metsä board investor presentation 2 february 2017
TRANSCRIPT
Metsä BoardInvestor presentation 2 February 2017
Investor presentation February 20172
ContentsInvestment highlights 3
Strategic cornerstones and financial targets 11
Operating environment and market position 19
Growth in the paperboard business 27
Q4/2016 and FY 2016 results and outlook 34
Balance sheet and funding 44
Investments 52
Production, capacities and sourcing 58
Sustainability 65
Owners 69
Appendix 72
Contact information 78
Investment highlights
• Market leader in folding boxboard in Europe and global market leader in coated white fresh fibrelinerboard
• Strong fibre know-how and self-sufficiency in pulp • Sales in 2016 EUR 1.7 billion and comparable
operating result EUR 137 million• Appr. 2,500 employees in 23 countries• Global sales to over 100 countries and eight
production units in Finland and Sweden
Investor presentation February 20174
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
5
High-performance packaging materialsFolding boxboards, white fresh fibre linerboards and fully bleached linerboards
Consumer goods Retail-ready Food service
Investor presentation February 2017
• Lightweightness– Even 30% lighter than competing grades (e.g. SBB, WLC)
• Excellent printability and runnability
• Purity and safety
• Bioenergy– More than 60% of the energy Metsä Board uses comes from
renewable resources
• Wood from known origin– Fibres used in production are sourced from sustainably
managed northern forests
6
Benefits of Metsä Board paperboards
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.
Folding boxboard is the stiffest yet lightest paperboard grade
Investor presentation February 2017
Investor presentation February 20177
Comparable EBITDA development
185 208 236 283 231
8,8 %10,3 %
11,8 %
14,1 % 13,4 %
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
50
100
150
200
250
300
2012 2013 2014 2015 2016
EU
R m
illio
n
2016 was negatively impacted by Husum’s new FBB machine ramp-upComparable ROCE-%
Investor presentation February 20178
Comparable EBIT-%
4,8
6,4
9,1
11,3
8,1
0
2
4
6
8
10
12
2012 2013 2014 2015 2016
%
3,6
5,2
6,8
9,08,0
0
2
4
6
8
10
2012 2013 2014 2015 2016%
Target over 12% from 2017
Investor presentation February 20179
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
• High investment costs
• Limited availability of high yield pulp (e.g. BCTMP)
• Leading global consumer goods companies 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 uniform brand look and feel globally– Sustainability and product safety aspects
• Skilled people and organizations a crucial success factor
Investor presentation February 201710
High threshold for new producers to enter high-quality paperboard segment
Vaihda kuva laadukas kartonki
Strategic cornerstones and financial targets
Values
• Responsible profitability• Reliability• Cooperation• Renewal
Strategic cornerstones
• Focus• Growth• Profitability
Investor presentation February 201712
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
Investor presentation February 201713
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
Investor presentation February 201714
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
Investor presentation February 201715
Growth
Financial targets
Comparable ROCE, %
Investor presentation February 201716
Net gearing, %
4,8
6,4
9,1
11,3
8,1
2012 2013 2014 2015 2016
72 70
51
32
44
2012 2013 2014 2015 2016
• Return on capital employed (ROCE) a minimum of 12% from 2017 onwards• Net gearing a maximum of 70%
• 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
Investor presentation February 201717
Main priorities and actions to achieve financial targets
• Metsä Board’s dividend payout target is at least 1/3 of EPS
• Dividend proposal for 2016:– 0.19 per share– Totalling EUR 68 million– Corresponds 76 per cent of EPS and
73 per cent of comparable 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
Investor presentation February 201718
Dividend and EPS
Operating environment and market position
Demand is based on global trends
Globalisation Technology Sustainability Consumption
• Increasing role of retail and harmonisation of global brands
• Growing importance of logistics
• Consolidation of carton converters
• New innovations utilising wood fibre and other biomaterials
• Continuous development of production technologies
• Digitisation and automatisation change business dynamics
• Greater significance of resource efficiency drives circular economy and life-cycle thinking
• Increasing regulation brings additional obligations
• Social responsibility through value chain
• Growing consumption and consumers’ increasing quality needs globally
• Stronger demand for sustainable packaging
• Digital services change purchasing behavior
The global fresh fibre paperboard packaging market is about USD 120 billion
The total packaging market is USD 840 billion
Investor presentation February 201721
Estimated average annual growth rate of fresh fibre paperboard is 3–4%
Fresh fibre paperboard
Other wood fibre based materials
Non-fibre based materials0
20
40
60
80
100
120
140
2013 2014 2015 2016E 2020F
USD bn
Source: Metsä Board estimates
Investor presentation February 201722
Global folding boxboard market is about 9 Mt/aTotal cartonboard market is about 36 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
Recycled grades
Avg. growth rate for premium cartonboards is
3–4%/a
Investor presentation February 201723
Global food service board market is 3.5 Mt/a*
Source: Metsä Board estimates*) Base board only, excl. other laminate materials such as aluminium and PE.
