Shaping our business for higher growth and value - Back on track Stora Enso Roadshow presentation
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Shaping our business for higher growth and value Back on track Stora Enso Roadshow presentation 4 May 2021
Disclaimer It should be noted that Stora Enso and its business are exposed to various risks and uncertainties and 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. 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. All statements are based on management’s best assumptions and beliefs in light of the information currently available to it and Stora Enso assumes no obligation to publicly update or revise any forward-looking statement except to the extent legally required. 2 4 May 2021 Stora Enso
Stora Enso in brief
Sales in 2020 7.0% operational Operational EBIT 2020
8.6 BEUR ROCE excluding
Forest in 2020 Packaging Materials
Packaging Solutions
Biomaterials
Operational EBIT in 2020 Employees
Wood Products
Forest
650 MEUR 23 000 Paper
External sales 2020
Packaging Materials
Packaging Solutions
2.3 net debt to
Biomaterials operational
Wood Products
Forest EBITDA Q4/20
Paper
3 4 May 2021
Stora Enso
Stora Enso’s annual estimated climate impact
Our forests Our products Our value Our products substitute Climate impact3
remove carbon1 store carbon chain emissions2 fossil-based products, saving
−1.5
million tonnes of CO2
−2.6
million tonnes of CO2e
+10.5
million tonnes of CO2e
−17.9
million tonnes of CO2e
= −11.5
million tonnes
1) Estimated net annual carbon sequestration in own and managed forests and plantations, which provide about 30% of our wood use. Excludes purchased wood. Third-party owned forests that
provide Stora Enso’s purchased wood are estimated to have an additional net carbon sequestration of –5 million tonnes of CO2 annually.
of CO2e
2) Fossil CO2 emissions in 2019 including direct emissions from our operations, emissions from purchased energy as well as emissions from other sources along our value chain (Scope 1, 2, and 3).
Calculated based on the guidance provided by the Greenhouse Gas Protocol.
3) Negative value indicates a net removal from atmosphere. Calculated by the Swedish University of Agricultural Sciences (SLU) in 2020 based on Stora Enso’s production, forest and wood use, and
emission figures in 2019: Climate effects of a forestry company – including biogenic carbon fluxes and substitution effects.
4 4 May 2021
Stora Enso
Shaping our business for higher growth and value…
Growth
Packaging Materials Packaging Solutions
Wood Products:
Building Solutions Biomaterials: Innovations
Foundation Cash
Wood Products:
Forest Traditional wood products Biomaterials: Pulp Paper
5 4 May 2021
Stora Enso
…by focusing on our three leading positions
Packaging Materials & Solutions Wood Products: Building Solutions Biomaterials Innovations
• High demand for plastic free and eco- • 10%+ annual growth • High growth end product markets
friendly circular packaging • Leading global supplier • Uncontested sustainability position
• Leading market positions • Potential to capture a larger share of the • Proprietary technologies and unique
• Attractive investment options available value chain value propositions
Significant growth potential with 3x sales from Building Solutions with 35%+ margin in novel markets with
20%+ margin ~20% margin strong growth
Majority of future company growth
6 4 May 2021
Stora Enso
• Packaging Materials – Leading
Packaging premium packaging board supplier
• Packaging Solutions – Premium
sustainable solution provider
7 4 May 2021
Stora Enso
Packaging Materials
Operational MEUR Sales and operational EBIT % %
ROOC
in Q1 21 16.7%
(Target >20%)
3,600
3,000
24
20
2,400 16
1,800 12
1,200 8
600 4
0 0
2018 2019 2020 Q1 21
Sales Operational EBIT %
8 4 May 2021
Stora Enso
Packaging Solutions
Operational MEUR Sales and operational EBIT % %
ROOC
in Q1 21 7.5%
(Target >25%)
800
600
20
15
400 10
200 5
0 0
2018 2019 2020 Q1 21
Sales Operational EBIT %
9 4 May 2021
Stora Enso
Significant growth opportunities for plastic free
and circular packaging
Global packaging market
Increased disposable Industrial packaging Consumer packaging
income & urbanisation Board based Board based
