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Metsä BoardInvestor presentation 1–3/2017
4 May 2017
Investor presentation Q1/20172
ContentsInvestment highlights 3
Strategy and financial targets 12
Operating environment and market position 20
Growth in the paperboard business 29
Result for January–March 2017 38
Balance sheet and financing 51
Capex and Husum investment programme 59
Production, capacities and sourcing 64
Sustainability 71
Shares and owners 77
Appendix 80
Contact information 87
Investment highlights
• Market leader in folding boxboard in Europe and global market leader in coated white fresh fibrelinerboard
• Strong fibre know-how and self-sufficiency in pulp • Sales in 2016 EUR 1.7 billion and comparable
operating result EUR 137 million• Appr. 2,500 employees in 23 countries• Global sales to over 100 countries and eight
production units in Finland and Sweden
Investor presentation Q1/20174
Metsä Board in brief
50%25%
15%
10%
Sales split in 2016
Folding boxboardLinerboardsMarket pulpOthers
75 %
17 %
8 %
Sales split by region in 2016
EMEA
Americas
APAC
5
Various end-uses from high-quality paperboardsFolding boxboards, white fresh fibre linerboards and fully bleached linerboards
Consumer goods Retail-readyFood service
Investor presentation Q1/2017
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.
6
Metsä Board’s folding boxboard has a three-layer structure
Investor presentation Q1/2017
• Lightweighting– Metsä Board’s folding boxboard can be even 30% lighter than
competing grades (eg. SBS, WLC)
• Purity and safety– Important especially in food packaging
• Sustainability– Fresh fibres are recyclable and renewable raw material. Metsä
Board’s wood raw material is 100% traceable to sustainably managed northern forests
• Quality– Metsä Board’s paperboards are premium-quality
7
Metsä Board’s paperboards havemany competitive advantages
Investor presentation Q1/2017
8
Metsä Board has a wide customer base Brand owner sales represents roughly 50% in folding boxboard, corrugated box manufacturers is the biggest customer segment in white linerboards
FOLDING BOXBOARD WHITE LINERBOARDSfresh forest fibre-based
CONVERTERSCORRUGATED BOX MANUFACTURERS
MERCHANTS
BRAND OWNERS
Investor presentation Q1/2017
Strong profitability development over time 2016 was negatively impacted by Husum’s new FBB machine ramp-upComparable ROCE-%
Investor presentation Q1/20179
Comparable EBIT-%
4,8
6,4
9,1
11,3
8,1
0
2
4
6
8
10
12
2012 2013 2014 2015 2016
%
3,6
5,2
6,8
9,08,0
0
2
4
6
8
10
2012 2013 2014 2015 2016%
Target over 12% from 2017
Investor presentation Q1/201710
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
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E
Productivity (capacity) Personnel average
Production capacity (tonnes) / employee at current millsPersonnel
Capacity tn /employee
• 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 uniform brand look and feel globally– Sustainability and product safety aspects
• Skilled people and organizations a crucial success factor
Investor presentation Q1/201711
High threshold for new producers to enter high-quality paperboard segment
Strategy and financial targets
Values
• Responsible profitability• Reliability• Cooperation• Renewal
Strategic cornerstones
• Focus• Growth• Profitability
Investor presentation Q1/201713
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
Investor presentation Q1/201714
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
Investor presentation Q1/201715
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
Investor presentation Q1/201716
Growth
Financial targets
Comparable ROCE, %
Investor presentation Q1/201717
Net gearing, %
4,8
6,4
9,1
11,3
8,1
2012 2013 2014 2015 2016
72 70
51
32
44
2012 2013 2014 2015 2016
• Return on capital employed (ROCE) a minimum of 12% from 2017 onwards• Net gearing a maximum of 70%
• 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
Investor presentation Q1/201718
Main priorities and actions to achieve financial targets
• Metsä Board’s dividend payout target is at least 1/3 of EPS
• Dividend for 2016:– EUR 0.19 per share– Totalling EUR 68 million– Corresponds to 76 per cent of EPS
0,00
0,10
0,20
0,30
0,40
0,50
2012 2013 2014 2015 2016
EPS and DPS, EUR
Earnings per share Dividend per share
Investor presentation Q1/201719
Dividend and EPS
Operating environment and market position
Demand is based on global trends
Globalisation Technology Sustainability Consumption
• Increasing role of retail and harmonisation of global brands
• Growing importance of logistics
• Consolidation of carton converters
• New innovations utilising wood fibre and other biomaterials
• Continuous development of production technologies
• Digitisation and automatisation change business dynamics
• Greater significance of resource efficiency drives circular economy and life-cycle thinking
• Increasing regulation brings additional obligations
• Social responsibility through value chain
• Growing consumption and consumers’ increasing quality needs globally
• Stronger demand for sustainable packaging
• Digital services change purchasing behavior
The global paperboard packaging market is about USD 260 billion
The total packaging market is USD 840 billion
Investor presentation Q1/201722
Average annual growth rate of paperboard packaging
Paperboard packaging
Other wood fibre based packaging
Non-fibre based packaging
0
50
100
150
200
250
300
350
USD 260 bn
USD bn
Source: Smithers Pira
+ 3% p.a.
