Arctic Paper results
for the 1st half of 2012
Michał Jarczyński, CEO
Michał Bartkowiak, CFO
Warsaw, August 31, 2012
Disclaimer
Please read the information below carefully
This presentation (the ‘Presentation’) was prepared by Arctic Paper S.A. (the ‘Company’) for information purposes only for use by investors, banks and the Company’s customers as
well as market analysts and under no circumstances may it be treated as a part of an invitation or offer to purchase securities, an invitation to make investments or conduct
transactions regarding securities, an inducement to make purchase offers or a recommendation to conclude any transactions, in particular transactions regarding the Company's
securities.
The information contained in the Presentation was taken from publicly available sources which the Company believes to be reliable. However, the Company cannot guarantee its
reliability or completeness, except for the information on the Company and its Group. The Company shall not be held liable for the consequences of decisions made on the basis of or
in reliance on the information contained in this Presentation. The information contained in the Presentation has not been independently verified and may be subject to change at any
time. The publication of the data contained in the Presentation by the Company does not constitute a breach of the provisions of the law which apply to companies whose shares are
listed on the regulated market, in particular the regulated market operated by the Warsaw Stock Exchange. The information contained herein has been published by the Company in
its current and periodic reports, or constitutes a supplement thereto which is not required to be published by the Company in order to comply with the Company’s reporting
requirements as a listed company.
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The Company is not obliged to publish updates and amendments to the information, data and representations contained in this Presentation as a result of a change of the Company’s
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provisions of law.
This Presentation contains information on the paper industry. With the exception of information indicated as originating from a specified source, the market information referred to
above has been prepared on the basis of data received from third parties who are named in this Presentation and contains estimates, assessments, corrections and opinions based
on the Company's experience and knowledge of the sector in which it conducts business. Because the market information referred to above may have been partially prepared with
the use of estimates, assessments, corrections and opinions and has not been verified by independent entities, to a certain extent, this information is of a subjective nature, with the
exception of the information which has been indicated as information originating from third parties from a specified source. It is presumed that estimates, assessments, corrections
and opinions are based on reasonable grounds and that the market information which has been prepared duly reflects the situation of the industry on the markets on which the
Company conducts business. However, there is no certainty that the estimates, assessments, corrections and opinions are the most appropriate basis for drawing conclusions on the
market information or that market information taken from other sources may not differ significantly from the market information contained in this Presentation.
The Company would like to point out to the readers of this Presentation that the only reliable source of data on Arctic Paper's financial results, forecasts and events, as well as the
Company’s indicators, is the current and periodic reports submitted by the Company in compliance with reporting requirements under Polish law.
This Presentation should be read together with the 2011 consolidated and standalone annual reports as well as the consolidated report for the first half of the year 2012.
Page  2
Arctic Paper S.A.
Agenda
• Market environment
• Operating and financial
results
• Summary of the first half of
the year 2012
Page  3
Arctic Paper S.A.
Market environment
Market environment
Deliveries of fine paper
Change Q2 2012 vs Q1 2012
Deliveries of paper in Europe ('000 metric tonnes)
-3,8
4 000
3 500
3 429
3 408
3 226
3 192
3 148
3 068
3 083
3 250
3 000
2 500
2 000
1 813
1 654
1 788
1 636
1 700
1 699
1 567
1 561
3 250
3 127
1 550
1 469
1 699
1 658
Q1 2012
Q2 2012
3 128
1 658
1 500
Change Q2 2012 vs. Q2 2011
1 000
1 616
1 572
1 556
1 621
-0,7
1 448
1 507
1 516
1 551
1 470
500
0
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Uncoated
Woodfree
Papiery
niepowlekane
(UWF) (UWF)
Q2 2011
Q3 2011
Papiery
powlekane
(CWF) (CWF)
Coated
Woodfree
Q4 2011
Q1 2012
Papiery
Finewysokogatunkowe
paper
3 148
3 127
1 447
1 469
1 700
1 658
Q2 2011
Q2 2012
Q2 2012
 In Q2 2012 deliveries of fine paper in Europe were lower by -3,8% than in Q1 2012 and by -0,7% than in Q2 2011. Deliveries in the uncoated woodfree (UWF) segment were down by -2,4% compared to Q1 2012 and down by -2,5% compared to Q2 2011. In the coated wood-free (CWF) segment
accordingly down by -5,2% and up by +1,5%.
 In Q2 2012 sales volume of Arctic Paper Group was -6.2% below Q1 2012 and +4.8% higher than in the corresponding period of 2011. In the second
quarter of 2012 the number of orders received remained stable.
Page  5
Arctic Paper S.A.
