FY-2017-investor-presentation.pptx [Vain luku] · 2018-02-08 · Investor presentation 1– 12/2017 2 Contents Investment highlights 3 Strategy and financial targets 13 Operating

Metsä BoardInvestor presentation FY 2017

8 February 2018

Investor presentation 1–12/20172

ContentsInvestment highlights 3

Strategy and financial targets 13

Operating environment and market position 21

Growth in the paperboard business 30

Husum investment programme and update 37

Result for Q4 2017 and FY 2017 43

Production, capacities and sourcing 59

Product development focus areas 64

Sustainability 70

Shares and owners 76

Appendix 80

Contact information 89

Investment highlights

• A pure-play paperboard company focused on premium fresh fibre paperboards

• Strong market position: – #1 in folding boxboard and white kraftliners in Europe

– #1 in coated white kraftliners globally

• Global megatrends – population growth, urbanization and sustainability – are driving the demand for ecological packacing

• A growth company with good profitability• Self-sufficiency in pulp

Investor presentation1–12/20174

Metsä Board – Investment highlightsFolding

boxboard 53%White

kraftliners27%

Market pulp 18%

Others 3%

Sales split in 2017

EMEA 72 %

Americas19 %

APAC9 %

Sales split by region in 2017

Global sales to over 100countries from 8 productionunits in Finland and Sweden

Metsä Board’s paperboard offers solutions for widevariety of brand applications

In pack On shelf On display On the go In graphics

Packaging solutions for consumer goods

Retail ready tray solutions

Display and point-of-sale solutions

Solutions for food service

Solutions for graphical uses


Roughly 50% of Metsä Board’s folding boxboard sales in Europe is negotiated directlywith brand owners

6

Metsä Board has a broad customer base

BRAND OWNERS

FOLDING BOXBOARD WHITE LINERBOARDS

MERCHANTS

CORRUGATED BOX MANUFACTURERS

CONVERTERS


Lightweighting• Metsä Board’s folding boxboard can be up to 30% lighter compared to competing grades (SBS, WLC)

Purity and safety of fresh fibre paperboards • Important especially for food and food service packaging

• Whiteness and quality - upscale consumer experience

Sustainability• Fresh fibres are recyclable and renewable material

• Wood raw material is 100% traceable to sustainably managed northern forests

• Strong and recognised credentials in environmental performance, water and energy efficiency and actions to combat climate change

Metsä Board’s paperboards have manycompetitive advantages

7

Metsä Board’s folding boxboards are produced from BCTMP or mechanical pulp, which is used in the middle layer (3) to make the board bulky and light.

The two outer fibre layers (2 and 4) are made of chemical pulp, which maximizes the strength of the board.

Coating layers (1) can be one or several and on top or both sides.

8

Three-layer structure makes the board light whilemaintaining the stiffness


Profitability development 2013–2017 ROCE reaching the targeted level of 12%

Comparable ROCE-%


Comparable EBIT-%

6,4

9,1

11,3

8,1

11,2

0

2

4

6

8

10

12

2013 2014 2015 2016 2017

% 5,2

6,8

9,08,0

10,5

0

2

4

6

8

10

12

2013 2014 2015 2016 2017%

Target over 12%

Year 2016 profitability was burdened by the ramp-up of Husum’s folding boxboard machine


Strong improvement in productivity over time

1 000

1 100

1 200

1 300

1 400

1 500

1 600

1 700

1 800

1 900

2 000

1 000

1 300

1 600

1 900

2 200

2 500

2 800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E

Productivity (capacity) Personnel average

Production capacity (tonnes) / employee at current millsPersonnel at current mills

Production capacity tn /employee

• Investments in 2017 were EUR 65 million (2016: EUR 162 million)

• Estimated capex in 2018 is roughly EUR 70 million

Clearly lower capex in 2017

0

30

60

90

120

150

180

2010 2011 2012 2013 2014 2015 2016 2017 2018E

Maintenance capex Growth capex Depreciation

EUR million

11 Investor presentation1–12/2017

Main growth in capex in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill

• High investment costs

• Limited availability of high yield pulp (e.g. BCTMP)

• Global brand owners and corrugated box manufacturers not willing to change paperboard suppliers easily in the high-quality segments

– High speed packaging lines very quality sensitive– Requirements for unified brand look and feel globally– Sustainability and product safety aspects

• Skilled people and organizations a crucial success factor


High threshold for new producers to enter high-quality paperboard segment

Strategy and financialtargets

Values

• Responsible profitability• Reliability• Cooperation• Renewal

Strategic cornerstones

• Focus• Growth• Profitability

Metsä Board’s vision is to be the preferred supplier of premium paperboards creating value for customers globally


