Metsä Board Investor presentation 1 6/ August 2017

Transcription

1 Metsä Board 3 August 2017

2 Contents 2 1 6/2017 Investment highlights 3 Strategy and financial targets 13 Operating environment and market position 21 Growth in the paperboard business 30 Husum investment programme and update 37 Result for January June Balance sheet and financing 55 Production, capacities and sourcing 63 Product development focus areas 69 Sustainability 74 Shares and owners 80 Appendix 84 Contact information 92

3 Investment highlights

4 4 Metsä Board in brief Focus on premium fresh fibre paperboards Market leader in folding boxboard and white fresh fibre linerboard in Europe, global market leader in coated white fresh fibre linerboard Global sales to over 100 countries and eight production units in Finland and Sweden 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 15% 25% 17 % Sales split in % 10% 75 % Folding boxboard Linerboards Market pulp Others 50% Sales split by region in 2016 EMEA Americas APAC

5 Solutions for wide variety of brand applications In pack On shelf On display On the go In graphics Packaging solutions for consumer goods Retail ready tray solutions Display and point-of-sale solutions Solutions for food service Solutions for graphical uses 5

6 Metsä Board has a broad customer base 50% of Metsä Board s folding boxboard sales are negotiated directly with brand owners BRAND OWNERS CONVERTERS MERCHANTS CORRUGATED BOX MANUFACTURERS FOLDING BOXBOARD WHITE LINERBOARDS 6

7 Metsä Board s paperboards have many competitive advantages Lightweight Up to 30% lighter than competing grades (eg SBS, WLC) with at least the same stiffness Purity and safety Important in food and food service packaging, eg recycled paperboard should not be in direct contact with food products Sustainability Wood raw material is 100% traceable to sustainably managed northern forests Quality Excellent printability and runnability 7

8 Metsä Board s folding boxboard has a three-layer structure Metsä Board s folding boxboards are produced from BCTMP or mechanical pulp, which is used in the middle layer (3) to make the board bulky and light. The two outer fibre layers (2 and 4) are made of chemical pulp, which maximizes the strength of the board. Coating layers (1) can be one or several and on top or both sides. 8

9 Strong profitability development 2016 was negatively impacted by Husum s new FBB machine ramp-up Comparable ROCE-% Comparable EBIT-% % ,4 9,1 11,3 8,1 Target over 12% 10,3 % ,2 6,8 9,0 8,0 9, / /2017 9

10 Strong improvement in productivity over time Personnel Production capacity (tonnes) / employee at current mills Capacity tn / employee Productivity (capacity) Personnel average E

11 High threshold for new producers to enter high-quality paperboard segment High investment costs Limited availability of high yield pulp (e.g. BCTMP) Global brand owners and corrugated box manufacturers not willing to change paperboard suppliers easily in the high-quality segments High speed packaging lines very quality sensitive Requirements for unified brand look and feel globally Sustainability and product safety aspects Skilled people and organizations a crucial success factor 11

12 Clearly lower capex in 2017 EUR million Investments in H were EUR 31 million (H1/16: EUR 103 million) Estimated capex in FY 2017 is EUR million E Maintenance capex Growth capex Depreciation 12 Main growth in capex in : Husum investment programme, extrusion coating line and equity investment in Metsä Fibre s bioproduct mill

13 Strategy and financial targets

14 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 14

15 Strategic cornerstones: 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 15

16 Strategic cornerstones: 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 16

17 Strategic cornerstones: 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 17

18 Financial targets Efficient use of capital and higher profitability through focused growth Comparable ROCE, % Net IB debt / Comparable EBITDA, % Annual growth in total paperboard deliveries, % Target: > 12% 4,8 6,4 9,1 11,3 8,1 3,4 2,9 1,8 Target: < 2.5x 1,2 2,0 Target is to exceed relevant market growth* 4% 7% 10% 13% 12% * Global fresh fibre paperboard demand growth 3-4%/a Dividend policy: Metsä Board aims to distribute at least 50% of its result for the financial period in annual dividends to its shareholders 18

19 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 19

20 Dividend and EPS Metsä Board s dividend payout target is at least 50 per cent of the result for the financial period Dividend for 2016: EUR 0.19 per share Totalling EUR 68 million 0,50 0,40 0,30 0,20 0,10 EPS and DPS, EUR Corresponds to 76 per cent of EPS 0, Earnings per share Dividend per share 20

