Capital Markets Day 2018

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Creating value in the bioeconomy

Stora Enso’s Capital Markets Day (CMD) 2018 took place in Helsinki on 7 November. More than 80 investors, analysts and bankers joined the event to hear about Stora Enso’s role in the bioeconomy on its journey to replace fossil-based materials with renewable materials. The programme continued the next day with mill visits to Lahti and Heinola.

The CMD provided an update on Stora Enso’s strategy, financials and businesses. This year, the CMD contained presentations from all our divisions: Consumer Board, Packaging Solutions, Biomaterials, Wood Products and Paper. In addition, the participants discussed the topics in detail in the breakout Q&A sessions with CEO Kalle Sundström, CFO Seppo Parvi and divisional heads Annica Bresky, Gilles van Nieuwenhuyzen and Jari Suominen. Several demo stations offered a chance to explore Consumer Board product prototypes, the newly launched ECO RFID tag for intelligent packaging, Lineo lignin, Wood city office virtual reality, wide Paper product selection and the Virtual forest application.

On Thursday 8 November, the CMD continued with Packaging Solutions site visits, hosted by EVP, Packaging Solutions, Gilles van Nieuwenhuyzen and SVP, Investor Relations Ulla Paajanen. The visits included presentations and mill tours in SC fluting mill in Heinola and in corrugated packaging plant in Lahti as well as a visit to Design Studio where guests could see some of the award-winning packaging solutions.

Presentations in Helsinki
Highlights are available in Twitter #storaensocmd.

Karl-Henrik Sundström, CEO, started by explaining Stora Enso’s role in bioeconomy: “Because of global megatrends, the world needs renewable materials. The urging need for replacing plastics is also supported by new legislation. This will open enormous opportunities for us”, he said. “We believe we can offer sustainable profitable growth, excl. Paper, of 4-6 % annually.”

He also gave an overview of our current R&D focus and innovation, including the new products and their impact to Stora Enso. “We are developing three new platforms: lignin-based products, biocomposites and liquid packaging MFC. These will be very important to us in the next 5-10 years”, he said. “The journey to replace plastics is not one big bang. It will take time but it will gradually happen”, he concluded.

Annica Bresky, EVP, Consumer Board, gave an outlook for the demand and supply in the packaging market, especially in China. “The total market size of packaging is enormous: 400 billion EUR market. The addressable market for Consumer Board out of that is about half”, she said and also explained the pricing dynamics in the Consumer Board business.

“Consumer Board is well positioned in the bioeconomy, as brand owners aim for reducing the amount of plastics in their packaging. We are commercializing new products with our customers: 14% of our sales already comes from new products. Our target is to reach 25% of sales from new products and services”, she concluded.

Gilles van Nieuwenhuyzen, EVP, Packaging Solutions, highlighted e-commerce and sustainability driving growth in packaging. “Plastics waste in oceans is on every consumer’s mind. Companies are therefore acting to go for renewable packaging. Corrugated is in the sweet spot of this: it is recyclable, renewable and compostable”, he said.

Packaging Solutions has been able to deliver strong performance and high profits. “How do I see growth for the future? Innovation, clear growth focus in containerboard and selective growth in corrugated. All this is supported by digitalisation. We are well-positioned to build on this in the future”, he concluded.

Markus Mannström, EVP, Biomaterials, gave an overview of current pulp market dynamics and explained how megatrends impact the pulp demand. “Growth is expected, as there is a solid need for chemical pulp. Supported by megatrends, the market is growing in China where 75% of the growth happens”, he said.

He emphasised that to replace plastics, innovation based on biomaterials is needed. “When we look at our innovation agenda from commercialisation perspective, we see basically two kinds of value propositions: improved material efficiency or replacing fossil-based materials with renewable ones - in a cost-competitive way. We are aiming at being the leading R&D innovator in the industry.”

Jari Suominen, EVP, Wood Products, stated that where one might see a planted seedling, we see a skyscraper in the making. He talked about current trading conditions and market outlook and the benefits of building with wood. “All megatrends are favouring building with wood. By using wood in construction, you can cut CO2 emissions in construction by 75%.”

He highlighted the annual growth of 6-8% to be estimated in the Building Components and Solutions, Classic Sawn and Biocomposites businesses. “We are one of the very few ones who can offer all components which are needed to build a high-rise building. We complement this with our service offering”, he explained. “During the last years, we have grown through innovation and investments. We are now focusing on creating a transparent value chain and taking full benefits from digitalisation.”

Kati ter Horst, EVP, Paper, highlighted the role of asset management and innovation approach in the division. “We have restructured our business for better profitability. By doing this, we have delivered continued solid performance”, she said. “We have sold, closed or converted 2.7 million tons of paper production since 2013. Now we are well-positioned and continue to deliver profitability and solid cash flow.”

“Our innovation is focused on operational excellence, new or improved paper grades and non-paper related new businesses, which utilise our knowhow and infrastructure”, she explained. “We continue to focus on operational efficiency and cost reduction. I am confident that we have the best global commercial team with the aim to maximise sales result and create value to customers”, she concluded.

Seppo Parvi, CFO, focused on explaining why access to wood is a critical advantage in the bioeconomy. “We are one of the biggest forest owners globally. But it is not enough that you own the forest - you must have productive forest as well. We need to ensure sustainable profitable growth through robust asset management, including forest ownership as that is one of the most valuable assets for us in the business of creating value in the bioeconomy.”

He also highlighted our roadmap to reach the Fixed costs to sales target of < 20%, which is based on sales growth, operational excellence and continuous cost improvement. He also talked about our capital expenditure management, and the importance of finding the best projects were to allocate the capital. “To support growth, we need to have a very systematic way of screening all our opportunities and proposals”, he concluded.

Quick links

Part of the bioeconomy, Stora Enso is a leading global provider of renewable solutions in packaging, biomaterials, wooden construction and paper. We employ some 23 000 people and have sales in more than 50 countries and our shares are listed on the Helsinki (STEAV, STERV) and Stockholm (STE A, STE R) stock exchanges.

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