Packaging Boards Strategy

1
Packaging Boards Strategy

• Pekka Laaksonen,
• SEVP Packaging Boards
• 2 November 2004

2
Production Chain of Packaging
Packaging (USD 450 billion)
Packaging materials (USD 200 billion)
Raw material base
End use
Wood fibre
Containerboard, Cartonboard, Kraft-papers,
WF-papers, Laminates (90 B )
Consumer and industrial applications, Transport
Corrugated Boxes, Cartons, Cups, Sacks,
Wrappings, Flexpack (170 B )
Polymers
Granulates, Films
Bottles, Containers, Cups, Flexpack, Caps
Consumer and industrial applications, Transport
Metals
Sheets and foil
Cans, Barrels, Flexpack
Beverage and other food, Transport
Glass
Glass
Bottles, Jars
Beverage, Food, Cosmetics, Pharma
Solid wood
Timber Plywood
Boxes, Pallets
Transport packaging
3
Core Products of Packaging Boards
4
Packaging Boards- Target Profitable Growth
M
Cash flow before investments
Cash flow after investments
) 2004 figures based on the result of Q2/2004
5
Packaging Boards
55 of Group Operating Profit
Operating Profit EUR 297 Million
2003 Sales EUR 2.8 Billion
2003 Deliveries 3 Million Tonnes
20 of Group Operating Capital
23 of Group Employees
Capacity 3.3 Million Tonnes
Stora Enso Value
6
Business Approach Main criteria for profitable
growth

• Market share and innovations
• Most rational choice for our customers
• Environmentally and socially sound
• Adequate return

7
Growth Strategy Preferences

• Existing businesses in Europe
• Geographical expansion
• Move closer to the consumer in the value chain
• Expand to new materials

8
Consumer Boards are our Most Important Packaging
Related Business
TargetAbove average growth
Stora Enso
1 000 tonnes
Source Stora Enso and Jaakko Pöyry analyses
9
Volume Growth of Consumer Board GradesAsia
growing fast, Europe and North America slowly
Demand growth per annum
8
WLC
Primary fibre based
Uncoatedrecycled
7
6
5
4
Average 3 pa (2004-2012)
3
2
1
0
0
5
10
15
20
25
30
Consumption, million tonnes
North America
Europe
South America
China
Rest of Asia Pacific
Source Stora Enso internal and external
analyses
10
Corenso Has Been One of the Fastest Growing Units
in Stora Enso
TargetDouble the business
Corenso
1 000 tonnes
Source Stora Enso and Jaakko Pöyry analyses
11
Volume Growth Cores and Tubes Strong growth
in China but the market is rather small
Demand growth per annum
9
China
8
7
6
5
Rest of AsiaPacific
Average 3.2 pa (2004-2012)
4
3
Europe
SouthAmerica
2
North America
1
0
0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
Consumption, million tonnes
) excl. in-house tissue tubes
Source Stora Enso and Jaakko Pöyry analyses
12
Corrugated Packaging is the Biggest Wood Fibre
Related Business
Value, EUR billion, 2003
Converting
80
Paper board
Total 320 B
70
60
50
40
30
20
10
0
Tissue
Newsprint
Sack paper
Other grades
Carton boards
CORRUGATED
Coated woodfree
Coated mechanical
Uncoated woodfree
Uncoated mechanical
Packaging total 170 billion
Source Stora Enso and Jaakko Pöyry analyses
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Corrugated Business in Europe is our Biggest
Growth Opportunity
TargetMultiply thebusiness
SEPack Intercell
Capacity Mm2
Source Stora Enso and Jaakko Pöyry analyses
14
Volume Growth Corrugating MaterialsRelatively
strong growth in China hardly any in North
America
Demand growth per annum
7
China
6
5
Rest of Asia
SouthAmerica
Average 3.3 pa (2004-2012)
4
3
Europe
2
North America
1
0
0
10
20
30
40
50
60
70
80
90
Consumption, million tonnes
Source Stora Enso and Jaakko Pöyry analyses
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Intercell Acquisition
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Intercell Key Facts
Sales by Division

• Sales EUR 150 million, EBITDA EUR 27 million
  (2003)
• Employees 1 700
• Operations mainly in Poland
• Also operates Polands largest recycled paper
  (mainly OCC) collection business

Sacks
16
Pulp Paper
40
Corrugated Board
Boxes
44
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Intercell- Strategic Fit with Stora Enso
Packaging Boards

• Expansion of corrugated and containerboard
  business
• Fast growing market in a new EU member country
• Good market position and profitable business
• Own recycling organisation
• Access to low cost virgin fibre raw material
• Potential additional synergies in recycled raw
  materials, timber and wood procurement
• Expansion potential in corrugated board and
  timber

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Intercell Locations

• Ostroleka
• Head office
• Pulp and Paper mill (250 000 tonnes)
• Corrugated board and boxes
• Sack
• Warsaw
• Marketing office
• Lódz
• Corrugated board and boxes
• Tychy
• Corrugated boxes
• abac
• Sack
• In the near future
• Mosina
• Corrugated boxes (sheet plant)

20 recycling locations around Poland
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Packaging Boards Mills
With Intercell
Kristiinankaupunki
Heinola
Lahti
Pori
Ruovesi
Mohed
Hammarby
Varkaus
Fors
Pankakoski
Uimaharju
Vikingstad
Imatra
Jönköping
WisconsinRapids
Kotka
Skoghall
Hangzhou
Ingerois
Forshaga
Karhula
Pasir Gudang
Loviisa
Bäckefors
Newcastle
Göteborg
Balabanovo
Skene
Bolton
Lübeck
Arzamas
Ostroleka
Milton Keynes
Edam
Mosina
Lódz
Krefeld
Tychy
Jülich
Tartu
Tallinn
Baienfurt
Saint-Seurin-Sur-LIsle
Saint-Seurin-Sur-LIsle
Riga
Páty
Klaipeda
Kaunas
abac
Tolosa
Barcelona
Valencia
Packaging Boards Pulp in bales
Cordoba
Lamia
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Pekka LaaksonenQuestions Discussion