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Metsä BoardInvestor presentation 1–3/2018

3 May 2018

Investor presentation

1–3/20182

Contents

Investment highlights 3

Strategy and financial targets 15

Operating environment and market position 23

Growth in the paperboard business 32

Results for Q1 2018 39

Credit update 50

Production, capacities and sourcing 56

Product development focus areas 63

Sustainability 69

Shares and owners 75

Appendix 78

Contact information 86

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

• Global megatrends – population growth, urbanization and

sustainability – are driving the demand for ecological packacing

• A growth company with good profitability

• Self-sufficiency in pulp


1–3/20184

Investment highlights

Folding boxboard

53%White kraftliners

27%

Market pulp 18%

Others 3%

Sales split in 2017

EMEA 72 %

Americas19 %

APAC9 %

Sales split by region in 2017

Global sales to over 100

countries from 8 production

units in Finland and Sweden

Increased shareholder value and steadily growing

dividend

Enterprise value, EUR million

0

500

1000

1500

2000

2500

3000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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

0,24

2012 2013 2014 2015 2016 2017

Dividend, EUR Dividend/EPS, %

5 Investor presentation

1–3/2018

EUR mill. EUR

Folding boxboards

Packaging solutions for consumer goods

Food service boards

Solutions for food service

White kraftliners

Retail-ready tray and point-of-sale solutions

Metsä Board’s lightweight premium paperboards

Roughly 50% of Metsä Board’s folding boxboard sales in Europe is negotiated directlywith brand owners

7

Metsä Board has a broad customer base

BRAND OWNERS

FOLDING BOXBOARD WHITE LINERBOARDS

MERCHANTS

CORRUGATED BOX

MANUFACTURERS

CONVERTERS


1–3/2018

Customers benefit from Metsä

Board’s paperboards

Lightweightness

– Metsä Board’s folding boxboard can be up to 30% lighter

compared to competing grades

Purity and product safety

– Fresh fibre paperboards do not include harmful substances

which could be absorbed into foodstuff in food and food

service packaging

Sustainability

– Major part of the energy the company uses is renewable

and the wood used as raw material is fully traceable

Quality

– Only high-quality paperboardsInvestor presentation

1–3/20188

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.

9

Three-layer structure makes the board light while

maintaining the stiffness


1–3/2018

Strong profitability development

Comparable ROCE-%


1–3/201810

Comparable EBIT-%

9,1

11,3

8,1

11,2

15,8

0

2

4

6

8

10

12

14

16

0

2

4

6

8

10

12

14

16

2014 2015 2016 2017 Q1/2018

% 6,8

9,08,0

10,5

14,0

0

2

4

6

8

10

12

14

16

2014 2015 2016 2017 Q1/2018

%

Target over 12%

Year 2016 profitability was burdened by the ramp-up of Husum’s folding boxboard machine

11

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

tonnes

of pulp

production

lost in 2016

Restructuring:

Efficiency

improvement

programme

FBB capacity

utilisation rate

>95% with

normal sales

price*


1–3/2018

* The sales price improvement in Euros is currently being delayed by the weakened US dollar.


1–3/201812

Improvement in productivity over time

1 000

1 200

1 400

1 600

1 800

2 000

2 200

1 000

1 300

1 600

1 900

2 200

2010 2011 2012 2013 2014 2015 2016 2017 2018E

Production capacity tn/employee Personnel at current mills

Production capacity (tonnes) / employee at current mills Personnel at

current mills

Production

capacity tn /

employee

Estimated capex for 2018 is EUR 70 million

0

30

60

90

120

150

180

2010 2011 2012 2013 2014 2015 2016 2017 2018E

Maintenance capex Growth capex Depreciation

EUR million

13Investor presentation

1–3/2018

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 (BCTMP)

