investor presentation 3q 2010 - m real
TRANSCRIPT
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ContentsInvestment highlights and update2 Investment Highlights
3 Strategy17 Financial Targets19 3Q 2010 Results & Outlook33 Price Development
35 Dividend38 InvestmentsFunding and debt information41 Divestments
42 Funding and Debt48 Credit Facilities49 Rating History
General presentation50 General Info
57 Business Portfolio66 Operations72 Deliveries74 Sourcing
82 Owners85 Market Position
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Investment Highlights Strong core in high-quality cartonboards
M-real the European market leader in folding boxboard Good growth potential
Turn-around in profitability
Significant net debt reduction in recent years
Strategic review ongoing
M-real the forerunner in paper merchanting and coated papers industryrestructuring in Europe
Asset divestments Extensive cost savings and cash flow improvement programmes
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Strategy
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Consistent Strategic Direction Since 2006
Cartonboards for consumer packaging
the strategic core business
Divestment of underperforming paper
businesses
Major cost savings through complexity
reduction
Responsible and proactive approach to
increase prices
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Packaging Is One of the Biggest and Fastest
Growing Businesses in the World
One of the most important well-beingdrivers in the world
Product safety issues are crucial
Branding and information sharingincreasingly important
Criticism against bad packagingincreasing
Flexibleplastics
20 %
Metal
15 %
Glass7 % Others
6 %
Board
31 %
Rigid
plastics
21 %
Sources: Pira & M-real
Global Packaging Market ($634 Billion)
Virgin fibre
cartonboard ~7% oftotal
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Several Megatrends Supporting GoodPackaging
Demand for good packaging heavily increasing
Good packaging is environmentally sustainable Made out of renewable raw material and recyclable High energy self-sufficiency in production Low carbon footprint
Lightweight
Good packaging is safe Durable No migration Good printing surface
Good packaging is economical
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Virgin Fibre Board Is the Best Example of GoodPackaging Lowest Carbon Footprint
Virgin fibre based lightweight
cartonboards the mostenvironmentally sound packagingmaterial
Wood fibre based productsreplace non-renewable materialslike plastic and aluminium
Virgin fibre board replaces alsorecycled fibre based packagingmaterials
0
2000
4000
6000
8000
10000
12000
14000
M-real's Carta
Solida
HDPE PET PLA (Biobased
polymer)
Aluminium
kg/tonne
Source: M-real and Sustainable Packaging Coalition - SPC
Cartonboard has the lowest carbon footprint
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Watch Your Weight!
For an order of 50.000 sheets (520 x 720 mm)
you will need 18.720 m2
of board:~13 mNm CD stiffness, ~500 m thickness
M-reallightweightpaperboardAverage
FBB(folding boxboard)SBB
(solid bleached board)WLC(white lined chipboard)
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M-real Targets Growth in Its Core Business
Packaging Huge growth potential in wood fibre based packaging applications when
replacing non-sustainable packaging materials
M-real a strong producer of virgin fibre based cartonboard and white toplinerboard as well as packaging related speciality papers
Access to wood raw material, superior fibre knowhow and pulp self-sufficiencyM-reals important competitive advantages
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M-real Well Equipped for Expansion of
Cartonboard Business
Excellent potential to increase the output of current
machines with modest investments Significant amount of excess pulp currently
New investments were announced by M-real in 3Q2010
Investigations ongoing to benefit growth potentialin Russia, Eastern Europe or Asia
Alone and together with the best selected local partners
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M-real is Investing in Its Cartonboard Business
26 M investment in 80 kton/a capacity expansion at Simpele
Simpeles cartonboard machine the most efficient in Europe
Simpele mills sheeting capacity will be expanded
To be completed in summer 2011
16 M investment in Kemiart Liners to modernize the coating
section
Increased share of high value added coated products
To be completed in autumn 2011
Evaluations regarding further development steps in
cartonboard business continue
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M-real Strategic Review- M-reals Response to the Changes in Business Environment
In March 2006, M-real's Board of Directors initiated a strategic review
M-real was the first major paper company to emphasize the need forindustry consolidation and extensive restructuring
M-real took the leading role in European paper merchantingrestructuring in 2007
