metsä board's cmd 2015 - holm

Strong financial performance

Markus Holm, CFO

Capital Markets Day 19 November 2015

Disclaimer

This presentation includes forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,” “will,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or any similar expressionsidentify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. By their nature forward-looking statements are subject to assumptions, risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual results may differ even materially from those expressed or implied by these forward-looking statements. We urge presentation participants not to place undue reliance on such statements.

The information and views contained in this presentation are provided as at the date of this presentation and are subject to changes without notice. Metsä Board does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally require

Viewers should understand that this presentation does not constitute, and should not be construed as, an offer to buy or subscribe for Metsä Board’s securities anywhere in the world or an inducement to enter into any investment activity relating to the same. No part of this presentation should solely form the basis of, or be relied on in connection with, any contract or commitment or decision to invest in Metsä Board securities whatsoever. Potential investors are instructed to acquaint themselves with Metsä Board’s annual accounts, interim reports and stock exchange releases as well as other information published by Metsä Board to form a comprehensive picture of the company and its securities.

2015 CMD2

3

• Financial performance

• Cost structure and capital expenditure

• Funding and debt

• Metsä Board’s share and outlook

• Q&A

Contents

2015 CMD

Steady sales and improving margins

2015 CMD4

19 29 36 28 35 37 43 47 550%

5%

10%

15%

0

10

20

30

40

50

Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Operating result*EUR million and % of sales

9 18 21 20 27 32 32 40 480%

5%

10%

15%

0

10

20

30

40

50

Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Pre-tax result* EUR million and % of sales

502 479 501 494 514 499 526 522 498200

300

400

500

600

Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

SalesEUR million

*) excluding non-recurring items

Paperboard delivery volumes

Lower FX hedging costs

Negative profit impact from Gohrsmühle mill* was eliminated

Strike in Finland

Maintenance shutdown in Kemi

Paper delivery volumes (planned)

2015 CMD5

Main operating result drivers

in Q3 2015 vs. Q2 2015

*) Divested in May 2015

Paperboard deliveries has continued to growAnnual average growth rate in 2013–2015E: 12%

2015 CMD6

189 192 197 185 191 197 210 203 204 213 224

94 93 9591

112 110120

111130

141137

0

60

120

180

240

300

360

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Folding boxboard Fresh forest fibre linerboard

1,000 tonnes

Strong cash flow from operations

33

-19

92 51 74 33 56 9110

-24

78 46 56 9 8 45

82

19

114

157

198

250

214

254

22

-37

57110

155

188

119 118

-100

-50

0

50

100

150

200

250

300

Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

Cash flow from operations, quarterly Free cash flow, quarterly

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

2015 CMD7

€ million

• Operating net working capital hasdecreased 76 M€ or 22% year-on-year

• ONWC/sales has decreased from17% to 13% year-on-year

• Changes mainly due to improvements in accountspayable and inventories as well as Gohrsmuhle divestment

2015 CMD8

0

4

8

12

16

20

24

-300

-150

0

150

300

450

600

Operating working

capital M€

Accounts payable M€

Accounts receivable M€

Inventories M€

ONWC/sales, %

Steady improvement in operating working capital

%M€

Strong balance sheet

Equity ratio, %

27%

33%

41%39%

46%

0%

10%

20%

30%

40%

50%

2011 2010 2013 2014 Q3/2015

106%

73% 70%

51%

34%

0%

20%

40%

60%

80%

100%

120%

2011 2012 2013 2014 Q3/2015

2015 CMD9

Net gearing, %

783625 597

427344

4,4

3,4

2,9

1,8

1,2

0

1

2

3

4

5

0

200

400

600

800

1000

2011 2012 2013 2014 Q3/2015

Net debt, M€

Net debt/EBITDA

Net debt, M€ and net debt/EBITDA

Target < 70%

2Q/2015 Results and OutlookCost structure and Capex

2015 CMD11

Cost structure

Estimated cost structure in 2015

Logistics

costs; 17%

Wood

usage; 17%

Chemicals;

15%Energy;

12%

Other

variable costs; 3%

Personnel;

17%

Other fixed

costs; 18%

20%

22%

24%

26%

28%

30%

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Fixed costs / Sales, % quarterly

Capital expenditure and depreciation

0

30

60

90

120

150

180

2010 2011 2012 2013 2014 2015E 2016E

Capex Growth capex Depreciation

• Annual capex excluding the growth capex

is €40-60 million

• Main growth capexes:

