Metsä Board Investor presentation 1 6/ August 2018

Transcription

1 Metsä Board 2 August 2018

2 Contents This is Metsä Board 3 Strategy and financial targets 14 Operating environment and market position 21 Growth in the paperboard business Half-Year Financial Report 38 Credit update 51 Production, capacities and sourcing 57 Product development focus areas 65 Sustainability 71 Appendix 77 Contact information 83 2

3 This is Metsä Board

4 Sales split in H Investment highlights Market pulp 19% 4 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 Global sales to over 100 countries 8 production units in Finland and Sweden White kraftliners 26% Americas 19 % APAC 9 % Folding boxboard 55% Sales split by region in H EMEA 72 %

5 Increased shareholder value and steadily growing dividend Enterprise value, million Dividend, and payout ratio, % EUR mill EUR 0,24 0,20 0,16 0,12 0,08 0,04 90% 75% 60% 45% 30% 15% /18 0, % Market capitalization, EUR million Dividend, EUR Dividend/EPS, % Net debt, EUR million 5

6 Metsä Board s growth has clearly exceeded the average market growth * Metsä Board s paperboard deliveries 1,000 tonnes * Annual global demand growth for folding boxboard and white kraftliners is estimated to be 3 4% Source: Metsä Board s own research H White kraftliner Folding boxboard

7 Metsä Board s lightweight premium paperboards Folding boxboards Packaging solutions for consumer goods Food service boards Solutions for food service White kraftliners Retail-ready tray and point-of-sale solutions

8 Customers benefit from Metsä Board s paperboards 8 Lightweightness Metsä Board s folding boxboard can be up to 30% lighter compared to competing grades Purity and product safety Fresh fibre paperboards do not include harmful substances which could be absorbed into foodstuff in food and food service packaging Sustainability Major part of the energy the company uses is renewable and the wood used as raw material is fully traceable Quality Only high-quality paperboards

9 High threshold for new producers to enter high-quality paperboard segment High investment costs Limited availability of high yield pulp (BCTMP) Global brand owners and manufacturers for corrugated products 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 9

10 Three-layer structure makes the board light while maintaining the stiffness 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. 10

11 Metsä Board has a broad customer base Roughly 50% of Metsä Board s folding boxboard sales in Europe is negotiated directly with brand owners BRAND OWNERS CONVERTERS MERCHANTS CORRUGATED BOX MANUFACTURERS FOLDING BOXBOARD WHITE LINERBOARDS 11

12 Dividend and EPS Metsä Board s dividend payout target is at least 50 per cent of the result for the financial period Dividend for 2017: EUR 0.21 per share Totalling EUR 75 million 0,50 0,40 0,30 0,20 0,10 EPS and DPS, EUR Corresponds to 50 per cent of EPS 0, Earnings per share Dividend per share 12

13 Potential to improve profitability of Husum At least EUR 100 million EBIT improvement from 2016 to ,000 tonnes of pulp Efficiency rate >95% 2016 improvement 2019 production lost in 2016 Restructuring: programme FBB capacity utilisation with normal sales price* 25 million 5 million 70 million 13 * The sales price improvement in Euros is currently being delayed by the weakened US dollar

14 Strategy and financial targets

15 Metsä Board s vision is to be the preferred supplier of premium paperboards creating value for customers globally Strategic cornerstones Focus Growth Profitability Values Responsible profitability Reliability Cooperation Renewal 15

16 Focus 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 16

17 Profitability 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 17

18 Growth 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 18

19 Financial targets and actuals Annual growth in total paperboard deliveries, % Comparable ROCE, % Net debt / comparable EBITDA, % Target is to exceed relevant market growth, 3-4%/a 15% 13% 12% 10% 6% H1/18 15,1 Target: >12% 11,3 11,2 9,1 8, H1/18 Target: <2.5 1,8 2,0 1,2 1,2 1, H1/18 Dividend policy: Metsä Board aims to distribute at least 50% of its result for the financial period in annual dividends to its shareholders 19

