1
Financial Update and Competitor Benchmarking
Matti Mörsky
Capital Markets’ Day 10 June 2010
10.6.20102
Content
1. Profitability Development2. Benchmarking3. Profit Improvement Programme 20104. Price Increases5. Financing
3
Profitability Development
10.6.20104
Key Figures – Quarterly
Operating result excl. non-rec. itemsSales
623 585 618 606
859 829 826722
602
250
500
750
1000
I II III IV I II III IV I
M€ M€
M€Result before taxes excl. non-rec. items
20092008
-65
714-22
-70
3-1
-51
39
-75
-50
-25
0
25
50
I II III IV I II III IV I
-21 -36 -34
-87
15
-62-83 -70
-15
-100
-75
-50
-25
0
25
I II III IV I II III IV I
2010
10.6.20105
Balance Sheet Ratios
34,4 32,736,637,5
30,9 30,8 29,6
0
5
10
15
20
25
30
35
40
2004 2005 2006 2007 2008 2009 1Q10
8995
86
99
8490
126
0
20
40
60
80
100
120
140
2004 2005 2006 2007 2008 2009 1Q10
Equity Ratio Net gearing
6
Benchmarking
10.6.20107
EBITDA Comparison – Significant Improvement in M-real’s Profitability
-10 %
-5 %
0 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010
M-real
Stora Enso
Holmen
Norske Skog
Portucel
*) Excluding one-offs; Stora Enso 2006 with old structure
10.6.20108
EBIT Comparison
-15 %
-10 %
-5 %
0 %
5 %
10 %
15 %
20 %
25 %
2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010
M-real
Stora Enso
Holmen
UPM
Norske Skog
Portucel
*) Excluding one-offs; Stora Enso 2006 with old structure
10.6.20109
M-real’s Net Gearing Close to Satisfactory Level
0 %
20 %
40 %
60 %
80 %
100 %
120 %
140 %
2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010
M-real
Stora Enso
Holmen
UPM
Norske Skog
*) Stora Enso 2006 with old structure
10.6.201010
Also Equity Ratio Improving
25 %
30 %
35 %
40 %
45 %
50 %
55 %
2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010
M-real
Stora Enso
Holmen
Norske Skog
Portucel
*) Stora Enso 2006 with old structure
10.6.201011
M-real the Most Profitable Cartonboard Company in the 1Q 2010
-2 %
0 %
2 %
4 %
6 %
8 %
10 %
12 %
14 %
16 %
18 %
2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010
M-real ConsumerPackaging
Stora EnsoConsumer Board
Holmen Iggesund
IP - ConsumerPackaging
Mayr-Melnhof MMKarton
*) Excluding one-offs
10.6.201012
Competitiveness in Uncoated Fine Paper Not YetSatisfactory
-16 %
-12 %
-8 %
-4 %
0 %
4 %
8 %
12 %
16 %
20 %
24 %
28 %
2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010
M-real Office Papers
Stora Enso FinePaper
Portucel
Mondi UncoatedFine Paper (half-yearly)
*) Excluding one-offs
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Profit Improvement Programme 2010
10.6.201014
M-real’s Recent Profit Improvement Programmes
Cumulative
Profit impact vs. 2009, m€total target 2010 2011
1 Profit improvement programme 2010 80 40 802 Rollover impact of 2009 programme 60 50 603 Rollover impact of 2008 programme 20 10 20
Total 160 100 160
10.6.201015
Main 2010 Profit Improvement Measures
• Profit improvement measures announced in December 2009– Plan to permanently shut down the Alizay pulp mill– EUR 22 million investment at Husum mill to improve its energy efficiency– New EUR 20 million internal profit improvement programme covering all M-real’s
business areas– The planned closures of two speciality paper machines in Reflex mill– The streamlining of the organizations in both Gohrsmühle and Reflex mills
• Total result improvement EUR 80 million
• Expected result improvement EUR 40 million in 2010
10.6.201016
Value of Action per Business Area – Total 80 M€
5 %3 %
28 %
64 %
Consumer Packaging Office Papers Speciality Papers Market Pulp & Energy
10.6.201017
EBITDA Impact 2010 – Total 40 M€
2
10
28
Consumer Packaging Office Papers Speciality Papers Market Pulp & Energy
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Price Increases
10.6.201019
M-real Shows Market Leadership in Price Increases
• Price increases of about 10% in FBB and linerboard in process– Slight improvement in average price expected by end 2Q– Prices for customers with long-term contracts increased at around year end
• WFU price increase of about 8% implemented in March– Additional 15% from May in negotiations – In total about 10% improvement in average price expected by end 2Q
• Price increases in speciality papers up to 10% in process– At least 3% improvement in average price expected by end 2Q
Increase estimates based on current sales mix and exchange rates
20
Financing
10.6.201021
Interest-Bearing Net Debt
821
1867
777
1254
2403
0
500
1000
1500
2000
2500
3000
2006 2007 2008 2009 1Q 2010
10.6.201022
Long-Term Interest Bearing Liabilities 31.3.2010
155
94
149
583
101
1 122
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015 2016 >2 016
10.6.201023
Next Steps in Financing
• Near-term maturities to be handled with cash and pension loan facilities
• Next major financing arrangements in coming years will include– A new back-up liquidity facility– Refinancing of the EUR 500 million bond (due 2013)
• The timing of new arrangements will be dependent on marketenvironment and overall liquidity situation
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Thank You!