21 Operating environment and market position

22 Global trends driving growth in packaging Growing consumption Stronger demand for sustainable packaging Greater significance of resource efficiency drives circular economy and life-cycle thinking Increasing regulation brings additional obligations Social responsibility throughout the value chain CMD Joukio

23 The global paperboard packaging market is about USD 260 billion The total packaging market is USD 840 billion Average annual growth rate of paperboard packaging USD bn % p.a. Paperboard packaging USD 260 bn Other wood fibre based packaging Non-fibre based packaging Roughly half is made of fresh fibres Source: Smithers Pira

24 Global cartonboard* market is 36 Mt/a of which folding boxboard market is about 9 Mt/a North America 6 Mt/a EMEA 8 Mt/a Avg. growth rate for folding boxboard is 3 4%/a Folding boxboard Other fresh fibre grades (e.g. SBS, CUK) Recycled grades Lat.Am. 2 Mt/a APAC 20 Mt/a 24 * Excluding liquid packaging board, cup & plate stock, liner and uncoated recycled board. Source: Metsä Board estimates

25 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 25 * Base board (e.g. SBB or FBB) only, excl. other laminate materials such as aluminium and PE. Source: Metsä Board estimates

26 Global white linerboard market is 10.5 Mt/a Global white coated kraftliner market is 1 Mt/a White coated kraftliner White uncoated kraftliner White recycled liner Americas 3 Mt/a Americas 3 Mt/a EMEA 4,5 Mt /a APAC 3 Mt/a Global containerboard market is 155 Mt/a, of which White linerboards 7% Brown kraftliner 17% Brown testliner 37% 26 Fluting 39% Source: Metsä Board estimates

27 Metsä Board has a strong position in Europe Largest Folding Boxboard Producers in Europe Total capacity: 3.7M tonnes Largest White Fresh Fibre Linerboard Producers in Europe Total capacity: 2.2M tonnes Metsä Board 36% Metsä Board 31% Stora Enso 20% Smurfit Kappa 22% Kotkamills Oy 11% Mondi 14% Mayr-Melnhof 9% BillerudKorsnäs 10% International Paper 7% SCA 7% Others 17% Others 15% Sources: Company information, Pöyry Management Consulting Oy Q2/2017

28 Market price development in folding boxboard and white-top kraftliner in Europe EUR/ tn Folding boxboard White-top kraftliner 28 Sources: RISI, Inc. & FOEX Indexes Ltd

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

30 Growth in the paperboard business

31 Globally growing paperboard market PAPERBOARD 5-YEAR GROWTH FORECAST EMEA Americas APAC Folding boxboard (FBB) Food service board (FSB) Coated white kraftliner n/a Uncoated white kraftliner Other fresh fibre paperboards (eg SBS, CUK) Recycled paperboards (eg WLC) Source: Metsä Board s own estimate n/a +2%/a or more +1 to +2%/a -1 to +1%/a -1 to -2%/a -2%/a or more 31

32 Metsä Board s growth exceeds clearly the average market growth Metsä Board s annual paperboard deliveries, 1,000 tonnes target 32 Fresh fibre linerboard Folding boxboard

33 Most important growth area is Americas 300 Actual and targeted deliveries to Americas ,000 tonnes target Folding boxboard Fresh fibre linerboard 33

34 Metsä Board's regional goals GROWTH IN THE AMERICAS IN THE COMING YEARS MAINTAIN THE STRONG MARKET POSITION IN EUROPE FOCUS ON PREMIUM PAPERBOARD SEGMENTS IN THE ASIA-PACIFIC REGION AMERICAS SHARE OF SALES IN % EMEA SHARE OF SALES IN % APAC SHARE OF SALES IN % 34

35 Metsä Board's growth drivers in Europe GROWTH IN THE AMERICAS IN THE COMING YEARS AMERICAS SHARE OF SALES IN % MAINTAIN THE STRONG MARKET POSITION IN EUROPE EMEA SHARE OF SALES IN % EUROPE A leading market position with strong, FOCUS long-lasting ON customer relationships PREMIUM especially with brand PAPERBOARD owners SEGMENTS IN Safety THE is increasing ASIA-PACIFIC significance in food REGION packaging Paperboard is a strong alternative to plastics and aluminium Growing APAC e-commerce increasing SHARE OF demand SALES IN 2016 for high-end white-top 8 % kraftliners 35