20 Main priorities and actions to achieve financial targets 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 20

21 Operating environment and market position

22 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 22

23 Fresh fibre paperboards offer solutions to major challenges Replacing fossilbased materials, i.e. plastics The solution: renewable and biodegradable wood fibre Increased waste generation due to urbanisation The solution: circular economy and bio-based packaging Reducing carbon footprint The solution: bio-based fuels, lower production emissions and lighter paperboards Consumer expectations on safer products especially in food packaging The solution: pure and safe fresh fibres

24 The total packaging market is $850 billion, of which paperboard packaging is roughly one third The total packaging market is USD 850 billion Average annual growth rate of paperboard packaging USD bn % per year USD 300 bn Paperboard packaging Other wood fibre based packaging Non-fibre based packaging 50 0 Source: Smithers Pira F

25 Metsä Board operates in growing paperboard market Annual 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: Metsä Board research Metsä Board s focus area 25

26 Annual global demand for cartonboard* is 38 million tonnes of which folding boxboard is about 10 million tonnes Folding boxboard Other fresh fibre grades (e.g. SBS, CUK) Recycled grades North America 7 Mt/a Lat.Am. 2 Mt/a EMEA 9 Mt/a APAC 20 Mt/a Avg. demand growth rate for folding boxboard is 3 4% per year 26 * Excluding liquid packaging board, cup & plate stock, liner and uncoated recycled board. Source: Metsä Board estimates

27 Global food service board* market is 3.5 Mt/a Avg. growth rate for food service board is 3 5%/a EMEA 0.9 Mt/a Cups Plates Americas 1.6 Mt/a APAC 1.0 Mt/a Cartons 27 * Base board (e.g. SBB or FBB) only, excl. other laminate materials such as aluminium and PE. Source: Metsä Board estimates

28 Annual global demand for white linerboard is 11 million tonnes Demand for white coated kraftliners is 1 million tonne Avg. growth rate for white linerboard is 3 4%/a White coated kraftliner White uncoated kraftliner White recycled liner Americas 3 Mt/a Americas 3 Mt/a EMEA 5 Mt /a APAC 3 Mt/a Global containerboard market is 160 Mt/a, of which White linerboards 7% Brown kraftliner 17% Brown testliner 37% 28 Fluting 39% Source: Metsä Board estimates

29 Metsä Board has a strong position in Europe Largest Folding Boxboard Producers in Europe Total capacity: 3.8M tonnes Largest White Fresh Fibre Linerboard Producers in Europe Total capacity: 2.1M tonnes Metsä Board Competitor 1 Competitor 2 Competitor 3 Competitor 4 Others Metsä Board Competitor 1 Competitor 2 Competitor 3 Competitor 4 Others Source: Metsä Board estimates

30 Market price development in folding boxboard and white-top kraftliner in Europe EUR/ tn Folding Boxboard White-top kraftliner 30 Sources: RISI, Inc. & FOEX Indexes Ltd

31 Pulp price development (PIX) EUR Softwood, USD Hardwood, USD Softwood, EUR Hardwood, EUR '10 '11 '12 '13 '14 '15 '16 '17 '18 USD Source: Foex Indexes Ltd

32 Metsä Board s growth in the paperboard business

33 Restructuring to a pure-play paperboard company From 2005 to 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 (2008) and Map Merchants (2007) - Paperboard (incl. market pulp) 100% of sales from 2017 onwards - Major improvement in profitability and financial position 33

34 1,000 tonnes Most important growth area is Americas In 2017, total deliveries to Americas grew by 23% year-on-year 300 Actual and targeted deliveries to Americas target Folding boxboard White kraftliner 34