M-real also took the leading role in European coated paper industry
restructuring in 2008
Extensive internal profit improvement programmes
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Strategic Review of the Paper BusinessProceeds
M-real in strong position in participating
restructuring of the European uncoatedfine paper business
M-real Zanders is a leading Europeanspeciality paper producer
Potentially, also separate divestments ofthe non-profitable units
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M-real the Forerunner in Re-Engineering ofEuropean Paper and Board Industry
Most extensive efficiency improvementsin European paper and board industry
2006-2010
Divestment of Map Merchant Group2007
Divestment of Graphic Papers,
2008
New Mets-Botnia ownership structure anddivestment Uruguay pulp mill
2009
Need of structural changeAnd new strategic direction
2005
Pulp self-sufficiency2008
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2011 Result Expected to Be Boosted by 60 M vs.2010 Due to Own Already Implemented Measures
Cumulative
Profit impact vs. 2009, mtotaltarget 2010 2011
1 Profit improvement programme 2010 80 40 80
2 Rollover impact of 2009 programme 60 50 60
3 Rollover impact of 2008 programme 20 10 20Total 160 100 160
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M-real Is a Responsible CompanyCompleted closures in 2007
Sittingbourne: coated fine paper 210 ktons/a
Gohrsmhle 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
Gohrsmhle: standard coated 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
Total paper capacity 1 465 ktons/a
Total board capacity 70 ktons/a
Total pulp (incl. BCTMP) capacity 415 ktons/a
*In Gohrsmhle the speciality paper and uncoated fine paper reel and folio sheet production expanded after thediscontinuation of the standard coated fine paper production.
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Financial Targets
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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%
13,5%
6,2%
2,1%1,6%0,5%0,9%
2,8%
-0,5%
-5,6%
8,0%10,2%
7,6%
99 00 01 02 03 04 05 06 07 08 09 1-3Q
10
Minimum target of 10%
184%
119%137%
82%95%
126%
99%90%84%81%83%
145%
99 00 01 02 03 04 05 06 07 08 09
3Q10
Maximum level of 100%
* Excluding non-recurring items
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3Q 2010 results and Outlook
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Key Events in 3Q 2010
Good profitability trend continued
Strong demand in all main grades
M-real continued to implement price increases
Investments in Simpele and Kemi were announced
Operative performance of Alizay paper mill improved
Partial divestment of Reflex mill
Credit rating upgrades by both Moodys and S&P
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Key Figures Quarterly
Sales Operating result excl. non-rec. items
623 585 618 606
859 829 826722
602676 662
250
500
750
1000
I II III IV I II III IV I II III
M M
-65
7-22
-70
143
-1
-51
39 4354
-75
-50
-25
0
25
50
75
I II III IV I II III IV I II III
M
Result before taxes excl. non-rec. items
20092008
-21-36 -34
-87
15
-62-83
-70
-1524
33
-100
-75
-50
-25
0
25
50
I II III IV I II III IV I II III
2010
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Operating Cash Flow Turned Positive in 3Q
M 3Q 2010 1-3Q 2010
EBITDA, excluding non-recurring items +85 +234
Change in ONWC -24 -132
Net investments +10 +7
Net financial costs -20 -59
Operating cash flow +51 +50
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Good Progress in Price Increases in ConsumerPackaging
310 305
0
100
200
300
400
2Q 2010 3Q 2010
SalesM
In comparison to 2Q 2010 profitability was negativelyimpacted by scheduled maintenance shut downs at all
board mills resulting in lower deliveries
Profitability improved due to implemented price increases
Demand continues strong. 4Q deliveries negativelyimpacted by seasonality
Price increases implemented to annual contracts asplanned, result impact mainly from 1Q 2011 onwards
Long delivery times and fully booked capacity in FBB still achallenge for daily business
New capacity increases announced
EBIT, excl non-recurring items
38 34
0
10
20
30
40
50
M
2Q 2010 3Q 2010
23
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Office Papers Result Improved Clearly
-4
9
-10
0
10
20
30
EBIT, excl non-recurring itemsM
153
164
0
50
100
150
200SalesM
2Q 2010 3Q 2010
2Q 2010 3Q 2010
Profitability improved due to implemented price increasesand better operating rates
Result was weakened by higher fibre price
Demand expected to continue strong, 4Q deliveries
negatively impacted by seasonality
Alizays operative performance improved by the permanentclosure of the pulp mill
Husums energy efficiency investments proceeding asplanned
New turbine in place in 1Q 2011, additional annual savings ofabout 12 m
24
E t i P fit I t A ti C ti d i
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Extensive Profit Improvement Actions Continued inSpeciality Papers
