Metsä Board Corporation Investor presentation - January - June 2019

 
Metsä Board Corporation Investor presentation - January - June 2019
Metsä Board Corporation
Investor presentation
January – June 2019
Metsä Board Corporation Investor presentation - January - June 2019
Contents
            This is Metsä Board …………………………       3    H1 2019 Results …………………………..           32
            Planned investments ………………………..      14   Sustainability ……………………………….           45
            Profitability drivers …………………………..   19   R&D …………………………………………                   56
            Operating environment ……………………..     27   Owners, management, contacts ………....   67

    Investor presentation
2
    1–6/2019
Metsä Board Corporation Investor presentation - January - June 2019
Metsä Board in brief                                                                                           Sales split by product
            Year 2018: Sales EUR 1.9bn, comparable operating result EUR 252m,                                               Market
            ROCE 14.4%, Capex EUR 70m, Personnel 2,352                                                                       pulp                 Folding
                                                                                                                            18 %                  boxboard
                                                                                                                                                  56 %
             Total paperboard capacity                                                                                                FY 2018:
                            2Mt/a                                          8                                               White
                                                                                                                                     EUR 1,944m

                     Net pulp balance                                production units                                  kraftlainer
                                                                 in Finland and Sweden                                       26 %
                      +600,000t/a

             MAIN CUSTOMERS                                    STRONG MARKET POSITION                                       Sales split by region
             Brand-owners, converters, merchants               #1 in folding boxboard and white kraftliner in Europe                 APAC
             and manufactures of corrugated products           #1 in coated white kraftliner globally                                 8%
                                                               Largest European importer of folding boxboard to US
             TOP10 customers: ~25% of sales
             Largest customer:
Metsä Board Corporation Investor presentation - January - June 2019
Metsä Board is focused on premium fresh fibre
paperboards with various end-uses
Folding boxboards         Food service boards          White kraftliners
Packaging solutions for   Solutions for food service   E-commerce, retail-ready
consumer goods                                         tray and point-of-sale solutions
Metsä Board Corporation Investor presentation - January - June 2019
Our fresh fibre paperboards offer solutions for global trends

GLOBALISATION AND     SUSTAINABILITY     FOOD SAFETY          E-COMMERCE
URBANISATION
                      We use only        We have good         Our paperboards
We offer recyclable   renewable fresh    control of raw       offer a strong
products that are     fibres from        materials, which     promotion and
ideal for the         sustainably        guarantees purity    branding
circular economy      managed northern   and safety in food   experience
                      forests            contact uses
Metsä Board Corporation Investor presentation - January - June 2019
We have a leading position in Europe in our
                  main products
                     Folding boxboard                     White kraftliner
                                                                                      • Regional sales split of
                         in Europe                          in Europe                   paperboard deliveries:
                   Total capacity 3.8m tonnes         Total capacity 2.1m tonnes
                                                                                            • 70% EMEA
                                                                                            • 23% Americas
                      Others                 Metsä        Others              Metsä
                                                                                            • 7% APAC
                                             Board   #5                       Board
                                              #1                               #1     • In APAC we focus on high-
                    #5

                    #4
                                 35%                 #4
                                                               32%                      quality FBB segment
                                                                                      • We are the largest European
                                                                                        importer of FBB to US

                            #3
                                                          #3                          • We are #1 in coated white
                                        #2                               #2
                                                                                        kraftliners globally

    Investor presentation
6
    1–6/2019
Metsä Board Corporation Investor presentation - January - June 2019
Our production is close to our main raw material
                            Total paperboard capacity:                             Our net balance in pulp in 2019,
                   Folding boxboard (FBB): 1,345,000 t/a                           including the 24.9% ownership in
                      White kraftliner (WKL): 675,000 t/a                          Metsä Fibre, is 600,000 t/a
                                                            Wood sourced from
                                                            Finland, Sweden,
                                        Kemi                Baltics and Russia.   Äänekoski
                                        425,000 t/a WKL                           255,000 t/a FBB
                                        610,000 t/a Pulp*                         1.3 million t/a Pulp*

                                        Husum, SWE                                Simpele
                                        400,000 t/a FBB                           290,000 t/a FBB
                                        250,000 t/a WKL
                                        730,000 t/a Pulp

                                        Kaskinen                                  Joutseno
                                        370,000 t/a BCTMP                         330,000 t/a BCTMP
                                                                                  690,000 t/a Pulp*

                                        Kyro                                      Tako
                                        190,000 t/a FBB                           210,000 t/a FBB

               *Metsä Fibre mill
    Investor presentation
7
    1–6/2019
Metsä Board Corporation Investor presentation - January - June 2019
We have good control of wood raw materials,
                  from forests to pulp and board production
                 •      High availability of Northern wood
                 •      Consistent quality of fibres that are tailor-made for the end products

                                                                  METSÄ GROUP

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

                            METSÄ                METSÄ                   METSÄ                 METSÄ              METSÄ
                            FOREST               FIBRE                   WOOD                  BOARD              TISSUE

                     Wood supply and       Pulp and sawn          Wood products         Paperboard          Tissue and
                     forest services       timber                                                           cooking papers

                                                                   METSÄ BOARD
                                                                    OWNS 24.9%

                                                       Through Metsä Fibre’s ownership Metsä
                                                         Board’s annual net pulp balance is
    Investor presentation
8
    1–6/2019
                                                            600,000 tonnes long in 2019
Metsä Board Corporation Investor presentation - January - June 2019
We have been growing well above average market growth rate
during past years …
                               Metsä Board’s annual paperboard deliveries and current capacity, 1,000 tonnes

                                                                            Total paperboard capacity 2 million tonnes
                2 000                                                                                                       2 000

                1 500                                                                        658              615           1 500
                                                                             580                                                              Annual global
 1,000 tonnes

