Q1 2016 Interim report investor presentation

Metsä BoardInvestor presentation Q1/2016

Q1 20162

Contents

Investment highlights 3

Strategic cornerstones and financial targets 12

Operating environment and market position 22

Q1/2016 results and outlook 33

Balance sheet and funding 46

Investments 54

Production, capacities and sourcing 61

Sustainability 69

Owners 73

Appendix 76

Contact information 82

Investment highlights

• Main customers are consumer goods companies,

converters and merchants

• Best-in class profitability and technology leader

• Steady cash flow generation and strong balance sheet

• Strong fibre know-how and self-sufficiency in pulp

• Valuable holdings in Metsä Fibre (24.9%) and

Pohjolan Voima (2.6%)

• Global sales to over 100 countries and eight

production units in Finland and Sweden

Q1 20164

Metsä Board is market leader in folding boxboard in Europe and

global market leader in coated white top kraftlinerSales split 2015

Paperboard*

Paper

Sales by region 2015

EMEA

Americas

APAC

*) Includes market pulp

CONSUMER GOODS

RETAIL-READY

FOOD SERVICE

Metsä Board’s

customers

benefit from

high-performance

packaging

materials

Folding boxboard,

white top kraftliners

and fully bleached

linerboard

• Pure and safe

• Superior printing surface

• Consistently high quality

• Even over 30% lighter in weight than other paperboards

Metsä Board’s paperboards offer an excellent way for

consumer goods companies to improve quality of their

packages and sustainability of their operations

Q1 20166

Metsä Board’s paperboards are examples of

successful product development

40,8 g

Recycled

fibre board

35,2 g

Solid

bleached

board

30,2 g

Average

folding

boxboard

27,7 g

Metsä Board’s

folding

boxboard

Q1 20167

EBITDA development 2011–2015

180 185208

236

283

7,2 %

8,8 %

10,3 %

11,8 %

14,1 %

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

50

100

150

200

250

300

2011 2012 2013 2014 2015

EU

R m

illio

n

EBITDA, excl. non-recurring items

Strong profitability development

ROCE-%, excl. non-recurring items

Q1 20168

EBIT-%, excl. non-recurring items

3,4

4,8

6,4

9,1

11,3

0

2

4

6

8

10

12

2011 2012 2013 2014 2015

%

2,4

3,6

5,2

6,8

9,0

0

2

4

6

8

10

2011 2012 2013 2014 2015

%

Target over 12% from 2017

Q1 20169

Strong continuing improvement in productivity

1000

1100

1200

1300

1400

1500

1600

1700

1800

1900

2000

1 000

1 300

1 600

1 900

2 200

2 500

2 800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E

Production capacity/employee Number of employees

Production capacity (tonnes) / employee at current millsNo. of

employees

Production

capacity/

employee

• Limited availability of high quality fibre – Sustainably harvested high quality fresh forest fibres are a must

– Own state of art chemical, mechanical and BCTMP pulping capacity

vital competitive factors

• Leading global consumer goods companies 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– High-quality paperboard companies have traditions from several

generations

Q1 201610

High threshold for new producers to

enter high-quality board segment

Q1 201611

Metsä Board’s paperboard business’ profitability

is top of its field in Europe

Strategic cornerstones and financial targets

Strategic cornerstones are

• Focus

• Growth

• Profitability

Q1 201613

Metsä Board’s vision is to be

the preferred supplier of

premium paperboards

creating value for

customers globally Responsible profitability

Reliability

Cooperation

Renewal

Values

Focus on premium fresh forest 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 forest fibres

• Our products are used for packages at the store and

from the store to the consumer

Q1 201614

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

Q1 201615

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

Q1 201616

Growth

Financial targets

Minimum ROCE 12%* from 2017

Q1 201617

Maximum net gearing 70%

3,4

4,8

6,4

9,1

11,3

2011 2012 2013 2014 2015

106

72 70

51

32

2011 2012 2013 2014 2015

• Return on capital employed (ROCE) a minimum of 12% from 2017 onwards• Net gearing not to exceed 70%

• Metsä Board’s dividend payout target is at least 1/3 of EPS

• Average pay-out ratio during 2012–2015 has been 40%

Q1 201618

Dividend

0,06

0,09

0,12

0,17

0

0,02

0,04

0,06

0,08

0,1

0,12

0,14

0,16

0,18

0,2

2012 2013 2014 2015

Q1 201619

Targeted average annual growth rate exceeds

clearly the market growth rate 3-5% p.a.