Focus on premium fresh fibre paperboards for consumer and retail packaging

This means to us:• We focus on serving customers whose quality

expectations require our high quality, light and strong packaging materials

• Our paperboards are produced from fresh fibres• Our products are used for packages at the store and

from the store to the consumer


Strategic cornerstones: Focus

Profitability is based on superior cost efficiency and healthy sales prices driven by high-quality pulps and unique technical know-how

This means to us:• Our superior cost efficiency will be achieved by further

developing productivity and efficiency of our mills, operations and people

• We will continue to drive down purchasing costs in all areas

• Our self-sufficiency in high-quality pulps together with unique paperboard making expertise helps us to improve our market position further and maintain healthy price levels


Strategic cornerstones: Profitability

Grow profitably together with brand owner, converter and merchant customers globally in businesses that benefit from our safe and sustainable paperboards

This means to us:• We grow in end-uses where our product is best suited to

protecting our customers’ products and promoting their brands and businesses

• Our customer base is global, including brand owner, private label, converter and merchant customers

• By selecting businesses that benefit from our paperboards we can generate value for our customers and grow profitably with them


Strategic cornerstones: Growth

Financial targets and actuals

Comparable ROCE, %

6,4

9,1

11,3

8,1

11,2

2013 2014 2015 2016 2017

2,9

1,8

1,2

2,0

1,2

2013 2014 2015 2016 2017

Net debt / Comparable EBITDA, %

7%

10%

13% 12%15%

2013 2014 2015 2016 2017

Annual growth in total paperboard deliveries, %

Target is to exceed relevant market growth*

Dividend policy: Metsä Board aims to distribute at least 50% of its result for the financial period in annual dividends to its shareholders

Target: >12%

Target: <2.5

* Global fresh fibre paperboard demand growth 3-4%/a


• Grow the paperboard businesses profitably globally

• Ensure successful sales of new capacity

• Secure good price levels

• Keep best in class product quality and improve supply chain

• Develop new products for existing and new end uses

• Continue productivity improvements and cost savings


Main priorities and actions to achieve financial targets

• Metsä Board’s dividend payout target is at least 50 per cent of the result for the financial period

• Dividend proposal for 2017:– EUR 0.21 per share– Totalling EUR 75 million– Corresponds to 50 per cent of EPS 0,00

0,10

0,20

0,30

0,40

0,50

2013 2014 2015 2016 2017

EPS and DPS, EUR

Earnings per share Dividend per share


Dividend and EPS

* The Board's proposal to 2018 Annual General Meeting

*

Operating environment andmarket position

Global trends driving growth in sustainably packaging

• Urbanization

• Growing consumption

• Stronger demand for ecological packaging

• Greater significance of resource efficiency

• Increasing regulation

• Social responsibility throughout the value chain


The global paperboard packaging market is about USD 300 billion

The total packaging market is USD 850 billion


Average annual growth rate of paperboard packaging

Paperboard packaging

Other wood fibre based packaging

Non-fibre based packaging

USD 300 bn

USD bn

Source: Smithers Pira

0

50

100

150

200

250

300

350

400

2012 2013 2014 2015 2016 2017 2022F

+ 3% per year

2017-2022

24

Annual global demand for cartonboard* is 38 million tonnes of which folding boxboard is about 10 million tonnes

Source: Metsä Board estimates

*Excluding liquid packaging board, cup & plate stock, liner and uncoated recycled board.

APAC20 Mt/a

EMEA9 Mt/a

NorthAmerica

7 Mt/a

Lat.Am.2 Mt/a

Folding boxboard

Other fresh fibre grades (e.g. SBS, CUK)

Recycled grades

Avg. demand growth rate for folding boxboard

is 3–4% per year


25

Annual global demand for food service board* is 3.5 million tonnes

* Base board (e.g. SBB or FBB) only, excl. other laminate materials such as aluminium and PE.

Cups

Plates

Cartons

APAC1.0 Mt/a

EMEA0.9 Mt/a

Americas1.6 Mt/a

Avg. demand growth rate for food service board is

3–5% per year

Source: Metsä Board estimatesInvestor presentation1–12/2017

26Source: Metsä Board estimates


Americas3 Mt/a

Annual global demand for white linerboard is 11 million tonnesDemand for white kraftliners is 4 million tonnes and for white coated kraftliners 1 million tonne

Global demand for containerboards is 160 Mt/a, of which

• White linerboards 7%• Brown kraftliner 17%

• Brown testliner 37%

• Fluting 39%

Americas3 Mt/a

EMEA5 Mt /a

APAC3 Mt/a

White uncoated kraftliner

White coated kraftliner

White recycled liner

Avg. demand growth rate for white kraftliner is

3–4% per year

Metsä Board has a strong position in EuropeAs per 31 December 2017

Largest Folding Boxboard Producers in EuropeTotal capacity: 3.8M tonnes

Largest White Fresh Fibre Linerboard Producers in EuropeTotal capacity: 2.2M tonnes

