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Jukka Härmälä BUILDING A GLOBAL COMPANY Goldman
Sachs Paper SeminarMay 11, 2000
JH Goldman Sachs /MH/mik
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Contents

• 1. Result January - March 2000
• 2. Strategy
• 3. Acquisition of Consolidated Papers

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Sales and operating margin
Sales
Operating margin
MEUR





) Before non-recurring items
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Profit before tax and minority items
MEUR
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78
25
372
Before non-recurring items
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Return on capital employed




Target gt 13 over the cycle
) Before non-recurring items
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ROOC by product area

Magazine Paper
Newsprint
Fine Paper
Packaging Boards
Pulp
Timber
ROCE 13(target)
WACC 9(pretax)
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Debt/equity
Target 0.80 in 2000
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Capital expenditure and depreciation
MEUR
Capital expenditure
Depreciation

Target Should not exceed the level of
depreciation
) Non-recurring write downs
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STRATEGY
JH Goldman Sachs /MH/mik
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Strategy in brief

• Vision To be the leading forest products company
  in the world
• Focus On three core product areasPublication
  papers, fine paper and packaging boards
• Growth primarily through MAs
• Target is to secure the generation of
  shareholder value

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Why Global ?

• To serve global customers
• be global, act local
• To strengthen market position
• presence in main and growing paper markets
• To enhance economies of scale
• global purchasing power
• market leadership
• global benchmarking
• To enhance global operating flexibility
• currency
• resources fibre and energy
• capacity utilization
• inventory management

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Growth strategy of core product areas

• Future growth
• Market position W.Europe World opportunities
• Publication papers
• Magazine paper 2 2 Europe, North-America
• Newsprint 1 2 Europe, North-America
• Fine papers 1 3 Europe, Asia
• Packaging Boards
• Consumer packaging 1 2 Europe, Asia
• Corrugated boards Baltic Rim, Russia

) Source Jaakko Pöyry Consulting, positions
before acquisitions in 2000
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Stora Enso production, sales network and trade
flows

• Global sales network
• Production should be close to where the sales is
• Local raw material supply

Production plant Sales office Consolidated Papers
Inc.

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Focus on core businesses

• Focus on one core area creates risks
• We prefer broader asset allocation and
  portfoliomanagement
• reduces cyclicality
• complete product palette gives competitive edge
• customers growing bigger

• Graphical industry
• Magazine papers
• Newsprint
• Fine papers

• Packaging industry
• Consumer packagingboards
• Corrugated board material
• Corrugated boards
• Coreboards

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Information technology

• Growth industry
• e-Commerce is to come
• will lower marketing costs
• sales office increased focus on customer
  relations
• speed up delivery times
• working capital management
• But,
• importance of quality, product identity and
  efficient logistics
• partnerships with key account customers will
  continue
• e-Dialogue

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Papyrus e-Business

• Today
• long and successful experience in Sweden
• fully integrated in supply chain
• On-going change program
• extensive investment
• focus on extended business model
• Pan-European launch
• Vision
• industry market leader in e-business

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ACQUISITION OF CONSOLIDATED PAPERS
JH Goldman Sachs /MH/mik
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Why Consolidated Papers?

• Excellent product match in fastest growing paper
  grades
• Leading market positions in core grades
• Long-standing and high-quality customer base
• Excellent sales and marketing network and market
  reputation in U.S. and Canada
• Strong management team with extensive coated
  paper experience

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Stora Ensos Leading Positionin Europe
Coated Woodfree
Coated Mechanical
Uncoated Mechanical Incl. SC
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14
18
9.0
8.4
6.8
Total European Capacity million mt/a
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Now a Leader in North America
Coated Woodfree
Coated Mechanical
Uncoated Mechanical Incl. SC
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5.4
5.2
5.0
Total North American Capacity million mt/a
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Integration Plans

• Objective is to build on Consolidated Papers
  track record and success
• Stora Enso utilizes its excellent experience from
  earlier mergers
• An integration team is in place to ensurea
  successful combination of the two businesses
• a flying start once the deal is closed

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Preliminary timetable

• June Distribute proxy material (F-4)
• July Extraordinary shareholder meetings
  of Stora Enso and Consolidated Papers
• August Closing of the deal and listing of the
  ADRs on the New York Stock Exchange
• If ADRs are not registered and listed by October
  31, 2000, Stora Enso will complete the
  transaction with 100 cash at 44 per share
• Subject to regulatory and SEC approvals.
  Process is longer than typical stock
  transactions due to the use of a new ADR program
  as acquisition consideration.

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Financial Targets and PoliciesRemain Unchanged

• Profitability
• target ROCE 13 over the cycle (current WACC 9)
• Q1 ROCE 17.9
• Financial structure
• debt/equity 0.8, expected to be reached in 2000
• Q1 debt/equity 0.84
• Share buy back
• 5, approval from AGM, subject to board decision
• Dividend policy
• 1/3 of net profit over the cycle
• Emphasis on growth MAs
• Long term creation of shareholder value