industrial packaging 10% consumer packaging
+4.5%* p.a. in 25% +4.5%* p.a. in
Growing e-commerce & addressable markets addressable markets
on-the-go consumption
~850
BEUR
40%
Demand for renewable
25%
& low CO2 alternatives Other industrial Other consumer
packaging packaging
*Including inflation
10 4 May 2021
Stora EnsoAttractive investment options for Packaging
Materials growth
Focus on brownfield investments,
debottlenecking and improving
operational efficiency
Oulu
Varkaus
Develop world leading cost Fors Heinola
Imatra
competitive integrates Skoghall
Ingerois
Beihai
Ostrołęka
Explore opportunities to consolidate
the market through selective M&A
11 4 May 2021
Stora EnsoSignificant opportunities for new sustainable packaging
Formed fiber Biofoam Biobarriers and films
Market growth
(CAGR 2020 - 2030) 3% 6% 3%
Total market size
(BEUR, 2020e) 30 15 80
EBIT margin Supporting
potential 30% 35% existing business
1st production line in Hylte Pilot plant in Fors Capacity investment in Forshaga
12 4 May 2021
Stora Enso• Building Solutions – Leading supplier
Wood of wood-based construction solutions
• Traditional wood products – Largest
Products producer of classic sawn and planed
wood in Europe
13 4 May 2021
Stora EnsoWood Products
MEUR Sales and operational EBIT % %
1,800 24
1,500 20
1,200 16
900 12
600 8
Operational
ROOC
in Q1 21 36.9%
(Target >20%)
300
0
4
0
2018 2019 2020 Q1 21
Sales Operational EBIT %
14 4 May 2021
Stora EnsoAttractive growth opportunities in Building Solutions
The global wood-based 2030 market share
Building Solutions market and value by geography
(BEUR)
Carbon storage & safer 9
workplaces 2.3 BEUR
Lower building costs &
faster construction 3.6 BEUR
Policies promoting 1.5 BEUR
wooden constructionGlobal market leader of wood-based Building Solutions
Stora Enso Cross Laminated Timber Stora Enso global CLT
(CLT) capacity (k m³) market share in 2020
360
+44%
250 20%
80%
2020 After Ždírec investment
Bad St. Leonhard Ybbs Varkaus Gruvön Ždírec Several projects
CLT CLT LVL CLT CLT
in pipeline
Capacity: 80 000 m3 Capacity: 110 000 m3 Capacity: 75 000 m3 Capacity: 100 000 m3 Capacity: 120 000 m3
2008 2022
16 4 May 2021
Stora Enso• Integrated pulp producer with
Biomaterials cost efficient stand alone assets
• Innovations to replace fossil-
based products
17 4 May 2021
Stora EnsoBiomaterials
Operational ROOC in Q1 21 MEUR Sales and operational EBIT % %
1,800 30
11.2%
(Target >15%)
1,500
1,200
25
20
900 15
600 10
300 5
0 0
2018 2019 2020 Q1 21
Sales Operational EBIT %
18 4 May 2021
Stora EnsoNew biomaterials are a highly attractive
innovation platform
Carbon for energy storage Bio-binders Carbon fibers
Market growth
(CAGR 2020 - 2030) 30% 2 - 4% 8 - 10%
Total market size
(BEUR, 2020e) 10 20 3
EBIT margin
potential 35% 35% 35%
Pilot plant in Sunila 1st production line in Sunila Pilot ongoing in JD with Cordenka
19 4 May 2021
Stora EnsoFocus on strengthening competitiveness
Delivered cost – Standard market pulp
Delivered cost per tonne
• Market pulp not a focus area for growth
Strengthen the competitiveness • Investments in integrated pulp to
support Packaging Materials
• Maintain cost competitiveness of the
Eucalyptus mills
Cumulative capacity
20 4 May 2021
Stora EnsoForest 4 May 2021 21 Stora Enso
Forest
MEUR Sales and operational EBIT % %
Operational
ROCE
in Q1 21 9.9%
(Target >3.5%)
2,500
2,000
25
20
1,500 15
1,000 10
500 5
0 0
2018 2019 2020 Q1 21
Sales Operational EBIT %
22 4 May 2021
Stora EnsoStora Enso’s global forest assets 7.2 BEUR –
significant share of the balance sheet
All figures total forest
assets including biological Sweden
assets and forest land* Tornator (41%)
5.45 BEUR
(Market transaction- 818 MEUR
based fair value) (DCF) (Q1/21)
Group forest assets (Q1/21)
Biological assets: 4.9 BEUR
Forest land*: 2.3 BEUR
Montes del
Plata (50%) Veracel (50%) Guangxi
98% certified wood from 439 MEUR 89 MEUR 373 MEUR
own forests with ~196 (DCF) (Q1/21) (DCF) (Q1/21) (DCF) (Q1/21)
million m3 standing stock**
*including leased land **Productive forest land
23 4 May 2021
Stora EnsoPaper 24 4 May 2021 Stora Enso
Paper
MEUR Sales and operational EBIT % %
3,500 14
12
3,000
10
2,500 8
6
2,000 4
1,500 2
0
1,000 -2
Cash flow
-4.6%
-4