Roughly halfis made of fresh fibres
23
Global cartonboard*) market is 36 Mt/a of which folding boxboard market is about 9 Mt/a
Source: Metsä Board estimates
*) Excluding liquid packaging board, cup & plate stock, liner and uncoated recycled board.
APAC20 Mt/a
EMEA8 Mt/a
NorthAmerica
6 Mt/a
Lat.Am.2 Mt/a
Folding boxboard
Other fresh fibre grades (e.g. SBS, CUK)
Recycled grades
Avg. growth rate for folding boxboard is
3–4%/a
Investor presentation Q1/2017
24
Global food service board market is 3.5 Mt/a*)
*) 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. growth rate for food service board is
3–5%/a
Source: Metsä Board estimatesInvestor presentation Q1/2017
25Source: Metsä Board estimates
Investor presentation Q1/2017
Americas3 Mt/a
EMEA4.5 Mt /a
APAC3 Mt/a
White top kraftliner
Fully bleached liner
White recycled liner
Global white linerboard market is 10.5 Mt/aGlobal coated white-top kraftliner market is 1 Mt/a, of which Metsä Board’s share is roughly 40%
Global containerboard market is 155 Mt/a, of which
• White linerboards 7%• Brown kraftliner 17%
• Brown testliner 37%
• Fluting 39%
40%
Metsä Board has a strong position in Europe
Largest Folding Boxboard Producers in EuropeTotal capacity: 3.6M tonnes
Largest White Fresh Fibre Linerboard Producers in EuropeTotal capacity: 2.2M tonnes
Sources: Company information, Pöyry Management Consulting Oy Q2/2017
15%
7%
9%
11%
21%
37%
0 300 600 900 1200 1500
Others
International Paper
Mayr-Melnhof
Kotkamills Oy
Stora Enso
Metsä Board
14%
8%
11%
13%
23%
31%
0 200 400 600 800
Others
SCA
BillerudKorsnäs
Mondi
Smurfit Kappa
Metsä Board
26 Investor presentation Q1/2017
500
600
700
800
900
1000
1100
2010 2011 2012 2013 2014 2015 2016 2017
Folding boxboard White‐top kraftliner
Market price development in folding boxboardand white-top kraftliner in Europe
Sources: Pöyry Management Consulting & FOEX Indexes Ltd
EUR/ tn
27 Investor presentation Q1/2017
Source: Foex Indexes Ltd
Softwood, USD
Softwood, EUR
Hardwood, EUR
Hardwood, USD
USDEUR
Pulp price development (PIX)
28
350400450
500550600650
700750800850900
95010001050
'10 '11 '12 '13 '14 '15 '16 '17350400450
500550600650
700750800850900
95010001050
Investor presentation Q1/2017
Growth in the paperboardbusiness
Metsä Board’s transformation work is completedFocus on premium fresh fibre paperboards for consumer and retail packaging
30
Marketgrowth
Paperboard company
ROCE %
Paper company
2006: New strategy2007–2013: Numerous divestments, closures and restructuring measures 2016: Completion of the transformation
2017: The leading fresh fibrepaperboard company in Europe
Investor presentation Q1/2017
Metsä Board’s growth exceeds clearly the average market growth
31
0
250
500
750
1 000
1 250
1 500
1 750
2 000
2012 2013 2014 2015 2016 2018 target
Fresh fibre linerboard Folding boxboard
Metsä Board’s annual paperboard deliveries, 1,000 tonnes
Investor presentation Q1/2017
Investor presentation Q1/201732
Most important growth area is Americas
