Metso CMD 20021
Metso Paper - Full scope supplier
Metso Capital Markets DayTampere, December 10, 2002
Juhani Pakkala, President of Metso Paper
Metso CMD 20022
• General market trends• Metso Paper’s profitability and growth• Metso Paper in South America• Metso Paper in China• Technology trends• Metso Future Care
Metso CMD 20024
Demand drivers for Metso PaperPopulation 6 billion
Consumption in 2001:• Paper 318 Mt/a, 52 kg/capita/• Wood Pulp 160 Mt/a, (mech. 35 Mt/a, chem. 125 Mt/a)• Recovered paper 150 Mt/a
Number of existing lines, end of 2001:• Paper machines, wire width > 3.5 m 2460, total number 8066• Chemical pulp mills 520
Growth of consumption:• Paper 2.2% /a, 8.5 Mt/a -average• Wood Pulp 1.7% /a 2.7 Mt/a -average• Recovered Paper 3.4% /a 5.1 Mt/a -average
Number of lines required :• New paper machines, wire width > 3.5 m 33/a, total 70/a• Paper machine rebuilds 140/a, total 220/a• New chemical wood pulp lines 3/a
Metso CMD 20025
Top producers and consumers 2001
P&B production(1,000 tons)
P&B consumption(1,000 tons)
P&B consumptionper capita (kg)
1 USA 80,759 1 USA 87,933 1 USA 3242 China 32,000 2 China 38,180 2 Belgium 2953 Japan 30,731 3 Japan 30,836 3 Denmark 2704 Canada 19,686 4 Germany 18,543 4 Canada 2505 Germany 17,879 5 UK 12,516 5 Sweden 2476 Finland 12,503 6 Italy 10,734 6 Japan 2427 Sweden 10,534 7 France 9,680 7 Austria 2418 Korea 9,724 8 Canada 7,875 8 Switzerland 2329 France 9,630 9 Korea 7,850 9 Norway 228
10 Italy 8,924 10 Brazil 6,618 10 Netherlands 227
Source: PPI Annual Review 2002
Metso CMD 20026
GDP and paper and paperboardconsumption per capita
Low- to medium-income regions with vast population such as Asia-Pacificand Latin America represent the biggest potential for the paper industry’sgrowth in the long term.
0
100
200
300
400
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
GDP per capita, USD 2000 prices
Consumption 2000, kg per capita
Japan
USA
Denmark
Sweden
Ireland
UKFinland
CanadaNetherlands
Austria
Belgium
Singapore
Germany
France
AustraliaItaly
Spain
NewZealand
Rep. of Korea
Malaysia GreecePortugal
ArgentinaMexico
VenezuelaBrazil
Turkey
SouthAfrica
Russia
China
India
Metso CMD 20027
Source: PPI Annual Review 2001
Paper and board consumption per capitavs. population 2000
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
Africa
Australasia
Asia
Latin America
North America
East Europe
Other W. Europe
EU
Population, millions
0 50 100 150 200 250 300 350 400P&B Cons/Capita, kg
Population
Paper and BoardConsumption / Capita
Metso CMD 20028
Leading paper companies in the world 2002The world paper industry has gradually adopted a global strategic orientation.The globalisation trend is expected to continue, with the strongest firms seekinggrowth through acquisitions and new investments in overseas markets.
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Stora Enso
International Paper
UPM-Kymmene
Oji
Georgia-Pacific
Smurfit-Stone
Weyerhaeuser
Nippon Unipac
Abitibi-Consolidated
M-real
Capacity 1,000 t/a
North America
Western Europe
Eastern Europe
Latin America
Asia
Rest of the World
Metso CMD 20029
0
5
10
15
20
25
30
35
1990 1999 2001
Top 10 supplier companies Share of Paper and Board Capacity in the world
Source: Dernecon
%
Metso CMD 200210
Market trends
• Less new machines - more rebuilds• Fewer customers• Overcapacity on supplier side• Full scope supplies• Automation increasing• Increased importance of environmental factors
- recycling- water usage- energy consumption
• Higher productivity
Metso CMD 200212
Preferred supplier
Metso aims to be the supplier from whom customersprefer to purchase. To achieve this we shall:
• be the leader in technology• approach our customers as one company• represent the most extensive, production line wide
scope of processes and service• have the best references in the industry, being the
leader in quality, process and project performance• utilize customer oriented, effective working methods in
our empowered, multiskilled organizations
Metso CMD 200213
Good return and growth
Our target in growth and profitability is to reach the corporatefinancial targets (OP, ROCE, EVA) over the business cycle.
