Metsä Board CorporationFY 2019 ResultsPresentation material12 February 2020

• Strong cash flow• Paperboard delivery volumes slightly lower

due to seasonality, prices remained stable• In Europe, market pulp prices continued to

decline• Profitability supported by less maintenance

and lower production costs• First investments made in the renewal of

the Husum pulp mill

• Board of Directors proposes a distributionof EUR 0.24 per share for 2019

2019 Results2

Q4 2019 in summary COMPARABLE

OPERATING RESULT

39.1EUR million

OPERATING CASH FLOW

89.6EUR million

PAPERBOARD DELIVERIES

440,000tonnes

TOTAL INVESTMENTS

56.8EUR million

3

• New ambitious sustainability targets for 2030• Several external recognitions, e.g. EcoVadis Gold rating,

position on the CDP Climate A list

• Improved folding boxboard portfolio which saves resources and reduces carbon footprint

• New ecobarrier paperboard provides an alternative to plastic

2019 Results4

Sustainability highlights from 2019Developing low-carbon solutions according to the principles of the circular economy

More information and all targets at www.metsaboard.com/sustainability

ENERGY CONSUMPTION

+0.7%PER PRODUCED TONNE,

COMPARED TO 2018

PROCESS WATER CONSUMPTION

-11%PER PRODUCED TONNE,

COMPARED TO 2018

SHARE OF FOSSIL-FREE

ENERGY

83%

Actuals in 2019:

Total paperboard delivery volumes slightly down year-on-year

265 304 299 276 297 328 297 293 302 299 305 300

163173 170

152171

161149 134 138 146 161 140

0

100

200

300

400

500

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

White kraftliner Folding boxboard

1,00

0 to

nnes

5 2019 Results

1,00

0 to

nnes

FY 2018: 1,830,000 tonnes

FY 2019: 1,791,000 tonnes

-2%

+3%

Paperboard sales development by market area in 2019

2019 Results6

EMEA860,000 (844k)

Americas242,000 (252k)

APAC105,000 (119k)

FBB deliveries in 2019 (2018)total 1,207,000 tonnes (1,215k)

71%

EMEA385,000 (438k)Americas

190,000 (173k)

APAC9,000 (4k)

WKL deliveries in 2019 (2018)total 584,000 tonnes (615k)

EMEA• Stable demand in FBB with rising price levels• Soft market situation in WKL in H1, demand picked

up during the summer. Slightly improved price levels year-on-year

AMERICAS• Slightly lower delivery volumes in FBB with clearly

improved price levels. Stable market situation in WKL with increased delivery volumes

APAC• Lower FBB delivery volumes

20%

9%

66%

33%

FBB = Folding boxboardWKL = White kraftliner

69 62

59 41

6443

60

39

0

60

120

180

240

300

2018 2019

Higher paperboard prices supported 2019 sales, profitability burdened mainly by lower market pulp prices

SalesEUR million

492 487

519 477

475 489

458 478

0

400

800

1200

1600

2000

2018 2019

7

Comparable operating resultEUR million and % of sales

EUR

milli

on

EUR

milli

on

2019 Results

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

FY 2018: EUR 252 million

13.0%

FY 2019: EUR 184 million

9.5%

FY 2018:EUR 1,944 million

FY 2019: EUR 1,932 million

Our long-term financial targets aim for profitability and a strong balance sheet

Comparable ROCE:Target at least 12%

8.111.2

14.410.4

2016 2017 2018 2019

2.0

1.2 1.0 1.1

2016 2017 2018 2019

Net debt/comparable EBITDA:Maximum level 2.5x

> 12%

< 2.5x

88 2019 Results

76

50 51 59

2016 2017 2018 2019

Dividend policy: Payout ratio at least 50% of net result

> 50%

Market pulp price decline decelerating but coronavirus causes uncertainty

9

Pulp price (PIX) development in Europe and China• In 2019 European NBSK (USD) decreased by

16%, while Chinese prices dropped by 28%*. Some stabilisation especially for Chinese prices towards the end of the year

• Strong Chinese consumption throughout 2019, driven by the resurgence of paper and paperboard production. Demand trend remains expanding. In Europe, the trend remains rather weak

• Global stock levels for both NBSK and BHK have declined from the peak levels in the summer 2019

2019 Results

Long-fibre pulp, Europe Long-fibre pulp, China (net)

Source: Fastmarkets Foex

USD/tonne USD/tonne

0

200

400

600

800

1 000

1 200

1 400

0

200

400

600

800

1 000

1 200

1 400

2013

2014

2015

2016

2017

2018

2019

*) calculated from the difference between the average yearly prices

Main investments in growth and development 2014–2020E:

2020E Husum pulp mill renewal

2019 Husum pulp mill renewal, new sheeting line in Äänekoski

2018 New baling line in Kaskinen BCTMP mill: 30,000 new BCTMP capacity

2017 New extrusion coating line in Husum: 100,000 t/a PE coating capacity

2015–16 New folding boxboard production line in Husum: 400,000 t/a of FBB and linerboard production line conversion: 250,000 t/a of WKL

10

Total capex in 2019 roughly EUR 100 millionHusum pulp mill renewal will increase capex in the coming years

0

50

100

150

200

250

2014 2015 2016 2017 2018 2019 2020E

Capex in growth and developmentMaintenance capexDepreciation

Capital expenditure and depreciation

EUR

milli

on

2019 Results

NOTE! Estimated investments in 2020 are provisional and dependent on the environmental permit process related to the Husum pulp mill renewal

68

106

30 3654

30 36 3144

90

5979

20 2343

-3

2913

26 37

-50

0

50

100

150

200

250

-50

0

50

100

150

200

250

Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19

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

EUR

milli

on

11 Free cash flow = cash flow from operations − total investments

Strong operative cash flow in 2019Q4 cash flow supported by release in working capital

EUR

milli

on

2019 Results

Renewal of Husum pulp mill in Sweden

Husum pulp mill renewal

2019 2020 2021 2022

Company expects to make the final investment decision

New recovery boiler and turbine expected to be in operation

Pre-engineering

phase launched

Company applies

amendment to environmental

permit

2019 Results13

The renewal consists of two phasesØ Create a solid foundation to increase paperboard capacity in the Husum integrate in the future

Ø Secure cost efficient pulp and energy production

Ø Enable the company to reach its ambitious target of fossil-free mills by 2030

Second phase: New fibre line. To be implemented during the 2020s after the first phase is fully completed

First phase: New recovery boiler and turbine

First investments made

Investment value• Investment value of first phase is EUR 320 million, divided over 2019–

2022 – In 2019 investments were EUR 21 million

Estimated impacts of the first phase • Self-sufficiency in electricity increases from 40% to over 80%*

• Reduced amount of purchased oil• Lower maintenance capex and costs

– Reduced duration and extended intervals between planned shutdowns → Increased pulp and paperboard production

• Annual cash flow improvement EUR 35 million, of which EUR 30 millionEBITDA improvement and EUR 5 million lower capex

• Financing costs to increase EUR 2 million per year

2019 Results14

Husum pulp mill renewal in figures

*) Annual increase in electricity production about 330 GWh, resulting in cost savings at 2019 electricity prices of approximately EUR 12 million

15

Near-term outlookJanuary–March 2020

• Strikes in Finnish mills will have a negative impact on operating result of approximately EUR 20 million, affecting mainly Q1 2020

• Metsä Board’s paperboard delivery volumes will be roughly at the same level as in Q4 2019

• Paperboard prices expected to be stable, pulp prices are not expected to decline

• No major planned maintenance shutdowns during Q1 2020

• Stable production costs, prolonged mild winter might increase wood costs

2019 Results

Metsä Board’s comparable operating result for the first quarter of 2020 is expected to weaken compared to the fourth quarter of 2019 due to strikes at mills in Finland.

2019 Results16

Result guidance for January–March 2020

• Q4 2019 development met the expectations

• First investments made to Husum pulp mill renewal

• Strikes in the Finnish mills will have a negative impact on profitability in H1

• Market outlook:– Stable market situation for

paperboard– Pulp prices are not expected to

decline, but coronavirus is causing uncertainty

2019 Results17

Summary

Appendix

2019 Results19

Key financials

Q4/19 Q4/18ChangeQ4/19

vs. Q4/18FY 2019 FY 2018

Change2019

vs. 2018

Sales EUR, m 478 458 4% 1,932 1,944 -1%

EBITDA* EUR, m 59 81 -27% 279 344 -19%

Operating result* EUR, m 39 60 -35% 184 252 -27%

% of sales* % 8.2 13.1 9.5 13.0

Metsä Fibre’s share of operating result* EUR, m 1 32 -97% 43 124 -64%

Earnings per share EUR 0.05 0.14 -64% 0.41 0.57 -28%

ROCE* % 8.9 13.7 10.4 14.4

Capex (own assets) EUR, m 54 34 59% 95 70 33%

Cash flow from operations EUR, m 90 30 195% 201 151 33%

IB Net debt, at end of period EUR, m 308 335 -8% 308 335 -8%

*comparable

2019 Results20

Comparable operating resultQ4 2019 vs. Q3 2019 and FY 2019 vs. FY 2018

Positive:+ less annual maintenance+ lower production costs+ sale of emission rights

