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Metsä BoardInvestor presentation 1–9/2017
1 November 2017
Investor presentation 1–9/20172
ContentsInvestment 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
January–September 2017 Results 43
Production, capacities and sourcing 57
Product development focus areas 63
Sustainability 68
Shares and owners 74
Appendix 78
Contact information 87
Investment highlights
• 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
• A growth company with good profitability• Global sales to over 100 countries from eight production units
in Finland and Sweden• Customers are brand owners, converters, merchants and
manufacturers of corrugated products• Strong fibre know-how and self-sufficiency in pulp
Investor presentation 1–9/20174
Metsä Board in brief
50%25%
15%
10%
Sales split in 2016
Folding boxboardLinerboardsMarket pulpOthers
75 %
17 %
8 %
Sales split by region in 2016
EMEA
Americas
APAC
Metsä Board’s paperboard offers solutions for widevariety 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
Investor presentation 1–9/20175
50% of Metsä Board’s folding boxboard sales are negotiated directly with brand owners
6
Metsä Board has a broad customer base
BRAND OWNERS
FOLDING BOXBOARD WHITE LINERBOARDS
MERCHANTS
CORRUGATED BOX MANUFACTURERS
CONVERTERS
Investor presentation 1–9/2017
Lightweighting• Metsä Board’s folding boxboard can be up to 30% lighter compared to competing grades (SBS, WLC)
Purity and safety of fresh fibre paperboards • Important especially for food and food service packaging
• Whiteness and quality - upscale consumer experience
Sustainability• Fresh fibres are recyclable and renewable material
• Wood raw material is 100% traceable to sustainably managed northern forests
• Strong and recognised credentials in environmental performance, water and energy efficiency and actions to combat climate change
Metsä Board’s paperboards have manycompetitive advantages
Investor presentation 1–9/20177
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
Three-layer structure makes the board lightmaintaining the stiffness
Investor presentation 1–9/2017
Strong profitability development2016 was negatively impacted by Husum’s new FBB machine ramp-up
Comparable ROCE-%
Investor presentation 1–9/20179
Comparable EBIT-%
6,4
9,1
11,3
8,1
10,6
0
2
4
6
8
10
12
2013 2014 2015 2016 1-9/2017
%
5,2
6,8
9,08,0
10,0
0
2
4
6
8
10
2013 2014 2015 2016 1-9/2017%
Target over 12%
Investor presentation 1–9/201710
Strong improvement in productivity over time
1 000
1 100
1 200
1 300
1 400
1 500
1 600
1 700
1 800
1 900
2 000
1 000
1 300
1 600
1 900
2 200
2 500
2 800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E
Productivity (capacity) Personnel average
Production capacity (tonnes) / employee at current millsPersonnel
Capacity tn /employee
• Investments in January–September were EUR 39 million (1–9/16: EUR 119 million)
• Estimated capex in 2017 is EUR 65–70 million
Clearly lower capex in 2017
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015 2016 2017E
Maintenance capex Growth capex Depreciation
EUR million
11 Investor presentation 1–9/2017
Main growth in capex in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill
• 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
Investor presentation 1–9/201712
High threshold for new producers to enter high-quality paperboard segment
Strategy and financialtargets
Values
• Responsible profitability• Reliability• Cooperation• Renewal
Strategic cornerstones
• Focus• Growth• Profitability
Metsä Board’s vision is to be the preferred supplier of premium paperboards creating value for customers globally
Investor presentation 1–9/201714
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
Investor presentation 1–9/201715
Strategic cornerstones: 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
Investor presentation 1–9/201716
Strategic cornerstones: 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
Investor presentation 1–9/201717
Strategic cornerstones: Growth
Financial targets and actuals
Comparable ROCE, %
6,4
9,1
11,3
8,1
10,6
2013 2014 2015 2016 1-9/17
2,9
1,8
1,2
2,01,7
2013 2014 2015 2016 1-9/17
Net debt / Comparable EBITDA, %
7%
10%
13% 12%
17%
2013 2014 2015 2016 1-9/17
Annual growth in total paperboard deliveries, %
Target is to exceed relevant market growth*
Dividend policy: Metsä Board aims to distribute at least 50% of its result for the financial period in annual dividends to its shareholders
Target: >12%
Target: <2.5×
* Global fresh fibre paperboard demand growth 3-4%/a
Investor presentation 1–9/201718
• 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
Investor presentation 1–9/201719
Main priorities and actions to achieve financial targets
• 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– Corresponds to 76 per cent of EPS 0,00
0,10
0,20
0,30
0,40
0,50
2012 2013 2014 2015 2016
EPS and DPS, EUR
Earnings per share Dividend per share
Investor presentation 1–9/201720
Dividend and EPS
Operating environment andmarket position
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
Investor presentation 1–9/201722
The global paperboard packaging market is about USD 260 billion
The total packaging market is USD 840 billion
Investor presentation 1–9/201723
Average annual growth rate of paperboard packaging
Paperboard packaging
Other wood fibre based packaging
Non-fibre based packaging
0
50
100
150
200
250
300
350
USD 260 bn
USD bn
Source: Smithers Pira
+ 3% p.a.