                                                             539                                                                             demand growth
                1 000                       444                                                                             1 000               for folding
                        373
                                                                                                                                              boxboard and
                                                                                                                                             white kraftliner is
                                                                                             1144             1215                           estimated to be
                 500                                                         988                                            500                     3%
                        763                 801              865

                   0                                                                                                        0
                        2013               2014              2015           2016             2017            2018
                               White kraftliner deliveries     Folding boxboard deliveries      Total paperboard capacity
                                                                                                                                    Source: Metsä Board´s own research
Metsä Board Corporation Investor presentation - January - June 2019
… driven by paperboard capacity increases

                               Capital expenditure and depreciation                  Investments in growth 2011–2018:

                                                                                     2018         New baling line in Kaskinen BCTMP mill:
                        180                                                                       30,000 new BCTMP capacity
                        150                                                                       New sheeting line in Äänekoski (to be in
          EUR million

                                                                                                  production 9/2019)
                        120
                                                                                     2017         New extrusion coating line in Husum:
                         90                                                                       100,000 t/a PE coating capacity
                         60                                                          2015–16      New folding boxboard production line in
                                                                                                  Husum: 400,000 t/a of FBB and linerboard
                         30                                                                       production line conversion: 250,000 t/a of
                                                                                                  WKL
                          0
                              2011 2012 2013 2014 2015 2016 2017 2018 2019E          2011–12      Debottlenecking in Simpele, Äänekoski and
                                                                                                  Kyro mills: total 150,000 t/a of FBB
                                 Maintenance capex        Growth capex
                                 Depreciation

10
     Investor presentation      Note! 2019E Capex does not include the planned investments announced on 26 April 2019
     1–6/2019
Our focus is now on profitability and a strong
              balance sheet …

              Comparable ROCE:                                    Net debt/comparable EBITDA:                     Dividend policy:
              At least 12%                                        Maximum level 2.5x                              Payout ratio at least 50% of net result

                                                                                                                             76
                                                                                                      < 2.5x
                                           14.4                           2,0
                                                                                                                   44                   50        51
              11.3                  11.2          11.7                                                                                                  > 50%
                                                      > 12%
                             8.1                                  1,2             1,2              1,2
                                                                                           1,0

              2015           2016   2017   2018   H1/19          2015    2016    2017     2018    6/19            2015      2016      2017       2018

                   In April, Metsä Board removed its earlier growth target for annual paperboard volumes. The target was to exceed average market growth.
                   Other financial targets and the dividend policy remained unchanged.
     Investor presentation
11
     1–6/2019
… and our aim is to create the highest possible
               shareholder value
                                                                             CAGR in dividend
                                                                                   +30%
               Dividend, EUR and payout ratio, %                                 in 2012–2018   Enterprise value, EUR million
             0,30                                                                 100%
                                                                                                3500
             0,25                                                                               3000
                                                                                  75%
             0,20                                                                               2500

             0,15                                                                 50%           2000

                                                                                                1500
             0,10
                                                                                  25%           1000
             0,05
                                                                                                 500
             0,00                                                                 0%
                       2012 2013 2014 2015 2016 2017 2018                                          0
                                                                                                       2012   2013     2014   2015   2016   2017   2018 6/2019
                             Dividend, EUR               Dividend/EPS, %

                              Note! Year 2018 total distribution consists of a                         Net debt      Market capitalization, EUR million
                              dividend of EUR 0.10 and other distribution of
                              equity of EUR 0.19 per share
12   Investor presentation
     1–6/2019
Capital allocation in 2019
                                                                                  Free cash flow in EUR million and % of EBITDA
           • Free cash flow
                 –      Since 2016 improved FCF as a result of improved           EUR million                                                 %
                        profitability, decreased capex and good working           200                                       Comparable        80
                                                                                                                            EBITDA, LTM,
                        capital discipline                                                                                  EUR 323 million
                                                                                  150                                                         60
           • Our capital allocation for 2019
                                                                                  100                                                         40
                 –      EUR 103 million dividend paid in April
                 –      Approximately EUR 100 million to reduce debt               50                                                         20

                 –      CAPEX: return-based allocation (ROCE above 12%),            0                                                         0
                        ongoing pre-engineering phase regarding the
                        renewal of Husum pulp mill                                 -50                                                        -20

                                                                                  -100                                                        -40
                                                                                         2013 2014 2015 2016 2017 2018              LTM

                                                                                                FCF, EUR million      FCF/EBITDA,%
13
     Investor presentation      FCF=Cash flow from operations after investments
     1–6/2019
                                                                                                                   LTM = 07/2018–06/2019
Investment plans by
Metsä Board and Metsä Fibre
Metsä Board and Metsä Fibre are planning three major
investments with total value of EUR 2 billion
The aim is to further improve the competitiveness of pulp and energy production
and move towards fossil-free production

Metsä Board: Husum, SWE          Metsä Fibre: Kemi, FIN          Metsä Fibre: Rauma, FIN
Renewal of the pulp mill         New bioproduct mill             New pine sawmill line
EUR ~300 million (first phase)   EUR ~1.5 billion                EUR ~200 million

                                            Metsä Board owns 24.9% of Metsä Fibre
Investment in Husum pulp mill
            would enable the long-term
            development of the integrate
            First phase: A new recovery boiler and a new turbine
                     – Reduced energy costs, improved reliability of production
                       and decreased duration of maintenance
                     – Self-sufficiency in electricity would increase to over 80%,
                       and be entirely based on renewable biomass
                     – Annual production capacity remains at 750,000 tonnes
            Second phase: Replacing the old fibre lines with one
            new fibre line

            Cost efficient, long-term energy production solution
            will create a solid foundation to increase paperboard
            capacity in the future.
     Investor presentation
16
     1–6/2019
Estimated time schedule for the Husum pulp mill renewal

                         Prefeasibility             Final
                         study on the               investment
                                                                                                               New
                         renewal                    decision        ~24 months after the investment decision   recovery
                         concluded                  expected
                                                                                                               boiler and
                                                    to be made in
                                                                                                               turbine in
                                                    Q4 2019, at
                                                                                                               operation
                                          06 / 19

                                                    the earliest

                                     2019                                 2020                         2021                  2022

                                                     The investment value of the first phase is ~EUR 300 million,
                                                                divided between the years 2019–2022

                                                                                             The second phase of the investment would take place during
                                                                                                   the 2020s after the first phase is fully completed.

