investor presentation 1q 2013 - metsä board · investor presentation 1q 2013 7.5. 2013. metsä...
TRANSCRIPT
Metsä GroupMetsä Board
Investor Presentation 1Q 2013
7.5. 2013
Metsä GroupMetsä Board2
Content
Investment highlights and update3 Investment Highlights4 Strategy19 Financial Targets21 1Q 2013 Results & Outlook28 Price Development30 Dividend33 Investments
Funding and debt information36 Divestments37 Funding and Debt45 Credit Facilities46 Rating History
General presentation47 General Info54 Business Portfolio62 Operations68 Deliveries70 Sourcing78 Owners80 Market Positions
Metsä GroupMetsä Board
Investment Highlights
‒ Strong growing core in high-quality paperboards‒ European market leader in folding boxboard and global market leader in coated white top kraftliner‒ Increased capacity in the most profitable part of the company, folding boxboard‒ Good further growth potential in paperboard
‒ Profitability of the paperboard production top class in its field
‒ Significant net debt reduction in recent years
‒ Material productivity improvement in recent years
‒ Measures to eliminate last paper business losses implemented
‒ Remaining paper and pulp units top class in their fields
3
Metsä GroupMetsä Board
Strategy
Metsä GroupMetsä Board
Consistent Strategic Direction
5
‒ Paperboard is Metsä Board’s core business‒ Good growth potential
‒ Growth through maximising capacity of existing mills
‒ Smaller but healthier paper business‒ Heavy re-engineering and successful divestments
‒ Extensive fibre know-how and pulp self-sufficiency
‒ Continuous development towards Super Productivity
Metsä GroupMetsä Board
Metsä Board is Heavily Focused on Paperboard. Paper Business Accounts Only About a Quarter of Total Sales
6
Sales distribution 4Q 2012
Paperboard 57%Paper 26%
Market pulp 17%
Sales distribution 2006
Paper 56%
Paperboard 18%Paper merchanting 26%
Metsä GroupMetsä Board
Packaging Material Business Is One of the Biggest Businesses in the World
Wood fibre based
materials36 %
Others64 %
‒ Demand for Good packaging is heavily increasing
‒ Good packaging is ‒ Ecological ‒ Safe‒ Efficient marketing and communication tool‒ Economical
Wood fibre the best raw material for Good packaging
Sources: Pira & Metsä Board
Global packaging market (~€530 Billion)
7
Metsä GroupMetsä Board
The Strategy of Metsä Board’s Paperboard Business Has Been Very Successful
‒ Focusing on lightweight fresh forest fibre paperboards and
the brand owner customer segment
‒ Reaching the European market leadership
‒ Securing healthy price level as the market leader
‒ Productivity improved nearly 60% since 2006
EBIT, excl. non-recurring items, % of sales
8
Metsä Board FBB and Linerboard
Metsä GroupMetsä Board
Metsä Board’s Main Product, Lightweight and Pure FBB, Is an Excellent Result of Successful Product Development
‒ Folding boxboard is a multilayered packaging material made of fresh forest fibre
‒ Pure and safe folding boxboard is an excellent material also for the most demanding end uses
‒ Metsä Board’s folding boxboards are up to 30 per cent lighter than other paperboards
‒ Very significant factor for environment and cost competitiveness
‒ Metsä Board’s production machinery has been renewed and capacity increased by some 20 per cent
Top know-how of paper, mechanical, energy and chemicalengineering are combined in the production of high-quality foldingboxboards
9
Metsä GroupMetsä Board
Metsä Board’s Lightweight Folding Boxboard has Excellent Growth Potential Globally
‒ Global cartonboard demand growth 3-4 %/a
‒ Excellent way for consumer goods companies to
improve sustainability with Metsä Board’s ecological FBB
‒ Metsä Board is further strengthening its market position
globally
‒ Metsä Board has good potential to further increase its
current FBB machines’ capacity with Smart Investments
‒ Threshold for new producers to enter high performance
FBB segment is very high
Share of ecological FBB of total cartonboard market still low in all continents
Europe 34%North America 4%
Asia 22%
10
Metsä GroupMetsä Board
Growth of the Folding Boxboard Business Proceeding According to Expectations
