AGM 1/4/2009 Annual Report

Annual General Meeting
1 April 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.

Annual General Meeting 1/4/2009 2

2008 summary

• First half
– High cost inflation
– Stable markets

• Second half
– Weakening markets
– Inflation still a burden

• Our actions
– Cut capacity
– Preserve cash flow


Paper deliveries in Western Europe
2000–2/2009

Tonnes

4 300 000

4 100 000

3 900 000

3 700 000

3 500 000

3 300 000

3 100 000

2 900 000

2 700 000

2 500 000
01.00 07.00 01.01 07.01 01.02 07.02 01.03 07.03 01.04 07.04 01.05 07.05 01.06 07.06 01.07 07.07 01.08 07.08 01.09
Sources: PPPC (Magazine paper and Newsprint)
Cepifine (Fine Paper)


Income statement
Continuing operations

EUR million 2008 2007 Change Change %
EUR million
Sales 11 028.8 11 848.5 -819.7 -6.9

EBITDA excl. NRI and fair valuations 1 027.2 1 569.9 -542.7 -34.6
Operating profit excl. NRI and
388.4 861.1 -472.7 -54.9
fair valuations
Operating profit / loss (IFRS) -726.6 176.9 -903.5 n/m
Net profit / loss excl. NRI 142.8 747.3 -604.5 -80.9
Net profit / loss -679.0 12.8 -691.8 n/m

ROCE excl. NRI and fair valuations, % 4.1 8.6 -4.5 -52.3

ROCE excl. NRI, % 3.4 11.3 -7.9 -69.9

EPS excl. NRI, EUR 0.18 0.94 -0.76 -80.9

EPS, EUR -0.86 0.01 -0.87 n/m


Change in EPS (Continuing operations)
2007–2008, including closed units

EUR million excluding non-recurring items

1.0
+0.94*
0.9

0.8
+0.10 -0.17
0.7

0.6
-0.27
0.5

0.4

-0.12
0.3 +0.09 -0.03 -0.05
+0.18
+0.12
-0.11
0.2

0.1

0.0
2007 2008
Sales Sales Sales Fixed Assoc
Energy Fibre Depr Other
Price FX Volume Costs
* 2007 includes 0.32 EUR impact of fair valuations and related items, which include Total Return Swaps (TRS), synthetic options and CO2 emission rights, and fair valuations of
biological assets mainly related to associated companies’ forest assets


Total cost comparison, 2008 vs 2006

Cost increase
Cost savings
in 2008 compared to 2006 cost level
in 2008 compared to 2006 cost level
• Fibre
• Personnel
22%  -4.6 margin points
10%  +1.5 margin points
• Energy
• Other fixed
• Chemicals
• Production services
• TOTAL
• Depreciation
Sales volume & price
• TOTAL

Total costs difference 2006 vs 2008 -3.8 margin points

Total costs in million Euros. / Continuing operations = Excluding discontinued operations (SENA, Merchants)
Excluding non-recurring items


Capital structure

EUR million 31 Dec 08 31 Dec 07 Change Change %
EUR million
Fixed assets 6 853.7 8 493.2 -1 639.5 -19.3
Associated companies 1 042.5 1 154.5 -112.0 -9.7
Operative working capital 1 674.7 2 084.4 -409.7 -19.7
Non-current interest-free items, net -513.6 -493.3 -20.3 4.1
Operating capital 9 057.3 11 238.8 -2 181.5 -19.4
Net tax liabilities -282.8 -618.6 335.8 -54.3
Capital employed 8 774.5 10 620.2 -1 845.7 -17.4

Equity 5 594.0 7 593.6 -1 999.6 -26.3
Minority Interest 56.5 71.9 -15.4 -21.4
Net interest-bearing liabilities 3 124.0 2 954.7 169.3 5.7
Financing total 8 774.5 10 620.2 -1 845.7 -17.4
Debt/Equity ratio 0.56 0.39 0.17 43.5


Reclassification of equity components

• Incorrect classification related to the cancellation of repurchased
shares in 2001, repeated in 2002–2006

• EUR 1 512 million reclassified from retained earnings to share
premium account

• No impact on the total equity in the Parent Company or in the Group


Operating cash flow
Continuing operations, rolling 4 quarters

Cash flow from operations excl provision payments
EUR million

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0
Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08


Actions

1. Divestment of SENA and Papyrus
2. Reduction short term debt
3. Removal Russian wood dependency
4. Two restructuring programs
– Support for employees made redundant
5. Reduction of Capital Expenditures
6. Pricing push
7. Drive for cash


Balance Sheet

Net Debt / EBITDA Debt/Equity

0.8
5,0x

4,5x
0.7
4,0x
0.6
3,5x
0.5
3,0x

0.4
2,5x

2,0x
0.3
1,5x
0.2
1,0x
0.1
0,5x

0.0
0,0x
2004 2005 2006 2007 2008
2004 2005 2006 2007 2008


Balance Sheet without Actions
(Pro Forma)

