Ladies and gentlemen, good morning and welcome to the press conference, both physically here in Helsinki this morning, but also via a global webcast that we're conducting. Today's press conference is going to last approximately 45 minutes. We're going to conduct it in English. Afterwards, it's of course possible here in Helsinki to ask questions also in other Nordic languages, one-on-one. At this time, I would like to introduce our Chairman of the Board of Directors, Gunnar Brock. He'll be hosting the press conference together with Karl-Henrik Sundström. Please, Gunnar, the floor is yours.
Thank you very much, good morning and welcome to all of you. As a responsible board, it is, of course, our duty to make sure that there is an orderly succession in the CEO assignments of the company. This process started in the autumn of last year when there was a discussion between Jouko Karvinen and the board about the future stay of Jouko in the company. Jouko had expressed a desire after seven years in the company, and after seven very tough years, involving many painful decisions in terms of closing units in the company in various parts of the world. Also having set the agenda for the future. The board started to look, and during the time since, we have had an external search, where we have had an internal candidate that has been put against external candidates.
The reason for this press conference today is, of course, to introduce to you Karl-Henrik Sundström, who will, as of August 1, be the CEO of Stora Enso. Does this mean a radical change in the strategy of the company? No, it does not. Karl-Henrik has been with the company during the last two years, first as CFO, and then during the last year as the Director responsible for the Printing and Living. He knows the company well. He's been part of the executive group management. He has been in discussions with the board about the strategic future of the company. There is no major change in how we would like to see the future of Stora Enso.
The future that we believe that hopefully some of the more painful past is behind us, and where the growth is going to be more evident than the restructuring as we go forward. I will not take the thunder and tell what Karl-Henrik will do as he gradually gets into his position, but rather give you the opportunity to ask questions to Karl-Henrik or to myself as Chairman of the Board. Let me say that with Karl-Henrik having had two years in the company, but extensive experience in the global manufacturing and service industries with Ericsson, with NXP, and other companies, he is very well-suited, and it's with the full confidence of the board that we look forward to working with Karl-Henrik. Please, Karl-Henrik, just a few words before we let questions loose.
Okay. First of all, my name is Karl-Henrik, but nobody calls me that. My name is Kalle Sundström . That's what I use. It's a lot easier. As Gunnar said, I've been in the company for almost two years, first as a CFO, and then taking over the paper and wood products for about one year tomorrow. Before that, I worked four years in a Dutch company that is in semiconductors, and before that, I worked 22 years in Ericsson. That's my story. I'm also a board member of Swedbank. I am very honored to get this possibility in what I believe is a great company. I don't know. I have nothing else. I'm a little bit overwhelmed, like I should be, because this is probably one of the nicest position you can get in any Nordic company, I think.
With that, I open up for Q&As.
Okay, if you are kind enough to direct your voice to the microphones because we are having a live audience, hopefully, far from Helsinki. There will be a microphone here.
Jyrki Iivonen, Helsingin Sanomat. Do you consider yourself that you are an insider in paper, board, and pulp business?
I don't think I'm a full insider yet. I feel I still have a couple of years to learn that, but I think I have all the competence I need within the company. I come with a different skill set from different industries, and I think a lot of the skill sets that you need in other industries are being applied right now in the paper and the board industry.
Other questions, comments?
Well, I will continue. Is the headquarter of Stora Enso going to stay here in Helsinki?
Perhaps I should answer that. Yes, the headquarter of Stora Enso, the legal seat is in Helsinki and will remain in Helsinki.
Next question to Kalle. How important do you see Finland to, Finnish mills and so on to the company?
First of all, I think it's very important that both Finland, Sweden, Germany are the core markets that we are working in. I don't see any differentiation between any mills in any countries. The investment we are having in Finland are actually bigger in size than we are having, for example, in Sweden. Obviously, it's very important.
How do you think, is the Stora Enso perhaps more Swedish company or Finnish company?
Should you perhaps repeat the question in the microphone? Sorry.
Sorry. What do you think, is the Stora Enso more Swedish company or Finnish company?
I think that Stora Enso is a global company, as such, the passport is not really of any major importance, particularly not when it comes to people. However, there is a legacy that is very important. Enso has a legacy in Finland, Stora has a legacy in Sweden. We should also remember that when Stora acquired Feldmühle back in the '90s, it actually did get a very large German legacy, and we still have many mills in Germany. Surely, it is possibly in Sweden it's a Finnish company, or in Finland it may be a Swedish company. I don't know. I think it is not important. It is a true call it venture between the original Enso and Stora, today it's a company in its own with a global market presence.
As you see, the investments are, in a way, unfortunately, taken in Latin America, in China, in India, that's because that's where raw material is available at lower costs. That's also where the consumers are. It is unfortunately not an option very often to make investment in Scandinavia or elsewhere. It is the other factors, the raw material, and the consumer access that is important.
I would like to say now, spending two years within Stora Enso, internally, the passport you're holding is not a liability or an asset. It doesn't really matter, I think that's very important to point out.
Is your home here in Finland, or where is it?
I live in Sweden. That's where my family's living. I work, like I've done in the last two years, I spend almost equal time between Helsinki and Stockholm.