0
50
100
150
200
250
300
2011 2012 2013 2014 2015 2016 2018 target
Folding boxboard Fresh fibre linerboard
300
250
1,00
0 to
nnes
Actual and targeted deliveries to Americas
Investor presentation Q1/201733
Targeted sales and sales split for new paperboard volume from Husum mill
250150
150
0
500
1 000
1 500
2 000
Deliveries in 2015 Folding boxboard toAmericas
Food service boardglobally
Linerboard toEurope andAmericas
Targeted deliveriesin 2018
A total of 400,000 tonnesof new FBB capacity
1,00
0 to
nnes
Incremental capacity in linerboard*)
*) Until July 2016 the paperboard machine (BM2) produced simultaneously fine paper reels.
GROWTH FROM THE AMERICAS IN THE COMING YEARS
AMERICASSHARE OF SALES IN 2016
17 %MAINTAINTHE STRONG MARKET POSITION IN EUROPE
EMEASHARE OF SALES IN 2016
75 %
FOCUS ON PREMIUM PAPERBOARDSEGMENTS IN THE ASIA-PACIFIC REGION
APACSHARE OF SALES IN 2016
8 %
Regional goals and operating models
In 2016 the y-o-y growth was: +14% in Americas, +10% in EMEA, +24% in APAC
• The goal is to remain Europe’s biggest producer of folding boxboard and white fresh fibre linerboards
• The biggest growth drivers are – Strong and long-term customer relationships – Innovative high-performance product portfolio to replace
other packaging materials– Top-class customer service concept
• In EMEA, Metsä Board’s paperboard delivery volumes grew by 10% in 2016 compared to 2015
Investor presentation Q1/201735
Maintaining a strong market position in Europe
Metsä Board uses only fresh fibres from sustainably managed northern forests.
EMEAShare of sales
75%
REGIONAL GOALS AND OPERATING MODEL:
• The most rapid growth is sought in the Americas, where most of Husum’s new capacity in folding boxboard is targeted
• The biggest growth drivers are– Limited local supply in folding boxboard– Due to strong consolidation, converters without own paperboard
production are looking for alternatives• In folding cartons their share is 40–50%
– Strong demand in food service board– Growing environmental awareness
• In Americas, Metsä Board’s paperboard delivery volumes grew by 14% in 2016 compared to 2015
Investor presentation Q1/201736
Growth in the Americas in the coming years
Paperboard offers a sustainable option for plastics such as styrofoam in food service applications.
AmericasShare of sales
17%
REGIONAL GOALS AND OPERATING MODEL:
• Metsä Board aims at moderate growth, primarily in cooperation with brand owners
• Responsible consumer goods companies promote good packaging– Consistent quality– Traceable raw materials– Responsible production
• Due to the local overcapacity in Asia, the timing is not good for aggressive growth
• In APAC, Metsä Board’s paperboard delivery volumes grew by 24% in 2016 compared to 2015
Investor presentation Q1/201737
Focus on premium segments in the Asia-Pacific region
Global consumer goods companies are not willing to change paperboard suppliers easily in the high-quality segments.