• Global brand owners and manufacturers for corrugated

products 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


1–3/201814

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


1–3/201816

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


1–3/201817


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


1–3/201818


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


1–3/201819


Growth

Financial targets and actuals in 2017

Comparable ROCE, %

6.4

9.1

11.3

8.1

11.2

2013 2014 2015 2016 2017

2.9

1.8

1.2

2.0

1.2

2013 2014 2015 2016 2017

Net debt / comparable EBITDA, %

7%

10%

13% 12%

15%

2013 2014 2015 2016 2017

Annual growth in paperboard deliveries, %

Target is to grow

over the average

3-4% market growth

Target: >12%

Target: <2.5

20

Dividend policy: Target is to distribute at least 50% of the

result for the financial period


1–3/201820

• 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


1–3/201821

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 2017:

– EUR 0.21 per share

– Totalling EUR 75 million

– Corresponds to 50 per cent of EPS 0,00

0,10

0,20

0,30

0,40

0,50

2013 2014 2015 2016 2017

EPS and DPS, EUR

Earnings per share Dividend per share


1–3/201822

Dividend and EPS

Operating environment andmarket position

Global trends driving growth in sustainably packaging


1–3/201824

• Urbanization

• Growing consumption

• Stronger demand for ecological

packaging

• Greater significance of resource

efficiency

• Increasing regulation

• Social responsibility throughout the

value chain

The global paperboard packaging market is about

USD 300 billion

The total packaging market is USD 850 billion

Paperboard packaging

Other wood fibre based packaging

Non-fibre based packaging


1–3/201825

Average annual growth rate of paperboard packaging

USD

300 bn

USD bn

Source: Smithers Pira

0

50

100

150

200

250

300

350

400

2012 2013 2014 2015 2016 2017 2022F

+ 3% per year

2017-2022

Annual global demand for cartonboard* is 38 million tonnes

of which folding boxboard is about 10 million tonnes


1–3/201826

Source: Metsä Board estimates

*Excluding liquid packaging board, cup & plate stock,

liner and uncoated recycled board.

APAC20 Mt/a

EMEA9 Mt/a

North

America7 Mt/a

Lat.Am.2 Mt/a

Folding boxboard

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

Recycled grades

Avg. demand growth rate

for folding boxboard

is 3–4% per year

27

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



1–3/2018

Annual global demand for white linerboard is

11 million tonnesDemand for white kraftliners is 4.5 million tonnes and for white coated kraftliners 1 million tonne


1–3/201828


Americas3 Mt/a

Global demand for containerboards is 160 Mt/a, of which

• White linerboards 7%

• Brown kraftliner 17%

• Brown testliner 37%

• Fluting 39%

Americas3 Mt/a

EMEA5 Mt /a

APAC3 Mt/a

White uncoated kraftliner

White coated kraftliner

White recycled liner

Avg. demand growth rate

for white kraftliner is

3–4% per year

Metsä Board has a strong position in Europe

Largest Folding Boxboard Producers in EuropeTotal capacity: 3.8M tonnes

18%

7%

9%

10%

21%

35%

0 300 600 900 1200 1500

Others

International Paper

Mayr-Melnhof

Kotkamills Oy

Stora Enso

Metsä Board

10%

8%

11%

14%

23%

33%

0 200 400 600 800

Others

SCA

BillerudKorsnäs

Mondi

Smurfit Kappa

Metsä Board


1–3/201829

Largest White Fresh Fibre Linerboard Producers in EuropeTotal capacity: 2.2M tonnes


500

600

700

800

900

1000

1100

1200

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Folding Boxboard White-top kraftliner


1–3/201830

Market price development in folding boxboard

and white-top kraftliner in Europe

EUR/ tn

Sources: RISI, Inc. & FOEX Indexes Ltd

350

400

450

500

550

600

650

700

750

800

850

900

950

1000

1050

1100

1150

'10 '11 '12 '13 '14 '15 '16 '17 '18

350

400

450

500

550

600

650

700

750

800

850

900

950

1000

1050

1100

1150

Source: Foex Indexes Ltd

Softwood, USD

Softwood, EUR

Hardwood, EUR

Hardwood, USD

USDEUR

Pulp price development (PIX)


1–3/201831

Metsä Board’s growth in the paperboard business


1–3/201833

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

5-YEAR GROWTH FORECAST EMEA Americas APAC

Folding boxboard (FBB)

