[PPT] - Mets Board Investor presentation Q1/2016 Contents Investment PowerPoint Presentation

SLIDE 1

Metsä Board Investor presentation Q1/2016

SLIDE 2

Q1 2016 2

Investment highlights

SLIDE 4

Main customers are consumer goods companies,

converters and merchants

Best-in class profitability and technology leader
Steady cash flow generation and strong balance sheet
Strong fibre know-how and self-sufficiency in pulp
Valuable holdings in Metsä Fibre (24.9%) and

Pohjolan Voima (2.6%)

Global sales to over 100 countries and eight

production units in Finland and Sweden

Q1 2016 4

Metsä Board is market leader in folding boxboard in Europe and global market leader in coated white top kraftliner

Sales split 2015

Paperboard* Paper

Sales by region 2015

EMEA Americas APAC

*) Includes market pulp

SLIDE 5

CONSUMER GOODS RETAIL- READY FOOD SERVICE

Metsä Board’s customers benefit from high-performance packaging materials

Folding boxboard, white top kraftliners and fully bleached linerboard

SLIDE 6

Pure and safe
Superior printing surface
Consistently high quality
Even over 30% lighter in weight than other paperboards

Metsä Board’s paperboards offer an excellent way for consumer goods companies to improve quality of their packages and sustainability of their operations

Q1 2016 6

Metsä Board’s paperboards are examples of successful product development

40,8 g Recycled fibre board 35,2 g Solid bleached board 30,2 g Average folding boxboard 27,7 g Metsä Board’s folding boxboard

SLIDE 7

Q1 2016 7

EBITDA development 2011–2015

180 185 208 236 283

7,2 % 8,8 % 10,3 % 11,8 % 14,1 %

0% 2% 4% 6% 8% 10% 12% 14% 16%

50 100 150 200 250 300 2011 2012 2013 2014 2015 EUR million

EBITDA, excl. non-recurring items

SLIDE 8

Strong profitability development

ROCE-%, excl. non-recurring items

Q1 2016 8

EBIT-%, excl. non-recurring items

3,4 4,8 6,4 9,1 11,3

2 4 6 8 10 12 2011 2012 2013 2014 2015 %

2,4 3,6 5,2 6,8 9,0

2 4 6 8 10 2011 2012 2013 2014 2015 %

Target over 12% from 2017

SLIDE 9

Q1 2016 9

Strong continuing improvement in productivity

1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 1 000 1 300 1 600 1 900 2 200 2 500 2 800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E

Production capacity/employee Number of employees

Production capacity (tonnes) / employee at current mills

No. of

employees Production capacity/ employee

SLIDE 10

Limited availability of high quality fibre

– Sustainably harvested high quality fresh forest fibres are a must – Own state of art chemical, mechanical and BCTMP pulping capacity vital competitive factors

Leading global consumer goods companies and corrugated box

manufacturers not willing to change paperboard suppliers easily in the high-quality segments

– High speed packaging lines very quality sensitive – Requirements for uniform brand look and feel globally – Sustainability and product safety aspects

Skilled people and organizations a crucial success factor

– High-quality paperboard companies have traditions from several generations

Q1 2016 10

High threshold for new producers to enter high-quality board segment

SLIDE 11

Q1 2016 11

Metsä Board’s paperboard business’ profitability is top of its field in Europe

SLIDE 12

Strategic cornerstones and financial targets

SLIDE 13

Strategic cornerstones are

Focus
Growth
Profitability

Q1 2016 13

Metsä Board’s vision is to be the preferred supplier of premium paperboards creating value for customers globally

Responsible profitability Reliability Cooperation Renewal

Values

SLIDE 14

Focus on premium fresh forest fibre paperboards for consumer and retail packaging This means to us:

We focus on serving customers whose quality

expectations require our high quality, light and strong packaging materials

Our paperboards are produced from fresh forest fibres
Our products are used for packages at the store and

from the store to the consumer

Q1 2016 14

Focus

SLIDE 15

Profitability is based on superior cost efficiency and healthy sales prices driven by high-quality pulps and unique technical know-how This means to us:

Our superior cost efficiency will be achieved by further

developing productivity and efficiency of our mills,

perations and people
We will continue to drive down purchasing costs in all

areas

Our self-sufficiency in high-quality pulps together with

unique paperboard making expertise helps us to improve

ur market position further and maintain healthy price

levels

Q1 2016 15

Profitability

SLIDE 16

Grow profitably together with brand owner, converter and merchant customers globally in businesses that benefit from our safe and sustainable paperboards This means to us:

We grow in end-uses where our product is best suited to

protecting our customers’ products and promoting their brands and businesses

Our customer base is global, including brand owner,

private label, converter and merchant customers

By selecting businesses that benefit from our paperboards

we can generate value for our customers and grow profitably with them

Q1 2016 16

Growth

SLIDE 17

Financial targets

Minimum ROCE 12%* from 2017

Q1 2016 17

Maximum net gearing 70%

3,4 4,8 6,4 9,1 11,3

2011 2012 2013 2014 2015

106 72 70 51 32

2011 2012 2013 2014 2015

Return on capital employed (ROCE) a minimum of 12% from 2017 onwards
Net gearing not to exceed 70%

SLIDE 18

Metsä Board’s dividend payout target is at least 1/3 of EPS
Average pay-out ratio during 2012–2015 has been 40%

Q1 2016 18

Dividend

0,06 0,09 0,12 0,17

0,02 0,04 0,06 0,08 0,1 0,12 0,14 0,16 0,18 0,2

2012 2013 2014 2015

SLIDE 19

Q1 2016 19

Targeted average annual growth rate exceeds clearly the market growth rate 3-5% p.a.

250 500 750 1 000 1 250 1 500 1 750 2 000 2011 2012 2013 2014 2015 2018 target Fresh forest fibre linerboard Folding boxboard

1,000 tonnes

SLIDE 20

Q1 2016 20

Most important growth area is Americas

50 100 150 200 250 300

2011 2012 2013 2014 2015 2018 target Folding boxboard Fresh forest fibre linerboard

300 250

1,000 tonnes

Actual and targeted deliveries to Americas

SLIDE 21

Grow the paperboard businesses profitably globally
Ensure successful sales of new capacity
Secure good price levels
Keep best in class product quality and improve supply

chain

Develop new products for existing and new end uses
Continue productivity improvements and cost savings

Q1 2016 21

Main priorities and actions to achieve financial targets

SLIDE 22

Operating environment and market position

SLIDE 23

Demand is based on global trends

Globalisation Technology Sustainability Consumption

Increasing role of retail

and harmonisation of global brands

Growing importance of

logistics

Consolidation of carton

converters

New innovations

utilising wood fibre and

ther biomaterials
Continuous

development of production technologies

Digitisation and

automatisation change business dynamics

Greater significance of

resource efficiency drives circular economy and life-cycle thinking

Increasing regulation

brings additional

bligations
Social responsibility

through value chain

Growing consumption

and consumers’ increasing quality needs globally

Stronger demand for

sustainable packaging

Digital services change

purchasing behavior

SLIDE 24

The global fresh forest fibre paperboard packaging market is about USD 110 billion

The total packaging market is USD 800 billion

Q1 2016 24

Estimated average annual growth rate of fresh forest fibre paperboard is 3–4%

Fresh forest fibre paperboard Other wood fibre based materials Non-fibre based materials

20 40 60 80 100 120 140 2013 2014 2015 2018E USD bn

Source: Metsä Board estimates

SLIDE 25

Q1 2016 25

Global cartonboard market is about 36 Mt/a*

The share of FBB is 9 Mt or 25% of the total market

Folding boxboard Other fresh forest fibre grades Recycled grades

Source: Metsä Board estimates

APAC

20 Mt/a

EMEA

8 Mt/a

North America

6 Mt/a

Lat. Am.

2 Mt/a

Avg. growth rate

for premium cartonboards is 3–4%/a

*) Excluding liquid packaging board, cup & plate stock, liner and uncoated recycled board.

SLIDE 26

Global food service board market is 3.5 Mt/a*

26

Cups Plates Cartons

Source: Metsä Board estimates

*) Base board only, excl. other laminate materials such as aluminium and PE.