APACShare of sales
8%
REGIONAL GOALS AND OPERATING MODEL:
Result for January−March 2017
• Good demand for high-quality paperboards continued
• Stable or rising market price levels• Metsä Board’s paperboard and market pulp
deliveries grew from the previous quarter• All Finnish mills performed well, good
momentum in linerboard business• No major maintenance shutdowns during the
first quarter• Husum still had a negative impact on profitability
Investor presentation Q1/201739
Q1 2017 in summary
Investor presentation Q1/201740
Key financialsQ1/17 Q4/16
ChangeQ1/17
vs. Q4/16Q1/16
ChangeQ1/17
vs. Q1/162016
Sales EUR million 445 422 +5% 436 +2% 1,720
EBITDA, comparable EUR million 69 53 +30% 58 +19% 231
Operating result, comparable EUR million 45 33 +36% 35 +29% 138
% of sales % 10.2 7.8 8.0 8.0
Result before taxes, comparable EUR million 40 23 +74% 30 +33% 107
Earnings per share EUR 0,10 0,05 +100% 0.07 +43% 0.26
ROCE, comparable % 10.6 7.7 8.3 8.1
Capex EUR million 19 43 -56% 54 -65% 162
Cash flow from operations EUR million 26 55 -53% -22 77
IB Net debt, at the end of period EUR million 458 464 -1% 412 +11% 464
Total paperboard deliveries grewAll-time high monthly level in March 2017
210 203 204 213 224 224 227 250 266 245 265
120 111 130 141 137 131 142148 148
143163
0
60
120
180
240
300
360
420
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Folding boxboard Fresh fibre linerboard
1,00
0 to
nnes
Growth in paperboarddeliveries:
+10% Q1/17 vs. Q4/16
+16% Q1/17 vs. Q1/16
+12% FY16 vs. FY15
41 Investor presentation Q1/2017
FY 2015:1.4 mill. tonnes
FY 2016:1.6 mill. tonnes
Sales increased and profitability improved
Sales, EUR million
526 522 498 462 436 423 440 422 4450
100
200
300
400
500
600
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
43 47 55 35 35 36 34 33 45
8,2 %9,0 %
11,0 %
7,6 % 8,0 %8,5 %
7,7 % 7,8 %
10,1 %
0%
2%
4%
6%
8%
10%
12%
0
10
20
30
40
50
60
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Investor presentation Q1/201742
Comparable operating result, EUR million and %
FY 2015:EUR 2,008 million
FY 2016:EUR 1,720 million
FY 2015:EUR 180 million
FY 2016:EUR 137 million
EU
R m
illio
n
EU
R m
illio
n
3345
01020304050
Q4 2016 Q1 2017
Operating result, EUR millionQ4 2016 vs. Q1 2017
Investor presentation Q1/201743
Impact on Q1 2017 operating resultvs. Q4 2016 and Q1 2016
3545
01020304050
Q1 2016 Q1 2017
Operating result, EUR millionQ1 2016 vs. Q1 2017
+ Growing delivery volumes in paperboardand market pulp, no major maintenanceshutdowns, increased price levels in coatedWTKL in the US and in market pulp
- Sales mix in Husum’s FBB and product mix in Husum’s white linerboards, increasedlatex price
+ Positive development in Finnish mills, discontinued paper operations, positive impactfrom FX rates after hedges
- Increased latex price
EBIT-%8.0
EBIT-%10.2EBIT-%
7.8
EBIT-%10.2
WTKL = white-top kraftlinerFBB = folding boxboard
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
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
Comparable ROCE, %Investor presentation Q1/201744
Higher profitability improved ROCE-%
Target >12% from 2017 onwards
Cash flows clearly positiveQ1 2017 cash flow from operations impacted by changes in working capital, advancepayments of employment pension contributions, and dividend from Metsä Fibre
33 5693
66
-22 -22
67 55 269 8 45 8
-76-50
49 17 7
250214
256 247
193
11589 78
126
188
119 118
70
-15
-73
-69
-60
23
-100
-50
0
50
100
150
200
250
300
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17
Cash flow from operations, quarterly Free cash flow, quarterlyCash flow from operations, rolling 12 months Free cash flow, rolling 12 months
EUR
milli
on
45 Investor presentation Q1/2017
Balance sheet remained stable
333 464 412 541 488 464 458
1,2
2.0
1,5
2,1 2,1 2.0 1,9