Cups
Plates
Cartons
Avg. growth rate for food service board is
3–5%/a
APAC1.0 Mt/a
EMEA0.9 Mt/a
Americas1.6 Mt/a
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: 2.2M tonnes
Sources: Company information, Pöyry Management Consulting Oy Q1 2017
16%
7%
9%
11%
21%
37%
0 300 600 900 1200 1500
Others
International Paper
Mayr-Melnhof
Kotkamills Oy
Stora Enso
Metsä Board
14%
8%
11%
13%
23%
31%
0 200 400 600 800
Others
SCA
BillerudKorsnäs
Mondi
Smurfit Kappa
Metsä Board
Investor presentation February 201724
500
600
700
800
900
1000
1100
2010 2011 2012 2013 2014 2015 2016
Folding boxboard White‐top kraftliner
Market price development in folding boxboardand white-top kraftliner in Europe
Sources: Pöyry Management Consulting & FOEX Indexes Ltd
EUR/ tn
25 Investor presentation February 2017
Source: Foex Indexes Ltd
Softwood, USD
Softwood, EUR
Hardwood, EUR
Hardwood, USD
USDEUR
350400450500
550600650700750800850
900950
10001050
'10 '11 '12 '13 '14 '15 '16350400450500
550600650700750800850
90095010001050
Pulp price development (PIX)
Investor presentation February 201726
Growth in the paperboardbusiness
Annual paperboard deliveries Target level 2 million t/a 2018 onwards
28
0
250
500
750
1 000
1 250
1 500
1 750
2 000
2012 2013 2014 2015 2016 2018 target
Fresh fibre linerboard Folding boxboardInvestor presentation February 2017
Paperboard deliveries, 1,000 tonnes Total deliveries in 2016 were 1.57m tonnes – annual growth 12%
Investor presentation February 201729
Most important growth area is Americas
0
50
100
150
200
250
300
2011 2012 2013 2014 2015 2016 2018 target
Folding boxboard Fresh fibre linerboard
300
250
1,00
0 to
nnes
Actual and targeted deliveries to Americas
Investor presentation February 201730
Ambitious growth targets for new paperboard volume from Husum mill
250150
150
0
500
1 000
1 500
2 000
Deliveries in 2015 Folding boxboard toAmericas
Food service boardglobally
Linerboard toEurope andAmericas
Targeted deliveriesin 2018
A total of 400,000 tonnesof new FBB capacity
1,00
0 to
nnes
Incremental capacity in linerboard*)
*) until July 2016 the paperboard machine (BM2) produced simoultenously fine paper reels.
• The goal is to remain Europe’s biggest producer of folding boxboard and white fresh fibre linerboards
• The biggest growth drivers are – Strong and long-term customer relationships – Innovative high-performance product portfolio to replace
other packaging materials– Top-class customer service concept
• In EMEA, Metsä Board’s paperboard delivery volumes grew by 10% in 2016 compared to 2015
Investor presentation February 201731
Maintaining of strong market position in Europe
Metsä Board uses only fresh fibres from sustainably managed northern forests
EMEAShare of sales
75%
REGIONAL GOALS AND OPERATING MODEL:
• The most rapid growth is sought in the Americas, where most of Husum’s new capacity in folding boxboard is targeted
• The biggest growth drivers are– Limited local supply in folding boxboard– Due to strong consolidation, converters without own paperboard
production are looking for alternatives• In folding cartons their share is 40–50%
– Strong demand in food service board– Growing environmental awareness
• In Americas, Metsä Board’s paperboard delivery volumes grew by 14% in 2016 compared to 2015
Investor presentation February 201732
Growth in the Americas in the coming years
Paperboard offers a sustainable option for plastics such as styrofoam in food service applications.