Roughly halfis made of fresh fibres
24
Global cartonboard* market is 36 Mt/a of which folding boxboard market is about 9 Mt/a
Source: Metsä Board estimates
*Excluding liquid packaging board, cup & plate stock, liner and uncoated recycled board.
APAC20 Mt/a
EMEA8 Mt/a
NorthAmerica
6 Mt/a
Lat.Am.2 Mt/a
Folding boxboard
Other fresh fibre grades (e.g. SBS, CUK)
Recycled grades
Avg. growth rate for folding boxboard is
3–4%/a
Investor presentation 1–9/2017
25
Global food service board* market is 3.5 Mt/a
* Base board (e.g. SBB or FBB) only, excl. other laminate materials such as aluminium and PE.
Cups
Plates
Cartons
APAC1.0 Mt/a
EMEA0.9 Mt/a
Americas1.6 Mt/a
Avg. growth rate for food service board is
3–5%/a
Source: Metsä Board estimatesInvestor presentation 1–9/2017
26Source: Metsä Board estimates
Investor presentation 1–9/2017
Americas3 Mt/a
Global white linerboard market is 10.5 Mt/aGlobal white coated kraftliner market is 1 Mt/a
Global containerboard market is 155 Mt/a, of which
• White linerboards 7%• Brown kraftliner 17%
• Brown testliner 37%
• Fluting 39%
Americas3 Mt/a
EMEA4,5 Mt /a
APAC3 Mt/a
White uncoated kraftliner
White coated kraftliner
White recycled liner
Metsä Board has a strong position in Europe
Largest Folding Boxboard Producers in EuropeTotal capacity: 3.6M tonnes
Largest White Fresh Fibre Linerboard Producers in EuropeTotal capacity: 2.1M tonnes
Sources: Company information, Pöyry Management Consulting Oy Q3/2017
17%
7%
9%
11%
20%
37%
0 300 600 900 1200 1500
Others
International Paper
Mayr-Melnhof
Kotkamills Oy
Stora Enso
Metsä Board
11%
8%
11%
15%
23%
32%
0 200 400 600 800
Others
SCA
BillerudKorsnäs
Mondi
Smurfit Kappa
Metsä Board
27Investor presentation 1–9/2017
500
600
700
800
900
1000
1100
1200
2009 2010 2011 2012 2013 2014 2015 2016 2017
Folding boxboard White-top kraftliner
Investor presentation 1–9/201728
Market price development in folding boxboard and white-top kraftliner in Europe
EUR/ tn
Sources: RISI, Inc. & FOEX Indexes Ltd
350400
450500550600
650700750
800850900950
10001050
'10 '11 '12 '13 '14 '15 '16 '17350400
450500550600
650700750
800850900950
10001050
Source: Foex Indexes Ltd
Softwood, USD
Softwood, EUR
Hardwood, EUR
Hardwood, USD
USDEUR
Pulp price development (PIX)
29 Investor presentation 1–9/2017
Growth in the paperboardbusiness
Investor presentation 1–9/201731
Metsä Board operates in growing paperboard marketAnnual global demand growth for folding boxboard and white kraftliners is estimated to be 3–4%
PAPERBOARD 5-YEAR GROWTH FORECAST EMEA Americas APAC
Folding boxboard (FBB)
Food service board (FSB)
Coated white kraftliner n/a
Uncoated white kraftliner n/a
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: RISI, CEPI, Pöyry and trade statistics among others
Metsä Board’s growth clearly exceeds averagemarket growth
32
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2012 2013 2014 2015 2016 LTM 2018 target
Fresh fibre linerboard Folding boxboard
Metsä Board’s annual paperboard deliveries, 1,000 tonnes
Investor presentation 1–9/2017
Investor presentation 1–9/201733
Most important growth area is Americas
0
50
100
150
200
250
300
2011 2012 2013 2014 2015 2016 LTM 2018 target
Folding boxboard Fresh fibre linerboard
300
200
1,00
0 to
nnes
Actual and targeted deliveries to Americas
34
Metsä Board's regional goals
