Metsä Board. Q4 and FY 2016 Results

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1 Metsä Board Q4 and FY 216 Results

2 Q4 216 in summary Sales declined moderately, and comparable EBIT remained roughly at the same level as in Q3 216 Delivery volumes in paperboard and market pulp declined The annual maintanance shutdown at Husum was extended by one week Average price level in paperboard was supported by an improved price level for Husum s new FBB and the stronger US dollar The market situation was stable 2 Q4 and FY 216 Results

3 Key financials Q4/16 Q3/16 Change Q4/16 vs. Q3/ Change 216 vs. 215 Sales EUR million % 1,72 2,8-14% EBITDA, comparable EUR million % % Operating result, comparable EUR million % % % of sales % , 9, Result before taxes, comparable EUR million % % Earnings per share EUR % % ROCE, comparable % Gross investments EUR million % % Cash flow from operations EUR million % % Dividend per share EUR.19* % *) proposal to AGM 3 Q4 and FY 216 Results

4 216 operating result mainly impacted by Husum Operating result, EUR million Operating result, EUR million EBIT-% 7.7 EBIT-% 7.8 Q3 216 Q EBIT-% 9. EBIT-% 8. FY 215 FY Improved price of Husum s new FBB, good performance in linerboard business, stronger US dollar Lower production and delivery volumes, extended maintenance shutdown at Husum + - Stable development in Finnish mills, positive impact from FX rates after hedges Ramp-up of new FBB machine, technical challenges at Husum, lower avg. price in FBB, declined market pulp prices 4 Q4 and FY 216 Results

5 ROCE-% remained at the same level throughout the year 18% 16% 14% 12% Target >12% from 217 onwards 1% 8% 6% 4% 2% % 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 Comparable ROCE, % 5 Q4 and FY 216 Results

6 Paperboard deliveries in 216 up by 12% Seasonal decline in Q4 42 Folding boxboard Fresh fibre linerboard 1, tonnes Change in paperboard deliveries: -6% Q4/16 vs.q3/16 +9% Q4/16 vs.q4/15 +12% FY16 vs.fy15 6 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Q2 216 Q3 216 Q Q4 and FY 216 Results

7 New folding boxboard production line at Husum in Sweden New folding boxboard production line at Husum started up in February 216 Total delivery volume of Husum s folding boxboard was 12, tonnes Efficiency improvement programme launched in May proceeded as planned Own extrusion coating line will start up in H Q4 and FY 216 Results

8 FX exposure and sensitivities Updated normal level in hedging from 217 onwards: 1% of balance sheet position + 5% of annual net FX flows are hedged (previously 25%) FX exposure by currency, Annual gross amount EUR 1.2bn FX sensitivities before hedges 1 % strengthening of foreign currency vs. EUR will have an impact on Metsä Board s operating result of 6 % 2 % USD Currency Next 12 months 34 % 58 % SEK GBP USD, $ Swedish krona EUR +7 million EUR -4 million Other currencies GBP, EUR +7 million 8 Q4 and FY 216 Results

9 Total capex in 216 was EUR 162 million million Main growth capex in 216 included Husum investment programme, extrusion coating line and equity investment in Metsä Fibre s bioproduct mill Estimated capex in 217 is EUR 65 7 million E Capex Growth capex Depreciation 9 Q4 and FY 216 Results

10 Cash flows turned clearly positive in H2 216 EUR million Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Cash flow from operations, quarterly Cash flow from operations, rolling 12 months Free cash flow, quarterly Free cash flow, rolling 12 months 1 Q4 and FY 216 Results

11 Positive cash flow decreased net debt in H Net gearing, % 51% 44% 32% 42% 54% Financial target in net gearing is maximum of 7% 49% 44%,6,5,4, Interest-bearing net debt / comparable EBITDA 2,1 2, ,8 2 1,5 1,2 2,2 2 1, /16 6/16 9/16 12/ /16 6/16 9/16 12/16 Interest-bearing net debt, EUR million Net gearing, % Interest-bearing net debt, EUR million Interest-bearing net debt / comparable EBITDA (rolling 12 months) 11 Q4 and FY 216 Results

12 Near-term outlook Metsä Board s paperboard delivery volumes are expected to increase in Q1 No planned shutdowns in January March 217 Demand and price levels in fresh fibre paperboards are expected to remain stable 12 Q4 and FY 216 Results

13 Profit guidance Metsä Board s comparable operating result in Q1 217 is expected to improve from Q Q4 and FY 216 Results

14 Summary 216 profitability was negatively impacted by the ramp-up of new folding boxboard production line in Husum Metsä Board s paperboard deliveries are expected to increase Cash flow will improve due to stabilised working capital and less investments Demand for high-quality fresh fibre paperboard is expected to remain good 14 Q4 and FY 216 Results

15 Appendix

16 Quarterly sales and EBIT development Sales, EUR million Comparable EBIT (EUR mill.) and EBIT-% , % 12% ,4 % 8,2 % 9, % 7,6 % 8, % 8,5 % 7,7 % 7,8 % 1% 8% 3 3 6% 2 2 4% Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 2% % FY 215: EUR 2,8 million FY 216: FY 215: -14% EUR 1,72 million EUR 18 million -24% FY 216: EUR 137 million 16 Q4 and FY 216 Results

17 Debt structure and liquidity 31 December 216 Interest-bearing debt, total EUR 688 million Available liquidity, total EUR 423 million Bonds Loans from financial institutions Pension loans Cash and cash equivalents Revolving credit facility Finance leases and other loans Other short-term loans 1 Unraised pension loans 17 Q4 and FY 216 Results Average maturity of long-term loans at 31 December 216 was 2.2 years.

18 Long-term debt and financial costs Maturity schedule in long-term IB debt EUR million Net financial costs (EUR million) and average interest rate (%) ,2% 4,6% 4,2% 3,8% 3,3% 5,5 5, 4,5 4, 3, >222 Long-term interest bearing liabilities, EUR million Committed undrawn credit facilities, EUR million Net financial costs, EUR million Average interest rate at the end of period, % 3, 2,5 18 Q4 and FY 216 Results

19 Market price development in folding boxboard and white-top kraftliner in Europe EUR/ tn Taivekartonki Folding boxboard Valkopintainen White-top kraftliner kraftlaineri Sources: Pöyry Management Consulting ja FOEX Indexes Ltd 19 Q4 and FY 216 Results

20 Pulp price development (PIX) EUR Softwood, USD Hardwood, USD Softwood, EUR Hardwood, EUR '1 '11 '12 '13 '14 '15 '16 USD Source: Foex Indexes Ltd 2 Q4 and FY 216 Results

21 Dividend proposal for 216 is EUR.19 per share Metsä Board s dividend payout target is at least 1/3 of EPS,5,4 EPS and DPS, EUR Dividend proposal for 216:,3.19 per share,2 Totalling EUR 68 million Corresponds 76 per cent of EPS and 73 per cent of comparable EPS,1, Earnings per share Dividend per share 21 Q4 and FY 216 Results

22 Market cap and ownership distribution Market cap and foreign owners 31 December 216 Ownership distribution 31 December 216 EUR million 2 5 % % 15 % Metsäliitto 25 % 42 % Cooperative *) Domestic institutional investors Domestic private investors Foreign owners Market cap, EUR million Share of foreign owners, % *) Metsäliitto Cooperative has 61% of voting rights 22 Q4 and FY 216 Results

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