35 Metsä Board's regional goals Americas, EMEA and APAC GROWTH CONTINUES IN THE AMERICAS MAINTAIN THE STRONG MARKET POSITION IN EUROPE FOCUS ON PREMIUM PAPERBOARD SEGMENTS IN THE ASIA-PACIFIC REGION AMERICAS SHARE OF TOTAL PAPERBOARD SALES IN H % EMEA SHARE OF TOTAL PAPERBOARD SALES IN H % APAC SHARE OF TOTAL PAPERBOARD SALES IN H % 35

36 Metsä Board's growth drivers in Europe EUROPE GROWTH CONTINUES IN THE AMERICAS AMERICAS SHARE OF SALES IN % MAINTAIN THE STRONG MARKET POSITION IN EUROPE EMEA SHARE OF SALES IN % Metsä Board s strengths are based FOCUS on long-standing ON customer PREMIUM accounts and a broad PAPERBOARD customer base Steady SEGMENTS growth is IN sought through THE ASIA-PACIFIC a diverse selection of products REGION and services focused on customer needs Stricter safety requirements support demand for fresh fibre paperboards APAC SHARE OF SALES IN % 36

37 Metsä Board's growth drivers in Americas GROWTH CONTINUES IN THE AMERICAS AMERICAS SHARE OF SALES IN % MAINTAIN FOCUS ON THE STRONG PREMIUM AMERICAS MARKET PAPERBOARD POSITION Growth is IN driven by the limited local SEGMENTS availability IN EUROPE of premium lightweight folding boxboard THE ASIA-PACIFIC and by rapid growth in the demand for food REGION service packaging made from fresh fibre paperboard The growth of discount store chains and online commerce increases demand for premium EMEA white kraftliner APAC SHARE OF SALES IN 2016 SHARE OF SALES IN % 8 % 37

38 Metsä Board January June 2018 Half-year Financial Report 2 August 2018

39 Q in brief Total delivery volumes of paperboards were at record high levels 489,000 tonnes Paperboard price levels were stable or slightly rising Pulp market remained strong Several planned maintenance shutdowns in Finnish mills Increased prices of imported wood from Baltics to Sweden and freight costs in US had a negative impact on operating result 39

40 1,000 tonnes Total paperboard delivery volumes at an all-timehigh in Q White kraftliner Folding boxboard Annual global demand growth for folding boxboard and white kraftliners is estimated to be 3 4% 0 Q Q Q Q Q Q Q Q Q Q ,000 tonnes +6% ,000 tonnes Source: Metsä Board s own research ,568,000 tonnes +15% ,802,000 tonnes

41 Paperboard delivery split in H Folding boxboard deliveries in H1/18 (H1/17) 1,000 tonnes White kraftliner deliveries in H1/18 (H1/17) 1,000 tonnes APAC 64 (59) 10% Americas 93 (98) Americas 127 (112) 20% 70% 28% 72% EMEA 433 (397) EMEA 237 (229) 41 Total FBB deliveries grew by 10% Total WKL deliveries decreased by 1%

42 EUR million EUR million Higher delivery volumes and rising prices increased sales Sales EUR million Comparable operating result EUR million and % of sales ,2 % 9,2 % 10,5 % 12,0 % 14,0 % 11,4 % 16% 12% % Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 4% 0% : 919 million : 1,011 million : 89 million : 128 million : 1,849 million : 194 million 42

43 Pulp market remained strong prices are at a record high in Europe 43 Metsä Board s pulp balance is over 500,000 tonnes long, including Metsä Fibre s share Current market drivers in pulp: Limited new capacity in the coming years Restrictions on recycled paper imports in China Pulp price (PIX) development in Europe USD Softwood (NBSK) Hardwood (NBHK) USD '10 '11 '12 '13 '14 '15 '16 '17 '18 Source: Foex Indexes Ltd

44 Wood costs continued to rise in Q Cost increase relates mainly to wood imported from Baltics to Sweden Metsä Board s wood costs are estimated to be EUR 30 million higher in 2018 vs Metsä Board s total wood sourcing in 2017 was 5.4 million m 3 Sweden 40%, Finland 32%, Baltic countries 17%, Russia 11% Personnel 14 % Metsä Board s cost split in 2017 total 1.6 billion Other variables 3 % Other fixed 15 % Energy 12 % Chemicals, pigments and fillers 14 % Wood 26 % Logistics 16 %