36 Metsä Board's growth drivers in Americas GROWTH IN THE AMERICAS IN THE COMING YEARS AMERICAS SHARE OF SALES IN % MAINTAIN FOCUS ON THE STRONG PREMIUM AMERICAS MARKET PAPERBOARD POSITION Local production IN not able to meet rising SEGMENTS trend of IN EUROPE lightweighting THE ASIA-PACIFIC REGION Non-integrated converters looking for alternative board suppliers Paperboard a strong alternative to plastics especially in food service applications EMEA APAC SHARE Growing OF SALES e-commerce IN 2016 increasing demand SHARE OF for SALES IN high-end % white-top kraftliners 8 % 36

37 Husum investment programme and update

38 Husum investment programme Launched at the end of 2014 Two paper machines closed in 2015 One paper machine converted to produce linerboard (BM2) New folding boxboard machine (BM1) started up in February 2016 Enhancements to the pulp mill and the mill site s own port New extrusion coating line started up in April 2017 Folding boxboard production Capacity approximately 400,000 t/a Deliveries mainly to Americas and food service globally Linerboard production Capacity approximately 270,000 t/a Deliveries to Europe and Americas 38

39 Investment in PE coating EUR 38 million investment, capacity of 100,000 t/a Targeted at food packaging and food service applications PE-coated * paperboard is an alternative to plastics and the mainstream barrier solution today PE fulfills important barrier requirements: Good water and moisture barrier Grease barrier (short time e.g. for food service) Good heat sealing properties Husum PE coating line utilises latest technology and benefits from a fully integrated production site Supports growth in a new customer segment 39

40 The integrated mill model improves efficiency and sustainability of the supply chain Husum integrated mill: Certified wood resources Raw material Own pulp mill at the mill site Paperboard production (BM1) Extrusion coating line (EM1) Own deep water port Raw Pulp material Raw Paperboard material Raw Extrusion material Raw Logistics material 40

41 Targeted sales and sales split for new paperboard volume from Husum mill A total of 400,000 tonnes of new FBB capacity Incremental capacity in linerboard *) 1,000 tonnes Deliveries in 2015 Folding boxboard to Americas Food service board globally Linerboard to Europe and Americas Targeted deliveries in *) Until July 2016 the paperboard machine (BM2) produced simultaneously fine paper reels.

42 Husum folding boxboard update post H1/2017 Capacity utilisation rate in FBB during H was 70% In June, both production and deliveries were over 85% of monthly capacity The target of having the capacity in full use by end of 2018 is intact Production costs per tonne produced still higher compared to Finnish mills Geographical sales mix burdened the average price in FBB Deliveries of own PE-coated paperboards to customers have started 42

43 Potential to improve profitability of Husum At least EUR 100 million EBIT improvement from 2016 to ,000 tonnes 2016 of pulp Efficiency >95% with 2019 production lost in 2016 Restructuring: improvement programme FBB capacity utilisation rate normal sales price + EUR 25 million + EUR 5 million + EUR >70 million 43

44 Result for January June 2017

45 Q in summary Good demand for high-quality paperboards continued Stable or rising market price levels Metsä Board s paperboard deliveries up by 11% from Q The average price of folding boxboard was burdened by Husum s geographic sales mix Steady working capital despite the strong sales growth New extrusion coating line in Husum started up 45

46 Key financials Q2/17 Q1/17 Change Q2/17 vs. Q1/17 H1/17 H1/16 Change H1/17 vs. H1/16 Sales EUR, m % % 1,720 EBITDA* EUR, m % % 231 Operating result* EUR, m % % 138 % of sales % Result before taxes* EUR, m % % 107 Earnings per share EUR % % 0.25 ROCE* % Capex EUR, m % % 162 Cash flow from operations EUR, m % IB Net debt, at end of period EUR, m % % 464 *comparable

47 All-time high in paperboard deliveries 500 Folding boxboard White fresh fibre linerboard 1,000 tonnes Growth in total paperboard deliveries: +11% Q2/17 vs. Q1/17 +18% H1/17 vs. H1/16 +12% FY16 vs. FY15 0 Q Q Q Q Q Q Q Q Q Q FY 2015: 1.4m tonnes FY 2016: 1.6m tonnes

