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Metsä BoardInvestor presentation 1–9/2017

1 November 2017

Investor presentation 1–9/20172

ContentsInvestment highlights 3

Strategy and financial targets 13

Operating environment and market position 21

Growth in the paperboard business 30

Husum investment programme and update 37

January–September 2017 Results 43

Production, capacities and sourcing 57

Product development focus areas 63

Sustainability 68

Shares and owners 74

Appendix 78

Contact information 87

Investment highlights

• A pure-play paperboard company focused on premium fresh fibre paperboards

• Strong market position: – #1 in folding boxboard and white kraftliners in Europe

– #1 in coated white kraftliners globally

• A growth company with good profitability• Global sales to over 100 countries from eight production units

in Finland and Sweden• Customers are brand owners, converters, merchants and

manufacturers of corrugated products• Strong fibre know-how and self-sufficiency in pulp


Metsä Board in brief

50%25%

15%

10%

Sales split in 2016

Folding boxboardLinerboardsMarket pulpOthers

75 %

17 %

8 %

Sales split by region in 2016

EMEA

Americas

APAC

Metsä Board’s paperboard offers solutions for widevariety of brand applications

In pack On shelf On display On the go In graphics

Packaging solutions for consumer goods

Retail ready tray solutions

Display and point-of-sale solutions

Solutions for food service

Solutions for graphical uses


50% of Metsä Board’s folding boxboard sales are negotiated directly with brand owners

6

Metsä Board has a broad customer base

BRAND OWNERS

FOLDING BOXBOARD WHITE LINERBOARDS

MERCHANTS

CORRUGATED BOX MANUFACTURERS

CONVERTERS


Lightweighting• Metsä Board’s folding boxboard can be up to 30% lighter compared to competing grades (SBS, WLC)

Purity and safety of fresh fibre paperboards • Important especially for food and food service packaging

• Whiteness and quality - upscale consumer experience

Sustainability• Fresh fibres are recyclable and renewable material

• Wood raw material is 100% traceable to sustainably managed northern forests

• Strong and recognised credentials in environmental performance, water and energy efficiency and actions to combat climate change

Metsä Board’s paperboards have manycompetitive advantages


Metsä Board’s folding boxboards are produced from BCTMP or mechanical pulp, which is used in the middle layer (3) to make the board bulky and light.

The two outer fibre layers (2 and 4) are made of chemical pulp, which maximizes the strength of the board.

Coating layers (1) can be one or several and on top or both sides.

8

Three-layer structure makes the board lightmaintaining the stiffness


Strong profitability development2016 was negatively impacted by Husum’s new FBB machine ramp-up

Comparable ROCE-%


Comparable EBIT-%

6,4

9,1

11,3

8,1

10,6

0

2

4

6

8

10

12

2013 2014 2015 2016 1-9/2017

%

5,2

6,8

9,08,0

10,0

0

2

4

6

8

10

2013 2014 2015 2016 1-9/2017%

Target over 12%


Strong improvement in productivity over time

1 000

1 100

1 200

1 300

1 400

1 500

1 600

1 700

1 800

1 900

2 000

1 000

1 300

1 600

1 900

2 200

2 500

2 800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E

Productivity (capacity) Personnel average

Production capacity (tonnes) / employee at current millsPersonnel

Capacity tn /employee

• 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

11 Investor presentation 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

• High investment costs

• Limited availability of high yield pulp (e.g. BCTMP)

• Global brand owners and corrugated box manufacturers not willing to change paperboard suppliers easily in the high-quality segments

– High speed packaging lines very quality sensitive– Requirements for unified brand look and feel globally– Sustainability and product safety aspects

• Skilled people and organizations a crucial success factor


High threshold for new producers to enter high-quality paperboard segment

Strategy and financialtargets

Values

• Responsible profitability• Reliability• Cooperation• Renewal

Strategic cornerstones

• Focus• Growth• Profitability

Metsä Board’s vision is to be the preferred supplier of premium paperboards creating value for customers globally