Result was weakened by lower operating rates anddecreased delivery volumes. Continued high pulp pricemaintains profitability challenges
Result was improved by price increases and implementedcost savings
Demand expected to remain stable
Positive price development continued in speciality grades
Full result impact of agreed productivity improvements from
1Q 2011 onwards. New measures are in the pipeline
Share of coated speciality grades still too low in Gohrsmhle Simpele speciality grades planned to be moved to Gohrsmhle Intensive actions to find new volumes continue
-5-7
-20
-10
0
10
20
EBIT, excl non-recurring itemsM
8075
0
25
50
75
100SalesM
2Q 2010 3Q 2010
2Q 2010 3Q 2010
25
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Market Pulp and Energys Profitability Stable
16 16
0
5
10
15
20
25
EBIT, excl non-recurring itemsM
126
93
0
50
100
150
200
SalesM
2Q 2010 3Q 2010
2Q 2010 3Q 2010
Profitability improved by increased pulp price
Profitability was negatively impacted by lower operatingrates due to maintenance shutdowns, lower deliveryvolumes and higher wood costs
Demand expected to continue strong, 4Q deliveriesnegatively impacted by seasonality
Good progress in technical sales actions to allocate moreKaskinen BCTMP volumes to Europe
Pulp price is expected to be slightly lower in 4Q than in 3Q
No radical decreases in sight
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M-real Is Showing Market Leadership
Board price increased slightly in 3Q and annual contract negotiations are proceeding well After agreed increases FBB and liner prices in excess of 10% higher than in the beginning of 2010
Result impact of new annual FBB contracts mainly from 1Q 2011
WFU prices were again increased in 3Q This year prices have increased in excess of 15 % in total
Further price increases are necessary to maintain profitability, however, possibilities seem limited
Carbonless and one-side coated speciality paper prices increased in 3Q Some potential for further increases exist, but no material changes in price levels are expected
Pulp price is somewhat lower in 4Q vs. 3Q, no material further decreases in sight
Estimates are based on current sales mix and currency rates
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M-real is Growing Its Cartonboard Business
26 M investment in 80 kton/a capacity expansion at Simpele
Simpeles cartonboard machine the most efficient in Europe
Simpele mills sheeting capacity will be expanded To be completed in summer 2011
16 M investment in Kemiart Liners to modernize the coating
section Increased share of high value added coated products
To be completed in autumn 2011
Evaluations regarding further development steps incartonboard business continue
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Recent Improvement Measures in Office Papers
Major complexity reduction in recent years including closures and divestments ofuncompetitive capacity
Actions implemented in 2010 improve results by over 30 M, fully from 2011 Energy efficiency investment worth 22 M under implementation in Husum
Personnel reduction of 200 in Husum
Closure of Alizay pulp mill
Streamlining of product portfolio Focus on high value added products
First deliveries of the new product SAVE! in September
Price increases
R t I t M i S i lit
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Recent Improvement Measures in SpecialityPapers
In recent years significant efficiency improvements and closures of uncompetitivecapacity
Discontinuation of Gohrsmhles former main business, standard WFC, in 2009
Intensive development of new speciality products to Gohrsmhle
Actions implemented in 2010 improve results by about 18 M, fully from 2011 Closure of two speciality paper machines at Reflex, product offering and business volumeunchanged
Personnel reduction of 220 in M-real Zanders
Planned continuation of Simpele speciality paper
production in Gohrsmhle
Partial divestment of the Reflex mill as part of thePaper Park concept
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Promising Further Profit Improvement Potential
All opportunities for new price increases will be utilised
Continue profitable growth in cartonboard business
New extensive profit improvement programme MRP11 focusing on paper units under
construction
Potential divestments of non-profitable assets
Next steps in implementation of Reflex Paper Park
Paper business strategic review continues
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Profitability Outlook
M-reals fourth quarter 2010 operating result,
excluding non-recurring items, is expected to
be temporarily weaker than in the third
quarter due to unfavourable exchange rate
development as well as seasonality
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Folding Boxboard Market Price in Europe
2000 9/2010EUR / tn Three month moving average
400
600
800
1000
1200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: M-real