• Our prices and income correspond with the value createdby our differentiated processes and service
• Competitive costs of our products and service will besecured by continuous development of our businessprocesses and working methods
• Our controlled growth is faster than the average growth inthe industry ensuring our leading position in the marketon the targeted profitability level
Metso CMD 200214
Major developments 2000-2002 (1/2)
• Restructuring of units• Sales office network reorganized• Beloit takeover successful• Customer Relationship Management program• Pulp & Paper Portal• New technology centers in Karlstad• New service center in Wuxi• New doctor blade factory for Pinaltek in Varkaus• New logistics and service center in Beloit, WI
Metso CMD 200215
Major developments 2000-2002 (2/2)
• New service technology centers under construction- Oulu- Järvenpää- Raisio- Sorocaba
• New service logistics center in Jyväskylä• New Winding Technology Center in Järvenpää• New RTD center under construction in Anjalankoski• Remote diagnostics centers
- Jyväskylä- Järvenpää- Pori
Metso CMD 200217
Metso Paper –serving the needs of a growing market
Latin American pulp & paperindustry• pulp production is increasing rapidly• higher efficiency and better quality
is expected from existing pulp &paper production lines
• the region’s industry has invested inadvanched fiber and paperproduction lines, includingdeliveries from Metso Paper
Latin America
Population 520,000,000Paper and boardproduction/tons 15,000,000Pulpproduction/tons 12,000,000Paper consumptionper capita/kg 36
Cenibra
Inpacel
Klabin, Riocell
Cia. Suzano de PapelVCP, Jacarei
Celucat
VCP, Luis Antonio
Cocelpa
Santiago
Arauco CMPC, LajaInforsa CMPC, PacificoBio bio
Bahia Sul
Klabin
Klabin-Bacel
Jarcel
International
TucumanLedesma
Buenos AiresProtisa
FamiliaKimberly
Bogota
Caracas
ManpaKimberly
São Paulo
Metso CMD 200219
Latest major orders from Brazil and Chile• VCP, Jacarei, SP, Brazil ECF Fiberline• VCP, Jacarei, SP, Brazil Pulp drying line• VCP, Piracicaba, SP, Brazil Coating color kitchen• Klabin, Monte Alegre,PR, Brazil LPB, On-line coater rebuild,
OptiCoat Duo, OptiSizer• Klabin, Monte Alegre, PR,Brazil LPB, On-line coater
rebuild, OptiCoat Duo• Suzano, Suzano, SP, Brazil Coating color kitchen rebuild• Suzano, Suzano, SP, Brazil Soft calender for WFC• Jari, Munguaba, PA, Brazil Woodhandling, Drying machine rebuild• Ripasa, Americana, SP, Brazil Coating color kitchen• Mederera Miquel Forte, União de Victoria, PR, Brazil Coating color kitchen• RioCell, Porto Alegre, RS, Brazil Cutter and baling line rebuild
• Celulosa Arauco, Valdivia, Chile Fiberline• CMPC, Pacifico, Chile Fiberline upgrade
Metso CMD 200221
Paper & board demand prospectsin China, European Union and USA
1.1%
3.2%
9.2%6.4%
2.1%
0.9%
4.3%
1.5%0.6%
Forecast
Source: Oinonen
0
20
40
60
80
100
120
1990 2000 2010 2020
Million Tons
USA
EU
China
Metso CMD 200222
Production and net trade of paper &board in China 1997-2015
Million tons
Source: Jaakko Pöyry Consulting
As of 2002, Based on Estimates Only
10
20
30
40
50
60
70
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Production Net trade
Metso CMD 200223
Reference map - ChinaPaper, Board, Tissue Machines
Jiamusi Paper Mill
Jilin Paper Yantai First PaperShandong Chenming Shouguang
Shandong Sishui Jinyi
Yue Yang
