Metso CMD 20021

Metso Paper - Full scope supplier

Metso Capital Markets DayTampere, December 10, 2002

Juhani Pakkala, President of Metso Paper

Metso CMD 20022

• General market trends• Metso Paper’s profitability and growth• Metso Paper in South America• Metso Paper in China• Technology trends• Metso Future Care

Metso CMD 20023

General market trends

Metso CMD 20024

Demand drivers for Metso PaperPopulation 6 billion

Consumption in 2001:• Paper 318 Mt/a, 52 kg/capita/• Wood Pulp 160 Mt/a, (mech. 35 Mt/a, chem. 125 Mt/a)• Recovered paper 150 Mt/a

Number of existing lines, end of 2001:• Paper machines, wire width > 3.5 m 2460, total number 8066• Chemical pulp mills 520

Growth of consumption:• Paper 2.2% /a, 8.5 Mt/a -average• Wood Pulp 1.7% /a 2.7 Mt/a -average• Recovered Paper 3.4% /a 5.1 Mt/a -average

Number of lines required :• New paper machines, wire width > 3.5 m 33/a, total 70/a• Paper machine rebuilds 140/a, total 220/a• New chemical wood pulp lines 3/a

Metso CMD 20025

Top producers and consumers 2001

P&B production(1,000 tons)

P&B consumption(1,000 tons)

P&B consumptionper capita (kg)

1 USA 80,759 1 USA 87,933 1 USA 3242 China 32,000 2 China 38,180 2 Belgium 2953 Japan 30,731 3 Japan 30,836 3 Denmark 2704 Canada 19,686 4 Germany 18,543 4 Canada 2505 Germany 17,879 5 UK 12,516 5 Sweden 2476 Finland 12,503 6 Italy 10,734 6 Japan 2427 Sweden 10,534 7 France 9,680 7 Austria 2418 Korea 9,724 8 Canada 7,875 8 Switzerland 2329 France 9,630 9 Korea 7,850 9 Norway 228

10 Italy 8,924 10 Brazil 6,618 10 Netherlands 227

Source: PPI Annual Review 2002

Metso CMD 20026

GDP and paper and paperboardconsumption per capita

Low- to medium-income regions with vast population such as Asia-Pacificand Latin America represent the biggest potential for the paper industry’sgrowth in the long term.

0

100

200

300

400

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

GDP per capita, USD 2000 prices

Consumption 2000, kg per capita

Japan

USA

Denmark

Sweden

Ireland

UKFinland

CanadaNetherlands

Austria

Belgium

Singapore

Germany

France

AustraliaItaly

Spain

NewZealand

Rep. of Korea

Malaysia GreecePortugal

ArgentinaMexico

VenezuelaBrazil

Turkey

SouthAfrica

Russia

China

India

Metso CMD 20027

Source: PPI Annual Review 2001

Paper and board consumption per capitavs. population 2000

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Africa

Australasia

Asia

Latin America

North America

East Europe

Other W. Europe

EU

Population, millions

0 50 100 150 200 250 300 350 400P&B Cons/Capita, kg

Population

Paper and BoardConsumption / Capita

Metso CMD 20028

Leading paper companies in the world 2002The world paper industry has gradually adopted a global strategic orientation.The globalisation trend is expected to continue, with the strongest firms seekinggrowth through acquisitions and new investments in overseas markets.

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

Stora Enso

International Paper

UPM-Kymmene

Oji

Georgia-Pacific

Smurfit-Stone

Weyerhaeuser

Nippon Unipac

Abitibi-Consolidated

M-real

Capacity 1,000 t/a

North America

Western Europe

Eastern Europe

Latin America

Asia

Rest of the World

Metso CMD 20029

0

5

10

15

20

25

30

35

1990 1999 2001

Top 10 supplier companies Share of Paper and Board Capacity in the world

Source: Dernecon

%

Metso CMD 200210

Market trends

• Less new machines - more rebuilds• Fewer customers• Overcapacity on supplier side• Full scope supplies• Automation increasing• Increased importance of environmental factors

- recycling- water usage- energy consumption

• Higher productivity

Metso CMD 200211

Metso Paper’s profitability and growth

Metso CMD 200212

Preferred supplier

Metso aims to be the supplier from whom customersprefer to purchase. To achieve this we shall:

• be the leader in technology• approach our customers as one company• represent the most extensive, production line wide

scope of processes and service• have the best references in the industry, being the

leader in quality, process and project performance• utilize customer oriented, effective working methods in

our empowered, multiskilled organizations

Metso CMD 200213

Good return and growth

Our target in growth and profitability is to reach the corporatefinancial targets (OP, ROCE, EVA) over the business cycle.

