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Metsä Group Results 2015
Kari JordanPresident & CEO
3.2.2016
• Sales EUR 5,016 million (EUR 4,970 million). • Operating result* EUR 537 million (EUR 418 million). • Operating result*, 10.7% of sales (8.4%)• Return on capital employed* 13.6% (11.4%)• Pulp Industry and Paperboard Industry accounted for the most
significant result improvement
3/2/2016 Metsä Group3
Year of strong results
Metsä Group –Results 2015
*excluding non-recurring items
• The construction of Metsä Fibre's bioproduct mill in Äänekoskiprogressed as planned
• Metsä Board began the installation of the new folding boxboard machine at the Husum mill in Sweden
• Metsä Board announced it would expand its range of paperboard for food service packaging by investing EUR 38 million in extrusion coating at the Husum mill in Sweden
• The sale of the share capital of Metsä Wood's French timber upgrading company, Metsä Wood France SAS, to mutares AG was completed
3/2/2016 Metsä Group4
Events during the last quarter of theyear
Metsä Group – Results 2015
3/2/2016 Metsä Group5
Annual sales
Metsä Group – Results 2015
EUR million
5,3465,001 4,939 4,970 5,016
0
1000
2000
3000
4000
5000
6000
2011 2012 2013 2014 2015
3/2/2016 Metsä Group6
Quarterly sales
Metsä Group – Results 2015
EUR million
1.284 1.247 1.242 1.228 1.264 1.242 1.214 1.219 1.254 1.2651.204
1.2481.330
1.225 1.205
0
200
400
600
800
1 000
1 200
1 400
Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
1.255
3/2/2016 Metsä Group7
Operating result excl. non-recurring items
Metsä Group – Results 2015
EUR million
314
256
343
418
537
050
100150200250300350400450500550600
2011 2012 2013 2014 2015
3/2/2016 Metsä Group8
Operating result
Metsä Group – Results 2015
5364 68 71
8994
7387
10592
104117
129137
149
123
45
62 57
77
94 89
63
8870
160
103
84
118
154142
128
0
20
40
60
80
100
120
140
160
180
Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Excl. non-recurring items Incl. non-recurring items
EUR million
3/2/2016 Metsä Group9
96
154 155142
130119
63
3
5364 68 71
89 94
7387
10592
104117
129137
149
123
0
20
40
60
80
100
120
140
160
180
Q1/
10
Q2/
10
Q3/
10
Q4/
10
Q1/
11
Q2/
11
Q3/
11
Q4/
11
Q1/
12
Q2/
12
Q3/
12
Q4/
12
Q1/
13
Q2/
13
Q3/
13
Q4/
13
Q1/
14
Q2/
14
Q3/
14
Q4/
14
Q1/
15
Q2/
15
Q3/
15
Q4/
15
Operating result excl. non-recurring items
Metsä Group – Results 2015
EUR million
Change in operating result
3/2/2016 Metsä Group10
Metsä Group – Results 2015
EUR million
Operating result excl. non-recurring items 1–12/2015 418
Sales prices -182
Sales volumes -19
Exchange rates 222
Raw materials 80
Energy 13
Employee costs 10
Write-offs and others, total -5 +119
Operating result excl. non-recurring items 1–12/2015 537
Non-recurring items in 2015
3/2/2016 Metsä Group11
Metsä Group – Results 2015
EUR million 2015
Operating result incl. non-recurring items 542.1
Non-recurring items:
Sale of Finsilva shares 20.8
Sale of Gohrsmühle mill 17.5
Sale of Metsä Wood France SAS -21.4
Metsä Tissue’s efficiency programme in the German napkin business and changes in operations in Russia -11.7
Write-off of Metsä Tissue’s B&C upgrading line in Düren -1.8
Other items 1.3
Non-recurring items total +4.7
Operating result excl. non-recurring items 537.4
Metsä Group12 3/2/2016 Metsä Group12
Return on capital employed excl. non-recurring items
Metsä Group – Results 2015
8.5
7.1
9.1
11.4
13.6
0
2
4
6
8
10
12
14
16
2011 2012 2013 2014 2015
%
Target >10%
7/5/201513 Metsä Group13
Equity ratio on 31.12.
Metsä Group – Results 2015
28.1
34.737.9 37.9
43.2
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
2011 2012 2013 2014 2015
%
3/2/2016 Metsä Group14
Interest-bearing net liabilities on 31.12.