45 Impacts from FX rate changes including hedges were neutral in Q2 vs. Q1 Impacts of FX rate changes including hedges: Q vs. Q1 2018: Neutral H vs. H1 2017: 28 million negative Q3 will have the biggest negative impact compared to other quarters 12 month transaction exposure EUR 1.1 billion 36 % 7 % 2 % USD 55 % SEK GBP FX sensitivities excluding hedges 10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board s EBIT of Currency USD, $ SEK Next 12 months EUR +64 million EUR -42 million 45 Other currencies GBP, EUR +8 million

46 ROCE is above its target level of 12% 12 month rolling return was 13.8% 16% 14% 12% 10% 8% 6% 4% 2% Target >12% Q2/18: 13.9% 0% 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 Q1/18 Q2/18 46 Comparable ROCE-%, Quarterly

47 EUR million Cash flow from operations EUR 240 million (Rolling 12 months) Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/ Cash flow from operations, quarterly Cash flow from operations, rolling 12 months Free cash flow, quarterly Free cash flow, rolling 12 months 47 Free cash flow = Cash flow from operations - investments

48 EUR million Strong financial position, leverage at 1.2x ,1 2,1 2,0 1,9 2,0 1,7 Net debt / EBITDA target level <2.5 3,0 2,5 2, ,2 1,1 1,2 1, , /2016 9/ /2016 3/2017 6/2017 9/ /2017 3/2018 6/2018 0,5 0,0 48 Net debt, EUR million Net debt to comparable EBITDA

49 Near-term outlook Good demand for fresh fibre paperboards, market prices are expected to be stable Total paperboard delivery volumes in Q are expected to stay at the same level as in Q2 Planned shutdowns in H Kemi integrate in Q3 and Husum integrate in Q3 Q4 Some additional headwind from FX in Q3 vs. Q2 Wood costs EUR 30 million higher in 2018 compared to

50 Result guidance for Q Metsä Board s comparable operating result in the third quarter of 2018 is expected to remain roughly at the same level as in the second quarter of

51 Credit update

52 Debt structure and liquidity on 30 June 2018 Interest-bearing debt EUR 483 million (31 March 2018: 617 M ) Available liquidity EUR 376 million (31 March 2018: 513 M ) Bonds 308 * Loans from financial institutions Pension loans Finance leases and other loans Other short-term loans Cash and cash equivalents Revolving credit facility Unraised pension loans * Of which EUR 248 million due 2027 and EUR 60 million due Average maturity of long-term loans on 30 June 2018 was 5.8 years.

53 EUR million Debt and its maturity 30 June 2018 Total interest-bearing debt on 30 June was EUR 483 million ( : EUR 617 million) On 27 April Metsä Board made an early repayment of EUR 100 million of its existing loan and increased the size of its undrawn credit facility by EUR 50 million Metsä Board s credit ratings Rating agency Standard & Poor s Moody s Rating and outlook BBBstable Ba1 positive Last update 02/2018 Upgrade from BB+ 04/2018 Upgrade from stable outlook 250 Interest-bearing debt maturity profile 30 June Bonds Loans from financial institutions Pension loans Other loans Company has an undrawn revolving credit facility of EUR 150 million maturing in 2020

54 Debt programmes 30 June 2018 Metsä Board s significant debt securities issued and outstanding at 30 June 2018 Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate* ), % Maturity EUR 250 million bond issued EUR 225 million bond issued Syndicated credit facility EUR 14 million bilateral loans EUR 9 million finance leases EUR 213 million pension loans * ) 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 30 June 2018 is 3,3%. Metsä Board s principal long-term liquidity reserves at 30 June 2018 Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate* ), % Maturity Revolving credit facility Pension loan facilities Short-term funding programmes Metsä Group internal short-term limit months Metsä Group Treasury funding programmes EUR 150 million domestic CP programme months 54