0
1
2
3
0
200
400
600
2015 2016 3/16 6/16 9/16 12/16 3/17
Interest-bearing net debt, EUR millionInterest-bearing net debt / EBITDA (rolling 12-month)
Interest-bearing net debt / comparable EBITDA
333 464 412 541 488 464 458
32%
44% 42%
54%49%
44% 44%
0
0,1
0,2
0,3
0,4
0,5
0,6
0
200
400
600
2015 2016 3/16 6/16 9/16 12/16 3/17
Interest-bearing net debt, EUR millionNet gearing, %
Net gearing, %
46 Investor presentation Q1/2017
Financial target in net gearing is a maximum of 70%
• Rising capacity utilisation rate in the FBB productionline (now 70%) will decrease production costs per tonne produced
• FBB production line fully utilised by the end of 2018• Total FBB deliveries to Americas will increase• PE-coated paperboards generate sales in a new
customer segment• The volumes of coated linerboards will grow
Investor presentation Q1/201747
High potential to improveprofitability in Husum
Investor presentation Q1/201748
Near-term outlook• Good demand for fresh fibre paperboards, pulp
market expected to remain healthy• Price levels in FBB are expected to be stable,
several linerboard producers have announced price increases
• Metsä Board’s paperboard delivery volumes are expected to increase
• Several maintenance shutdowns at the Finnish mills in Q2, rising latex price increasing production costs
Metsä Board's comparable operating result for the second quarter of 2017 is expected to remain roughly on the same level as in the first quarter of 2017.
Investor presentation Q1/201749
Profit guidance
• Good overall performance in the firstquarter of 2017
• High potential to improve profitability in Husum
• Extrusion coating line in Husum offers improved availability and competitive products, especially in the food service segment
• In 2017, focus is on sales of the new paperboard capacity
Investor presentation Q1/201750
Summary
Balance sheet and financing
Investor presentation Q1/201752
Strong balance sheet
Equity ratio, %
41% 39%
46% 48% 47%
0%
10%
20%
30%
40%
50%
2013 2014 2015 2016 3/2017
70%
51%
32%
44% 44%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2013 2014 2015 2016 3/2017
Net gearing, %
597 427 333 464 458
2,9
1,8
1,2
2,0
1,9
0
1
2
3
4
0
200
400
600
2013 2014 2015 2016 3/2017
Net debt, EUR million
Net debt/EBITDA (rolling 12 months)
Net debt, EUR million and Net debt / Comparable EBITDA
Debt structure and liquidity31 March 2017
223
149128
23
137
Bonds
Loans fromfinancial institutions
Pension loans
Finance leases andother loans
Other short-termloans
199
100
102
Cash and cashequivalentsRevolving creditfacilityUnraised pensionloans
Interest-bearing debt, total EUR 660 million
Available liquidity, total EUR 401 million
Average maturity of long-term loans on 31 March 2017 was 2.2 years. 53 Investor presentation
Q1/2017
Investor presentation Q1/201754
Maturity schedule in long-term IB debt
105
35
257
174
1 2
100 102
0
50
100
150
200
250
300
2017 2018 2019 2020 2021 >2021
Long-term interest-bearing debt (total EUR 469 million) and committed undrawn credit facilities 31 March 2017
Long-term interest bearing liabilities Committed undrawn credit facilities
EUR million
Investor presentation Q1/201755
Debt programmes 31 March 2017Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*), % Maturity
EUR 225 million bond Issue 2014 225 225 4.5 2019
Syndicated credit facility 2014 250 150 3.2 2020
EUR 51 million bilateral loans 51 51 1.4 2017–2020
EUR 24 million finance leases 24 24 2.3 2017–2024
EUR 230 million pension loans 230 128 4.5 2017–2020
Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*), % Maturity
Revolving credit facility 2014 100 0 - 2020
Pension loan facilities 230 128 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 March 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 March 2017 is 3.3%.