0

250

500

750

1 000

1 250

1 500

1 750

2 000

2011 2012 2013 2014 2015 2018 target

Fresh forest fibre linerboard Folding boxboard

1,000 tonnes

Q1 201620

Most important growth area is Americas

0

50

100

150

200

250

300

2011 2012 2013 2014 2015 2018 target

Folding boxboard Fresh forest fibre linerboard

300

250

1,0

00 tonnes

Actual and targeted deliveries to Americas

• 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

Q1 201621

Main priorities and actions to

achieve financial targets

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 fresh forest fibre paperboard packaging

market is about USD 110 billion

The total packaging market is USD 800 billion

Q1 201624

Estimated average annual growth rate of fresh forest fibrepaperboard is 3–4%

Fresh forest fibre paperboard

Other wood fibre based materials

Non-fibre based materials0

20

40

60

80

100

120

140

2013 2014 2015 2018E

USD bn

Source: Metsä Board estimates

Q1 201625

Global cartonboard market is about 36 Mt/a*The share of FBB is 9 Mt or 25% of the total market

Folding boxboard

Other fresh forest fibre grades

Recycled grades

Source: Metsä Board estimates

APAC20 Mt/a

EMEA8 Mt/a

North

America6 Mt/a

Lat. Am.2 Mt/a

Avg. growth rate

for premium

cartonboards is

3–4%/a

*) Excluding liquid packaging board, cup & plate

stock, liner and uncoated recycled board.

Global food service board market is 3.5 Mt/a*

26

Cups

Plates

Cartons

Source: Metsä Board estimates *) Base board only, excl. other laminate materials such as aluminium and PE.

APAC1.0 Mt/a

EMEA0.9 Mt/a

Americas1.6 Mt/a

Q1 2016

Avg. growth rate

for food service

board is

3–5%/a

Q1 201627

Market price development in EuropeFolding boxboard and white-top kraftliner

500

600

700

800

900

1000

1100

2009 2010 2011 2012 2013 2014 2015 2016

Folding boxboard

1/2009–1/2016

White-top kraftliner

1/2009–1/2016

EUR/tonne

Sources: Pöyry Management consulting, FOEX Indexes Ltd.

Q1 201628

Pulp price development in USD and EUR (PIX)Pulp Price Indexes Europe

350

400

450

500

550

600

650

700

750

800

850

900

950

1000

1050

350

400

450

500

550

600

650

700

750

800

850

900

950

1000

1050

'04 '05 '06 '07 '08 ´09 '10 '11 '12 '13 '14 '15 '16

USD

EUR

USD EUR

Softwood pulp

Hardwood pulp

Softwood pulp

Hardwood pulp

Source: Foex Indexes Ltd

Metsä Board has a strong position in Europe

Largest Folding Boxboard Producers in EuropeCapacity: 1,000 tonnes/a

Q1 201629

Largest White Fresh Forest Fibre Linerboard Producers in EuropeCapacity: 1,000 tonnes/a

* The paperboard machine BM2 in Husum produces simultaneously uncoated paper. This

production will be finished by the end of 2016.Sources: Metsä Board, Pöyry Management Consulting Oy

• Continuous steady growth above the market

• The biggest growth drivers are

– strong and long-term customer relationships

– innovative high-performance product portfolio to replace

other packaging materials

– best-in class customer service concept

• In Europe, paperboard sales volume grew 12% in 2015

compared to 2014

Q1 201630

Metsä Board is the market

leader in Europe

Metsä Board uses only fresh

forest fibres from

sustainably managed

northern forests

• Americas is Metsä Board’s main growth market

• The biggest growth drivers are

– Limited local supply in high-quality paperboards

– Due to strong consolidation, converters without own

paperboard production are looking for alternatives

• In folding cartons their share is 40–50%

– Growing environmental awareness

• In Americas, paperboard sales volume grew 16% in

2015 compared to 2014

Q1 201631

Metsä Board has a significant

foothold in North America

Paperboard offers a

sustainable option

for plastics such as

styrofoam in food service

applications.

