Company InFocus DIVIDEND AND AGM INFORMATION CONTACTS Payment of dividend Kari Vainio The Board of Directors proposes to the Annual General Executive Vice President, Corporate Communications Meeting (AGM) that a dividend of EUR 0.45 per share Tel. +44 20 7016 3140 be paid for the fiscal year ending 31 December 2003. Fax +44 20 7016 3208 Dividends payable on VPC registered shares will Postal address: Stora Enso International Office, be forwarded by VPC and paid in Swedish krona. 9 South Street, London W1K 2XA, UK Dividends payable to ADR-holders will be forwarded [email protected] by Deutshe Bank Trust Company Americas and paid in US dollars. For more details, see Information for Keith B Russell Shareholders on page 52. Senior Vice President, Investor Relations Tel. +44 20 7016 3146 Dividend Policy Fax +44 20 7016 3208 Strive to pay stable dividends linked to Postal address: Stora Enso International Office, the long-term performance 9 South Street, London W1K 2XA, UK One half of net profits over a business cycle [email protected] Annual General Meeting Ulla Paajanen-Sainio The AGM of Stora Enso Oyj will be held at 16.00 Vice President, Investor Relations and Financial Communications (Finnish time) on Thursday, 18 March 2004 at the Tel. +358 2046 21242 Finlandia Hall, Mannerheimintie 13 e, Helsinki, Finland. Fax +358 2046 21307 Postal address: Stora Enso Oyj, P.O. Box 309, FIN-00101 Helsinki, Finland [email protected] Cover picture Scott A. Deitz Vice President, Investor Relations, North America View of a cylinder in the dryer section Tel. +1 715 422 1521 of the new paper machine at Fax +1 715 422 3882 Langerbrugge. The end of the cylinder at the top left is yellow, the felt at the Postal address: Stora Enso North America, P.O. Box 8050, bottom right is grey, and reflections off Wisconsin Rapids, WI 54495-8050, USA the cylinder surface in between are red. [email protected] CONTENTS 8 STRATEGY 32 BOARD OF DIRECTORS 21 Focused strategy will enhance profitability and growth. ROCE 34 MANAGEMENT GROUP target remains 13% over a business cycle. Dividend policy 38 CORPORATE GOVERNANCE amended to distributing half of Stora Enso has updated its net profits over a cycle. Corporate Governance in response to reorganisation of the Group, 12 STORA ENSO ACCOUNT public interest in governance MANAGEMENT issues, new rules and recommen- An innovation for key customers dations of the Helsinki, Stockholm providing a single integrated and New York Stock Exchanges service for all their purchases. and the Sarbanes Oxley Act. 14 NEW ORGANISATIONAL 42 SHARES AND STRUCTURE SHAREHOLDERS Organisation streamlined around 2 COMPANY PRESENTATION Stora Enso’s three core product 46 FINANCIAL SUMMARY Stora Enso is an integrated paper, areas: Paper, Packaging Boards, For the full financial information, packaging and forest products and Forest Products. see www.storaenso.com/2003 company producing publication or the separate Financials 2003 and fine papers, packaging boards 16 PAPER report. Instructions for ordering and wood products, areas in 20 New paper machine at it are on the back cover of this which the Group is a global Langerbrugge report. market leader. 22 PACKAGING BOARDS 52 INFORMATION FOR FINANCIAL HIGHLIGHTS SHAREHOLDERS 2 24 InnoCentre Key figures for 2003 excluding non-recurring items: operating 26 FOREST PRODUCTS 11 profit EUR 538.1 million (4.4% 29 Further processing: of sales), profit before tax and window frames minority interests EUR 331.4 million and EPS EUR 0.25. 30 HUMAN RESOURCES MANAGEMENT 3 YEAR 2003 IN BRIEF Stora Enso employs some 44 000 employees in more than 40 4 PRODUCT AREAS IN BRIEF countries. Their importance to Stora Enso’s long-term success is 6 LETTER TO SHAREHOLDERS reflected in the Group’s HR vision “What People Can Do”. STORA ENSO COMPANY 2003 1 COMPANY PRESENTATION Creating value tora Enso is an integrated paper, Stora Enso serves its mainly business- Stora Enso is committed to develop- packaging and forest products com- to-business customers through its own ing its business towards ecological, social S pany producing publication and global sales and marketing network. A and economic sustainability. This com- fine papers, packaging boards and wood global presence provides local customer mitment is demonstrated through its products, areas in which the Group is a service. Customers are large and small values and its environmental and social global market leader. publishers, printing houses and mer- responsibility policy, and has been recog- Stora Enso sales totalled EUR 12.2 bil- chants, as well as the packaging, joinery nised by selection for the Dow Jones DJSI lion in 2003. The Group has some 44 000 and construction industries worldwide. World and DJSI STOXX sustainability employees in more than 40 countries in The main markets are Europe, North indexes since they were launched in five continents and an annual production America and Asia. 