Wood based urban construction - is wood industry ready to take the challenge? 24 May 2013 / Matti Mikkola, SVP, Stora Enso Building & Living

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Jemima Stanley
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1 Wood based urban construction - is wood industry ready to take the challenge? 24 May 2013 / Matti Mikkola, SVP, Stora Enso Building & Living 1

2 Building scenarios by main markets Low construction market growth, fierce competition and high wood prices are expected to continue Housing starts in Europe, USA and Japan 140 Index 2003 = % +4.3% Cumulative : USA +102% Europe +22% Japan -15% -6.5% +24% USA Europe Japan % 20 Forecast Stora Enso Building Solutions - Matti Mikkola 24 May 2013 Sources: Euroconstruct, Consensus Forecasts, NAHB 2

3% Cumulative 2012-18: USA +102% Europe +22% Japan -15% -6.

3 European market provides a huge potential for wood based construction ~ 0% Housing starts (2011) Non-wood Wood-frame Million housing units % 55% 80-90% 0 China Europe Japan USA Stora Enso Building Solutions - Matti Mikkola 24 May

Wood-frame Million housing units 8 6 4 2 10% 55% 80-90% 0 China

4 Building and constrcution Key drivers for construction companies 1. Profitability No unexpected risks 2. Building companies = project management companies Subcontracting 3. Regulations OHS, energy Brand and strategy Sustainability Customer demand Stora Enso Building Solutions - Matti Mikkola 24 May

Building companies = project management companies Subcontracting 3.

5 Europe can be divided into three geographical markets Differences in company structures and customer demand 1. Nordic Total solution West-Europe Engineered and erected 3. Central-/East-Europe Product with added features Stora Enso Building Solutions - Matti Mikkola 24 May

6 Customer expectations Basic requirements are not that many Risk free solution that is: Technically reliable Approved by the authorities Competitive against other systems...and in erected form Stora Enso Building Solutions - Matti Mikkola 24 May

the authorities Competitive against other systems.

7 Customer expectations What does it mean for us as a supplier - Risk free solution Tested solutions, references needed Stora Enso Building Solutions - Matti Mikkola 24 May

8 Customer expectations What does it mean for us as a supplier - Technically reliable Home work done, also jointly with the industry Stora Enso Building Solutions - Matti Mikkola 24 May

9 Customer expectations What does it mean for us as a supplier - Approved by the authorities Direct discussions and partly with the industry Stora Enso Building Solutions - Matti Mikkola 24 May

discussions and partly with the industry Stora

10 Customer expectations What does it mean for us as a supplier - Competitive against other systems Industrially manufactured Stora Enso Building Solutions - Matti Mikkola 24 May

11 Business concept precondition for successfull business 1. Partner (financing, continuity and repetition) Stora Enso Building Solutions - Matti Mikkola 24 May

12 Business concept precondition for successfull business 1. Partner (financing, continuity and repetition) 2. Deep end-use knowledge and understanding Stora Enso Building Solutions - Matti Mikkola 24 May

13 Business concept precondition for successfull business 1. Partner (financing, continuity and repetition) 2. Deep end-use (segment) understanding 3. Local know-how and a clear role in the market Stora Enso Building Solutions - Matti Mikkola 24 May

14 Business concept Wood industry is still struggeling with the conceptual approach and role definition One off projects Lacking focus and repetition Lack of industrial solutions Limited prefabrication and too much work at the building site Weak/unclear position in the value chain Still in many cases the material supplier without any role at the building site Mainly regional approach Difficulties in scaling the business Often uncompetitive against other materials Stora Enso Building Solutions - Matti Mikkola 24 May

the value chain Still in many cases the material supplier without any role at the building site Mainly regional approach

15 Stora Enso approach Starting with individual projects > 1500 delivered projects Optimized building systems > optimized use of CLT High level of industrial prefabrication Single family houses through partners Focus on urban concepts B2B Stora Enso Building Solutions - Matti Mikkola 24 May

industrial prefabrication Single family houses through partners Focus on

16 Ready to take the challenge. References Stora Enso Building Solutions - Matti Mikkola 24 May

17 Assisted-living project, Rauma Finland

18 The Finnish Nature Centre Haltia, Espoo

19 Residential area development, Austria

20 School, Austria

21 Residential multi-storey project, Luxembourg

22 Bridport House rental apartments, London UK

23 Dock Square Library, Melbourne Australia

24 Polaris Residential apartments, Milan Italy

25 Residential development, Graz Austria

26 Residential project Lintuviita, Seinäjoki Finland

27 Urban development Wood City, Helsinki Finland

28 Stora Enso Building Solutions - Matti Mikkola 24 May

Global Pricing Study 2011: "Weak pricing cuts profits by 25%" Short summary

Global Pricing Study 2011: Weak pricing cuts profits by 25% Short summary Global Pricing Study 2011: "Weak pricing cuts profits by 25%" Short summary August 2011 Bonn Office Haydnstr. 36, 53115 Bonn, Germany Tel.: +49 228 9843-351, fax: +49 228 9843-380 e-mail: bonn@simon-kucher.com