APAC

1.0 Mt/a

EMEA

0.9 Mt/a

Americas

1.6 Mt/a

Q1 2016

Avg. growth rate

for food service board is 3–5%/a

SLIDE 27

Q1 2016 27

Market price development in Europe

Folding boxboard and white-top kraftliner

500 600 700 800 900 1000 1100 2009 2010 2011 2012 2013 2014 2015 2016

Folding boxboard 1/2009–1/2016 White-top kraftliner 1/2009–1/2016 EUR/tonne

Sources: Pöyry Management consulting, FOEX Indexes Ltd.

SLIDE 28

Q1 2016 28

Pulp price development in USD and EUR (PIX)

Pulp Price Indexes Europe

350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050

'04 '05 '06 '07 '08 ´09 '10 '11 '12 '13 '14 '15 '16

USD EUR

Softwood pulp Hardwood pulp Softwood pulp Hardwood pulp

Source: Foex Indexes Ltd

SLIDE 29

Metsä Board has a strong position in Europe

Largest Folding Boxboard Producers in Europe Capacity: 1,000 tonnes/a

Q1 2016 29

Largest White Fresh Forest Fibre Linerboard Producers in Europe Capacity: 1,000 tonnes/a

* The paperboard machine BM2 in Husum produces simultaneously uncoated paper. This production will be finished by the end of 2016.

Sources: Metsä Board, Pöyry Management Consulting Oy

SLIDE 30

Continuous steady growth above the market
The biggest growth drivers are

– strong and long-term customer relationships – innovative high-performance product portfolio to replace

ther packaging materials

– best-in class customer service concept

In Europe, paperboard sales volume grew 12% in 2015

compared to 2014

Q1 2016 30

Metsä Board is the market leader in Europe

Metsä Board uses only fresh forest fibres from sustainably managed northern forests

SLIDE 31

Americas is Metsä Board’s main growth market
The biggest growth drivers are

– Limited local supply in high-quality paperboards – Due to strong consolidation, converters without own paperboard production are looking for alternatives

In folding cartons their share is 40–50%

– Growing environmental awareness

In Americas, paperboard sales volume grew 16% in

2015 compared to 2014

Q1 2016 31

Metsä Board has a significant foothold in North America

Paperboard offers a sustainable option for plastics such as styrofoam in food service applications.

SLIDE 32

Metsä Board is the paperboard quality benchmark in

Asia

Responsible consumer goods companies promote

good packaging

– Sustainability – Traceable raw materials – Product safety

Due to the local overcapacity in Asia, the timing is not

good for aggressive growth

Q1 2016 32

Focus on the high-quality segment in APAC

Global consumer goods companies not willing to change paperboard suppliers easily in the high-quality segments

SLIDE 33

Q1/2016 results and outlook

SLIDE 34

Stable market situation
Paperboard deliveries were at all-

time-high level

Operating result remained on the

same level as in Q4/2015

Increase in working capital

weakened operative cash flow

Balance sheet remained strong
After the review period, Metsä

Board announced to iniatiate efficiency improvement programme at Husum integrate

Q1 2016 34

Key points in Q1/2016

SLIDE 35

Q1 2016 35

Financials in Q1/2016

Q1/16 Q4/15

Change Q1/16

vs. Q4/15

Q1/15

Change Q1/16

vs. Q1/15

FY 2015

Sales

EUR million

436 462 ↓ 526 ↓ 2 008 EBITDA, excl. NRIs

EUR million

58 60 ↓ 70 ↓ 283 % of sales

%

13 13 13 14 Operating result, excl. NRIs

EUR million

35 35 43 ↓ 180 % of sales

%

8 8 8 9 Result before taxes, excl. NRIs

EUR million

30 30 32 ↓ 150 Earnings per share

EUR million

0.07 0.07 0.09 ↓ 0.39 ROCE, excl. NRIs

%

8 8 11 ↓ 11 Gross investments

EUR million

54 61 ↓ 24 ↓ 178 Cash flow from operations

EUR million

22

66 ↓ 33 ↓ 247

SLIDE 36

Q1 2016 36

Paper deliveries decreased as planned and reduced sales

36 28 35 37 43 47 55 35 35

7% 6% 7% 7% 8% 9% 11% 8% 8%

0% 5% 10% 15% 10 20 30 40 50 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Operating result*

EUR million and % of sales 21 20 27 32 32 40 48 30 30

4% 4% 5% 6% 6% 8% 10% 7% 7%

0% 5% 10% 15% 10 20 30 40 50 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Pre-tax result*