1999. Stora Enso had the highest score in capacity of 15.7 million tonnes of paper The Group has production facilities in this sustainability ranking among forest and board and 7.4 million cubic metres of Europe, North America and Asia. Its mod- products companies in 2003. Stora Enso is sawn wood products, including 2.8 mil- ern production capacity and the good also included in the FTSE4Good index. lion cubic metres of value-added prod- integration between raw material, energy ucts. Stora Enso’s shares are listed in and efficient processes ensure production Helsinki, Stockholm and New York. continuity. Financial highlights 2002 2003 2002 2003 Sales, EUR million 12 783 12 172 Debt/Equity ratio **0.37 0.48 Operating profit, EUR million -152 484 Earnings per share, EUR -0.25 0.17 excluding non-recurring items, EUR million 927 538 excluding non-recurring items, EUR 0.57 0.25 % of sales 7.2 4.4 Cash earnings per share, EUR 2.49 1.58 Profit before tax and minority interests, EUR million -343 223 excluding non-recurring items, EUR 1.97 1.64 excluding non-recurring items, EUR million 735 331 Equity per share, EUR 9.36 9.65 Net profit for the period, EUR million -222 147 Dividend per share, EUR 0.45 * 0.45 Capital expenditure, EUR million 878 1 248 Payout ratio, % 79 180 Interest-bearing net liabilities, EUR million 3 267 3 919 Market capitalisation, EUR million, 31 Dec. 9 052 9 288 Capital employed, EUR million 11 242 11 744 Deliveries of paper and board, 1 000 tonnes 13 149 13 551 Return on capital employed (ROCE), % -1.5 4.1 Deliveries of wood products, 1 000 m3 5 112 5 822 excluding non-recurring items, % 7.1 4.6 Average number of employees 43 853 44 264 Return on equity (ROE), % -3.3 1.8 *) Board’s dividend proposal **) Adjusted with the initial valuation of IAS 41 Agriculture 2 STORA ENSO COMPANY 2003 YEAR 2003 IN BRIEF Year in Brief lobal uncertainty in forest prod- mill’s output. The mill will be the largest production capacity of the machine ucts industry markets persisted single-line bleached eucalyptus pulp mill will be about 420 000 tonnes of high- G for the third year, mainly because in the world. It is scheduled to begin pro- quality super-calendered (SC) papers. The economic stagnation kept demand low, duction in mid 2005. machine is expected to start up at the end especially in advertising-driven paper In December Stora Enso approved a of 2005. Simultaneously with the start-up grades. The decline in the value of the US EUR 211 million investment in Skoghall 130 000 tonnes of capacity will be shut- dollar negatively impacted the Group’s Mill’s Energy 2005 project. The new down. margins on overseas sales and in Europe, evaporation plant and recovery boiler will Also within the ARP, paper machine 6 where competition increased. start up in autumn 2005 and the biofuel which produces SC-B paper at Maxau Mill In North America the moderate boiler in summer 2006. in Germany will be rebuilt to enhance its growth that started in late 2002 acceler- In December Stora Enso announced productivity and competitiveness. ated in the second half of the year, allow- its intention of restructuring ownership ing the announcement of some price of the Group’s forestlands in Sweden. increases, especially in magazine and Stora Enso’s partner in the transaction is newsprint grades, but at the end of the Korsnäs. The Swedish forests of Stora year these increases were facing resist- Enso and Korsnäs will be transferred to a ance. Imports from Europe and Asia dis- new company named Bergvik Skog AB. turbed the supply and demand balance, Stora Enso will retain a minority share- keeping prices under pressure. holding of 44% in the new company. The rest of the company’s shares were placed Main events 2003 with institutional investors. In February Stora Enso and the owners of AS Sylvester, Estonia’s largest sawmill Asset Restructuring Programme and wood procurement company, closed (ARP) the previously announced acquisition. In December Stora Enso approved the In May Stora Enso Oyj and Aracruz construction of a new paper machine at Celulose S.A. announced their decision to Kvarnsveden Mill in Sweden to improve go ahead with construction of a 900 000 its competitiveness in uncoated magazine tonnes per year eucalyptus pulp mill for paper production as part of the ARP. The Veracel Celulose S.A. in Bahia, Brazil. total investment is estimated at approxi- Stora Enso will be entitled to half of the mately EUR 450 million and the annual Read more www.storaenso.com/2003 STORA ENSO COMPANY 2003 3 PRODUCT AREAS IN BRIEF Stora Enso Paper PUBLICATION PAPER FINE PAPER PRODUCTS PRODUCTS Uncoated super-calendered (SC), uncoated machine-finished Graphic papers (coated fine paper), office papers (uncoated (MF), light-weight coated (LWC), medium-weight coated fine paper) and speciality papers (technical, label and flexible (MWC), heavy-weight coated (HWC) and machine-finished packaging papers).