Sources: Company information, Pöyry Management Consulting Oy Q1/2018

18%

7%

9%

10%

21%

35%

0 300 600 900 1200 1500

Others

International Paper

Mayr-Melnhof

Kotkamills Oy

Stora Enso

Metsä Board

10%

8%

11%

14%

23%

33%

0 200 400 600 800

Others

SCA

BillerudKorsnäs

Mondi

Smurfit Kappa

Metsä Board

27Investor presentation1–12/2017


Market price development in folding boxboard and white-top kraftliner in Europe

EUR/ tn

Sources: RISI, Inc. & FOEX Indexes Ltd

500

600

700

800

900

1000

1100

1200

2009 2010 2011 2012 2013 2014 2015 2016 2017

Folding Boxboard White-top kraftliner

350400

450500550

600650700

750800

850900950

10001050

'10 '11 '12 '13 '14 '15 '16 '17350400

450500550

600650700

750800

850900950

10001050

Source: Foex Indexes Ltd

Softwood, USD

Softwood, EUR

Hardwood, EUR

Hardwood, USD

USDEUR

Pulp price development (PIX)


Metsä Board’s growth in the paperboard business


Metsä Board operates in growing paperboard marketAnnual global demand growth for folding boxboard and white kraftliners is estimated to be 3–4%

5-YEAR GROWTH FORECAST EMEA Americas APAC

Folding boxboard (FBB)

Food service board (FSB)

Coated white kraftliner

Uncoated white kraftliner

Other fresh fibre paperboards (e.g. SBS, CUK)

Recycled paperboards (e.g. WLC)

+2%/a or more

+1 to +2%/a

-1 to +1%/a

-1 to -2%/a

-2%/a or more

Source: RISI, CEPI, Pöyry and trade statistics among others Metsä Board’s focus area

Metsä Board’s growth clearly exceeds averagemarket growth

32

0

500

1 000

1 500

2 000

2013 2014 2015 2016 2017 2018 target

Fresh fibre linerboard Folding boxboard

Metsä Board’s annual paperboard deliveries 1,000 tonnes



Most important growth area is Americas In 2017, total deliveries to Americas grew by 23% year-on-year

0

50

100

150

200

250

300

2011 2012 2013 2014 2015 2016 2017 2018 target

Folding boxboard Fresh fibre linerboard

300

200

1,00

0 to

nnes

Actual and targeted deliveries to Americas

34

Metsä Board's regional goalsAmericas, EMEA and APAC

GROWTH CONTINUESIN THE AMERICAS

MAINTAINTHE STRONG MARKET POSITION IN EUROPE

FOCUS ON PREMIUM PAPERBOARDSEGMENTS IN THE ASIA-PACIFIC REGION

AMERICASSHARE OF SALES IN 2017

19%

EMEASHARE OF SALES IN 2017

72%

APACSHARE OF SALES IN 2017

9%


35

GROWTH CONTINUES IN THE AMERICAS




19%


72%


9 %


Metsä Board's growth drivers in EuropeEUROPE

• Metsä Board’s strengths are based on long-standing customer accounts and a broad customer base

• Steady growth is sought through a diverse selection of products and services focused on customer needs

• Stricter safety requirements support demand for fresh fibre paperboards

36

GROWTH CONTINUESIN THE AMERICAS




19%


75 %


8 %

AMERICAS• Growth is driven by the limited local availability

of premium lightweight folding boxboard and by rapid growth in the demand for food service packaging made from fresh fibre paperboard

• The growth of discount store chains and online commerce increases demand for premium white kraftliner


Metsä Board's growth drivers in Americas

Husum investmentprogramme and update


• Launched at the end of 2014• Two paper machines closed in 2015 • One paper machine converted to produce linerboard (BM2)• New folding boxboard machine (BM1) started up in February

2016• Enhancements to the pulp mill and the mill site’s own port• New extrusion coating line started up in April 2017

Folding boxboard production

• Capacity approximately 400,000 t/a

• Deliveries mainly to Americas and food service globally

Linerboard production

• Capacity approximately 270,000 t/a

• Deliveries to Europe and Americas

Husum investment programme

• EUR 38 million investment, capacity of 100,000 t/a• Targeted at food packaging and food service applications• PE-coated (polyethylene) paperboard is an alternative to

plastics and the mainstream barrier solution today • PE fulfills important barrier requirements:

– Good water and moisture barrier

– Grease barrier (short time e.g. for food service)

