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Metsä Board Financial statements review 2015
Metsä Board2015 Financial statements review
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• Paperboard delivery volumes increased by 12% compared to 2014
• Operating profit improved 32%
• Strong operating cash flow and balance sheet
• Board proposes to AGM a dividend of 0,17 EUR / share
• Husum investment programme proceeded as planned
• Investment decision on own extrusion line
• Divestment of Gohrsmühle mill and exit from paper production
Q4 20152
Highlights in 2015
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Strong financial performance in 2015
2015 2014 Change
Sales EUR million 2,008 2,008 ---
EBITDA, excl. NRIs EUR million 283 236 20%
% of sales % 14,1 11,8 ↑
Operating result, excl. NRIs EUR million 180 137 31%
% of sales % 9,0 6,8 ↑
Result before taxes, excl. NRIs EUR million 150 100 50%
Earnings per share EUR 0,39 0,20 95%
ROCE, excl. NRIs % 11,3 9,1 ↑
Gross investments EUR million 178 44
Cash flow from operations EUR million 247 198 25%
Q4 20153
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Continuous improvement in profitability
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
%Q4 20154
ROCE-%, excl. non-recurring itemsEBIT-%, excl. non-recurring items
Target over 12% from 2017
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Operating result in Q4 weakened as expected,
sales down due to the decreased paper deliveries
Q4 20155
29 36 28 35 37 43 47 55 35
6%7%
6%7%
7%8%
9%
11%
8%
0%
5%
10%
15%
0
10
20
30
40
50
Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q415
Operating result*EUR million and % of sales
18 21 20 27 32 32 40 48 30
4% 4% 4%5%
6% 6%
8%
10%
7%
0%
5%
10%
15%
0
10
20
30
40
50
Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Pre-tax result* EUR million and % of sales
479 501 494 514 499 526 522 498 462200
300
400
500
600
Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
SalesEUR million
*) excluding non-recurring items
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Paperboard deliveries declined slightly in Q4/2015Growth in 2015 vs. 2014 was 12%
Q4 20156
189 192 197 185 191 197 210 203 204 213 224 224
94 93 9591
112 110120
111130
141 137 131
0
60
120
180
240
300
360
Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Folding boxboard Fresh forest fibre linerboard
1,000 tonnes
Note! Figures exclude wallpaper deliveries
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Paperboard segment in Q4/2015
Q4 20157
Operating result, excl. non-recurring itemsSales
EU
R m
illio
n
EU
R m
illio
n
5161 60 65
51
14%16% 15% 16%
13%
-2%
1%
4%
7%
10%
13%
16%
0
20
40
60
Q4/14 Q1/15 Q2/15 Q3/15 Q4/150
100
200
300
400
Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Q4/2015 (Q3/2015)
• Delivery volumes decreased due to seasonality and were 365 000 tons (373 000)
• Negative impact from the investment related integrate shutdown in Husum was EUR 20 million, of which
slightly less than half was allocated to Paperboard segment
• Price levels remained stable. Metsä Board’s FBB price increase announcement in Europe
came into effect on 1 December.
Operating result, M€
Operating result, M€
EBIT-%
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Non-core operations segment in Q4/2015
Q4 20158
Operating result, excl. non-recurring itemsSales
EU
R m
illio
n
EU
R m
illio
n
0
50
100
150
Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
-1,8 -3,2 -3,4 -1,3 -8,4
-1% -3%
-3%
-2%
-17%
-18%
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
-18
-14
-10
-6
-2
2
Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Q4/2015 (Q3/2015)
• Significant decrease in paper delivery volumes
• Negative impact from the investment related integrate shutdown in Husum was EUR 20 million,
of which slightly over a half was allocated to Non-core operations segment
• Production of uncoated paper sheets ended in Husum
Operating result, M€
Operating result, M€
EBIT-%
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FX exposure by currencyAnnual gross amount EUR 1.1 billion
62 %26 %
9 %3 % USD
SEK
GBP
Othercurrencies
10 % strengthening of foreign currency vs. EUR
will have an impact on Metsä Board’s annual EBIT of
Currency 2015 2016 (est.)