• Our prices and income correspond with the value createdby our differentiated processes and service

• Competitive costs of our products and service will besecured by continuous development of our businessprocesses and working methods

• Our controlled growth is faster than the average growth inthe industry ensuring our leading position in the marketon the targeted profitability level

Metso CMD 200214

Major developments 2000-2002 (1/2)

• Restructuring of units• Sales office network reorganized• Beloit takeover successful• Customer Relationship Management program• Pulp & Paper Portal• New technology centers in Karlstad• New service center in Wuxi• New doctor blade factory for Pinaltek in Varkaus• New logistics and service center in Beloit, WI

Metso CMD 200215

Major developments 2000-2002 (2/2)

• New service technology centers under construction- Oulu- Järvenpää- Raisio- Sorocaba

• New service logistics center in Jyväskylä• New Winding Technology Center in Järvenpää• New RTD center under construction in Anjalankoski• Remote diagnostics centers

- Jyväskylä- Järvenpää- Pori

Metso CMD 200216

Metso Paper in South America

Metso CMD 200217

Metso Paper –serving the needs of a growing market

Latin American pulp & paperindustry• pulp production is increasing rapidly• higher efficiency and better quality

is expected from existing pulp &paper production lines

• the region’s industry has invested inadvanched fiber and paperproduction lines, includingdeliveries from Metso Paper

Latin America

Population 520,000,000Paper and boardproduction/tons 15,000,000Pulpproduction/tons 12,000,000Paper consumptionper capita/kg 36

Cenibra

Inpacel

Klabin, Riocell

Cia. Suzano de PapelVCP, Jacarei

Celucat

VCP, Luis Antonio

Cocelpa

Santiago

Arauco CMPC, LajaInforsa CMPC, PacificoBio bio

Bahia Sul

Klabin

Klabin-Bacel

Jarcel

International

TucumanLedesma

Buenos AiresProtisa

FamiliaKimberly

Bogota

Caracas

ManpaKimberly

São Paulo

Metso CMD 200218

The Metso Center in 2003

Metso CMD 200219

Latest major orders from Brazil and Chile• VCP, Jacarei, SP, Brazil ECF Fiberline• VCP, Jacarei, SP, Brazil Pulp drying line• VCP, Piracicaba, SP, Brazil Coating color kitchen• Klabin, Monte Alegre,PR, Brazil LPB, On-line coater rebuild,

OptiCoat Duo, OptiSizer• Klabin, Monte Alegre, PR,Brazil LPB, On-line coater

rebuild, OptiCoat Duo• Suzano, Suzano, SP, Brazil Coating color kitchen rebuild• Suzano, Suzano, SP, Brazil Soft calender for WFC• Jari, Munguaba, PA, Brazil Woodhandling, Drying machine rebuild• Ripasa, Americana, SP, Brazil Coating color kitchen• Mederera Miquel Forte, União de Victoria, PR, Brazil Coating color kitchen• RioCell, Porto Alegre, RS, Brazil Cutter and baling line rebuild

• Celulosa Arauco, Valdivia, Chile Fiberline• CMPC, Pacifico, Chile Fiberline upgrade