Metsä Board’s principal long-term liquidity reserves at 31 March 2017
Investor presentation Q1/201756
Steadily decreasing net financial costs
56 39 32 31 5
4,6
4,2
3,8
3,3 3,3
3,03,23,43,63,84,04,24,44,64,8
0
20
40
60
2013 2014 2015 2016 3/2017
Net financial costs, EUR million
Average interest rate at the end of period, %
EUR million %
• Net financials in Q1 were EUR -5 million (Q4/16: EUR -10 million)
• Net exchange gains and lossesamounted to EUR 0 million(EUR -4 million)
• Impact of FX rate changes after hedges in Q1 2017: flat in Q1/17 vs. Q4/16, EUR 5 million positive in Q1 2017 vs. Q1 2016
• Hedging policy from 1 January 2017 onwards– 100% of balance sheet position
– 50% of annual net FX flows
FX exposure and sensitivities
58 %34 %
6 %2 %USD
SEK
GBP
Othercurrencies
Annual transaction exposureEUR 1.2 billion
FX sensitivities before hedges
10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s EBIT of
Currency Next 12 months
USD, $ EUR +70 million
Swedish krona EUR -40 million
GBP, £ EUR +7 million
57 Investor presentation Q1/2017
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
58
Metsä Board 's credit rating
Moody’sStandard & Poor’s
BB+ | Ba1
Stable
Positive
BB | Ba2
BB- | Ba3
B+ | B1
B | B2
B- | B3
CCC+ | Caa1
CCC | Caa2
Investor presentation Q1/2017
Capex and Husuminvestment programme
• Investments in January–March were EUR 19 million (Q1/16: EUR 54 million)
• Estimated capex in 2017 is EUR 65–70 million
Clearly lower capex in 2017
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015 2016 2017E
Maintenance capex Growth capex Depreciation
EUR million
60 Investor presentation Q1/2017
Main growth in capexes in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill
Investor presentation Q1/201761
Husum investment programme
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 Capacity changes 2014 vs. 2016:
• Paperboard capacity +670,000 tn/a
• Paper capacity -600,000 tn/a
• Launched at the end of 2014• Two paper machines were shut down in 2015 • One paper machine converted to produce linerboard (BM2)• New folding boxboard machine (BM1) started up on February 2016• Enhancements to the pulp mill and the mill site’s own port
Investor presentation Q1/201762
New state-of-the-art extrusion coating line started up at Husum
• EUR 38 million investment, capacity of 100,000 t/a• PE-coated*) paperboard is an alternative to plastics• Targeted for food packaging and food service
applications• In 2016, Metsä Board introduced PE-coated
paperboards• Supports growth in a new customer segment• Metsä Board continues development work on other
innovative barrier solutions including the use of bio-based materials
*) PE=polyethylene, the most common barrier material used against moisture and grease
• Net capacity increase at the site is approximately 800,000 t/a
• Total capacity is 1.3 million t/a– Investment cost roughly EUR 1.2 billion and start up in Q3 2017
• Capital invested by Metsä Board in Q2 2016 was EUR 24.9 million– No other financial commitments in the project– Metsä Board’s holding in Metsä Fibre remains at 24.9%
• Metsä Board’s pulp balance from 2018 onwards is 500,000–600,000 t/a long
– Result contribution is driven by the market price of softwood chemical pulp
– Reserve to grow paperboard business further in the future while maintaining self-sufficiency in pulp
Investor presentation Q1/201763
Metsä Board’s associated company Metsä Fibre builds a bioproduct mill
Production, capacities and sourcing
Paperboard mills• Husum (FBB and linerboard)• Kemi (linerboard)• Kyro (FBB)• Tako (FBB)• Simpele (FBB)• Äänekoski (FBB)
Pulp mills• Husum (chemical pulp)• Joutseno (BCTMP)• Kaskinen (BCTMP)
Investor presentation Q1/201765
Production locations
Äänekoski
Simpele
Joutseno
Tako
Kyro
KaskinenHusum
Kemi
Investor presentation Q1/201766
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 1 280 280
Kemi Finland 1 410 410
Husum Sweden 2 400 270 670
Total 8 1,320 680 2,000
Investor presentation Q1/201767
