yr)

22
Questions Discussion
23
Appendices
24
Industry Structure Market PositionTop
producers CMR
W. Europe
North America
Top 5 73 of total capacity
Top 5 77 of total capacity
Source Jaakko Pöyry, October 2002 / Stora Enso
official capacities 2002
25
Industry Structure Market PositionTop
producers SC-paper
W. Europe
North America
Top 5 74 of total capacity
Top 5 97 of total capacity
Source Jaakko Pöyry, Oct. 02 / Stora Enso
official capacities 2002
26
MarketPrice development Germany 1995 2002
monthly
EUR/t paper USD/t NBSK
Source PPI
27
MarketPrice development USA1995 - 2002 monthly
USD/metric tonne
Source PPI
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