‒ FBB delivery volumes in 1Q 2013 12% higher than a year ago
‒ Efficiencies of the FBB machines have developed according to plans‒ There is still room for improvement at all mills
‒ Current products are further improved‒ Further reduction in weight and improvement of product and service portfolio
‒ New products and end use areas are actively developed
‒ Europe remains our main market but new business is actively pursued also in North America and Asia
‒ Metsä Board is able to increase its FBB capacity further with moderate investments, if market situation so requires
11
2100 22002510
0
1000
2000
3000
2010 2012 1-3 2013
Metsä Board FBB machines’ daily production
Tons+20%
Metsä GroupMetsä Board
High Threshold for New Producers to Enter High Performance FBB Segment
‒ High quality fresh forest fibres are a must ‒ Very difficult for newcomers to establish efficient wood sourcing and processing operations‒ Most today’s big forest companies have developed their operations for over 100 years
‒ Excellent fibre know-how combined with own state of art chemical, mechanical and BCTMP pulping capacity vital competitive factors
‒ Only a few companies in addition to Metsä Board have full fibre control
‒ Huge multi-product board-making lines not suitable for production of high performance FBB‒ No room for huge machines in the niche market. Swing machines’ challenge is productivity and quality consistency‒ Skilled people and long board-making tradition needed to meet high product quality requirements
‒ Main customers are leading consumer goods companies. To be recognized by them as a reliable high performance FBB supplier takes decades
12
Metsä GroupMetsä Board
Metsä Board is the World’s Leading Producer of High-Quality Coated White Top Kraftliners
‒ Fresh forest fibre linerboards are used in high-quality corrugated boxes increasingly also in consumer packaging end uses
‒ Metsä Board has strong long time presence both in Europe and North America
‒ Demand is increasing 3-4 % globally. Main growth drivers are sustainability, safety and top class quality
‒ The coating section of the Kemi linerboard mill was upgraded in 2011 and the production will focus mainly on coated grades
‒ The profitability of the Kemi linerboard mill has been improved to a very good leveland its capacity is in full use
13
Metsä Board’s white-top kraftliner deliveries
EMEA 62%
Americas 37%
Asia-Pacific 1%
Metsä GroupMetsä Board
Metsä Board Is Increasing Capacity to Grow Its Linerboard Business
‒ Production of light-weight fully bleached uncoated linerboards has been started at Husum mill‒ Linerboard was produced at Husum until early 2000s
‒ Husum’s new products replace partially the mill’s unprofitable paper production and complement Metsä Board’s linerboard portfolio in an excellent way
14
‒ Kemi mill is further dedicated to coated grades and part of the uncoated volumes are transferred to Husum
‒ Intensive actions ongoing to sell increasing volumes of Husum linerboards to Metsä Board’s existing and new white top kraftliner customers
Metsä GroupMetsä Board
Metsä Board’s Future Was Secured by Massive Re-Engineering of the Paper Operations
‒ In 2006, the successful strategic review of the company’s paper
business was started. Our paper capacity then was about 5 million t/a
‒ Closures of 2 million tonnes annual capacity
‒ Divestments worth over 2 b€ incl.‒ Graphic Papers business for Sappi
‒ Map Merchants for Sequana
‒ New Thames for DS Smith
‒ Material productivity improvement of the remaining paper units
15
Metsä GroupMetsä Board
Material Closures Implemented in Recent Years
Completed closures in 2007‒ Sittingbourne: coated fine paper 210 ktons/a‒ Gohrsmühle PM6 and PM7: coated fine paper 100 ktons/a‒ Wifsta: uncoated fine paper 175 ktons/a‒ Tako BM2: folding boxboard 70 ktons/a
Closures in 2008‒ Kangas PM2: coated magazine paper 100 ktons/a ‒ Lielahti: BCTMP 105 ktons/a ‒ New Thames: uncoated fine paper (divestment, grade conversion) 230 ktons/a