Net Debt / EBITDA Debt/Equity

5.0X 1.0

4.5X 0.9

4.0X 0.8

3.5X 0.7

3.0X 0.6

2.5X 0.5

2.0X 0.4

1.5X 0.3

1.0X 0.2

0.5X 0.1

0.0X 0.0
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008


Safeguard cash flow & customer volumes

Newsprint and Book Paper
Magazine Paper
Fine Paper
Wood Products

Order flow to lowest cost machine
• independent of country
• also within a country


Changes in selected cost components 2007 to 2008

Energy Costs % Personnel Costs % Wood Costs %
35 35 35

25 25 25

15 15 15

5 5 5

-5 -5 -5

-15 -15 -15

-25 -25 -25
FI DE SE SE FI DE SE SE FI DE SE SE
(SEK) (EUR)* (SEK) (EUR)* (SEK) (EUR)*

Underlying costs for paper and board (incl pulp) Euro per tonne, excluding non-recurring items Excluding discontinued (SENA, Merchants), closed and divested operations
FX-rates in 2007 / 2008 / March 2009: EUR/SEK 9,2517 / EUR/SEK 9,6280 / EUR/SEK 10,9565
* 2008 cost level in SEK converted to EUR with current FX-rate (EUR/SEK 10,9565)


Northern pulp lines are at great risk
Cost Competitiveness in Rotterdam (BHKP) - Hard Wood

Net Sales Price = FOEX Reference Market Price – 13 % Discount
2008/IV Operating rate 100%
EUR/t 1 USD=0.744 EUR
1 EUR=1.344 USD

900

800

700
600 Net Sales Price
July 2008 464 EUR/t
500

400

300 Net Sales Price
March 2009 341 EUR/t
200

100

0
0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000
Cumulative capacity, 1000 t/a
Source: Pöyry


Finland

• Industry situation in Europe traumatic
• Finland in a dangerous situation
– total cost increase in Finland 11% from 2006 to 2008, almost
double compared to the total cost increase of the Group
• The problem is too big for anybody to solve alone
• Now it is time to work together
• We all win or we all lose


Top 15 producers of chemical pulp

International Paper
Stora Enso
Domtar
APP/Sinar Mas
VCP
Georgia-Pacific
Nippon Paper Group
RGM/APRIL
Botnia
Oji
Sappi
Arauco
Suzano
Weyerhaeuser
Capacity
UPM 1 000 t/a

0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000
Source: JPsmartterminal
Includes SW and HW, bleached and semi-bleached, kraft, sulfite, semichemical


2009

• Pricing quality and cash preservation

• CAPEX reduced to EUR 400 million
(EUR 700 million in 2008)

• Order flow to lowest cost production units

• Temporary lay-offs & other cost measures must continue


Our Promise – Vision and Mission

Vision:
• Today we as a company, people and planet face new
challenges never before seen. The world needs a new
approach to materials.

Mission:
• We will win with solutions based on renewable materials.


Carbon footprint of beverage cartons and
plastic bottles in Spain
kg CO2 equivalents per 1000 L beverage carton

200

175

150

125

100

75

50

25

0
1 L PET bottle 1 L HDPE 1 L aseptic brick carton
Source: IFEU Carbon Footprint of milk and juice containers in Spain, 2008 The carbon footprint calculation uses a “cradle-to-grave” approach. It covers all relevant process steps from
raw material sourcing to the final waste treatment or recycling of the used packaging. Certain allocation assumptions have been made in the study.


Long-term Demand Growth by Region through 2025
Paper and Paperboard

Demand growth, %/a

7
India
6

5 China Russia
Middle East
4 Africa
Eastern Europe
3 Latin America
Rest of Asia
2
Average 1.9%/a
1 Oceania
Western Europe
0
North America Japan
-1
0 20 40 60 80 100
Share of consumption in 2006, %
Source: Pöyry


Towards the future with
Biofuel development

We do not convert native
forests into plantations.

Sustainably managed
forests remove CO2
from the atmosphere and
our products are carbon
storages.

All our products are
100% recyclable.

Through the storm

Past two years
• Unforeseen challenges
• Secure vital strengths
• Capable, loyal, resilient personnel
2009
• Traumatic weakening of markets
• Strong cash flow, pricing quality
• Cost savings efforts
Future
• Fibre-based, recyclable packaging
• Cost-competitive pulp from plantations
• Stora Enso more efficient, more focused, ready for change


Distribution of funds

• The Board of Directors proposes to the AGM that EUR 0.20 per share,
a maximum aggregate of EUR 157 907 699.80, be distributed to the
shareholders from the share premium fund of the parent company.

