Metsä Board January-March 2017 results presentation

Metsä BoardInterim report 1−3/2017Presentation material

• Good demand for high-quality paperboards continued

• Stable or rising market price levels• Metsä Board’s paperboard and market pulp

deliveries grew from the previous quarter• All Finnish mills performed well, good

momentum in linerboard business• No major maintenance shutdowns• Husum still had a negative impact on profitability

Q1 2017 Interim report2

Q1 2017 in summary

Total paperboard deliveries grewAll-time high monthly level in March 2017

210 203 204 213 224 224 227 250 266 245 265

120 111 130 141 137 131 142148 148

143163

0

60

120

180

240

300

360

420

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Folding boxboard White fresh fibre linerboard

1,00

0 to

nnes

Growth in totalpaperboard deliveries:

+10% Q1/17 vs. Q4/16

+16% Q1/17 vs. Q1/16

+12% FY16 vs. FY15

3 Q1 2017 Interim reportFY 2015:

1.4 mill. tonnesFY 2016:

1.6 mill. tonnes

Sales increased and profitability improved

Sales, EUR million

526 522 498 462 436 423 440 422 4450

100

200

300

400

500

600

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

43 47 55 35 35 36 34 33 45

8,2 %9,0 %

11,0 %

7,6 % 8,0 %8,5 %

7,7 % 7,8 %

10,1 %

0%

2%

4%

6%

8%

10%

12%

0

10

20

30

40

50

60

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117


Comparable operating result, EUR million and %

FY 2015:EUR 2,008 million

FY 2016:EUR 1,720 million

FY 2015:EUR 180 million

FY 2016:EUR 137 million

EU

R m

illio

n

EU

R m

illio

n

3345

01020304050

Q4 2016 Q1 2017

Operating result, EUR millionQ4 2016 vs. Q1 2017


Impact on Q1 2017 operating resultvs. Q4 2016 and Q1 2016

3545

01020304050

Q1 2016 Q1 2017

Operating result, EUR millionQ1 2016 vs. Q1 2017

+ Growing delivery volumes in paperboardand market pulp, no major maintenanceshutdowns, increased price levels in coatedWTKL in the US and in market pulp

- Geographic sales mix in Husum’s FBB and product mix in Husum’s white linerboards, increased latex price

+ Positive development at Finnish mills, discontinued paper operations, positive impactfrom FX rates after hedges

- Increased latex price

EBIT-%8.0

EBIT-%10.2EBIT-%

7.8

EBIT-%10.2

WTKL = white-top kraftlinerFBB = folding boxboard

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Q1/13 Q2/13 Q3/13 Q4/13 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

Comparable ROCE, %


Higher operating result improved ROCE-%

Target >12% from 2017 onwards

• Investments in January–March were EUR 19 million (Q1/16: EUR 54 million)

• Estimated capex in 2017 is EUR 65–70 million

Clearly lower capex in 2017

0

30

60

90

120

150

180

2010 2011 2012 2013 2014 2015 2016 2017E

Maintenance capex Growth capex Depreciation

EUR million

7 Q1 2017 Interim report

Main growth in capexes in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill

Cash flows clearly positiveQ1 2017 cash flow from operations impacted by changes in working capital, advancepayments of employment pension contributions, and dividend from Metsä Fibre

33 5693

66

-22 -22

67 55 269 8 45 8

-76-50

49 17 7

250214

256 247

193

11589 78

126

188

119 118

70

-15

-73

-69

-60

23

-100

-50

0

50

100

150

200

250

300

Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17

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

EUR

milli

on


Balance sheet remained stable

333 464 412 541 488 464 458

1,2

2.0

1,5

2,1 2,1 2.0 1,9

0

1

2

3

0

200

400

600

2015 2016 3/16 6/16 9/16 12/16 3/17

Interest-bearing net debt, EUR millionInterest-bearing net debt / EBITDA (rolling 12-month)

Interest-bearing net debt / comparable EBITDA

333 464 412 541 488 464 458

32%

44% 42%

54%49%

44% 44%

0

0,1

0,2

0,3

0,4

0,5

0,6

0

200

400

600

2015 2016 3/16 6/16 9/16 12/16 3/17

Interest-bearing net debt, EUR millionNet gearing, %

Net gearing, %


Financial target in net gearing is a maximum of 70%

• Rising capacity utilisation rate in the FBB productionline (now 70%) will decrease production costs per tonne produced

• FBB production line fully utilised by the end of 2018• Total paperboard deliveries to Americas will increase• PE-coated paperboards generate sales in a new

customer segment• The volumes of coated linerboards will grow


High potential to improveprofitability in Husum


New state-of-the-art extrusion coating line started up at Husum

• EUR 38 million investment, capacity of 100,000 t/a• PE-coated*) paperboard is an alternative to plastics• Targeted mostly for food packaging and food service

applications• In 2016, Metsä Board introduced PE-coated

paperboards• Supports growth in a new customer segment• Metsä Board continues development work on other

innovative barrier solutions including the use of bio-based materials

*) PE=polyethylene, the most common barrier material used against moisture and grease


Near-term outlook

• Good demand for fresh fibre paperboards, pulp market expected to remain healthy

• Price levels in FBB are expected to be stable, several linerboard producers have announced price increases

• Metsä Board’s paperboard delivery volumes are expected to increase

• Several maintenance shutdowns at the Finnish mills in Q2, rising latex price increasing production costs

Metsä Board's comparable operating result for the second quarter of 2017 is expected to remain roughly on the same level as in the first quarter of 2017.


