Metsä Board

Light-Weight Concept in Paperboard Business Offers Great Growth Opportunities for Metsä Board

Mikko Helander, CEOCMD

22.5.2014

Metsä GroupMetsä Board2

Content

1. Metsä Board Today

2. Profitable Growth

3. Conclusions

Metsä Board

Metsä Board Today

Metsä GroupMetsä Board

Metsä Board Is the Leading European Fresh Forest FibrePaperboard Producer

‒ Annual sales about 2.0 b€

‒ Europe’s largest in folding boxboard. World’s largest in coated white-top fresh forest fibre linerboard

‒ Major uncoated fine and printing paper as well as market pulp supplier

‒ Valuable holdings in Metsä Fibre and Pohjolan Voima

‒ Main customers are brand owners, printers, corrugated packagingmanufacturers, merchants and office products suppliers

‒ Global sales and customer service network in over 70 countries and nine production units in Finland, Sweden and Germany

4

Metsä GroupMetsä Board

Consistent Strategy

5

‒ Paperboard is Metsä Board’s core business‒ Focus on high-quality paperboards

‒ Smaller but healthier paper business‒ Heavy re-engineering and successful divestments

‒ Extensive fibre know-how and pulp self-sufficiency‒ Metsä Board’s role in Metsä Fibre’s planned new pulp mill

in Äänekoski to be clarified latest early next year

‒ Continuous development towards Super Productivity

Largest Folding Boxboard Producers in Europe

Source: Metsä Board, Pöyry Management Consulting Oy

Largest White Top Kraftliner and Fully Bleached Kraftliner Producers in Europe

Holmen

Metsä GroupMetsä Board

Paperboard incl. Market Pulp AccountedAlreadyAbout 75 per cent of Sales

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Sales distribution 1Q 2014

Paperboard 64%

Paper 25%

Market pulp 11%

Sales distribution 2006

Paper 56%

Paperboard 18%Paper merchanting 26%

Metsä GroupMetsä Board

Profitability of Metsä Board’s Core Business is Best in its Field

Operating result excluding non-recurring items, % of sales

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Metsä GroupMetsä Board

Metsä Board’s Productivity Has Been Improved by Almost 70 per cent Since 2006

Year end

8

Capacity per employee in Metsä Board’s board, paper and pulp mills

300

600

900

1 200

1 500

1 800

2006 2007 2008 2009 2010 2011 2012 2013

tonn

es/a

/per

son

Metsä GroupMetsä Board

3019

29

6

2520

24 2636

0

10

20

30

40

50

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

545 522 532 509 535 503 479502 501

0

200

400

600

800

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

-9

1710 9

199

184

21

-10

0

10

20

30

40

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Sales, m€ Operating result excl. non-rec. items, m€

Result before taxes excl. non-rec. items, m€

Results Gradually Improving as the Strategy Implementation Proceeds

9

” Metsä Board’s operating result, excluding non-recurring items, is in the second quarter of 2014 expected to weaken from the first quarter of 2014 due to the annual maintenance shutdowns at Husum mill integrate and at the associated company Metsä Fibre’s Joutseno and Äänekoski pulp mills ”

Metsä Board

Profitable Growth

Metsä GroupMetsä Board

Packaging Materials Is about EUR 600 Billion Business Globally and It Is Growing Strong

Wood fibre based

materials36 %

Others64 %

‒ Growing population

‒ Urbanization

‒ Environmental awareness

‒ Safety

Source: Smithers Pira

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Highest growth inpaperboard packaging, accounting

for the largest share of the total

Metsä GroupMetsä Board

Metsä Board’s High-Quality Paperboards Help the World’s Leading Consumer Goods Companies to Succeed

‒ Increasing sales

‒ Improving sustainability

‒ Securing product safety

‒ Decreasing costs

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Lower quality recycled fibre paperboards

Metsä Board’s grades’ global demand growth 3-4 %/a

Recycled and fresh forest fibre based cartonboards

and linerboards

High-quality fresh forest fibre cartonboards

and linerboards

Metsä GroupMetsä Board

Metsä Board’s Renewed Fresh Forest Fibre Based PaperboardPortfolio Fits Well to Consumer Goods Companies’ Demand