– Good heat sealing properties

• Husum PE coating line utilises latest technology and benefits from a fully integrated production site

• Supports growth in a new customer segment

Investment in PE coating


Raw materialLogistics

Raw materialExtrusion

Raw materialPaperboard

Raw materialPulp

40

The integrated mill model improves efficiency and sustainability of the supply chain

• Certified wood resources

• Own deep water port

• Own pulp mill at the mill site

• Paperboard production (BM1)

• Extrusion coating line (EM1)

Raw materialRaw materialHusum integrated mill:


• Capacity utilisation rate in 2017 was 71%– Target is to have capacity in full use by the end of

2018 • Improved sales mix towards end of the year 2017• Average sales price still below target• Potential to improve operating profit in Husum by

EUR 100 million from 2016 to 2019


Update on Husum’s folding boxboard

42

Potential to improve profitability of HusumAt least EUR 100 million EBIT improvement from 2016 to 2019

2016 2019

+ EUR

25 million+ EUR

5 million+ EUR

>70 million

120,000 tonnesof pulp

productionlost in 2016

Restructuring:

Efficiency improvementprogramme

FBB capacityutilisation rate

>95% withnormal sales

price*


* The sales price improvement in Euros is currently being delayed by the weakened US dollar.

Result for FY 2017 and Q4 2017


Q4 2017 in summary(vs. Q3 2017)

• Paperboard delivery volumes were lower,mainly due to seasonality

• Increased average prices in folding boxboard and white kraftliners

• Strong pulp market supported profitability• Negative impact from maintenance

shutdown in Husum• Strong cash flow from operations

Dividend proposal for 2017 is EUR 0.21

January–December 2017: Increasing sales and improved operating result

SalesEUR million

436 423 440 422 445 474 479 4510

100

200

300

400

500

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

+7%

35 36 34 33 45 44 50 54

8,0 % 8,5 %7,7 % 7,8 %

10,2 %9,2 %

10,5 %

12,0 %

0%

2%

4%

6%

8%

10%

12%

14%

-5

5

15

25

35

45

55

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

+41%


Comparable operating resultEUR million and % of sales

FY 2016:EUR 1,720 million

EU

R m

illio

n

EU

R m

illio

n

FY 2017:EUR 1,849 million

FY 2016:EUR 138 million

FY 2017:EUR 194 million

Strong growth continued in Metsä Board’s paperboard deliveries

204 213 224 224 227 250 266 245 265 304 299 276

130 141 137 131 142148 148

143163

173 170152

0

100

200

300

400

500

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

White kraftliner Folding boxboard

1,00

0 to

nnes


FY 2015:1,404 tonnes

FY 2016:1,568 tonnes

FY 2017:1,802 tonnes+12% +15%

Annual global demand growth for folding boxboard

and white kraftlinersis estimated to be

3–4%

Source: RISI, CEPI, Pöyry and trade statistics among others

Europe is the main market area for Metsä BoardAmericas is growing: FBB deliveries up by 54% in 2017 vs. 2016

Folding boxboard (FBB) deliveries in 2017 (2016)1,000 tonnes

EMEA796 (725)

Americas232 (151)

APAC116 (110)

EMEA457 (382)

Americas187 (191)

APAC14 (7)


White kraftliner (WKL) deliveries in 2017 (2016)1,000 tonnes

70%20%

10%

69%29%

2%

Total FBB deliveries grew by 16% in 2017 vs. 2016

Total WKL deliveries grew by 13% in 2017 vs. 2016

• Impacts of FX rate changes including hedges:– Q4 2017 vs. Q3 2017: EUR 4 million negative

– FY 2017 vs. FY 2016: EUR 13 million positive

• Hedging policy: 50% of annual transaction exposure and 100% of balance sheet position

Weakening USD causing headwind

57 %35 %

6 %2 %USD

SEK

GBP

Othercurrencies

Annual transaction exposureEUR 1.14 billion

FX sensitivities excluding hedges

10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s EBIT of

Currency Next 12 months

USD, $ EUR +65 million

SEK EUR -39 million

GBP, £ EUR +7 million


0%

2%

4%

6%

8%

10%

12%

14%

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17

Comparable Return on Capital Employed, %, QuarterlyInvestor presentation1–12/201749

ROCE is approaching its targeted levelFY 2017 Comparable ROCE was 11.2%

Target >12%Q4/17:12.4%

Cash flows clearly positive

3356

9366

-22 -22

67 55 2637

68

106

9 8 45 8

-76 -72

49 17 7 2559

79

247

78

236

70

-82

170

-100

-50

0

50

100

150

200

250

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/14

Cash flow from operations, quarterly Free cash flow, quarterlyCash flow from operations, rolling 12 months Free cash flow, rolling 12 months