Zhanjiang Guanhao Paper
Guangzhou Paper Mill
Zhenjiang Dadong PaperUPM-Kymmene Changshu
StoraEnso Suzhou
Liujiang Zhejiang Zhenzhou Paper Huzhou
Shandong Huazhong
Nanping Paper
Ningxia Meijie
Kimberly-Clark Shanghai
Qing Shan Paper Mill
Black Dragon Paper, Qiqihar
Nine Dragons Paper
Jiangsu Gold East Paper
Order Backlog
Delivered
Sun Paper
Shanghai Xinghuo Wuhan Chenming Hanyang Paper
Jilin Shixian Paper, Tumen
Guitang Tissue
HengAn Changde Tissue
APP Gold Hongye Tissue
Vinda Tissue
Yoong Foong Yu Kunshan Mill
P&G Suzhou Tissue
Weifang Tissue
Luohe Tissue
TissueDongguan Jinzhou
Dongguan Jianhui
Ning Shin Dev. Ningbo
Metso CMD 200224
Reference map - ChinaPulping Lines
Jiamusi, HeilongjianglJilin Paper
Shandong HuataiShandong Sun Paper
Shandong Sishui Jinyi
Sichuan Yibin
Guangzhou
UPM-Kymmene ChangshuStoraEnso Suzhou
Scott Shanghai
Zhuhai Hongta Renheng
Zhejiang Minfeng
Shandong Jining
Fujian Nanping
Shanghai Xinlun
Fujian Qingshan
Black Dragon Paper, Qiqihar
Nine Dragons Paper
Stock Preparation
Shandong Chenming
Mechanical PulpingChemical Pulping Zhanjiang Guanlong
Xinjiang Bositenghu
Xinjiang Tianxi
Fujian Jiangle
Sichuan Leshan
Hangzhou XinhuaSichuan Yongfeng
Guangxi Hexian
Yue Yang
Ning Shin Dev. Ningbo
Metso CMD 200226
Metso Paper Technology centersPaper Making Lines, PML
• Jyväskylä• Järvenpää• Anjalankoski• Turku• Clarks Summit• Hollola• Raisio
Board Making Lines, BML• Karlstad
• Järvenpää• Turku
Tissue Making Lines, TML• Karlstad
• Biddeford• Gorizia• Järvenpää
Finishing, FIN• Järvenpää
• Hollola• Raisio
Chemical Pulping Lines, CPL• Pori
• Sundsvall • Turku
Mechanical Pulping Lines, MPL• Valkeakoski
• Anjalankoski• Sundsvall
Converting Lines, CNV• Bedford, Casale
Jyväskylä
Hollola
Valkeakoski
AnjalankoskiJärvenpää
RaisioTurku
Pori
Sundsvall
Karlstad
Biddeford
Clarks Summit
Casale
Bedford
Gorizia
Metso CMD 200227
Changes in papermaking in the future
• Products are changing in function and form• Electronic media will dramatically increase its share of
total media• Digital printing will become main printing method• Product technology changing eg disposable optics and
electronics in packaging through implantation of nano-particles within paper structure
• Intelligent paper and packaging, printed electronics• Process technology broadening eg embossing, printing,
laminating, vacuum coating
Metso CMD 200228
Changes in papermaking in the future
• Demand for lower tonnages of customized products withshort delivery times
• Raw materials- Fine paper Kraft DIP, PGW, TMP- Newsprint 100% DIP
• Environmental Issues- fresh water usage 9-12 m³/t 2 m³/t 0 m³/t- ultra- and nanofilter technologies
• Process simplification- OptiFeed, sensors,Single nip presses, Extended Roll Covers
Metso CMD 200231
Future Care gives more added value
Performance Management
Predictive Maintenance
Proc
ess
perf
orm
ance
No Maintenance
Corrective Maintenance
Preventive Maintenance
Start-up Continuous production
Metso CMD 200232
Daily operations and maintenance
Performance
Intelligent product
Performance ProviderFour level approach to life-cycle management
A full scope performance provider:products and services in all levels according tocustomer needs
Service level
Product level
Predictive
Monitor ableproduct
Preventive
MaintainableproductCorrective
Basic product
MachineSupplier
SolutionProvider
Perfor-mance
Provider