Pulp capacityMetsä Board pulp mills Country Chemical pulp BCTMP Total
Husum Sweden 730 730
Joutseno Finland 320 320
Kaskinen Finland 340 340
Total 730 660 1,390
Metsä Fibre pulp mills Country Chemical pulp BCTMP Total
Äänekoski Finland 530 530
Kemi Finland 610 610
Rauma Finland 650 650
Joutseno Finland 690 690
Total 2,480 2,480
Deliveries by region in 2016
Folding boxboard
Investor presentation Q1/201768
Fresh fibre linerboard
48%
25%
16%
11%
Western Europe
Eastern Europe
Americas
Asia and Pacific
60%
7%
32%
1%
Own generation
20%
Through PVO shareholding
32%
Purchased energy
45%
Outsourced generation
3%
Wood-based60%
Nuclear power22%
Gas7%
Hydro4%
Coal2%
Peat2% Oil
2%
Sweden 38%
Finland31%
Baltic countries18 %
Russia13%
Sourcing 2016Electricity sourcing
(total 2,438 GWh)
Investor presentation Q1/201769
Primary energy used(total 12.0 TWh)
Wood sourcing by country (total 4.6 million cubic metres)
Investor presentation Q1/201770
Cost structure in 2016Delivery costs
16%
Wood26%
Chemicals, pigments and fillers
14%
Energy12%
Other variables3%
Personnel 14%
Other fixed15%
Fixed costs
Variablecosts
Sustainability
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.
72 Investor presentation Q1/2017
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%
SAFETY AT WORKLOST-TIME ACCIDENTS FREQUENCY ANNUALLY
PERFORMANCE 2016 -18.9%
-10%ENERGYENERGY EFFICIENCY IMPROVEMENT2009−2020
PERFORMANCE 2016 7.8%
12% -17%RESOURCE EFFICIENCYPROCESS WATER USE PERPRODUCT TONNE 2010−2020
PERFORMANCE 2016 -14%
Metsä Board’s sustainability targets
>80%
WOODTHE SHARE OFCERTIFIED WOOD
PERFORMANCE 2016 81%
-30%
CLIMATEFOSSIL CO2 EMISSIONS PER PRODUCT TONNE 2009−2020
PERFORMANCE 2016 -45%
<3%WELL-BEINGSICKNESS ABSENTEEISM
PERFORMANCE 2016 4.1%
BIOENERGY SHARE OF TOTAL PURCHASED ENERGY 51%
Investor presentation Q1/201774
• CDP Water A List– For the second year in a row Metsä Board was globally the
only forest company chosen to the A List
• CDP Climate A List– Only 9% of the companies were chosen on the list
• CDP Forest programme– Leadership status
• CDP Supply chain programme– Metsä Board participates together with its customers– L’Oréal nominated Metsä Board to its best performer as
packaging material supplier in 2015
75
Metsä Board scored again highin CDP in 2016
Investor presentation Q1/2017
EU Commission– In December 2016, announced plans to regulate printed food
contact materials (FCMs) on EU level
Food Contact Material legislation in Switzerland– Part of Swiss Food law– Recycled paper cannot be used as FCM, if direct contact with food
products (exceptions for example eggs)– No regulation of mineral oil but concentration limits of certain
polyaromatic hydrocarbons micrograms/kg food has been set
Draft German mineral oil regulation– 4th ordinance draft is expected to be published soon– The earlier drafts were focusing on mineral oil migration from
recycled fibre based paperboards to food. The new draft is notexpected to change in this respect
76
Increased regulation to ensureproduct safety
Investor presentation Q1/2017
Shares and owners
Market cap and foreign owners31 March 2017
Ownership distribution31 March 2017
Market cap and ownership distribution
0
4
8
12
16
20
24
0
500
1 000
1 500
2 000
2 500
2012 2013 2014 2015 2016 1-3/2017
Market cap, EUR million
Share of foreign owners, %
42 %
25 %
18 %
15 % MetsäliittoCooperative
Domestic institutionalinvestors
Domestic privateinvestors
Foreign owners
EUR million
*) Metsäliitto Cooperative has 61% of voting rights
*)
78
%
Investor presentation Q1/2017
Investor presentation Q1/201779
Ownership structure on 31 March 2017
42 %
16 %
18 %
13 %
6 %
2 % 3 %
MetsäliittoCooperative
Foreign owners*
Households
Public sectororganisations
Finance andinsurancecompaniesNon-profitorganisations
Other companies
61 %15 %
11 %
6 %
4 %
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
Source: Euroland
Metsä Board has two series of shares: 35,895,651 A-shares and 319,617,095 B-shares.A-share entitles to 20 votes and B-share entitle to 1 vote at a General Meeting.