EUR

milli

on

50 Investor presentation1–12/2017 Free cash flow = Cash flow from operations - investments

333 412 541 488 464 458 495 437 358

1,21,5

2,1 2,1 2 1,9 21,7

1,2

0,0

0,5

1,0

1,5

2,0

2,5

3,0

0

100

200

300

400

500

600

12/2015 3/2016 6/2016 9/2016 12/2016 3/2017 6/2017 9/2017 12/2017

Net debt, EUR million Net debt to comparable EBITDAInvestor presentation1–12/201751

Strong financial positionNet debt reduced nearly EUR 80 million in the Q4, leverage at 1.2x

Net debt/EBITDA target level <2.5

EU

R m

illio

n

Debt structure and liquidity31 December 2017

308163

95

92

Bonds

Loans fromfinancial institutions

Pension loans

Finance leases andother loans

Other short-termloans

215

100

134

Cash and cashequivalentsRevolving creditfacilityUnraised pensionloans

Interest-bearing debt, total EUR 577 million

Available liquidity, total EUR 449 million

Average maturity of long-term loans on 31 December 2017 was 5.4 years. 52 Investor presentation

1–12/2017

* Of which EUR 248 million due 2027 and EUR 60 million due 2019

*

0

50

100

150

200

250

2018 2019 2020 2021 2022–26 2027

Bonds Loans from financial institutions Pension loans Other loansInvestor presentation1–12/201753

Debt maturity lengthened due to new 10-year bond

Interest-bearing debt maturity profile 31 December 2017

EUR

milli

on

• Total interest-bearing debt on 31 December was EUR 577 million (31 Dec 2016: EUR 688 million)

• In 2017, Metsä Board issued new 10-year EUR 250 million bond with 2.75% annual coupon

Rating agency Rating andoutlook

Last update

Standard & Poor‘s

BB+ (positive) 02/2017

Moody‘s Ba1 (stable) 08/2017Upgrade from Ba2

Metsä Board‘s credit ratings


Increased financial costs due to the financing arrangements in September

56 39 32 31 36

4,6

4,2

3,8

3,3 3,3

3,0

3,5

4,0

4,5

5,0

0

10

20

30

40

50

60

2013 2014 2015 2016 2017

Net financial costs, EUR millionAverage interest rate at the end of period, %

EUR million %• Net financials in 1–12/2017

were EUR -36 million (1–12/16: EUR -31 million)

• Full-year financial expenses include EUR 11 million of costs related to the early repurchase of the bond maturing in 2019


Debt programmes 31 December 2017Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*), % Maturity

EUR 250 million bond issued 2017 250 250 2.8 2027

EUR 225 million bond issued 2014 60 60 4.4 2019

Syndicated credit facility 2014 250 150 2.9 2020

EUR 14 million bilateral loans 14 14 1.4 2018–2022

EUR 8 million finance leases 8 8 4.0 2018–2024

EUR 229 million pension loans 229 95 4.5 2018–2020

Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*), % Maturity

Revolving credit facility 2014 100 0 - 2020

Pension loan facilities 229 95 4.5 -

Short-term funding programmes

Metsä Group internal short-term limit 150 0 - 0–12 months

Metsä Group Treasury funding programmes

EUR 150 million domestic CP programme 150 0 - 0–12 months

Metsä Board’s significant debt securities issued and outstanding at 31 December 2017

*) The average interest rate take into account outstanding interest rate swaps and amortised arrangement fees.The average interest rate of all Metsä Board interest bearing net liabilities incl. interest rate derivatives per 31 December 2017 is 3.3%.

Metsä Board’s principal long-term liquidity reserves at 31 December 2017


Near-term outlook

• Total paperboard delivery volumes are expected to increase in Q1 2018 compared to Q4 2017

• Market prices in fresh fibre paperboards are expected to rise

• Negative impact from weakened USD• Production costs estimated to rise in 2018• Target is to continue to improve the average

price of FBB from Husum and increase sales to Americas

Metsä Board’s comparable operating result in the first quarter of 2018 is expected to improve slightly compared to the fourth quarter of 2017.


