Stora Enso expands business in Pakistan Mats Nordlander, Executive Vice President Renewable Packaging September 18 2012 1
Stora Enso portfolio FY 2011 Group Sales, EUR 10 964.9 million Operational EBIT, 866.7 EUR million Printing and Reading Biomaterials Building and Living Renewable Packaging Other 29% 0% 46% 34,8 % 5,5 % 32,9 % 15% 10% 6,0 % 19,5 % 2
Stora Enso strategy Growth markets Renewable packaging Biomaterials Competitive paper
Implementing strategy High return growth businesses Project On target Status Montes del Plata pulp mill, Uruguay Ostroleka containerboard machine, Poland Guangxi, China Skoghall investment Stora Enso Inpac Start up approximately mid-year 2013 Proceeding as planned Proceeding as planned Support wood handling in Sweden and further develop Skoghall mill Q3 2011 Bulleh Shah Packaging Limited Q1 2013
Timing of Strategic Projects Stora Enso Inpac Q3 2011 Skoghall, Sweden Investment start-up end Q4 2012 Bulleh Shah Packaging Limited Q1 2013 Ostroleka, Poland Container board machine startup Q1 2013 Montes del Plata, Uruguay Pulp mill, start-up mid-year 2013 Guangxi, China Pulp and Board mill, start-up Q4 2014 5
Strongest growth will be in Asia - Increasing demand of virgin fibre-based consumer board CAGR 0,2 % CAGR 1,4 % CAGR 4,6 % 0.9 1.5 CAGR 6,9 % 6,2 6,3 3,8 4,4 Eastern Europe North America Western Europe CAGR 3,3 % 0,5 0,7 11,6 Middle East & Africa 6,0 2010-2020 Million tonnes CAGR 3,5 % 1,1 1,5 South America Fibre-based consumer board consumption CAGR China 9% Pakistan 9% India 6% Middle East 4% Asia Source: Pöyry and Stora Enso 6
Pakistan is an attractive growing consumer market Stora Enso partners in customers expansion into new growth markets Pakistan the 4 th biggest dairy market globally The market for our products is growing 5 15 percent per year Stora Enso global customers are expanding in Pakistan 7
Liquid dairy products significant driver for growth Especially in China, Brazil, Pakistan and India Consumption estimate for Liquid Dairy Products CAGR 2010-2012 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 2,1% 9,0% 2,8% 3,2% Total Global LDP average growth rate: 2.4% 1,5% 1,2% -1% -2% -3% -4% -5% Volume 2012 Bil Litres -0,1% 57.4 33.7 25.9 22.6-0,4%-0,3% -2,8% 12.8 11 7.7 6.7 5.6 5.1 Source: Tetra Pak Dairy Index 2009 8
Key facts about the investment Stora Enso has signed an agreement to establish a joint venture with Packages Ltd. of Pakistan. The initial shareholding will be 35% with a commitment to increase the shareholding at the agreed value to 50% subject to certain conditions being met. The joint venture will include the operations of Kasur Mill, which is a mill under development (paperboard and corrugated packaging), and Karachi Plant (corrugated packaging) currently owned by Packages. The joint venture will to a large extent provide packaging products, such as liquid packaging board, folding boxboard and corrugated packaging, to key local and international companies in the fast-growing market of Pakistan. The joint venture will employ about 950 people and its annual capacity will be 360 000 tonnes of paperboard, corresponding to a turn over of USD 390 million when the investments have been completed. 9
Facts about the joint venture and Packages Ltd Packages Ltd. is the largest packaging and board producer and converter in Pakistan. It has 3 000 employees. The main assets are located in Lahore and Kasur in the province of Punjab. The shares of Packages Ltd. are listed on the Karachi, Islamabad and Lahore stock exchanges. 10
Our financial commitment Maximum USD 130 million Enterprise value of JV is up to USD 125 million Investment made in two steps; 35 % of the JV now and additional 15 % later, subject to certain conditions being met. Including an additional maximum performance compensation, based on the financial results of the second half of 2012 and the first half of 2013 Both partners are committed to further investment programme of total USD 135 million during 2013 and 2014 including: a new biomass power plant a rebuild of current board machines In total, maximum Stora Enso capital commitment of USD 130 million 11
Modern processes and equipment Presenter name September 19, 2012 12
Modern processes and equipment Presenter name September 19, 2012 13
Modern processes and equipment Presenter name September 19, 2012 14
Long tradition of cooperation Packages is a long term partner that Stora Enso knows well. The largest shareholder is the family of Babar Ali who has long ties with Swedish and international companies including Stora Enso in the region. Packages Ltd. has a long tradition of working with key local and international companies. Stora Enso already has a 6.4% shareholding in Packages Ltd. 15
Managed in accordance with Stora Enso policies A strong sustainability agenda is established in Pakistan. Already there is advanced processes established at Packages. In addition, Stora Enso will have its own expertise organization in place. Main activities are training, monitoring, auditing and follow up in reference to Stora Enso code of conduct 16
Summary Strategic move Expands in growth market Attractive investment Long tradition of cooperation We are committed to growth and this investment is one of several proof points in that process. 17