GROWTH IN THE AMERICAS IN THE COMING YEARS
MAINTAINTHE STRONG MARKET POSITION IN EUROPE
FOCUS ON PREMIUM PAPERBOARDSEGMENTS IN THE ASIA-PACIFIC REGION
AMERICASSHARE OF SALES IN 2016
17%
EMEASHARE OF SALES IN 2016
75%
APACSHARE OF SALES IN 2016
8%
Investor presentation 1–9/2017
35
GROWTH IN THE AMERICAS IN THE COMING YEARS
MAINTAINTHE STRONG MARKET POSITION IN EUROPE
FOCUS ON PREMIUM PAPERBOARDSEGMENTS IN THE ASIA-PACIFIC REGION
AMERICASSHARE OF SALES IN 2016
17%
EMEASHARE OF SALES IN 2016
75%
APACSHARE OF SALES IN 2016
8 %
EUROPE• A leading market position with
strong, long-lasting customerrelationships – especially withbrand owners
• Safety is increasing significancein food packaging
• Paperboard is a strong alternative to plastics andaluminium
• Growing e-commerceincreasing demand for high-end white-top kraftliners
Investor presentation 1–9/2017
Metsä Board's growth drivers in Europe
36
GROWTH IN THE AMERICAS IN THE COMING YEARS
MAINTAINTHE STRONG MARKET POSITION IN EUROPE
FOCUS ON PREMIUM PAPERBOARDSEGMENTS IN THE ASIA-PACIFIC REGION
AMERICASSHARE OF SALES IN 2016
17%
EMEASHARE OF SALES IN 2016
75 %
APACSHARE OF SALES IN 2016
8 %
AMERICAS• Local production not able to meet rising trend of
lightweighting• Non-integrated converters looking for alternative
board suppliers• Paperboard a strong alternative to plastics –
especially in food service applications• Growing e-commerce increasing demand for
high-end white-top kraftliners
Investor presentation 1–9/2017
Metsä Board's growth drivers in Americas
Husum investmentprogramme and update
Investor presentation 1–9/201738
• 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
Husum investment programme
• EUR 38 million investment, capacity of 100,000 t/a• Targeted at food packaging and food service applications• PE-coated (polyethylene) 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
Investment in PE coating
Investor presentation 1–9/201739
Raw materialLogistics
Raw materialExtrusion
Raw materialPaperboard
Raw materialPulp
40
The integrated mill model improves efficiency and sustainability of the supply chain
• Certified wood resources
• Own deep water port
• Own pulp mill at the mill site
• Paperboard production (BM1)
• Extrusion coating line (EM1)
Raw materialRaw materialHusum integrated mill:
Investor presentation 1–9/2017
• Capacity utilisation rate in July–September 2017 was 76%– FY 2017 estimate is slightly below 75%– Target is to have capacity in full use by the end of 2018
• Annual maintenance shutdown in October• Improved average price of folding boxboard• Production costs per tonne are still higher than at the Finnish mills• Metsä Board’s FBB/FSB deliveries to Americas in 1–9/2017 up by
65% compared to corresponding period last year
Investor presentation 1–9/201741
Update on Husum’s folding boxboard
42
Potential to improve profitability of HusumAt least EUR 100 million EBIT improvement from 2016 to 2019
2016 2019
+ EUR
25 million+ EUR
5 million+ EUR
>70 million
120,000 tonnesof pulp
productionlost in 2016
Restructuring:
Efficiency improvementprogramme
FBB capacityutilisation rate
>95% withnormal sales
price
Investor presentation 1–9/2017
Result for January−September 2017
January–September 2017: Increasing sales and improved operating result
SalesEUR million
436 423 440 422 445 474 4790
100
200
300
400
500
Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17
+8%
35 36 34 33 45 44 50
8,0 % 8,5 %7,7 % 7,8 %
10,2 %9,2 %
10,5 %
0%
2%
4%
6%
8%
10%
12%
0
10
20
30
40
50
Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17
+33%
Investor presentation 1–9/201744
Comparable operating resultEUR million and %
1–9 2016:EUR 1,299 million
EU
R m
illio
n
EU
R m
illio
n
1–9 2017:EUR 1,397 million
1–9 2016:EUR 105 million
1–9 2017:EUR 139 million
Strong growth in paperboard deliveries
204 213 224 224 227 250 266 245 265304 299
130 141 137 131 142148 148
143163
173 170
0
100
200
300
400
500
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
White fresh fibre linerboard
Folding boxboard
1,00
0 to
nnes
45 Investor presentation 1–9/2017
FY 2015:1,404 tonnes
FY 2016:1,569 tonnes
Q1-Q3 2017:1,375 tonnes
(Q1-3/16: 1,181)
+17%
Q1-Q3 2016
Q1-Q3 2017
Investor presentation 1–9/201746
Q3 2017 in summary(vs. Q2 2017)
• Higher production volumes • Increased average price of folding boxboard• Paperboard deliveries roughly at level of Q2• Cash flow from operations strong due to improved
result and good working capital performance
• Stable or rising market price levels in local currencies
– Metsä Board announced price increases in Europe in FBB and white linerboard
• Metsä Fibre’s new bioproduct mill started as planned in August
• FX rate changes including hedges had a small positive impact in Q3/17 vs. Q2/17 • The positive impact from hedging will start to dilute towards the end of the year• Annual sensitivities have changed due to the changes in FX rates
FX exposure and sensitivities
58 %34 %
6 %2 %USD
SEK
GBP
Othercurrencies
Annual transaction exposureEUR 1.1 billion
FX sensitivities excluding hedges
10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s EBIT of
Currency Next 12 months
USD, $ EUR +64 million
SEK EUR -38 million
GBP, £ EUR +7 million
47 Investor presentation 1–9/2017 Hedging policy: 100% of balance sheet position and 50% of annual net FX flows
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
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 Q3/17
Comparable ROCE, %Investor presentation 1–9/201748
Return on capital employed, %
Target >12%
Q3/17:11.5%
Cash flows clearly positiveStrong cash flow in Q3 due to improved result and good working capital performance
3356
9366
-22 -22
67 55 2637
689 8 45 8
-76 -72
49 17 7 2559
250214
256 247
193
11589 78
126
185 186188
119 118
70
-15
-95
-91
-82
198
108
-150
-100
-50
0
50
100
150
200
250
300
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17
Cash flow from operations, quarterly Free cash flow, quarterlyCash flow from operations, rolling 12 months Free cash flow, rolling 12 months
EUR
milli
on
49 Investor presentation 1–9/2017
Free cash flow = Net cash flow from operating activities + Investments in intangible and tangible assets + Acquisition of associate company shares + Acquisition of other shares
Investor presentation 1–9/201750
Strong balance sheet
Equity ratio, %
41% 39%
46% 48% 51%
0%
10%
20%
30%
40%
50%
2013 2014 2015 2016 9/2017
70%
51%
32%
44%39%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2013 2014 2015 2016 9/2017
Net gearing, %
597 427 333 464 437
2,9
1,8
1,2
2,0
1,7
0
1
2
3
4
0
200
400
600
2013 2014 2015 2016 9/2017
Net debt, EUR million
Net debt/EBITDA (rolling 12 months)
Net debt, EUR million and Net debt / Comparable EBITDA
