Metsä Board’s strategy update and outlook

Mika Joukio, CEO

Capital Markets Day 19 November 2015

Disclaimer

This presentation includes forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,” “will,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or any similar expressionsidentify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. By their nature forward-looking statements are subject to assumptions, risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual results may differ even materially from those expressed or implied by these forward-looking statements. We urge presentation participants not to place undue reliance on such statements.

The information and views contained in this presentation are provided as at the date of this presentation and are subject to changes without notice. Metsä Board does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally require

Viewers should understand that this presentation does not constitute, and should not be construed as, an offer to buy or subscribe for Metsä Board’s securities anywhere in the world or an inducement to enter into any investment activity relating to the same. No part of this presentation should solely form the basis of, or be relied on in connection with, any contract or commitment or decision to invest in Metsä Board securities whatsoever. Potential investors are instructed to acquaint themselves with Metsä Board’s annual accounts, interim reports and stock exchange releases as well as other information published by Metsä Board to form a comprehensive picture of the company and its securities.

2015 CMD2

3

• Metsä Board today

• Strategic cornerstones and financial targets

• Completion of transformation

• Product development and sustainability

• Q&A

Contents

2015 CMD

Metsä Board is the leading fresh forest fibre

paperboard producer in Europe

2015 CMD4

• Market leader in folding boxboard in Europe and

global market leader in coated white top kraftliner

• Best-in-class profitability and a technology leader

• Steady cash flow generation and strong balance sheet

• Strong fibre know-how and self-sufficiency in pulp

• Global sales to over 100 countries and eight

production units in Finland and Sweden

74 %

26 %

Sales split2014

Paperboard

Paper

77 %

11 %

12 %

Sales by region 2014

EMEA

Americas

APAC

*

*) Includes Market pulp

Metsä Board strengthens its market leadership

2015 CMD5

Largest Folding Boxboard

Producers in Europe1,000 tonnes

400

4002000 800 1,2001,000 1,400600

Capacity: 1000 tons/a

Current Post-

measures

Holmen (7%)

IP (8%)

Mayr-Melnhof (13%)

Stora Enso (25%)

935(35%)

150

2001000 700300 600500400

Smurfit Kappa

(15%)

(13%)

Mondi

580(29%)

(25%)

(12%)

Current

730 / 34%

Post-

measures

SCA

BillerudKorsnäs

Capacity: 1000 tons/a

+43%+21%

1,335 / 43%

Note: Share of production capacity currently shown in parenthesis

Sources: Metsä Board, Pöyry Management Consulting Oy

Largest White Fresh Forest Fibre

Linerboard Producers in Europe1,000 tonnes

Improved profitability

2015 CMD6

59 75 104 137 145

2,3

3,6

5,2

6,8

9,4

0

1

2

3

4

5

6

7

8

9

10

0

20

40

60

80

100

120

140

160

2011 2012 2013 2014 Q1-Q3/2015

EBIT, M€ EBIT-%

GROUP EBIT, M€ and EBIT-% excl. NR items

44 51 61 60 65

11,8 %

14,0 %15,5 %

14,6 %15,7 %

0

0,05

0,1

0,15

0,2

0

20

40

60

80

Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015

EBIT EBIT-%

PAPERBOARD-SEGMENT

EBIT, M€ and EBIT-% excl. NR items

81

-2,9 -1,8 -3,2 -3,4 -1,3

-2,3 %

-1,4 %

-2,5 %

-3,1 %

-1,5 %

-0,04

-0,03

-0,02

-0,01

0

-4Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015

EBIT EBIT-%

NON CORE OPERATIONS -SEGMENT

EBIT, M€ and EBIT-% excl. NR items

2015 CMD7

Metsä Board’s paperboard business’ profitability

is top of its field in Europe

Strategic cornerstones and financial targets

Vision

The preferred supplier of premium paperboards

creating value for customers globally

2015 CMD9

Responsible profitability

Reliability

Cooperation

Renewal

• Focus

• Growth

• Profitability

2015 CMD10

Strategic cornerstones

Focus

Focus on premium fresh forest 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 forest fibres.

• Our products are used for packages at the store and

from the store to the consumer.

2015 CMD11

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.

2015 CMD12

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.

