Metsä Group Result 2018...4 7.2.2019 Metsä Group Sales Metsä Group –Result 2018 EUR million 4,970 5,016 4,658 5,040 5,709 0 1000 2000 3000 4000 5000 6000 2014 2015 2016 2017 2018

Metsä GroupResult 2018

Ilkka HämäläPresident & CEO

7 February 2019

• Sales EUR 5,709 million (2017: EUR 5,040 million)• Operating result* EUR 849 million (EUR 566 million)• Operating result* 14.9% of sales (11.2%)• Return on capital employed* 16.8% (12.3%)• Sales increased due to greater delivery volumes and higher pulp

and paperboard prices• Operating result grew mainly due to increase in pulp deliveries and

prices as well as positive development in paperboard business• Exchange rate fluctuations had a negative effect of around EUR 135

million on the operating result, compared to 2017. The effect wasmainly attributable to US dollar

7.2.2019 Metsä Group2

Excellent financial result forMetsä Group

Metsä Group – Result 2018

*comparable

• The demand for and market price of pulp declined in China towardsthe end of the fourth quarter

• Paperboard deliveries declined from the previous quarter mainlydue to the seasonal decline

• Metsä Board started up a new baling line at the Kaskinen mill, andannounced an investment in a new sheet-cutting line at Äänekoski

• Metsä Tissue’s new converting lines at the Žilina and Raubach millsstarted up. The renewal of the baking paper machine at Düren wascompleted

• Metsä Tissue commenced a strategic review concerning theStotzheim mill in Germany

• The construction of the textile fibre demo plant at Äänekoskibioproduct mill commenced in October

7.2.20193

Events in the fourth quarter of 2018


Metsä Group


Sales


EUR million

4,970 5,0164,658

5,040

5,709

0

1000

2000

3000

4000

5000

6000

2014 2015 2016 2017 2018


1 2541 2651 2041 2481 255

1 3301 2251 2051 1561 1841 1431 1751 2161 2351 260

1 3281 4281 477

1 3861 419

0

400

800

1 200

1 600

Sales quarterlyMetsä Group – Result 2018

EUR million


Comparable operating result


EUR million

418

537

439

566

849

0

200

400

600

800

1000

2014 2015 2016 2017 2018


10592

104117

129 137149

123109

120103 107

128 119134

185

208 210223

208

0

50

100

150

200

250

Q1/14 Q2 Q3 Q4 Q1/15 Q2 Q3 Q4 Q1/16 Q2 Q3 Q4 Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4


EUR million

Comparable operating result

Change in comparable operating result



EUR million

Comparable operating result 2017 566

Sales prices 579

Sales volumes 97

Exchange rates -135

Raw materials and energy -174

Employee costs -17

Maintenance and other fixed costs -19

Depreciation -31

Other -16

Comparable operating result 2018 849

Items affecting comparability



EUR million 2018

Operating result (IFRS) 843.0

Items affecting comparability:

Metsä Board / Efficiency improvement program at Husum mill -4.1

Metsä Board / TVO divesting Meri-Pori coal-fired power plant -1.7

Metsä Board / other +0.2

Items total -5.6

Comparable operating result 848.5


Comparable ROCEMetsä Group – Result 2018

11.4

13.6

10.2

12.3

16.8

0

4

8

12

16

20

2014 2015 2016 2017 2018

%

Target* > 12%

*Target increased from earlier 10%


Equity ratio


37.943.2 43.9 45.0

53.1

0

10

20

30

40

50

60

2014 2015 2016 2017 2018

%


Interest-bearing net liabilities


938

610

1,033 993

463

0

300

600

900

1 200

1 500

2014 2015 2016 2017 2018

EUR million


Capital expenditure


143

492

758

608

272

0

200

400

600

800

2014 2015 2016 2017 2018

EUR million


Personnel


10,4109,599 9,300 9,126 9,310

0

3 000

6 000

9 000

12 000

2014 2015 2016 2017 2018

Wood delivery volumes at record level• The supply of wood in Finland was good. Rising

stumpage prices stabilized during the secondhalf of the year

• Harvesting and transport conditions in Finlandwere good throughout the year

• Early in the year, there was scarcity of wood inthe Baltic Sea region, due to the weather in theautumn and early winter. Market situationbalanced at the end of the year

• Metsä Forest delivered approximately 36.4million cubic metres (32.0) of wood

• 35% of wood acquired from private forestowners was purchased by digital means. In thesale of forest management services, the figurewas 42%


Sales and comparable operating resultEUR million

Metsä Forest – Wood Supply and Forest Services

401 378 356399

433397 376

429490 496

471526

7,86,5

7,78,9 8,5

4,45,9 5,4

8,7

5,8

8,9 8,9

0

3

6

9

12

15

18

0

100

200

300

400

500

600

Sales Operating result

Good demand for engineered wood products.UK market was challenging

• Sales of engineered wood products remained at lastyear’s level. Sales of the UK business declined