Closures in 2009‒ Hallein paper mill: coated fine paper 310 ktons/a ‒ Gohrsmühle: standard coated fine paper (conversion to uncoated fine paper) 250 ktons/a
Closures in 2010‒ Two machines in Reflex: Speciality paper 80 ktons/a‒ Alizay pulp mill: Chemical pulp 310 ktons/a‒ Simpele paper mill: Speciality paper 50 ktons/a
Closures in 2011‒ Äänekoski paper mill Coated fine paper 190 ktons/a
Closures in 2012‒ Gohrsmühle’s unprofitable operations: Uncoated fine paper and Speciality paper 190 ktons/a‒ Alizay paper mill: Uncoated fine paper 310 ktons/a
Total paper capacity 2 205 ktons/a Total board capacity 70 ktons/a Total pulp (incl. BCTMP) capacity 415 ktons/a
16
Metsä GroupMetsä Board
New Measures Taken to Improve Husum’s Profitability
- Husum is the largest unit in its field in Europe with top class productivity - Increase of pulp production to 750,000 tonnes and paper production to over 800,000 tonnes
17
- New measures to improve profitability are needed due to the difficult situation of the European paper market
- New cost savings programme implemented
- New, more profitable products are being developed in addition to current products
- Possibilities to participate the European paper industry consolidation are still being surveyed
Metsä GroupMetsä Board
Metsä Board’s Strategy Has Proven Its Success
‒ Metsä Board’s focuses on growing paperboard businesses and has clearly reduced its exposure in declining paper businesses
‒ Profitable growth continues in FBB and linerboard
‒ Cash flow from paper and pulp business will be maximized
‒ Good potential for further productivity improvement
As a paperboard focused company we are in good position to reach a top class profitability of our field in Europe
70
80
90
100
110
120
130
2007
2008
2009
2010
2011
2012
Delivery volumes in EuropeIndex (2007=100)
Cartonboards
Graphic papers
80
90
100
110
120
130
2007 2008 2009 2010 2011 2012
Prices in Europe
Index (2007=100)
Folding boxboard
Coated magazine paper
Uncoated fine paper
Sources: Cepi, PPPC, Foex, Pöyry Management Consulting
18
Metsä GroupMetsä Board
Financial Targets
Metsä GroupMetsä Board
Financial Targets
‒ ROCE target set at a minimum of 10% on average over the business cycle
‒ Net gearing not to exceed 100%
Minimum ROCE 10%* Maximum net gearing 100%
* Excluding non-recurring items
184%
119%137%
82%95%
126%99%90%84%83%
106%
72%69%83%
145%
99 00 01 02 03 04 05 06 07 08 09 10 11 121Q
13
Maximum level of 100%
13,5%
6,2%
2,1%1,6%0,5%0,9%2,8%
-0,5%
-5,6%
7,6%
3,4%4,8%6,8%
10,2%7,6%
99 00 01 02 03 04 05 06 07 08 09 10 11 121Q
13
Minimum target of 10%
20
Metsä GroupMetsä Board
1Q 2013 Results and Outlook
Metsä GroupMetsä Board
Key Events in 1Q 2013
‒ Folding boxboard market situation improved from previous quarter
‒ Production of the upgraded FBB machines increased as planned
‒ White top kraftliner market continued very strong and Metsä Board announced a price increase
‒ Paper delivery volumes increased from previous quarter but prices declined. Metsä Board announced a WFU price increase
‒ Pulp demand continued strong and prices increased
‒ Metsä Board divested the property and production assets of its Alizay mill site in France to Conceil Général l’Eure for EUR 22 million
22
Metsä GroupMetsä Board
625 24
436
32
-21
20 30
-40
-20
0
20
40
60
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
685 660 616 524 545 522 509532 535
0
200
400
600
800
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
28 16-11
-33
17 10 9-9
4
-50
-25
0
25
50
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Sales, m€ Operating result excl. non-rec. items, m€
Result before taxes excl. non-rec. items, m€
Operating Result Improved Further in 1Q 2013
23
Result before taxes, excl. non-recurring items would have been 12 m€ in 1Q 2013 without the interest costs from early repayment of USD 121 million private placement, otherwise booked during the next 12 months
Metsä GroupMetsä Board
‒ Higher FBB and white top kraftliner delivery volumes improved profitability from 4Q 2012
‒ FBB deliveries are expected to somewhat increase in 2Q 2013 and the linerboard deliveries to remain at the very strong level