55 Net financial costs January June 2018 EUR million % 50 5,0 40 4,2 4,5 3,8 30 4,0 3,3 3,3 3,3 3,5 20 3,0 Net financial costs (including foreign exchange differences) in were EUR 14 million (1 6/17: EUR 12 million) Q2/2018 2,5 2,0 Net financial costs, EUR million Average interest rate at the end of period, % 55

56 Metsä Board s credit ratings BBB- / Baa3 BB+ / Ba1 BB / Ba2 BB- / Ba3 B+ / B1 B / B2 B- / B3 CCC+ / Caa1 BBB- / Baa3 BB+ / Ba1 BB / Ba2 BB- / Ba3 B+ / B1 B / B2 B- / B3 CCC+ / Caa1 56

57 Production, capacities and sourcing

58 Metsä Board s production units 58 Integrated mills Husum, Sweden Kemi 400,000 t/a folding boxboard 270,000 t/a white linerboard 730,000 t/a chemical pulp 420,000 t/a white linerboard 620,000 t/a chemical pulp by Metsä Fibre Äänekoski Joutseno 240,000 t/a folding boxboard 1,300,000 t/a chemical pulp by Metsä Fibre 330,000 t/a BCTMP 690,000 t/a chemical pulp by Metsä Fibre Non-integrated mills Kyro (Kyröskoski) Simpele 190,000 t/a folding boxboard 290,000 t/a folding boxboard Tako (Tampere) Kaskinen 210,000 t/a folding boxboard 340,000 t/a BCTMP Husum Taking into account Metsä Group s pulp production, Metsä Board s pulp balance in 2018 is over 500,000 t/a long Äänekoski Kaskinen Simpele Tako Kyro Kemi Joutseno

59 The integrated mill model improves efficiency and sustainability of the supply chain Metsä Board s Husum integrated mill Certified wood resources Raw material Own pulp mill at the mill site Raw Pulp material Paperboard production (BM1) Raw Paperboard material Extrusion coating line (EM1) Raw Extrusion material Own deep water port Raw Logistics material 59

60 Improvement in productivity over time Production capacity tn / employee Production capacity (tonnes) / employee at current mills Personnel at current mills E Production capacity tn/employee Personnel at current mills 60

61 Paperboard capacity Town Country Machines Folding boxboard White fresh fibre linerboard Total Tampere (Tako) Finland Kyröskoski (Kyro) Finland Äänekoski Finland Simpele Finland Kemi Finland Husum Sweden Total 8 1, ,020 61

62 Pulp capacity Metsä Board pulp mills Country Chemical pulp BCTMP Total Husum Sweden Joutseno Finland Kaskinen Finland Total ,400 Metsä Fibre pulp mills Country Chemical pulp BCTMP Total Äänekoski Finland 1,300 1,300 Kemi Finland Rauma Finland Joutseno Finland Total 3,260 3,260 62

63 Estimated capex for 2018 is EUR 70 million EUR million E Maintenance capex Growth capex Depreciation 63 Main growth in capex in : Husum investment programme, extrusion coating line and equity investment in Metsä Fibre s bioproduct mill

64 Sourcing 2017 Purchased energy 46% Electricity sourcing (total 2,440 GWh) Outsourced generation 3% Own generation 22% Gas 8% Primary energy used (total 12.0 TWh) Peat 4% Coal 4% Oil 2% Hydro 0% Wind + solar 0% Woodbased 52% Wood sourcing by country (total 5.4 million cubic metres) Baltic countries 17 % Russia 12% Sweden 40% Through PVO shareholding 29% Nuclear power 28% Finland 32% 64