Result guidance for January–March 2018

• First year as a pure paperboard company: strong growth and improved profitability in 2017

• Dividend proposal EUR 0.21• Good overall market situation for 2018…• …but negative impact from weakened

USD


Summary

Production, capacities and sourcing


Metsä Board’s production units

Äänekoski

Simpele

Joutseno

Tako

Kyro

KaskinenHusum

KemiIntegrated mills• Husum, Sweden

400,000 t/a folding boxboard270,000 t/a white linerboard730,000 t/a chemical pulp

• Kemi420,000 t/a white linerboard620,000 t/a chemical pulp by Metsä Fibre

• Äänekoski240,000 t/a folding boxboard1,300,000 t/a chemical pulp by Metsä Fibre

• Joutseno330,000 t/a BCTMP690,000 t/a chemical pulp by Metsä Fibre

Non-integrated mills• Kyro (Kyröskoski)

190,000 t/a folding boxboard

• Simpele290,000 t/a folding boxboard

• Tako (Tampere)210,000 t/a folding boxboard

• Kaskinen340,000 t/a BCTMP

Taking into account Metsä Group‘s pulpproduction, Metsä Board‘s pulp balancein 2018 is over 500,000 t/a long


Paperboard capacity

Town Country Machines Folding boxboard

White freshfibre linerboard Total

Tampere (Tako) Finland 2 210 210

Kyröskoski (Kyro) Finland 1 190 190

Äänekoski Finland 1 240 240

Simpele Finland 1 290 290

Kemi Finland 1 420 420

Husum Sweden 2 400 270 670

Total 8 1,330 690 2,020


Pulp capacityMetsä Board pulp mills Country Chemical pulp BCTMP Total

Husum Sweden 730 730

Joutseno Finland 330 330

Kaskinen Finland 340 340

Total 730 670 1,400

Metsä Fibre pulp mills Country Chemical pulp BCTMP Total

Äänekoski Finland 1,300 1,300

Kemi Finland 620 620

Rauma Finland 650 650

Joutseno Finland 690 690

Total 3,260 3,260

Own generation

22%

Through PVO shareholding

29%

Purchased energy

46%

Outsourced generation

3%

Wood-based52%

Nuclear power28%

Gas8%

Coal4%

Peat4%

Oil2% Wind +

solar0%

Hydro0%

Sweden 40%

Finland32%

Baltic countries17 %

Russia12%

Sourcing 2017Electricity sourcing

(total 2,440 GWh)

Investor presentation 1–12/201763

Primary energy used(total 12.0 TWh)

Wood sourcing by country (total 5.4 million cubic metres)

Product development focus areas

Key product development focus areas

Improved BCTMP

Microfibrillated cellulose (MFC)

Strength additives

Sustainable lightweighting

Dispersion barriers

Bio-based raw materials

Barrier boardPE extrusion coated products


Lighter-weight paperboards: Better with Less

Metsä Boardlightweight paperboard

Average FBB –Folding boxboard

SBB –Solid bleached board

WLC –White lined chipboard


67

Barrier boards types

NO

N-R

ENEW

AB

LE

BIODEGRADABLE

REN

EWA

BLE

NON-BIODEGRADABLE

Metsä Board’s baseboard is biobased, bio-degradable and compostable.

Biobased, biodegradable coating, i.e. starch, PLA etc.

Oil-based, biodegradable coating

Bioplastic coating, i.e. green PE

Latex based dispersion coatingPE extrusion coating


Metsä Board barrier boards roadmap

Bio

base

dba

rrie

rN

onbi

obas

edba

rrie

r

Outsourced PE extrusion coating

Own PE extrusion coating

Biobased barrierBiobasedlight barrier

2016 2017Investor presentation1–12/201768

• Biobased, fully recyclable and biodegradable paperboard

• Developed especially for food service use with short food contact time and when light grease resistance is sufficient

• Metsä Board continues to develop other barrier solutions, and is investigating the utilization of dispersion and biobased coatings, and their commercial potential


Metsä Board launched an innovative eco-barrier paperboard

Sustainability

• Metsä Board’s raw material, fresh fibres, is 100% traceable to sustainably managed forests

• Production of strong but lightweight paperboards requires less energy and water

• Metsä Board received several recognitions for sustainability in 2017:• CDP: A Lists in Climate and Water,

Leadership status in Forest programme• Gold rating from EcoVadis


Sustainability is at the core of Metsä Board’s operations

Pure paperboard helps to store the packaged product

safely.

The circular economy of a durable and safe package

Durable paperboard protects the packaged product

effectively.

Our paperboards are recyclable and biodegradable, or they can be used for energy production.

We follow goodmanufacturing principles(GMP).

All of our products meet the requirements of relevant international legislation.

Fresh fibre is a pure and safe, renewable

raw material. We only use carefully selected and safe raw materials in our products.


Rain waters the forest

Bark is utilised as a bio-energy source

Metsä Board’s boardproduction is mostly integrated in pulp production

Waste waters are always carefully cleanedbefore returned back to the waterways

Also lakes and seas are a source of recreation

Light weight boards are resource efficient both for us as well as for our customers

99% of water used in the productionprocess is returned back to the waterways

Metsä Board’s paperboards can be recycled, depending upon local recycling services

Forests are a source of recreation

Metsä Board uses water efficiently

Metsä Board has decreased its CO2 emissions by 45% since 2009 and the use of water by 14% since 2010

Metsä Board only uses surface waterin its production

LOGISTICSENSURE THE SUSTAINAINABILITY OF MAIN LOGISTIC FLOWS

PERFORMANCE 2016−2017 100% In the end of 2017, all 481 logistics partners included in the sustainability survey fulfilled MetsäGroup’s sustainability criteria.