‒ FBB price increase announcement during 2Q 2013 under consideration
‒ Metsä Board has announced a white top kraftliner price increase of about 50 €/ton in all main markets
‒ Planned maintenance shutdowns have some negative result impact in 2Q 2013 vs. 1Q 2013
24
EBIT, excl. non-recurring items
Sales
Paperboard’s Results Improved in 1Q 2013
m€
m€293
279289274281
0
50
100
150
200
250
300
350
1Q12 2Q12 3Q12 4Q12 1Q13
32
2724
2827
0
10
20
30
40
1Q12 2Q12 3Q12 4Q12 1Q13
Metsä GroupMetsä Board
No Major Changes in Paper and Pulp’s Performance in 1Q 2013
‒ Lower paper prices weakened result from 4Q 2012
‒ Result was improved by seasonally higher paper delivery volume
‒ Both uncoated fine paper and coated paper deliveries expected to somewhat decrease in 2Q 2013
‒ Paper prices are exceptionally low. Metsä Board attempts currently to increase WFU prices. No improvement in coated paper pricing in sight
‒ Market pulp deliveries are forecast to be at previous quarter level. Pulp price increase is expected to continue
‒ Production of new light-weight uncoated linerboards has been started at Husum
25
EBIT, excl non-recurring items
m€
m€
Sales
217245 229 223
210
0
50
100
150
200
250
300
1Q12 2Q12 3Q12 4Q12 1Q13
-2
-12
52
0
-15
-10
-5
0
5
10
1Q12 2Q12 3Q12 4Q12 1Q13
Metsä GroupMetsä Board
Short-Term Profitability Outlook
26
‒ Metsä Board’s operating result, excluding non-recurring
items, is in the second quarter of 2013 expected to be
roughly in line with the first quarter of 2013
Metsä GroupMetsä Board27
Key Focus Areas in 2013
1. Fully benefit the potential of the expanded folding boxboard capacity
2. Develop even more ecological paperboards and expand the current product range
3. Improve profitability and cash flow of the current paper mills- Husum, Kyro Paper and Gohrsmühle
4. Increase the amount of contractual market pulp customers
5. New measures towards Super Productivity and best in class supply chain
Metsä GroupMetsä Board
EUR / tn
Folding Boxboard Market Price in Europe2004 – 1Q 2013
28
Source: Pöyry Management Consulting
800
900
1000
1100
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Metsä GroupMetsä Board
EUR / tn
Paper and Pulp Market Price in Europe1998 – 1Q 2013
Coated fine paper (100 g)Uncoated fine paper (B-copy, 80 g)
Softwood pulp NBSKCoated magazine paper LWC (60g)
Source: Foex, Reuters
EUR/USD
EUR/USD
400
500
600
700
800
900
1000
1100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130,8
0,9
1
1,1
1,2
1,3
1,4
1,5
1,6
1,7
29
Metsä GroupMetsä Board
Dividend
Metsä GroupMetsä Board
Dividend Policy
- Future dividends will take into account the need to achieve and maintain sufficient financial flexibility
- The Company remains committed to an attractive and competitive dividend
- Metsä Board's dividend policy is stable and rewarding to shareholders, and aims at paying a dividend of at least 1/3 of the Company's EPS on average over the business cycle, nonetheless taking into account the Company's net gearing target
31
Metsä GroupMetsä Board
0,50
1,09 1,13
1,85
0,460,30
-0,79
-1,58
-1,09
-0,83
0,530,26 0,37 0,38
0,51 0,51 0,510,25 0,00 0,00 0,000,09
-0,59
-1,21
-0,25-0,430,23 0,00 0,060,060,06
0,14 0,12 0,12
3,0%
0,0%0,0%0,0%
4,3%
0,0%1,3%1,4%
2,1%2,8%3,3%
4,1%
5,6% 5,5%6,9%
8,6%
7,2%
-2
-1,5
-1
-0,5
0
0,5
1
1,5
2
2,5
3
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
€ pe
r sha
re
-8 %
-6 %
-4 %
-2 %
0 %
2 %
4 %
6 %
8 %
10 %
12 %
Div
iden
d yi
eld,
%
Earnings per share Dividend per share Dividend yield
Dividend yield calculated from annual average B-share volume weighted price
Dividend Yield
32
Metsä GroupMetsä Board
Investments
Metsä GroupMetsä Board
-1 000
-500
0
500
1 000
1 500
2 000
2 500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Mill
ion
€
Disposals
Acquisitions
Capital expenditure onfixed assets
Capital Investments about 60 m€ in 2013
*Indicative level for 2013
34
Metsä GroupMetsä Board
Funding and Debt Information
35
Metsä GroupMetsä Board
Significant Divestments- EUR 3.6 billion in assets divested since 2001
2004 Metsä Tissue 5702002 Papierfabrik Albbruck 2352001 MD Papier 3002001 Noviant (19%) 41