Focus on premium fresh 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 fibres• Our products are used for packages at the store and

from the store to the consumer


Strategic cornerstones: Focus

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


Strategic cornerstones: Profitability

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


Strategic cornerstones: Growth

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


• Grow the paperboard businesses profitably globally

• Ensure successful sales of new capacity

• Secure good price levels

• Keep best in class product quality and improve supply

chain

• Develop new products for existing and new end uses

• Continue productivity improvements and cost savings


Main priorities and actions to achieve financial targets

• Metsä Board’s dividend payout target is at least 50 per cent of the result for the financial period

• Dividend for 2016:– EUR 0.19 per share– Totalling EUR 68 million– Corresponds to 76 per cent of EPS 0,00

0,10

0,20

0,30

0,40

0,50

2012 2013 2014 2015 2016

EPS and DPS, EUR

Earnings per share Dividend per share


Dividend and EPS

Operating environment andmarket position

Global trends driving growth in packaging

• Growing consumption

• Stronger demand for sustainable packaging

• Greater significance of resource efficiency drives circular economy and life-cycle thinking

• Increasing regulation brings additional obligations

• Social responsibility throughout the value chain


The global paperboard packaging market is about USD 260 billion

The total packaging market is USD 840 billion


Average annual growth rate of paperboard packaging

Paperboard packaging

Other wood fibre based packaging

Non-fibre based packaging

0

50

100

150

200

250

300

350

USD 260 bn

USD bn

Source: Smithers Pira

+ 3% p.a.

Roughly halfis made of fresh fibres

24

Global cartonboard* market is 36 Mt/a of which folding boxboard market is about 9 Mt/a

Source: Metsä Board estimates

*Excluding liquid packaging board, cup & plate stock, liner and uncoated recycled board.

APAC20 Mt/a

EMEA8 Mt/a

NorthAmerica

6 Mt/a

Lat.Am.2 Mt/a

Folding boxboard

Other fresh fibre grades (e.g. SBS, CUK)

Recycled grades

Avg. growth rate for folding boxboard is

3–4%/a


25

Global food service board* market is 3.5 Mt/a

* Base board (e.g. SBB or FBB) only, excl. other laminate materials such as aluminium and PE.

Cups

Plates

Cartons

APAC1.0 Mt/a

EMEA0.9 Mt/a

Americas1.6 Mt/a

Avg. growth rate for food service board is

3–5%/a

Source: Metsä Board estimatesInvestor presentation 1–9/2017

26Source: Metsä Board estimates


Americas3 Mt/a

Global white linerboard market is 10.5 Mt/aGlobal white coated kraftliner market is 1 Mt/a

Global containerboard market is 155 Mt/a, of which

• White linerboards 7%• Brown kraftliner 17%

• Brown testliner 37%

• Fluting 39%

Americas3 Mt/a

EMEA4,5 Mt /a

APAC3 Mt/a

White uncoated kraftliner

White coated kraftliner

White recycled liner

Metsä Board has a strong position in Europe

Largest Folding Boxboard Producers in EuropeTotal capacity: 3.6M tonnes

Largest White Fresh Fibre Linerboard Producers in EuropeTotal capacity: 2.1M tonnes

Sources: Company information, Pöyry Management Consulting Oy Q3/2017

17%

7%

9%

11%

20%

37%

0 300 600 900 1200 1500

Others

International Paper

Mayr-Melnhof

Kotkamills Oy

Stora Enso

Metsä Board

11%

8%

11%

15%

23%

32%

0 200 400 600 800

Others

SCA

BillerudKorsnäs

Mondi

Smurfit Kappa

Metsä Board

27Investor presentation 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


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)


Growth in the paperboardbusiness


Metsä Board operates in growing paperboard marketAnnual global demand growth for folding boxboard and white kraftliners is estimated to be 3–4%

PAPERBOARD 5-YEAR GROWTH FORECAST EMEA Americas APAC

Folding boxboard (FBB)

Food service board (FSB)

