Metsä Board Interim report 2Q 2015

Highlights in 2Q 2015

• Profitability improved from the previous quarter

• Paperboard delivery volumes continued to increase

• Price levels were stable

• Final steps in transformation to a paperboard

company progressed as planned

• The Gohrsmühle mill in Germany was divested

• Moody's Investors Service upgraded Metsä Board’s

rating by two notches

2 2Q/2015

Operating result improved in 2Q 2015

2Q/20153

2619

2936

2835 37

43 47

0

10

20

30

40

50

Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 2Q/15

503 502 479 501 494 514 499 526 522

200

300

400

500

600

Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Sales Operating result, excl. non-recurring items

Result before taxes, excl. non-recurring itemsEUR million

199

1821 20

27 32 3240

0

10

20

30

40

50

Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

EUR million EUR million

4

Main operating result drivers in 2Q 2015 vs. 1Q 2015

+Paperboard delivery volumes

Exchange rates,

including hedge accounting results

Divestment of the Gohrsmühle mill

–Paper delivery volumes

(as planned)

Investment shutdown at the Husum mill

Market pulp delivery volumes

2Q/20154

Increase of paperboard sales volumes continues

as planned

2Q/20155

176 185 185 189 192 197 185 191 197210 203 204

217

8593 85

94 93 9591

112 110

120111

130

137

0

60

120

180

240

300

360

Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Fresh forest fibre linerboard

Folding boxboard

1,000 tonnes+13% vs. 1H/2014

Most important growth area is North America –

in 2015, FBB growth is limited by production capacity

2Q/20156

Fresh forest fibre liner deliveries to

North and South America, 1,000 tonnes

7693 97

107129

154

182

0

40

80

120

160

200

2009 2010 2011 2012 2013 2014 1H15

Folding boxboard deliveries to North

and South America, 1,000 tonnes

810 11

15

23

27

3128

30

0

5

10

15

20

25

30

35

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Sales target of FBB is over

300,000 tonnes annually in medium-termSales target of linerboard is over

250,000 tonnes annually in medium-term

annual run rate

Paperboard segment’s sales increased and operating

result remained at the previous quarter level

2Q/20157

Operating result, excl. non-recurring itemsSales

EUR millionEUR million

45 4451

61 60

0

10

20

30

40

50

60

70

Q2/14 Q3/14 Q4/14 Q1/15 Q2/150

100

200

300

400

500

Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Non-core operations segment’s sales decreased as

expected and operating result was unchanged

2Q/20158

Operating result, excl. non-recurring itemsSales

EUR millionEUR million

-7-3 -2 -3 -3

-20

-10

0

10

20

Q2/14 Q3/14 Q4/14 Q1/15 Q2/150

40

80

120

160

200

Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

2Q/20159

Exchange rate changes during

the last 12 months favourable

• Duration of Metsä Board’s hedges of the main foreign currency

flows has been 4–6 months during the last 12 months

• Annual unhedged EBIT sensitivity of 10% change vs. euro– EUR 45 million in USD

– EUR 20 million in GBP

– Reversed EUR 30 million SEK

• Slight positive EBIT impact after hedges in 2Q 2015 compared

to previous quarter

• Segment numbers reflect exchange rate changes rapidly

but hedge accounting result in Other operations balance the

impact

Balance sheet continues strong

• Gross debt was EUR 671 million and net debt EUR 389

million at the end of 2Q 2015 (EUR 319 million at the end

of 1Q 2015)

• Net gearing was 39% (34%), equity ratio 46% (41%)

and average interest rate 3.8% (3.9%) at the end of 2Q

• Strong liquidity position

• Moody's raised Metsä Board’s credit rating by

two notches to Ba2

2Q/201510

827 783

625 597

427 389

0

250

500

750

1000

2010 2011 2012 2013 2014 2Q 15

2,7

4,4

3,42,9

1,81,5

0

1

2

3

4

5

2010 2011 2012 2013 2014 2Q15

Net debtEUR million

Net debt / EBITDA%

2Q/201511

Short-term market outlook

• Paperboard delivery volumes are expected to increase

slightly in 3Q 2015 compared to the previous quarter

• No significant paperboard price changes in sight

• Long fibre pulp demand is expected to continue to grow

moderately and the supply and demand to be in balance in

the near future

• The market situation of the paper businesses reported in

Non-core operations segment is expected to remain stable

• The average production costs are not expected to change

materially in 3Q 2015

2Q/201512

Short-term profitability outlook

• Metsä Board's operating result excluding non-recurring

items is in the third quarter of 2015 expected to improve

slightly compared to the second quarter of 2015

2Q/201513

Gohrsmühle mill divested to

mutares and its partner company

• mutares AG is a stock listed German industrial holding

company focusing on acquiring companies in special situations

• Negative cash flow impact of about EUR 37 million was clearly

less than in the case of a potential closure

• Positive non-recurring item of EUR 17,5 million booked

in 2Q 2015

• Compared to 2014, the divestment reduces Metsä Board’s

annual sales by about EUR 90 million and improves operating

result excl. non-recurring items by EUR 20 million

– Somewhat over half materialises in 2015

2Q/201514

Transformation of Husum mill is

proceeding as planned

• The first investment shutdown was held successfully in April.