     Investor presentation
17
     1–6/2019
Metsä Fibre is planning
               two major investments
               New bioproduct mill* in Kemi, Finland
               • Size of the investment EUR 1.5 billion
               • Annual capacity 1.5 million tonnes of chemical pulp and
                 several other bioproducts
               • Final investment decision expected in the summer of 2020

               New sawmill line in Rauma, Finland
               • Size of the investment EUR 200 million
               • Annual capacity 750,000 cubic meters
               • If realised, would be the most modern and efficient sawmill
                 line in the world
               • Final investment decision in the beginning of 2020

                               *)
                                would replace the existing pulp mill in Kemi, with
     Investor presentation
18
     1–6/2019                  annual capacity of 630,000 tonnes of chemical pulp
Main contributors in
Metsä Board’s profitability
Our main profit components and sensitivities
            Component                                      Change            Impact on EBIT

            Folding boxboard    Price                      +/- 10%         > EUR 100 million

            White kraftliners   Price                      +/- 10%          > EUR 50 million

            FX                  USD/EUR                    +/- 10%            EUR 70 million

                                SEK/EUR                    +/- 10%            EUR 50 million

            Pulp                Pix price of SW/HW         +/- 10%            EUR 25 million
                                per tonne
                                                                                               In 2018, Metsä Board sourced 5.5 million m3
            Wood                Price per m3 in             +/-10%           EUR 30 million*
                                                                                               wood, of which 37% from Sweden, 28%
                                Finnish mills
                                                                                               Finland, 20% Baltics and 15% Russia.
                                Price per m3 in             +/-10%            EUR 20 million   Including the 24.9% share from Metsä Fibre,
                                Husum                                                          the total sourcing was 8.5 million m3

     Investor presentation                        * incl. ownership in Metsä Fibre
20
     1–6/2019
FX impacts and sensitivies
                     FX impact, including hedges:
                             • Q2 2019 vs Q1 2019: Neutral                     Annual transaction exposure
                             • H1 2019 vs H1 2018: EUR +21 million                total EUR 1.1 billion
                             • Q3 2019 vs Q2 2019, estimated: Neutral
                                                                                        Other
                                                                                      currencies
                                                                                GBP      2%
               FX sensitivities excluding hedges                                7%

                  10% strengthening of foreign currency vs. EUR
                  would have an impact on Metsä Board’s EBIT of

                  Currency                          Next 12 months
                                                                                                       USD
                                                                        SEK                            57 %
                  USD, $                            EUR +65 million
                                                                        34 %
                  SEK, kr                            EUR -40 million

                  GBP, £                             EUR +8 million

     Investor presentation
21
     1–6/2019
Main cost components and expected development
                                                                                                      Metsä Board’s cost split in 2018
                                                                                                      incl. 24.9% share from Metsä Fibre’s costs
                       Cost          Near-term outlook
                       component
                                                                                                                   Other fixed
                       Wood          Prices in Finland and Sweden are expected to remain                             14 %
                                     stable. In the Baltics, the price level will depend on the                                         Wood
                                     demand in export markets                                                                           28 %
                       Logistics     In line with general cost inflation                               Personnel
                                                                                                         13 %
                       Chemicals     In line with or below general cost inflation
                       Energy        Stabilisation following the oil and electricity price hikes in
                                                                                                         Energy
                                     2018                                                                 14 %
                                                                                                                                       Logistics
                       Personnel     Approximately +2% y-on-y, mainly based on collective                                               16 %
                                     agreements                                                                           Chemicals
                                                                                                                            15 %
                       Other fixed   In line with or below general cost inflation
                                                                                                            Total costs in 2018: EUR 1.7 billion
                                                                                                                   (2017: EUR 1.6 billion)

     Investor presentation
22
     1–6/2019
Price development of pulp in Europe (PIX)
                 With a net long position in pulp, Metsä Board gains from higher pulp prices
                              Price per tonne, USD and EUR
               1250                                                                                                       1250
               1200                                                              Long-fibre, USD                          1200
               1150                                                                                                       1150
               1100                                                                                                       1100
               1050                                                            Short-fibre, USD                           1050
               1000                                                                                                       1000
                950                                                                                                       950
                900                                                                                                       900
                850                                                                                                       850
                800                                                                                                       800
                750                                                                                                       750
                700                                                                                    Long-fibre, EUR    700
                650                                                                                                       650
                600                                                                                                       600
                550                                                                                                       550
                500                                                                               Short-fibre, EUR        500
                450                                                                                                       450
                400                                                                                                       400
                350                                                                                                       350
                             '10       '11       '12         '13   '14   '15    '16      '17          '18        '19

                                                                                               Source: Fastmarkets Foex
     Investor presentation
23
     1–6/2019
Price development of folding boxboard and
               white kraftliner in Europe
               EUR/ tonne                                                                                        EUR/ tonne
                                                         Folding boxboard
               1200                                                                                              1200

               1100                                                                                              1100

               1000                                                                                              1000

                 900                                                                                             900
                                                                White-top kraftliner
                 800                                                                                             800

                 700                                                                                             700

                 600                                                                                             600

                 500                                                                                             500
                             2010   2011   2012   2013   2014   2015     2016      2017      2018       2019
                                                                       Sources: Fastmarkets RISI & Fastmarkets FOEX
     Investor presentation
24
     1–6/2019
Price development of roadside pulpwood in Finland
                  and Sweden
               Pulpwood roadside prices in Finland, EUR/m3                                    Pulpwood roadside prices in Sweden*, SEK/m3