Metso CMD 200220

Metso Paper in China

Metso CMD 200221

Paper & board demand prospectsin China, European Union and USA

1.1%

3.2%

9.2%6.4%

2.1%

0.9%

4.3%

1.5%0.6%

Forecast

Source: Oinonen

0

20

40

60

80

100

120

1990 2000 2010 2020

Million Tons

USA

EU

China

Metso CMD 200222

Production and net trade of paper &board in China 1997-2015

Million tons

Source: Jaakko Pöyry Consulting

As of 2002, Based on Estimates Only

10

20

30

40

50

60

70

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Production Net trade

Metso CMD 200223

Reference map - ChinaPaper, Board, Tissue Machines

Jiamusi Paper Mill

Jilin Paper Yantai First PaperShandong Chenming Shouguang

Shandong Sishui Jinyi

Yue Yang

Zhanjiang Guanhao Paper

Guangzhou Paper Mill

Zhenjiang Dadong PaperUPM-Kymmene Changshu

StoraEnso Suzhou

Liujiang Zhejiang Zhenzhou Paper Huzhou

Shandong Huazhong

Nanping Paper

Ningxia Meijie

Kimberly-Clark Shanghai

Qing Shan Paper Mill

Black Dragon Paper, Qiqihar

Nine Dragons Paper

Jiangsu Gold East Paper

Order Backlog

Delivered

Sun Paper

Shanghai Xinghuo Wuhan Chenming Hanyang Paper

Jilin Shixian Paper, Tumen

Guitang Tissue

HengAn Changde Tissue

APP Gold Hongye Tissue

Vinda Tissue

Yoong Foong Yu Kunshan Mill

P&G Suzhou Tissue

Weifang Tissue

Luohe Tissue

TissueDongguan Jinzhou

Dongguan Jianhui

Ning Shin Dev. Ningbo

Metso CMD 200224

Reference map - ChinaPulping Lines

Jiamusi, HeilongjianglJilin Paper

Shandong HuataiShandong Sun Paper

Shandong Sishui Jinyi

Sichuan Yibin

Guangzhou

UPM-Kymmene ChangshuStoraEnso Suzhou

Scott Shanghai

Zhuhai Hongta Renheng

Zhejiang Minfeng

Shandong Jining

Fujian Nanping

Shanghai Xinlun

Fujian Qingshan

Black Dragon Paper, Qiqihar

Nine Dragons Paper

Stock Preparation

Shandong Chenming

Mechanical PulpingChemical Pulping Zhanjiang Guanlong

Xinjiang Bositenghu

Xinjiang Tianxi

Fujian Jiangle

Sichuan Leshan

Hangzhou XinhuaSichuan Yongfeng

Guangxi Hexian

Yue Yang

Ning Shin Dev. Ningbo

Metso CMD 200225

Technology trends

Metso CMD 200226

Metso Paper Technology centersPaper Making Lines, PML

• Jyväskylä• Järvenpää• Anjalankoski• Turku• Clarks Summit• Hollola• Raisio

Board Making Lines, BML• Karlstad

• Järvenpää• Turku

Tissue Making Lines, TML• Karlstad

• Biddeford• Gorizia• Järvenpää

Finishing, FIN• Järvenpää

• Hollola• Raisio

Chemical Pulping Lines, CPL• Pori

• Sundsvall • Turku

Mechanical Pulping Lines, MPL• Valkeakoski

• Anjalankoski• Sundsvall

Converting Lines, CNV• Bedford, Casale

Jyväskylä

Hollola

Valkeakoski

AnjalankoskiJärvenpää

RaisioTurku

Pori

Sundsvall

Karlstad

Biddeford

Clarks Summit

Casale

Bedford

Gorizia

Metso CMD 200227

Changes in papermaking in the future

• Products are changing in function and form• Electronic media will dramatically increase its share of

total media• Digital printing will become main printing method• Product technology changing eg disposable optics and

electronics in packaging through implantation of nano-particles within paper structure

• Intelligent paper and packaging, printed electronics• Process technology broadening eg embossing, printing,

laminating, vacuum coating

Metso CMD 200228

Changes in papermaking in the future

• Demand for lower tonnages of customized products withshort delivery times

• Raw materials- Fine paper Kraft DIP, PGW, TMP- Newsprint 100% DIP

• Environmental Issues- fresh water usage 9-12 m³/t 2 m³/t 0 m³/t- ultra- and nanofilter technologies

• Process simplification- OptiFeed, sensors,Single nip presses, Extended Roll Covers

Metso CMD 200229

Metso Paper machinesDesign speed development / generations

Metso CMD 200230

Metso Future Care

Metso CMD 200231

Future Care gives more added value

Performance Management

Predictive Maintenance

Proc

ess

perf

orm

ance

No Maintenance

Corrective Maintenance

Preventive Maintenance

Start-up Continuous production

Metso CMD 200232

Daily operations and maintenance

Performance

Intelligent product

Performance ProviderFour level approach to life-cycle management

A full scope performance provider:products and services in all levels according tocustomer needs

Service level

Product level

Predictive

Monitor ableproduct

Preventive

MaintainableproductCorrective

Basic product

MachineSupplier

SolutionProvider

Perfor-mance

Provider