3,645
Year Divestiture Enterprise Value
m€
2005 Savon Sellu 202005 Forestia (95%) 163
2005 Botnia (8%) 1642007 Botnia (9%) 2402007 Folding carton plants 602007 Map Merchant Group 3822008 New Thames mill 82**2008 100 000 B2 shares in PVO 802008 Graphic Papers 750
* Cash portion**Incl. pension liabilities
2009 Metsä-Botnia’s Uruguayn operations 300*2011 Hallein 34
36
2012 0.5 % stake in PVO 642012 7.3 % stake in Metsä Fibre 1382013 Alizay property and other assets 22
Metsä GroupMetsä Board
Financial Situation Improved Further in 1Q 2013
‒ Net debt 578 m€
‒ Net gearing 69%, equity ratio 33.3%
‒ Remaining USD 121 million private placement was prepaid in March which increased the financing costs in 1Q
‒ Metsä Fibre dividend 25 m€ was received in March
‒ Metsä Board’s cash about 140 m€ at end 1Q
‒ Average interest rate reduced to 4.1%
‒ After the reporting period in April the 500 m€ term loans were drawn and the remaining 450 m€ of the 500 m€ bond was repaid
Net Debt, m€
578
3693
2403
0
500
1000
1500
2000
2500
3000
3500
4000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
1Q13
37
Metsä GroupMetsä Board
Agreement on Metsä Board’s Refinancing Signed in May 2012
‒ 600 m€ term loan and revolving credit facility agreement with a syndicate of five banks and certain Finnish institutional investors
‒ This agreement was utilized to refinance the 500 m€ eurobondmatured in April 2013
‒ Facilities include a 100 m€ RCF available immediately and 500 m€term loans available from late March 2013
‒ Maturity of RCF is three years ‒ 150 m€ of term loans matures at end June 2014 and 350 m€ at end March 2016
‒ The average financing cost of the facilities calculated for the entire loan period is 6.5 %
38
Metsä GroupMetsä Board
Loans and Interest Rate
At the end of 1Q 2013
‒ Average maturity of long term loans 0,8 years
‒ Average interest rate of loans (including derivatives) 4,1 %
‒ Interest rate maturity of loans (including derivatives) 12,3 months
‒ Of the loans about 75 per cent was subject to variable interest rates and 25 per cent to
fixed interest rates
39
Metsä GroupMetsä Board
Total 712 m€ 31.3.2013
Long-Term Interest Bearing Liabilities
63 %
8 %4 %
0 %
25 %
BondsPension premium loansLoans from financial institutionsFinance leasesOther interest bearing liabilities
40
Metsä GroupMetsä Board
Total 313 m€ 31.3.2013
Short-Term Interest Bearing Liabilities
1 %
99 %
Metsä GroupShort-term bank loans and other
41
Metsä GroupMetsä Board
Interest Bearing Net Liabilities 31.3.2013
‒ Long-term 712
‒ Short-term 313
Total interest bearing liabilities 1 025
‒ Liquidity and other interest bearing receivables 447
Interest bearing net liabilities 578
42
m€
Metsä GroupMetsä Board
Long-term Interest Bearing Liabilities and CommittedUndrawn Credit Facilities 31.3.2013
500
2972
22 21 21 20 28
150
100
350
20
0
100
200
300
400
500
600
2013 2014 2015 2016 2017 2018 2019 >2 019
Long-term interest bearing liabilitiesCommitted undrawn credit facilities
m€
43
After the reporting period in April the 500 m€ term loans were drawn and the remaining 450 m€ of the 500 m€ bond was repaid
Metsä GroupMetsä Board
Liquidity
Committed credit facilitiesLiquid fundsm€
0
100
200
300
400
500
600
1Q12 2Q12 3Q12 4Q12 1Q12
44
Metsä GroupMetsä Board
Debt Programs
45
The following table sets forth the significant debt securities issued and outstanding of Metsä Board as at March 31, 2013
Average
Long-term borrowings Total amount Outstanding Interest Rate (1) Maturity
USD 350 million Private Note Issue USD 350 USD 0 – –EUR 500 million Bond Issue EUR 500 EUR 500 6,3 % 2013Global Medium-Term Note Program EUR 1 500 EUR 0 – –EUR 66 million bilateral loans EUR 54 EUR 54 6,3 % 2013-2015EUR 27 million finance leases EUR 26 EUR 26 2,2 % 2013–2020EUR 230 million pension loans EUR 230 EUR 181 4,8 % 2013–2020
Short-term funding programmes
EUR 350 million domestic CP-program EUR 350 EUR 0 – –EUR 150 milj. Belgian CP-program EUR 150 EUR 0 – –
Average interest rate of all Metsä Board Group interest bearing liabilities including interest rate derivatives per 31.3.2013 is 4,1 %.