Food service board (FSB)

Coated white kraftliner

Uncoated white kraftliner

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: Metsä Board estimates Metsä Board’s focus area

Metsä Board’s growth clearly exceeds average

market growth

34

0

500

1 000

1 500

2 000

2013 2014 2015 2016 2017 2018 target

Kraftliner Folding boxboard

Metsä Board’s annual paperboard deliveries 1,000 tonnes


1–3/2018

Annual global

demand growth for

folding boxboard and

white kraftliners

is estimated to be

3–4%

Source: Metsä

Board´s own

research


1–3/201835

Most important growth area is Americas In 2017, total deliveries to Americas grew by 23% year-on-year

0

50

100

150

200

250

300

2011 2012 2013 2014 2015 2016 2017 2018 target

Folding boxboard Fresh fibre linerboard

300

200

1,0

00 tonnes

Actual and targeted deliveries to Americas

36

Metsä Board's regional goalsAmericas, EMEA and APAC

GROWTH

CONTINUES

IN THE

AMERICAS

MAINTAIN

THE STRONG

MARKET

POSITION IN

EUROPE

FOCUS ON

PREMIUM

PAPERBOARD

SEGMENTS IN

THE ASIA-PACIFIC

REGION

AMERICASSHARE OF SALES IN 2017

19%

EMEASHARE OF SALES IN 2017

72%

APACSHARE OF SALES IN 2017

9%


1–3/2018

37

GROWTH

CONTINUES

IN THE

AMERICAS

MAINTAIN

THE STRONG

MARKET

POSITION IN

EUROPE

FOCUS ON

PREMIUM

PAPERBOARD

SEGMENTS IN

THE ASIA-PACIFIC

REGION


19%


72%


9 %


1–3/2018

Metsä Board's growth drivers in Europe

EUROPE

• Metsä Board’s strengths are

based on long-standing

customer accounts and a

broad customer base

• Steady growth is sought

through a diverse selection of

products and services focused

on customer needs

• Stricter safety requirements

support demand for fresh fibre

paperboards

38

GROWTH

CONTINUES

IN THE

AMERICAS

MAINTAIN

THE STRONG

MARKET

POSITION IN

EUROPE

FOCUS ON

PREMIUM

PAPERBOARD

SEGMENTS IN

THE ASIA-PACIFIC

REGION


19%


75 %


8 %

AMERICAS

• Growth is driven by the limited local availability

of premium lightweight folding boxboard and by

rapid growth in the demand for food service

packaging made from fresh fibre paperboard

• The growth of discount store chains and online

commerce increases demand for premium

white kraftliner


1–3/2018

Metsä Board's growth drivers in Americas

Result for January–March2018

• Rising market prices of paperboards fully compensated

unfavourable FX development

• Production and delivery volumes of paperboard and

market pulp increased

• No major maintenance shutdowns during the quarter

• Production efficiency of the mills was good

• Strong pulp market supported profitability

• S&P upgraded Metsä Board to investment grade


1-3/2018 40

Q1 2018: The best quarter in years

Q1 2018 vs. Q4 2017

Increased sales and strong profitability development

SalesEUR million

436 423 440 422 445 474 479 451 4920

100

200

300

400

500

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18

35 36 34 33 45 44 50 54 69

8,0 %8,5 %

7,7 % 7,8 %

10,2 %9,2 %

10,5 %

12,0 %

14,0 %

0%

4%

8%

12%

16%

0

20

40

60

80

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18


1–3/201841

Comparable operating resultEUR million and % of sales

FY 2016:

EUR 1,720 million

EU

R m

illio

n

EU

R m

illio

n

FY 2017:

EUR 1,849 millionFY 2016:

EUR 138 million

FY 2017:

EUR 194 million

Total paperboard deliveries up by 40 000 tonnes

compared to the previous quarter

227 250 266 245 265304 299 276 297

142148 148

143163

173 170152

171

0

100

200

300

400

500

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018

White kraftliner Folding boxboard

1,0

00

to

nn

es


1–3/2018

FY 2016:

1,568 tonnesFY 2017:

1,802 tonnes

Annual global

demand growth

for folding

boxboard and

white kraftliners

is estimated to

be

3–4%

Source: Metsä Board’s

own research

+15%

Paperboard delivery split in Q1 2018

Folding boxboard deliveries in Q1/18 (Q1/17) 1,000 tonnes

EMEA205 (186)

Americas60 (52)

APAC 31(27)

EMEA122 (111)

Americas48 (47)


1–3/201843

White kraftliner deliveries in Q1/18 (Q1/17)1,000 tonnes

70%

20%

10%

72%

28%

Total FBB deliveries

grew by 12%

Total WKL deliveries

grew by 5%

• Impacts of FX rate changes including hedges:

– Q1 2018 vs. Q4 2017: EUR 12 million negative

– Q1 2018 vs. Q1 2017: EUR 15 million negative

• FX impacts will be small in Q2/2018 compared to Q1, further headwind in Q3

• Hedging policy: 50% of annual transaction exposure and 100% of balance sheet position

Weakened USD caused headwind in Q1

56 %

35 %

7 % 2 %USD

SEK

GBP

Othercurrencies

12 month transaction exposure

EUR 1.09 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 +65 million

SEK EUR -39 million

GBP, £ EUR +7 million


1–3/2018

0%

2%

4%

6%

8%

10%

12%

14%

16%

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 Q4/17 Q1/18

Comparable ROCE-%, QuarterlyInvestor presentation

1–3/201845

Q1/2018 ROCE nearly 16%

Target >12%

66

-22 -22

6755

2637

68

106

30

8

-76 -72

49

177

25

5979

20

-100

-50

0

50

100

150

200

250

-100

-50

0

50

100

150

200

250

Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18

Cash flow from operations, quarterly Free cash flow, quarterly

Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months

EU

R m

illio

n


1–3/2018 Free cash flow = Cash flow from operations - investments

Cash flow from operations EUR 241 million(Rolling 12 months)

412 541 488 464 458 495 437 358 335

1,5

2,1 2,12,0

1,92,0

1,7

1,21,1

0,0

0,5

1,0

1,5

2,0

2,5

3,0

0

100

200

300

400

500

600

3/2016 6/2016 9/2016 12/2016 3/2017 6/2017 9/2017 12/2017 3/2018

Net debt, EUR million Net debt to comparable EBITDAInvestor presentation

1–3/201847

Strong financial position, leverage at 1.1x

Net debt/EBITDA target level <2.5

EU

R m

illio

n


1–3/201848

Near-term outlook

• Good demand in fresh fibre paperboards, market

prices are expected to be stable or rising

• Total paperboard delivery volumes are expected

to increase slightly in Q2 2018 compared to Q1

• Several maintenance shutdowns at Finnish mills

in Q2

• Negative impact from weakened USD against

EUR will continue

• FY 2018 production costs estimated to rise

Metsä Board’s comparable operating

result in the second quarter of 2018 is

expected to weaken compared to the

first quarter of 2018.


1–3/201849

Result guidance for

Q2 2018

Credit update

Debt structure and liquidity31 March 2018

308

164

95

941 Bonds

Loans fromfinancial institutions

Pension loans

Finance leases andother loans

Other short-termloans

279

100

134

Cash and cashequivalents

Revolving creditfacility

Unraised pensionloans

Interest-bearing debt,

total EUR 617 million

Available liquidity,

total EUR 513 million

Average maturity of long-term loans on 31 March 2018 was 5.1 years. 51


1–3/2018

* Of which EUR 248 million due 2027

and EUR 60 million due 2019

*

0

50

100

150

200

250

2018 2019 2020 2021 2022–26 2027

Bonds Loans from financial institutions Pension loans Other loansInvestor presentation

1–3/201852

Debt maturity31 March 2018

Interest-bearing debt maturity profile 31 March 2018

EU

R m

illio

n

• Total interest-bearing debt on 31 March was

EUR 617 million (31 Dec 2017: EUR 577 million)

