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Metsä Board
January–June 2018Half-Year Financial Report
2 August 2018
• Total delivery volumes of paperboards were at record
high levels – 489,000 tonnes
• Paperboard price levels were stable or slightly rising
• Pulp market remained strong
• Several planned maintenance shutdowns in Finnish
mills
• Increased prices of imported wood from Baltics to
Sweden and freight costs in US had a negative impact
on operating result
1-6/2018 Half-Year Report2
Q2 2018 in brief
Total paperboard delivery volumes at an all-time-
high in Q2 2018
227 250 266 245 265304 299 276 297 328
142148 148
143163
173 170152
171161
0
100
200
300
400
500
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
White kraftliner Folding boxboard
1,0
00 tonnes
3 1-6/2018 Half-Year Report
1-12 2016
1,568,000 tonnes1-12 2017
1,802,000 tonnes
Annual global
demand growth
for folding
boxboard and
white kraftliners
is estimated to
be
3–4%
Source: Metsä Board’s
own research
1-6 2017
906,000 tonnes1-6 2018
957,000 tonnes+6%
+15%
Higher delivery volumes and rising prices increased
sales
SalesEUR million
445 474 479 451 492 5190
100
200
300
400
500
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18
45 44 50 54 69 59
10,2 %9,2 %
10,5 %
12,0 %
14,0 %
11,4 %
0%
4%
8%
12%
16%
0
20
40
60
80
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18
1-6/2018 Half-Year Report4
Comparable operating resultEUR million and % of sales
EU
R m
illio
n
EU
R m
illio
n
1-12 2017:
€ 1,849 million
1-6 2017:
€ 919 million
1-6 2018:
€ 1,011 million
1-12 2017:
€ 194 million
1-6 2017:
€ 89 million1-6 2018:
€ 128 million
600
650
700
750
800
850
900
950
1000
1050
1100
1150
1200
1250
'10 '11 '12 '13 '14 '15 '16 '17 '18
600
650
700
750
800
850
900
950
1000
1050
1100
1150
1200
1250
Softwood (NBSK) Hardwood (NBHK)
Source: Foex Indexes Ltd
USD
Pulp market remained strong – prices are at a
record high in Europe
1-6/2018 Half-Year Report5
USD
Pulp price (PIX) development in Europe• Metsä Board’s pulp balance is over
500,000 t/a long, including Metsä
Fibre’s share
• Current market drivers in pulp:
• Limited new capacity in the
coming years
• Restrictions on recycled paper
imports in China
Wood26 %
Logistics16 %
Chemicals, pigments and fillers
14 %
Energy12 %
Other variables
3 %
Personnel14 %
Other fixed15 %
1-6/2018 Half-Year Report6
Wood costs continued to rise in Q2 2018
• Cost increase relates mainly to wood
imported from Baltics to Sweden
• Metsä Board‘s wood costs are
estimated to be EUR 30 million higher
in 2018 vs. 2017
• Metsä Board‘s total wood sourcing in
2017 was 5.4 million m3
• Sweden 40%, Finland 32%, Baltic
countries 17%, Russia 11%
Metsä Board’s cost split in 2017
total €1.6 billion
• Impacts of FX rate changes including hedges:
– Q2 2018 vs. Q1 2018: Neutral
– H1 2018 vs. H1 2017: €28 million negative
• Q3 2018 will have the biggest negative impact compared to other quarters
Impacts from FX rate changes including hedges were
neutral in Q2 vs. Q1
55 %
36 %
7 % 2 %USD
SEK
GBP
Othercurrencies
12 month transaction exposure
EUR 1.1 billion FX sensitivities excluding hedges
10% strengthening of foreign currency vs. EUR will have
an impact on Metsä Board’s EBIT of
Currency Next 12 months
USD, $ EUR +64 million
SEK EUR -42 million
GBP, £ EUR +8 million
7 1-6/2018 Half-Year Report
0%
2%
4%
6%
8%
10%
12%
14%
16%
Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18
Comparable ROCE-%, Quarterly
1-6/2018 Half-Year Report8
ROCE is above its target level of 12%12 month rolling ROCE was 13.8%
Target >12%
Q2/18:
13.9%
-22 -22
6755
2637
68
106
30 36
-76 -72
49
17 725
5979
20 23
-100
-50
0
50
100
150
200
250
-100
-50
0
50
100
150
200
250
Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18
Cash flow from operations, quarterly Free cash flow, quarterly
Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months
EU
R m
illio
n
9 1-6/2018 Half-Year ReportFree cash flow = Cash flow from operations - investments
Cash flow from operations EUR 240 million(Rolling 12 months)
541 488 464 458 495 437 358 335 388
2,1 2,12,0
1,92,0
1,7
1,21,1
1,2
0,0
0,5
1,0
1,5
2,0
2,5
3,0
0
100
200
300
400
500
600
6/2016 9/2016 12/2016 3/2017 6/2017 9/2017 12/2017 3/2018 6/2018
Net debt, EUR million Net debt to comparable EBITDA (12 months)
1-6/2018 Half-Year Report10
Strong financial position, leverage at 1.2x
Net debt / EBITDA target level <2.5
EU
R m
illio
n
1-6/2018 Half-Year Report11
Metsä Board receives EcoVadis Gold
rating for corporate environmental
and social responsibility
• Gold level rating for the second consecutive year
• Metsä Board was ranked in the top 1% of suppliers
across all categories
EcoVadis operates a platform allowing companies to assess the environmental and social performance of its suppliers on a
global basis. The criteria include four themes; the environment, labour practices, sustainable procurement and fair business
practices. The methodology and criteria used are in line with international Corporate Social Responsibility (CSR) standards
including the Global Reporting Initiative (GRI), UN Global Compact, and ISO 26000.