EUR million and % of sales 501 494 514 499 526 522 498 462 436 200 300 400 500 600 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Sales

EUR million *) excluding non-recurring items

SLIDE 37

Low production volumes in Husum

due to the start-up of new folding boxboard machine (↓)

Lower market pulp prices (↓)
Decrease in unprofitable paper

production (↑)

Fixed costs and depreciation were

reallocated from non-core operations to paperboard-segment (↑) (↓)

Q1 2016 37

Main result drivers in Q1 were Husum investment programme and decreased paper production

10 20 30 40 Q4/2015 Paperboard Non-core

perations

Other

perations

Q1/2016

EBIT bridge Q4/15 vs. Q1/16

excl. non-recurring items

EUR million 35 35

9

+9

SLIDE 38

Q1 2016 38

Growing paperboard deliveries

CAGR% in 2011–2015 has been 9%

191 197 210 203 204 213 224 224 227 112 110 120 111 130 141 137 131 142 60 120 180 240 300 360 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Folding boxboard Fresh forest fibre linerboard

1,000 tonnes

Note! Figures exclude wallpaper deliveries

SLIDE 39

Profitability impacted by Husum investment programme

ROCE-%, excl. non-recurring items

Q1 2016 39

EBIT-%, excl. non-recurring items

4,8 6,4 9,1 11,3 8,3

2 4 6 8 10 12 2012 2013 2014 2015 Q1/2016

3,6 5,2 6,8 9,0 8,0

2 4 6 8 10 2012 2013 2014 2015 Q1/2016

Target over 12% from 2017

SLIDE 40

61 60 65 51 42

16% 15% 16% 13% 11%

2%

1% 4% 7% 10% 13% 16% 20 40 60 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 100 200 300 400 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Stable sales development
Operating result was negatively

impacted by

– Low production volumes in pulp and folding boxboard in Husum – Decrease in market pulp prices – Increased depreciation – Fixed costs reallocations from non-core segment

Pulp trading to Sappi Ltd discontinued.

Impact on 2016 sales is approximately EUR 60 million. No impact on 2016 result.

Q1 2016 40

Paperboard segment in Q1/2016

Operating result, EUR million

excl. non-recurring items

Sales, EUR million

EUR million EUR million

Operating result Operating result, EBIT-%

SLIDE 41

50 100 150 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Paper deliveries decreased to

15 000 tonnes (Q4/2015: 65 000 and Q1/2015: 156 000)

Sales down to EUR 18 million
Decreased depreciation and fixed

costs improved the segment’s result

Metsä Board estimates, that remaining

paper production will be fully discontinued by end of 2016

Q1 2016 41

Non-core operations segment in Q1/2016

3,2
3,4
1,3
8,4

0,2

3%
3%
2%
17%

1%

18%
16%
14%
12%
10%
8%
6%
4%
2%

0% 2%

18
14
10
6
2

2 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16

Sales, MEUR Operating result, MEUR

excl. non-recurring items

EUR million EUR million

Operating result, M€ Operating result, M€ EBIT-%

SLIDE 42

Other operations segment include costs

which are not allocated to units, e.g. head

ffice costs and hedge accounting
Cost base of these is roughly EUR 5 million

per quarter

Result fluctuation is mainly caused by

hedge accounting; in Q1/2016 hedge accounting had only a small impact on segment’s operating result

Q1 2016 42

Other operations segment in Q1/2016

14
9
9
8
7
15
10
5

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

Operating result,

excl. non-recurring items

EUR million

SLIDE 43

Q1 2016 43

Growing working capital and investments had a negative impact on cash flows

19

92 51 74 33 56 93 66

22
24

78 46 56 9 8 45 8

76

19 114 157 198 250 214 256 247 193

37

57 110 155 188 119 118 70

15
100
50

50 100 150 200 250 300 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Cash flow from operations, quarterly Free cash flow, quarterly Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months

EUR million

SLIDE 44

Healthy demand in fresh forest fibre paperboards

expected to continue

Total delivery volumes in paperboard expected to

grow compared to Q1/2016

Q2 profitability will be impacted by

– Start-up phase including low average price of new folding boxboard from Husum – Higher number of maintenance shutdowns vs. Q1