• Metsä Board is the paperboard quality benchmark in

Asia

• Responsible consumer goods companies promote

good packaging

– Sustainability

– Traceable raw materials

– Product safety

• Due to the local overcapacity in Asia, the timing is not

good for aggressive growth

Q1 201632

Focus on the high-quality

segment in APAC

Global consumer goods

companies not willing

to change paperboard

suppliers easily in the

high-quality segments

Q1/2016 results and outlook

• Stable market situation

• Paperboard deliveries were at all-

time-high level

• Operating result remained on the

same level as in Q4/2015

• Increase in working capital

weakened operative cash flow

• Balance sheet remained strong

• After the review period, Metsä

Board announced to iniatiate

efficiency improvement programme

at Husum integrateQ1 201634

Key points in Q1/2016

Q1 201635

Financials in Q1/2016

Q1/16 Q4/15Change

Q1/16

vs. Q4/15Q1/15

Change

Q1/16

vs. Q1/15FY 2015

Sales EUR million 436 462 ↓ 526 ↓ 2 008

EBITDA, excl. NRIs EUR million 58 60 ↓ 70 ↓ 283

% of sales % 13 13 13 14

Operating result, excl. NRIs EUR million 35 35 43 ↓ 180

% of sales % 8 8 8 9

Result before taxes, excl. NRIs EUR million 30 30 32 ↓ 150

Earnings per share EUR million 0.07 0.07 0.09 ↓ 0.39

ROCE, excl. NRIs % 8 8 11 ↓ 11

Gross investments EUR million 54 61 ↓ 24 ↓ 178

Cash flow from operations EUR million -22 66 ↓ 33 ↓ 247

Q1 201636

Paper deliveries decreased as planned and

reduced sales

36 28 35 37 43 47 55 35 35

7%

6%7%

7%8%

9%

11%

8% 8%

0%

5%

10%

15%

0

10

20

30

40

50

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

Operating result*EUR million and % of sales

21 20 27 32 32 40 48 30 30

4% 4%5%

6% 6%

8%

10%

7% 7%

0%

5%

10%

15%

0

10

20

30

40

50

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

Pre-tax result* EUR million and % of sales

501 494 514 499 526 522 498 462 436200

300

400

500

600

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

SalesEUR million

*) excluding non-recurring items

• Low production volumes in Husum

due to the start-up of new folding

boxboard machine (↓)

• Lower market pulp prices (↓)

• Decrease in unprofitable paper

production (↑)

• Fixed costs and depreciation were

reallocated from non-core operations

to paperboard-segment (↑) (↓)

Q1 201637

Main result drivers in Q1 were Husum investment

programme and decreased paper production

0

10

20

30

40

Q4/2015 Paperboard Non-coreoperations

Otheroperations

Q1/2016

EBIT bridge Q4/15 vs. Q1/16excl. non-recurring items

EU

R m

illio

n

35 35

-9

+9

Q1 201638

Growing paperboard deliveriesCAGR% in 2011–2015 has been 9%

191 197 210 203 204 213 224 224 227

112 110120

111130

141 137 131 142

0

60

120

180

240

300

360

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

Folding boxboard Fresh forest fibre linerboard1,000 tonnes

Note! Figures exclude wallpaper deliveries

Profitability impacted by Husum investment

programme

ROCE-%, excl. non-recurring items

Q1 201639

EBIT-%, excl. non-recurring items

4,8

6,4

9,1

11,3

8,3

0

2

4

6

8

10

12

2012 2013 2014 2015 Q1/2016

3,6

5,2

6,8

9,0

8,0

0

2

4

6

8

10

2012 2013 2014 2015 Q1/2016

Target over 12% from 2017

61 60 6551

42

16% 15% 16%13%

11%

-2%

1%

4%

7%

10%

13%

16%

0

20

40

60

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

0

100

200

300

400

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

• Stable sales development

• Operating result was negatively impacted by

– Low production volumes in pulp and folding boxboard in Husum

– Decrease in market pulp prices

– Increased depreciation

– Fixed costs reallocations from non-core segment

• Pulp trading to Sappi Ltd discontinued. Impact on 2016 sales is approximately EUR 60 million. No impact on 2016 result.

