3 - Stora Enso

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FOREST PRODUCTS Enhancing efficiency in the supply chain Stora Enso Forest Products focuses on the effi cient supply and use of wood raw material, adding value for Stora Enso’s internal and external customers. Integrated procurement and optimised utilisation of sawlogs and pulpwood supports Stora Enso’s paper, packaging board and wood products core businesses and ensures the Group’s future competitiveness. Maximum synergy from integrated wood fl ows The Forest Products division comprises Stora Enso Timber and Wood Supply. Stora Enso Timber converts logs into competitive wood products, and serves its global customer base through its own marketing network. Wood Supply is responsible for Stora Enso’s global wood fi bre strategy and wood raw material sustainability issues. It manages wood deliveries to Stora Enso’s mills in Europe and facilitates co-operation between all the Group’s wood supply units. Stora Enso Forest Products aims at maximising the synergy benefi ts resulting from integrated wood fl ows to the Asset Performance Review Mill Action Capacity Grade Country Linghed Sawmill Divestment 40 000 m 3 Sawn softwood Sweden 24• STORA ENSO COMPANY 2005 Group’s sawmills and pulp and paper mills. Procurement from cost-competitive and sustainable sources is important as wood raw material accounts for a signifi cant part of Stora Enso’s costs. Wood Supply and Stora Enso Timber made important organisational changes during 2005 to meet the demands of the changing business environment. Improving profi tability Stora Enso’s Profi t 2007 programme and the Asset Performance Review have both affected Forest Products. Profi t improvement measures in Stora Enso Timber have begun with a decision to divest Linghed Sawmill in Sweden. Veitsiluoto Sawmill in Finland has been idle since mid-2005, and the mill’s future is now under review. Stora Enso Timber has also taken decisions to reduce production volumes and personnel at some other sawmills. These actions aim at balancing raw material costs and availability, as well as overhead costs, with the sales price potential of the wood product market. Further actions will involve productivity improvements, more effi cient logistic solutions, reduction of fi xed costs, and further fi netuning of the organisation. Wood Supply aims at achieving considerable cost savings by 2007. These are to be realised through a number of specifi c projects addressed to logistics and other operations throughout the wood supply chain. In addition, Wood Supply will continue to streamline its organisational structure and investigate outsourcing opportunities.
Wood Supply: Expanding in new growth markets Wood markets in Northern Europe remain tense, with the forest taxation change in Finland bringing an additional element of uncertainty. In the near future, eucalyptus pulp fl ows from the Veracel Pulp Mill will also have a signifi - cant impact on birch wood consumption and wood markets in Europe Read more about Veracel on page 19. Stora Enso has continued to expand its wood procurement in Russia and Central Europe. In China, Stora Enso is progressing with plantation development in Guangxi. In South America, the Group has acquired land in Brazil and Uruguay with a view to establish new fast-growing plantations. In Russia, Wood Supply has invested in improving its control over the supply chain. This has involved acquisitions of Russian logging companies that have long-term agreements with the Russian government. These logging companies now have the capacity to supply about 1.2 million m3 of wood, or nearly 15 % of total wood procurement in Russia. Read more about wood procurement in the Sustainability 2005 report on pages 12–13. Stora Enso Timber: Adding value to wood Stora Enso Timber supplies sawn and processed softwood products to the construction and joinery industries and the wood products trade. Timber frame construction products include standardised solid and glued posts, beams, studs and joists, usually made from spruce. Joinery Storm hit Nordic region. “Gudrun” hit Southern Sweden in January 2005. The storm is estimated to have felled up to 70 million m3 of timber which corresponds to almost the entire annual harvest in Sweden. Storm damages were also seen in the Baltic countries. customers manufacturing windows, doors, and furniture prefer pine. Both species are used in planed boards for interior use and exterior cladding. Stora Enso Timber is a global player in the fragmented wood product market. The key factors driving this market include developments in interest rates and national programmes affecting building activity, standards covering wooden frame structures, as well as developments in the DIY (do-it-yourself) market. Focusing on mass-customised, higher value-added products – and reducing the role of standard bulk products – represents an integral part of Stora Enso Timber’s strategy, and is designed to reduce the volatility of the business and increase profi tability, by offering more complete product and service solutions to customers. • Focus on performance “Our aim is to be the world’s best wood product company, and the leading wood supplier worldwide. We are addressing profi tability issues through reorganisation, consolidation, and by continuing to move into new growth markets,” says Elisabet Salander Björklund, Senior Executive Vice President, Stora Enso Forest Products. STORA ENSO COMPANY 2005• 25
Page 2 and 3: Stora Enso’s Annual Report 2005 c
Page 4 and 5: STORA ENSO IN BRIEF Stora Enso in b
Page 6 and 7: DIVISIONS IN BRIEF Publication Pape
Page 8 and 9: STRATEGY LETTER TO SHAREHOLDERS Dea
Page 10 and 11: STRATEGY Improving profi tability -
Page 12 and 13: STRATEGY Strategy in action in 2005
Page 14 and 15: PUBLICATION PAPER Improved asset ma
Page 16 and 17: PUBLICATION PAPER BUSINESS AREAS |
Page 18 and 19: FINE PAPER Cost-effi cient producti
Page 20 and 21: FINE PAPER BUSINESS AREAS More than
Page 22 and 23: PACKAGING BOARDS Getting closer to
Page 24 and 25: PACKAGING BOARDS BUSINESS AREAS Cor
Page 28 and 29: FOREST PRODUCTS BUSINESS AREAS Wood
Page 30 and 31: HUMAN RESOURCES People performance
Page 32 and 33: CORPORATE GOVERNANCE Corporate Gove
Page 34 and 35: CORPORATE GOVERNANCE Chief Executiv
Page 36 and 37: CORPORATE GOVERNANCE Remuneration C
Page 38 and 39: BOARD OF DIRECTORS Board of Directo
Page 40 and 41: EXECUTIVE MANAGEMENT GROUP Executiv
Page 42 and 43: MANAGEMENT GROUP Management Group M
Page 44 and 45: SHARES AND SHAREHOLDERS Shares and
Page 46 and 47: SHARES AND SHAREHOLDERS Incentive p
Page 48 and 49: FINANCIAL SUMMARY Consolidated Inco
Page 50 and 51: FINANCIAL SUMMARY Consolidated Cash
Page 52 and 53: FINANCIAL SUMMARY Key Figures 1997
Page 54 and 55: ORGANISATION CHART Stora Enso’s o
Page 56 and 57: North America North America is the
Page 58: Colorado Stora Enso Oyj P.O. Box 30

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