65 Product development focus areas

66 Key product development focus areas Sustainable lightweighting Improved BCTMP Microfibrillated cellulose (MFC) Strength additives Barrier board PE extrusion coated products Dispersion barriers Bio-based raw materials 66

67 Lighter-weight paperboards: Better with Less SBB Solid bleached board Average FBB Folding boxboard Metsä Board lightweight paperboard WLC White lined chipboard 67 The weights equal to a print job of sheets on a standard size printing press

68 RENEWABLE Barrier boards types BIODEGRADABLE Biobased, biodegradable coating, i.e. starch, PLA etc. Bioplastic coating, i.e. green PE Oil-based, biodegradable coating Latex based dispersion coating PE extrusion coating NON-RENEWABLE Metsä Board s baseboard is biobased, biodegradable and compostable. NON-BIODEGRADABLE 68

69 Non biobased barrier Biobased barrier Metsä Board barrier boards roadmap Biobased light barrier Biobased barrier Outsourced PE extrusion coating Own PE extrusion coating

70 In January 2018 Metsä Board launched an innovative eco-barrier paperboard 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 70

71 Sustainability

72 External recognitions and commitments in sustainability Metsä Board is included in CDP s Climate A list and Water A list as well as in Supplier Climate A list and Supplier Water A list. In addition, Metsä Board achieved the Leadership status (A-) in CDP Forest programme in Metsä Board scored the highest recognition level Gold in EcoVadis CSR ranking in 2018, and is included in the top 1% of suppliers assessed across all categories. Metsä Board received a rating of AAA (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment in June Metsä Board was awarded Prime status in Oekom corporate responsibility rating in May As a member of Pack2Go Europe Metsä Board is committed to the environmental, health and safety aspects within the on-thego food and beverage packaging industry. Metsä Board is committed to Science Based Targets to reduce its GHG emissions in line with the goal of the Paris Agreement. Metsä Board as a part of Metsä Group is committed to the UN Global Compact corporate responsibility initiative and its principles in the areas of human rights, labour, environment and anti-corruption. Metsä Board has an overall ESG score of 86/100 and is considered a Leader in Sustainalytics assessment in May 2018.

73 The circular economy of a durable and safe package Pure paperboard helps to store the packaged product safely. Fresh fibre is a pure and safe, renewable raw material. Our paperboards are recyclable and biodegradable, or they can be used for energy production. Durable paperboard protects the packaged product effectively. We only use carefully selected and safe raw materials in our products. We follow good manufacturing principles (GMP). All of our products meet the requirements of relevant international legislation.

74 Metsä Board uses water efficiently Rain waters the forest Metsä Board has decreased its CO 2 emissions by 45% since 2009 and the use of water by 14% since % of water used in the production process is returned back to the waterways Also lakes and seas are a source of recreation Forests are a source of recreation Metsä Board s board production is mostly integrated in pulp production Waste waters are always carefully cleaned before returned back to the waterways Light weight boards are resource efficient both for us as well as for our customers Bark is utilised as a bio-energy source Metsä Board only uses surface water in its production Metsä Board s paperboards can be recycled, depending upon local recycling services

75 Metsä Board s sustainability targets WOOD THE SHARE OF CERTIFIED WOOD >80% PERFORMANCE % BIOENERGY SHARE OF TOTAL PURCHASED ENERGY 52% WELL-BEING SICKNESS ABSENTEEISM <3% PERFORMANCE % CLIMATE FOSSIL CO 2 EMISSIONS PER PRODUCT TONNE % PERFORMANCE % LOGISTICS SAFETY AT WORK ENERGY RESOURCE EFFICIENCY 75 ENSURE THE SUSTAINAINABILITY OF MAIN LOGISTIC FLOWS PERFORMANCE % In the end of 2017, all 481 logistics partners included in the sustainability survey fulfilled Metsä Group s sustainability criteria. LOST-TIME ACCIDENTS FREQUENCY ANNUALLY -10% PERFORMANCE % ENERGY EFFICIENCY IMPROVEMENT PERFORMANCE % 12% -17% PROCESS WATER USE PER PRODUCT TONNE PERFORMANCE %