– Debottlenecking at Finnish mills in 2010–12

– Husum investment 170 M€ in 2015–16

– Extrusion line 38 M€ in 2016–17

– Metsä Fibre’s bioproduct mill 25 M€ in 2016

2015 CMD12

€ million

2Q/2015 Results and OutlookFunding and Debt InformationFunding and debt

Well diversified funding, strong liquidity

33 %

30 %

26 %

3%7 % Bonds

Loans from financialinstitutionsPension loans

Finance leases

Other loans

2015 CMD14

Debt structureTotal €670 million

30 September 2015

69 %

21 %

10 % Liquid assets

Undrawn RCF

Undrawn pensionloans

Available liquidityTotal €467 million

30 September 2015

Well-balanced maturity schedule

6446

96

182

254

250 1

100

45

0

50

100

150

200

250

300

2015 2016 2017 2018 2019 2020 2021 >2021

Long-term interest bearing liabilities and committed undrawn credit facilities at 30 September 2015

Long-term interest bearing liabilities Committed undrawn credit facilities

2015 CMD15

EUR million

FX exposure by currencyAnnual gross amount €1.1 bn

49 %

17 %

30 %

4 %

USD GBP SEK Other currencies

Currency Q3 2015 Estimated in

2017

USD, $ +45 M€ +70 M€

GBP, £ +20 M€ +10 M€

Swedish krona -30 M€ -30 M€

2015 CMD16

Annual FX sensitivities to Group EBIT

Foreign exchange exposure and sensitivites

10 % strengthening of foreign currency vs. EUR

will have an impact on EBIT:

Financial costs are declining steadily

3,0

3,5

4,0

4,5

5,0

5,5

0

10

20

30

40

50

60

2012 2013 2014 Q1–Q3 2015

Net financial costs, EUR million

Average interest rate, %

• Net financial costs in January–September

totalled EUR 27 million (Q1–Q3/2014: EUR 34

million)

• Declining costs due to the lower interest rates,

credit margins and IB debt

• Average interest rate in IB debt in

Q1–Q3/2015 was 3.8%

• Estimated level for 2015 is EUR 35 million

2015 CMD17

Net financial costs and average interest rateEUR %

Metsä Board’s shareand outlook

Market cap and foreign owners

42 %

22 %

17 %

19 %

MetsäliittoCooperative

Domesticinstitutionalinvestors

Domestic privateinvestors

Foreign owners

2015 CMD20

Ownership distribution

Rising market cap with more foreign owners

0

4

8

12

16

20

0

500

1 000

1 500

2 000

2 500

2011 2012 2013 2014 2015

Market cap, M€

Share of foreign owners, %

*) 13 November 2015

*

Dividend payout target is at least 1/3 of EPS

0,06

0,09

0,12

0

0,02

0,04

0,06

0,08

0,1

0,12

0,14

2012 2013 2014

Dividend/share, EUR

2015 CMD21

Dividend pay-out 12%

Dividend pay-out excl. NRI 46%





2015 CMD22

Outlook for Q4/2015

• Paperboard delivery volumes are expected to decrease slightly

due to the seasonally weaker December. Average price level is

expected to remain stable

• Metsä Board announced price increase in FBB in Europe,

effective from 1 December

• Paper delivery volumes will decrease clearly as planned

• Long fibre pulp supply and demand is expected to be in balance

• The earlier announced investment shutdown in Husum will have a

negative impact on operating result of approximately EUR 15 million

Profit guidance (5 November 2015):

Metsä Board’s operating result excluding non-recurring items

in Q4/2015 is expected to decline compared to Q3/2015.

2015 CMD23

Assumptions for 2016

• Sales expected to increase gradually from Q1 2016 onwards as

declining paper volumes are offset by increasing paperboard volumes

• Husum startup grades expected to have an effect in H1 2016

• Expected positive impacts on operating profit:

• € 20 million from Gohrsmühle divestment (vs. €10 million in 2015)

• at least 1/3 of total €50 million from Husum transformation process

• Capex approximately €135 million*

• Net financials below €30 million

• Effective tax rate close to 20%

*) including the investment to Metsä Fibre bioproduct mill of €25m

Thank you!

Q&A

metsä board's cmd 2015 - holm

Investor Relations