AmericasShare of sales
17%
REGIONAL GOALS AND OPERATING MODEL:
• Metsä Board aims at moderate growth, primarily in cooperation with brand owners
• Responsible consumer goods companies promote good packaging– Consistent quality– Traceable raw materials– Responsible production
• Due to the local overcapacity in Asia, the timing is not good for aggressive growth
• In APAC, Metsä Board’s paperboard delivery volumes grew by 24% in 2016 compared to 2015
Investor presentation February 201733
Focus on premium segments in the Asia-Pacific region
Global consumer goods companies not willing to change paperboard suppliers easily in the high-quality segments
APACShare of sales
8%
REGIONAL GOALS AND OPERATING MODEL:
Q4 2016 and FY 2016 results and outlook
• Sales declined moderately, and comparable EBIT remained roughly at the same level as in Q3 2016
• Delivery volumes in paperboard and market pulpdeclined
• The annual maintanance shutdown at Husum wasextended by one week
• Average price level in paperboard was supported byan improved price level for Husum’s new FBB and the stronger US dollar
• The market situation was stable
Q4 2016 in summary
35 Investor presentation February 2017
Investor presentation February 201736
Key financials
Q4/16 Q3/16ChangeQ4/16
vs. Q3/162016 2015
Change2016
vs. 2015
Sales EUR million 422 440 -4% 1,720 2,008 -14%
EBITDA, comparable EUR million 53 59 -11% 231 283 -18%
Operating result, comparable EUR million 33 34 -4% 137 180 -24%
% of sales % 7.8 7.7 8,0 9,0
Result before taxes, comparable EUR million 23 27 -16% 107 150 -29%
Earnings per share EUR 0.07 0.05 +40% 0.25 0.39 -36%
ROCE, comparable % 7.7 8.0 8.1 11.3
Gross investments EUR million 43 16 +164% 162 178 -9%
Cash flow from operations EUR million 55 67 -19% 77 247 -69%
Dividend per share EUR 0.19* 0.17 +12%*) proposal to AGM
Quarterly sales and EBIT development
Sales, EUR million
499 526 522 498 462 436 423 440 4220
100
200
300
400
500
600
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
37 43 47 55 35 35 36 34 33
7,4 %8,2 %
9,0 %
11,0 %
7,6 % 8,0 %8,5 %
7,7 % 7,8 %
0%
2%
4%
6%
8%
10%
12%
0
10
20
30
40
50
60
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Investor presentation February 201737
Comparable EBIT (EUR mill.) and EBIT-%
FY 2015:EUR 2,008 million
FY 2016:EUR 1,720 million
FY 2015:EUR 180 million
FY 2016:EUR 137 million-14% -24%
34 33
0
10
20
30
40
Q3 2016 Q4 2016
Operating result, EUR million
Investor presentation February 201738
2016 operating result mainly impacted by Husum
180
137
0
50
100
150
200
FY 2015 FY 2016
Operating result, EUR million
+ Improved price of Husum’s new FBB, good performance in linerboard business, stronger US dollar
- Lower production and delivery volumes, extended maintenance shutdown at Husum
+ Stable development in Finnish mills, positive impact from FX rates afterhedges
- Ramp-up of new FBB machine, technicalchallenges at Husum, lower avg. price in FBB, declined market pulp prices
EBIT-%9.0
EBIT-%8.0
EBIT-%7.7
EBIT-%7.8
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
Comparable ROCE, %Investor presentation February 201739
ROCE-% remained at the same level throughoutthe year
Target >12% from 2017 onwards
Paperboard deliveries in 2016 up by 12%Seasonal decline in Q4
210 203 204 213 224 224 227 250 266 245
120 111 130 141 137 131 142148 148
143
0
60
120
180
240
300
360
420
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Folding boxboard Fresh fibre linerboard
1,00
0 to
nnes
Change in paperboarddeliveries:
-6% Q4/16 vs.Q3/16
+9% Q4/16 vs.Q4/15
+12% FY16 vs.FY15
40 Investor presentation February 2017
Cash flows turned clearly positive in H2 2016
51 74 33 56 93 66
-22 -22
67 5546 56 9 8 45 8
-76-50
49 17
157
198
250
214
256 247
193
11589 77
110
155188
119 11870
-15
-73 -69 -56-100
-50
0
50
100
150
200
250
300
Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16
Cash flow from operations, quarterly Free cash flow, quarterlyCash flow from operations, rolling 12 months Free cash flow, rolling 12 months
EUR million
41 Investor presentation February 2017