Total production costs are expected to remain

stable

Q1 2016 44

Outlook for Q2

SLIDE 45

Metsä Board’s operating result excluding non-recurring items in Q2/2016 is expected to remain roughly on the same level as in Q1/2016

Q1 2016 45

Profit guidance for Q2/2016

SLIDE 46

Balance sheet and funding

SLIDE 47

Q1 2016 47

Strong balance sheet

Equity ratio, %

33% 41% 39% 47% 44%

0% 10% 20% 30% 40% 50% 2012 2013 2014 2015 3/16

73% 70% 51% 32% 42%

0% 10% 20% 30% 40% 50% 60% 70% 80% 2012 2013 2014 2015 3/16

Net gearing, %

625 597 427 333 412

3,4 2,9 1,8 1,2 1,5

1 2 3 4 200 400 600 2012 2013 2014 2015 3/16 Net debt, EUR million Net debt/EBITDA (rolling 12m)

Net debt, EUR million and Net debt/EBITDA

SLIDE 48

Q1 2016 48

Debt structure and liquidity

31 March 2016

32 % 29 % 23 % 11 % 5 %

Bonds Loans from financial institutions Pension loans Finance leases and other loans Other short-term loans

63 % 22 % 15 %

Cash and cash equivalents Revolving credit facility Unraised pension loans

Debt structure, total EUR 694 million Available liquidity, total EUR 447 million

Average repayment time of long-term borrowing at 31 March in 2016 was 2.3 years.

SLIDE 49

Q1 2016 49

Debt programmes 31 March 2016

Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*, % Maturity EUR 225 million bond Issue 2014 225 225 4.5 2019 Syndicated credit facility 2014 250 150 3.9 2018 EUR 104 million bilateral loans 104 104 3.0 2016–2020 EUR 21 million finance leases 21 21 2.0 2016–2022 EUR 218 million pension loans 225 160 3.7 2016–2020 Long-term borrowings Total amount, EUR million Outstanding, EUR million Average interest rate*, % Maturity Revolving credit facility 2014 100

2018

Pension loan facilities 225 160 3.7

Short-term funding programmes

Metsä Group internal short-term limit 150

0–12 months

Metsä Group Treasury funding programmes EUR 150 million domestic CP programme 150

0–12 months

Metsä Board’s significant debt securities issued and outstanding at 31 March 2016

* The average interest rate take into account outstanding interest rate swaps and amortised arrangement fees The average interest rate of all Metsä Board interest bearing net liabilities incl. interest rate derivatives per 31 March 2016 is 3.7%

Metsä Board’s principal long-term liquidity reserves at 31 March 2016

SLIDE 50

Q1 2016 50

Maturity schedule in long-term IB debt

44 148 183 255 25 100 65 50 100 150 200 250 300 2016 2017 2018 2019 2020 2021 >2021

Long-term interest bearing debt (total EUR 656,2 million) and committed undrawn credit facilities 31 March 2016

Long-term interest bearing liabilities Committed undrawn credit facilities

EUR million

SLIDE 51

Q1 2016 51

Net financial costs are declining steadily

47 56 39 32 5 3,0 3,5 4,0 4,5 5,0 5,5 20 40 60 2012 2013 2014 2015 Q1/16 Net financial costs, EUR million Average interest rate, % EUR million

Q1/16 Q1/15 FY2015

Financial income and expenses

6.5
7.2
28.6

Net FX gains and losses

1.6

3.8
3.4

Total net financials

4.9
11.0
32.0
Avg. interest

rate, %

3.7% 3.8%

EUR million %

SLIDE 52

Hedging duration of the main foreign currency flows is 3–5 months

Q1 2016 52

FX exposure and sensitivities

63 % 27 % 7 % 3 %

USD SEK GBP Other currencies

10 % strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s annual EBIT of Currency 2016 (est.) USD, $ EUR +60 million GBP, £ EUR +10 million Swedish krona EUR -30 million

FX exposure by currency Annual gross amount EUR 1.1 billion Annual FX sensitivities to Group EBIT before hedges

SLIDE 53

Q1 2016 53

Positive rating development

Moody’s Standard & Poor’s

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1/2016 BB+ | Ba1

Stable Positive

BB | Ba2 BB- | Ba3 B+ | B1 B | B2 B- | B3 CCC+ | Caa1 CCC | Caa2

SLIDE 54

Investments

SLIDE 55

Annual maintenance capex is EUR

40–60 million

Main growth capexes in 2016:

– Husum investment programme: EUR 40 million (total EUR 170 mil.) – Extrusion line: EUR 23 million (total EUR 38 mil.) – Metsä Fibre’s bioproduct mill: EUR 25 million*

Q1 2016 55

Capital expenditure

30 60 90 120 150 180 2010 2011 2012 2013 2014 2015 2016E Capex Growth capex Depreciation EUR million

*) investment in equity

SLIDE 56

Q1 2016 56

Husum investment programme of EUR 170 million

Folding boxboard production

Capacity approximately 400,000 t/a
Deliveries mainly to Americas and

Food service globally

Start-up in February 2016, full

production capacity end of 2016

Linerboard production

Capacity approximately 300,000 t/a
Deliveries to Europe and Americas
Remaining uncoated paper*

production to linerboard production in 2016

Capacity changes 2014 vs. 2016:

Paperboard capacity +700,000 tn/a
Paper capacity -600,000 tn/a

*) Currently, the paperboard machine BM2 produces

simultaneously uncoated paper.

In Husum two paper machines were shut down in 2015
One paper machine converted to produce linerboard (BM2)
New folding boxboard machine (BM1)

SLIDE 57

Total investment value is EUR 170 million
Total annual EBIT impact EUR 50 million, full impact in

2018

Low production volumes in pulp and folding boxboard

in H1 2016

Q1 2016 57

Impacts on Husum investment programme

SLIDE 58

Q1 2016 58

Ambitious growth targets for new paperboard volume from Husum mill

250 150 150

500 1 000 1 500 2 000 Deliveries in 2015 Folding boxboard to Americas Food service board globally Linerboard to Europe and Americas Targeted deliveries in 2018

A total of 400,000 tonnes

f new FBB capacity

If the demand/supply situation so requires in the coming years, Metsä Board has possibilities to adjust its production accordingly

1,000 tonnes

SLIDE 59

Net capacity increase at the site is approximately 800,000 t/a

– Investment cost of approximately EUR 1.2 billion – Start up in 3Q 2017

Capital invested by Metsä Board will be EUR 24,9 million

– Metsä Board has no other financial commitments in the project – Investment will be made on Q2 2016

Metsä Board’s holding in Metsä Fibre remains unchanged at

24.9 per cent

All in all, Metsä Board’s pulp balance is expected to be

500,000–600,000 t/a long from 2018 onwards

– Majority of the market pulp is softwood chemical pulp – Reserve to grow paperboard business further in the future while maintaining self-sufficiency in pulp

Q1 2016 59

Metsä Board’s associated company Metsä Fibre builds a bioproduct mill

SLIDE 60

Food service packaging requires barrier features e.g. moisture and fat resistance

Investment value EUR 38 million
Will be implemented at Husum mill
Start-up in H1/2017 with capacity of 100,000 t/a
In 2015–2016 Metsä Board’s paperboards are coated by

external converter

The company continues to develop other barrier solutions

including biobased materials

Q1 2016 60

Metsä Board expands its offering in food and food service paperboards by investing in extrusion coating

SLIDE 61

Production, capacities and sourcing

SLIDE 62

Paperboard mills

Husum
Kemi
Kyro
Tako
Simpele
Äänekoski

Pulp mills

Husum
Joutseno
Kaskinen

Speciality paper mill

Kyro

Q1 2016 62

Production locations

Äänekoski Simpele Joutseno Tako Kyro Kaskinen Husum Kemi

SLIDE 63

Q1 2016 63

Paperboard and specialty paper capacity in 2015

Town Country Machines Folding boxboard White fresh forest fibre linerboard Wallpaper base Total

Tampere (Tako) Finland 2 210 210 Kyröskoski (Kyro) Finland 2 190 100** 290 Äänekoski Finland 1 240 240 Simpele Finland 1 280 280 Kemi Finland 1 410 410 Husum Sweden 2 400 300* 700 Total 9 1,320 710 100 2,130