Negative:- weakened market pulp prices- Metsä Fibre’s result share- lower paperboard delivery volumes

Positive:+ higher prices in FBB and WKL + FX

Negative:- weakened market pulp prices- Metsä Fibre’s result share - higher wood and raw material costs in paperboard and pulp

Comparable operating resultQ4 2019: EUR 39.1 million (Q3 2019: EUR 42.5 million)

Comparable operating resultFY 2019: EUR 184.4 million (FY 2018: EUR 251.9 million)

358 335 388 344 335 297 380 352 308

1,2 1,1 1,21,0 1,0 0,9

1,2 1,2 1,1

0,0

0,5

1,0

1,5

2,0

2,5

3,0

0

100

200

300

400

500

600

12/2017 3/2018 6/2018 9/2018 12/2018 3/2019 6/2019 9/2019 12/2019

Net debt, EUR million Net debt to comparable EBITDA (last 12 months)

21

Strong balance sheet at the year endNet debt at EUR 308 million, leverage 1.1x

Net debt / EBITDA target level: <2.5

EUR

milli

on

2019 Results

Impact including hedges, actual– Q4 2019 vs Q3 2019: EUR +1 million

– Q4 2019 vs Q4 2018: EUR +10 million

– FY 2019 vs FY 2018: EUR +48 million

Expected impacts including hedges– Q1 2020 vs Q4 2019: slightly positive

– Q1 2020 vs Q1 2019: positive

Impacts from FX changes

USD57%SEK

34%

GBP7%

Other currencies

2%

Annual transaction exposuretotal EUR 1.1 billion

FX sensitivities excluding hedges

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

Currency Next 12 months

USD, $ EUR +63 million

SEK, kr EUR -39 million

GBP, £ EUR +9 million

22 2019 Results

Cost inflation accelerated in 2018 and costs remained at a high level in 2019

Q4 2019 vs. Q3 2019Declined wood costs, lower pulp costs in the paperboard business

FY 2019 vs. FY 2018Prices of raw materials remained high in 2019. Wood costs were at a higher level than the year before, but declined slightly towards the end of the year

Wood28%

Logistics16%

Chemicals16%

Energy14%

Personnel12%

Other fixed14%

2019 Results23

Metsä Board’s cost split in 2019

Metsä Board’s total costs in 2019: EUR 1.70 billion

(2018: EUR 1.69 billion)

4%

6%

8%

10%

12%

14%

16%

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 Q3/19 Q4/19

Comparable return on capital employed, %

Quarterly Rolling 12m Target

24

In 2019 comparable ROCE at 10.4%

Target level > 12%

2019 Results

R12m10.4%

Q4/19:8.9%

0

50

100

150

200

250

2020 2021-2024 2025 2027

Bonds Loans from financial institutions Pension loans Finance lease liabilities2019 Results25

Debt and its maturity

Long-term interest-bearing debt maturity profile as per 31 December 2019

EUR

milli

on

• On 30 September, Metsä Board agreed on a new bank financing facility consisting of a five-year term loan of EUR 150 million and a five-year RCF of EUR 200 million to replace the drawn loan of EUR 50 million and undrawn RCF of EUR 150 million

• Interest-bearing debt on 31 December was EUR 445 million (31 Dec 2018: EUR 447 million)

Rating agency Rating and outlook

Last update

S&P Global BBB-stable

02/2018 Upgrade from BB+

Moody‘s Investor Services

Baa3 stable

01/2019Upgrade from Ba1

Metsä Board’s both credit ratings are investment grade

2019 Results26

Net financial costs in 2019 were EUR 15.4 million

32 31 36 22 15

3.8

3.3 3.3 3.3

2.5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

0

10

20

30

40

2015 2016 2017 2018 2019

Net financial costs, EUR mill ionAverage interest rate at the end of period, %

EUR million %

• Net financial costs, including foreign exchange differences, in 2019 were EUR 15.4 million (FY 2018: 22.3)

• Average interest rate on loans at the end of review period was 2.5% and the average maturity of long-term loans was 6.4 years

• No major differences in annual interest payments after the new financial arrangements on 30 September 2019

• Annual financial costs expected to increase by EUR 2 million with the Husum pulp mill renewal