               40                                                                            400
               38                                                                            380
               36                                                                            360
               34                                                                            340
               32                                                                            320
               30                                                                            300

               28                                                                            280

               26                                                                            260

               24                                                                            240

               22                   Spruce               Birch          Pine                 220                        –Spruce –Birch –Pine
               20                                                                            200

                                                                                                   2010

                                                                                                          2011

                                                                                                                 2012

                                                                                                                         2013

                                                                                                                                2014

                                                                                                                                       2015

                                                                                                                                              2016

                                                                                                                                                     2017

                                                                                                                                                            2018

                                                                                                                                                                   2019
                      2010

                             2011

                                    2012

                                           2013

                                                  2014

                                                          2015

                                                                 2016

                                                                        2017

                                                                               2018

                                                                                      2019

                                                     Sources: Luke (Natural Resources Institute Finland) and Skogsstyrelsen (The Swedish Forest Agency)
     Investor presentation
25
     1–6/2019
26
1–6/2019
                                           1,13
                                                  1,16
                                                                1,22
                                                                       1,25
                                                                              1,28

                                                         1,19

                                     1,1

Investor presentation
                        29.12.2017
                         29.1.2018
                         28.2.2018
                                                                                     EUR/USD
                         31.3.2018
                         30.4.2018
                         31.5.2018
                         30.6.2018
                         31.7.2018
                         31.8.2018
                         30.9.2018
                        31.10.2018
                        30.11.2018
                        31.12.2018
                         31.1.2019
                         28.2.2019
                         31.3.2019
                         30.4.2019
                         31.5.2019
                         30.6.2019
                                                  10,1
                                                                10,5
                                                                       10,7
                                                                              10,9

                                                         10,3

                                     9,7
                                           9,9

                        29.12.2017
                         29.1.2018
                                                                                     EUR/SEK

                         28.2.2018
                         31.3.2018
                         30.4.2018
                         31.5.2018
                         30.6.2018
                         31.7.2018
                                                                                               Metsä Board gains from strong USD and weak SEK

                         31.8.2018
                         30.9.2018
                        31.10.2018
                        30.11.2018
                        31.12.2018
                         31.1.2019
                                                                                                                                                FX rates development: EUR/USD and EUR/SEK

                         28.2.2019
                         31.3.2019
                         30.4.2019
                         31.5.2019
                         30.6.2019
Operating environment for
fresh fibre paperboards
Paperboard is the packaging material of the future

    The total packaging market is USD 850 billion       Average annual growth rate of paperboard packaging

                  Glass                                      350
                                  Paperboard                        +3% per year 2017–2022
        Metal          7%                                    300

                 13%                                         250
                              36%

                                                    USD bn
                            USD                              200
                            300 bn
                                                             150
                 34%
                                                             100
                              10%
       Plastic                       Other                   50
                                     fibre-
                                     based                    0
                                                                   2012 2013 2014 2015 2016 2017      2022F
                                                                                                   Source: Smithers Pira
We have good growth opportunities in premium
                 paperboards
                                                                                                                                   FSB
                                                                                                                                                        36%

                             Americas                                                   EMEA                                       FBB                   APAC
                                                                                                                                  Other
                                                                                                                             fresh fibre
                                                                                                                                 grades

                   FSB                                                   FSB
                                   28%
                   FBB                                                   FBB                  41%

                 Other                                                  Other                                                 Recycled
            fresh fibre                                            fresh fibre                      CWKL                        grades
                                                                       grades                                          38%
                grades                                                                               WKL

                                                                    Recycled                                                                                     WKL
             Recycled                  CWKL                                                      White
                                                             77%      grades                                                                                    White
               grades                   WKL                                                    testliner                                                      testliner
                               White testliner

                    Cartonboard          White linerboard                  Cartonboard              White linerboard                 Cartonboard                White linerboard

Total annual          10 million                 3 million                       10 million                5 million                       22 million                     3 million
    demand:            tonnes                     tonnes                          tonnes                    tonnes                          tonnes                         tonnes

                              FSB = food service board, FBB = folding boxboard, SBS & CUK = other fresh fibre grades, WLC = recycled grades
                              WKL = uncoated white kraftliner, CWKL=coated white kraftliner
     Investor presentation
29                                                                                                                           Source: Metsä Board research based on several sources,
     1–6/2019
                                                                                                                             e.g. CEPI Cartonboard and Containerboard, RISI
We sell globally, but have a regional approach
                   The Americas is the biggest growth area

                   AMERICAS                        EMEA                            APAC
                   SHARE OF TOTAL PAPERBOARD       SHARE OF TOTAL PAPERBOARD       SHARE OF TOTAL PAPERBOARD
                   DELIVERIES IN 2018              DELIVERIES IN 2018              DELIVERIES IN 2018

                   23%                             70%                             7%

               Demand drivers:                 Demand drivers:                 Demand drivers:
               •    Emerging environmental     •     Acceleration in           •    Growing upper and middle
                    considerations                   environmental                  classes, and increased
                                                     commitments and                purchasing power
               •    Trend for lightweight            regulations
                    packaging – but limited                                    •    More brand-aware
                    local capacity in FBB      •     Stricter food safety           consumers
                                                     requirements              •    Continued shift to modern
                                                                                    retail and mobile
                                                                                    commerce

     Investor presentation
30
     1–6/2019
Branding and personalisation
              becoming more important in
              E-commerce
             • Functionality, durability and consumer experience are the
               key words
             • Demand for white kraftliner driven by
                    –        Increasing branding of the packaging
                    –        Trend towards shipping the product in its own container
                    –        Personalisation of boxes, supported by advanced technology
                             in digital printing
             • The global value of E-commerce is expected to grow by
               20% per year on average, increasing its share of the retail
               trade from 10% to 18% in 2017–2021

