Metsä Board

Metsä BoardResults 1Q 2015

Metsä Board

Highlights in 1Q 2015

2

‒ Profitability improved from the previous quarter

‒ Paperboard delivery volume increased and price levels were stable

‒ Net debt reduced to EUR 319 million thanks to the successful share offering implemented in March and good cash flow

‒ Exchange rates moved to a favourable direction

‒ Final steps in transformation to a paperboard company proceeded as planned

‒ Public financial targets were updated

‒ Organization and reporting structure were renewed as of 1 Jan 2015

‒ In April, after the reporting period, Gohrsmühle mill was agreed to be divested to mutares AG

Metsä Board

36 35 3730 1926

29 2843

0

10

20

30

40

50

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

535 503 502 479 501 494 499514 526

200

300

400

500

600

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

419

918 20 27 32

2132

-10

0

10

20

30

40

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

Sales Operating result excl. non-rec. items

Result before taxes excl. non-rec. items

Sales increased and operating result improved in 1Q 2015

3

EUR million EUR million

EUR million

1Q result before taxes impacted by increased FX hedging losses

Metsä Board

Main operating result drivers in 1Q 2015 vs. previous quarter

4

+Paperboard delivery volume

Exchange rate changes

Slightly improved linerboard pricing

–Paper delivery volume (as planned)

4Q 2014 was improved by sale of CO2 rights

Accelerated depreciations of Husum paper capacity in 2015

Somewhat higher fixed costs

Metsä Board

169 176 185 185 189 192 197 185 191 197 210 203 204

8085

93 85 94 93 9591

112 110120

111130

0

60

120

180

240

300

360

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

Fresh forest fibre linerboardFolding boxboard

Sales volumes growing as planned

5

1000 tonnes +10% vs. 1Q 2014

Metsä Board6

EBIT, excl. non-recurring itemsSales

Paperboard segment’s performance improved clearly in 1Q 2015

EUR millionEUR million

61

44 45 44

51

0

10

20

30

40

50

60

70

1Q14 2Q14 3Q14 4Q14 1Q15

391364375

356350

0

50

100

150

200

250

300

350

400

450

1Q14 2Q14 3Q14 4Q14 1Q15

Metsä Board7

EBIT, excl. non-recurring itemsSales

Non-core operations continued loss-making in 1Q 2015

EUR millionEUR million

-3-6

-7

-3 -2

-15

-10

-5

0

5

10

15

1Q14 2Q14 3Q14 4Q14 1Q15

128127128127

136

0

20

40

60

80

100

120

140

160

1Q14 2Q14 3Q14 4Q14 1Q15

Metsä Board

Net debt reduced to EUR 319 million thanks to the successful share offering and good cash flow

‒ Gross debt EUR 685 million and net debt EUR 319 million at end 1Q (EUR 427 million at end 2014)

‒ Net gearing 34 % (51 %), equity ratio 41 % (39 %) and average interest rate 3.9 % (4.0 %) at the end of 1Q

‒ Net debt to EBITDA dropped to 1.3

‒ Strong liquidity position

‒ S&P raised Metsä Board’s credit rating by two notches to BB

8

Net Debt / EBITDA

Net DebtEUR million

319

827

0

250

500

750

1000

2010 2011 2012 2013 2014 1Q15

1,3

2,7

0

1

2

3

4

5

2010 2011 2012 2013 2014 1Q15

Metsä Board

Share offering was completed successfully

‒ Share offering was oversubscribed: 140 %

‒ Net proceeds EUR 98 million

‒ Total amount of Metsä Board’s shares increased to 355 512 746 of which‒ A-shares: 35 895 651‒ B-shares: 319 617 095

‒ Trading with the new shares commenced on 1 April 2015

9

Metsä Board10

‒ Duration of Metsä Board’s hedges of the main foreign currency flows

has been 4-7 months during the last 12 months

‒ Annual unhedged EBIT sensitivity of 10 % change vs. euro‒ EUR 45 million in USD

‒ EUR 20 million in GBP

‒ Reversed EUR 30 million SEK

‒ Positive EBIT impact after hedges over EUR 10 million in 1Q

compared to previous quarter

‒ Segment numbers reflect exchange rate changes rapidly

but hedge accounting result in Other operations balance the impact

Exchange rates moved to favorable direction in 2H 2014 and early 2015

Metsä Board

Short-term market outlook

11

‒ Paperboard delivery volumes are expected to increase slightly in 2Q

‒ FBB prices expected to continue stable

‒ Metsä Board has announced a 40 EUR/t linerboard price increase in continental Europe as of 11 May 2015

‒ Pulp market balance is forecast to continue good

‒ Market situation of the businesses reported under Non-core operations expected to remain stable in 2Q

‒ Average production costs are forecast to be flat in 2Q

Metsä Board

Short-term profitability outlook

12

‒ Metsä Board’s operating result excluding non-

recurring items is in the second quarter of 2015

expected to be roughly at the same level as in the first

quarter of 2015

Metsä Board

Transformation of Husum mill proceeding as planned

‒ First investment shutdown was in April. BM 2 now ready for 300 000 t/a linerboard production