The following table sets forth Metsä Board´s principal long-term liquidity reserves as at March 31, 2013:
Average Liquidity reserves Total amount Outstanding Interest Rate (1) Maturity
(EUR in millions)Revolving Credit Facility 2012 EUR 100 EUR 0 – 2015Bridge Financing Faciility 2012 EUR 150 EUR 0 – 2014Term Loan Facility 2012 EUR 350 EUR 0 – 2016Pension loan facilities EUR 230 EUR 181 4,8 % -
(1) The average interest rates take into account outstanding interest rate swaps and amortised arrangement fees.
(currency in millions) After the reporting period in April the 500 m€ term loans were drawn and the remaining 450 m€ of the 500 m€ bond was repaid
Metsä GroupMetsä Board
Ratings’ History
2000S&P: Short term ratings lowered to A3, Long term ratings placed to credit watch negativeMoody’s: Long and short term ratings outlook changed from stable to negative
2001S&P: Long term ratings lowered to BBB-,stable outlookMoody’s: Long and short term ratings lowered to Baa3/P3, negative outlook
2003S&P: Downgrade to BB+, stable outlookMoody’s: Downgrade to Ba1, negative outlook
2004S&P: Outlook changed from stable to negative, ratings affirmedMoody’s: Downgrade to Ba2, stable outlook
2005S&P: Downgrade to BB, stable outlookMoody’s: Outlook changed from stable to negative, ratings affirmed
2006S&P: Downgrade to BB-, negative outlookMoody’s: Downgrade to Ba3, negative outlookMoody’s: Downgrade to B2, negative outlookS&P: Downgrade to B+, negative outlook
2007Moody’s: Downgrade to B3, negative outlookS&P: Downgrade to B, negative outlookS&P: Downgrade to B-, stable outlook
2008S&P: Outlook to negative
2009S&P: Downgrade to CCC+, negative outlook Moody’s: Downgrade to Caa1, outlook negative
2010S&P: Outlook to stableMoody’s: Outlook to stableS&P: Upgrade to B-, stable outlookMoody’s: Upgrade to B3, outlook to positive
2011S&P: Outlook to positiveS&P: Outlook to stableMoody’s: Outlook to stable
2012Moody’s: Outlook to positive
2013S&P: Outlook to positive
46
Metsä GroupMetsä Board
General Presentation
Metsä GroupMetsä Board
Metsä Board in Brief
‒ Annual sales about 2.2 b€
‒ Leading European paperboard company
‒ Major uncoated fine and printing paper and market pulp supplier
‒ Valuable holdings in Metsä Fibre and Pohjolan Voima
‒ Global sales and customer service network in 70 countries and nine production units in Finland, Sweden and Germany
‒ Listed on the NASDAQ OMX Helsinki Ltd and a part of Metsä Group, one of the largest forest industry groups in Europe
48
Metsä GroupMetsä Board
Offering for Consumer Packaging, Communications and Advertising
‒ Cartonboards and white-top kraftliners for packaging beautycare, healthcare, cigarettes, food, consumer durables etc.
‒ Graphic boards e.g. for book covers, postcards, greeting cards, CD or DVD covers
‒ Office papers from high-volume copying and printing to high-quality color presentations
‒ Speciality papers for advertising and corporate materials, creative designs, labeling and for wallcoveringindustry
49
Metsä GroupMetsä Board
Customers
Office product resellers
Publishers
Brand owners
Printers and converters
Advertising and design agencies
Office paper users
Paper merchants
50
Metsä GroupMetsä Board
17 %
32 %
12 %
9 %
12 %
6 %
9 %3 %
Paper PulpPaperboard PackagingTissue Mechanical Forest ProductsMerchanting Chemicals
53 %
32 %
15 %
Focus on Core Businesses
1995 Sales€2.3 billion
2012 Sales€2.1 billion
8 Businesses 3 Businesses
51
Metsä GroupMetsä Board
Acquisitions
Divestments
Biberist Paper Mill
Simpele Mill UK Paper
Modo Paper
Zanders
ChemicalsBusiness
Botnia Wood
CorrugatedPackaging
MD Papier Metsä Tissue
Albbruck
Metsä Board Restructuring Story