500
after investing -6
activities to 0 -8
2018 2019 2020 Q1 21
sales in Q1 21 (Target >7%)
Sales Operational EBIT %
25 4 May 2021
Stora EnsoStructural paper demand decline continues
European paper (Excl. wood free coated) demand European paper demand by end use
(million t)
35
CAGR: -4.6%
Other commercial
30
Direct mail
25
CAGR: -5.5%
21 Insert & Flyers Copy paper
17
15 Catalogues
Books
Supplements
Newsprint
Magazines
2008 2010 2012 2014 2016 2018 2020 2022 2024
26 4 May 2021
Stora EnsoPlans to permanently close down pulp and paper
production at Kvarnsveden and Veitsiluoto mills
• Decision is subject to completed co-determination
negotiations
• Kvarnsveden Mill, Sweden
− 565 000/a tonnes of SC magazine paper and improved news
(two machines)
− 900 000/a tonnes of thermomechanical pulp
• Veitsiluoto Mill, Finland
− 790 000/a tonnes of woodfree uncoated office paper and coated
magazine paper (three paper machines)
− 360 000/a tonnes chemical pulp
− Groundwood mill and sheeting plant
− Sawmill operations continue
• Potential personnel impact of max 1 110 persons
27 4 May 2021
Stora EnsoFinancial impact of potential paper mill closures
• Plans would reduce paper capacity by 35% or ~1.3
million tonnes/a
• Annual sales would decrease by approximately 600
MEUR
• Paper sales would be reduced to slightly above 10% of
Group sales
• Operational EBITDA would improve by 35 MEUR
annually
• 127 MEUR non-cash impairment costs as IAC in Q1
2021 results
• 104 MEUR cost as IAC in Q2 2021 results
− Of which 96 MEUR cash impact
28 4 May 2021
Stora EnsoFinancial with Q1 figures 29 4 May 2021 Stora Enso
Improving performance and market conditions
Q1 2021 year-on-year
• Sales increased by 3%, 14% excl. Paper
• Operational EBIT increased to 328 (180) MEUR,
excl. Paper to 362 (158) MEUR
− Impact of 74 MEUR from forest sales in Sweden
• Operational EBIT % increased to 14.4% (8.1%),
excl. Paper 19.4% (9.7%)
• Cash flow from operations 185 (146) MEUR and
after investments -9 (-32) MEUR
• Net debt to operational EBITDA at 2.3x (2.3x)
• Operational ROCE excl. Forest division
increased to 12.0% (7.8%)
30 4 May 2021
Stora EnsoStrong market conditions for the growth businesses
• Robust performance continues for Packaging
Materials
− Capacity sold-out for the division
− Market situation in China continued to improve
• Solid e-commerce demand supports corrugated
packaging, prices yet to catch-up with raw
material price increases
• Classic sawn as well as CLT and LVL strong in
Wood Products
• Continued healthy performance for Forest
• Excellent market conditions for Biomaterials
• Paper demand decline continued
31 4 May 2021
Stora EnsoSelective capex to support growth
Biological capex
Strategic capex
Maintenance capex
Capex estimate for 2021
Depreciation and depletion of
capitalised silviculture costs
Capex for 2019-2020 and estimate for 2021 include the capitalised leasing contracts according to IFRS 16 Leases standard
32 4 May 2021
Stora EnsoOperational EBIT in 2021 is expected to be
higher than in 2020, as guided earlier
• Global economy recovering from the pandemic
• Demand for our products healthy except for graphic paper
• In Packaging Materials Oulu Mill operational EBITDA break-even in
Q3 2021. Previously it was estimated to be Q1 2022
− Approx. 10-15 MEUR negative impact of ramp-up on operational EBIT in Q2
− Approx. 40-50 MEUR total negative impact of ramp-up on operational EBIT
in 2021
− Design capacity reached by the end of Q2
− Commercialisation of product portfolio by the end of 2021
• The 400 MEUR profit protection programme will be concluded ahead
of plan by end of Q2 2021
33 4 May 2021
Stora EnsoBack on track • Improving performance and market conditions • 14% growth of core businesses • Operational EBIT improved by 82% • Plan of two paper mill closures significantly improves profitability and long-term competitiveness of Paper business • Close to 90% of group sales would come from core businesses after planned closures • Oulu Mill is reaching operational EBITDA break- even already in Q3 2021 • Operational EBIT in 2021 is expected to be higher than in 2020 34 4 May 2021 Stora Enso
35 4 May 2021 Stora Enso
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