Q1 201640

Paperboard segment in Q1/2016

Operating result, EUR millionexcl. non-recurring items

Sales, EUR million

EU

R m

illio

nE

UR

mill

ion

Operating result

Operating result,

EBIT-%

0

50

100

150

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

• Paper deliveries decreased to

15 000 tonnes (Q4/2015: 65 000 and

Q1/2015: 156 000)

• Sales down to EUR 18 million

• Decreased depreciation and fixed

costs improved the segment’s result

• Metsä Board estimates, that remaining

paper production will be fully

discontinued by end of 2016

Q1 201641

Non-core operations segment in Q1/2016

-3,2 -3,4

-1,3

-8,4

0,2

-3% -3%-2%

-17%

1%

-18%-16%-14%-12%-10%-8%-6%-4%-2%0%2%

-18

-14

-10

-6

-2

2

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Sales, MEUR

Operating result, MEURexcl. non-recurring items

EU

R m

illio

nE

UR

mill

ion

Operating result, M€

Operating result, M€

EBIT-%

• Other operations segment include costs

which are not allocated to units, e.g. head

office costs and hedge accounting

• Cost base of these is roughly EUR 5 million

per quarter

• Result fluctuation is mainly caused by

hedge accounting; in Q1/2016 hedge

accounting had only a small impact on

segment’s operating result

Q1 201642

Other operations segment in Q1/2016

-14

-9 -9-8

-7

-15

-10

-5

0

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Operating result,

excl. non-recurring itemsEUR

million

Q1 201643

Growing working capital and investments had a

negative impact on cash flows

-19

92

51 74 33 56 93 66

-22

-24

78

46 56 9 8 45 8

-76

19

114

157

198

250

214

256 247

193

-37

57

110155

188

119 118

70

-15

-100

-50

0

50

100

150

200

250

300

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

Cash flow from operations, quarterly Free cash flow, quarterly

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

EUR million

• Healthy demand in fresh forest fibre paperboards

expected to continue

• Total delivery volumes in paperboard expected to

grow compared to Q1/2016

• Q2 profitability will be impacted by

– Start-up phase including low average price of new folding

boxboard from Husum

– Higher number of maintenance shutdowns vs. Q1

• Total production costs are expected to remain

stable

Q1 201644

Outlook for Q2

Metsä Board’s operating result

excluding non-recurring items in

Q2/2016 is expected to remain

roughly on the same level as

in Q1/2016

Q1 201645

Profit guidance

for Q2/2016

Balance sheet and funding

Q1 201647

Strong balance sheet

Equity ratio, %

33%

41%39%

47%44%

0%

10%

20%

30%

40%

50%

2012 2013 2014 2015 3/16

73%70%

51%

32%

42%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2012 2013 2014 2015 3/16

Net gearing, %

625 597 427 333 412

3,4

2,9

1,81,2

1,5

0

1

2

3

4

0

200

400

600

2012 2013 2014 2015 3/16

Net debt, EUR million

Net debt/EBITDA (rolling 12m)

Net debt, EUR million and

Net debt/EBITDA

Q1 201648

Debt structure and liquidity31 March 2016

32 %

29 %

23 %

11 %5 %

Bonds

Loans fromfinancialinstitutions

Pension loans

Finance leasesand other loans

Other short-termloans

63 %22 %

15 %Cash and cashequivalents

Revolving creditfacility

Unraised pensionloans

Debt structure,

total EUR 694 million

Available liquidity,

total EUR 447 million

Average repayment time of long-term borrowing at 31 March in 2016 was 2.3 years.

Q1 201649

Debt programmes 31 March 2016

Long-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 3.9 2018

EUR 104 million bilateral loans 104 104 3.0 2016–2020

EUR 21 million finance leases 21 21 2.0 2016–2022

EUR 218 million pension loans 225 160 3.7 2016–2020

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

Revolving credit facility 2014 100 0 - 2018

Pension loan facilities 225 160 3.7 -

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 2016

* 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 2016 is 3.7%

Metsä Board’s principal long-term liquidity reserves at 31 March 2016

Q1 201650

Maturity schedule in long-term IB debt

44

148

183

255

25

100

65

0

50

100

150

200

250

300

2016 2017 2018 2019 2020 2021 >2021

Long-term interest bearing debt (total EUR 656,2 million) and committed undrawn credit facilities 31 March 2016