SavonSellu
Forestia
Kemiart Liners (53 %)
8% in Botnia
PSM
9% in Botnia
Cartonplants
Map
100 000 B2 shares
in PVO
New Thames MB
Uruguay
Graphic Papers
Part of Reflex
Halleinmill
1997 20001998 1999 2001 2002 2003 2004 2005 2006 2007 20092008 2010 2011
52
Rest of Reflex
0.5% in PVO
2012
7.3 % in Metsä Fibre
Metsä GroupMetsä Board
Annual Sales Development
210824852605
2432
3236
4440
56245241
54606044
65646923
5898
33193014
2313
4044
0
1000
2000
3000
4000
5000
6000
7000
8000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
EUR, million
53
Metsä GroupMetsä Board
Business Portfolio
54
Metsä GroupMetsä Board
Business Portfolio
Paperboard Paper and Pulp
55
Metsä GroupMetsä Board56
Main Businesses of Paperboard Business Area
‒ European market leader and global quality leader in folding boxboard (FBB)‒ Mainly for consumer packaging‒ Strong demand growth‒ Annual sales over 800 m€‒ Good profitability
‒ Global market and quality leader in white top kraftliner‒ For heavier consumer goods and high quality transport boxes‒ Strong demand growth ‒ Annual sales about 300 m€‒ Good profitability
Metsä GroupMetsä Board57
‒ Husum mill is the largest fine paper and pulp integrate in Europe‒ Major producer of uncoated fine paper and coated papers‒ Also linerboard production started‒ One of the largest pulp mills in Europe with 750 000 t/a capacity‒ Annual sales about 650 m€‒ Good cash flow generator
‒ Kaskinen is one of the most modern high yield pulp (BCTMP) plants in the world
‒ Start up in 2005‒ Capacity 300 000 t/a‒ Annual sales about 100 m€‒ Improving cash flow
Main Businesses of Paper and Pulp Business Area
Metsä GroupMetsä Board
Paperboard business area
‒ Fibre-based high value-added packaging solutions for global brand owners in beautycare, healthcare, cigarette, food and consumer electronics industries as well as for graphical end-uses
‒ Relatively high earnings stability
‒ High segment consolidation
‒ Competitive folding boxboard mills with end use specified production
Capacity Share (%)
8 %
9 %
12 %
24 %
35 %
0 % 5 % 10 % 15 % 20 % 25 % 30 % 35 % 40 %
Careo
IP
Mayr-Melnhoff
Stora Enso
Metsä Board
No. 1 Folding Boxboard Producer in Europe
Source: Pöyry Management Consulting Oy58
Metsä GroupMetsä Board
Paper and Pulp Business Area
Capacity Share (%)
4 %
8 %
10 %
12 %
12 %
14 %
0 % 5 % 10 % 15 %
Metsä Board
International Paper
UPM-Kymmene
Mondi
Stora Enso
Portucel
No. 6 Uncoated Fine Paper Producer in Europe
- High quality uncoated fine papers for printing and photocopying as well as for forms, envelopes, manuals and communication purposes. Additionally, chemical pulp and BCTMP for external customers
- Diversified customer base, e.g. merchants, retail chains, office equipment manufacturers and corporations
- Leading European office paper brands like DataCopy and SAVE!
Source: Pöyry Management Consulting Oy59
Metsä GroupMetsä Board
Business Area Performance – Comparison to Previous Quarter
Sales, m€
1Q 20134Q 2012
60
279
210
293
217
0
50
100
150
200
250
300
350
Paperboard Paper and Pulp
28
0
32
‐2
‐10
0
10
20
30
40
Paperboard Paper and Pulp
Operating result, excluding non-recurring items, m€
Metsä GroupMetsä Board
Business Area Performance – Comparison to Previous Year
Sales, m€
1Q 20131Q 2012
61
281
245
293
217
0
50
100
150
200
250
300
350
Paperboard Paper and Pulp
27
‐12
32
‐2
‐20
‐10
0
10
20
30
40
50
Paperboard Paper and Pulp
Operating result, excluding non-recurring items, m€
Metsä GroupMetsä Board
Operations
Metsä GroupMetsä Board
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
Paper Board Pulp and BCTMP
1000 tons/a
Production Capacity
63
Metsä GroupMetsä Board