Metsä Group – Results 2015
1,953
1,6091,510
938
610
0
250
500
750
1 000
1 250
1 500
1 750
2 000
2011 2012 2013 2014 2015
EUR million
3/2/2016 Metsä Group15
Capital expenditure
Metsä Group – Results 2015
227204 214
143
492
0
100
200
300
400
500
600
2011 2012 2013 2014 2015
EUR million
Income Statement
3/2/2016 Metsä Group16
Metsä Group – Results 2015
EUR million 2015 2014 ChangeSales 5,016.0 4,970.3 45.7
Other operating income 95.7 170.3 -74.6
Operating expenses -4,311.4 -4,447.5 136.2
Depreciation and impairment losses -258.2 -276.5 18.0
Operating result 542.1 416.9 125.2
Operating result exclunding non-recurring items 537.4 418.1 119.3
Share of results from associated companies and joint ventures 11.2 16.4 -5.2
Exchange gains and losses -1.2 2.7 -3.9
Other net financial items -83.8 -106.1 22.3
Result before income tax 468.4 329.9 138.4
Key figures
3/2/2016 Metsä Group17
Metsä Group – Results 2015
2015 2014 ChangeROCE, % 13.7 11.1 2.6
excluding non-recurring items 13.6 11.4 2.2
ROE, % 15.9 13.0 2.9
excluding non-recurring items 15.8 13.4 2.4
Equity ratio, % 43.2 37.9 5.3
Net gearing ratio, % 25 46 -21
Interest-bearing net liabilities, EUR million 610 938 -328
Investments, EUR million 492 143 349
Personnel at the end of period 9,599 10,410 -811
Cash Flow Statement I
3/2/2016 Metsä Group18
Metsä Group – Results 2015
EUR million 2015 2014
Cash flow from operating activities
Result for the period 355.7 260.3
Adjustments to result for the period 387.2 305.0
Interest received 4.0 5.6
Interest paid -68.9 -91.9
Dividends received 5.7 3.3
Taxes -97.3 -52.7
Other financial items, net -11.9 -11.0
Change in working capital 221.3 198.6
Cash flow arising from operating activities 796.0 617.3
Cash Flow Statement IIEUR million 2015 2014Net cash flow from operating activities 796.0 617.3
Purchase of shares -2.4 -3.4Acquired shares from non-controlling interest 0.0 -20.9Investments -491.6 -143.0Sales of assets and others 40.2 145.5Changes in members' capital and in other equity 106.4 67.8Interest on members' capital and dividends paid -94.9 -87.9Change in long-term loans and other financial items -180.8 -79.5
Change in cash and cash equivalents 172.8 495.8
Cash and cash equivalents at beginning of period 947.9 454.4Translation differences and others 0.1 -2.3Change in cash and cash equivalents 172.8 495.8
Cash and cash equivalents at end of period 1,120.8 947.93/2/2016 Metsä Group19
Metsä Group – Results 2015
3/2/2016 Metsä Group20
Personnel on 31.12.
Metsä Group – Results 2015
12,525
11,44710,736 10,410
9,599
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
2011 2012 2013 2014 2015
Wood supply and Forest services
Wood supply and Forest services
3/2/2016 Metsä Group22
Metsä Forest – Wood supply and forest services
EUR million 2015 2014 Change
Sales 1,518.1 1,575.0 -56.9
Other operating income 7.4 6.7 0.7
Operating expenses -1,493.1 -1,552.0 58.9
Depreciation and impairment losses -3.5 -3.0 -0.5
Operating result 29.0 26.7 2.3
Non-recurring items, total - 1.5 -1.5
Operating result excluding non-recurring items 29.0 28.2 0.8
% of sales 1.9 1.8 0.1
Continued good growth in sales of forest services• Supply of wood remained good throughout the
year and the stumpage prices were stable• Metsä Forest delivered 30.0 million cubic
metres of wood to customers (30.2)• Mild weather in the last quarter made
harvesting stands and delivering wood more difficult
• Sales of forest management servicescontinued to grow during the year
• Electronic services related to wood trade and forest management were well-received
• Metsä Group increased bonuses payable to owner-members from wood trade
3/2/2016 Metsä Group23
Operating result excl. non-recurring itemsEUR million
Metsä Forest – Wood supply and Forest services
7.4 7.7
5.5
7.1
8.6
7.0
4.5
8.18.7
6.9 7.06.3
0
1
2
3
4
5
6
7
8
9
10
Q1/
13
Q2/
13
Q3/
13
Q4/
13
Q1/
14
Q2/
14
Q3/
14
Q4/
14
Q1/
15
Q2/
15
Q3/
15
Q4/
15
Wood Products Industry
Wood Products Industry
3/2/2016 Metsä Group25