2015 CMD13

Average annual growth rate exceeds clearly

the market growth rate

14

0

250

500

750

1 000

1 250

1 500

1 750

2 000

2011 2012 2013 2014 2015E 2018 target

Fresh forest fibre linerboard Folding boxboard

1,000 tonnes

2015 CMD

ROCE, %

2015 CMD15

3,4

4,8

6,4

9,1

12,1

0

2

4

6

8

10

12

2011 2012 2013 2014 9/2015

Target >12%

Net gearing, %

106

73 70

51

34

0

50

100

2011 2012 2013 2014 9/2015

Dividend pay-out ratio, %

Target <70%

Financial targets

0

12

47

57

0

20

40

60

2011 2012 2013 2014

Target >1/3

excl. non-recurring items Dividend pay-out ratios excl. NR items:

2012: 46%, 2013: 53%, 2014: 44%

Completion of transformation

2015 CMD17

Husum will become a leading fresh

forest fibre paperboard unit in Europe

Folding boxboard production

Capacity 400,000 t/a

Deliveries mainly to Americas and

Food service globally

Full production capacity reached

by the end of 2016

Expected delivery volumes in 2016

at least 200,000 tonnes

Linerboard production

• Capacity 300,000 t/a

• Deliveries to Europe and Americas

• Remaining uncoated paper* production to

linerboard production by the end of 2017

Capacity changes 2014 vs. 2017:

• Paperboard capacity +700,000 tn/a

• Paper capacity -600,000 tn/a

*) Currently, the paperboard machine BM2 produces simultaneously uncoated paper

(capacity 100,000 tn/a). This production will will be finished by the end of 2017.

• Transformation process in Husum mill, Sweden

– Annual Operating result impact +EUR 50 million

– Full impact mostly in 2017 and fully in 2018

– Expected impact on 2016 is roughly one third of the total

• Gohrsmühle divestment

– Annual Operating result impact +EUR 20 million

– Roughly half materialises in 2015

– Reduces annual sales by EUR 90 million

• Total paperboard capacity after the transformation

over 2 million tonnes

2015 CMD18

Completion of the transformation

and expected impacts

All figures are based on company estimates and compared to FY2014 figures

19

1000

1100

1200

1300

1400

1500

1600

1700

1800

1900

2000

1 000

1 300

1 600

1 900

2 200

2 500

2 800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016F

Production capacity/employee Number of employees

Strong continuing improvement in productivity

Production capacity (tonnes) / employee at current mills

2015 CMD

No. of

employees

Production

capacity/

employee

Paperboard is Metsä Board’s core business

74 %

26 %

2014

Paperboard Paper

2015 CMD20

81 %

19 %

2015E

Paperboard Paper

96 %

4 %

2016E

Paperboard Paper

Paperboard includes the market pulp

Product development and sustainability

2015 CMD22

Metsä Board expands its offering in

food and food service paperboards

by investing in extrusion coating

• Investment value EUR 38 million

• Will be implemented at Husum mill

• Start-up in Q1/2017 with capacity of 100,000 t/a

• In 2015–2016 Metsä Board’s paperboards are coated by

external converter

• The company continues to develop other barrier solutions

including biobased materials

Food service packaging requires barrier

features e.g. moisture and fat resistance

2015 CMD23

High-quality paperboard with foam

forming

Metsä Board is the first in the world to start testing foam forming

on a production scale

Foam forming

• 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 based on customers needs to commercialise this new

technology

Lightweight paperboards improve sustainability

throughout the value chain

24

ENERGY

Energy efficiency

improvementTarget from 2009 to 2020

12%

Performance by 2014 7%

CLIMATE

Fossil CO2 emissions

per product tonneTarget from 2009 to 2020

-30%

Performance by 2014 -37%

RESOURCE EFFICIENCY

Process water use

per product tonneTarget from 2010 to 2020

-17%

Performance by 2014 -15%

BIOENERGY

Share of

total energy 62%

2015 CMD

Target level in Energy has recently been raised

from 10% to 12%.

• Highest possible score 100/100 for the depth and quality of

climate change data (2014: 98/100 and 2013: 82/100).

• High scores indicate success in providing robust climate change

data and strong understanding of climate-related issues.

Leaders usually have a solid financial performance.

• Metsä Board recognized as world leader for corporate action on

water security.

2015 CMD25

Metsä Board recognized as a leader for

corporate actions on climate change

CDP is an international, not-for-profit organization providing the only global system for companies

and cities to measure, disclose, manage and share vital environmental information. CDP works with

market forces, including 767 institutional investors with assets of US$92 trillion, to motivate

companies to disclose their impacts on the environment and natural resources and take action to

reduce them.

• Effective ramp-up of new cartonboard machine

• Ensure successful sales of new capacity

• Secure good price levels

• Keep high product quality and further improve

supply chain

• Continue product development and enter new

end use areas

• Ensuring the cost efficiency and productivity

2015 CMD26

Key priorities in 2016

Thank you!

Q&A