SAFETY AT WORKLOST-TIME ACCIDENTS FREQUENCY ANNUALLY

PERFORMANCE 2017 -28.4%

-10%ENERGYENERGY EFFICIENCY IMPROVEMENT2009−2020

PERFORMANCE 2017 10.2%

12% -17%RESOURCE EFFICIENCYPROCESS WATER USE PERPRODUCT TONNE 2010−2020

PERFORMANCE 2017 -17%

Metsä Board’s sustainability targets

>80%

WOODTHE SHARE OFCERTIFIED WOOD

PERFORMANCE 2017 80%

-30%

CLIMATEFOSSIL CO2 EMISSIONS PER PRODUCT TONNE 2009−2020

PERFORMANCE 2017 -47%

<3%WELL-BEINGSICKNESS ABSENTEEISM

PERFORMANCE 2017 3.9%

BIOENERGY SHARE OF TOTAL PURCHASED ENERGY 52%

74

EU Commission– Announced plans to regulate printed food contact materials (FCMs)

on EU levelFood Contact Material legislation in Switzerland

– Part of Swiss Food law– Recycled paper cannot be used as FCM, if direct contact with food

products – Concentration limits of certain polyaromatic hydrocarbons

micrograms/kg food has been setDraft German mineral oil regulation

– 4th ordinance draft published in March 2017– The draft focuses on mineral oil migration from recycled fibre based

packaging materials to food

75

Increased regulation to ensureproduct safety


Shares and owners

Market cap and foreign owners31 December 2017

Ownership distribution31 December 2017

Market cap and ownership distributionMetsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki

0

4

8

12

16

20

24

0

500

1 000

1 500

2 000

2 500

2012 2013 2014 2015 2016 2017

Market cap, EUR million

Share of foreign owners, %

42 %

20 %

18 %

20 % MetsäliittoCooperative

Domestic institutionalinvestors

Domestic privateinvestors

Foreign owners

EUR million

* Metsäliitto Cooperative has 61% of voting rights

*

77

%



Ownership structure on 31 December 2017

42 %

20 %

18 %

11 %

4 % 2 % 3 %

MetsäliittoCooperative

Foreign owners*

Households

Public sectororganisations

Finance andinsurancecompaniesNon-profitorganisations

Other companies

61 %15 %

11 %

7 %

3 %

2 %1 %

MetsäliittoCooperative

Public sectororganisations

Households

Foreign owners*

Non-profitorganisations

Finance andinsurance companies

Other companies

Shares, % (total no. of shares 355,512,746)

Votes, % (total no. of votes 1,037,530,115)

* incl. nominee registered

Metsä Board has two series of shares: 35,886,682 A-shares and 319,626,064 B-shares.A-share entitles to 20 votes and B-share entitle to 1 vote at a General Meeting.

Increased shareholder value and steadily growingdividendEnterprise value, EUR million

0

500

1000

1500

2000

2500

3000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Net debt Market capitalization

Dividend and payout ratio %

0%

15%

30%

45%

60%

75%

90%

0,00

0,04

0,08

0,12

0,16

0,20

0,24

2012 2013 2014 2015 2016 2017

Dividend, EUR Dividend/EPS, %


EUR mill. EUR

Appendix

METSÄ TISSUE

Tissue and cookingpapers

Sales:

EUR 1.0 billionPersonnel:

2,800Metsäliitto Cooperativeholding 100%

METSÄ WOOD

Wood Products

Sales:


1,400Metsäliitto Cooperativeholding 100%

METSÄ FOREST

Wood Supply and ForestServices

Sales:


850Metsäliitto Cooperativeholding 100%


METSÄ BOARD

Paperboard

Sales:


2,350Metsäliitto Cooperativeholding 41.5%, 61.4% of votes

METSÄ FIBRE

Pulp and SawnTimber

Sales:


1,200Metsäliitto Cooperativeholding 50.1%, Itochu Corporation 25.0%Metsä Board 24.9%

METSÄ GROUP | Sales EUR 5.0 billion | Personnel 9,100

METSÄLIITTO COOPERATIVE | Group’s parent company | Owned by 104,000 Finnish forest owners

(consolidated)

