12 March 2010

Message from CEO Jouko Karvinen

Message from CEO published on 4 February 2010:

“The year 2009 ended on a strong note for Stora Enso. The highlight of the year – EUR 1 261 million cash flow from operations – is the result of active working capital management that we started already in late 2008. In light of the dramatic drop in demand, we promised a year ago that we would finance at least two thirds of our capital expenditure of about EUR 400 million through working capital improvement – the improvement was actually a lot more, EUR 500 million. The second significant achievement is the cost improvements that we also started early. That allowed us not only to maintain our margin level year on year with volumes one fifth less, but more importantly enabled us to achieve margins and absolute earnings clearly higher in the second half than the first half of the year. Finally, net debt reduction of EUR 530 million in the most difficult operating environment in decades should demonstrate to our stakeholders that our strategy of acting early on things we can control, and not waiting for better times or for others to act, has been and remains the right strategy.

“After three consecutive years of very significant if different challenges, we could have hoped for an easier 2010. The good news is that, after implementation of several improvement actions, Consumer Board is not only strong, but also positioned for continued and further improving performance. We believe Industrial Packaging is also well positioned for further growth with improvement actions such as power plant investment in Poland, and the efforts to divest laminating paper will improve the situation further. At the same time, we see that following our early actions, our graphics paper businesses (newsprint, magazine paper and coated fine paper) are now well positioned to get through yet another challenging year in 2010. As we indicated already in October 2009, the underlying structural supply and demand imbalances in newsprint and some other graphical grades are putting pressure on pricing. This just underlines how crucial our early actions were, such as significant cost and capacity cuts, as well as cost-improving investments in for example power plants in Langerbrugge and Maxau, which will be completed in the next few months.

“We will now not only make sure that already announced programmes will produce the benefits promised, we will also take new measures when needed to stay on our path of defending earnings quality through proactive business mix and capacity management. Our production capacity needs to be in line with sustainably profitable demand for our products, and we will therefore not hesitate to take further temporary or permanent capacity cuts if necessary. We will also continue our working capital ratio improvements that we started five quarters ago, even though the completion of our power plant investments and seasonality will have a limiting impact on absolute short-term cash flow. We are determined to stay on our path and move even faster where possible. This, and only this, will enable us to continue to build our future growth in fibre-based packaging, low-cost pulp and other areas where we can create a sustainable earnings capability.”