Corrugated Packaging

1
Corrugated Packaging

• Hannu Alalauri,
• MD, Stora Enso Packaging
• 2 November 2004

2
Presentation Topics

• Corrugated Market
• Size of corrugated business
• Demand for corrugating raw materials
• European CCM producers
• CCM import / export balance in Western Europe
• European corrugated board producers
• Stora Enso Packaging Group
• Mill locations
• Strategy of Stora Enso Packaging
• Russian Corrugated Market
• Polish Corrugated Market

3
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
4
Demand for Corrugating Raw Materials
Western Europe
EasternEurope
EE Average4.1 /a
WE Average2.0 /a
SC-fluting
Recycled fluting
Testliner
Kraftliner
Source Jaakko Pöyry Consulting and Stora Enso
estimates
5
Corrugating Raw Materials
European Corrugating Raw Material Producers
Stora Enso
Intercell
0
500
1,000
1,500
2,000
2,500
3,000
3,500
'000 Tonnes
Source JP Capital
6
Export/Import Balance of Western European CCM
Net Imports, Million tonnes
Source Risi
7
Corrugated Board Producers (mm2)
European Corrugating Board Producers
Stora Enso
Intercell
0
1,000
2,000
3,000
4,000
5,000
6,000
2
Million m
Source JP Capital
8
Stora Enso Packaging Group
9
Stora Ensos Corrugated Plant Locations

• 2 550 employees
• 960 million m2 of total capacity of corrugated
  boxes
• CCM integration lt 40

Ruovesi
Heinola
Kristiinankaupunki
Lahti
Tallinn Tartto
Vikingstad
Jönköping
Arzamas
Riga
Balabanovo
Klaipeda
Skene
Kaunas
Ostroleka
Lodtz
Tychy
Pàty
10
Strategy of Stora Enso Packaging

• Profitable Growth
• Increase the size of current business
• Fulfil Stora Enso groups financial targets
• Means of Growth
• MA
• Focused capex on existing assets
• Maintain positions and add the sales of value
  added services in mature markets

11
Strategy of Stora Enso Packaging (cont.)

• MA Criteria
• Profitability
• Strong market position
• Synergies with existing businesses customers
• Secured raw material supply
• Key Success Factors
• Productivity / Cost competitiveness
• Market position / High market share
• Logistics service concept

12
Russian Polish Corrugated Market
13
Russian Corrugated Market

• Russian corrugated market is circa 1 500 Mm2
• Growth circa 10 pa
• Stora Ensos capacity is 200 Mm2 (presence only
  in value added segment)
• 400 employees
• Main Russian corrugated box suppliers
• Naberezhnie Chelny
• Arkhangelsk
• Gotek
• Gofron
• Permsky
• Kappa
• SCA

North-West 240,1 Mln m2 15,3
Volga East 265,4 Mln m2 16,9
St. Petersburg
Central 576,7 Mln m2 36,8
Nizhny Novgorod
Moscow
Arzamas
Balabanovo
Other 335,5 Mln m2 21,4
14
Polish Corrugated Market

• Market size 1 250 Mm2
• Intercells capacity 250 Mm2
• 530 employees
• Raw material integration is well in balance

Czech Republic
Šabac, Serbia
15
Intercell Summary Financials

• EUR million 2001 2002 2003
• Net sales 140.0 149.8 149.6
• EBITDA 18.2 21.6 27.0
• EBITDA 13.0 14.4 18.0
• EBIT 4.1 7.6 14.4
• EBIT 3.0 5.1 9.6

16
Corrugated Board Suppliers in Poland
Source Stora Ensos estimation
Million m2
17
Hannu AlalauriQuestions Discussion