Coated white kraftliner n/a

Uncoated white kraftliner n/a

Other fresh fibre paperboards (e.g. SBS, CUK)

Recycled paperboards (e.g. WLC)

+2%/a or more

+1 to +2%/a

-1 to +1%/a

-1 to -2%/a

-2%/a or more

Source: RISI, CEPI, Pöyry and trade statistics among others

Metsä Board’s growth clearly exceeds averagemarket growth

32

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



Most important growth area is Americas

0

50

100

150

200

250

300

2011 2012 2013 2014 2015 2016 LTM 2018 target

Folding boxboard Fresh fibre linerboard

300

200

1,00

0 to

nnes

Actual and targeted deliveries to Americas

34

Metsä Board's regional goals

GROWTH IN THE AMERICAS IN THE COMING YEARS

MAINTAINTHE STRONG MARKET POSITION IN EUROPE

FOCUS ON PREMIUM PAPERBOARDSEGMENTS IN THE ASIA-PACIFIC REGION

AMERICASSHARE OF SALES IN 2016

17%

EMEASHARE OF SALES IN 2016

75%

APACSHARE OF SALES IN 2016

8%


35





17%


75%


8 %

EUROPE• A leading market position with

strong, long-lasting customerrelationships – especially withbrand owners

• Safety is increasing significancein food packaging

• Paperboard is a strong alternative to plastics andaluminium

• Growing e-commerceincreasing demand for high-end white-top kraftliners


Metsä Board's growth drivers in Europe

36





17%


75 %


8 %

AMERICAS• Local production not able to meet rising trend of

lightweighting• Non-integrated converters looking for alternative

board suppliers• Paperboard a strong alternative to plastics –

especially in food service applications• Growing e-commerce increasing demand for

high-end white-top kraftliners


Metsä Board's growth drivers in Americas

Husum investmentprogramme and update


• Launched at the end of 2014• Two paper machines closed in 2015 • One paper machine converted to produce linerboard (BM2)• New folding boxboard machine (BM1) started up in February

2016• Enhancements to the pulp mill and the mill site’s own port• New extrusion coating line started up in April 2017

Folding boxboard production

• Capacity approximately 400,000 t/a

• Deliveries mainly to Americas and food service globally

Linerboard production

• Capacity approximately 270,000 t/a

• Deliveries to Europe and Americas

Husum investment programme

• EUR 38 million investment, capacity of 100,000 t/a• Targeted at food packaging and food service applications• PE-coated (polyethylene) paperboard is an alternative to

plastics and the mainstream barrier solution today • PE fulfills important barrier requirements:

– Good water and moisture barrier

– Grease barrier (short time e.g. for food service)

– Good heat sealing properties

• Husum PE coating line utilises latest technology and benefits from a fully integrated production site

• Supports growth in a new customer segment

Investment in PE coating


Raw materialLogistics

Raw materialExtrusion

Raw materialPaperboard

Raw materialPulp

40

The integrated mill model improves efficiency and sustainability of the supply chain

• Certified wood resources

• Own deep water port

• Own pulp mill at the mill site

• Paperboard production (BM1)

• Extrusion coating line (EM1)

Raw materialRaw materialHusum integrated mill:


• 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 corresponding period last year


Update on Husum’s folding boxboard

42

Potential to improve profitability of HusumAt least EUR 100 million EBIT improvement from 2016 to 2019

2016 2019

+ EUR

25 million+ EUR

5 million+ EUR

>70 million

120,000 tonnesof pulp

productionlost in 2016

Restructuring:

Efficiency improvementprogramme

FBB capacityutilisation rate

>95% withnormal sales

price


Result for January−September 2017

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%


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


FY 2015:1,404 tonnes

FY 2016:1,569 tonnes

Q1-Q3 2017:1,375 tonnes

(Q1-3/16: 1,181)

+17%

Q1-Q3 2016

Q1-Q3 2017


Q3 2017 in summary(vs. Q2 2017)