‒ Slight negative result impact in 2Q

‒ Paper machines 6 and 7 are closed in Oct-Nov 2015

‒ New FBB production line (BM1) will start up on 4 January 2016‒ Investment shutdown has a negative result impact in 4Q 2015‒ Valmet main supplier and Pöyry consulting partner

‒ Related infra improvements are proceeding

13

Metsä Board

Metsä Board has agreed to divest Gohrsmühle mill in Germany to mutares and its partner company

‒ mutares AG is a stock listed German industrial holding company focusing on acquiring companies in special situations

‒ Divestment is subject to German competition authorities approval‒ Closing expected by the end of May 2015

‒ Negative cash flow impact, but clearly less than in the case of a potential closure. Positive non-recurring item of EUR 15 million booked in 2Q 2015 in Non-core operations

‒ Divestment reduces Metsä Board’s annual sales by about EUR 90 million and improve operating result by EUR 20 million compared to 2014

‒ Gohrsmühle’s main products are cast coated and label papers and there are approximately 480 employees

14

Metsä Board

Metsä Board’s associated company Metsä Fibre builds a new bioproduct mill in Äänekoski, Finland

‒ Net capacity increase at the site is approximately 800,000 t/a‒ Investment cost of approximately EUR 1.2 billion‒ Start up in 3Q 2017

‒ Capital invested by Metsä Board will be 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‒ Majority of the market pulp is softwood chemical pulp‒ Reserve to grow paperboard business further in the future while maintaining self-sufficiency in pulp

15

Metsä Board

Metsä Board has new long-term financial targets

New targets:

Return on Capital Employed (ROCE) minimum 12 per cent from 2017 onwards

Net gearing maximum 70 per cent

‒ Old targets were ROCE minimum 10 per cent and net gearing maximum 100 per cent

‒ Dividend policy remains unchanged. The aim is to pay a dividend of at least 1/3 of the EPS, taking into account the net gearing target

16

Metsä Board

Key priorities in 2015

‒ Grow profitably the paperboard businesses globally

‒ Implement successfully the Husum investment projects

‒ Secure good price levels

‒ Keep high product quality and further improve supply chain

‒ Enter new end use areas

‒ Eliminate the losses from Gohrsmühle mill

‒ Continue productivity improvements and cost savings

‒ Develop competences, especially related to Husum’s new products

11,0

9,1

6,4

4,8

3,4

0

3

6

9

12

15

2011 2012 2013 2014 1Q15

Target min. 12 % from 2017 onwards

ROCE, excl. non-recurring items%

17

Metsä Board

Appendix

Metsä Board

11,0

9,1

6,4

4,8

3,4

0

3

6

9

12

15

2011 2012 2013 2014 1Q15

ROCE % and EBIT, % of sales

19

EBIT % of sales excl. non-recuring items ROCE %, excl. non-recurring items

2,4

3,6

5,2

6,8

8,2

0

1

2

3

4

5

6

7

8

9

10

2011 2012 2013 2014 1Q15

Target min. 12 % from 2017 onwards

Metsä Board

EBITDA development

20

EBITDA excl. non-recurring items

70

236

208

186179

0

60

120

180

240

300

2011 2012 2013 2014 1Q15

EUR million

Metsä Board

Segment performance – comparison to previous quarter

Sales

1Q 20154Q 2014

21

364

127

391

128

0

100

200

300

400

500

Paperboard Non-coreoperations

Operating result, excluding non-recurring itemsEUR million EUR million

51

-2

61

-3

-20

0

20

40

60

80

Paperboard Non-coreoperations

Metsä Board

Segment performance – comparison to previous year

22

Sales Operating result, excluding non-recurring itemsEUR million EUR million

1Q 20151Q 2014

350

136

391

128

0

100

200

300

400

500

Paperboard Non-coreoperations

44

-6

61

-3

-20

0

20

40

60

80

Paperboard Non-coreoperations

Metsä Board

Balance Sheet Ratios

23

783

625597

427

319

4,4

3,4

2,9

1,8

1,3

0

100

200

300

400

500

600

700

800

900

2011 2012 2013 2014 1Q150

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

Net Debt and Net Debt/EBITDA* Net Gearing

106

72

70

51

34

0

20

40

60

80

100

120

2011 2012 2013 2014 1Q15

Net debt, EUR million

Net debt/EBITDA

*Excluding non-recurring items

%

Metsä Board

EUR / tonne

Folding boxboard market price in Europe2004 – 1Q 2015

24

Source: Pöyry Management Consulting

800

900

1000

1100

2009 2010 2011 2012 2013 2014 2015

Metsä Board

500

600

700

800

900

2009 2010 2011 2012 2013 2014 2015

25

Uncoated white-top kraftliner market price in Europe2009 – 1Q 2015

Source: Foex

EUR / tonne

Metsä Board

EUR / tonne

Paper and pulp market price in Europe1998 – 1Q 2015

Coated fine paper (100 g)Uncoated fine paper (B-copy, 80 g)

Softwood pulp NBSKCoated magazine paper LWC (60g)

Source: Foex, Reuters

EUR/USD

EUR/USD

400

500

600

700

800

900

1000

1100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150,8

0,9

1

1,1

1,2

1,3

1,4

1,5

1,6

1,7

26

Metsä Board

Ownership structure 31.3.2015Shares Votes

Source: Euroland27