1-6/2018 Half-Year Report12
Near-term outlook
• Good demand for fresh fibre paperboards, market
prices are expected to be stable
• Total paperboard delivery volumes in Q3 2018 are
expected to stay at the same level as in Q2
• Planned shutdowns in H2 2018
– Kemi integrate in Q3 and Husum integrate in Q3–Q4
• Some additional headwind from FX in Q3 vs. Q2
• Wood costs EUR 30 million higher in 2018 compared
to 2017
Metsä Board’s comparable operating
result in the third quarter of 2018 is
expected to remain roughly at the
same level as in the second quarter of
2018.
1-6/2018 Half-Year Report13
Result guidance for
July–September 2018
• Higher paperboard delivery volumes
together with rising price levels
increased sales in Q2
• Pulp market continued to be strong
• Rising wood costs impact the full
year’s profitability
• Good demand in ecological fresh fibre
paperboards is expected to continue
1-6/2018 Half-Year Report14
Summary
Metsä Board’s
Capital Markets Day 2018November 14, 2018
Venue: Haberdashers’ Hall in London
Appendix
1-6/2018 Half-Year Report17
Key financials
Q2/18 Q1/18Change
Q2/18
vs. Q1/18H1/18 H1/17
Change
H1/18
vs H1/17
FY
2017
Sales EUR, m 519 492 +5 % 1,011 919 +10 % 1,849
EBITDA* EUR, m 84 94 -11 % 178 136 +31 % 289
Operating result* EUR, m 59 69 -14 % 128 89 +45 % 194
% of sales % 11.4 14.0 12.7 9.7 10.5
Result before taxes* EUR, m 53 61 -12 % 114 77 +49 % 157
Earnings per share EUR 0.12 0.15 -20 % 0.27 0.19 +42 % 0.42
ROCE* % 13.9 15.8 15.1 10.3 11.2
Capex EUR, m 15 10 +46 % 26 31 -18 % 65
Cash flow from operations EUR, m 36 30 +20 % 67 63 +6 % 236
IB Net debt, at end of period EUR, m 388 335 +16 % 388 495 +22 % 358
*comparable
Paperboard delivery split in H1 2018
Folding boxboard deliveries in H1/18 (H1/17) 1,000 tonnes
EMEA433 (397)
Americas127 (112)
APAC 64(59)
EMEA237 (229)
Americas93 (98)
1-6/2018 Half-Year Report18
White kraftliner deliveries in H1/18 (H1/17)1,000 tonnes
70%
20%
10%
72%
28%
Total FBB deliveries
grew by 10%
Total WKL deliveries
decreased by 1%
Financial targets and actuals
Comparable ROCE, %
9,1
11,3
8,1
11,2
15,1
2014 2015 2016 2017 H1/18
1,8
1,2
2,0
1,2 1,2
2014 2015 2016 2017 H1/18
Net debt / comparable EBITDA, %
10%
13%12%
15%
6%
2014 2015 2016 2017 H1/18
Annual growth in total paperboard deliveries, %
Target is to
exceed
relevant
market
growth,
3-4%/a
Dividend policy: Metsä Board aims to distribute at least 50% of its result for
the financial period in annual dividends to its shareholders
Target: >12%
Target: <2.5
19 1-6/2018 Half-Year Report19
Estimated capex for 2018 is EUR 70 millionH1 2018 capex was EUR 26 million
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015 2016 2017 2018E
Maintenance capex Growth capex Depreciation
EUR million
20 1-6/2018 Half-Year Report
Main growth in capex in 2015−2016: Husum investment programme, extrusion coating line
and equity investment in Metsä Fibre’s bioproduct mill
0
50
100
150
200
250
2018 2019 2020 2021 2022–26 2027
Bonds Loans from financial institutions Pension loans Other loans
1-6/2018 Half-Year Report21
Debt and its’ maturity30 June 2018
Interest-bearing debt maturity profile 30 June 2018
EU
R m
illio
n
• Total interest-bearing debt on 30 June was EUR 483
million (31.3.2018: EUR 617 million)
• On 27 April Metsä Board made an early repayment of
