Stora Enso Fourth Quarter and Full Year Results 2011 - Presentation by CEO Jouko Karvinen and CFO Markus Rauramo

1. Financial Results Full Year and Q4 2011
CEO Jouko Karvinen and CFO Markus Rauramo
8 February 2012

2. Full year 2011 operational EBIT improved by 9%
Operational EBIT EUR 867 million
Operational ROCE 10.0%
Strong cash flow EUR 1 034 million
Dividend increased to EUR 0.3
Full year 2011
Financial results Q4 2011 8 February 2012 2

3. Solid year and satisfactory quarter
Operational EBIT* Operational EBIT*
Operational EBIT margin % Operational EBIT margin %, 4 Q avg
900 8,0 % 300 10,0 %
9,0 %
250
7,9 %
8,0 %
EUR million
EUR million
850 200
7,8 % 7,0 %
150 6,0 %
7,7 %
5,0 %
800 100
4,0 %
7,6 %
50
3,0 %
750 7,5 % 0 2,0 %
2010 2011 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4
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.
Financial results Q4 2011 8 February 2012 3

4. Curtailments increased to reduce inventories
% of capacity
Paper and Board Wood Products
30
25
20
% of capacity
15
10
5
0
Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411
Financial results Q4 2011 8 February 2012 4

5. Flexibility improvements continue
Fixed cost/sales
0,30
Fixed Cost/Sales
0,28
0,26
0,24
FY2007 FY2008 FY2009 FY2010 FY2011
Financial results Q4 2011 8 February 2012 5

6. Productivity continued to increase
55% per person since 2005
400 000
350 000
Sales/employee
300 000
250 000
200 000
2005 2006 2007 2008 2009 2010 2011
Continuing operations
Financial results Q4 2011 8 February 2012 6

7. Full year solid – rethinking continues
Operational EBIT by segments
Change% Change%
EUR million IV/2011 2011 IV/2010 2010
IV11/IV10 2011/2010
Consumer Board 28 272 52 277 -46.8 -1.7
% of sales 4.8 10.9 8.5 12.0 -43.5 -9.2
Industrial Packaging 14 73 22 66 -37.7 11.0
% of sales 5.3 7.3 9.1 6.9 -41.8 5.8
Newsprint and Book
Paper 29 116 -3 -11 n/m n/m
% of sales 8.4 8.8 -0.8 -0.9 n/m n/m
Magazine Paper 18 128 20 91 -9.2 40.9
% of sales 3.3 6.1 3.6 4.4 -8.3 38.6
Fine Paper 25 192 68 259 -62.4 -26.1
% of sales 4.8 8.9 12.7 12.2 -62.2 -27.0
Wood Products 6 63 10 71 -41.2 -11.4
% of sales 1.6 3.8 2.5 4.5 -36.0 -15.6
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.
Financial results Q4 2011 8 February 2012 7

8. Plan to increase competitiveness in Coated
Magazine
• Restructuring at Corbehem, Veitsiluoto and Kabel
Mills
• Cost efficiency and productivity improvements
– Reduction of costs by EUR 48 million /a
– Full impact Q3 2013 onwards
– Q1 cash provision about EUR 5 million
– Q1 fixed asset write-down
about EUR 1 million
• Investments EUR 18 million to quality,
productivity and energy savings
• Planned employee reduction 110 people
• Actions completed by end 2012
Financial results Q4 2011 8 February 2012 8

9. Swedish maintenance streamlining plan
• To increase further efficiency and flexibility by
restructuring and changing processes
• Impacting Renewable Packaging and
Printing and Reading
• Reduction of costs by EUR 21 million /a
– Starting gradually from late 2012 onwards
• Cash provisions for Q1
– Renewable packaging EUR 6 million
– Printing and reading EUR 4 million
• Planned employee reduction 130 people
Financial results Q4 2011 8 February 2012 9

10. Maintenance costs down in Finnish mills
Decrease in unplanned shutdowns by 27% since 2008
Basic Maintenance Cost Unplanned shutdowns
130 % 130 %
120 % 120 %
110 % 110 %
100 % 100 %
INDEX
INDEX
90 % 90 %
80 % 80 %
70 % 70 %
60 % 60 %
50 % 50 %
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Index = 2007 Index = 2007
Financial results Q4 2011 8 February 2012 10

11. Summary financials
Q4 2011 and Full year 2011
Change% Change%
EUR million IV/2011 2011 IV/2010 2010
IV11/IV10 2011/2010
Sales 2 682 10 965 2 685 10 297 -0.1 % 6.5 %
Operational EBITDA 243 1 308 289 1 217 -15.9 % 7.5 %
Operational EBIT 145 867 177 797 -18.2 % 8.7 %
Profit before tax. excl. NRI 141 639 162 705 -12.7 % -9.4 %
Profit before tax 110 421 364 885 -69.7 % -52.5 %
EPS excl. NRI (EUR) 0.10 0.63 0.19 0.79 -47.4 % -20.3 %
Operational ROCE 6.7 10.0 8.4 9.7 -20.2 % 3.1 %
Cash flow from operations 302 1 034 265 992 14.3 % 4.3 %
Cash flow after investing activities 115 625 126 592 -8.3 % 5.6 %
Debt/equity 0.47 0.47 0.39 0.39 20.5 % 20.5 %
NRI = Non-recurring items. These are exceptional transactions that are not related to normal business operations. The most common non-
recurring items are capital gains, additional write-downs or reversals of write-downs, provisions for planned restructuring and penalties. Non-
recurring items are normally specified individually if they exceed one cent per share.
Financial results Q4 2011 8 February 2012 11