Metsä Wood – Wood Products Industry
EUR million 2015 2014 ChangeSales 852.2 896.9 -44.7
Other operating income 8.4 10.1 -1.7
Operating expenses -820.3 -842.5 22.2
Depreciation and impairment losses -30.4 -30.4 0.0
Operating result 10.0 34.1 -24.1
Non-recurring items, total 21.4 3.1 18.3
Operating result excluding non-recurring items 31.4 37.2 -5.8
% of sales 3.7 4.1 -0.4
4.4
11.9
-2.9
2.0
8.6
14.4
6.2
8.0 7.9
10.2
5.9
7.5
-4
-2
0
2
4
6
8
10
12
14
16
Q1/
13
Q2/
13
Q3/
13
Q4/
13
Q1/
14
Q2/
14
Q3/
14
Q4/
14
Q1/
15
Q2/
15
Q3/
15
Q4/
15
Slight growth in delivery volumes• Metsä Wood's comparable delivery volumes grew
slightly from the previous year due to the increased deliveries of sawn timber
• Oversupply of Nordic sawn timber continued throughout the year, which manifested in prices that were clearly lower than in the previous year
• Metsä Wood adjusted the sawing volume during the autumn
• Delivery volumes of birch and spruce plywood were at the previous year's level and market prices increased mainly due to changes in exchange rates
• Metsä Wood France SAS and pole business Burt Boulton and Haywood Ltd. were divested
3/2/2016 Metsä Group26
Operating result excl. non-recurring itemsEUR million
Metsä Wood – Wood Products Industry
Pulp Industry
Pulp Industry
3/2/2016 Metsä Group28
Metsä Fibre – Pulp Industry
EUR million 2015 2014 MuutosSales 1,444.6 1,295.7 148.9
Other operating income 15.9 33.4 -17.5
Operating expenses -1,060.2 -1,039.2 -21.0
Depreciation and impairment losses -63.1 -62.0 -1.1
Operating result 3 37.2 227.9 109.3
Non-recurring items, total - -20.3 20.3
Operating result excluding non-recurring items 337.2 207.5 129.7
% of sales 23.3 16.0 7.3
3/2/201629
Price of pulp (PIX) 2007–2015
Metsä Fibre – Pulp Industry
USD EUR
Source: FOEX Indexes Ltd
350
450
550
650
750
850
950
1050
350
450
550
650
750
850
950
1050
'07 '08 ´09 ´10 ´11 ´12 ´13 ´14 ´15
Hardwood/EUR Softwood/EUR Hardwood/USD Softwood/USD
47.3 47.550.8 51.0
54.9
36.3
51.8
64.5
78.7
92.585.5
80.5
0
10
20
30
40
50
60
70
80
90
100
Q1/
13
Q2/
13
Q3/
13
Q4/
13
Q1/
14
Q2/
14
Q3/
14
Q4/
14
Q1/
15
Q2/
15
Q3/
15
Q4/
15
Positive effect from higher delivery volume and favourable USD exchange rate
• Operating result improved compared to previous year due to higher delivery volume, favourable US dollar rate as well as decrease in raw material costs
• Euro-denominated prices of pulps increased compared to the previous year due to the stronger US dollar
• Bioproduct mill project progresses as planned
– More than 10% of the mill is ready– Equipment installation has started– Capital investments in 2015 were over EUR
220 million
3/2/2016 Metsä Group30
Operating result excl. non-recurring items EUR million
Metsä Fibre – Pulp Industry
Paperboard Industry
Paperboard Industry
3/2/2016 Metsä Group32
Metsä Board – Paperboard Industry
EUR million 2015 2014 ChangeSales 2,007.5 2,008.4 -0.9
Other operating income 47.7 69.6 -21.8
Operating expenses -1,752.8 -1,835.8 83.1
Depreciation and impairment losses -103.5 -125.6 22.2
Operating result 199.0 116.5 82.5
Non-recurring items, total -19.2 19.9 -39.1
Operating result excluding non-recurring items 179.9 136.5 43.4
% of sales 9.0 6.8 2.2
3/2/2016 Metsä Group33
Market prices of folding boxboard and white-top kraftliner in Europe 2010–2015
Metsä Board – Paperboard Industry
EUR/tonne
Source: Pöyry Management Consulting and FOEX Indexes Ltd
600650700750800850900950
100010501100
2010 2011 2012 2013 2014 2015
Folding boxboard White-top kraftliner
30.226.0
18.9
29.3
36.1
28.3
35.2 36.9
43.247.0
54.6
35.1
0
10
20
30
40
50
60
Q1/
13
Q2/
13
Q3/
13
Q4/
13
Q1/
14
Q2/
14
Q3/
14
Q4/
14
Q1/
15
Q2/
15
Q3/
15
Q4/
15
Clear profitability improvement• Operating result was improved by increased
paperboard deliveries, favourable exchange rate changes, and divestment of the loss-making Gohrsmühle mill
• Metsä Board's transformation from a paper company to a leading paperboard company, launched in 2005, was completed.