Market environment
Fine paper prices
 As at the end of the first half of the year 2012
prices of fine paper in Europe experienced a
decrease compared to the prices at the end of
2011. The average prices decrease was -1.5% for
UWF and -2.8% for CWF.
Graphic paper prices in EUR - German market
950
900
850
800
 The average prices for UWF at the end of June
2012 were slightly higher than at the end of the
first quarter of 2012 (+0.6%), while for CWF
slightly lower (-0.2%).
750
Changes in prices for fine paper for the German
market, which illustrate trends visible on key
markets and segments in which the Arctic Paper
Group operates.
700
650
Source: Arctic Paper based on RISI data.
 The average prices invoiced by Arctic Paper in
EUR for the UWF segment changed from March
to June 2012 within the range of +0.4% to +1.5%,
while
in
the
CWF
segment
from
-3.7% to +0.1%.
600
12.2008 03.2009 06.2009 09.2009 12.2009 03.2010 06.2010 09.2010 12.2010 03.2011 06.2011 09.2011 12.2011 03.2012 06.2012
UWF 80g Offset Sheets DE
UWF 80g Offset Reels DE
CWF 90g Sheets DE
CWF 90g Reels DE
Change in prices for graphic paper in EUR and GBP - selected Western Europe countries
06.2012 vs. 03.2012
06.2012 vs. 12.2011
Minimum
price
Average
price
Maximum
price
Minimum
price
Average
price
Maximum
price
UWF
1,0%
0,6%
0,3%
-0,9%
-1,5%
-2,0%
CWF
-0,3%
-0,2%
-0,1%
-2,7%
-2,8%
-2,9%
Source: Arctic Paper based on RISI data
Page  6
Arctic Paper S.A.
Market environment
Pulp prices
Pulp prices (USD/tonne)

As at the end of Q2 2012 pulp prices
were at USD 831 per tonne for NBSK
and USD 784 per tonne for BHKP. The
average price for NBSK in Q2 2012 was
-16.1% lower than in Q2 2011, while
BHKP was down by -11.6%. In Q2 2012
average NBSK pulp price was +1.6%
higher while BHKP pulp price was
+10.3% higher than in Q1 2012.
 The average cost of pulp per tonne for
AP Group in Q2 2012, expressed in PLN,
was up by +7% compared to Q1 2012
and by +1% compared to Q2 2011.
BHKP (USD/tonne)
NBSK (USD/tonne)
+1,6
(16,1)
+10,3
1 007
832
845
845
699
Average
Q1 2012
Page  7
Average
Q2 2012
Average
Q2 2011
 The share of pulp costs in total costs of
sales after 6 months of 2012 amounted
to 47% compared to app. 49% in the first
half of the previous year.
Average
Q2 2012
Average
Q1 2012
771
Average
Q2 2012
(11,6)
872
Average
Q2 2011
 Pulp usage for AP Group production was
BHKP 60%, NBSK 18%, and other 22%.
771
Average
Q2 2012
Arctic Paper S.A.
Market environment
Exchange rates
5,00
Changes in exchange rate EUR and USD vs. PLN
4,70
EUR/PLN
EUR/PLN
USD/PLN
4,47
4,41
4,50
4,22
4,15
4,11
4,00
3,99 3,96
4,42
+0,7
4,26
+7,6
4,16
4,01
4,23
4,26
Average
Q1 2012
Average
Q2 2012
3,96
3,86
4,26
3,99
3,54
3,17
3,26
2,89 2,85
3,00
3,39
3,42
3,39
3,50
3,12
2,93 2,96
2,87
2,82
 In Q2 2012 the average EUR/PLN exchange rate amounted to 4.26 and was
+0.7% higher than in Q1 2012 and +7.6% higher than in Q2 2011.
 In Q2 2012 the average USD/PLN exchange rate amounted to 3.33 and was
by +3,1% higher than in Q1 2012 and by +20.9% higher than in Q2 2011.
 Compared to Q2 2011, the EUR/PLN rate positevely influenced levels of
sales revenue realized in Arctic Paper Kostrzyn. Compared to Q1 2012 the
exchange rate was neutral considering the results. The change of USD/PLN
exchange rate had a major adverse impact on pulp costs expressed in PLN,
particularly compared to Q2 2011.
Page  8
Average
Q2 2012
USD/PLN
30/06
31/03
31/12
30/09
31/03
31/12
30/09
30/06
31/03
31/12
30/09
30/06
31/03
31/12
30/06
2,75
2,50
Average
Q2 2011
+3,1
+20,9
3,22
3,33
3,33
Average
Q1 2012
Average
Q2 2012
2,75
Average
Q2 2011
Average
Q2 2012
Arctic Paper S.A.