• The distribution shall be paid after the Finnish National Board of
Patents and Registration has given its consent to the decrease of the
share premium fund which is expected to take place in July 2009 at the
earliest.

• The Board of Directors proposes that it will be authorised to decide on
record date and payment date after the consent.

• Estimated record date 31 July 2009
• Estimated payment date 10 August 2009


Proposal by the
Nomination Committee

Remuneration for the Members of
the Board of Directors
At the initiative of the BOD, the remuneration is proposed to be reduced
by 50% for the year 2009.

Proposal for remuneration 2009
Chairman EUR 67 500
Deputy Chairman EUR 42 500
Members EUR 30 000

• The Nomination Committee also proposes that 40% of the
remuneration be paid in Stora Enso Series R shares purchased from
the market.


the Board Committees
At the initiative of the BOD, the remuneration is proposed to be
reduced by 50% for the year 2009.
Financial and Audit Committee
Chairman EUR 10 000
Members EUR 7 000
Remuneration Committee
Chairman EUR 5 000
Members EUR 3 000


Proposed Members of the Board of Directors

• Gunnar Brock • Ilkka Niemi
• Claes Dahlbäck • Juha Rantanen
• Dominique Hériard Dubreuil • Matti Vuoria
• Birgitta Kantola • Marcus Wallenberg
• Hans Stråberg


Hans Stråberg

• President and CEO of AB Electrolux
– Holds a Master’s degree in Science and Engineering from the
Chalmers University of Technology in Gothenburg

• Board Member of Roxtec, Swedish Engineering Industries,
Confederation of Swedish Enterprise and AB Electrolux


Appointment of Nomination Committee

Duties
• The Nomination Committee proposes that the AGM appoint a
Nomination Committee to prepare proposals concerning (a) the number
of members of the Board of Directors, (b) the members of the Board of
Directors, (c) the remuneration for the Chairman, Vice Chairman and
members of the Board of Directors and (d) the remuneration for the
Chairman and members of the committees of the Board of Directors.
Members:
• The Chairman of the Board of Directors
• The Vice Chairman of the Board of Directors
• Two members appointed by the two largest shareholders (one each) as
of 1 October 2009
Remuneration for 2009
• EUR 3 000/year (payable only to non-board members)

the Board of Directors
At the initiative of the BOD, the remuneration is proposed to be reduced
by 50% for the year 2009.

Chairman EUR 67 500
Deputy Chairman EUR 42 500
Members EUR 30 000

• The Nomination Committee also proposes that 40% of the
remuneration be paid in Stora Enso Series R shares purchased from
the market.


the Board Committees
At the initiative of the BOD, the remuneration is proposed to be
reduced by 50% for the year 2009.
Financial and Audit Committee
Chairman EUR 10 000
Members EUR 7 000
Remuneration Committee
Chairman EUR 5 000
Members EUR 3 000


Esitys hallituksen jäseniksi

• Gunnar Brock • Ilkka Niemi
• Claes Dahlbäck • Juha Rantanen
• Dominique Hériard Dubreuil • Matti Vuoria
• Birgitta Kantola • Marcus Wallenberg
• Hans Stråberg


Election of Auditors

• The Board of Directors proposes to the AGM that Authorised Public
Accountants Deloitte & Touche Oy continue as the statutory auditor of
the Company until the end of the following AGM.


Appointment of
Nomination Committee

Appointment of Nomination Committee

Duties
• The Nomination Committee proposes that the AGM appoint a
Nomination Committee to prepare proposals concerning (a) the number
of members of the Board of Directors, (b) the members of the Board of
Directors, (c) the remuneration for the Chairman, Vice Chairman and
members of the Board of Directors and (d) the remuneration for the
Chairman and members of the committees of the Board of Directors.
Members:
• The Chairman of the Board of Directors
• The Vice Chairman of the Board of Directors
• Two members appointed by the two largest shareholders (one each) as
of 1 October 2009
Remuneration for 2009
• EUR 3 000/year (payable only to non-board members)

Share premium fund
and reserve fund

Decrease of the share premium fund and the reserve
fund of the parent company
• The Board of Directors proposes that:
– the share premium fund as shown in the balance sheet of the
parent company as per 31 December 2008 will be decreased by an
amount of EUR 1 688 145 310.08
– the reserve fund as shown in the balance sheet of the parent
company as per 31 December 2008 by an amount of
EUR 353 946 990.12

• The decreased amounts shall be transferred to the invested non-
restricted equity fund.

• The decrease of the share premium fund and the reserve fund become
effective after the Finnish National Board of Patents and Registration
has given its consent to the decrease.