• In 2017, Metsä Board issued new 10-year

EUR 250 million bond with 2.75% annual coupon

Rating agency Rating and

outlook

Last update

Standard &

Poor‘s

BBB- stable 02/2018

Upgrade from BB+

Moody‘s Ba1 positive 04/2018

Upgrade from

stable outlook

Metsä Board’s credit ratings


1–3/201853

Financial costs January–March 2018

39 32 31 36 8

4,2

3,8

3,3 3,3

3,0

2,0

2,5

3,0

3,5

4,0

4,5

5,0

0

10

20

30

40

50

2014 2015 2016 2017 Q1/2018

Net financial costs, EUR million

Average interest rate at the end of period, %

EUR million %• Net financial costs (including

foreign exchange differences)

in 1–3/2018 were EUR 8 million

(1–3/17: EUR 5 million)


1–3/201854

Debt programmes 31 March 2018

Long-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 60 60 4.4 2019

Syndicated credit facility 2014 250 150 2.7 2020

EUR 14 million bilateral loans 14 14 0.7 2018–2022

EUR 8 million finance leases 8 8 4.0 2018–2024

EUR 229 million pension loans 229 95 4.5 2018–2020

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

Revolving credit facility 2014 100 0 - 2020

Pension loan facilities 229 95 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 31 March 2018

*) 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 31 March 2018 is 3%.

Metsä Board’s principal long-term liquidity reserves at 31 March 2018


1–3/201855

Metsä Board’s credit ratingUpgrade to Investment grade by S&P in Q1 2018

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

Production, capacities and sourcing

Raw materialLogistics

Raw materialExtrusion

Raw materialPaperboard

Raw materialPulp

57

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 material

Metsä Board‘s Husum integrated mill


1–3/2018


1–3/201858

Metsä Board’s production units

Äänekoski

Simpele

Joutseno

Tako

Kyro

KaskinenHusum

KemiIntegrated mills

• Husum, Sweden

400,000 t/a folding boxboard

270,000 t/a white linerboard

730,000 t/a chemical pulp

• Kemi

420,000 t/a white linerboard

620,000 t/a chemical pulp by Metsä Fibre

• Äänekoski


1,300,000 t/a chemical pulp by Metsä Fibre

• Joutseno

330,000 t/a BCTMP

690,000 t/a chemical pulp by Metsä Fibre

Non-integrated mills

• Kyro (Kyröskoski)


• Simpele


• Tako (Tampere)


• Kaskinen

340,000 t/a BCTMP

Taking into account Metsä Group‘s pulp

production, Metsä Board‘s pulp balance

in 2018 is over 500,000 t/a long


1–3/201859

Paperboard capacity

Town Country MachinesFolding

boxboard

White fresh

fibre linerboard Total

Tampere (Tako) Finland 2 210 210

Kyröskoski (Kyro) Finland 1 190 190

Äänekoski Finland 1 240 240

Simpele Finland 1 290 290

Kemi Finland 1 420 420

Husum Sweden 2 400 270 670

Total 8 1,330 690 2,020


1–3/201860

Pulp capacity

Metsä Board pulp mills Country Chemical pulp BCTMP Total

Husum Sweden 730 730

Joutseno Finland 330 330

Kaskinen Finland 340 340

Total 730 670 1,400

Metsä Fibre pulp mills Country Chemical pulp BCTMP Total

Äänekoski Finland 1,300 1,300

Kemi Finland 620 620

Rauma Finland 650 650

Joutseno Finland 690 690

Total 3,260 3,260

Own generation

22%

Through PVO shareholding

29%

Purchased energy

46%

Outsourced generation

3%

Wood-based52%

Nuclear power28%

Gas8%

Coal4%

Peat4%

Oil2%

Wind + solar0%

Hydro0%

Sweden 40%

Finland32%

Baltic countries17 %

Russia12%

Sourcing 2017

Electricity sourcing (total 2,440 GWh)


1–3/201861

Primary energy used(total 12.0 TWh)