48 Sales and operating result Sales EUR million Comparable operating result EUR million and % EUR million EUR million ,0 % 8,5 % 7,7 % 7,8 % 10,2 % 9,2 % 12% 10% 8% 6% 4% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 2% 0% H1 2016: EUR 859 million +7% H1 2017: EUR 919 million H1 2016: EUR 71 million +25% H1 2017: EUR 89 million 48

49 Impacts on operating result Q vs. Q and H vs. H Comparable operating result, EUR million Q vs. Q EBIT-% 10.2 EBIT-% 9.2 Q Q Comparable operating result, EUR million H vs. H EBIT-% 8.2 EBIT-% 9.7 H H Growing delivery volumes in paperboard and positive development in market pulp - Geographic sales mix of Husum s FBB and product mix of Husum s white linerboards, maintenance at Finnish mills + Positive development at Finnish paperboard mills and in market pulp, positive impact from FX rates including hedges - Increased latex price 49 WTKL = white-top kraftliner FBB = folding boxboard

50 Return on capital employed, % 18% 16% 14% 12% Target >12% 10% 8% Q2/17: 10.3% 6% 4% 2% 0% Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 50 Comparable ROCE, %

51 Cash flows clearly positive Working capital remained nearly unchanged despite the strong growth in Q EUR million Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 51 Cash flow from operations, quarterly Cash flow from operations, rolling 12 months Free cash flow, quarterly Free cash flow, rolling 12 months

52 Stable balance sheet 600 Net gearing, % 44% 54% 49% 44% 44% 45% 0,6 0,5 600 Interest-bearing net debt / comparable EBITDA 2,0 2,1 2,1 2,0 3,0 Financial target: <2.5x 2,0 1,9 2, % 0,4 0, , , ,0 0, /16 9/16 12/16 3/17 6/ /16 9/16 12/16 3/17 6/17 0,0 Interest-bearing net debt, EUR million Net gearing, % Interest-bearing net debt, EUR million Interest-bearing net debt / EBITDA (rolling 12-month) 52

53 Near-term outlook Price levels in FBB are expected to be stable, several linerboard producers have announced price increases. Pulp market expected to remain in balance Metsä Board s Q3 paperboard delivery volumes are expected to stay flat compared to Q2 Focus on improving the geographic sales mix in Husum s folding boxboard and increase the share of North American sales, in particular Start-up phase of Metsä Fibre s new bioproduct mill in August is expected to have only a minor negative impact on Metsä Board s result 53

54 Profit guidance Metsä Board's comparable operating result for the third quarter of 2017 is expected to improve slightly compared to the second quarter of

55 Balance sheet and financing

56 Strong balance sheet 50% 40% 30% 20% 10% 0% Equity ratio, % 48% 51% 46% 41% 39% / % 70% 60% 50% 40% 30% 20% 10% 0% Net gearing, % 70% 51% 44% 45% 32% / Net debt, EUR million and Net debt / Comparable EBITDA 2,9 1,8 1,2 2, /2017 Net debt, EUR million 2, Net debt/ebitda (rolling 12 months) 56

57 Debt structure and liquidity 30 June 2017 Interest-bearing debt, total EUR 640 million Available liquidity, total EUR 343 million Bonds 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 57 Average maturity of long-term loans on 30 June 2017 was 2.0 years.

58 Maturity schedule in long-term IB debt EUR million Long-term interest-bearing debt (total EUR 558 million) and committed undrawn credit facilities 30 June >2021 Long-term interest bearing liabilities Committed undrawn credit facilities 58

59 Debt programmes 30 June 2017 Metsä Board s significant debt securities issued and outstanding at 30 June 2017 Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate* ), % Maturity EUR 225 million bond Issue Syndicated credit facility EUR 51 million bilateral loans EUR 23 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 2017 is 3.3%. Metsä Board s principal long-term liquidity reserves at 30 June 2017 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 59

60 Steadily decreasing net financial costs EUR million % 60 5,0 50 4,6 4,5 40 4,2 30 3,8 4,0 20 3,3 3,3 3, , H1/2017 Net financials in H were EUR -12 million (H1/16: EUR -14 million) Net exchange gains and losses in H1 amounted to EUR -0.6 million (EUR -0.3 million) 60 Net financial costs, EUR million Average interest rate at the end of period, %

