Metsä Board CorporationCEO’s Review

Mika Joukio2019 Annual General Meeting

Contents

• Metsä Board today

• Profitability guides our future

growth

• Sustainability is at the core

of our business

• Strong performance in 2018

• Summary

• We are the #1 producer in folding boxboard and white

kraftliner in Europe and the #1 producer in coated white

kraftliner globally

• Strong market trends, such as sustainability and

urbanisation, increase the demand for our products

• Our customers are brand owners, converters and

merchants

• We have strong fibre know-how and high self-sufficiency

in pulp

• Eight production units in Finland and Sweden

Metsä Board today Folding boxboard

56 %

White kraftliner

26 %

Market pulp 18 %

EMEA74 %

Americas19 %

APAC8 %

Sales split by product 2018

Sales split by region 2018

EUR

1 944million

EUR

1 944 million

2019 AGM 3

Our

VISION

isto be

creating valuefor customers globally

THE PREFERRED SUPPLIER OF

PREMIUM PAPERBOARDS,

2019 AGM 4

SUSTAINABILITY

We use only renewable fresh fibres from sustainably managed northern forests

FOOD SAFETY

We have good control of raw materials, which guarantees purity and safety in food contact uses

E-COMMERCE

Our paperboards offer a strong promotion and branding experience

Our fresh fibre paperboards offer solutions for global trends

GLOBALISATION AND URBANISATION

We offer recyclable products that are ideal for the circular economy

6

We have a strong market position

35% 32%

Folding boxboard in EuropeTotal capacity 3.8m tonnes

White kraftliner in EuropeTotal capacity 2.1m tonnes

Metsä

Board

#1

#2

#3

#4

#5

Others Metsä

Board

#1

#2

#3

#4

#5

Others

2019 AGM

Our production is close to our main raw material

7

Husum, SWE400,000 t/a FBB

250,000 t/a WKL

730,000 t/a Pulp

Kemi425,000 t/a WKL

610,000 t/a Pulp*

Kaskinen370,000 t/a BCTMP

Kyro190,000 t/a FBB

Äänekoski255,000 t/a FBB

1.3 million t/a Pulp*

Simpele290,000 t/a FBB

Joutseno330,000 t/a BCTMP

690,000 t/a Pulp

Tako210,000 t/a FBB

Wood sourced from

Finland, Sweden, the

Baltics and Russia.

*Metsä Fibre mill

Our net balance in pulp, including the

ownership in Metsä Fibre, is 600,000 t/aTotal paperboard capacity

2 million t/a

2019 AGM

FBB = folding boxboard

WKL = white kraftliner

BCTMP = bleached chemi-thermomechanical pulp

We have created shareholder value with focused

strategy

Enterprise value, EUR million

0

500

1000

1500

2000

2500

3000

3500

2012 2013 2014 2015 2016 2017 2018

Net debt, EUR million

Market capitalization, EUR million

Dividend, EUR and payout ratio, %

0%

25%

50%

75%

100%

0,00

0,05

0,10

0,15

0,20

0,25

0,30

2012 2013 2014 2015 2016 2017 2018

Dividend, EUR Dividend/EPS, %

8

CAGR in dividend

+30%in 2012–2018

2019 AGM

Year 2018 is a Board’s proposal to AGM to be

held on 28 March.

Total distribution consists of a dividend of 0.10

and other distribution of equity of EUR 0.19

Profitability guides our future growth

We have been growing well above average market growth rate

during past few years …

0

500

1 000

1 500

2 000

2013 2014 2015 2016 2017 2018

White kraftliner Folding boxboard

Metsä Board’s annual paperboard deliveries, CAGR 2013–2017: 12%

Annual global

demand growth for

folding boxboard

and white kraftliner

is estimated to be

3%

Source: Metsä Board´s own research

1,0

00 t

onnes

2019 AGM

Investments in growth 2011–2018:

2018 New baling line in Kaskinen BCTMP mill:

30,000 new BCTMP capacity

New sheeting line in Äänekoski (to be in

production 9/2019)

2017 New extrusion coating line in Husum:

100,000 t/a PE coating capacity

2015–16 New folding boxboard production line in

Husum: 400,000 t/a of FBB and linerboard

production line conversion: 250,000 t/a of

WKL

2011–12 Debottlenecking in Simpele, Äänekoski and

Kyro mills: total 150,000 t/a of FBB

11

…driven by capacity increases

0

30

60

90

120

150

180

2011 2012 2013 2014 2015 2016 2017 2018 2019E

Maintenance capex Growth capex Depreciation

Capital expenditure and depreciation

EU

R m

illio

n

2019 AGM

• Our top priorities are:

– to keep ROCE above 12% and

– to generate the highest possible

shareholder value

• We will continue small and medium-

sized investments at our current

production facilities

• In medium term, this means moderate

growth and a strong focus on

profitability

12

Focus in profitability

2019 AGM

0%

2%

4%

6%

8%

10%

12%

14%

16%

Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18

Comparable ROCE-%, Quarterly

13

Our ROCE is above the targeted level …FY 2018 ROCE was 14.4% (2017: 11.2)