12. Increased dividend
EPS, excl NRI (EUR)
• Dividend proposal increased to
EUR 0.30 Dividend and distribution (EUR)
1,00
• EPS excluding NRI EUR 0.63
0,80
0,60
EUR 0,40
0,20
0,00
2006 2007 2008 2009 2010 2011
Financial results Q4 2011 8 February 2012 12

13. Over 80% of investments to high-return growth
EUR million
1000 Dividend
197
800
92
EUR million
Investments to other
600
951 447
400
Investments to high-return
growth
200
254
0 Net financial items and net
Cash flow generated Cash outflow income tax paid
by operations
Financial results Q4 2011 8 February 2012 13

14. Guidance
• Q1 2012 sales and
operational EBIT
approximately in line with Q4
2011
• Combined improvement of
Business Area results offset by
lower results in forest
companies (EAI)
Financial results Q4 2011 8 February 2012 14

15. Renewable Ecosystems
Capital Markets Day, Langerbrugge Mill, Belgium
Thursday 22 March 2012
Financial results Q4 2011 8 February 2012 15

16. Recap
• Strong operational cash flow
• Full year improved
• Increased dividend
• Strategic investments proceeding
• Q4 showed rethink must continue
Financial results Q4 2011 8 February 2012 16

17. Financial results Q4 2011 8 February 2012 17

18. Net Financial Items
Change % Change %
EUR million IV/2011 III/2011 IV/2010
Q411/Q410 Q411/Q311
Net interest expense -35.1 -35.9 -25.6 -37.1 2.2
Foreign exchange gains and losses -3.0 -11.4 1.8 -266.7 73.7
Other financial items. of which -21.1 -146.1 2.1 n/m 85.6
PIK notes 2.0 2.1 1.6
Fair valuation of interest rate derivates* -4.4 -16.4 4.4
Fair valuation of long-term debt -0.4 -1.1 0.1
NewPage lease provision - -128.2 -
Arktos writeoff -10.2 - -
Other items -8.1 -2.5 -4.0
Total net financial items -59.2 -193.4 -21.7 -172.8 69.4
*Not hedge accounted interest rate derivatives.
Financial results Q4 2011 8 February 2012 18

19. Softwood pulp prices
Stora Enso’s market pulp is softwood
1 050
950
850
USD/tonne
Bleached softwood kraft
750 pulp
650 Bleached hardwood kraft
pulp
550
450
07Q1
07Q2
07Q3
07Q4
08Q1
08Q2
08Q3
08Q4
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
Source: FOEX
Financial results Q4 2011 8 February 2012 19

20. Pulp wood and saw log prices decreased from Q3 2011
Wood prices in Finland
80
70
60
50
EUR/m 3
Pulpwood, Pine
40
Sawlogs, Pine
30
20
10
0
06Q1
06Q4
07Q1
07Q4
08Q1
09Q1
10Q1
10Q2
11Q1
11Q2
06Q2
06Q3
07Q2
07Q3
08Q2
08Q3
08Q4
09Q2
09Q3
09Q4
10Q3
10Q4
11Q3
11Q4
Source: METLA
Financial results Q4 2011 8 February 2012 20

21. Wood prices in Sweden
600
500
400
Pulpwood
SEK/m 3
300
Sawlogs
200
100
0
06Q2
07Q2
08Q2
09Q1
09Q2
10Q1
10Q2
11Q1
11Q2
06Q1
06Q3
06Q4
07Q1
07Q3
07Q4
08Q1
08Q3
08Q4
09Q3
09Q4
10Q3
10Q4
11Q3
11Q4
Pulpwood includes pine. spruce and birch.
Sawlogs include pine and spruce.
Source: SDC. Skogsstyrelsen
Financial results Q4 2011 8 February 2012 21

22. RCP prices
200
160
Mixed
EUR/tonne
120
OCC
80
De-inking
40
0
07Q1
07Q2
07Q3
07Q4
08Q1
08Q2
08Q3
08Q4
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
German RCP price development. free delivered
Source: Verband Deutscher Papierfabriken/Stora Enso
Financial results Q4 2011 8 February 2012 22

23. Debt/equity
2009 – Q4 2011
0,8
0,7
0,6
0,51
0,5 0,45 0,47
0,41
0,39 0,38
0,4
0,3
0,2
0,1
0
2009 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011
Total operations
Financial results Q4 2011 8 February 2012 23

24. Transaction risk and hedges
as at 31 December 2011
EUR million USD GBP SEK
Estimated annual net operating cash flow exposure 1 200 600 -870
Transaction hedges as at 31 December 2011 -540 -270 380
Hedging percentage as at 31 December 2011 for the next 12 months 45% 45% 44%
Additional USD and GBP hedges for 13-16 months increase the hedging percentages by
7% and 4% respectively.
Operational EBIT: Currency strengthening of + 10% EUR million
USD 120
SEK -87
GBP 60
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.
Financial results Q4 2011 8 February 2012 24

25. Maturity profile
31 December 2011
€m Bonds Other loans / liabilities Commercial paper
1 200 SEK 500m 3.5 2015
SEK 1.4 bn S+3.7 2015
EUR 750m 5.125 2014 SEK 2.4 bn 5.75 2015
1 000
EUR 390m E+4.21 2016
800 USD 507m 6.404 2016
600
USD 300m 7.25 2036
400
200
0
2012 2013 2014 2015 2016 2017 2018 2019-2035 2036
Revolving Credit Facility € 700 million matures in January 2015 and is fully undrawn
Financial results Q4 2011 8 February 2012 25

26. 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.
Financial results Q4 2011 8 February 2012 26