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

47 Investor presentation 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, %Investor presentation 1–9/201748

Return on capital employed, %

Target >12%

Q3/17:11.5%

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


Free cash flow = Net cash flow from operating activities + Investments in intangible and tangible assets + Acquisition of associate company shares + Acquisition of other shares


Strong balance sheet

Equity ratio, %

41% 39%

46% 48% 51%

0%

10%

20%

30%

40%

50%

2013 2014 2015 2016 9/2017

70%

51%

32%

44%39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2013 2014 2015 2016 9/2017

Net gearing, %

597 427 333 464 437

2,9

1,8

1,2

2,0

1,7

0

1

2

3

4

0

200

400

600

2013 2014 2015 2016 9/2017

Net debt, EUR million

Net debt/EBITDA (rolling 12 months)

Net debt, EUR million and Net debt / Comparable EBITDA

Debt structure and liquidity30 September 2017

315

149

111

22 53 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. 51 Investor presentation

1–9/2017

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

*)

0

50

100

150

200

250

2017 2018 2019 2020 2021-26 2027

Bonds Loans from financial institutions Pension loans Other loansInvestor presentation 1–9/201752

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


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)

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


Debt programmes 30 September 2017Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*), % Maturity

EUR 250 million bond issued 2017 250 250 2.8 2027

EUR 225 million bond issued 2014 67 67 4.4 2019

Syndicated credit facility 2014 250 150 3.2 2020

EUR 51 million bilateral loans 51 51 1.4 2017–2020

EUR 22 million finance leases 22 22 2.3 2017–2024

EUR 213 million pension loans 213 111 4.5 2017–2020

Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*), % Maturity

Revolving credit facility 2014 100 0 - 2020

Pension loan facilities 213 111 4.5 -

Short-term funding programmes

Metsä Group internal short-term limit 150 0 - 0–12 months

Metsä Group Treasury funding programmes

EUR 150 million domestic CP programme 150 0 - 0–12 months

Metsä Board’s significant debt securities issued and outstanding at 30 September 2017

*) The average interest rate take into account outstanding interest rate swaps and amortised arrangement fees.The average interest rate of all Metsä Board interest bearing net liabilities incl. interest rate derivatives per 30 September 2017 is 3.2%.

Metsä Board’s principal long-term liquidity reserves at 30 September 2017


Near-term outlook• Metsä Board’s Q4 paperboard delivery volumes are

expected to decline due to seasonality. Target is to further increase average price in paperboards

• 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 in Q4 • 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.


Profit guidance

Production, capacities and sourcing


Metsä Board’s production units

Äänekoski

Simpele

Joutseno

Tako

Kyro

KaskinenHusum

KemiIntegrated mills• Husum, Sweden

400,000 t/a folding boxboard270,000 t/a white linerboard730,000 t/a chemical pulp

• Kemi410,000 t/a white linerboard620,000 t/a chemical pulp by Metsä Fibre

• Äänekoski240,000 t/a folding boxboard1,300,000 t/a chemical pulp by Metsä Fibre

• Joutseno320,000 t/a BCTMP690,000 t/a chemical pulp by Metsä Fibre

Non-integrated mills• Kyro (Kyröskoski)

190,000 t/a folding boxboard

• Simpele280,000 t/a folding boxboard

• Tako (Tampere)210,000 t/a folding boxboard

• Kaskinen340,000 t/a BCTMP

Taking into account Metsä Group‘s pulpproduction, Metsä Board‘s pulp balancein 2017 is 400,000 t/a long