Target: over 12%

2019 AGM

541 488 464 458 495 437 358 335 388 344 335

2,1 2,12,0

1,92,0

1,7

1,21,1

1,2

1,0 1,0

0,0

0,5

1,0

1,5

2,0

2,5

3,0

0

100

200

300

400

500

600

6/2016 9/2016 12/2016 3/2017 6/2017 9/2017 12/2017 3/2018 6/2018 9/2018 12/2018

Net debt, EUR million Net debt to comparable EBITDA (12 months)

14

… and we have a strong financial position

Net debt / comparable EBITDA <2.5

EU

R m

illio

n

2019 AGM

Sustainability is the core of our business

2019 AGM

RAW MATERIALS AND SUPPLY CHAIN

We are committed to high performance on sustainability

Share of certified wood:

PERFORMANCE 2018

79%TARGET

>80%

Fossil CO2 emissions per product tonne

2009–2020:

PERFORMANCE 2018

-48%TARGET

-30%

Energy efficiency improvement

2009–2020:

PERFORMANCE 2018

11.7%TARGET

12%

Process water use per product tonne

2010–2020:

PERFORMANCE 2018

-20%TARGET

-17%

Coverage of Code of Conduct training:

PERFORMANCE 2018

97%TARGET

100%

Lost-time accidents frequency annually

(LTA1: 7.5): *

PERFORMANCE 2018

+15.9%TARGET

-10%

Sickness absenteeism:

PERFORMANCE 2018

3.5%TARGET

<3%

RESOURCE EFFICIENCY

AND ENVIRONMENTAL

IMPACTS

STAKEHOLDERS

AND SOCIAL IMPACTS

2019 AGM 16

*Long-term target is zero accidents.

Leader in Sustainalytics’

assessment in May 2018.

A rating of AAA in the MSCI

ESG Ratings assessment in

June 2018.

Metsä Board was awarded

“Prime” status in ISS-oekom

corporate responsibility rating in

May 2018

We were awarded several external recognitions in

sustainability in 2018

2019 AGM 18

We need alternatives to fossil-

based packaging materials …

… and solutions to combat

climate change.

Replacing plastic

ecological

durable

RENEWABLE

LIGHTWEIGHT

consumer’s choice

recyclable

NATURAL

TRACEABLE

Pure and safe

− opportunities for several packaging solutions

PACKAGING MATERIALOF THE FUTURE

Fresh fibre paperboard is a

• Fresh fibre paperboards can help replace non-renewable

packaging materials

• We launched a new eco-barrier paperboard in 2018

– Metsä Board’s eco-barrier paperboard holds an industrial

compostability certification

• Focus areas for Metsä Board’s R&D:

– Sustainable lightweighting of paperboards

– Barrier boards development

2019 AGM 20

Brand-owners seek more

sustainable packaging solutions

Metsä Board Corporation

FY 2018 ResultsPresentation material

7 February 2019

Strong performancein 2018

• Increased prices of folding boxboard and white

kraftliner

• All-time-high delivery volumes of paperboards

• Strong pulp market supported profitability

• Cost inflation accelerated and wood prices rose

• Several annual production records in different

production lines

• In Husum, profitability improved better than

expected

• Investment in Kaskinen BCMTP mill

Highlights from 2018

2019 AGM 22

Our sales increased and profitability improved

SalesEUR million

445 474 479 451 492 519 475 4580

100

200

300

400

500

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

45 44 50 54 69 59 64 60

10,2 %9,2 %

10,5 %

12,1 %

14,0 %

11,4 %

13,4 % 13,1 %

0%

4%

8%

12%

16%

0

20

40

60

80

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

23

Comparable operating resultEUR million and % of sales

EU

R m

illio

n

EU

R m

illio

n

1–12/2017:

EUR 1,849 million

1–12/2018:

EUR 1,944 million

1–12/2017:

EUR 194 million

(10.5% of sales)

1–12/2018:

EUR 252 million

(13.0% of sales)

2019 AGM

+ 5% + 30%

Source: Thomson Reuters Datastream/ Fastmarkets Ltd, Metsä BI

Strong pulp market supported our profitability

24

Price development in long-fibre pulp (PIX) in Europe and in China

• Higher production and delivery volumes

from Metsä Fibre supported Metsä Board’s

result in 2018

• Growing uncertainty especially in the pulp

market in China towards the year end

• In the long-term, pulp demand is

supported by

• Limited new capacity in the coming years

• Restrictions on recycled paper imports in

China

2019 AGM

Long-fibre pulp, Europe Long-fibre pulp, China (net)

• Higher wood prices resulted in over EUR 30 million cost

increase in 2018 vs. 2017

• Increased transportation costs in the US had EUR 10

million impact

• General cost inflation accelerated in 2018, but slowed

down towards end of the year

• Negative result impact from FX changes was EUR 54

million

25

Costs and FX impacts in 2018

2019 AGM

• Market trends support the demand for

ecological fresh fibre paperboards

• Delivery volumes and selling prices of

paperboards have developed

favourably

• Long-term market outlook for pulp is

good

• Availability and origin of wood raw

material is a key competitive factor

• In the near future our focus is on

profitability with moderate growth

2019 AGM 26

Summary