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Paper and Pulp Market Price in Europe
1998 9/2010EUR / tn
Coated fine paper (100 g)
Uncoated fine paper (B-copy, 80 g)
Softwood pulp NBSK
Coated magazine paper LWC (60g)
Source: Foex, ReutersEUR/USD
EUR/USD
400
500
600
700
800
900
1000
1100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0,8
0,9
1
1,1
1,2
1,3
1,4
1,5
1,6
1,7
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Dividend
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Dividend Policy Future dividends will take into account the need to achieve and
maintain sufficient financial flexibility
The Company remains committed to an attractive andcompetitive dividend
M-real's dividend policy is stable and rewarding toshareholders, and aims at paying a dividend of at least 1/3 ofthe Company's EPS on average over the business cycle,
nonetheless taking into account the Company's gearing target
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Dividend Yield
0,50
1,09 1,13
1,85
0,460,30
-0,79
-1,58
-1,09
0,26 0,37 0,380,51 0,51 0,51
0,25 0,00 0,00
-0,59
-1,21
-0,25-0,43
0,23 0,060,060,14 0,12 0,120,0%
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
pershare
-8 %
-6 %
-4 %
-2 %
0 %
2 %
4 %
6 %
8 %
10 %
12 %
Dividen
dyield,
%
Earnings per share Dividend per share Dividend yield
Dividend yield calculated from annual average B-share volume weighted price
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Investments
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Capital InvestmentsCapital Investments about 70 m in 2010
-1 500
-1 000
-500
0
500
1 000
1 500
2 000
2 500
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
Million
Disposals
Acquisitions
Capitalexpenditure onfixed assets
*Indicative level for 2010
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Funding and debt information
Significant Divestments
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Significant Divestments
- EUR 3.4 billion in assets divested since 2001Year Divestiture Enterprise Value
300*2009 Mets-Botnias Uruguayn operations7502008 Graphic Papers
802008 100 000 B2 shares in PVO82**2008 New Thames mill
3822007 Map Merchant Group602007 Folding carton plants
EUR millions
2402007 Botnia (9%)1642005 Botnia (8%)
1632005 Forestia (95%)
202005 Savon Sellu
5702004 Mets Tissue
2352002 Papierfabrik Albbruck
3002001 MD Papier
Noviant (19%)2001 41
3,387
* Cash portion
**Incl. pension liabilities
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Loans and Interest Rate
At the end of 3Q 2010
Average maturity of long term loans 2,8 years
Average interest rate of loans (including derivatives) 5,0 %
Interest rate maturity of loans (including derivatives) 7,9 months
Of the loans about 83 per cent was subject to variable interestrates and 17 per cent to fixed interest rates
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Long-term Interest Bearing Liabilities5 %5 %3 %
7 %
20 %
60 %
MTN Programme
Bonds
Pension premium loansLoans from financial institutions
Finance leases
Other interest bearing liabilities
Total 1 123 m 30.9.2010
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Short term interest bearing liabilities
Short-term Interest Bearing Liabilities
Total 237 m 30.9.2010
2 %
98 %
Metsliitto Group
Short-term bank loans and other
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Interest bearing net liabilities 31.12.2003Interest Bearing Net Liabilities 30.9.2010
Long-term 1 123
Short-term 237Total interest bearing liabilities 1 360
Liquidity and other interest bearing receivables 539
Interest bearing net liabilities 821
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Long-term Interest Bearing Liabilities 30.9.2010
33
98
158
600
117
18 18
81
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015 2016 >2 016
EUR, million
Li idi
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Liquidity
Committed credit facilities
Liquid fundsM
0
200
400
600
800
1000
1200
1400
I/09 II/09 III/09 IV/09 I/10 II/10 III/10
Debt Programs
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Debt Programs
The following table sets forth the significant debt securities issued and outstanding of M-real as at Sept. 30, 2010:
Average
Long-te rm borrow ings Total am ount Outstanding Interest Ra te Maturity
USD 350 million Private Note Issue USD 350 USD 224 5.7% (1) 20122014
EUR 500 mil lion Bond Issue EUR 500 EUR 500 7.0% (1) 2013
EUR 400 mil lion Bond Issue EUR 400 EUR 0 2010
Global Medium-Term Note Program EUR 1 500
EUR 52 million private placements EUR 52 3,3 % 2011
EUR 131 mil lion bilateral loans EUR 131 EUR 131 1,5 % 20102013EUR 29 mil lion finance leases EUR 29 EUR 29 5,0 % 20102014
EUR 245 mil lion pension loans EUR 245 EUR 226 5.4% (1) 20102020
Sho rt-term funding pro gra mmes
EUR 350 mil lion domestic CP-program EUR 350 EUR 0
EUR 150 mil j. Belgian CP-program EUR 150 EUR 0
Average interest rate of all M-real Group interest bearing liabilities inc luding interest rate derivatives per 30.9.2010 is 5,0 %.