Debt structure and liquidity on 31 December 2019

249149

24

23Bonds

Loans fromfinancialinstitutions

Pension loans

Finance leasesand other loans

24

134

200

190

Cash and cashequivalents

RCF, unraised

Pension loans,unraised

Interest-bearing debt EUR 445 million

Available liquidityEUR 524 million

Average maturity of long-term loans on 31 December 2019 was 6.4 years. 27 2019 Results

Market cap and foreign owners31 December 2019

Ownership distribution31 December 2019

Market cap and ownership distributionMetsä Board’s A- and B-shares are listed on Nasdaq Helsinki

0

5

10

15

20

25

0

500

1 000

1 500

2 000

2 500

3 000

12/2015 12/2016 12/2017 12/2018 12/2019

Market cap, EUR millionShare of foreign owners, %

Metsäliitto Cooperative

46%

Domestic institutional investors

19%

Domestic private

investors20%

Foreign owners

15%

EUR million

28

%

2019 Results

External recognition and commitments

In ISS ESG Corporate Rating (previously oekom research Corporate Rating) Metsä Board has a Prime status.

Metsä Board scored the Goldlevel in EcoVadis’ CSR ranking in 2019, and is included in the top 1% of companies assessed in the corrugated paper and paperboard industry.

Metsä Board has been on the CDP Climate AList since 2016. In addition, Metsä Board scored A- in the CDP Water and Forest Programmesand in the Supplier Engagement Rating in 2019.

Metsä Board as a part of Metsä Group is committed to the UN Global Compact corporate responsibility initiative and its principles in the areas of human rights, labour, environment and anti-corruption. Metsä Board also supports the UN’s Sustainable Development Goals, the SDGs.

Metsä Board’s GHG emissions’ reduction targets are approved by the Science Based Targets initiative.

In 2019, Metsä Board received a rating of AAA (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment.

In December 2019 , MetsäBoard received an overall ESG Risk Rating score of 17.6 and is considered by Sustainalytics to be at low risk of experiencing material financial impacts from ESG factors.

Link to MSCI Terms and Conditions

Metsä Board’s ESG performance was rated “Advanced” in Vigeo Eiris ESG assessment in July 2019.

500

600

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800

900

1000

1100

1200

500

600

700

800

900

1000

1100

1200

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Folding boxboard

White-top kraftliner

30

Price development of folding boxboard and white kraftliner in Europe

EUR/ tonne

Sources: Fastmarkets RISI & Fastmarkets FOEX

EUR/ tonne

350400450500550600650700750800850900950100010501100115012001250

350400450500550600650700750800850900950

100010501100115012001250

'10 '11 '12 '13 '14 '15 '16 '17 '18 '19

Source: Fast Markets Foex

USD or EUR USD or EUR

31

Price development of pulp in Europe (PIX)Long-fibre (SW) and short-fibre (HW) pulp

Long-fibre, USD

Long-fibre, EUR

Short-fibre, EUR

Short-fibre, USD

Price development of roadside pulpwood in Finland and Sweden

Pulpwood roadside prices in Finland, EUR/m3 Pulpwood roadside prices in Sweden*, SEK/m3

Sources: Luke (Natural Resources Institute Finland) and Skogsstyrelsen (The Swedish Forest Agency)Investor presentation1–12/2019

2022242628303234363840

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Spruce Birch Pine150170190210230250270290310330350370390

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Spruce Birch Pine

FX rates development: EUR/USD and EUR/SEKEUR/USD

1–12/2019 33

EUR/SEK

1,08

1,1

1,12

1,14

1,16

1,18

1,2

1,22

1,24

1,26

12.2

9.20

171.

29.2

018

2.28

.201

83.

31.2

018

4.30

.201

85.

31.2

018

6.30

.201

87.

31.2

018

8.31

.201

89.

30.2

018

10.3

1.20

1811

.30.

2018

12.3

1.20

181.

31.2

019

2.28

.201

93.

31.2

019

4.30

.201

95.

31.2

019

6.30

.201

97.

31.2

019

8.31

.201

99.

30.2

019

10.3

1.20

1911

.30.

2019

12.3

1.20

19

9,6

9,8

10

10,2

10,4

10,6

10,8

11

12.2

9.20

171.

29.2

018

2.28

.201

83.

31.2

018

4.30

.201

85.

31.2

018

6.30

.201

87.

31.2

018

8.31

.201

89.

30.2

018

10.3

1.20

1811

.30.

2018

12.3

1.20

181.

31.2

019

2.28

.201

93.

31.2

019

4.30

.201

95.

31.2

019

6.30

.201

97.

31.2

019

8.31

.201

99.

30.2

019

10.3

1.20

1911

.30.

2019

12.3

1.20

19