76 Increased regulation to ensure product safety EU Commission 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 Concentration limits of certain polyaromatic hydrocarbons micrograms/kg food has been set Draft 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 76

77 Appendix

78 Market cap and ownership distribution Metsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki Market cap and foreign owners 30 June 2018 Ownership distribution 30 June 2018 EUR million % % 17 % 41 % Metsäliitto Cooperative Domestic institutional investors Domestic private investors * /2018 Market cap, EUR million 0 19 % Foreign owners Share of foreign owners, % * Metsäliitto Cooperative has 62% of voting rights 78

79 METSÄ GROUP Sales EUR 5.0 billion Personnel 9,100 (consolidated) METSÄLIITTO COOPERATIVE Group s parent company Owned by 104,000 Finnish forest owners METSÄ FOREST METSÄ TISSUE METSÄ WOOD METSÄ BOARD METSÄ FIBRE Wood Supply and Forest Services Tissue and cooking papers Wood Products Paperboard Pulp and Sawn Timber Sales: EUR 1.6 billion Personnel: 850 Sales: EUR 1.0 billion Personnel: 2,800 Sales: EUR 0.5 billion Personnel: 1,400 Sales: EUR 1.8 billion Personnel: 2,350 Sales: EUR 1.9 billion Personnel: 1,200 Metsäliitto Cooperative holding 100% Metsäliitto Cooperative holding 100% Metsäliitto Cooperative holding 100% Metsäliitto Cooperative holding 41.5%, 61.4% of votes Metsäliitto Cooperative holding 50.1%, Itochu Corporation 25.0% Metsä Board 24.9% 79 Metsä Board is listed on the Nasdaq Helsinki

80 Metsä Board Corporate Management Team Mika Joukio CEO Chairman of CMT since 2014 MG employee since 1990 Share ownership: 250,000 Jussi Noponen CFO Member of CMT since 2016 MG employee since 2000 Share ownership: 54,000 Sari Pajari SVP, Marketing and Sales Member of CMT since 2011 MG employee since 2007 Share ownership: 50,000 Ari Kiviranta SVP, Development Member of CMT since 2014 MG employee since 1993 Share ownership: 38,938 Harri Pihlajaniemi SVP, Production Member of CMT since 2017 MG employee in and since 2017 Share ownership: no ownership Susanna Tainio SVP, HR Member of CMT since 2015 MG employee since 2011 Share ownership: 31, Share ownerships are B-shares. MG = Metsä Group

81 M&A activity Acquisitions Biberist Paper Mill Simpele Mill UK Paper Modo Paper Zanders Kemiart Liners (53 %) Chemicals Business Divestments 81 Botnia Wood Corrugated Packaging MD Papier Albbruck Metsä Tissue Savon Sellu Forestia PSM 8% in Botnia 9% in Botnia Carton plants Map New Thames Graphic Papers B2 shares in PVO MB Uruguay Part of Reflex Hallein mill Rest of Reflex 0.5% in PVO Alizay mill Lielahti real estate 7.3 % in Metsä Fibre Gohrsmühle mill

82 Significant Divestments EUR 3.7 billion in assets divested since 2001 Year Divestiture Enterprise Value, EUR million 2015 Gohrsmühle mill in Germany neg Lielahti real-estate Alizay property and other estates % stake in Metsä Fibre % stake in PVO Hallein Metsä-Botnia s Uruguayan operations 300* 2008 Graphic Papers ,000 shares in PVO New Thames mill 82** 2007 Map Merchant Group Folding carton plants Botnia (9%) Botnia (8%) Savon Sellu Forestia (95%) Metsä Tissue Papierfabrik Albbruck MD Papier Noviant (19%) 41 3, * Cash portion **Incl. pension liabilities

83 Contact information Katri Sundström Vice President, Investor relations Tel

84