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Metsä Board’s strategy update and outlook
Mika Joukio, CEO
Capital Markets Day 19 November 2015
Disclaimer
This presentation includes forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,” “will,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or any similar expressionsidentify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. By their nature forward-looking statements are subject to assumptions, risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, actual results may differ even materially from those expressed or implied by these forward-looking statements. We urge presentation participants not to place undue reliance on such statements.
The information and views contained in this presentation are provided as at the date of this presentation and are subject to changes without notice. Metsä Board does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally require
Viewers should understand that this presentation does not constitute, and should not be construed as, an offer to buy or subscribe for Metsä Board’s securities anywhere in the world or an inducement to enter into any investment activity relating to the same. No part of this presentation should solely form the basis of, or be relied on in connection with, any contract or commitment or decision to invest in Metsä Board securities whatsoever. Potential investors are instructed to acquaint themselves with Metsä Board’s annual accounts, interim reports and stock exchange releases as well as other information published by Metsä Board to form a comprehensive picture of the company and its securities.
2015 CMD2
3
• Metsä Board today
• Strategic cornerstones and financial targets
• Completion of transformation
• Product development and sustainability
• Q&A
Contents
2015 CMD
Metsä Board is the leading fresh forest fibre
paperboard producer in Europe
2015 CMD4
• Market leader in folding boxboard in Europe and
global market leader in coated white top kraftliner
• Best-in-class profitability and a technology leader
• Steady cash flow generation and strong balance sheet
• Strong fibre know-how and self-sufficiency in pulp
• Global sales to over 100 countries and eight
production units in Finland and Sweden
74 %
26 %
Sales split2014
Paperboard
Paper
77 %
11 %
12 %
Sales by region 2014
EMEA
Americas
APAC
*
*) Includes Market pulp
Metsä Board strengthens its market leadership
2015 CMD5
Largest Folding Boxboard
Producers in Europe1,000 tonnes
400
4002000 800 1,2001,000 1,400600
Capacity: 1000 tons/a
Current Post-
measures
Holmen (7%)
IP (8%)
Mayr-Melnhof (13%)
Stora Enso (25%)
935(35%)
150
2001000 700300 600500400
Smurfit Kappa
(15%)
(13%)
Mondi
580(29%)
(25%)
(12%)
Current
730 / 34%
Post-
measures
SCA
BillerudKorsnäs
Capacity: 1000 tons/a
+43%+21%
1,335 / 43%
Note: Share of production capacity currently shown in parenthesis
Sources: Metsä Board, Pöyry Management Consulting Oy
Largest White Fresh Forest Fibre
Linerboard Producers in Europe1,000 tonnes
Improved profitability
2015 CMD6
59 75 104 137 145
2,3
3,6
5,2
6,8
9,4
0
1
2
3
4
5
6
7
8
9
10
0
20
40
60
80
100
120
140
160
2011 2012 2013 2014 Q1-Q3/2015
EBIT, M€ EBIT-%
GROUP EBIT, M€ and EBIT-% excl. NR items
44 51 61 60 65
11,8 %
14,0 %15,5 %
14,6 %15,7 %
0
0,05
0,1
0,15
0,2
0
20
40
60
80
Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
EBIT EBIT-%
PAPERBOARD-SEGMENT
EBIT, M€ and EBIT-% excl. NR items
81
-2,9 -1,8 -3,2 -3,4 -1,3
-2,3 %
-1,4 %
-2,5 %
-3,1 %
-1,5 %
-0,04
-0,03
-0,02
-0,01
0
-4Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
EBIT EBIT-%
NON CORE OPERATIONS -SEGMENT
EBIT, M€ and EBIT-% excl. NR items
2015 CMD7
Metsä Board’s paperboard business’ profitability
is top of its field in Europe
Strategic cornerstones and financial targets
Vision
The preferred supplier of premium paperboards
creating value for customers globally
2015 CMD9
Responsible profitability
Reliability
Cooperation
Renewal
• Focus
• Growth
• Profitability
2015 CMD10
Strategic cornerstones
Focus
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.
2015 CMD11
Growth
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.
2015 CMD12
Profitability
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, operations
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 our market
position further and maintain healthy price levels.