SLIDE 64

Q1 2016 64

Pulp capacity in 2015

Metsä Board pulp mills Country Chemical pulp BCTMP Total Husum Sweden 750 750 Joutseno Finland 320 320 Kaskinen Finland 320 320 Total 750 640 1,390 Metsä Fibre pulp mills Country Chemical pulp BCTMP Total Äänekoski Finland 530 530 Kemi Finland 590 590 Rauma Finland 650 650 Joutseno Finland 690 690 Total 2,460 2,460

SLIDE 65

Deliveries by region in 2015

Folding Boxboard

Q1 2016 65

Fresh forest fibre linerboard

50% 26% 14% 11%

Western Europe Eastern Europe Americas Asia and Pacific

61% 6% 32% 1%

SLIDE 66

The amount of certified wood was

75%

A new supply chain management

target was launched: to audit 100% of risk rated key material suppliers against sustainability criteria by end 2015 89% of all Metsä Board purchases, excluding wood, come from countries where we have own production

Raw materials and supply chain management 2015

Q1 2016 66

Metsä Board purchases by country, %

(excl. wood supply)

68 17 7 4 3 1 Finland Sweden Other EU Germany Outside Europe Other

SLIDE 67

Own generation 20,90% Through PVO shareholding 29,60% Purchased energy 49,50% Wood- based 58% Nuclear power 22% Natural gas 8% Hydro 5% Coal 4% Oil 2% Other 1% Sweden 39% Finland 25% Baltic countries 20% Russia 15%

Sourcing 2015

Electricity sourcing (total 2,533 GWh)

Q1 2016 67

Primary energy used (total 12.3 TWh) Wood sourcing by country (total 5.0 million cubic metres)

SLIDE 68

Q1 2016 68

Cost structure in 2015

Delivery costs 16% Wood 26% Chemicals, pigments and fillers 14% Energy 10% Other variables 4% Personnel 14% Other fixed 16%

Fixed costs Variable costs

SLIDE 69

Sustainability

SLIDE 70

WOOD

THE AMOUNT OF CERTIFIED WOOD PERFORMANCE 2015 75%

> 80% SUPPLY CHAIN

RISK-RATED KEY MATERIAL SUPPLIERS AUDITED

100% SAFETY

LOST-TIME ACCIDENTS ANNUALLY PERFORMANCE 2015 11,1

ENERGY

ENERGY EFFICIENCY IMPROVEMENT10 PERFORMANCE 2015 10%

12% *) CLIMATE

FOSSIL CO2 EMISSIONS PER PRODUCT TONNE PERFORMANCE 2015 -42%

30%

WELL-BEING

SICKNESS ABSENTEEISM PERFORMANCE 2015 4,1%

<3% RESOURCE EFFICIENCY

PROCESS WATER USE PER PRODUCT TONNE PERFORMANCE 2015 - 16%

17%

BIOENERGY SHARE OF TOTAL PURCHASED ENERGY 81%

*) Target has been brought up from 10% to 12%

Q1 2016 70

Metsä Board’s sustainability targets (2020 vs. 2009)

SLIDE 71

Fresh forest fibre is a pure and safe raw material.

Many advantages of lightweight and safe cartonboard

71

Lightweight boards use less raw material, water and energy and lower transported weights. Consistent quality enables trouble-free runnability in converting and packing lines. Strong packaging stays in shape in logistics. High quality packaging attracts at the point-of-sale. Lightweight boards generate less waste. They are recyclable and compostable. Ensured consumer safety

1 2 3 4 5 6 6

SLIDE 72

Highest possible score 100/100 for the depth and quality of

climate change data (2014: 98/100 and 2013: 82/100)

High scores indicate success in providing robust climate

change data and strong understanding of climate-related

issues. Leaders usually have a solid financial performance
Metsä Board recognized as world leader for corporate action
n water security
Metsä Board achieved leadership status in the materials

sector of the Forest programme

Q1 2016 72

Metsä Board recognised as a leader for corporate actions on climate change

CDP is an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. CDP works with market forces, including 767 institutional investors with assets of USD 92 trillion, to motivate companies to disclose their impacts on the environment and natural resources and take action to reduce them.