61 FX exposure and sensitivities Impact of FX rate changes including hedges Q vs. Q1 2017: EUR -1.5 million H vs. H1 2016: EUR 11 million Annual transaction exposure EUR 1.1 billion 35 % 5 % 2 % USD 58 % SEK GBP Other currencies FX sensitivities excluding hedges 10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board s EBIT of Currency USD, $ SEK GBP, Next 12 months EUR +70 million EUR -40 million EUR +7 million 61 Hedging policy: 100% of balance sheet position and 50% of annual net FX flows

62 Metsä Board 's credit rating BB+ Ba1 BB Ba2 BB- Ba3 Standard & Poor s Moody s Positive Stable B+ B1 B B2 B- B3 CCC+ Caa1 CCC Caa

63 Production, capacities and sourcing

64 Metsä Board s production units 64 Integrated mills Husum, Sweden Kemi 400,000 t/a folding boxboard 270,000 t/a white linerboard 730,000 t/a chemical pulp 410,000 t/a white linerboard 620,000 t/a chemical pulp by Metsä Fibre Äänekoski Joutseno 240,000 t/a folding boxboard 530,000 t/a chemical pulp by Metsä Fibre 320,000 t/a BCTMP 690,000 t/a chemical pulp by Metsä Fibre Non-integrated mills Kyro (Kyröskoski) Simpele 190,000 t/a folding boxboard 280,000 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 is 400,000 t/a long Kemi Äänekoski Kaskinen Simpele Tako Joutseno Kyro

65 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, ,000 65

66 Pulp capacity Metsä Board pulp mills Country Chemical pulp BCTMP Total Husum Sweden Joutseno Finland Kaskinen Finland Total ,390 Metsä Fibre pulp mills Country Chemical pulp BCTMP Total Äänekoski Finland Kemi Finland Rauma Finland Joutseno Finland Total 2,480 2,480 66

67 Deliveries by region in 2016 Folding boxboard Fresh fibre linerboard 11% 1% 16% 48% 32% 60% 25% Western Europe 7% Eastern Europe Americas 67 Asia and Pacific

68 Sourcing 2016 Electricity sourcing (total 2,438 GWh) Primary energy used (total 12.0 TWh) Wood sourcing by country (total 4.6 million cubic metres) Purchased energy 45% Outsourced generation 3% Own generation 20% Hydro 4% Gas 7% Peat Coal 2% Oil 2% 2% Russia 13% Baltic countries 18 % Sweden 38% Through PVO shareholding 32% Nuclear power 22% Woodbased 60% Finland 31% 68

69 Product development focus areas

70 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 70

71 Lighter-weight paperboards: Better with Less SBB Solid bleached board Average FBB Folding boxboard Metsä Board lightweight paperboard WLC White lined chipboard 71

72 Metsä Board Barrier boards roadmap Bio based barrier Bio based light barrier Bio based barrier Non bio-based barrier Outsourced PE extrusion coating Own PE extrusion coating

73 Barrier boards types BIODEGRADABLE RENEWABLE Bio based, bio-degradable coating, i.e. starch, PLA etc. Bioplastic coating, i.e. green PE Oil based, bio-degradable coating Latex based dispersion coating PE extrusion coating NON-RENEWABLE Metsä Board s baseboard is bio based, biodegradable and compostable. NON-BIODEGRADABLE 73

74 Sustainability

75 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. 75

76 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

77 Metsä Board s sustainability targets WOOD THE SHARE OF CERTIFIED WOOD >80% PERFORMANCE % BIOENERGY SHARE OF TOTAL PURCHASED ENERGY 51% WELL-BEING SICKNESS ABSENTEEISM <3% PERFORMANCE % CLIMATE FOSSIL CO 2 EMISSIONS PER PRODUCT TONNE % PERFORMANCE % LOGISTICS ENSURE THE SUSTAINAINABILITY OF MAIN LOGISTIC FLOWS PERFORMANCE % SAFETY AT WORK -10% LOST-TIME ACCIDENTS FREQUENCY ANNUALLY PERFORMANCE % ENERGY ENERGY EFFICIENCY IMPROVEMENT PERFORMANCE % RESOURCE EFFICIENCY 12% -17% PROCESS WATER USE PER PRODUCT TONNE PERFORMANCE % 77

78 Metsä Board scored again high in CDP in 2016 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

79 Increased regulation to ensure product safety 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 was published in March 2017 The draft focuses on mineral oil migration from recycled fibre based packaging materials to food EU notification is expected to start during autumn