Market environment
Exchange rates
12,00
Changes in exchange rate EUR and USD vs SEK
10,98 10,85
11,00
EUR/SEK
EUR/SEK
USD/SEK
+0,7
10,22 10,27
9,71
10,00
9,51
9,15 8,97
9,26
8,93
8,92
9,00
8,27
8,85
8,91
9,01
8,91
Average
Q1 2012
Average
Q2 2012
Average
Q2 2011
Average
Q2 2012
8,84 8,78
9,17
7,70
8,00
(1,1)
7,79
6,99
7,13
7,22
6,71 6,71
7,00
6,84
6,90
6,28
6,00
6,98
6,63
6,33
 In Q2 2012 the average EUR/SEK exchange rate increased by +0.7%
compared to Q1 2012 and was down by -1.1% compared to Q2 2011. The
appreciation of SEK towards EUR has a major adverse effect on the level of
revenue invoiced in EUR in Swedish mills (AP Munkedals and AP
Grycksbo).
 In the same period the average USD/SEK exchange rate increased by
+3.1% compared to Q1 2012 and by +11.1% compared to Q2 2011. The
change of average exchange rate had a negative effect on profitability of
Swedish mills causing the increase of pulp costs expressed in SEK.
Page  9
USD/SEK
30/06
31/03
31/12
30/09
30/06
31/03
31/12
30/09
30/06
31/03
31/12
30/09
30/06
31/03
31/12
5,00
+3,1
6,75
6,96
Average
Q1 2012
Average
Q2 2012
+11,1
6,26
Average
Q2 2011
6,96
Average
Q2 2012
Arctic Paper S.A.
Market environment
Exchange rates
Changes in exchange rate PLN vs. SEK
Changes in exchange rate EUR vs. USD
2,80
1,60
EUR/USD
PLN/SEK
2,70
1,46
1,50
1,45
1,44
1,41
1,40
2,50
2,51
2,50
1,36
1,34
1,33
2,60
1,42
1,34
1,33
2,40
1,35
1,30
1,29
1,26
2,43 2,42
2,30
2,30
2,23
2,34
2,29 2,30
2,20
1,20
2,27
2,12
1,22
2,10
2,06
2,10
2,02
1,10
EUR/USD
Page  10
1,28
Average
Q1 2012
Average
Q2 2012
30/06
31/03
31/12
30/09
30/06
31/03
31/12
30/09
PLN/SEK
(2,3)
1,31
30/06
31/03
31/12
30/09
30/06
31/03
31/12
30/06
31/03
31/12
30/09
30/06
31/03
31/12
30/09
30/06
31/03
31/12
30/09
30/06
31/03
31/12
2,00
(0,1)
(10,9)
1,44
Average
Q2 2011
1,28
2,09
2,09
Average
Q2 2012
Average
Q1 2012
Average
Q2 2012
(8,1)
2,28
Average
Q2 2011
2,09
Average
Q2 2012
Arctic Paper S.A.
Operating and financial results
Operating and financial results
Use of production capacity and sales volume
Use of production capacity for all mills
120%
110%
98%
100%
97%
97%
94%
93%
95%
91%
97%
98%
Q1 2012
Q2 2012
93%
 In Q2 2012 use of production capacity for all Group mills
was 98% and 1.2 p.p. higher than in Q1 2012 and 6.6
p.p. higher than in Q2 2011. The average use of
production capacity in the last 12 months was app. 95%.
90%
80%
70%
60%
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Sales volume ('000 tonnes)
250
200
-6,2%
199
182
193
191
Q3 2011
Q4 2011
203
+4,8%
191
182
191
150
100
50
 In Q2 2012 the AP Group noted an increase in sales
volume compared to Q2 2011 of about +4.8% and
decrease of -6.2% compared to Q1 2012. Sales volume
in the current quarter amounted to 191 thousand tonnes
and in six months of 2012 to 394 thousand tonnes. The
result in the first half of the year 2012 was better by
+3.4% compared to the corresponding period of the
previous year.
0
Q1 2011
Page  12
Q2 2011
Q1 2012
Q2 2012
Q2 2011
Q2 2012
Arctic Paper S.A.
Operating and financial results
Sales revenue
Total sales revenue (PLN ‘000 000)
-7,1%
800
641
635
680
674
+9,5%
632
632
577
600
577
 AP Group sales revenue in Q2 2012 was PLN 632
million, representing an increase of +9.5% compared to
Q2 2011 and a decrease of -7.1% compared to Q1
2012.
 Cumulative sales revenue after six months of 2012
amounted to PLN 1,313 thousand which means an
increase of +8.3% compared to the corresponding
period of the previous year.
