metsä board · 2018-11-30 · 3 investment highlights of metsä board folding boxboard 55 % white...
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Metsä Board
Investor presentationJanuary–December 2018
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Investor presentation
1-9/20182
Contents
Metsä Board in brief 3
Operating environment and demand drivers 15
Main contributors in Metsä Board’s profitability 23
Results: January–September 2018 29
Balance sheet and financing 39
Sustainability and product safety 43
Sustainability guides our R&D work 55
Owners and management 66
Contact information 70
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3
Investment highlights of Metsä Board
Folding boxboard55 %
White kraftlainer
27 %
Market pulp18 %
Sales split
by productSales split
by market area• We are pure-play paperboard company
focused on premium fresh fibre
paperboards
• Global trends, e.g. sustainability and
urbanization drive the demand for
ecological and lightweight packaging
• We have a strong market position …
• … and good control of wood raw
material and self-sufficiency in pulp
EMEA70 %
Americas23 %
APAC7 %
FY 2017:
EUR 1,849m
FY 2017:
EUR 1,849m
Our total paperboard capacity is
2m tonnes/yearof which
1/3 are white kraftliners and
2/3 folding boxboard Investor presentation
1-9/2018
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Folding boxboards
Packaging solutions for consumer goods
Food service boards
Solutions for food service
White kraftliners
Retail-ready tray and point-of-sale solutions
Our light, pure and safe paperboards have various
end-uses…
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5
… and we have a broad customer base
BRAND OWNERS
FOLDING BOXBOARD WHITE KRAFTLINERS
MERCHANTS
CORRUGATED BOX
MANUFACTURERS
CONVERTERS
Investor presentation
1-9/2018
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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 & urbanisation
We offer recyclable products that are ideal for the circular economy
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7
We have a leading position in Europe
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
• Our regional sales split:
70% EMEA
23% Americas
7% APAC
• In APAC we focus on high-
quality FBB segment
• We are the largest European
importer of FBB to US
• We are #1 in coated white
kraftliners globally
Investor presentation
1-9/2018
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Wood products Paperboard
METSÄ
TISSUE
METSÄ
FOREST
Wood supply and
forest services
METSÄ
FIBRE
Pulp and sawn
timber
METSÄ
WOOD
METSÄ
BOARD
Tissue and
cooking papers
Group’s parent company, owned by 104,000 Finnish forest owners
METSÄLIITTO COOPERATIVE
METSÄ GROUP
METSÄ BOARD
OWNS 24.9%
• High availability of northern wood
• Consistent quality of fibres that are tailor-made for the end products
We have good control of wood raw materials,
from forests to pulp and board production
Through Metsä Fibre’s ownership Metsä
Board’s annual net pulp balance is
550,000 tonnes long in 2018Investor presentation
1-9/20188
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Our production is close to our main raw material
9
Husum, SWE400,000 t/a FBB
270,000 t/a WKL
730,000 t/a Pulp
Kemi420,000 t/a WKL
620,000 t/a Pulp*
Kaskinen370,000 t/a BCTMP
Kyro190,000 t/a FBB
Äänekoski240,000 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,
Baltics and Russia.
*Metsä Fibre mill
Our net balance in pulp in 2018,
including the 24.9% ownership in
Metsä Fibre, is 550,000 t/a
Total paperboard capacity:
Folding boxboard (FBB): 1.33m t/a
White kraftliner (WKL): 690,000 t/a
Investor presentation
1-9/2018
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Our focused strategy has increased shareholder value
Enterprise value, EUR million
0
500
1000
1500
2000
2500
3000
3500
2012 2013 2014 2015 2016 2017 9/18
Market capitalization, EUR million
Net debt, EUR million
Dividend, EUR and payout ratio, %
0%
20%
40%
60%
80%
100%
0,00
0,05
0,10
0,15
0,20
0,25
2012 2013 2014 2015 2016 2017
Dividend, EUR Dividend/EPS, %
10
CAGR in dividend
+30%in 2012–2017
Investor presentation
1-9/2018
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Our financial targets aim for profitable growth
and a strong balance sheet
Comparable ROCE, %
9,1
11,3
8,1
11,2
14,1
2014 2015 2016 2017 LTM
1,8
1,2
2,0
1,21,0
2014 2015 2016 2017 9/2018
Net debt / comparable EBITDA
10%
13%12%
15%
6%
2014 2015 2016 2017 LTM
Annual growth in total paperboard deliveries, %
Target is to
exceed
relevant
market
growth,
3%/a
Dividend policyWe aim to distribute at least 50% of our
result for the financial period in annual dividends
Target >12% Target <2.5
1111Investor presentation
1-9/2018
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12
We have been growing at a CAGR of 12% –
well above average market growth…
0
500
1 000
1 500
2 000
2013 2014 2015 2016 2017 LTM
White kraftliner Folding boxboard
Metsä Board’s annual paperboard deliveries
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
Investor presentation
1-9/2018
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Growth capex:
2011–12 Debottlenecking in Simpele, Äänekoski and Kyro mills: total 150,000 t/a of FBB