2015 CMD13
Average annual growth rate exceeds clearly
the market growth rate
14
0
250
500
750
1 000
1 250
1 500
1 750
2 000
2011 2012 2013 2014 2015E 2018 target
Fresh forest fibre linerboard Folding boxboard
1,000 tonnes
2015 CMD
ROCE, %
2015 CMD15
3,4
4,8
6,4
9,1
12,1
0
2
4
6
8
10
12
2011 2012 2013 2014 9/2015
Target >12%
Net gearing, %
106
73 70
51
34
0
50
100
2011 2012 2013 2014 9/2015
Dividend pay-out ratio, %
Target <70%
Financial targets
0
12
47
57
0
20
40
60
2011 2012 2013 2014
Target >1/3
excl. non-recurring items Dividend pay-out ratios excl. NR items:
2012: 46%, 2013: 53%, 2014: 44%
Completion of transformation
2015 CMD17
Husum will become a leading fresh
forest fibre paperboard unit in Europe
Folding boxboard production
Capacity 400,000 t/a
Deliveries mainly to Americas and
Food service globally
Full production capacity reached
by the end of 2016
Expected delivery volumes in 2016
at least 200,000 tonnes
Linerboard production
• Capacity 300,000 t/a
• Deliveries to Europe and Americas
• Remaining uncoated paper* production to
linerboard production by the end of 2017
Capacity changes 2014 vs. 2017:
• Paperboard capacity +700,000 tn/a
• Paper capacity -600,000 tn/a
*) Currently, the paperboard machine BM2 produces simultaneously uncoated paper
(capacity 100,000 tn/a). This production will will be finished by the end of 2017.
• Transformation process in Husum mill, Sweden
– Annual Operating result impact +EUR 50 million
– Full impact mostly in 2017 and fully in 2018
– Expected impact on 2016 is roughly one third of the total
• Gohrsmühle divestment
– Annual Operating result impact +EUR 20 million
– Roughly half materialises in 2015
– Reduces annual sales by EUR 90 million
• Total paperboard capacity after the transformation
over 2 million tonnes
2015 CMD18
Completion of the transformation
and expected impacts
All figures are based on company estimates and compared to FY2014 figures
19
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 2015E 2016F
Production capacity/employee Number of employees
Strong continuing improvement in productivity
Production capacity (tonnes) / employee at current mills
2015 CMD
No. of
employees
Production
capacity/
employee
Paperboard is Metsä Board’s core business
74 %
26 %
2014
Paperboard Paper
2015 CMD20
81 %
19 %
2015E
Paperboard Paper
96 %
4 %
2016E
Paperboard Paper
Paperboard includes the market pulp
Product development and sustainability
2015 CMD22
Metsä Board expands its offering in
food and food service paperboards
by investing in extrusion coating
• Investment value EUR 38 million
• Will be implemented at Husum mill
• Start-up in Q1/2017 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
Food service packaging requires barrier
features e.g. moisture and fat resistance
2015 CMD23
High-quality paperboard with foam
forming
Metsä Board is the first in the world to start testing foam forming
on a production scale
Foam forming
• Improves printing surface and enables further reduction of
weight
• Reduces the use of raw materials, energy and water
Metsä Board has done extensive development work for several
years based on customers needs to commercialise this new
technology
Lightweight paperboards improve sustainability
throughout the value chain
24
ENERGY
Energy efficiency
improvementTarget from 2009 to 2020
12%
Performance by 2014 7%
CLIMATE
Fossil CO2 emissions
per product tonneTarget from 2009 to 2020
-30%
Performance by 2014 -37%
RESOURCE EFFICIENCY
Process water use
per product tonneTarget from 2010 to 2020
-17%
Performance by 2014 -15%
BIOENERGY
Share of
total energy 62%
2015 CMD
Target level in Energy has recently been raised
from 10% to 12%.
• 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 on
water security.
2015 CMD25
Metsä Board recognized 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 US$92 trillion, to motivate
companies to disclose their impacts on the environment and natural resources and take action to
reduce them.
• Effective ramp-up of new cartonboard machine
• Ensure successful sales of new capacity
• Secure good price levels
• Keep high product quality and further improve
supply chain
• Continue product development and enter new
end use areas
• Ensuring the cost efficiency and productivity
2015 CMD26
Key priorities in 2016
Thank you!
Q&A
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