Metsä Board

Profitable Paper and Pulp Business

Seppo PuotinenCapital Market’sDay19 September2012

Metsä Board

Content

1. Metsä Board’s Paper and Pulp Business Today

2. Market Update

3. Succesfull Restructuring Measures and Result Development

4. Conclusions

2

Metsä Board

Metsä Board’s Paper and Pulp Business Today

Metsä Board

Paper and Pulp Business Area in Brief

4

‒ Annual sales in total about 850 m€

‒ Pulp capacity 1 050 000 t/a

‒ Husum: Chemical Pulp HW&SW 750 000 t/a

‒ Kaskinen: High Yield Pulp (BCTMP) 300 000 t/a

‒ Paper capacity 810 000 t/a

‒ Husum Uncoated fine paper (WFU) 470 000 t/a

‒ Husum Coated magazine paper (CMR) &

Coated fine paper (WFC) 340 000 t/a

Husum coated papers continue to be sold by Sappi

Husum Kaskinen

Capacity Share (%)

4 %

8 %

10 %

12 %

12 %

14 %

0 % 5 % 10 % 15 %

Metsä Board

International Paper

UPM-Kymmene

Mondi

Stora Enso

Portucel

No. 6 WFU Producer in Europe

Source: Pöyry Management Consulting Oy

Metsä Board

Market Update

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Paper Demand in Western Europe is Expected to Decline and Overcapacity Situation to Continue

Source: EMGE, April 2012 Source: PPPC, Febr. 2012

0

2000

4000

6000

8000

10000

12000

2007

2008

2009

2010

2011

2012

F

2013

F

WFU Demand and Capacity in Western Europe

Demand

Capacity

1000 t/a

0

2000

4000

6000

8000

10000

12000

2007

2008

2009

2010

2011

2012

F

2013

FCMR and WFC Demand and Capacity in Western Europe

Demand

CapacityAdditionally, major CMR export volumes to outside Europe

No material WFU export volumes to outside Europe

1000 t/a

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Global Pulp Demand-Supply Balance is Expected to Remain Good in Softwood, Somewhat Weaker in Hardwood

Source: PPPC, May 2012

0

5000

10000

15000

20000

25000

30000

35000

40000

2007

2008

2009

2010

201120

12F

2013

F20

14F

Softwod Pulp Demand and Capacity Globally

DemandCapacity

1000 t/a

0

5000

10000

15000

20000

25000

30000

35000

40000

2007

2008

2009

2010

201120

12F

2013

F20

14F

Hardwood Pulp Demandand Capacity Globally

DemandCapacity

1000 t/a

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Demand for High Yield Pulp is Growing Steadily. Demand Supply Balance Expected to Further Improve

0

1000

2000

3000

4000

5000

6000

2007

2008

2009

2010

2011

2012

F

2013

F

2014

F

High Yield Pulp Demandand Capacity Globally

Demand

Capacity

1000 t/a

Source: PPPC, May 2012

Metsä Board

Rather Stable Short-Term Market Outlook

‒ Uncoated fine paper and pulp delivery volumes expected to be stable in near term

‒ Coated paper delivery volumes have increased in 3Q 2012. Second half of the year is typically seasonally better than the first

‒ Metsä Board has announced a WFU price increase of 6-8% from September 2012. No major coated paper or pulp price changes in sight

Metsä Board

Succesfull RestructuringMeasures and Result

Development

Metsä Board11

- Divestment of Hallein pulp mill in late 2011

- Closure of Äänekoski WFC production in late 2011 and radical change in paper production concept in Husum

- Closures and divestments at Reflex mill in 2011 and 2012

- Closure of Alizay paper mill in early 2012

- Improved sales and customer mix of Kaskinen high yield pulp in 2012

In Paper and Pulp business area the expected annual operating result improvement of the implemented measures is about 70 m€ compared to actual performance in 2011

Recent Restructuring and Development Actions Have Been Successful

Metsä Board

Significant Productivity Improvements at Husum Mill

‒ Re-engineering of internal processes to lower headcount to below 800

‒ Widened paper production range (WFU, CMR, CWF) and maximized flexibility to enable full capacity utilization increasing total paper production by over 100 000 t/a to 810 000 t/a

‒ Pulp mill capacity increasing to 750 000 t/a

‒ Energy self-sufficiency from 32 % to about 60 % with minor investments

‒ Extensive variable cost savings

0

500

1 000

1 500

2 000

2 500

2006 2007 2008 2009 2010 2011 2012to

nnes

/a/p

erso

n

Capacity per paper and pulp employee

Metsä Board

Husum is a Valuable Asset for Metsä Board

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- Europe’s largest fine paper and pulp integrate

- Good cash generator for Metsä Board

- No major investment needs in sight, maintenance capex ~20 m€/a

- Husum expected to have a role in the future European paper industry restructuring

0

30

60

90

120

2008 2009 2010 2011

m€EBITDA, excl. non-recurring items

Metsä Board

Kaskinen Turned Around from Fully Integrated Mill to a Market Pulp Producer

‒ High yield pulp is an excellent tailor-made fibre to improve board, paper and tissue products’ quality and cost competitiveness

‒ Metsä Board is the largest high yield market pulp producer in the world

‒ Substantial profit improvement actions ongoing‒ Full capacity utilization‒ Focus is on delivering to long-term contractual customers in Europe ‒ Cost savings by simplification of product portfolio

‒ Kaskinen mill is a good reserve for Metsä Board to grow its paperboard business in the future

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Metsä Board

245229

314297

282

238

0

50

100

150

200

250

300

350

I II III IV I II

-12

5

-6-4

-10

-20

-30

-20

-10

0

10

I II III IV I II

* excl. non-recurring items

Sales Operating Result*m€ m€

2012

2011

15

Improvement Measures Start to Materialize in the Results

‒ Extensive maintenance shutdown at Husum as well as strengthened SEK will have negative impacts on 3Q 2012 result

Metsä Board

Conclusions

Metsä Board

Target for Paper and Pulp Is to Generate Strong Cash Flow

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‒ Full capacity utilization and new product innovations in Husum: Increase of total paper and pulp production to about 1.6 million t/a with minor capex

‒ Radical improvement in Kaskinen high yield pulp sales and customer mix to enable full capacity utilization

‒ Super Productivity secures strong cash flow also in the future

‒ Metsä Board continues to be interested to take part in the European wide paper industry consolidation

Metsä Board

Thank you!QA

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