80 Shares and owners

81 Market cap and ownership distribution Metsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki Market cap and foreign owners 30 June 2017 Ownership distribution 30 June 2017 EUR million % / % 18 % Metsäliitto Cooperative 22 % 42 % Domestic institutional investors Domestic private investors * Foreign owners Market cap, EUR million Share of foreign owners, % * Metsäliitto Cooperative has 61% of voting rights 81

82 Ownership structure on 30 June 2017 Shares, % (total no. of shares 355,512,746) Votes, % (total no. of votes 1,037,530,115) 4 % 2 % 3 % 13 % 42 % Metsäliitto Cooperative Foreign owners* Households Public sector organisations 11 % 1 % 4 % 1 % 7 % Metsäliitto Cooperative Public sector organisations Households Foreign owners* 18 % 18 % Finance and insurance companies Non-profit organisations 15 % 61 % Non-profit organisations Finance and insurance companies Other companies * incl. nominee registered Other companies 82 Metsä Board has two series of shares: 35,886,682 A-shares and 319,626,064 B-shares. A-share entitles to 20 votes and B-share entitle to 1 vote at a General Meeting.

83 Transformation has increased shareholder value Enterprise value, EUR million Dividend and payout ratio % EUR mill EUR 0,20 0,16 0,12 0,08 0,04 90 % 75 % 60 % 45 % 30 % 15 % , % Net debt Market capitalization Dividend, EUR Dividend/EPS, % 83

84 Appendix

85 Corporate Management Team Mika Joukio CEO Chairman of CMT since 2014 Share ownership 261,884 Jussi Noponen CFO Member of CMT since 2016 Share ownership: 50,000 Sari Pajari SVP, Marketing and Sales Member of CMT since 2011 Share ownership: 45,740 Ari Kiviranta SVP, Development Member of CMT since 2014 Share ownership: 16,236 Susanna Tainio SVP, HR Member of CMT since 2015 Share ownership 20,505 Harri Pihlajaniemi was appointed SVP, Production, and a member of the Corporate Management Team on 6 June He will start by 6 September 2017 at the latest. Share ownerships are B-shares 85

86 METSÄ GROUP Sales EUR 4.7 billion Personnel 9,300 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 1.5 billion Personnel: 860 Sales: EUR 1.0 billion Personnel: 2,700 Sales: EUR 0.5 billion Personnel: 1,520 Sales: EUR 1.7 billion Personnel: 2,500 Sales: EUR 1.6 billion Personnel: 1,230 Metsäliitto Cooperative holding 100% Metsäliitto Cooperative holding 100% Metsäliitto Cooperative holding 100% Metsäliitto Cooperative holding 42%, 61% of votes Metsäliitto Cooperative holding 50.2%, Metsä Board 24.9%, Itochu Corporation 24.9% 86

87 Metsä Board s associated company Metsä Fibre builds a Bioproduct Mill INVESTMENT, EUR 1.2 billion WOOD USAGE, m 3 /a 6.5 million CERTIFIED WOOD 90 percent CAPACITY, tonnes/a 1.3 million METSÄ BOARD INVESTED EUR 24.9 MILLION IN EQUITY COMPANY S PULP BALANCE WILL GROW BY 200,000 TONNES/A. ELECTRICITY, Wh/a 1.8 tera ELECTRICITY SELF SUFFICIENCY 240 percent START UP August

88 Restructuring to a pure-play paperboard company from 2005 onwards From 26 to 8 production units Paper capacity from 5 million tonnes to zero Paperboard capacity from 1.1 million tonnes to 2.0 million tonnes Major divestments incl. Graphic Papers and Map Merchants Paperboard (incl. market pulp) 100% of sales from 2017 onwards Major improvement in profitability and financial position Today strong position and growing #1 producer of folding boxboard in Europe #1 producer of coated white-top kraftliner globally Husum investment programme enabling significant growth steps 88

89 M&A activity Acquisitions Biberist Paper Mill Simpele Mill UK Paper Modo Paper Zanders Kemiart Liners (53 %) Chemicals Business Divestments 89 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

90 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

91 Sales and EBIT-% development ,6 6,8 9,0 8,0 9,0 7,0 % ,2 5, ,8 1,1 2,4 3,6 3,0 1,0 1, ,1 6, ,0 5,0 7,0 Sales, EUR million Comparable EBIT % 91

92 Contact information Katri Sundström Vice President, Investor relations Tel

93