Proposal by shareholders
Matti Ikonen,
Matti Liimatainen and
Annina Käppi

Proposal to amend Stora Enso’s
policy on old-growth forests
Sini Harkki
April 1st 2009
Marina Congress Center

Value of intact forests
• Less than 5% of Finnish forests are in
natural state
• Loss of intact forests is a global concern
– Biodiversity
– Adapting to climate change and mitigating it
– Ecosystem services


Stora Enso’s policy on old-growth
forests

“We do not purchase wood and fibre from
protected areas or areas in the official
process of designation for protection, old
growth forests and high conservation
value forests defined in national
stakeholder processes unless the
purchases are clearly in line with the
national conservation regulations. “


Old-growth forests in Finland
• According to scientific estimates approximately
half are protected
• Forests whose structure has not been
significantly changed by forestry or are in a
natural state
• Significant to threatened species and also to
other uses of forests
• In Finnish North-Boreal zone the amount of
protected forest in natural state is less than 7%


Old-growth forests in Forest
Lapland


Old-growth forests in Forest Lapland

• Finnish Association for Nature Conservation,
Greenpeace, Luonto-Liitto 2006
• Thousands of findings of threatened species
• Most of the forest in the areas is old-growth
• Even medieval trees can be found, natural
structure
• Significant to recreation and forest based
livelihoods because of their wilderness-like
nature

Old-growth forests in Forest Lapland
• In 2007 more than 250 researchers appealed for these
forests to be protected, including more than 70
professors

“The natural development of Lapland's
forest ecosystems is so slow that logging
in its remaining old natural forests cannot
be considered a sustainable use of natural
resources… It can be reasonably stated
that logging of natural forests causes
irreversible change of habitat, and
destroys an important part of our national

Stora Enso’s policy on old-growth
forests
• AGM 2007:

Stora Enso asked Metsähallitus to
inventory the natural values of the
contested areas before logging would be
re-started


Logging continued
• No reports on the inventories or ecological
values have been published
• Metsähallitus classified the areas in three
classes but presented no evidence or
criteria: 1) natural state, 2) ”areas with
earlier forestry operations”, 3) natural
state, with ”no special nature values”


Logging in 2009
• In Ahmatunturi and Talluskotavaara in old-
growth forests that were classified ”in
natural state” by Metsähallitus itself
(classes 1 and 3).

->How can the logging of natural state old-
growth be in line with SE’s principles?
->Why can SE/MH not publish the reports on
the inventories?

Logging in 2009
• Over 300 years old trees logged
• Completely natural state forest
• Forests important to other livelihoods and
local people
• In a situation where contractors have been
laid off and wood storage piles are filled


Stora Enso’s policy
• Trying to get around it: ”individual old trees”,
”trees are 80 year old, some 140-200 years”


Stora Enso’s policy
• Misusing FSC Controlled Wood as proof of
the sustainability of certain operations –
not allowed by the FSC
• Does not take into account ecological data
or researchers’ appeals
• Does not consider even forests classified
as ”natural state” by Metsähallitus valuable
enough


The proposal
“We propose that Stora Enso Oyj no
longer procure from the Finnish state
enterprise Metsähallitus any wood from
forest areas in forest Lapland that nature
conservation organisations have
designated as rare contiguous wilderness
areas formed by old-growth forests, bogs
and fells.”


The proposal
• Ecological data supports the decision
• Finally a real environmental policy
decision
• In the current wood procurement situation,
there should be no financial impediments
to taking such a responsible decision


We can afford it
• Proposal concerns 30,000 ha of forest land
outside protected areas
• This is less than 0,8 % of Lapland’s forest land
outside protected areas
• 10,2 million m3 of Lapland’s tree growth is in
forestry use and only 1,6 million m3 in protected
areas
• Logging opportunities in young forests are
growing and capacity is decreased at the same
time


Conclusions
• 2010 is the year of biodiversity and natural
forests (CBD, EU Countdown)
• No financial impediments to sustainable
policy on old-growth forests
• Stora Enso has a sustainable policy in the
Saami Homeland, why not in other old-
growth areas as well?


Stora Enso’s response to
the proposal regarding
protection of biodiversity
in Forest Lapland

Stora Enso is committed to protecting biodiversity

• Stora Enso is committed to protecting old-growth forests
• We do not buy wood from forests which have been protected as old-
growth in a national stakeholder process
• We have supported many multi-stakeholder processes in northern
Finland since 1996 to protect old-growth forests
• Already 43% of the forests (0.5 million hectares) in Forest Lapland are
protected
• According to the Finnish Ministry of Environment there is no need for
further protection areas in Forest Lapland


Stora Enso’s position

• Stora Enso can receive wood from the areas addressed by the
environmental organizations
– Not protected as valuable old-growth forests in the national
stakeholder processes

• We encourage all relevant stakeholders to participate in the dialogue
– The next opportunity to make a difference is to take part in the
Metsähallitus’ Natural Resource Planning process starting in fall
2009


AGM 1/4/2009 Annual Report

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