(1) The average interest rates take into account outstanding interest rate swaps and amortised arrangement fees.
(currency in million s)
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Ratings History2000
S&P: Short term ratings lowered to A3,Long term ratings placed to credit watchnegative
Moodys: Long and short term ratingsoutlook changed from stable to negative2001
S&P: Long term ratings lowered to BBB-,stable outlookMoodys: Long and short term ratingslowered to Baa3/P3, negative outlook
2003S&P: Downgrade to BB+, stable outlookMoodys: Downgrade to Ba1, negativeoutlook
2004S&P: Outlook changed from stable tonegative, ratings affirmedMoodys: Downgrade to Ba2, stable outlook
2005S&P: Downgrade to BB, stable outlookMoodys: Outlook changed from stable to negative,
ratings affirmed2006
S&P: Downgrade to BB-, negative outlookMoodys: Downgrade to Ba3, negative outlookMoodys: Downgrade to B2, negative outlookS&P: Downgrade to B+, negative outlook
2007Moodys: Downgrade to B3, negative outlook
S&P: Downgrade to B, negative outlookS&P: Downgrade to B-, stable outlook2008
S&P: Outlook to negative2009
S&P: Downgrade to CCC+, negative outlookMoodys: Downgrade to Caa1, outlook negative
2010S&P: Outlook to stableMoodys: Outlook to stableS&P: Upgrade to B-, stable outlookMoodys: Upgrade to B3, outlook to positive
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General presentation
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M-real in Brief Annual sales about EUR 2.5 billion.
Approximately 4,900 employees.
Present in over 70 countries.
13 production units in 5 Europeancountries.
Part of Metsliitto Group and listed onthe NASDAQ OMX Helsinki Ltd.
Metsliitto Group is one of the largestforest industry groups in the world,owned by a cooperative of 130.000private Finnish forest owners.
Consumer Packaging 40%Paper 40%
Market pulp and energy 20%
Sales breakdown 2009
Offering for Consumer Packaging,
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Communications and Advertising
Cartonboards and white-top kraftliners for packagingbeautycare, 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,
flexible packaging, creative designs, labeling, self-adhesivelaminates and for wallcovering industry
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M-reals Customers
Publishers
Office productresellers
Brand owners
Printers andconverters
Paper merchants
Office paper users Advertising anddesign agencies
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Focus on Core Businesses
17 %
32 %
12 %
9 %
12 %
6 %
9 % 3 %
Paper Pulp
Paperboard Packaging
Tissue Mechanical Forest Products
Merchanting Chemicals
40 % 40 %
20 %
1995 Sales2.3 billion
2009 Sales2.4 billion
8 Businesses 3 Businesses
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M-real Restructuring Story
AcquisitionsModo Paper
Biberist Paper Mill
19971996 20001998
SimpeleMill
1995 1999
Divestments
Kyro Board Mill
UK Paper
Zanders
SawnGoods &
BuildingMaterials
ChemicalsBusiness
BotniaWood
CorrugatedPackaging
MD Papier MetsTissue
2001 2002 2003 2004
KemiartLiners (53 %)
Albbruck
2005
SavonSellu
Forestia
8% in
Botnia
2006 2007
PSM
9% inBotnia
Cartonplants
Map
100 000B2 shares
in PVO
20092008
NewThames
MBUruguay
GraphicPapers
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Annual Sales Development
2432
3236
4440
56245241
5460
60446564
6923
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
EUR, million
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Business Portfolio
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Business PortfolioConsumer Packaging Office Papers Speciality
Papers
Market Pulp
and Energy
Consumer Packaging
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Mainly Folding Boxboard and Linerboard
Fibre-based high value-added packaging solutions for global brandowners 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 %
10 %
25 %
32 %
0 % 5 % 10 % 15 % 20 % 25 % 30 % 35 %
IP
Careo
Mayr-Melnhoff
Stora Enso
M-real