     Investor presentation                                           Sources: eMarketer, Smithers Pira
31
     1–6/2019
Results for
January – June 2019
Key financials
                                                                        Change                   Change
                                                                         Q2/19                    H1/19
                                                        Q2/19   Q2/19            H1/19   H1/18            FY 2018
                                                                          vs.                      vs.
                                                                         Q1/19                    H1/18

               Sales                           EUR, m   477     519      -9%     964     1,011    -5%        1,944
               EBITDA*                         EUR, m    68      84      -19%    158     178      -11%        344
               Operating result*               EUR, m    41      59      -31%    103     128      -20%        252

                 % of sales*                     %       8.6    11.4             10.7    12.7                 13.0
               Metsä Fibre’s share of
                                               EUR, m    16      30      -47%     38      58      -34%        124
               operating result*
               Earnings per share               EUR     0.10    0.12     -17%    0.27    0.27                 0.57

               ROCE*                             %       9.7    13.9             11.7    15.1                 14.4

               Capex                           EUR, m    18      15      20%      24      26      -8%           70

               Cash flow from operations       EUR, m    31      36      -14%     67      67                  151

               IB Net debt, at end of period   EUR, m   380     388      - 2%    380     388      -2%         335

33   Investor presentation   *comparable
     1–6/2019
Q2 in summary
         • Steady market situation in folding
           boxboards, more uncertainty in white
           kraftliners
         • Pulp prices continued to weaken
         • Several planned maintenance shutdowns
           at the Finnish mills
         • Metsä Board and Metsä Fibre launched
           pre-engineering phases for three major
           investments

     Investor presentation
34
     1–6/2019
Total paperboard delivery volumes in Q2 slightly
                        up from Q1
                                                                                                      -9%
                                      White kraftliner    Folding boxboard                                        +1%
                                                                                    489
                               500
                                                                                                            440         445

                               400                                                 161
                                                 173     170                 171          149         134   138         146
                                      163                        152
                1,000 tonnes

                                                                                                                              1,000 tonnes
                               300

                               200
                                                 304     299                 297   328    297               302         299
                                      265                        276                                  293
                               100

                                0
                                     Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018      Q4 2018 Q1 2019 Q2 2019

                                                                         H1 2018 total:                     H1 2019 total:
                                                                          957k tonnes                        886k tonnes
35
     Investor presentation                                                                      -7%
     1–6/2019
Paperboard delivery split in H1 2019 vs. H1 2018
               Stable in FBB, main changes in white kraftliners in EMEA

                Folding boxboard (FBB) deliveries in H1 2019 (H1 2018)   White kraftliner (WKL) deliveries in H1 2019 (H1 2018)
                1,000 tonnes                                             1,000 tonnes
                                APAC                                                       APAC
                                 50k                                                       4k (3)
                                 (64)

                 Americas               8%                               Americas
                  120k                                                     97k                                EMEA
                  (127)                                                    (93)                               183k
                                                       EMEA                            35%                    (237)
                               22%                     432k                                         65%
                                                       (433)
                                             71%

                                                                                      Total WKL deliveries
                               Total FBB deliveries                                 H1 2019: 284,000 tonnes
                             H1 2019: 602,000 tonnes                                  (H1 2018: 332,000)
                               (H1 2018: 624,000)
     Investor presentation
36
     1–6/2019
Sales and profitability behind year-on-year levels

                   Sales                                                           Comparable operating result
                   EUR million                                                     EUR million and % of sales

                   2000
                                                                                   300                          13.0%   12.7%              15,0
                   1600                                                                                                                    Operating result,
                                                                                   240              10.5%                        10.7%     % of sales:
                                                                                                                                           12,0
     EUR million

                                                                     EUR million
                   1200                                                                   8.0%                                             Q2/19: 8.6%
                                                                                   180                                                     9,0
                                                                                                                                           Q1/19: 12.7%
                    800                           519       477 Q2                 120                                                     6,0
                                                                                                                          59              Q2
                    400                                                                                                           41
                                                                                    60                                                     3,0
                                                  492       487 Q1                                                        69      62      Q1
                      0                                                              0                                                     0,0
                            2016   2017   2018   H1 2018   H1 2019                        2016       2017       2018    H1 2018 H1 2019

     Investor presentation
37
     1–6/2019
Higher FBB prices supported operating result in H1 2019,
           negative from lower pulp prices and higher production
           costs
               Comparable operating result                                 Comparable operating result
               Q1 2019 vs. Q2 2019                                         H1 2018 vs. H1 2019

                             - market pulp                                          - production costs
                             - annual maintenance                                   - lower delivery volumes
         Q1 2019:
                                                                      H1 2018:      - market pulp
           EUR
                                                                        EUR
         62 million
                                                                      128 million
                                                         Q2 2019:                                               H1 2019:
                               + FBB prices                EUR                                                    EUR
                               + paperboard production   41 million                      + improved prices in   103 million
                               costs                                                     paperboard
                                                                                         + changes from FX

     Investor presentation
38
     1–6/2019
H1 2019 ROCE at 11.7%

                                                      Return on capital employed, %
                 16%

                 14%
                                                                                                               R12m
                                                                                          Target level > 12%   13.3%
                 12%

                 10%                                                                                           Q2/19:
                                                                                                                9.7%
                   8%

                   6%

                   4%
                             Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19
                                                     Quarterly    Rolling 12m    Target
     Investor presentation
39
     1–6/2019
Pulp prices in Europe have continued to slide
            throughout H1 2019
                                                                    Pulp price (PIX) development in Europe and China
              •      In 2019, activity in the pulp market picked
                     up in Q1, especially in China, but                    Long-fibre pulp, Europe                  Long-fibre pulp, China (net)
                     weakened again in Q2                          USD
                                                                   1 400
              •      The PIX price of NBSK in Europe has
                                                                   1 200
                     declined by $200/tonne from the beginning
                                                                   1 000
                     of year
                                                                    800
              •      Annual maintenance shutdowns and               600
                     production curtailments by some producers
                                                                    400
                     will reduce short term supply
                                                                    200
              •      Producers’ inventory levels globally are         0
                     still very high