Wood sourcing by country (total 5.4 million cubic metres)

Wood26%

Logistics 16%

Chemicals, pigments and fillers14%

Energy12%

Other variables

3%

Personnel 14%

Other fixed15%

62

Metsä Board’s cost structure

• Total costs in 2017 were EUR 1.6 billion –

30% fixed and 70% variable costs

• In 2018, the general cost inflation is expected

to accelerate

Wood sourcing by country in 2017

Pulpwood roadside prices in Finland

Metsä Board (total 5.4 million m3)

• Sweden 40%, Finland 32%, Baltic countries 17%, Russia 11%

Metsä Fibre pulp mills (total 16.0 million m3)

• Finland 93%, Russia 4%, Baltic countries 3%

Source: Luke

€/m

3


1–3/2018

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 board

PE extrusion coated products


1–3/201864

Lighter-weight paperboards: Better with Less

Metsä Board

lightweight paperboard

Average FBB –

Folding boxboard

SBB –

Solid bleached board

WLC –

White lined chipboard


1–3/201865 The weights equal to a print job of 30 000 sheets on a standard size printing press

66

Barrier boards types

NO

N-R

EN

EW

AB

LE

BIODEGRADABLE

RE

NE

WA

BL

E

NON-BIODEGRADABLE

Metsä Board’s

baseboard is

biobased, bio-

degradable and

compostable.

Biobased,

biodegradable

coating, i.e. starch,

PLA etc.

Oil-based,

biodegradable

coating

Bioplastic coating,

i.e. green PE

Latex based

dispersion coating

PE extrusion

coating


1–3/2018

Metsä Board barrier boards

roadmap

Bio

based

barr

ier

No

nb

iob

ased

ba

rrie

r

Outsourced PE

extrusion coating

Own PE extrusion

coating

Biobased barrierBiobased

light barrier

2016 2017 2018Investor presentation

1–3/201867

• Biobased, fully recyclable and biodegradable

paperboard

• Developed especially for food service use with

short food contact time and when light grease

resistance is sufficient

• Metsä Board continues to develop other barrier

solutions, and is investigating the utilization of

dispersion and biobased coatings, and their

commercial potential


1–3/201868

Metsä Board launched an innovative

eco-barrier paperboard

Sustainability

Metsä Board’s commitment to

sustainable business is widely

recognized by CDP and EcoVadis,

among others.

In Q1/2018 CDP included Metsä Board

on both its Supplier Climate A and

Supplier Water A lists. Metsä Board is

the only Finnish company on these lists

and globally the only forest industry

company on the Supplier Climate A list.

Sustainability is a significant part of Metsä Board’s

core operations


1–3/201870

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 good

manufacturing 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 board

production is mostly

integrated in pulp production

Waste waters are always carefully cleaned

before 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 production

process 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 water

in its production

LOGISTICS

ENSURE THE

SUSTAINAINABILITY OF

MAIN LOGISTIC FLOWS

PERFORMANCE 2016−2017

100% In the end of 2017, all 481

logistics partners included in the

sustainability survey fulfilled Metsä

Group’s sustainability criteria.