Long-term interest bearing liabilities Committed undrawn credit facilities

EUR million

Q1 201651

Net financial costs are declining steadily

47 56 39 32 5 3,0

3,5

4,0

4,5

5,0

5,5

0

20

40

60

2012 2013 2014 2015 Q1/16

Net financial costs, EUR million

Average interest rate, %

EUR million Q1/16 Q1/15 FY2015

Financial income and

expenses-6.5 -7.2 -28.6

Net FX gains and

losses1.6 -3.8 -3.4

Total net financials -4.9 -11.0 -32.0

Avg. interest

rate, %3.7% 3.8%

EUR million %

• Hedging duration of the main foreign currency flows is 3–5 months

Q1 201652

FX exposure and sensitivities

63 %27 %

7 % 3 % USD

SEK

GBP

Othercurrencies

10 % strengthening of foreign currency vs. EUR

will have an impact on Metsä Board’s annual EBIT of

Currency 2016 (est.)

USD, $ EUR +60 million

GBP, £ EUR +10 million

Swedish krona EUR -30 million

FX exposure by currency

Annual gross amount EUR 1.1 billionAnnual FX sensitivities

to Group EBIT before hedges

Q1 201653

Positive rating developmentMoody’s

Standard & Poor’s

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1/2016

BB+ | Ba1

Stable

Positive

BB | Ba2

BB- | Ba3

B+ | B1

B | B2

B- | B3

CCC+ | Caa1

CCC | Caa2

Investments

• Annual maintenance capex is EUR

40–60 million

• Main growth capexes in 2016:

– Husum investment programme:

EUR 40 million (total EUR 170 mil.)

– Extrusion line:

EUR 23 million (total EUR 38 mil.)

– Metsä Fibre’s bioproduct mill:

EUR 25 million*

Q1 201655

Capital expenditure

0

30

60

90

120

150

180

2010 2011 2012 2013 2014 2015 2016E

Capex Growth capex Depreciation

EUR million

*) investment in equity

Q1 201656

Husum investment programme of

EUR 170 million

Folding boxboard production

• Capacity approximately 400,000 t/a

• Deliveries mainly to Americas and

Food service globally

• Start-up in February 2016, full

production capacity end of 2016

Linerboard production

• Capacity approximately 300,000 t/a

• Deliveries to Europe and Americas

• Remaining uncoated paper*

production to linerboard production

in 2016

Capacity changes 2014 vs. 2016:

• Paperboard capacity +700,000 tn/a

• Paper capacity -600,000 tn/a *) Currently, the paperboard machine BM2 produces

simultaneously uncoated paper.

• In Husum two paper machines were shut down in 2015

• One paper machine converted to produce linerboard (BM2)

• New folding boxboard machine (BM1)

• Total investment value is EUR 170 million

• Total annual EBIT impact EUR 50 million, full impact in

2018

• Low production volumes in pulp and folding boxboard

in H1 2016

Q1 201657

Impacts on Husum investment

programme

Q1 201658

Ambitious growth targets 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 tonnes

of new FBB capacity

If the demand/supply situation so requires in the coming years, Metsä Board has

possibilities to adjust its production accordingly

1,0

00 tonnes

• Net capacity increase at the site is approximately 800,000 t/a– Investment cost of approximately EUR 1.2 billion

– Start up in 3Q 2017

• Capital invested by Metsä Board will be EUR 24,9 million– Metsä Board has no other financial commitments in the project

– Investment will be made on Q2 2016

• Metsä Board’s holding in Metsä Fibre remains unchanged at

24.9 per cent

• All in all, Metsä Board’s pulp balance is expected to be

500,000–600,000 t/a long from 2018 onwards– Majority of the market pulp is softwood chemical pulp