Positive cash flow decreased net debt in H2 2016
427 333 464 412 541 488 464
1,8
1,2
2.0
1,5
2,1 2,1 2.0
0
1
2
3
0
200
400
600
2014 2015 2016 3/16 6/16 9/16 12/16
Interest-bearing net debt, EUR million
Interest-bearing net debt / comparable EBITDA(rolling 12 months)
Interest-bearing net debt / comparable EBITDA
427 333 464 412 541 488 464
51%
32%
44% 42%
54%49%
44%
0
0,1
0,2
0,3
0,4
0,5
0,6
0
200
400
600
2014 2015 2016 3/16 6/16 9/16 12/16
Interest-bearing net debt, EUR million
Net gearing, %
Net gearing, %
42 Investor presentation February 2017
Financial target in net gearing is maximumof 70%
• Metsä Board’s paperboard delivery volumes are expected to increase in Q1
• No planned shutdowns in January–March 2017 • Demand and price development in fresh fibre
paperboards are expected to remain stable • Metsä Board’s comparable operating result in Q1
2017 is expected to improve from Q4 2016
Near-term outlook and guidance
43 Investor presentation February 2017
Balance sheet and funding
Investor presentation February 201745
Strong balance sheet
Equity ratio, %
33%
41% 39%
46% 48%
0%
10%
20%
30%
40%
50%
2012 2013 2014 2015 2016
73% 70%
51%
32%
44%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2012 2013 2014 2015 2016
Net gearing, %
625 597 427 333 464
3,4
2,9
1,81,2
2,0
0
1
2
3
4
0
200
400
600
2012 2013 2014 2015 2016
Net debt, EUR million
Net debt/EBITDA (rolling 12 months)
Net debt, EUR million and Net debt / Comparable EBITDA
Debt structure and liquidity31 December 2016
223
199
128
23
115Bonds
Loans fromfinancial institutions
Pension loans
Finance leases andother loans
Other short-termloans
221
100
102Cash and cashequivalentsRevolving creditfacilityUnraised pensionloans
Interest-bearing debt, total EUR 688 million
Available liquidity, total EUR 423 million
Average maturity of long-term loans at 31 December 2016 was 2.2 years. 46 Investor presentation
February 2017
Investor presentation February 201747
Debt programmes 31 December 2016Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*, % Maturity
EUR 225 million bond Issue 2014 225 225 4.5 2019
Syndicated credit facility 2014 250 150 3.1 2020
EUR 101 million bilateral loans 101 101 1.7 2017–2020
EUR 23 million finance leases 23 23 2.3 2017–2024
EUR 230 million pension loans 230 128 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 230 128 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 December 2016
* The average interest rate take into account outstanding interest rate swaps and amortised arrangement feesThe average interest rate of all Metsä Board interest bearing net liabilities incl. interest rate derivatives per 31 December 2016 is 3.3 %
Metsä Board’s principal long-term liquidity reserves at 31 December 2016
Investor presentation February 201748
Maturity schedule in long-term IB debt
155
35
257
174
1 2
100 102
0
50
100
150
200
250
300
2017 2018 2019 2020 2021 >2021
Long-term interest-bearing debt (total EUR 469 million) and committed undrawn credit facilities 31 December 2016
Long-term interest bearing liabilities Committed undrawn credit facilities
EUR million
Investor presentation February 201749
Steadily decreasing net financial costs
47 56 39 32 31
5,2
4,6
4,2
3,8
3,3
3,0
3,5
4,0
4,5
5,0
5,5
0
20
40
60
2012 2013 2014 2015 2016
Net financial costs, EUR million
Average interest rate at the end of period, %
EUR million %
• Net financials in Q4 were EUR -10 million (Q3/16: EUR -7 million)
• Net exchange gains and lossesamounted to EUR -4 million(EUR -1 million)
• Updated normal level in hedging: 100% of balance sheet position + 50% of annual net FX flows are hedged (previously 25%)
FX exposure and sensitivities
58 %34 %
6 %2 %USD
SEK
GBP
Othercurrencies
FX exposure by currency,Annual gross amount EUR 1.2bn FX sensitivities before hedges
10 % strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s operating result of
Currency Next 12 months
USD, $ EUR +70 million
Swedish krona EUR -40 million
GBP, £ EUR +7 million
50 Investor presentation February 2017
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