Paperboard capacity

Town Country Machines Folding boxboard

White freshfibre linerboard Total

Tampere (Tako) Finland 2 210 210

Kyröskoski (Kyro) Finland 1 190 190

Äänekoski Finland 1 240 240

Simpele Finland 1 280 280

Kemi Finland 1 410 410

Husum Sweden 2 400 270 670

Total 8 1,320 680 2,000


Pulp capacityMetsä Board pulp mills Country Chemical pulp BCTMP Total

Husum Sweden 730 730

Joutseno Finland 320 320

Kaskinen Finland 340 340

Total 730 660 1,390

Metsä Fibre pulp mills Country Chemical pulp BCTMP Total

Äänekoski Finland 1,300 1,300

Kemi Finland 610 610

Rauma Finland 650 650

Joutseno Finland 690 690

Total 3,250 3,250

Deliveries by region in 2016

Folding boxboard


Fresh fibre linerboard

48%

25%

16%

11%

Western Europe

Eastern Europe

Americas

Asia and Pacific

60%7%

32%

1%

Own generation

20%

Through PVO shareholding

32%

Purchased energy

45%

Outsourced generation

3%

Wood-based60%

Nuclear power22%

Gas7%

Hydro4%

Coal2%

Peat2% Oil

2%

Sweden 38%

Finland31%

Baltic countries18 %

Russia13%

Sourcing 2016Electricity sourcing

(total 2,438 GWh)


Primary energy used(total 12.0 TWh)

Wood sourcing by country (total 4.6 million cubic metres)

Product development focus areas

Key product development focus areas

Improved BCTMP

Microfibrillated cellulose (MFC)

Strength additives

Sustainable lightweighting

Dispersion barriers

Bio-based raw materials

Barrier boardPE extrusion coated products


Lighter-weight paperboards: Better with Less

Metsä Boardlightweight paperboard

Average FBB –Folding boxboard

SBB –Solid bleached board

WLC –White lined chipboard


Metsä Board barrier boards roadmap

Bio

base

dba

rrie

rN

onbi

o-ba

sed

barr

ier

Outsourced PE extrusion coating

Own PE extrusion coating

Bio based barrierBio based light barrier

2016 2017Investor presentation 1–9/201766

67

Barrier boards types

NO

N-R

ENEW

AB

LE

BIODEGRADABLE

REN

EWA

BLE

NON-BIODEGRADABLE

Metsä Board’s baseboard is bio based, bio-degradable and compostable.

Bio based, bio-degradable coating, i.e. starch, PLA etc.

Oil based, bio-degradable coating

Bioplastic coating, i.e. green PE

Latex based dispersion coatingPE extrusion coating


Sustainability

Pure paperboard helps to store the packaged product

safely.

The circular economy of a durable and safe package

Durable paperboard protects the packaged product

effectively.

Our paperboards are recyclable and biodegradable, or they can be used for energy production.

We follow goodmanufacturing principles(GMP).

All of our products meet the requirements of relevant international legislation.

Fresh fibre is a pure and safe, renewable

raw material. We only use carefully selected and safe raw materials in our products.


Rain waters the forest

Bark is utilised as a bio-energy source

Metsä Board’s boardproduction is mostly integrated in pulp production

Waste waters are always carefully cleanedbefore returned back to the waterways

Also lakes and seas are a source of recreation

Light weight boards are resource efficient both for us as well as for our customers

99% of water used in the productionprocess is returned back to the waterways

Metsä Board’s paperboards can be recycled, depending upon local recycling services

Forests are a source of recreation

Metsä Board uses water efficiently

Metsä Board has decreased its CO2 emissions by 45% since 2009 and the use of water by 14% since 2010

Metsä Board only uses surface waterin its production

LOGISTICSENSURE THE SUSTAINAINABILITY OF MAIN LOGISTIC FLOWS

PERFORMANCE 2016−2017 100%

SAFETY AT WORKLOST-TIME ACCIDENTS FREQUENCY ANNUALLY

PERFORMANCE 2016 -18.9%

-10%ENERGYENERGY EFFICIENCY IMPROVEMENT2009−2020

PERFORMANCE 2016 7.8%

12% -17%RESOURCE EFFICIENCYPROCESS WATER USE PERPRODUCT TONNE 2010−2020

PERFORMANCE 2016 -14%

Metsä Board’s sustainability targets

>80%

WOODTHE SHARE OFCERTIFIED WOOD

PERFORMANCE 2016 81%

-30%

CLIMATEFOSSIL CO2 EMISSIONS PER PRODUCT TONNE 2009−2020

PERFORMANCE 2016 -45%

<3%WELL-BEINGSICKNESS ABSENTEEISM

PERFORMANCE 2016 4.1%

BIOENERGY SHARE OF TOTAL PURCHASED ENERGY 51%


2017 CDP• Metsä Board chosen to the Water A List and Climate A List• Leadership status on Forest programme• Metsä Board participated on CDP Supply chain programme

together with its customers2017 EcoVadis• Metsä Board achieved the Gold rating for its Corporate Social

