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“Stora Enso is the customers’ first choice” ANNUAL REPORT 2000 Contents Year 2000 in brief ............................................................1 Report on operations .....................................................47 Company presentation ....................................................2 Consolidated income statements ...................................51 Mission, vision and values................................................4 Consolidated balance sheets..........................................52 Strategy...........................................................................5 Equity reconciliation ......................................................53 Letter to shareholders ......................................................6 Consolidated cash flow statements ................................54 Shares and shareholders ..................................................8 Notes to the consolidated financial statements ..............56 Financial review .............................................................14 Parent company income statements ..............................89 Magazine paper.............................................................26 Parent company cash flow statements ...........................90 Newsprint......................................................................28 Parent company balance sheets.....................................91 Fine paper .....................................................................30 Parent company notes...................................................92 Packaging boards ..........................................................32 Proposal for the distribution of dividend ........................97 Timber products ............................................................34 Auditors' report ............................................................98 Merchants .....................................................................36 Group structure .............................................................99 Pulp...............................................................................37 Board of Directors........................................................100 Nordic forest .................................................................38 Management Group....................................................102 North American division ................................................39 Corporate governance.................................................104 Asia Pacific division ........................................................39 Glossary of technical terms ..........................................106 Marketing and sales network .........................................40 Capacity ......................................................................107 Environment..................................................................41 Group world wide presence.........................................109 Research and development............................................42 Calculation of key figures.............................................110 Human resources...........................................................43 Information to shareholders ........................................Flap Financial Information in 2001 Your Investor Relations contacts are: Stora Enso website: www.storaenso.com/investors Maija Harsu Scott Deitz 7 February .........................Financial result for 2000 operations Tel. +358 2046 21242 Tel. +1 715 422 1521 26 April .............................Interim Review, January – March 2001 Fax +358 2046 21307 Fax +1 715 422 3882 26 July ..............................Interim Review, January – June 2001 P.O. Box 309 P.O.Box 8050 25 October .......................Interim Review, January – September 2001 FIN-00101 Helsinki Wisconsin Rapids, WI 54495-8050 [email protected] [email protected] 20 March ...........................Annual General Meeting Languages The Annual Report, Interim Review and Environmental Report are available in English, Finnish, Swedish and German. The Annual Report and Environmental Report will be distributed to all shareholders. The printed Interim Review is available on request from: [email protected] or from the back cover addresses. 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. We deliver Year 2000 in briefresults Good market During the first nine months of the year demand and prices were strong but from autumn on the market gradually weakened as a result of de-stocking and softening of the US market, which led to production curtailments especially in pulp and coated fine paper. Despite weaker demand prices remained stable. The sawn timber market suffered somewhat from increased supply and high inventories during the year. Financial result improved Earnings per share before non-recurring items rose by 48% to EUR 1.32. Cash earnings per share before non-recurring items were EUR 2.61, up 25%. Operating profit before non-recurring items reached EUR 1,925.6 million, 15% of sales, and profit before tax and minority interests respectively was EUR 1,653.3 million. The improvements were attributable to higher prices, increased delivery volumes, favourable currency development and improved efficiency, which more than offset high recovered paper prices, the paper industry strike in Finland in April and lower delivery vol- umes in the autumn resulting from production curtailments. Financial targets met Return on capital employed (ROCE) before non-recurring items was 16.8%, the target being 13% over the cycle. The debt/equity ratio was 0.59, well below the target of 0.8. Capital expenditure amounted to EUR 769.3 million, less than the depreciation and consistent with Group’s objective that the capital expenditure should not exceed the depreciation. Stora Enso’s synergies totalled EUR 240 million, compared with the target of EUR 170 million for the year 2000. Dividend raised The Board of Directors proposes to the Annual General Meeting a dividend per share of EUR 0.45, giving a payout ratio of 34%. Year of restructuring The structural streamlining of the Group continued. The main changes were the sale of power assets outside mills and the decisions to acquire the US-based paper producer, Consolidated Papers, Inc. and to restructure our interest in the Gruvön mill in Sweden. Financial highlights 1999 2000 1999 2000 Sales, EUR million 10,635.7 13,017.0 Return on capital employed (ROCE), % 13.1 20.7 Operating profit, EUR million 1,399.6 2,371.3 – before non-recurring items, % 12.1 16.8 – before non-recurring items, EUR million 1,296.6 1,925.6 Debt/equity ratio 0.78 0.59 – % of sales 12.2 14.8 Earnings per share, EUR 0.98 1.77 Profit before tax and minority - before non-recurring items, EUR 0.89 1.32 interests, EUR million 1,142.7 2,099.0 Cash earnings per share, EUR 2.18 3.16 – before non-recurring items, EUR million 1,039.7 1,653.3 - before non-recurring items, EUR 2.09 2.61 Profit for the period, EUR million 746.4 1,435.0 Equity per share, EUR 7.8 9.4 Capital expenditure, EUR million 740 769 Dividend per share, EUR 0.40 0.451) – % of sales 7.0 5.9 Market capitalisation, EUR million 13,209 11,733 Interest-bearing net liabilities, EUR million 4,783 5,183 Deliveries of paper and board, million tonnes 12.0 13.0 Capital employed, EUR million 10,941 13,903 Deliveries of timber products, million m3 4.6 4.9 Average number of employees 40,226 41,785 1) proposed dividend Stora Enso Annual Report 1 We take the lead Stora Enso is an integrated forest products company producing magazine papers, newsprint, fine papers and packaging boards, areas in which the Group is a global market leader. Stora Enso also conducts exten- sive sawmilling operations. To strengthen its market position and better serve customers in the United States, the company acquired the

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