– Husum’s new folding boxboard production line is in a start up phase
– Production of printing paper at Husum came to an end almost in its entirety by end 2015
• Range of paperboard for food service packaging was decided to be expanded by investing EUR 38 million in extrusion coating at Husum
3/2/2016 Metsä Group34
Operating result excl. non-recurring items EUR million
Metsä Board – Paperboard Industry
Tissue and cooking papers
Tissue and Cooking papers
3/2/2016 Metsä Group36
Metsä Tissue – Tissue and Cooking papers
EUR million 2015 2014 ChangeSales 1,015.8 1,012.8 2.9
Other operating income 4.8 9.3 -4.5
Operating expenses -938.5 -921.6 -16.9
Depreciation and impairment losses -40.5 -38.7 -1.8
Operating result 41.6 .61.8 -20.2
Non-recurring items, total 13.5 0.4 13.1
Operating result excluding non-recurring items 55.1 62.2 -7.1
% of sales 5,4 6.1 -0.7
13.2 13.812.6
15.1
11.8
9.7
19.621.1
15.8
7.6
13.2
18.6
0,0
5,0
10,0
15,0
20,0
25,0
Q1/
13
Q2/
13
Q3/
13
Q4/
13
Q1/
14
Q2/
14
Q3/
14
Q4/
14
Q1/
15
Q2/
15
Q3/
15
Q4/
15
Sales Growth
• Slight growth in sales due to price increases• Operating result was weakened by higher
pulp and recycled fibre prices, as well as the weakening of the Norwegian krone against the euro
• At Raubach, renewal of the production line was started to improve tissue paper quality
• New product launches and product development have strengthened the position of company's own brands in the Nordic countries and eastern Central Europe
3/2/2016 Metsä Group37
Operating result excl. non-recurring items EUR million
Metsä Tissue – Tissue and Cooking papers
Summary
Outlook for the business areas 1/2Wood Supply and Forest services• Wood demand is focusing on felling sites to be harvested when the ground is unfrozen and, in terms of energy
wood, on crown wood• Sales of forest management services are expected to grow
Wood Products Industry • Sales are expected to be on a similar level as previous year’s first quarter• In the first quarter, the sawn timber market balance is expected to improve for spruce sawn timber. For pine
sawn timber, oversupply is expected to continue due to weak demand in the EMEA sales region• Shutdowns are possible in birch plywood production, depending on the market situation• Demand for other wood products is expected to continue stable
Pulp Industry• Global economic uncertainty and changes in the currency market will impact Metsä Fibre's operating
environment• Global demand for pulp has remained stable, and there are no signs of material changes in the market situation
3/2/2016 Metsä Group39
Summary
Outlook for the business areas 2/2
Paperboard• Metsä Board's paperboard deliveries in January–March are expected to grow from the last quarter of 2015• The new paperboard production line at Husum, still in the start-up phase, will have an effect of decreasing
the average price of folding boxboard. The required quality objectives are expected to be reached latest by the third quarter of 2016, according to the original plan
Tissue and Cooking papers• In the tissue and cooking paper markets, demand is expected to continue stable in all market areas• Demand for tissue paper is expected to grow in particular in eastern Central Europe and for cooking papers
in Asia
3/2/2016 Metsä Group40
Summary
• Metsä Group’s operating result excluding non-recurring items is in the first quarter of 2016 expected to be approximately on the same level as in the fourth quarter of 2015
3/2/2016 Metsä Group41
Near-term outlook
Summary