SLIDE 73

Owners

SLIDE 74

Market cap and foreign owners

31 March 2016

Q1 2016 74

Ownership distribution

31 March 2016

Rising market cap with more foreign owners

Metsä Board’s new Market cap segmentation from 2016 onwards is Large Cap

4 8 12 16 20 24 500 1 000 1 500 2 000 2 500

2012 2013 2014 2015 3/2016

Market cap, EUR million Share of foreign owners, %

42 % 21 % 17 % 20 %

Metsäliitto Cooperative Domestic institutional investors Domestic private investors Foreign owners

EUR million

SLIDE 75

Q1 2016 75

Ownership structure on 31 March 2016

42 % 20 % 17 % 12 % 5 % 2 % 2 % Metsäliitto Cooperative Foreigners* Households Public sector

rganisations

Finance and insurance companies Non-profit

rganisations

Other companies 62 % 14 % 10 % 7 % 4 % 2 % 1 % Metsäliitto Cooperative Public sector

rganisations

Households Foreigners* Non-profit

rganisations

Finance and insurance companies Other companies

Shares, % (total no. of shares 355,512,746) Votes, % (total no. of votes 1,037,530,115)

* incl. nominee registered Source: Euroland

SLIDE 76

Appendix

2,800

Metsäliitto Cooperative holding 91%

METSÄ GROUP | Sales

EUR 5.0 billion | Personnel 9,600

METSÄLIITTO COOPERATIVE | Group’s parent company

| Owned by 116,000 Finnish forest owners

Metsä Board is part of Metsä Group & listed in Nasdaq Helsinki

SLIDE 78

2005 Structural change starts

Paper businesses over 80% of sales Decision to exit paper business

2006 Strategic review launched

Restructuring and focused investment programme initiated, focus on paperboard

2007–2013 Streamlining and focused investments

Paper capacity reduction from about 5 million to 0.8 million annual tonnes Major divestments incl. Graphic Papers and Map Merchants Paperboard capacity increases

2013 Strategic review completed

Clear focus on paperboard Paper production about a quarter of sales

2015 Strong position and growing

Europe’s leading producer of folding boxboard The world’s leading manufacturer of coated white-top kraftliners Exit from paper business (fully by end of 2016)

Q1 2016 78

True success story

SLIDE 79

Q1 2016 79

Sales and EBIT-% development 2000–2015

EUR million

5241 5624 4440 3236 2432 2605 2485 2108 2019 2008 2008

10,0
8,0
6,0
4,0
2,0

0,0 2,0 4,0 6,0 8,0 10,0

10000
8000
6000
4000
2000

2000 4000 6000 8000 10000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sales EBIT-%

%

SLIDE 80

Q1 2016 80

M&A activity 1997-2015

100 000 B2 shares in PVO

Acquisitions Divestments

Biberist Paper Mill UK Paper Modo Paper Zanders Chemicals Business Botnia Wood Corrugated Packaging MD Papier Metsä Tissue Albbruck Savon Sellu Forestia Kemiart Liners (53 %) 8% in Botnia PSM 9% in Botnia Carton plants Map New Thames MB Uruguay Graphic Papers Part of Reflex Hallein mill 1997 2000 1998 1999 2001 2002 2003 2004 2005 2006 2007 2009 2008 2010 2011 Rest of Reflex 0.5% in PVO 2012 7.3 % in Metsä Fibre 2013 2014 Alizay mill Lielahti real estate 2015 Gohrsmühle mill Simpele Mill

SLIDE 81

Year Divestiture Enterprise Value, EUR million

2015 Gohrsmühle mill in Germany neg. 2014 Lielahti real-estate 32 2013 Alizay property and other estates 22 2012 7.3% stake in Metsä Fibre 138 2012 0.5% stake in PVO 64 2011 Hallein 34 2009 Metsä-Botnia’s Uruguayan operations 300* 2008 Graphic Papers 750 2008 100,000 shares in PVO 80 2008 New Thames mill 82** 2007 Map Merchant Group 382 2007 Folding carton plants 60 2007 Botnia (9%) 240 2005 Botnia (8%) 164 2005 Savon Sellu 20 2005 Forestia (95%) 163 2004 Metsä Tissue 570 2002 Papierfabrik Albbruck 235 2001 MD Papier 300 2001 Noviant (19%) 41 3,679 Q1 2016 81

Significant Divestments EUR 3.7 billion in assets divested since 2001

* Cash portion **Incl. pension liabilities

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Katri Sundström

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

Q1 2016 82

Contact information

SLIDE 83