BM2 is now able to produce about 300,000 tonnes of linerboard

annually

• Paper machines 6 and 7 will be closed in Oct.–Nov. 2015

• New FBB production line (BM1) will start on 4 January 2016– Investment shutdown has a negative result impact in 4Q 2015

• Related infra improvements are proceeding

• Agreed personnel reduction is about 180

2Q/201515

The transformation of Husum

enables production optimisation

• Product portfolio of all mills will be simplified which results in

better production efficiency

• Enables the sales volume growth from the Finnish folding

boxboard mills

• Production of food service board is concentrated to Husum

• Linerboard production will not change materially

2Q/201516

Increased emphasis on

product development

• Further improvement of product quality and sustainability

• Close cooperation with customers

• Technical properties of food service boards will be developed

and thus the end use range widened

• The Kyro mill will be the first in the world to start testing foam

forming on a production scale – Improves printing surface and enables further reduction of weight

– Reduces the use of raw materials, energy and water

– Metsä Board has done extensive development work for several

years to commercialise this new technology

Key priorities in 2015

2Q/201517

ROCE, excl. non-recurring items

%

3,44,8

6,4

9,1

11,6

0

2

4

6

8

10

12

14

2011 2012 2013 2014 1H 15

Target min. 12% starting from 2017

• Grow profitably the paperboard businesses globally

• Implement successfully the Husum investment projects

• Secure good price levels

• Keep high product quality and further improve supply chain

• Enter new end use areas

• Continue productivity improvements and cost savings

• Develop competences, especially related to Husum’s new products

Appendix

ROCE % and EBIT, % of sales

2Q/201520

11,6

9,1

6,4

4,8

3,4

0

3

6

9

12

15

2011 2012 2013 2014 1H15

2,4

3,6

5,2

6,8

8,6

0

1

2

3

4

5

6

7

8

9

10

2011 2012 2013 2014 1H15

Target min. 12% starting from

EBIT, % of sales, excl. non-recurring itemsROCE %, excl. non-recurring items

EBITDA development

2Q/201521

143

236208

186179

0

60

120

180

240

300

2011 2012 2013 2014 1H15

EBITDA, excl. non-recurring itemsEUR million

Segment performance –

comparison to previous quarter

2Q/201522

2Q 20151Q 2015

391

128

408

109

0

100

200

300

400

500

Paperboard Non-coreoperations

61

-3

60

-3

-20

0

20

40

60

80

Paperboard Non-coreoperations

Sales Operating result, excl. non-recurring items

EUR million EUR million

Segment performance

– comparison to previous year

2Q/201523

1H 20151H 2014

705

263

799

237

0

200

400

600

800

1000

Paperboard Non-coreoperations

85

-13

120

-7

-30

0

30

60

90

120

150

Paperboard Non-coreoperations

Sales Operating result, excl. non-recurring items

EUR million EUR million

Hedge accounting losses have negatively

impacted Other operations’ results

2Q/201524

-3 -3-1 -2 -6 -6

-12-14

-9

-15

-12

-9

-6

-3

0Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15

Other operations’ operating result,

excl. non-recurring itemsEUR million

• Other operations include costs which are not

allocated to units, certain small scale assets

items and the hedge accounting result

• Cost base in Other operations is EUR 4-5

million per quarter

• Result fluctuation is caused by hedge

accounting result, which has been EUR 3-8

million negative per quarter during the past year

Balance sheet ratios

2Q/201525

389

427

597625

783

4,4

3,4

2,9

1,8

1,5

0

100

200

300

400

500

600

700

800

900

2011 2012 2013 2014 1H15

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

106

7270

51

39

0

20

40

60

80

100

120

2011 2012 2013 2014 1H15

Net debt and net debt/EBITDA* Net gearingNet debt,

EUR million Net debt/

EBITDA

%

* excl. non-recurring items

Folding boxboard market price in Europe

2004–1H 2015

2Q/201526

EUR / tonne

Source: Pöyry Management Consulting

800

900

1000

1100

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

White-top kraftliner market price in Europe

2009–1H 2015

2Q/201527

EUR / tonne

500

600

700

800

900

2009 2010 2011 2012 2013 2014 2015

Source: Foex

Paper and pulp market price in Europe 2000–1H 2015

2Q/201528

Euroa / tonniEUR/USD

400

500

600

700

800

900

1000

1100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0,8

0,9

1

1,1

1,2

1,3

1,4

1,5

1,6

1,7

Coated fine paper (100 g)

Uncoated fine paper (B-copy, 80 g)

Softwood pulp NBSK

Coated magazine paper LWC (60g)

Source: Foex, Reuters

EUR/USD

Source: Euroland29

Ownership structure on 30 June 2015Shares Votes