Appendix
81
Corporate Management Team
Mika JoukioCEO
Chairman in CMT since 2014Share ownership 261,884
Ari KivirantaSVP, Production and Technology
Member in CMT since 2014Share ownership: 16,236
Jussi NoponenCFO
Member in CMT since 2016Share ownership: 50,000
Sari PajariSVP, Business Development
Member in CMT since 2011Share ownership: 45,740
Seppo PuotinenSVP, Marketing and Sales
Member in CMT since 2005Share ownership 107,000
Susanna TainioSVP, HR
Member in CMT since 2015Share ownership 20,505
Investor presentation Q1/2017
Share ownerships are B-shares
METSÄ TISSUE
Tissue and cookingpapers
Sales:
EUR 1.0 billionPersonnel:
2,700Metsäliitto Cooperativeholding 100%
METSÄ WOOD
Wood Products
Sales:
EUR 0.5 billionPersonnel:
1,520Metsäliitto Cooperativeholding 100%
METSÄ FOREST
Wood Supply and ForestServices
Sales:
EUR 1.5 billionPersonnel:
860Metsäliitto Cooperativeholding 100%
Investor presentation Q1/201782
METSÄ BOARD
Paperboard
Sales:
EUR 1.7 billionPersonnel:
2,500Metsäliitto Cooperativeholding 42%, 61% of votes
METSÄ FIBRE
Pulp and SawnTimber
Sales:
EUR 1.6 billionPersonnel:
1,230Metsäliitto Cooperativeholding 50.2%, Metsä Board 24.9%,Itochu Corporation 24.9%
METSÄ GROUP | Sales EUR 4.7 billion | Personnel 9,300
METSÄLIITTO COOPERATIVE | Group’s parent company | Owned by 104,000 Finnish forest owners
2005 Structural change starts Paper production over 80% of sales -> Decision to exit paper business
2006 Strategic review launchedRestructuring and focused investment programme initiated, focus on paperboard
2007–2013 Streamlining and focused investmentsPaper capacity reduction from about 5 million to 0.8 million annual tonnesMajor divestments incl. Graphic Papers and Map MerchantsPaperboard capacity increases
2013 Strategic review completed Clear focus on paperboard Paper production 25% of sales
2015 Strong market position in main productsEurope’s leading producer of folding boxboardThe world’s leading manufacturer of coated white fresh fibre linerboards
2016 Final exits from non-core businessesFine paper production at Husum mill and wallpaper base production at Kyro mill endedPaperboard capacity 2 million t/a
Investor presentation Q1/201783
True success story
Investor presentation Q1/201784
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
Investor presentation Q1/201785
Significant Divestments EUR 3.7 billion in assets divested since 2001
* Cash portion**Incl. pension liabilities
Investor presentation Q1/201786
5624 4440 3236 2432 2605 2485 2108 2019 2008 2008 1720
0,8 1,1
‐1,1‐6,2
6,6
2,43,6
5,2
6,8
9,0
8,0
‐7,0
‐5,0
‐3,0
‐1,0
1,0
3,0
5,0
7,0
9,0
0
1000
2000
3000
4000
5000
6000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sales, EUR million EBIT‐%
%
Sales and EBIT-% development
Katri SundströmVice President, Investor relations
Tel +358 400 976 [email protected]
87
Contact information
Investor presentation Q1/2017