Profit guidance

• Good overall performance in the firstquarter of 2017

• High potential to improve profitability in Husum

• Extrusion coating line in Husum offers improved availability and competitive products, especially in the food and food service segments

• In 2017, focus is on sales of new paperboard capacity


Summary

Metsä Board’s2017 Capital Markets Day

1 June 2017 in Helsinki

More info: www.metsaboard.com/investors







Appendix


Key financialsQ1/17 Q4/16

ChangeQ1/17

vs. Q4/16Q1/16

ChangeQ1/17

vs. Q1/162016

Sales EUR million 445 422 +5% 436 +2% 1,720

EBITDA, comparable EUR million 69 53 +30% 58 +19% 231

Operating result, comparable EUR million 45 33 +36% 35 +29% 138

% of sales % 10.2 7.8 8.0 8.0

Result before taxes, comparable EUR million 40 23 +74% 30 +33% 107

Earnings per share EUR 0,10 0,05 +100% 0.07 +43% 0.26

ROCE, comparable % 10.6 7.7 8.3 8.1

Capex EUR million 19 43 -56% 54 -65% 162

Cash flow from operations EUR million 26 55 -53% -22 77

IB Net debt, at the end of period EUR million 458 464 -1% 412 +11% 464

Comparable EBITDA

52 62 61 70 73 8160 58 61 59 53

69

11%12% 12%

13%14%

16%

13% 13%14% 14%

13%

16%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

20

40

60

80

100

Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17

EBITDA, EUR million EBITDA, %


• Impact of FX rate changes after hedges in Q1 2017: flat in Q1/17 vs. Q4/16, EUR 5 million positive in Q1 2017 vs. Q1 2016

• Hedging policy from 1 January 2017 onwards– 100% of balance sheet position

– 50% of annual net FX flows

FX exposure and sensitivities

58 %34 %

6 %2 %USD

SEK

GBP

Othercurrencies

Annual transaction exposureEUR 1.2 billion

FX sensitivities before hedges

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

Currency Next 12 months

USD, $ EUR +70 million

Swedish krona EUR -40 million

GBP, £ EUR +7 million


Debt structure and liquidity31 March 2017

223

149128

23

137

Bonds

Loans fromfinancial institutions

Pension loans

Finance leases andother loans

Other short-termloans

199

100

102

Cash and cashequivalentsRevolving creditfacilityUnraised pensionloans

Interest-bearing debt, total EUR 660 million

Available liquidity, total EUR 401 million

Average maturity of long-term loans on 31 March 2017 was 2.2 years. 20 Q1 2017 Interim report

Long-term debt and financial costs

Net financial costs (EUR million) and average interest rate (%)

Maturity schedule in long-term IB debtEUR million

105

35

257

174

1 2

100 102

0

50

100

150

200

250

300

2017 2018 2019 2020 2021 >2022

Long-term interest bearing liabilities, EUR million

Committed undrawn credit facilities, EUR million


56 39 32 31 5

4,6

4,2

3,8

3,3 3,3

3,03,23,43,63,84,04,24,44,64,8

0

20

40

60

2013 2014 2015 2016 Q1/2017

Net financial costs, EUR million

Average interest rate at the end of period, %

500

600

700

800

900

1000

1100

2010 2011 2012 2013 2014 2015 2016 2017

Folding boxboard White‐top kraftliner

Market price development in folding boxboardand white-top kraftliner in Europe

Sources: Pöyry Management Consulting & FOEX Indexes Ltd

EUR/ tn


Source: Foex Indexes Ltd

Softwood, USD

Softwood, EUR

Hardwood, EUR

Hardwood, USD

USDEUR

Pulp price development (PIX)

23

350400450

500550600650

700750800850900

95010001050

'10 '11 '12 '13 '14 '15 '16 '17350400450

500550600650

700750800850900

95010001050

Q1 2017 Interim report

• Metsä Board’s dividend payout target is at least 1/3 of EPS

• Dividend for 2016:– EUR 0.19 per share– Totalling EUR 68 million– Corresponds to 76% of EPS

0

0,1

0,2

0,3

0,4

0,5

2012 2013 2014 2015 2016

Earnings per share Dividend per share


Steadily growing dividends

EUR

Market cap and foreign owners31 March 2017

Ownership distribution31 March 2017

Market cap and ownership distribution

0

4

8

12

16

20

24

0

500

1 000

1 500

2 000

2 500

2012 2013 2014 2015 2016 3/2017

Market cap, EUR million

Share of foreign owners, %

42 %

25 %

18 %

15 % MetsäliittoCooperative

Domestic institutionalinvestors

Domestic privateinvestors

Foreign owners

EUR million

*) Metsäliitto Cooperative has 61% of voting rights

*)

25

%

Q1 2017 Interim report

Investor Relations

Metsä Board January-March 2017 results presentation