Mill Capacity (tonnes) Grade Personnel - Stora Enso

Stora Enso continues the change
Jouko Karvinen, CEO & Markus Rauramo, CFO
19 August 2009

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.
August 2009 2

Contents
Stora Enso continues the change
Actions
Financial impact on the company
Support measures
Summary
Appendix
August 2009 3

Stora Enso continues the change

Stora Enso continues the change
• Stora Enso plans further reductions of manufacturing
capacity:
– Continuing weak demand
– Long-term cost pressure on wood fibre and energy
– Loss making since the fourth quarter of 2008; continued during
the first half of 2009
– Earlier actions not sufficient in the present environment
August 2009 5

Wood costs 2003–2008
Currency rates are not the reason or the solution to the problems
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Source: Stora Enso
Wood costs in Finland compared to Sweden
road-side price
2003 2004 2005 2006 2007 2008 2009e
birch pulp wood spruce pulp wood
pine pulp wood
pine sawlogs
spruce sawlogs
August 2009 6
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2003 2004 2005 2006 2007 2008 2009e
Based on fixed currency rates in 2003

Pulp costs in Brazil, Sweden and Finland
1-6/2009, pulp transported to the port of Rotterdam
Pulp mill in
Brazil
Pulp mill in
Sweden,
short fibre
Pulp mill in
Sweden, long
fibre
Pulp mill in
Finland, short
fibre
Wood costs Other costs (incl. trasnportation)
Pulp mill in
Finland, long
fibre
The figures do not include the cost of capital.
August 2009 7

Industrial electricity taxation in different countries
8
7
6
5
4
3
2
1
0
EUR/MWh
Finland UK Germany Austria France Sweden
Source: Finnish Forest Industries Federation
Electricity
tax
Additional electricity tax
(proposal) 2011
August 2009 8

Costs on distance
Comparison between Swedish and Finnish units
% Sales
FY 2008 3 year average
Unit/Sweden Unit/Finland Unit/Sweden Unit/Finland
August 2009 9

Company plans to reduce high-cost manufacturing base
further

Units planned to be permanently closed down
Mill
Sunila Pulp Mill 375 000
Tolkkinen
sawmill
Imatra PM 8 210 000
Capacity
(tonnes) Grade Personnel Timing
Long-fibre
pulp
250 2 nd quarter 2010
260 000 m 3 Sawn wood 55 By the end of 2009
Uncoated
fine paper
140 1 st quarter 2010
Tolkkinen
Varkaus
August 2009 11
Sunila
Kotka
Imatra

Kotka mills to be divested
Mill Capacity (tonnes) Grade Personnel
Kotka mills 185 000 MFC 530
175 000 Laminating paper
250 000 m 3 sawn wood
Tolkkinen
Varkaus
August 2009 12
Sunila
Kotka
Imatra

Varkaus Mills provisionally planned to be permanently
closed down in 2010
Mill Capacity (tonnes) Grade Personnel
Varkaus mills 290 000
310 000
Newsprint and
directory paper
Uncoated fine
paper
270 000 m 3 sawn wood
August 2009 13
630
Tolkkinen
Varkaus
Sunila
Kotka
Imatra

Support people affected

People affected in earlier restructurings
Kemijärvi and Summa
Employees 664
Retirement 107
New jobs 433
Training 38
Kemijärvi
Summa
August 2009 15

We will continue to help people affected
• Help to affected personnel in finding re-employment
• Internal job offering, outplacement services
• Stora Enso to actively work with labour authorities to find new jobs and
training opportunities
• Support to those having to move to another location
• Financial support to those people that want to start own businesses
August 2009 16

Financial impact on the company

Financial impact on the company
• Non recurring items Q3 2009:
– Approximately EUR 245 million fixed asset and inventory write-
downs for the Q3 of 2009
– Approximately EUR 25 million restructuring provision of Sunila,
Imatra (PM8) and Tolkkinen
• The debt equity ratio will increase from 0.53 (09Q2) to 0.59 as a result
of the combined impact of the fixed asset impairment testing and asset
restructuring
• The targeted annual operating profit improvement of planned closure is
estimated to be in range of EUR 140 million to EUR 160 million
depending of the outcome of the provisional planned closure of
Varkaus Mills and the divestment of Kotka Mills from the beginning of
2011 onwards.
August 2009 18

Financial impact on the company
• Planned closures of Sunila Pulp Mills, Tolkkinen sawmill and PM 8 at
Imatra Mills:
– Reduction of external sales approximately EUR 150 million and
capital employed approximately EUR 50 million
August 2009 19

Summary

Summary
• Today’s announcement is based on the dramatic reduction in
demand we have seen during the past year – we predict that some
of that demand will not recur
• We need to balance our production to the changed demand
environment and reduce our capacity starting from the highest cost
units
• Finnish government has said in connection with state budget
preparations that it will consider actions which could improve
Finnish forest industry operating environment
• We appreciate that government has taken the necessary initiative
and we welcome all decisions which may improve the situation
• However, those initiatives will not affect the plans published today –
instead those longer term decisions will aim at safeguarding the
remaining Finnish forest industry assets from 2011 onwards
August 2009 21

Appendix

Permanent pulp, paper and board capacity reductions
since 2006
Mill Date Grade Capacity reduction, t
Corbehem PM 3 and PM 4 Jun 2006 LWC 250 000
Varkaus PM 1 End 2006 WFC 95 000
Berghuizer Mill Oct 2007 WFU 235 000
Reisholz Mill End 2007 SC 215 000
Summa Mill Jan 2008 Newsprint, SC, book paper 415 000
Anjala Mill PM1 Feb 2008 Coated magazine paper 155 000
Baienfurt Mill End 2008 FBB 190 000
Kabel Mill PM 3 End 2008 Coated magazine 140 000
Kemijärvi Pulp Mill April 2008 Long-fibre (SW) pulp 250 000
Norrsundet Pulp Mill Dec 2008 Long-fibre (SW), pulp 300 000
Varkaus Mill coreboard machine Dec 2008 Coreboard 100 000
Total 2 345 000
Totals % of capacity as at end 2005
(adjusted for disposals)
Paper and board 1 795 000 t/a 11%
Pulp 550 000 t/a 9%
August 2009 23

Permanent sawn wood capacity reductions since 2006
Mill Date Capacity reduction, m 3
Veitsiluoto Sawmill 2006 100 000
Honkalahti Sawmill 2006 90 000
Sauga Sawmill Jun 2007 130 000
Sollenau Sawmill 2007 110 000
Näpi Sawmill 2007-2008 100 000
Kotka Sawmill 2007-2008 70 000
Paikuse Sawmill End 2008 220 000
Zdirec Sawmill 2008 120 000
Ybbs Sawmill 2008 & Jun 2009 200 000
Kitee Sawmill 2008 & Jun 2009 130 000
Varkaus Sawmill Jun 2009 60 000
Total 1 330 000
Reductions equal 17% of capacity as at end 2005 (adjusted for disposals)
August 2009 24