Debt structure and liquidity30 September 2017
315
149
111
22 53 Bonds
Loans fromfinancial institutions
Pension loans
Finance leases andother loans
Other short-termloans
210
100
102
Cash and cashequivalentsRevolving creditfacilityUnraised pensionloans
Interest-bearing debt, total EUR 651 million
Available liquidity, total EUR 412 million
Average maturity of long-term loans on 30 September 2017 was 5.4 years. 51 Investor presentation
1–9/2017
*) Of which EUR 248 million due 2027 and EUR 67 million due 2019
*)
0
50
100
150
200
250
2017 2018 2019 2020 2021-26 2027
Bonds Loans from financial institutions Pension loans Other loansInvestor presentation 1–9/201752
Debt maturity lengthened due to new 10-year bond
Interest-bearing debt maturity profile 30.9.2017
EUR
milli
on
• Total interest-bearing debt on 30 September was EUR 651 million
• In September, Metsä Board issued new 10-year EUR 250 million bond with 2.75% annual coupon. At the same time, the company made a tender offer for the old EUR 225 million bond due in 2019 (EUR 158m tendered)
• In August, Moody‘s upgraded Metsä Board‘s credit rating from Ba2 to Ba1
Rating agency Rating andoutlook
Last update
Standard & Poor‘s
BB+ (positive) 02/2017
Moody‘s Ba1 (stable) 08/2017Upgrade from Ba2
Metsä Board‘s credit ratings
Investor presentation 1–9/201753
Increased financial costs due to the financing arrangements in September
56 39 32 31 29
4,6
4,2
3,8
3,33,2
3,0
3,5
4,0
4,5
5,0
0
10
20
30
40
50
60
2013 2014 2015 2016 1-9/2017
Net financial costs, EUR millionAverage interest rate at the end of period, %
EUR million %
• Net financials in 1-9/2017 were EUR -29 million (1-9/16: EUR -21 million)
• Q3 financial expenses include EUR 11 million of costs related to the early repurchase of the bond maturing in 2019
Investor presentation 1–9/201754
Debt programmes 30 September 2017Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*), % Maturity
EUR 250 million bond issued 2017 250 250 2.8 2027
EUR 225 million bond issued 2014 67 67 4.4 2019
Syndicated credit facility 2014 250 150 3.2 2020
EUR 51 million bilateral loans 51 51 1.4 2017–2020
EUR 22 million finance leases 22 22 2.3 2017–2024
EUR 213 million pension loans 213 111 4.5 2017–2020
Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*), % Maturity
Revolving credit facility 2014 100 0 - 2020
Pension loan facilities 213 111 4.5 -
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 30 September 2017
*) 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 September 2017 is 3.2%.
Metsä Board’s principal long-term liquidity reserves at 30 September 2017
Investor presentation 1–9/201755
Near-term outlook• Metsä Board’s Q4 paperboard delivery volumes are
expected to decline due to seasonality. Target is to further increase average price in paperboards
• Pulp market is expected to remain in balance. Metsä Fibre’s new bioproduct mill is expected to have positive impact on Metsä Board’s Q4 result
• Annual maintenance shutdown in Husum mill in Q4 • Positive hedging impact from USD will dilute towards the
year-end• Impacts from price increases expected to be visible mainly
from Q1 2018 onwards
Mainly due to the maintenance shutdown at the Husum integrated mill, Metsä Board’s comparable operating result in the fourth quarter of 2017 is expected to weaken slightly from the third quarter of 2017.