400
200
0
Q1 2011
4,00
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q2 2011
Q2 2012
Sales revenue per tonne of paper (PLN ‘000)
3,52
3,50
3,32
3,19
3,17
Q1 2011
Q2 2011
3,35
3,32
Q1 2012
Q2 2012
3,00
 Revenue per tonne of paper sold, expressed in PLN,
was PLN 3,316 in Q2 2012 which represents a
decrease of -0.9% compared to the result achieved in
Q1 2012 and an increase of +4.5% compared to Q2
2011.
2,50
2,00
Page  13
Q3 2011
Q4 2011
Arctic Paper S.A.
Operating and financial results
Main items of profit and loss statement
Q2 2012 vs.
Q1 2012
Change %
Q2
2012
Q1
2012
Q2
2011
Revenues
632 354
680 420
577 487
-7,1%
Gross profit on sales (w/h D&A)
127 399
144 977
101 423
20,1%
21,3%
Depreciation & Amortization
-30 289
Gross profit on sales
PLN'000
% of sales
Q2 2012 vs.
Q2 2011
Change %
YTD Q2'2012 vs.
YTD Q2'2011
Change %
YTD Q2
2012
YTD Q2
2011
9,5%
1 312 774
1 212 119
8,3%
-12,1%
25,6%
272 376
216 704
25,7%
17,6%
-1 p.p.
3 p.p.
20,7%
17,9%
3 p.p.
-30 424
-31 738
-0,4%
-4,6%
-60 712
-63 399
-4,2%
97 111
114 553
69 685
-15,2%
39,4%
211 664
153 305
38,1%
% of sales
15,4%
16,8%
12,1%
-1 p.p.
3 p.p.
16,1%
12,6%
3 p.p.
EBITDA
38 038
53 734
16 548
-29,2%
129,9%
91 772
47 046
95,1%
% of sales
6,0%
7,9%
2,9%
-2 p.p.
3 p.p.
7,0%
3,9%
3 p.p.
7 749
23 311
-15 190
-66,8%
n.a.
31 060
-16 353
n.a.
1,2%
3,4%
-2,6%
-2 p.p.
4 p.p.
2,4%
-1,3%
4 p.p.
EBIT
% of sales
8 040
9 611
-41 647
-16,3%
n.a.
17 650
-50 113
n.a.
% of sales
Net profit / loss
1,3%
1,4%
-7,2%
-0 p.p.
8 p.p.
1,3%
-4,1%
5 p.p.
Earnings per share [PLN]
0,15
0,17
-0,75
n.a.
n.a.
0,32
-0,90
n.a.
 Increase of sales revenue compared to H1 2011 as a result of increase of sales in tonnes by +3.4% and of favorable exchange rates fluctuations,
partucularly EUR/PLN (+7,4%).
 Sales profit and sales profit margin in the first half of the year higher than in the corresponding period of 2011.
 EBITDA (PLN 91.8 million) and EBITDA margin (7.0%) in H1 2012 nearly doubled compared to the corresponding period of 2011. Decrease of these
both factors in Q2 compared to Q1 2012.
 H1 2012 operating profit of PLN 31.1 million compared to significant loss in operating activity in 1H 2011.
 Net profit in H1 2012 of PLN +17.7 million compared to loss of PLN -50.1 million in H1 2011. In Q2 net profit of PLN +8.0 million PLN compared to
profit of PLN.+9.6 million in the first quarter of 2012.
Page  14
Arctic Paper S.A.
Summary of the first half
of the year 2012
Summary of the first half of the year 2012
Arctic Paper Group
 Stable level of orders received and increase of sales volume and sales revenue.
 High level of production capacity use.
 Significantly better finacial results in H1 2012 compared to the corresponding period of the previous year, however, worse
results compared to the first quarter of 2012.
The market
 Poor demand for high-quality papers in Europe in Q2 2012.
 Stabilization of market paper prices in the second half of Q2 2012. Significantly lower market prices compared to the
corresponding period of the previous year.
 Increase of pulp prices in Q2 2012 compared to the previous quarter. Lower pulp prices in the first half of the year
compared to the corresponding period of the previous year.
 Positive influence of exchange rates fluctuations in H1 2012 on the levels of revenues realized (EUR/PLN, EUR/SEK) as
well as stronger adverse impact on the level of pulp costs expressed in PLN (USD/PLN, USD/SEK, SEK/PLN). However,
negative impact of currencies on Q2 2012 vs. Q1 2012.
Page  16
Arctic Paper S.A.
Thank you
Michał Jarczyński, CEO
ARCTIC PAPER GROUP
Michał Bartkowiak, CFO
ARCTIC PAPER GROUP
Arctic Paper S.A. | Jana Henryka Dabrowskiego 334A | PL-60406 | Poznan | Poland
© 2012 Arctic Paper S.A. | All rights reserved