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