SAFETY AT WORK

LOST-TIME ACCIDENTS

FREQUENCY ANNUALLY

PERFORMANCE 2017 -28.4%

-10%

ENERGY

ENERGY EFFICIENCY

IMPROVEMENT

2009−2020

PERFORMANCE 2017 10.2%

12% -17%

RESOURCE EFFICIENCY

PROCESS WATER USE PER

PRODUCT TONNE

2010−2020

PERFORMANCE 2017 -17%

Metsä Board’s sustainability targets

>80%

WOOD

THE SHARE OF

CERTIFIED WOOD

PERFORMANCE 2017 80%

-30%

CLIMATE

FOSSIL CO2 EMISSIONS

PER PRODUCT TONNE

2009−2020

PERFORMANCE 2017 -47%

<3%

WELL-BEING

SICKNESS ABSENTEEISM

PERFORMANCE 2017 3.9%

BIOENERGY SHARE OF TOTAL

PURCHASED ENERGY 52%

EU Commission

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

on EU level

Food 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 set

Draft 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

74

Increased regulation to ensure

product safety


1–3/2018

Shares and owners

Market cap and foreign owners31 March 2018

Ownership distribution31 March 2018

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

3 000

2013 2014 2015 2016 2017 Q1/2018

Market cap, EUR million

Share of foreign owners, %

41 %

20 %

18 %

21 %MetsäliittoCooperative

Domestic institutionalinvestors

Domestic privateinvestors

Foreign owners

EUR million

* Metsäliitto Cooperative has 61% of voting rights

*

76

%


1–3/2018


1–3/201877

Ownership structure on 31 March 2018

41 %

21 %

18 %

11 %

4 %2 % 3 %

MetsäliittoCooperative

Foreign owners*

Households

Public sectororganisations

Finance andinsurancecompanies

Non-profitorganisations

Other companies

61 %14 %

11 %

8 %

3 %1 % 2 %

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 1,036,618,704)

* incl. nominee registered

Metsä Board has two series of shares: 35,847,682 A-shares and 319,665,064 B-shares.

A-share entitles to 20 votes and B-share entitle to 1 vote at a General Meeting.

Appendices

METSÄ TISSUE

Tissue and cookingpapers

Sales:

EUR 1.0 billionPersonnel:

2,800

Metsäliitto Cooperative

holding 100%

METSÄ WOOD

Wood Products

Sales:


1,400


holding 100%

METSÄ FOREST

Wood Supply and ForestServices

Sales:


850


holding 100%


1–3/201879

METSÄ BOARD

Paperboard

Sales:


2,350


holding 41.5%, 61.4% of votes

METSÄ FIBRE

Pulp and SawnTimber

Sales:


1,200


holding 50.1%,

Itochu Corporation 25.0%

Metsä Board 24.9%

METSÄ GROUP | Sales EUR 5.0 billion | Personnel 9,100

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

(consolidated)

Metsä Board is listed

on the Nasdaq Helsinki


1–3/201880

Metsä Board Corporate Management Team

Mika JoukioCEO

Chairman of CMT since 2014

MG employee since 1990

Share ownership: 326,631

Jussi NoponenCFO

Member of CMT since 2016



Sari PajariSVP, Marketing and Sales




Ari KivirantaSVP, Development




Harri PihlajaniemiSVP, Production


MG employee in 2001-2004

and since 2017

Share ownership: no ownership

Susanna TainioSVP, HR




Share ownerships are B-shares.

MG = Metsä Group

- 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 and white kraftliner in Europe

- #1 producer of coated white-top kraftliner globally

- Husum investment programme enabling significant growth steps


1–3/201881

Restructuring to a pure-play paperboardcompany from 2005 onwards


1–3/201882

4440 3236 2432 2605 2485 2108 2019 2008 2008 1720 1849

1,1 -1,1

-6,2

6,6

2,4

3,6

5,2

6,8

9,0

8,0

10,5

-8,0

-4,0

0,0

4,0

8,0

12,0

0

1000

2000

3000

4000

5000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Sales, EUR million Comparable EBIT-%

%

Sales and EBIT-% development


1–3/201883

M&A activity 1997−2015

100 000 B2

shares in

PVO

Acquisitions

Divestments

Biberist Paper Mill

UK Paper

Modo Paper

Zanders

Chemicals

Business

Botnia

WoodCorrugated

PackagingMD Papier Metsä

Tissue

Albbruck Savon

Sellu

Forestia

Kemiart

Liners (53 %)

8% in

Botnia

PSM

9% in

Botnia

Carton

plants

Map

New

ThamesMB

Uruguay

Graphic

Papers

Part of

Reflex

Hallein

mill

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


1–3/201884

Significant Divestments

EUR 3.7 billion in assets divested since 2001

* Cash portion

**Incl. pension liabilities

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


1–3/2018

Katri Sundström

Vice President, Investor relations

Tel +358 400 976 333

[email protected]

www.metsaboard.com

86

Contact information


1–3/2018

mailto:[email protected]

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