51
Metsä Board 's credit rating
Moody’sStandard & Poor’s
BB+ | Ba1
Stable
Positive
BB | Ba2
BB- | Ba3
B+ | B1
B | B2
B- | B3
CCC+ | Caa1
CCC | Caa2
Investor presentation February 2017
Investments
• Main growth capex in 2016 included Husum investment programme, extrusion coating line and equity investment in MetsäFibre’s bioproduct mill
• Estimated capex in 2017 is EUR 65–70 million
Capex in 2016 was EUR 162 million
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015 2016 2017E
Capex Growth capex Depreciation
€ million
53 Investor presentation February 2017
Investor presentation February 201754
Husum investment programme
Folding boxboard production
• Capacity approximately 400,000 t/a
• Deliveries mainly to Americas and Food service globally
Linerboard production
• Capacity approximately 300,000 t/a
• Deliveries to Europe and Americas
Capacity changes 2014 vs. 2016:
• Paperboard capacity +700,000 tn/a
• Paper capacity -600,000 tn/a
• Launched at the end of 2014• Two paper machines were shut down in 2015 • One paper machine converted to produce linerboard (BM2)• New folding boxboard machine (BM1) started up on February 2016• Enhancements to the pulp mill and the mill site’s own port
• New folding boxboard production line at Husumstarted up in February 2016
• Total delivery volume of Husum’s folding boxboardwas 120,000 tonnes
• Efficiency improvement programme launched in Mayproceeded as planned
• Own extrusion coating line will start up in H1 2017
Husum update
55 Investor presentation February 2017
Food service packaging requires barrier features e.g. moisture and fat resistance
• Investment value EUR 38 million• Located at Husum mill• Start-up in H1/2017 with capacity of 100,000 t/a, until then
Metsä Board’s paperboards are coated by external converter
• The company continues to develop other barrier solutions, and closely monitors their commercial feasibility
Investor presentation February 201756
Metsä Board expands its offering in food and food service paperboards by investing in extrusion coating
• Net capacity increase at the site is approximately 800,000 t/a• Total capacity is 1.3 million t/a
– Investment cost of approximately EUR 1.2 billion– Start up in Q3 2017
• Capital invested by Metsä Board was EUR 24.9 million– Metsä Board has no other financial commitments in the project
• Metsä Board’s holding in Metsä Fibre remains unchanged at 24.9 per cent
• All in all, Metsä Board’s pulp balance is expected to be 500,000–600,000 t/a long from 2018 onwards
– Result contribution is driven by the market price of softwood chemical pulp
– Reserve to grow paperboard business further in the future while maintaining self-sufficiency in pulp
Investor presentation February 201757
Metsä Board’s associated company Metsä Fibre builds a bioproduct mill
Production, capacities and sourcing
Paperboard mills• Husum (FBB and linerboard)• Kemi (linerboard)• Kyro (FBB)• Tako (FBB)• Simpele (FBB)• Äänekoski (FBB)
Pulp mills• Husum (chemical pulp)• Joutseno (BCTMP)• Kaskinen (BCTMP)
Investor presentation February 201759
Production locations
Äänekoski
Simpele
Joutseno
Tako
Kyro
KaskinenHusum
Kemi
Investor presentation February 201760
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 9 1,320 680 2,000
Investor presentation February 201761
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 530 530
Kemi Finland 610 610
Rauma Finland 650 650
Joutseno Finland 690 690
Total 2,480 2,480
Deliveries by region in 2016
Folding boxboard
Investor presentation February 201762
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)
Investor presentation February 201763
Primary energy used(total 12.0 TWh)
Wood sourcing by country (total 4.6 million cubic metres)
Investor presentation February 201764
Cost structure in 2016Delivery costs
16%
Wood26%
Chemicals, pigments and fillers
14%
Energy12%
Other variables3%
Personnel 14%
Other fixed15%
Fixed costs
Variablecosts
Sustainability
Transportation package protects the paperboard from being damaged during the delivery chain.