                                                                           2012

                                                                                  2013

                                                                                           2014

                                                                                                    2015

                                                                                                             2016

                                                                                                                       2017

                                                                                                                               2018

                                                                                                                                      2019
                                                                      Source: Thomson Reuters Datastream/ Fastmarkets Ltd, Metsä BI
     Investor presentation
40                                                                   Note! The specifications of PIX China Net index were renewed
     1–6/2019
                                                                     in the beginning of 2017. Earlier data not comparable with new
Cash flow from operations EUR 67 million in H1 2019
                                                                                                                                                    250
                       250

                                                                                                                                                    200
                       200

                       150                                                                                                                          150
         EUR million

                                                                                                                                                          EUR million
                                           106
                       100                                                                                                                          100
                                                 79
                             68
                                      59                                              54       43
                       50                                30             36                               30             36              31          50
                                                                              23                                              29
                                                               20                                                                              13
                        0                                                                                                                           0
                                                                                                                -3
                       -50                                                                                                                          -50
                              Q3/17         Q4/17         Q1/18          Q2/18             Q3/18           Q4/18         Q1/19            Q2/19

                                            Cash flow from operations, quarterly                   Free cash flow, quarterly
                                            Cash flow from operations, rolling 12 months           Free cash flow, rolling 12 months
     Investor presentation
41
     1–6/2019                                                                       Free cash flow = cash flow from operations − investments
Net debt increased from Q1, leverage at 1.2x

                       600                                                                                                 3,0
                                                                                    Net debt / EBITDA target level:
Debt and its maturity
                                                                                                    Metsä Board’s both credit ratings are investment grade
                    30 June 2019
                                                                                                      Rating agency           Rating and            Last update
            • Interest-bearing debt on 30 June was EUR 466 million (30.6.2018:                                                   outlook
              EUR 483 million)                                                                        S&P Global                     BBB-                02/2018
                                                                                                                                    stable     Upgrade from BB+
            • Interest-bearing net debt on 30 June was EUR 380 million
              (30.6.2018: EUR 388 million)                                                            Moody‘s Investor               Baa3               01/2019
                                                                                                      Services                      stable     Upgrade from Ba1

                                          Long-term interest-bearing debt maturity profile 30 June 2019

                           250

                           200
             EUR million

                           150

                           100

                            50

                             0
                                 2019                     2020                      2021                    2022–26                     2027

                                          Bonds          Loans from financial institutions        Pension loans          Other loans

43
     Investor presentation       In addition, Metsä Board has an undrawn revolving credit facility of EUR 150 million maturing in
     1–6/2019                    2020 and unraised pension loans of EUR 166 million
Near-term outlook

          • Paperboard delivery volumes in Q3 are expected to
            remain roughly at the Q2 level
          • Good market situation for FBB,
            some uncertainty with white kraftliners
          • Average market pulp prices will be lower in H2 2019
            compared to H1 2019
          • Planned maintenance shutdowns in Q3:
                   – Kemi integrate, Husum integrate (partly)
                   – Metsä Fibre’s Rauma pulp mill
          • Stable production costs and FX impacts in Q3
            compared to Q2
          • Metsä Board’s comparable operating result for
            Q3 2019 is expected to weaken compared to
            Q2 2019
     Investor presentation
44
     1–6/2019
Sustainability
“Our comprehensive approach
                                                                          to reducing our environmental
              Sustainability is on                                          impact means looking at all

              everybody’s agenda                                           aspects of our business, how
                                                                          they intersect and how we can
                                                                             integrate new solutions to
                                                                               create meaningful and
                                                                                 sustained change.”
             • Growing consumer awareness:
                                                                               – Starbucks website
               Origin and transparency of
               materials, renewability, resource
               efficiency and recylability
             • Brand owners are committed to
               reducing their carbon footprints:   “We want low-carbon to become
                                                   the new normal, so we’re taking
               Lighter packaging reduces CO2       action to reduce GHG emissions
               emissions across the value chain      throughout our value chain.”

                                                         – Unilever website

     Investor presentation
46
     1–6/2019
Alternative to plastics:
          Paperboard adds value to packaging
          • Consumers regard paperboard as a more responsible choice than plastic packaging –
            willingness to pay more for it
          • Paperboard cartons preserved the cherry tomatoes at least as well as the plastic equivalent
          • The climate effect of a recycled PET container was calculated at six times higher than the average
            value for the paperboard cartons
                                                      A detailed consumer study with cherry tomatoes was carried out in Finland by Sense N Insight,
                                                      Luke (Natural Resources Institute Finland) and Metsä Board

     Investor presentation
47
     1–6/2019
Fresh fibre paperboards offer solutions to major challenges

Increased waste         Replacing fossil-        Reducing carbon      Ensuring food
generation due to       based materials,         footprint            safety
urbanisation            i.e. plastics            The solution:        The solution:
The solution:           The solution:            renewable energy,    pure and safe
Paperboard is           renewable and            efficient energy     fresh fibres in food
recyclable              biodegradable            and water usage in   packaging
– and widely            wood fibre               production
recycled
Lighter packaging reduces CO2 emissions across the
value chain – Our fossil CO2 emissions per product tonne
have reduced by almost 50% since 2009

  Less energy, water and
  raw material consumed

                                          Less waste
                                          generated

                           Less
                           transport
                           weight
Wood is our main raw
              material

           • Metsä Board sources its
             wood mainly from Finland
             and Sweden (65 %)
           • All wood used is 100% traceable and
             comes from sustainably managed forest
             sources ensuring the bio-diversity and
             recreational use of forests
           • 79% of wood sourced is certified
             (remaining 21 % from controlled forest
             sources)

     Investor presentation
50
     1–6/2019
Finland – the largest forest cover in Europe