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Consumer Goods Companies

Fresh forest fibre linerboard

Graphicalend-uses

Carton printersMerchants Corrugated box manufacturers

Folding boxboard

Metsä GroupMetsä Board

As the FBB Market Leader Metsä Board Continues Steady Organic Growth and Responsible Pricing in the Domestic Markets in Europe

‒ Metsä Board continues to offer an ecological, safe and cost competitive option for brand owners to replace plastics and recycled fibre board

‒ Totally new business from food service and cup stock end uses‒ Large and fast growing segment

‒ Best-in class customer service concept‒ New advanced supply chain model‒ Good technical service

‒ Healthy price levels a key priority for Metsä Board also in the future

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Sources: Smithers Pira & Metsä Board

Total cartonboard market 7 million t/aDemand growth 2 %/a

WLC 50%FBB 35%SBS 7%CUK 8%

Metsä GroupMetsä Board

Metsä Board Continues Good Growth in the Highest Quality Segment in Asia. Timing not Good for Aggressive Growth

‒ Metsä Board is the cartonboard quality benchmark in Asia

‒ Responsible consumer goods companies promote good packaging

‒ Sustainability‒ Traceable raw materials‒ Product safety

‒ Leading Chinese producers not in general targeting the highest quality segment

‒ Fast demand growth in commodity segment‒ Lack of high quality raw material

‒ Metsä Board continues to grow in Chinese high quality segment and increases activities in other main Asian markets

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Sources: Metsä Board & Risi

Total cartonboard market 15 million t/aDemand growth 5%/a

WLC 73%FBB 22%Others 5%

Metsä GroupMetsä Board

Metsä Board Offers a Sustainable, Safe and Cost-Competitive Option for Consumer Goods Companies in North America

‒ Sustainability and safety increasingly important also for North American brand owners

‒ Consumption mainly in conventional heavy cartonboards

‒ Four leading cartonboard producers dominate US market and most of them are integrated to converting‒ Product development has not been in focus ‒ No investments in new technology and capacity‒ Difficult position for independent non-integrated converters

‒ Timing is perfect for Metsä Board to become a strong long-term partner for local brand owners and converters ‒ Metsä Board’s FBB even over 30% lighter in weight‒ Customer service ability as good as best local players’

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Sources: Smithers Pira & Metsä Board

Total cartonboard market 6,5 million t/aDemand growth 1 %/a

WLC 34%SBS 34%CUK 27%FBB 5%

Metsä GroupMetsä Board

In Addition to Folding Boxboard Metsä Board Develops Strongly and Successfully Its Linerboard Business

‒ Successful transformation of Kemi mill to high end doublecoated segment‒ Profitability to a totally new level‒ Fully booked for several years

‒ Husum’s light weight fully bleached linerboards complete Metsä Board’s offering enabling growth in totally new end uses

‒ Steady decrease of unprofitable paper volumes in Husum

‒ 70 % growth in North America during the past 5 years‒ USA today the biggest single market‒ All leading corrugated box manufacturers as main customers

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Metsä Board’s fresh forest fibre linerboard deliveries in 2013

EMEA 62%

Americas 37%

Asia-Pacific 1%

Metsä Board’s fresh forest fibre linerboard deliveries to North America, 1,000 tonnes

0

30

60

90

120

150

2009 2010 2011 2012 2013

+70%

Metsä GroupMetsä Board

Threshold for New Producers to Enter High Quality Paperboard Segment Is High

‒ 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

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Metsä Board

Conclusions

Metsä GroupMetsä Board

Growth Accelerating by Expansion to North America and Entering New End Use Segments Combined with Steady Organic Growth in Europe

Folding boxboard ‒ Continued steady growth in Europe‒ Aggressive growth in North America to over 200 000 t/a

in mid-term‒ Food service and cup stock deliveries to over

100 000 t/a in mid-term

Fresh forest fibre linerboard ‒ Fully utilize Kemi’s new doublecoated products market

potential‒ Maximize Husum’s light-weight linerboard volumes‒ Total linerboard sales to exceed 650 000 t/a in mid-term

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Paperboard deliveries, 1,000 tonnes

200

500

800

1 100

1 400

2011 2012 2013

1000

tonn

es

+12%

Metsä GroupMetsä Board

Thank you!

QA

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