Can you tell something about your family?
I'll tell you about my family. I have two twin daughters that are 22, and one is studying biology in Umeå, and the other one is just graduating from religious history. I have a son that is 17, I'm married to Ulrika, my wife.
Do you think that you are going to learn Finnish?
I can tell you honestly that I will try, I don't think I will succeed because I'm too old. My brain doesn't work that good any longer.
Eeva Pesonen from Kauppalehti. We've understood that Jouko Karvinen was a very strong leader. What is your style of leadership?
My style of leadership?
Yes.
I consider myself a team player. I do believe I build fairly good teams. That's the way I would like to work. I think it's more important the position of Stora Enso than any single individual. I believe Jouko also was a team player. Jouko had a period where he had to make a lot of tough decisions and so forth. That's my style. I'm probably quite energetic. That's about me.
Are there more tough decisions ahead?
There will always be a number of tough decisions going forward. We have part of the business which is in structural decline, which is the paper business, and if that's going to decline by 3% or 5%, I don't know. I don't think even God knows. That means that there will be actions going forward into paper. However, we are using a lot of that competence when we are growing in other areas, such as biomaterial, renewable packaging. A good example is when we convert the Varkaus into a kraftliner. That's.
Do you have more of these sort of plans?
I don't have any plans, anything yet, because I haven't started. I think you could give me some time, then I will come back and talk to you. Right now, I am still head of the Printing and Living. I have to deliver Q2 results, that's the short-term focus. Then I start in my new job the 1st of August.
Do you see the future in the bioeconomy products?
Yes
in the Nordic forestry?
Yes. I think we are coming from a history and a knowledge base that will drive the renewable materials, because we are purely working in renewable materials going forward. I think that will be an asset that will become more and more valuable over time, because using coal, petroleum, it's a limited asset. We need to get out of that because one day we will have no more petroleum-based fuels. I think renewable and biomaterials is something for the future.
How we can win in the Nordic area in that?
I think we can win by being more innovative and driving and using the knowledge that we have in.
Thank you.
You have to remember, even in Brazil and even in China, the plantations that we're having, either ourselves or with our partners, are based on the forestry tradition we brought up in Finland and Sweden, with the seedlings and how you do that. We have a huge knowledge base in that area.
Can you tell something of your remuneration, for example, in which age you can retire and so on?
Perhaps I should answer that rather than the person in question. When it comes to the remuneration, you will find all the details in the annual accounts, everything to the, I was going to say penny, but I guess it's cents these days, not penny. There is nothing particular about that.
My retirement age would be 65.
65.
65?
Yeah.
Yes.
Oh, that's good.
Yes, that's the tradition of the company.
You're over 60.
Yes, he's past.
I will continue. As you mentioned, the demand of the printing paper is decreasing 6%-7% every year. Do you think that there is need for structural changes in paper industry in Europe?
First of all, the decline has been around 5% per year. It's gone down a little bit in the last couple of quarters.
It really was six.
Yes, that was year-on-year.
Okay.
That was for newsprint. Other paper grades are holding up. Regarding consolidation, I think in Stora Enso, I think it's important that we will look on every opportunity that is creating value for our stakeholders and look on that. However, we are not in a situation where we must do something. We are in a situation that we can do if it's beneficial for us, and most of the transformation has already been done, and we can do that on our own means.
Have you any discussions with UPM now going on?
No, you may say, we may say no, both of us.
Yes.
Let me just say that from the board's point of view, when we talk about the future of the company, we are today, with the renewable packaging and biomaterials, having by far our majority of assets, turnover, earning capacity in growth areas. The contribution from Printing and Living today in terms of result is actually, unfortunately, rather small in relation particularly to the assets we deploy. We should not look upon Stora Enso as a uniquely paper company, newsprint, magazine, fine paper. It is a company where most of the efforts are in the growth areas. However, one of the tougher jobs for Karl-Henrik in the future, which of course he is responsible for already today, is to find a structure and an operating performance product-wise in fine paper, magazine, and newsprint that is sustainable and profitable, where we can earn above the cost of capital.
Given other of our competitors, I think we have a better footprint, actually.
The target for the return on capital employed is 13%.
Yes.
Is that going to stay?
I-
It's quite high.
I will not make any comments on that because when I start my new job, I will sort of look into these things.
Are you going to change that?
I'm not saying anything. Let me just start in the job, and I will come back on that one later on.
Can I just, on the board's behalf, say that I think we owe our shareholders to try to return 13%. However, of course, today, when interest rates are basically zero in most economies, inflation is also very low. You could argue that in an environment like the pulp and paper industry, it may be high. On the other hand, given what I just said on the growth sectors, it is not high. The more we can grow in those more profitable areas and the more we can improve the structure and the profitability of the remaining paper business, it may not be too high. We will, for sure, put enough efforts and demand on the new CEO.
Your answer is yes and no.
More yes than no.
Ladies and gentlemen, are there any more questions physically here in Helsinki? As I said before, there is a chance to interview most likely both gentlemen for a short period of time after the press conference. If there's no more questions at this point, I would like to close the webcast and the official part of the press conference, and we will continue with one-on-one interviews after this. Thank you very much.
Thank you.
Thank you.