                                                            The area of Finland

                                                             5%          Cities, villages and roads
                   Annual growth of Finnish forests is      10%
      100+
      MILLION M3
                   over 100 million m3 – more than ever
                                                            10%
                                                                         Fields and agricultural use

                                                                         Lakes and rivers

                   Forests grow more than they are used,
                   annual harvesting 72 million m3 (2017)

                   Four seedlings are planted for each
                   harvested tree                           75%          Forest

                   Over 20% of the Finnish export comes
                   from forest-based products

51
We have decreased our
          process water use by 20%
          since 2010

            • Metsä Board uses only
              surface water in its processes
            • Water is been recirculated
              in processes several times
            • 99% of the water used is returned
              back to the close-by waterways
              after thorough purification

     Investor presentation
52
     1–6/2019
Primary energy used in 2018
                                                                                                                                           (total 12.0 TWh)
              Our energy efficiency has improved
                                                                                                                      Fossil-based
              by almost 12% during 2009–2018                                                                                  18 %

                                                                                                                                                                Renewable,
                                                                                                                                                                mainly
                                                                                                                                                                wood-based
                                                                                                                         Nuclear
                                                                                                                                                                55 %
                                                                                                                          power
               • Over 80% of primary energy we use is fossil free                                                          27 %

               • After OL31) starts up, we will be nearly self-sufficient in
                 electricity in Finland
                                                                                                                               Electricity sourced in 2018
                             − Including the electricity used in Husum mill,                                                          (total 2.4 TWh)
                               self-sufficiency will be nearly 80%                                                                      Outsourced
                                                                                                                                        generation
               • Metsä Board’s shareholding in PVO2) is 3.2%                                                                               3%                 Own
                                                                                                                                                              generation
                             − Fair value as per 31 December 2018 was EUR 266 million                                              3)
                                                                                                                                                              21 %
                                                                                                                    Purchased
                                                                                                                     electricity
                                                                                                                         44 %
                                                                                                                                                                Through
                                        1)   Olkiluoto Nuclear Power Plant                                                                                      PVO
                                                                                                                                                                shareholding
                                        2)   Pohjolan Voima Oyj is a non-listed public limited liability company.                                               32 %
                                             It supplies electricity and heat for its shareholders at cost price
     Investor presentation              3)   Out of 44% share of purchased energy, 14% is from Metsä Fibre
53
     1–6/2019
Metsä Board’s strategic 2030 sustainability objectives and targets
      WE BRING                         WE WORK FOR A                   WE OFFER                        WE CREATE
      THE FOREST TO YOU                BETTER                          SUSTAINABLE CHOICES             WELL-BEING
                                       CLIMATE AND
     Certified wood fibre              ENVIRONMENT
     • Share of certified fibre >90%
                                       Fossil free mills                Fossil free raw materials      Responsible corporate culture
     Increasing the amount of          • Fossil CO2 emissions           • Share of fossil free raw     • Ethics barometer 100%
     carbon stored in forests and        0 tCO2 (Scope 1)                 materials 100%
     products                                                                                          Accident-free work
     • Area of regeneration and        Fossil-free purchased energy     Sustainable supply chain       environment
        management of young stands     • Fossil CO2 emissions,          • Sustainable suppliers 100%   •   Accident frequency LTA1 0
        +30% vs. 2018                    0 tCO2 (Scope 2)               • Traceability of raw
     • Amount of carbon stored in                                         materials 100%
        products (t)
                                       Resource efficient production
       +30% vs. 2018
                                       • Utilisation of side-streams
                                         100%
     Safeguarding biodiversity         • Process water use per
     • Increasing the amount of          product ton (m3/t)
       decayed wood: high                – 30% vs. 2018
       biodiversity stumps in          • Energy efficiency
                                         improvement
       90% of thinnings and
                                          >10% vs. 2018
       retention trees in all
       regeneration logging sites
     Investor presentation
54
     1–6/2019
External recognition and commitments

                 Metsä Board has been included on the CDP
                 Water A List every year since 2015 and on         Metsä Board scored the highest     Metsä Board received a rating of
                 the CDP Climate A List since 2016. In             recognition level “Gold” in        AAA (on a scale of AAA-CCC) in
                 addition, Metsä Board has scored A- in the        EcoVadis’ CSR ranking in 2018,                                          Metsä Board was awarded
                                                                                                      the MSCI ESG Ratings
                 CDP Forest programme since 2015, and is           and is included in the top 1% of                                        “Prime” status in ISS-oekom
                                                                                                      assessment in June 2018.
                 included on the Supplier Engagement               suppliers assessed across all                                           corporate responsibility rating in
                 leader board in 2019 for its efforts to address   categories.                                                             May 2018.
                 climate change.

               As a member of Pack2Go Europe Metsä                 Metsä Board is committed to        Metsä Board as a part of Metsä      Metsä Board has an overall ESG
               Board is committed to the environmental,            Science Based Targets to           Group is committed to the UN        score of 86/100 and is
               health and safety aspects within the on-the-        reduce its GHG emissions in line   Global Compact corporate            considered a Leader in
               go food and beverage packaging industry.            with the goal of the Paris         responsibility initiative and its   Sustainalytics’ assessment in
                                                                   Agreement.                         principles in the areas of human    May 2018.
                                                                                                      rights, labour, environment and
     Investor presentation
55
     1–6/2019
                                                                                                      anti-corruption.
Research and Development
Our key product development focus areas
               LIGHTWEIGHTING                         BARRIER BOARDS
                 • Improved BCTMP                     • Dispersion barriers
                 • Microfibrillated cellulose (MFC)   • Bio-based raw materials
                 • Strength additives

     Investor presentation
57
     1–6/2019
Our R&D and innovation work
                  is based on sustainability
                  • Metsä Board launched its renewed FBB
                    portfolio in April helping customers tackle big
                    issues in packaging: To save resources and
                    reduce carbon footprint
                  • A new R&D excellence centre to be established
                    in Äänekoski to boost the development of new
                    paperboard and packaging solutions of the
                    future