– Reserve to grow paperboard business further in the future while

maintaining self-sufficiency in pulp

Q1 201659

Metsä Board’s associated company

Metsä Fibre builds a bioproduct mill

Food service packaging requires barrier features

e.g. moisture and fat resistance

• Investment value EUR 38 million

• Will be implemented at Husum mill

• Start-up in H1/2017 with capacity of 100,000 t/a

• In 2015–2016 Metsä Board’s paperboards are coated by

external converter

• The company continues to develop other barrier solutions

including biobased materials

Q1 201660

Metsä Board expands its offering in food and

food service paperboards by investing in

extrusion coating

Production, capacities and sourcing

Paperboard mills• Husum• Kemi • Kyro• Tako• Simpele• Äänekoski

Pulp mills• Husum• Joutseno• Kaskinen

Speciality paper mill• Kyro

Q1 201662

Production locations

Äänekoski

Simpele

Joutseno

Tako

Kyro

KaskinenHusum

Kemi

Q1 201663

Paperboard and specialty paper capacity in 2015

Town Country Machines Folding

boxboard

White fresh

forest fibre

linerboard

Wallpaper

base

Total

Tampere (Tako) Finland 2 210 210

Kyröskoski (Kyro) Finland 2 190 100** 290

Äänekoski Finland 1 240 240

Simpele Finland 1 280 280

Kemi Finland 1 410 410

Husum Sweden 2 400 300* 700

Total 9 1,320 710 100 2,130

Q1 201664

Pulp capacity in 2015

Metsä Board pulp mills Country Chemical pulp BCTMP Total

Husum Sweden 750 750

Joutseno Finland 320 320

Kaskinen Finland 320 320

Total 750 640 1,390

Metsä Fibre pulp mills Country Chemical pulp BCTMP Total

Äänekoski Finland 530 530

Kemi Finland 590 590

Rauma Finland 650 650

Joutseno Finland 690 690

Total 2,460 2,460

Deliveries by region in 2015

Folding Boxboard

Q1 201665

Fresh forest fibre linerboard

50%

26%

14%

11%

Western EuropeEastern EuropeAmericasAsia and Pacific

61%

6%

32%

1%

• The amount of certified wood was

75%

• A new supply chain management

target was launched: to audit 100% of

risk rated key material suppliers

against sustainability criteria by end

2015

89% of all Metsä Board purchases,

excluding wood, come from countries

where we have own production

Raw materials and supply chain management 2015

Q1 201666

Metsä Board purchases by country, % (excl. wood supply)

68

17

7

4 3 1

Finland

Sweden

Other EU

Germany

Outside Europe

Other

Own generation

20,90%

Through PVO shareholding

29,60%

Purchased energy49,50%

Wood-based58%

Nuclear power22%

Natural gas8%

Hydro5%

Coal4%

Oil2%

Other1%

Sweden 39%

Finland25%

Baltic countries20%

Russia15%

Sourcing 2015

Electricity sourcing (total 2,533 GWh)

Q1 201667

Primary energy used(total 12.3 TWh)

Wood sourcing by country (total 5.0 million cubic metres)

Q1 201668

Cost structure in 2015

Delivery costs16%

Wood26%

Chemicals, pigments and fillers

14%

Energy10%

Other variables4%

Personnel 14%

Other fixed16%

Fixed

costs

Variable

costs

Sustainability

WOOD

THE AMOUNT OF

CERTIFIED WOOD

PERFORMANCE 2015 75%

> 80%

SUPPLY CHAIN

RISK-RATED

KEY MATERIAL SUPPLIERS

AUDITED

100%

SAFETY

LOST-TIME ACCIDENTS

ANNUALLY

PERFORMANCE 2015 11,1

0

ENERGY

ENERGY EFFICIENCY

IMPROVEMENT10

PERFORMANCE 2015 10%

12% *)

CLIMATE

FOSSIL CO2 EMISSIONS

PER PRODUCT TONNE

PERFORMANCE 2015 -42%

-30%

WELL-BEING

SICKNESS ABSENTEEISM

PERFORMANCE 2015 4,1%

<3%

RESOURCE EFFICIENCY

PROCESS WATER USE PER

PRODUCT TONNE

PERFORMANCE 2015 - 16%

-17%

BIOENERGY SHARE OF TOTAL

PURCHASED ENERGY 81%

*) Target has been brought up from 10% to 12%

Q1 201670

Metsä Board’s sustainability targets (2020 vs. 2009)

Fresh forest fibre is

a pure and safe raw

material.

Many advantages of lightweight and safe

cartonboard

71

Lightweight boards use

less raw material, water

and energy and lower

transported weights. Consistent quality

enables trouble-free

runnability in

converting and

packing lines.

Strong packaging

stays in shape in

logistics.

High quality

packaging attracts

at the point-of-sale.

Lightweight boards

generate less waste.