USD, $ EUR +45 million EUR +60 million
GBP, £ EUR +20 million EUR +10 million
Swedish krona EUR -30 million EUR -30 million
9
Annual FX sensitivities to Group EBIT
• FX rate changes in the main foreign currencies were favourable to Metsä Board in 2015
• Hedge accounting costs in 2015 were EUR 22 million (10)
• Hedging duration of the main foreign currency flows is 3–6 months
• Segment figures reflect exchange rate changes rapidly but hedge accounting result in Other operations
balance the impact
Q4 2015
FX exposure and sensitivities
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Strong balance sheet
Equity ratio, %
27%
33%
41%39%
47%
0%
10%
20%
30%
40%
50%
2011 2010 2013 2014 2015
106%
73% 70%
51%
32%
0%
20%
40%
60%
80%
100%
120%
2011 2012 2013 2014 2015
Q4 201510
Net gearing, %
783 625 597 427 333
4,4
3,4
2,9
1,8
1,2
0
1
2
3
4
5
0
200
400
600
800
1000
2011 2012 2013 2014 2015
Net debt, EUR million
Net debt/EBITDA
Net debt, EUR million and Net debt/EBITDA
Target 70%
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Capital expenditure
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015 2016E
Capex Growth capex Depreciation
• Annual capex excluding the growth capex
is EUR 40–60 million
• Main growth capexes in 2015–2016 :
– Husum investment:
EUR 170 million (in 2015: 132 M€)
– Extrusion line:
EUR 38 million (in 2016: 23M€)
– Metsä Fibre’s bioproduct mill:
EUR 25 million* (2016)
Q4 201511
EUR million
*) investment in equity
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Q4 201512
Investment programme in Husum
is completed
• The new FBB production line is in the start-up phase
– Delay in the start-up phase will have a slight negative impact on the
operating result in Q1/2016
– Integrate shutdown had approximately EUR -20 million impact on
Q4/2015 operating result
• Targeted product quality is expected to be reached by Q3/2016
according to the original plan
Folding boxboard production (BM1)
• Full production capacity (400,000 t/a)
reached by the end of 2016
• Deliveries mainly to Americas and
Food service globally – expected volume in
2016 at least 200,000 tonnes
Linerboard production (BM2)
• Capacity 300,000 t/a
• Deliveries to Europe and Americas
• Remaining uncoated paper*
production to linerboard production
by end of 2017
*) current run-rate 100,000 tn/a
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Investment programme in Husum mill, Sweden
Annual EBIT impact EUR +50 million
– Roughly one third will materialise in 2016, full impact in 2018
Gohrsmühle divestment
Annual EBIT impact EUR +20 million
– Roughly half materialised in 2015, full impact in 2016
– Reduces annual sales by EUR 90 million
Q4 201513
Financial impacts of transformation
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Q4 201514
Outlook for Q1/2016
• Total delivery volumes in paperboard will grow
compared to Q4/2015
• Average price level in FBB is expected to decline due
to the start-up volumes from the new FBB production
line
• The delay in the start-up phase of the new FBB
production line will have a negative impact on pulp and
paperboard production volumes
• Total production costs are expected to remain stable
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Metsä Board’s operating result excluding
non-recurring items in Q1/2016 is expected
to remain roughly at the same level as in Q4/2015
Q4 201515
Profit guidance for Q1/2016
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The Board proposes a dividend of 0,17 EUR / share
which equals 44% of EPS
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
2015 CMD16
• Metsä Board’s dividend payout target is at least 1/3 of EPS
• Average pay-out ratio during 2012–2014 has been 40%
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• Solid financial performance in 2015: Improved profitability,
strong operating cash flow and balance sheet
• Metsä Board’s paperboard deliveries grew by 12%
compared to 2014
• Healthy demand in fresh forest fibre paperboards
expected to continue
• Metsä Board’s new FBB production line is in the start-up
phase in Husum. The target is to sell 200,000 tonnes of
new FBB to Americas and food service globally in 2016
• Transformation process to pure paperboard company is
completed
Q4 201517
Summary
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Appendix
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Other operations segment in Q4/2015
Q4 201519
-2 -6 -6 -12 -14 -9 -9 -8
-15
-12
-9
-6
-3
0
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Other operations segment:
Operating result, excl. non-recurring itemsEUR million
• 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, which had a total negative impact of
EUR 22 million in 2015 (-10)
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EBITDA development
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
Q4 201520
EBITDA, excl. non-recurring items
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Financial costs are declining steadily
47 56 39 323,0
3,5
4,0
4,5
5,0
5,5
0
20
40
60
2012 2013 2014 2015
Net financial costs, EUR million
Average interest rate, %
• Net financial costs in FY2015 totalled EUR 32
million (2014: 39)
• Net financial costs in Q4/2015 totalled EUR
4.7 million (Q3/15: 7.1)
• Declining costs due to the lower interest rates
and credit margins as well as decline in IB
debt
• Average interest rate in IB debt in
FY2015 was 3.8% (4.0)
Q4 201521
Net financial costs and average interest rateEUR %
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Strong cash flow from operations
-19
92
51 74 33 56 91 66
-24
78
46 56 9 8 45 8
19
114
157
198
250
214
254 245
-37
57
110155
188
119 118
70
-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
Cash flow from operations, quarterly Free cash flow, quarterly
Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months
Q4 201522
EUR million
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Diversified funding sources, strong liquidity
34 %
39 %
24 %
3%Bonds
Loans from financialinstitutions
Pension loans
Finance leases andother loans
Q4 201523
Debt structureTotal EUR 659 million
31 December 2015
67 %
20 %
13 % Liquid assets andinvestments
Revolving creditfacility
Undrawn pensionloan
Available liquidityTotal EUR 490 million
31 December 2015
Average interest rate of IB at the end of 2015 was 3.8% and average repayment time of long-term borrowing 2.6 years.
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Shares, % (total no. of shares 355,512,746)
24
Votes, % (total no. of votes 1,037,530,115)
16,8
2,2
19,8
40,2
4,5
5,311,2
Households
Non-profitorganisations
Foreigners*
MetsäliittoCooperative
Other companies
Finance andinsurance companies
Public sectororganisations
10,0 4,1
7,0
60,9
1,8
1,9 14,4
Households
Non-profitorganisations
Foreigners*
MetsäliittoCooperative
Other companies
Finance andinsurance companies
Public sectororganisations
Ownership structure on 31 December 2015
* incl. nominee registeredSource: Euroland
Q4 2015
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500
600
700
800
900
1000
1100
2009 2010 2011 2012 2013 2014 2015
Taivekartonki Valkopintainen kraftlaineri
Price development of FBB and white-top kraftliner in
Europe in 2009–2015
Sources: Pöyry Management Consulting ja FOEX Indexes Ltd
EUR/ tn
Folding boxboard White-top kraftliner
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9.2.2016
Price development in pulp (PIX) 2004–2015
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
350
400
450
500
550
600
650
700
750
800
850
900
950
1000
1050
Havu
Lehti
Lehti
Havu
USD
EUR
USD
Source: Foex Indexes Ltd
EUR
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