Responsibility practices by EcoVadis in 2017• Overall Metsä Board was ranked in the top 1% of suppliers

assessed by EcoVadis across all categories

72

Metsä Board is recognised as a globalleader in sustainability practices


EU Commission– Announced plans to regulate printed food contact materials (FCMs)

on EU levelFood Contact Material legislation in Switzerland

– Part of Swiss Food law– Recycled paper cannot be used as FCM, if direct contact with food

products – Concentration limits of certain polyaromatic hydrocarbons

micrograms/kg food has been setDraft German mineral oil regulation

– 4th ordinance draft published in March 2017– The draft focuses on mineral oil migration from recycled fibre based

packaging materials to food

73

Increased regulation to ensureproduct safety


Shares and owners

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

*

75

%



Ownership structure on 30 September 2017

42 %

18 %

19 %

12 %

4 % 2 % 3 %

MetsäliittoCooperative

Foreign owners*

Households

Public sectororganisations

Finance andinsurancecompaniesNon-profitorganisations

Other companies

61 %15 %

11 %

7 %

3 %

2 %1 %

MetsäliittoCooperative

Public sectororganisations

Households

Foreign owners*

Non-profitorganisations

Finance andinsurance companies

Other companies

Shares, % (total no. of shares 355,512,746)

Votes, % (total no. of votes 1,037,530,115)

* incl. nominee registered

Metsä Board has two series of shares: 35,886,682 A-shares and 319,626,064 B-shares.A-share entitles to 20 votes and B-share entitle to 1 vote at a General Meeting.

Transformation has increased shareholder value

Enterprise value, EUR million

0

500

1000

1500

2000

2500

3000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Net debt Market capitalization

Dividend and payout ratio %

0%

15%

30%

45%

60%

75%

90%

0,00

0,04

0,08

0,12

0,16

0,20

2012 2013 2014 2015 2016

Dividend, EUR Dividend/EPS, %


EUR mill. EUR

Appendix


Metsä Board Corporate Management Team

Mika JoukioCEO

Chairman of CMT since 2014MG employee since 1990Share ownership: 261,884

Jussi NoponenCFO

Member of CMT since 2016MG employee since 2000Share ownership: 50,000

Sari PajariSVP, Marketing and Sales


Ari KivirantaSVP, Development


Harri PihlajaniemiSVP, Production

Member of CMT since 2017MG employee in 2001-2004 and since 2017Share ownership: no ownership

Susanna TainioSVP, HR


Share ownerships are B-shares.MG = Metsä Group

METSÄ TISSUE

Tissue and cookingpapers

Sales:

EUR 1.0 billionPersonnel:

2,700Metsäliitto Cooperativeholding 100%

METSÄ WOOD

Wood Products

Sales:


1,520Metsäliitto Cooperativeholding 100%

METSÄ FOREST

Wood Supply and ForestServices

Sales:


860Metsäliitto Cooperativeholding 100%


METSÄ BOARD

Paperboard

Sales:


2,500Metsäliitto Cooperativeholding 42%, 61% of votes

METSÄ FIBRE

Pulp and SawnTimber

Sales:


1,230Metsäliitto Cooperativeholding 50.2%, Metsä Board 24.9%,Itochu Corporation 24.9%

METSÄ GROUP | Sales EUR 4.7 billion | Personnel 9,300

METSÄLIITTO COOPERATIVE | Group’s parent company | Owned by 104,000 Finnish forest owners

INVESTMENT, EUR

1.2 billion

ELECTRICITY, Wh/a

1.8 tera

WOOD USAGE, m3/a

6.5 million

ELECTRICITY SELF SUFFICIENCY

240 percent

CERTIFIED WOOD

90 percent

START UP

August 2017

METSÄ BOARD INVESTED EUR 24.9 MILLION IN EQUITY → COMPANY’S PULP BALANCE WILL GROW BY 200,000 TONNES/A.