Investor presentation 1–9/201756
Profit guidance
Production, capacities and sourcing
Investor presentation 1–9/201758
Metsä Board’s production units
Äänekoski
Simpele
Joutseno
Tako
Kyro
KaskinenHusum
KemiIntegrated mills• Husum, Sweden
400,000 t/a folding boxboard270,000 t/a white linerboard730,000 t/a chemical pulp
• Kemi410,000 t/a white linerboard620,000 t/a chemical pulp by Metsä Fibre
• Äänekoski240,000 t/a folding boxboard1,300,000 t/a chemical pulp by Metsä Fibre
• Joutseno320,000 t/a BCTMP690,000 t/a chemical pulp by Metsä Fibre
Non-integrated mills• Kyro (Kyröskoski)
190,000 t/a folding boxboard
• Simpele280,000 t/a folding boxboard
• Tako (Tampere)210,000 t/a folding boxboard
• Kaskinen340,000 t/a BCTMP
Taking into account Metsä Group‘s pulpproduction, Metsä Board‘s pulp balancein 2017 is 400,000 t/a long
Investor presentation 1–9/201759
Paperboard capacity
Town Country Machines Folding boxboard
White freshfibre linerboard Total
Tampere (Tako) Finland 2 210 210
Kyröskoski (Kyro) Finland 1 190 190
Äänekoski Finland 1 240 240
Simpele Finland 1 280 280
Kemi Finland 1 410 410
Husum Sweden 2 400 270 670
Total 8 1,320 680 2,000
Investor presentation 1–9/201760
Pulp capacityMetsä Board pulp mills Country Chemical pulp BCTMP Total
Husum Sweden 730 730
Joutseno Finland 320 320
Kaskinen Finland 340 340
Total 730 660 1,390
Metsä Fibre pulp mills Country Chemical pulp BCTMP Total
Äänekoski Finland 1,300 1,300
Kemi Finland 610 610
Rauma Finland 650 650
Joutseno Finland 690 690
Total 3,250 3,250
Deliveries by region in 2016
Folding boxboard
Investor presentation 1–9/201761
Fresh fibre linerboard
48%
25%
16%
11%
Western Europe
Eastern Europe
Americas
Asia and Pacific
60%7%
32%
1%
Own generation
20%
Through PVO shareholding
32%
Purchased energy
45%
Outsourced generation
3%
Wood-based60%
Nuclear power22%
Gas7%
Hydro4%
Coal2%
Peat2% Oil
2%
Sweden 38%
Finland31%
Baltic countries18 %
Russia13%
Sourcing 2016Electricity sourcing
(total 2,438 GWh)
Investor presentation 1–9/201762
Primary energy used(total 12.0 TWh)
Wood sourcing by country (total 4.6 million cubic metres)
Product development focus areas
Key product development focus areas
Improved BCTMP
Microfibrillated cellulose (MFC)
Strength additives
Sustainable lightweighting
Dispersion barriers
Bio-based raw materials
Barrier boardPE extrusion coated products
Investor presentation 1–9/201764
Lighter-weight paperboards: Better with Less
Metsä Boardlightweight paperboard
Average FBB –Folding boxboard
SBB –Solid bleached board
WLC –White lined chipboard
Investor presentation 1–9/201765
Metsä Board barrier boards roadmap
Bio
base
dba
rrie
rN
onbi
o-ba
sed
barr
ier
Outsourced PE extrusion coating
Own PE extrusion coating
Bio based barrierBio based light barrier
2016 2017Investor presentation 1–9/201766
67
Barrier boards types
NO
N-R
ENEW
AB
LE
BIODEGRADABLE
REN
EWA
BLE
NON-BIODEGRADABLE
Metsä Board’s baseboard is bio based, bio-degradable and compostable.
Bio based, bio-degradable coating, i.e. starch, PLA etc.
Oil based, bio-degradable coating
Bioplastic coating, i.e. green PE
Latex based dispersion coatingPE extrusion coating
Investor presentation 1–9/2017
Sustainability
Pure paperboard helps to store the packaged product
safely.
The circular economy of a durable and safe package
Durable paperboard protects the packaged product
effectively.
Our paperboards are recyclable and biodegradable, or they can be used for energy production.
We follow goodmanufacturing principles(GMP).
All of our products meet the requirements of relevant international legislation.
Fresh fibre is a pure and safe, renewable
raw material. We only use carefully selected and safe raw materials in our products.