They are recyclable

and compostable.Ensured

consumer safety

12

3

4

5

6 6

• Highest possible score 100/100 for the depth and quality of

climate change data (2014: 98/100 and 2013: 82/100)

• High scores indicate success in providing robust climate

change data and strong understanding of climate-related

issues. Leaders usually have a solid financial performance

• Metsä Board recognized as world leader for corporate action

on water security

• Metsä Board achieved leadership status in the materials

sector of the Forest programme

Q1 201672

Metsä Board recognised as a leader for

corporate actions on climate change

CDP is an international, not-for-profit organization providing the only global system for companies and

cities to measure, disclose, manage and share vital environmental information. CDP works with market

forces, including 767 institutional investors with assets of USD 92 trillion, to motivate companies to

disclose their impacts on the environment and natural resources and take action to reduce them.

Owners

Market cap and foreign owners31 March 2016

Q1 201674

Ownership distribution31 March 2016

Rising market cap with more foreign ownersMetsä Board’s new Market cap segmentation from 2016 onwards is Large Cap

0

4

8

12

16

20

24

0

500

1 000

1 500

2 000

2 500

2012 2013 2014 2015 3/2016

Market cap, EUR million

Share of foreign owners, %

42 %

21 %

17 %

20 %

MetsäliittoCooperative

Domesticinstitutionalinvestors

Domestic privateinvestors

Foreign owners

EUR million

Q1 201675

Ownership structure on 31 March 2016

42 %

20 %

17 %

12 %

5 %

2 %2 %


Foreigners*

Households

Public sectororganisations

Finance andinsurancecompaniesNon-profitorganisations

Other companies

62 %14 %

10 %

7 %

4 %

2 % 1 %


Public sectororganisations

Households

Foreigners*

Non-profitorganisations

Finance andinsurancecompanies

Other companies

Shares, %

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

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

* incl. nominee registeredSource: Euroland

Appendix

Q1 201677

METSÄ WOOD

Wood products

Sales:

EUR 0.9 billionPersonnel:

2,000

Metsäliitto Cooperative

holding 100%

METSÄ FOREST

Wood supply and forest services

Sales:


900


holding 100%

METSÄ BOARD

Paperboard

Sales:


2,000


holding 42.24%

(61.63% of votes)

METSÄ FIBRE

Pulp

Sales:


850

Metsäliitto Cooperative holding

50.2%, Metsä Board 24.9%.

Itochu Corporation 24.9%

METSÄ TISSUE

Tissue and cookingpapers

Sales:


2,800Metsäliitto Cooperative

holding 91%

METSÄ GROUP | Sales EUR 5.0 billion | Personnel 9,600

METSÄLIITTO COOPERATIVE | Group’s parent company | Owned by 116,000 Finnish forest owners

Metsä Board is part of Metsä Group & listed in Nasdaq Helsinki

2005 Structural change starts Paper businesses over 80% of salesDecision 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 about a quarter of sales

2015 Strong position and growingEurope’s leading producer of folding boxboardThe world’s leading manufacturer of coated white-top kraftlinersExit from paper business (fully by end of 2016)

Q1 201678

True success story

Q1 201679

Sales and EBIT-% development 2000–2015

EUR million

5241 5624

4440

32362432 2605 2485 2108 2019 2008 2008

-10,0

-8,0

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

10000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales EBIT-%

%

Q1 201680

M&A activity 1997-2015

100 000 B2

shares in

PVO

Acquisitions

Divestments

Biberist Paper Mill

UK Paper

Modo Paper

Zanders

Chemicals

Business

Botnia

WoodCorrugated

PackagingMD Papier Metsä

Tissue

Albbruck Savon

Sellu

Forestia

Kemiart

Liners (53 %)

8% in

Botnia

PSM

9% in

Botnia

Carton

plants

Map

New

ThamesMB

Uruguay

Graphic

Papers

Part of

Reflex

Hallein

mill

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

Q1 201681

Significant Divestments

EUR 3.7 billion in assets divested since 2001

* Cash portion

**Incl. pension liabilities

Katri Sundström

Vice President, Investor relations

Tel +358 400 976 333

[email protected]

www.metsaboard.com

Q1 201682

Contact information

mailto:[email protected]

Documents

Q1 2016 Interim report investor presentation