EUR 100 million of its existing loan and increased the size
of its undrawn credit facility by EUR 50 million
Rating agency Rating and
outlook
Last update
Standard &
Poor‘s
BBB-
stable
02/2018
Upgrade from BB+
Moody‘s Ba1
positive
04/2018
Upgrade from
stable outlook
Metsä Board’s credit ratings
Company has an undrawn revolving credit facility of EUR 150 million maturing in 2020
1-6/2018 Half-Year Report22
Net financial costs January–June 2018
39 32 31 3614
4,2
3,8
3,3 3,3 3,3
2,0
2,5
3,0
3,5
4,0
4,5
5,0
0
10
20
30
40
50
2014 2015 2016 2017 H1/2018
Net financial costs, EUR million
Average interest rate at the end of period, %
EUR million % Net financial costs (including
foreign exchange rate differences)
in 1–6/2018 were EUR 14 million
(1–6/2017: EUR 12 million)
Debt structure and liquidity on 30 June 2018
30864
79
1121
Bonds
Loans from financialinstitutions
Pension loans
Finance leases andother loans
Other short-termloans
92
150
134
Cash and cashequivalents
Revolving creditfacility
Unraised pensionloans
Interest-bearing debt
EUR 483 million
(31 March 2018: EUR 617
million)
Available liquidity
EUR 376 million
(31 March 2018: EUR 513
million)
Average maturity of long-term loans on 30 June 2018 was 5.8 years. 23 1-6/2018 Half-Year Report
* Of which EUR 248 million due 2027
and EUR 60 million due 2019
*
Market cap and foreign owners30 June 2018
Ownership distribution30 June 2018
Market cap and ownership distributionMetsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki
0
5
10
15
20
25
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2013 2014 2015 2016 2017 6/2018
Market cap, EUR million
Share of foreign owners, %
41 %
19 %
17 %
23 %
MetsäliittoCooperative
Domesticinstitutionalinvestors
Domestic privateinvestors
Foreign owners
EUR million
* Metsäliitto Cooperative has 62% of voting rights
*
24
%
1-6/2018 Half-Year Report
500
600
700
800
900
1000
1100
1200
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Folding Boxboard White-top kraftliner
1-6/2018 Half-Year Report25
Market price development in folding boxboard
and white-top kraftliner in Europe
EUR/ tn
Sources: RISI, Inc. & FOEX Indexes Ltd
External recognitions and commitments in sustainability
Metsä Board was awarded
“Prime” status in Oekom
corporate responsibility rating in
May 2018.
Metsä Board scored the highest
recognition level “Gold” in
EcoVadis’ CSR ranking in 2018,
and is included in the top 1% of
suppliers assessed across all
categories.
Metsä Board is included in CDP’s Climate A list
and Water A list as well as in Supplier Climate A
list and Supplier Water A list. In addition, Metsä
Board achieved the Leadership status (A-) in
CDP Forest programme in 2017.
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 is committed to
Science Based Targets to
reduce its GHG emissions in line
with the goal of the Paris
Agreement.
As a member of Pack2Go Europe Metsä
Board is committed to the environmental,
health and safety aspects within the on-the-
go food and beverage packaging industry.
Metsä Board received a rating of
AAA (on a scale of AAA-CCC) in
the MSCI ESG Ratings
assessment in June 2018.
Metsä Board has an overall ESG
score of 86/100 and is
considered a Leader in
Sustainalytics’ assessment in
May 2018.
1-6/2018 Half-Year Report26