69 Investor presentation 1–9/2017
Rain waters the forest
Bark is utilised as a bio-energy source
Metsä Board’s boardproduction is mostly integrated in pulp production
Waste waters are always carefully cleanedbefore returned back to the waterways
Also lakes and seas are a source of recreation
Light weight boards are resource efficient both for us as well as for our customers
99% of water used in the productionprocess is returned back to the waterways
Metsä Board’s paperboards can be recycled, depending upon local recycling services
Forests are a source of recreation
Metsä Board uses water efficiently
Metsä Board has decreased its CO2 emissions by 45% since 2009 and the use of water by 14% since 2010
Metsä Board only uses surface waterin its production
LOGISTICSENSURE THE SUSTAINAINABILITY OF MAIN LOGISTIC FLOWS
PERFORMANCE 2016−2017 100%
SAFETY AT WORKLOST-TIME ACCIDENTS FREQUENCY ANNUALLY
PERFORMANCE 2016 -18.9%
-10%ENERGYENERGY EFFICIENCY IMPROVEMENT2009−2020
PERFORMANCE 2016 7.8%
12% -17%RESOURCE EFFICIENCYPROCESS WATER USE PERPRODUCT TONNE 2010−2020
PERFORMANCE 2016 -14%
Metsä Board’s sustainability targets
>80%
WOODTHE SHARE OFCERTIFIED WOOD
PERFORMANCE 2016 81%
-30%
CLIMATEFOSSIL CO2 EMISSIONS PER PRODUCT TONNE 2009−2020
PERFORMANCE 2016 -45%
<3%WELL-BEINGSICKNESS ABSENTEEISM
PERFORMANCE 2016 4.1%
BIOENERGY SHARE OF TOTAL PURCHASED ENERGY 51%
Investor presentation 1–9/201771
2017 CDP• Metsä Board chosen to the Water A List and Climate A List• Leadership status on Forest programme• Metsä Board participated on CDP Supply chain programme
together with its customers2017 EcoVadis• Metsä Board achieved the Gold rating for its Corporate Social
Responsibility practices by EcoVadis in 2017• Overall Metsä Board was ranked in the top 1% of suppliers
assessed by EcoVadis across all categories
72
Metsä Board is recognised as a globalleader in sustainability practices
Investor presentation 1–9/2017
EU Commission– Announced plans to regulate printed food contact materials (FCMs)
on EU levelFood 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 setDraft 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
73
Increased regulation to ensureproduct safety
Investor presentation 1–9/2017
Shares and owners
Market cap and foreign owners30 September 2017
Ownership distribution30 September 2017
Market cap and ownership distributionMetsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki
0
4
8
12
16
20
24
0
500
1 000
1 500
2 000
2 500
2012 2013 2014 2015 2016 1-9/2017
Market cap, EUR million
Share of foreign owners, %
42 %
22 %
18 %
18 % MetsäliittoCooperative
Domestic institutionalinvestors
Domestic privateinvestors
Foreign owners
EUR million
* Metsäliitto Cooperative has 61% of voting rights
*
75
%
Investor presentation 1–9/2017
Investor presentation 1–9/201776
Ownership structure on 30 September 2017
42 %
18 %
19 %
12 %
4 % 2 % 3 %
MetsäliittoCooperative
Foreign owners*
Households
Public sectororganisations
Finance andinsurancecompaniesNon-profitorganisations
Other companies
61 %15 %
11 %
7 %
3 %
2 %1 %
MetsäliittoCooperative
Public sectororganisations
Households
Foreign owners*
Non-profitorganisations
Finance andinsurance companies
Other companies
Shares, % (total no. of shares 355,512,746)
Votes, % (total no. of votes 1,037,530,115)
* incl. nominee registered
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.