No. 1 Folding Boxboard Producer in Europe
Office Papers
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Mainly Uncoated Fine Paper
Capacity Share (%)
9 %
10 %
11 %
14 %
14 %
0 % 5 % 10 % 15 %
M-real
UPM-Kymmene
Mondi
Stora Enso
Portucel
No. 5 Uncoated Fine Paper Producer in Europe
High quality uncoated fine papers for printing and photocopying aswell as for forms, envelopes, manuals and communication purposes
Diversified customer base, e.g. merchants, retail chains, officeequipment manufacturers and corporations
Leading European office paper brands like DataCopy and Evolve
Speciality Papers
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Speciality Papers
Leading European speciality paperproducer with strong focus on
packaging applications
Packaging specialities Flexible packaging Luxury packaging
Labels
Graphical specialities Premium fine papers Carbonless papers
Digital imaging papers
Uncoated fine papersPackaging specialities 50%
Graphical specialities 30%
WFU 20%
Speciality paper sales
Sales by Business Area
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M
80
153
126
310
107
75
164
305
0
50
100
150
200
250
300
350
Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy
2Q 2010 3Q 2010
Operating Result by Business Area*
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p g y
M
* excl. non-recurring items
-5
-4
16
38
16
-7
9
34
-20
-10
0
10
20
30
40
50
Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy
3Q 20102Q 2010
Sales by Business Area
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Sales by Business Area
M
279
411382
713
328
237
477
872
0
100
200
300
400
500
600
700
800
900
1000
Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy
1-3Q 20101-3Q 2009
Operating Result by Business Area*
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p g y
M
* excl. non-recurring items
-45-48 -45
35 41
-18
5
111
-60
-40
-20
0
20
40
60
80
100
120
Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy
1-3Q 20101-3Q 2009
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Operations
Production Capacity
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p y
1 800
1 200
2 100
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
M-real Production Locations
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Consumer Packaging: Simpele nekoski board and paper Kyro
Tako Kemi Joutseno
Office Papers: Alizay
Husum paper and pulp
Speciality Papers: Gohrsmhle Reflex
Market Pulp and Energy: Kaskinen Hallein
Alizay
Hallein
Husum
Gohrsmhle
and Reflex
nekoskiSimpele
Joutseno
Kemi
TakoKyro
Kaskinen
Paper and Board Capacity by Grade
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Paper and Board Capacity by Grade(1000 t/a)
BOARD M ILLS
Board Mil l Country Machines Fo lding
Box board L iner Total
Tampere Finland 2 205 205
Kyrskoski Finland 1 160 160
nekoski Finland 1 210 210
Simpele Finland 1 220 220
Kemi Finland 1 375 375
Total 6 795 375 1170
PAPER MILLSPaper Mill Country Machines Coated Coated Uncoated
Magazine Fine F ine Specia lty
Paper Pape r Paper Paper Total
nekoski Finland 1 180 180
Simpele Finland 1 55 55
Kyrskoski Finland 1 105 105
Bergisch Gladbach Germany 2 180 80 260
Dren Germany 2 20 20
Husum Sweden 3 275 435 710
Alizay France 1 310 310
Total 11 275 180 925 260 1640
Pulp Capacity
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Pulp Capacity(1000 t/a)
PULP MI LLS
Pulp Mil l Country Chem ical
Pulp BCTMP TotalHusum Sweden 690 690
Hallein Austria 160 160
Joutseno Finland 280 280
Kaskinen Finland 300 300
Total 850 580 1430
BOTNI A *
Mil l Country Chem ica l
Pulp Total
nekoski Finland 500 500
Kemi Finland 590 590
Rauma Finland 630 630Joutseno Finland 650 650
Total 2370 2370
* M-real share is 30% of the capacity
Personnel Development
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Personnel Development
46824903
6546
9508
1412515154
16490
203722107022237
17351
13885
12637
11463
15572
0
5000
10000
15000
20000
25000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10