Metsä Board is listedon the Nasdaq Helsinki


Metsä Board’s credit rating

0

1

2

3

4

5

6

7

8

1.1.2011 1.1.2012 1.1.2013 1.1.2014 1.1.2015 1.1.2016 1.1.2017

Moody's Standard & Poors Investment Grade

CCC+ / Caa1

B- / B3

B / B2

B+ / B1

BB- / Ba3

BB / Ba2

BBB- / Baa3

BB+ / Ba1

CCC+ / Caa1

B- / B3

B / B2

B+ / B1

BB- / Ba3

BB / Ba2

BBB- / Baa3

BB+ / Ba1


Metsä Board Corporate Management Team

Mika JoukioCEO

Chairman of CMT since 2014MG employee since 1990Share ownership: 261,884

Jussi NoponenCFO

Member of CMT since 2016MG employee since 2000Share ownership: 50,000

Sari PajariSVP, Marketing and Sales


Ari KivirantaSVP, Development


Harri PihlajaniemiSVP, Production

Member of CMT since 2017MG employee in 2001-2004 and since 2017Share ownership: no ownership

Susanna TainioSVP, HR


Share ownerships are B-shares.MG = Metsä Group

- From 26 to 8 production units

- Paper capacity from 5 million tonnes to zero

- Paperboard capacity from 1.1 million tonnes to 2.0 million tonnes

- Major divestments incl. Graphic Papers and Map Merchants

- Paperboard (incl. market pulp) 100% of sales from 2017 onwards

- Major improvement in profitability and financial position

Today strong position and growing

- #1 producer of folding boxboard and white kraftliner in Europe

- #1 producer of coated white-top kraftliner globally

- Husum investment programme enabling significant growth steps


Restructuring to a pure-play paperboardcompany from 2005 onwards


4440 3236 2432 2605 2485 2108 2019 2008 2008 1720 1849

1,1 ‐1,1‐6,2

6,6

2,4

3,6

5,2

6,8

9,0

8,0

10,5

‐8,0

‐4,0

0,0

4,0

8,0

12,0

0

1000

2000

3000

4000

5000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Sales, EUR million Comparable EBIT‐%

%

Sales and EBIT-% development


M&A activity 1997−2015

100 000 B2 shares in

PVO

Acquisitions

Divestments

Biberist Paper Mill

UK Paper

Modo Paper

Zanders

ChemicalsBusiness

BotniaWood

CorrugatedPackaging

MD Papier Metsä Tissue

Albbruck SavonSellu

Forestia

KemiartLiners (53 %)

8% in Botnia

PSM

9% in Botnia

Cartonplants

Map

New Thames

MB Uruguay

Graphic Papers

Part of Reflex

Halleinmill

1997 20001998 1999 2001 2002 2003 2004 2005 2006 2007 20092008 2010 2011

Rest of Reflex

0.5% in PVO

2012

7.3 % in Metsä Fibre

2013 2014

Alizay mill Lielahti

real estate

2015

Gohrsmühle mill

Simpele Mill

Year Divestiture Enterprise Value, EUR million

2015 Gohrsmühle mill in Germany neg.

2014 Lielahti real-estate 32

2013 Alizay property and other estates 22

2012 7.3% stake in Metsä Fibre 138

2012 0.5% stake in PVO 64

2011 Hallein 34

2009 Metsä-Botnia’s Uruguayan operations 300*

2008 Graphic Papers 750

2008 100,000 shares in PVO 80

2008 New Thames mill 82**

2007 Map Merchant Group 382

2007 Folding carton plants 60

2007 Botnia (9%) 240

2005 Botnia (8%) 164

2005 Savon Sellu 20

2005 Forestia (95%) 163

2004 Metsä Tissue 570

2002 Papierfabrik Albbruck 235

2001 MD Papier 300

2001 Noviant (19%) 41

3,679


Significant Divestments EUR 3.7 billion in assets divested since 2001

* Cash portion**Incl. pension liabilities

INVESTMENT, EUR

1.2 billion

ELECTRICITY, Wh/a

1.8 tera

WOOD USAGE, m3/a

6.5 million

ELECTRICITY SELF SUFFICIENCY

240 percent

CERTIFIED WOOD

90 percent

START UP

August 2017

METSÄ BOARD INVESTED EUR 24.9 MILLION IN EQUITY → COMPANY’S PULP BALANCE WILL GROW BY 200,000 TONNES/A.

CAPACITY, tonnes/a

1.3 million

Metsä Fibre’s new Bioproduct Mill


Katri SundströmVice President, Investor relations

Tel +358 400 976 [email protected]

89

Contact information


Documents

FY-2017-investor-presentation.pptx [Vain luku] · 2018-02-08 · Investor presentation 1– 12/2017 2 Contents Investment highlights 3 Strategy and financial targets 13 Operating