Transformation has increased shareholder value
Enterprise value, EUR million
0
500
1000
1500
2000
2500
3000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Net debt Market capitalization
Dividend and payout ratio %
0%
15%
30%
45%
60%
75%
90%
0,00
0,04
0,08
0,12
0,16
0,20
2012 2013 2014 2015 2016
Dividend, EUR Dividend/EPS, %
77 Investor presentation 1–9/2017
EUR mill. EUR
Appendix
Investor presentation 1–9/201779
Metsä Board Corporate Management Team
Mika JoukioCEO
Chairman of CMT since 2014MG employee since 1990Share ownership: 261,884
Jussi NoponenCFO
Member of CMT since 2016MG employee since 2000Share ownership: 50,000
Sari PajariSVP, Marketing and Sales
Member of CMT since 2011MG employee since 2007Share ownership: 45,740
Ari KivirantaSVP, Development
Member of CMT since 2014MG employee since 1993Share ownership: 16,236
Harri PihlajaniemiSVP, Production
Member of CMT since 2017MG employee in 2001-2004 and since 2017Share ownership: no ownership
Susanna TainioSVP, HR
Member of CMT since 2015MG employee since 2011Share ownership: 20,505
Share ownerships are B-shares.MG = Metsä Group
METSÄ TISSUE
Tissue and cookingpapers
Sales:
EUR 1.0 billionPersonnel:
2,700Metsäliitto Cooperativeholding 100%
METSÄ WOOD
Wood Products
Sales:
EUR 0.5 billionPersonnel:
1,520Metsäliitto Cooperativeholding 100%
METSÄ FOREST
Wood Supply and ForestServices
Sales:
EUR 1.5 billionPersonnel:
860Metsäliitto Cooperativeholding 100%
Investor presentation 1–9/201780
METSÄ BOARD
Paperboard
Sales:
EUR 1.7 billionPersonnel:
2,500Metsäliitto Cooperativeholding 42%, 61% of votes
METSÄ FIBRE
Pulp and SawnTimber
Sales:
EUR 1.6 billionPersonnel:
1,230Metsäliitto Cooperativeholding 50.2%, Metsä Board 24.9%,Itochu Corporation 24.9%
METSÄ GROUP | Sales EUR 4.7 billion | Personnel 9,300
METSÄLIITTO COOPERATIVE | Group’s parent company | Owned by 104,000 Finnish forest owners
INVESTMENT, EUR
1.2 billion
ELECTRICITY, Wh/a
1.8 tera
WOOD USAGE, m3/a
6.5 million
ELECTRICITY SELF SUFFICIENCY
240 percent
CERTIFIED WOOD
90 percent
START UP
August 2017
METSÄ BOARD INVESTED EUR 24.9 MILLION IN EQUITY → COMPANY’S PULP BALANCE WILL GROW BY 200,000 TONNES/A.
CAPACITY, tonnes/a
1.3 million
Metsä Fibre’s new Bioproduct Mill
81 Investor presentation 1–9/2017
Investor presentation 1–9/201782
Metsä Board’s credit rating
0
1
2
3
4
5
6
7
8
1.1.2011 1.1.2012 1.1.2013 1.1.2014 1.1.2015 1.1.2016 1.1.2017
Moody's Standard & Poors Investment Grade
CCC+ / Caa1
B- / B3
B / B2
B+ / B1
BB- / Ba3
BB / Ba2
BBB- / Baa3
BB+ / Ba1
CCC+ / Caa1
B- / B3
B / B2
B+ / B1
BB- / Ba3
BB / Ba2
BBB- / Baa3
BB+ / Ba1
- 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
Investor presentation 1–9/201783
Restructuring to a pure-play paperboardcompany from 2005 onwards
Investor presentation 1–9/201784
M&A activity 1997-2015
100 000 B2 shares in
PVO
Acquisitions
Divestments
Biberist Paper Mill
UK Paper
Modo Paper
Zanders
ChemicalsBusiness
BotniaWood
CorrugatedPackaging
MD Papier Metsä Tissue
Albbruck SavonSellu
Forestia
KemiartLiners (53 %)
8% in Botnia
PSM
9% in Botnia
Cartonplants
Map
New Thames
MB Uruguay
Graphic Papers
Part of Reflex
Halleinmill
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
Investor presentation 1–9/201785
Significant Divestments EUR 3.7 billion in assets divested since 2001
* Cash portion**Incl. pension liabilities
Investor presentation 1–9/201786
5624 4440 3236 2432 2605 2485 2108 2019 2008 2008 1720
0,8 1,1
‐1,1‐6,2
6,6
2,43,6
5,2
6,8
9,0
8,0
‐7,0
‐5,0
‐3,0
‐1,0
1,0
3,0
5,0
7,0
9,0
0
1000
2000
3000
4000
5000
6000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sales, EUR million Comparable EBIT‐%
%
Sales and EBIT-% development
Katri SundströmVice President, Investor relations
Tel +358 400 976 [email protected]
87
Contact information
Investor presentation 1–9/2017