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Deliveries
Annual Deliveries*
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Annual Deliveries
Uncoated fine paperCartonboard
32 %
6 %
18 %
44 %
Western- Europe Eastern- Europe Americas Asia & Pacific
8 %
86 %
5 %1 %
* Indicative numbers
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Sourcing
M-real Cost Structure 2009*
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(total annual costs in industrial operations ~ EUR 2 Billion)
Personnel
18 %
Other fixed
13 %
Delivery costs
16 %
Wood
21 %
Chemicals,
pigments and
fillers
15 %
Other
variables
7 %
Energy
10 %
Fixed costs
Variable costs
* Percentage of annual costs in industrial operations
Electricity Sourcing 2009 (total 3 400 GWh)
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y g ( )
Associated
company(PVO)
29 %Outsourced
generation
2 %
Owngeneration
43 %
Purchased
energy
26 %
Fuels Used 2009 (total 19,6 TWh)
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( , )
Wood-
based
60 %
Natural gas
13 %
Coal
9 %
Oil
4 %
Peat
1 %Hydropower
4 %
Nuclear
power9 %
Wood Sourcing by Country
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Wood Sourcing by Country
1 000 m3 2009
Finland 3488
Sweden 2272
Russia 563
France 133
Austria 524Latvia 228
Estonia 204
Lithuania 47
Total 7459
Development of Softwood PulpwoodCost at Mill, Wood for Chemical Pulping
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p g
1980 2Q 2010
Source: Pyry
0
10
20
30
40
50
60
1980198119821983198419851986198719881989199019911992199319941995199619971998199920
0020
0120
0220
0320
0420
0520
0620
0720
0820
09
2010
q2
EUR/m3sob, nominal
Finland, south, pine
Sweden, south, pine
Germany, south, pine
Chile, radiata pineUSA South, SYP
Canada East, SPF
Development of Softwood PulpwoodCost at Mill, Wood for Mechanical Pulping
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1980 2Q 2010
Source: Pyry
0
10
20
30
40
50
60
70
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
q2
EUR/m3sob, nominal
Finland, south, spruce
Sweden, south, spruce
Germany, south, spruce
Austria, spruceCanada East, SPF
USA Great Lakes, spruce
Development of Hardwood PulpwoodCost at Mill, Wood for Chemical Pulping
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1980 2Q 2010
Source: Pyry
0
10
20
30
40
50
60
1980198119821983198419851986198719881989199019911992199319941995199619971998199920
0020
0120
0220
0320
0420
0520
0620
0720
0820
09
2010
q2
EUR/m3sob, nominal
Finland, south, birchSweden, south, birchPortugal, E. globulus
Brazil, E. grandisSouth Africa, E. grandisUSA South, mixed hw
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Owners
M-real Shareholders 30.9.2010
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Non-Finnish nationals;
18 %
Non-profitmaking
organizations; 3 %
Other companies; 5
%
Metsliitto; 39 %
Households; 24 %
Public communities; 7
%
Financial and
insurance institutions;
4 %
M-real Voting Rights 30.9.2010
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Non-Finnish nationals;
6 %
Non-profitmaking
organizations; 4 %
Other companies; 2 %
Metsliitto; 61 %
Households; 12 %
Public communities;
14 %
Financial and
insurance institutions;
2 %
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Market Position
Folding Boxboard Capacities in EuropeBIG-5 = 84% of total
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0 100 200 300 400 500 600 700 800 900
Others
Holmen
IP
Careo
Mayr-Melnhof
Stora Enso
M-real
Source: Pyry Forest Industry Consulting
Capacity: tons/year (million)
32%
25%
10%
9%
8%
8%
8%
Uncoated Fine Paper Capacities in EuropeBIG-5 = 57% of total
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0 500 1000 1500 2000 2500 3000 3500
Others
Sappi
Arctic Paper
International Paper
M-real
UPM
Mondi
Stora Enso
Portucel 14%
14%
11%
10%
8%
8%
3%
3%
28%
Source: Pyry Forest Industry Consulting, M-real
Capacity: tons/year (million)
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Thank youwww.m-real.com