• Sales price rose thanks to price increases and abetter product mix

• Challenges in production declined delivery volumes• The profitability was weakened by cost inflation, a

decline in the profitability of the UK business and thecosts from the new mills

• Production began in August at the new birchplywood mill in Pärnu, Estonia

• Construction of Kerto LVL line at Punkaharjuproceeded according to schedule towards the start-up in the first half of 2019



Metsä Wood – Wood Products Industry

121130

115 115 120 122110 108 109

119106 108

8,2

13,2

9,08,3

10,7

8,47,6

6,96,2

5,5

2,82,2

0

3

6

9

12

15

0

30

60

90

120

150


Excellent performance thanks to strong pulp demand• Higher pulp prices as well as deliveries as a result

of the bioproduct mill increased sales and operatingresult

• Strong demand in the pulp market during the firstthree quarters increased prices to all-time high

• The USD-denominated average market prices oflong-fibre pulp rose by 32% and short-fibre pulp by26% compared to the previous year

• Slowdown in economic development in Chinareduced local prices of and demand for pulp at theend of the year

• Delivery volumes of sawn timber decreased. Theprices of sawn timber developed favourably untilthe autumn, after which they took a downward turn



Metsä Fibre – Pulp and Sawn Timber

409 423389 416 422 427

475

552601 629

609630

61 53 46 54 5571 68

126145

165

187172

0

40

80

120

160

200

240

280

0

100

200

300

400

500

600

700



Pulp price (PIX) 2010–2018

Metsä Fibre – Pulp and Sawn Timber

400

600

800

1000

1200

1400

400

600

800

1000

1200

1400

´10 ´11 ´12 ´13 ´14 ´15 ´16 ´17 ´18

Hardwood/EUR Softwood/EUR Hardwood/USD Softwood/USD

USD EUR

Lähde: Foex

Good price and delivery development also in paperboard

• Sales and profitability improved thanks to higherprices of paperboard and market pulp as well asincreased folding boxboard deliveries

• Increased pulp production and delivery volumesof the associated company Metsä Fibre’s pulphad a clearly positive effect on results

• The production costs increased due to higherwood prices and road transport costs in the USA

• Exchange rate fluctuations had a negative effectof approximately EUR 53 million compared to theprevious year



Metsä Board – Paperboard Industry

436 423 440 422 445474 479

451492

519475 458

35 36 34 33

45 4450 54

6959

64 60

0

20

40

60

80

100

120

0

100

200

300

400

500

600



600

700

800

900

1000

1100

1200

2011 2012 2013 2014 2015 2016 2017 2018

Folding boxboard White-top kraftliner Sources: Fastmarkets RISI & Fastmarkets FOEX

Prices of folding boxboard and white-top kraftliner inEurope 2011–2018EUR/tonne

Metsä Board – Paperboard Industry

Production efficiency of tissue and greaseproofpapers to be improved

• Growth in sales was mainly attributable toincreased deliveries and higher prices

• Operating result was weakened by cost inflationwhich could not be passed on in full to end-productprices

• Also exchange rates had a negative result impact• At the end of the year, Metsä Tissue commenced

an operational review aiming at improving internalefficiency

• The strategic review of the Stotzheim mill inGermany explores short term profitabilityimprovement possibilities as well as the mill’spossible divestment or closure



Metsä Tissue – Tissue and Greaseproof Papers

246 249 247 249 252 251 250 261 259 256 254270

13,5 13,215,8

20,6

17,616,3 16,8

23,3

12,3 11,5

6,4 6,1

0

5

10

15

20

25

30

0

50

100

150

200

250

300


• Wood demand will focus on thinning sites to be harvested when theground is unfrozen and, in terms of energy wood, on crown wood

• Outlook for spruce plywood is good but the birch plywood is subjectto uncertainty. The outlook of Kerto LVL products is primarily stable

• Demand for pulp and sawn timber is expected to remain good in2019, provided that global economic growth is in line with forecasts

• Paperboard deliveries in the Q1 are expected to rise slightly.Folding boxboard market prices in local currencies are expected torise, and the average prices are increased also by optimising thesales mix

• Demand for tissue and greaseproof papers is expected to remainstable. Demand for tissue paper increases in Central East Europe,and for greaseproof papers in Asia. Profitability is burdened by thehigh raw material prices


Summary

Market outlook

• Metsä Group’s comparable operatingresult is in the first quarter of 2019expected to weaken from the fourthquarter of 2018


Near-term result outlook

Summary

Documents

Metsä Group Result 2018...4 7.2.2019 Metsä Group Sales Metsä Group –Result 2018 EUR million 4,970 5,016 4,658 5,040 5,709 0 1000 2000 3000 4000 5000 6000 2014 2015 2016 2017 2018