Production Locations
Paperboard:• Simpele• Äänekoski• Kyro• Tako • Kemi• Gohrsmühle• Joutseno
Paper and Pulp: • Husum• Kaskinen
Husum
Gohrsmühle
ÄänekoskiSimpele
Joutseno
Kemi
TakoKyro
Kaskinen
64
Metsä GroupMetsä Board
Board and Paper Capacity by Grade(1000 t/a)
65
Production Capacities (1000 t)
BOARD MILLS
Board Mill Country Machines FoldingBoxboard Liner Total
Tampere Finland 2 205 205Kyröskoski Finland 1 190 190Äänekoski Finland 1 240 240Simpele Finland 1 300 300Kemi Finland 1 375 375
Total 6 935 375 1310
PAPER MILLS
Paper Mill Country Machines Coated Coated UncoatedMagazine Fine Fine Specialty
Paper Paper Paper Paper Total
Kyröskoski Finland 1 105 105Bergisch Gladbach Germany 2 50 50Husum Sweden 3 370 440 810
Total 6 370 0 440 155 965
Metsä GroupMetsä Board
Pulp Capacity
(1000 t/a)
66
PULP MILLS
Pulp Mill Country ChemicalPulp BCTMP Total
Husum Sweden 750 750Joutseno Finland 280 280Kaskinen Finland 300 300
Total 750 580 1330
METSÄ FIBRE *
Mill Country ChemicalPulp Total
Äänekoski Finland 500 500Kemi Finland 590 590Rauma Finland 630 630Joutseno Finland 650 650
Total 2370 2370
* Metsä Board's share is 24.9% of the capacity
Metsä GroupMetsä Board
Personnel Development
32393279407045384903
6546
9508
1412515154
16490
2107022237
17351
20372
0
5000
10000
15000
20000
25000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1Q13
67
Metsä GroupMetsä Board
Deliveries
Metsä GroupMetsä Board
Uncoated fine paperCartonboard
Annual Deliveries*
25 %
5 %
18 %
52 %
Western- Europe Eastern- Europe Americas Asia & Pacific
10 %
78 %
10 %2 %
* Indicative numbers69
Metsä GroupMetsä Board
Sourcing
Metsä GroupMetsä Board
Personnel 16 %
Other fixed18 %
Delivery costs14 %
Wood21 %
Chemicals, pigments and
fillers15 %
Other variables
3 % Energy13 %
Cost Structure 2012* (total annual costs in industrial operations ~ EUR 1,6 Billion)
Fixed costs
Variable costs
* Percentage of annual costs in industrial operations
71
Metsä GroupMetsä Board
Electricity Sourcing 2012 (total 2 742 GWh)
Through PVO shareholding
30 %
Outsourced generation
2 %
Own generation23 %
Purchased energy45 %
72
Metsä GroupMetsä Board
Fuels Used 2012 (total 12,6 TWh)
Wood-based56 %
Nuclear power23 %
Natural gas8 %
Oil3 % Peat
1 %Coal4 %
Hydro5 %
73
Metsä GroupMetsä Board
Wood Sourcing by Country in 2012
1 000 m3
Sweden 2102
Finland 1193
Baltic countries 1075
Russia 433
Norway 3
Total 4806
74
Metsä GroupMetsä Board
Development of Softwood PulpwoodCost at Mill, Wood for Chemical Pulping
1980 – 2Q 2012
Source: Pöyry Management Consulting Oy
75
EUR/m³sob
Metsä GroupMetsä Board
Development of Softwood PulpwoodCost at Mill, Wood for Mechanical Pulping
1980 – 2Q 2012
Source: Pöyry Management Consulting Oy
76
EUR/m³sob
Metsä GroupMetsä Board
Development of Hardwood PulpwoodCost at Mill, Wood for Chemical Pulping
1980 – 2Q 2012
Source: PöyrySource: Pöyry Management Consulting Oy
77
EUR/m³sob
Metsä GroupMetsä Board
Owners
78
Metsä GroupMetsä Board
Ownership Structure 31.3.2013Shares Votes
Source: Euroland79
Metsä GroupMetsä Board
Market Position
Metsä GroupMetsä Board
0 100 200 300 400 500 600 700 800 900 1000
Others
Holmen
Careo
IP
Mayr-Melnhof
Stora Enso
Metsä Board
Folding Boxboard Capacities in Europe BIG-5 = 84% of total
Capacity: tons/year (thousand)
35%
24%
12%
9%
8%
7%
5%
Source: Pöyry Management Consulting Oy
81
Metsä GroupMetsä Board
0 500 1000 1500 2000 2500 3000 3500
Others
Guipuzcoana de Zicuñaga
Arctic Paper
Metsä Board
International Paper
UPM
Mondi
Stora Enso
Portucel
Uncoated Fine Paper Capacities in EuropeBIG-5 = 56% of total
14%
12%
12%
10%
8%
4%
3%
3%
29%
Capacity: tons/year (thousand)
Source: Pöyry Management Consulting Oy
82