     Investor presentation
58
     1–6/2019
The role of packaging is to promote the brand and
                              protect the product – in a cost-effective way

                                                                                                    Metsä Board’s
                                                    Solid bleached board                            folding boxboard
                                                    (SBB)
     PROMOTION
                 Brightness

                                                                                 Folding boxboard
                                                                                 (FBB)

                                             Coated unbleached kraft
                                             (CUK)

                                White lined chipboard
                                (WLC)

                                                                           PROTECTION
      Investor presentation                                                  Stiffness
59
      1–6/2019
We achieve high bending stiffness
            from a strong outer layers and a
            thick and light inner layer

               Top coating
                                    Bleached chemical pulp

                                    High yield pulp (BCTMP)
                                    or groundwood pulp

                                    Bleached chemical pulp

     Investor presentation
60
     1–6/2019
High-yield pulp makes the difference between folding boxboard
and other grades …

Light weight         High strength and   High brightness   Consistent quality
– better yield       bending stiffness   and smoothness    – improved
and sustainability   – secure            – excellent       production
                     protection          printability      efficiency
… and leave more trees standing

                        SBS                                                       =
                        (100% chemical pulp)
                                               5 m3 of wood per tonne of pulp

                        Metsä Board FBB
                        (up to 70% BCTMP,                           =
                        30% chemical pulp )
                                               3.4 m3 of wood per tonne of pulp

Investor presentation
1–6/2019
Lighter-weight paperboards: Better with Less
               The weights equal to a print job of 30 000 sheets on a standard size printing press

                                                                                               Metsä Board
                                                                                               lightweight paperboard

                                                                                Average FBB –
                                                                                Folding boxboard

                                                              SBB –
                                                              Solid bleached board

                                      WLC –
                                      White lined chipboard

     Investor presentation
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     1–6/2019
Metsä Board enhances its leading
              position in premium lightweight
              paperboards
               In April 2019, we announced of our new, improved FBB
               portfolio, that answers to increasing demands for
               sustainability, product safety and brand promotion

                      – Further opportunities for lightweighting
                      – Enhanced visual properties
                      – Industry-leading quality consistency
                      – Improved supply security and availability

               Enabled by our improved high-yield BCTMP and full
               R&D focus on paperboard
     Investor presentation
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     1–6/2019
Brand-owners seek more
                sustainable packaging solutions

                • Fresh fibre paperboards can help replace non-
                  renewable packaging materials
                • Metsä Board’s eco-barrier paperboard
                       – is developed especially for food service use with
                         short food contact time and when light grease
                         resistance is sufficient
                       – has an industrial compostability certification

     Investor presentation
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     1–6/2019
Getting familiar with terminology:
              Barrier boards types

                Examples of materials used in coating
                                              BIODEGRADABLE                                             Note!
                                                                                                  Biobased material
                                                        PVA (polyvinyl alcohol)                           =
                             PLA (polylactide): often

                                                                                   NON-BIOBASED
                                                        PBS (polybutylene                         Renewable material
                             based on corn starch
                                                        succinate)
               BIOBASED

                                                                                                          ≠
                                                                                                     Compostable
                                                                                                          ≈
                                                        PE: made from fossil raw
                             Green PE: made from
                                                        materials, used in                          Biodegradable
                             biomaterials
                                                        extrusion coating

                                            NON-BIODEGRADABLE
     Investor presentation
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     1–6/2019
Owners, management and
contact information
Market cap and ownership distribution
                Metsä Board shares are listed on Nasdaq Helsinki

               Market cap and foreign owners                                                        Ownership distribution
               30 June 2019                                                                         30 June 2019
               EUR million                                                              %            Foreign
                 3 000                                                                  25           owners
                                                                                                      15%
                 2 500                                                                  20
                 2 000
                                                                                        15                                      Metsäliitto
                 1 500                                                                                                         Cooperative
                                                                                             Domestic
                                                                                                                                  41%
                                                                                        10     private
                 1 000                                                                       investors
                                                                                        5       22%
                   500

                       0                                                                0
                             12/2014   12/2015   12/2016   12/2017   12/2018   6/2019

                                           Market cap, EUR million                                              Domestic
                                                                                                               institutional
                                           Share of foreign owners, %                                           investors
                                                                                                                   22%

     Investor presentation
68
     1–6/2019
Metsä Board Corporate Management Team

                              Mika Joukio                  Jussi Noponen                                                Sari Pajari
                              CEO                          CFO                                                          SVP, Marketing and Sales

                              Chairman of CMT since 2014   Member of CMT since 2016                                     Member of CMT since 2011
                              MG employee since 1990       MG employee since 2000                                       MG employee since 2007
                              Share ownership: 297,700     Share ownership: 73,000                                      Share ownership: 66,075

                                                           Harri Pihlajaniemi
                             Ari Kiviranta                 SVP, Production                                              Camilla Wikström
                             SVP, Development                                                                           SVP, HR
                                                           Member of CMT since 2017
                             Member of CMT since 2014      MG employee in 2001-2004                                     Member of CMT since 2019
                             MG employee since 1993        and since 2017                                               MG employee since 2001
                             Share ownership: 50,000       Share ownership: no ownership                                Share ownership: 17,807

                                                                                           Share ownerships are B-shares.
     Investor presentation                                                                 MG = Metsä Group
69
     1–6/2019
Contact information

                 Katri Sundström
                 Vice President, Investor relations
                 Tel +358 400 976 333
                 katri.sundstrom@metsagroup.com

                 Metsä Board Corporation
                 P.O. Box 20
                 02020 Metsä, Finland
                 www.metsaboard.com

     Investor presentation
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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 expressions
               identify 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
               change 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 required.
               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 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.
               Metsä Board publishes inside information according to Market Abuse Regulation (MAR) and rules of the Nasdaq Helsinki.

     Investor presentation
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