INVESTOR PRESENTATION Q3 2017 Lennart Eberleh 1 CONTENTS - PowerPoint PPT Presentation

INVESTOR PRESENTATION Q3 2017 Lennart Eberleh 1

CONTENTS • Rottneros in brief: Sustainable growth in selected niches • The market • Q3 2017 • The way forward 2

SUSTAINABLE GROWTH IN SELECTED NICHES 3

THE ROTTNEROS GROUP Vallvik Mill, HQ for The Group BRIEF FACTS Rottneros Mill Rottneros Packaging • Customised market pulp Rottneros Baltic SIA • Global market • Production 2016: 374 100 tonnes – Rottneros Mill: Mechanical pulp, CTMP & groundwood pulp – Vallvik Mill: long-fibre chemical sulphate pulp, bleached and unbleached – Rottneros Packaging: Fibre trays – Rottneros Baltic: Wood supply GEOGRAPHICAL DISTRIBUTION OF TURNOVER THE GROUP’S PRODUCTS, DELIVERY VOLUME DISTRIBUTION Asia 3% • NASDAQ Stockholm since 1987 Rest of Europe Germany 18% 20 % 38 % Bleached sulphate pulp Other Nordic • Financially strong countries 21 % Unbleached SEKm SEKm 4% sulphate pulp Italy 23 % CTMP USA 21% 13% 18 % Groundwood pulp Sweden 21% 4

THE ROTTNEROS GROUP ROTTNEROS’ CUSTOMER SEGMENTS – SHARE OF TOTAL DELIVERIES 7 % 4 % 24 % Specialty paper Other Printing and writing paper 9 % E-pulp 25 % Board and packaging 18 % Filters 13 % Tissue paper 5

THE ROTTNEROS GROUP THE NICHE AREAS ARE GROWING PRINTING AND END FILTERS INSULATION TISSUE PAPER BOARD PRODUCTS APPLICATIONS WRITING PAPER 6

THE MARKET 7

MARKET FAVORABLE WINDS • Good demand for pulp globally but large geographic differences – Asia drives demand, Europe declines slightly • Producer inventories 36 days at the end of Q3 – Falling inventories of softwood (29 d) - now somewhat low – Rising inventories of hardwood(43 d) - now slightly high – Low customer inventories • Strong price development since summer with higher prices for all grades • The impact on Rottneros somewhat dampened by the stronger SEK 8

MARKET SLIGHTLY INCREASED PAPER PRODUCTION IN EUROPE - PACKAGING STRONG EUROPEAN PAPER AND BOARD PRODUCTION EUROPE, PRODUCTION OF PAPER AND BOARD, GROWTH JANUARY-AUGUST 2017 0.6% 0.4% 0.4% Graphic Paper 0.2% 0.1% 0.1% 0.1% Tissue 0.0% Packaging -0.2% -0.2% Other -0.4% -0.6% Total Graphic paper Tissue Packaging Other Source: CEPI Source: CEPI 9

MARKET CHEMICAL PULP: GOOD GROWTH GLOBALLY – ASIA A DRIVER, EUROPE DECLINES SLIGHTLY WORLD CHEMICAL MARKET PULP SHIPMENTS, GROWTH, WORLD CHEMICAL MARKET PULP SHIPMENTS JANUARY - SEPTEMBER 2017 JANUARY- SEPTEMBER 2017 1.1% 0.9% Europe 0.9% 0.7% China 0.7% Other Asia 0.5% 0.4% 0.4% North America 0.3% Latin America 0.1% Other -0.1% -0.1% -0.1% -0.3% Total Europe China Other Asia North AmericaLatin America Source: PPPC Source: PPPC 10

MARKET PULP INVENTORIES SOME 4.9 M TONS ( 36 DAYS) IN SEPTEMBER – SOFTWOOD BALANCED PRODUCER ¡INVENTORY, ¡DAYS ¡& ¡PULP ¡PRICE PRODUCER INVENTORY AND PULP PRICE 6 000 1200 1000 45 950 5 000 1000 40 900 4 000 800 850 35 1000 ton USD/ton 800 3 000 600 30 750 2 000 400 700 25 650 1 000 200 600 20 12-­‑01 12-­‑05 12-­‑09 13-­‑01 13-­‑05 13-­‑09 14-­‑01 14-­‑05 14-­‑09 15-­‑01 15-­‑05 15-­‑09 16-­‑01 16-­‑05 16-­‑09 17-­‑01 17-­‑05 17-­‑09 0 0 05 06 07 08 09 10 11 12 13 14 15 16 17 Days NBSK ¡Price, ¡USD Total World NBSK Price Western Europe Source: FOEX & PPPC Source: FOEX & PPPC 11

MARKET PRICE INCREASE IN Q3, BUT STRONGER SEK REDUCES IMPACT PRICE DEVELOPMENT IN EUROPE NBSK, WESTERN EUROPE: PRICE IN USD & SEK 8000 1100 1200 7500 1000 1000 7000 900 800 6500 USD/ton SEK/ton USD/ton 6000 800 600 5500 700 400 5000 600 200 4500 4000 500 0 07 08 09 10 11 12 13 14 15 16 17 05 06 07 08 09 10 11 12 13 14 15 16 17 NBSK, SEK NBSK, USD NBSK BHKP BCTMP-HW Source: FOEX, Rottneros Source: FOEX, Riksbanken 12

Q3 2017 13

Q3 2017 CONTINUED PRODUCTION INCREASES • Production volume increased by 12% to 102.5 thousand tonnes, quarterly production record in Vallvik. • Net sales for the third quarter increased by 6% to MSEK 472 (444). • Profit after financial items for the third quarter was charged with unplanned items and amounted to MSEK 41 (45). Increased cost focus ahead. • Strong market situation, signs of price increases after the end of the quarter. • The financing of Agenda 500 was completed with a 5-year bond loan of 400 MSEK. Contributes to optimize the capital structure. • Agenda 500 runs according to plan, good opportunities for continued growth in our niches. 14

Q3 2017 THE QUARTER IN NUMBERS 15

Q3 2017 MORE EFFFICIENT BALANCE SHEET, BUT STILL SOLID % MSEK 250 90 80 200 70 150 60 100 50 40 50 30 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 20 2015 2016 2017 -50 10 -100 0 Cash flow from operating activities, SEKm Net cash, SEKm Equity /assets ratio, % 16

THE WAY FORWARD 17

THE WAY FORWARD GROWTH IN SELECTED NICHES • We increase capacity through successive investments. • The goal is to expand capacity to more than 470,000 tons/year around 2021. • In 2015-2017, investment decisions totaling MSEK 620 have been taken. • Of these, SEK 370 million was completed 2015-16, the remaining 250m are carried out in 2017-2018. • Rottneros Packaging, high-quality fiber trays, 90-95% fossil-free, mainly for food, a new development area since in 2016. • Rottneros most profitable among comparable pulp companies, the return on capital employed was 15% in 2016. 18

THE WAY FORWARD CAPACITY EXPANSION 19

Q&A