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.
Investor presentation February 201766
LOGISTICSENSURE THE SUSTAINAINABILITY OF MAIN LOGISTIC FLOWS
PERFORMANCE 2016−2017 100%
SAFETYLOST-TIME ACCIDENTS
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
Min 80%
WOODTHE AMOUNT 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%
Investor presentation February 201767
• CDP Water A list– Metsä Board was the only forest industry company in
the world included on the list
• CDP Climate A list– Only 9% of the reporting companies were included on
the A list
• Leadership status in CDP’s 2016 Forest programme
• According to L’Oréal Metsä Board was the best packaging material supplier in CDP’s 2015 CDP Supply chain programme.
68
Metsä Board received againrecognition from CDP in 2016
Investor presentation February 2017
Owners
Market cap and foreign owners31 December 2016
Ownership distribution31 December 2016
Market cap and ownership distribution
0
4
8
12
16
20
24
0
500
1 000
1 500
2 000
2 500
2012 2013 2014 2015 2016
Market cap, EUR million
Share of foreign owners, %
42 %
25 %
18 %
15 % MetsäliittoCooperative
Domestic institutionalinvestors
Domestic privateinvestors
Foreign owners
EUR million
*) Metsäliitto Cooperative has 61% of voting rights
*)
70
%
Investor presentation February 2017
Investor presentation February 201771
Ownership structure on 31 December 2016
42 %
15 %
18 %
13 %
7 %
2 % 3 %MetsäliittoCooperative
Foreign owners*
Households
Public sectororganisations
Finance andinsurancecompaniesNon-profitorganisations
Other companies
61 %15 %
10 %
5 %
4 % 3 %1 % Metsäliitto
Cooperative
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 registeredSource: Euroland
Appendix
METSÄ TISSUE
Tissue and cookingpapers
Sales:
EUR 1.0 billionPersonnel:
2,700Metsäliitto Cooperativeholding 100%
METSÄ WOOD
Wood Products
Sales:
EUR 0.5 billionPersonnel:
1,520Metsäliitto Cooperativeholding 100%
METSÄ FOREST
Wood Supply and ForestServices
Sales:
EUR 1.5 billionPersonnel:
860Metsäliitto Cooperativeholding 100%
Investor presentation February 201773
METSÄ BOARD
Paperboard
Sales:
EUR 1.7 billionPersonnel:
2,500Metsäliitto Cooperativeholding 42%, 61% of votes
METSÄ FIBRE
Pulp and SawnTimber
Sales:
EUR 1.6 billionPersonnel:
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
2005 Structural change starts Paper production over 80% of sales -> Decision to exit paper business
2006 Strategic review launchedRestructuring and focused investment programme initiated, focus on paperboard
2007–2013 Streamlining and focused investmentsPaper capacity reduction from about 5 million to 0.8 million annual tonnesMajor divestments incl. Graphic Papers and Map MerchantsPaperboard capacity increases
2013 Strategic review completed Clear focus on paperboard Paper production 25% of sales
2015 Strong market position in main productsEurope’s leading producer of folding boxboardThe world’s leading manufacturer of coated white fresh fibre linerboards
2016 Final exits from non-core businessesFine paper production at Husum mill and wallpaper base production at Kyro mill endedPaperboard capacity 2 million t/a
Investor presentation February 201774
True success story
Investor presentation February 201775
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
Investor presentation February 201776
Significant Divestments EUR 3.7 billion in assets divested since 2001
* Cash portion**Incl. pension liabilities
Investor presentation February 201777
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 EBIT‐%
%
Sales and EBIT-% development
Katri SundströmVice President, Investor relations
Tel +358 400 976 [email protected]
78
Contact information
Investor presentation February 2017