Metsä BoardInterim Report 1−9/2017Presentation material

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%

Interim Report 1-9/20172

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

3 Interim Report 1-9/2017

FY 2015:1,404 tonnes

FY 2016:1,569 tonnes

Q1-Q3 2017:1,375 tonnes

(Q1-Q3/16: 1,181)

+17%

Q1-Q3 2016

Q1-Q3 2017

Interim Report 1-9/20174

Q3 2017 in summary(vs. Q2 2017)

• Higher production volumes • Increased average price of folding boxboard• Paperboard deliveries roughly at the 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 folding boxboard 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

5 Interim Report 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, %

Interim Report 1-9/20176

Return on capital employed, %

Target >12%

Q3/17:11.5%

• 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 1–9/2016

• Potential to improve profitability in Husum by EUR 100 million is intact

Interim Report 1-9/20177

Update on Husum’s folding boxboard

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

8 Interim Report 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

Stable balance sheet

333 464 488 464 458 495 437

1,2

2,0 2,1 2,0 1,9 2,0

1,7

0,0

1,0

2,0

3,0

0

200

400

600

2015 2016 9/16 12/16 3/17 6/17 9/17

Interest-bearing net debt, EUR millionInterest-bearing net debt / EBITDA (rolling 12-month)

Interest-bearing net debt / comparable EBITDA

333 464 488 464 458 495 437

32%

44%49%

44% 44% 45%

39%

0

0,1

0,2

0,3

0,4

0,5

0,6

0

200

400

600

2015 2016 9/16 12/16 3/17 6/17 9/17

Interest-bearing net debt, EUR millionNet gearing, %

Net gearing, %

9 Interim Report 1-9/2017

Financial target: <2.5x

0

50

100

150

200

250

2017 2018 2019 2020 2021-26 2027

Bonds Loans from financial institutions Pension loans Other loansInterim Report 1-9/201710

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

Metsä Board’s growth clearly exceeds averagemarket growth

11

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

Interim Report 1-9/2017 *last twelve months

Annual global demand growth for folding boxboard

and white kraftliners is

estimated to be 3–4%

Source: RISI, CEPI, Pöyryand trade statistics among

others

• Postitions on the CDP Climate A and Water A Lists

• Leadership status in CDP Forest programme

Interim Report 1-9/201712

Metsä Board was again rated among the world’s best performing companies by CDP

CDP is a non-profitorganization providing a global system to measure, disclose, manage and share vitalenvironmentalinformation.

Metsä Fibre’s new bioproduct mill in Äänekoski has startedStart-up as scheduled, costs in budget and production above the ramp-up curve

Total investmentEUR 1.2 billion

Annual pulp capacity1.3 million tonnes

Metsä Board investedEUR 24.9 million

Metsä Board’s annualpulp balance grows by

200,000 tonnes*

* According to Metsä Board’s 24.9% ownership of Metsä Fibre

Interim Report 1-9/201714

Near-term outlook

• Metsä Board’s Q4 paperboard delivery volumes are expected to decline due to seasonality

• 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 will have negative impact on profitability

• 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.

Interim Report 1-9/201715

Profit guidance

• Solid performance in Q3• Good demand for high-quality

paperboards, with stable or rising price levels

• Near-term focus on improving average price of Husum’s folding boxboard and increasing sales to Americas

• Metsä Board expects to have its current paperboard capacity in full use by the end of 2018

Interim Report 1-9/201716

Summary

Appendix

Interim Report 1-9/201718

Key financials

Q3/17 Q2/17ChangeQ3/17

vs. Q2/171-9/17 1-9/16

Change1-9/17

vs. 1-9/162016

Sales EUR, m 479 474 +1% 1,397 1,299 +8% 1,720

EBITDA* EUR, m 75 68 +10% 211 178 +19% 231

Operating result* EUR, m 50 44 +14% 139 105 +32% 138

% of sales % 10.5 9.2 10.0 8.1 8.0

Result before taxes* EUR, m 34 37 -8% 110 84 +31% 107

Earnings per share EUR 0.11 0.09 +22% 0.30 0.18 +67% 0.25

ROCE* % 11.5 10.3 10.6 8.3 8.1

Capex EUR, m 7 12 -42% 39 119 -67% 162

Cash flow from operations EUR, m 68 37 +84% 130 23 over 100% 77

IB Net debt, at end of period EUR, m 437 495 -12% 437 488 -10% 464*comparable

43.550.4

0102030405060

Q2 2017 Q3 2017

Q3 2017 vs. Q2 2017

Interim Report 1-9/201719

Comparable operating resultQ3/17 vs Q2/17: +16% and 1-9/17 vs. 1-9/16: +33%

104.7

139.1

020406080

100120140

1-9 2016 1-9 2017

1-9 2017 vs. 1-9 2016

+ Inreased average price of FBB, higher productionvolumes in paperboard and pulp, lower maintenancecosts, impact from FX rates including hedges

- Start-up of Metsä Fibre’s new bioproduct mill

+ Positive development in linerboard and market pulpoperations, discontinued paper business, impact fromFX rates including hedges

- Increased latex price

EBIT-%8.1

EBIT-%10.0EBIT-%

9.2

EBIT-%10.5

WTKL = white-top kraftlinerFBB = folding boxboard

• 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

20 Interim Report 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

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

Interim Report 1-9/201721

Debt structure and liquidity30 September 2017

315

149

111

2253 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. 22 Interim Report 1-9/2017

*) Of which EUR 248 million due in 2027 and EUR 67 million due in 2019

*)

Interim Report 1-9/201723

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)

• In September, Metsä Board issued new 10-year EUR 250 million bond due 2027

• Q3 financial expenses include EUR 11 million of costs related to the early repurchase of the bond maturing in 2019

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

*

24

%

Interim Report 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

Interim Report 1-9/201725

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)

26 Interim Report 1-9/2017