CAPACITY, tonnes/a

1.3 million

Metsä Fibre’s new Bioproduct Mill



Metsä Board’s credit rating

0

1

2

3

4

5

6

7

8

1.1.2011 1.1.2012 1.1.2013 1.1.2014 1.1.2015 1.1.2016 1.1.2017

Moody's Standard & Poors Investment Grade

CCC+ / Caa1

B- / B3

B / B2

B+ / B1

BB- / Ba3

BB / Ba2

BBB- / Baa3

BB+ / Ba1

CCC+ / Caa1

B- / B3

B / B2

B+ / B1

BB- / Ba3

BB / Ba2

BBB- / Baa3

BB+ / Ba1

- From 26 to 8 production units

- Paper capacity from 5 million tonnes to zero

- Paperboard capacity from 1.1 million tonnes to 2.0 million tonnes

- Major divestments incl. Graphic Papers and Map Merchants

- Paperboard (incl. market pulp) 100% of sales from 2017 onwards

- Major improvement in profitability and financial position

Today strong position and growing

- #1 producer of folding boxboard in Europe

- #1 producer of coated white-top kraftliner globally

- Husum investment programme enabling significant growth steps


Restructuring to a pure-play paperboardcompany from 2005 onwards


M&A activity 1997-2015

100 000 B2 shares in

PVO

Acquisitions

Divestments

Biberist Paper Mill

UK Paper

Modo Paper

Zanders

ChemicalsBusiness

BotniaWood

CorrugatedPackaging

MD Papier Metsä Tissue

Albbruck SavonSellu

Forestia

KemiartLiners (53 %)

8% in Botnia

PSM

9% in Botnia

Cartonplants

Map

New Thames

MB Uruguay

Graphic Papers

Part of Reflex

Halleinmill

1997 20001998 1999 2001 2002 2003 2004 2005 2006 2007 20092008 2010 2011

Rest of Reflex

0.5% in PVO

2012

7.3 % in Metsä Fibre

2013 2014

Alizay mill Lielahti

real estate

2015

Gohrsmühle mill

Simpele Mill

Year Divestiture Enterprise Value, EUR million

2015 Gohrsmühle mill in Germany neg.

2014 Lielahti real-estate 32

2013 Alizay property and other estates 22

2012 7.3% stake in Metsä Fibre 138

2012 0.5% stake in PVO 64

2011 Hallein 34

2009 Metsä-Botnia’s Uruguayan operations 300*

2008 Graphic Papers 750

2008 100,000 shares in PVO 80

2008 New Thames mill 82**

2007 Map Merchant Group 382

2007 Folding carton plants 60

2007 Botnia (9%) 240

2005 Botnia (8%) 164

2005 Savon Sellu 20

2005 Forestia (95%) 163

2004 Metsä Tissue 570

2002 Papierfabrik Albbruck 235

2001 MD Papier 300

2001 Noviant (19%) 41

3,679


Significant Divestments EUR 3.7 billion in assets divested since 2001

* Cash portion**Incl. pension liabilities


5624 4440 3236 2432 2605 2485 2108 2019 2008 2008 1720

0,8 1,1

‐1,1‐6,2

6,6

2,43,6

5,2

6,8

9,0

8,0

‐7,0

‐5,0

‐3,0

‐1,0

1,0

3,0

5,0

7,0

9,0

0

1000

2000

3000

4000

5000

6000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sales, EUR million Comparable EBIT‐%

%

Sales and EBIT-% development

Katri SundströmVice President, Investor relations

Tel +358 400 976 [email protected]

87

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