2015–16 New folding boxboard production line in Husum: 400,000 t/a of FBB and linerboard production line conversion: 270,000 t/a of WKL
2017 New extrusion coating line in Husum: 100,000 t/a PE coating capacity 13
…driven by capacity increases
0
30
60
90
120
150
180
2010 2011 2012 2013 2014 2015 2016 2017 2018E
Maintenance capex Growth capex
Depreciation
Capital expenditure and depreciation
EU
R m
illio
n
NEXT STEPS
• Focus on profitability
– To keep ROCE above 12% and
– To generate the highest possible
shareholder value
• The best returns can be achieved from
medium-sized investments to increase
the capacity of our current production
lines
• In medium term, this means moderate
growth and a strong focus on profitability
Investor presentation
1-9/2018
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• Our free cash flow has improved due to
– Improved profitability
– Decreased capex
– Good working capital discipline
• Capital allocation in the near future
– Dividend: supported by strong performance
– Capital structure: deleveraging continues to levels
below 1.0x
– CAPEX: return-based allocation (ROCE above 12%)
-40
-20
0
20
40
60
80
-100
-50
0
50
100
150
200
2013 2014 2015 2016 2017 LTM
FCF, EUR million FCF/EBITDA,%14
Our cash flow generation is back on track after the
heavy investment years of 2015–2016
EUR million %
Free cash flow in EUR million and % of EBITDA
Comparable EBITDA (LTM) EUR 341 millionInvestor presentation
1-9/2018
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Operating environmentand demand drivers
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Paperboard is the packaging material of the future
Growing by 3% per year
16
The total packaging market is USD 850 billion Average annual growth rate of paperboard packaging
USD
300 bn
US
D b
nSource: Smithers Pira
0
50
100
150
200
250
300
350
2012 2013 2014 2015 2016 2017 2022F
+3% per year 2017–2022
Board and Paper
Other fibre-based
Plastic
Metal
Glass
36%
10%
34%
13%
7%
Investor presentation
1-9/2018
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17
We have good growth opportunities in premium
paperboards
Cartonboard White linerboardCartonboard White linerboard Cartonboard White linerboard
Total annual
demand:
10 million
tonnes
3 million
tonnes10 million
tonnes
5 million
tonnes
22 million
tonnes
3 million
tonnes
Americas EMEA APAC
FSB
FBB
Other
fresh fibre
grades
Recycled
grades
CWKL
WKL
White testliner
FSB
FBB
Other
fresh fibre
grades
Recycled
grades
CWKL
WKL
White
testliner
FSB
FBB
Other
fresh fibre
grades
Recycled
grades
WKL
White
testliner
Annual global
demand
growth for
FBB, FSB and
WKL is
estimated to be
3%
FSB = food service board, FBB = folding boxboard, SBS = other fresh fibre grades, CUK, WLC = recycled grades
WKL = uncoated white kraftliner, CWKL=coated white kraftliner
28%
77%
41%
38%
36%
Source: Metsä Board research based on several sources,
e.g. CEPI Cartonboard and Containerboard, RISI
Investor presentation
1-9/2018
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18
We sell globally, but have a regional approach The Americas is the biggest growth area
AMERICASSHARE OF TOTAL PAPERBOARD
DELIVERIES IN 1–9/2018
23%
EMEASHARE OF TOTAL PAPERBOARD
DELIVERIES IN 1–9/2018
70%
APACSHARE OF TOTAL PAPERBOARD
DELIVERIES IN 1–9/2018
7%
Demand drivers:
• Growing upper and middle
classes, and increased
purchasing power
• More brand-aware
consumers
• Continued shift to modern
retail and mobile
commerce
Demand drivers:
• Stronger consumer
confidence
• Acceleration in
environmental
commitments and
regulations
• Stricter food safety
requirements
Demand drivers:
• Strong consumer
confidence in the US,
private consumption
recovering in Latin America
• Emerging environmental
considerations
• Trend for lightweight
packaging – but limited
local capacity in FBB
Investor presentation
1-9/2018
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Rapidly growing concern about non-renewable
packaging materials is increasing demand for
fresh fibre paperboards
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• Growing consumer awareness:
Origin and transparency of
materials, renewability, resource
efficiency and recylability
• Brand owners are committed to
reducing their carbon footprints:
Lighter packaging reduces CO2
emissions across the value chain
20
Sustainability is on
everybody’s agenda
“Our comprehensive approach
to reducing our environmental
impact means looking at all
aspects of our business, how
they intersect and how we can
integrate new solutions to
create meaningful and
sustained change.”
– Starbucks website
“We want low-carbon to become
the new normal, so we’re taking
action to reduce GHG emissions
throughout our value chain.”
– Unilever website
Investor presentation
1-9/2018
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• Health and safety aspects are strongly emerging in
food packaging
• Purity and safety have become critical factors, also for
consumers
• Growing worry about e.g. fluorochemicals or mineral oil
migration from recycled packaging into foodstuffs set
stricter demands on packaging materials
• Packaging’s strength and durability are non-negotiables
to reduce food waste
21
Food safety is growing its
importance
Investor presentation
1-9/2018
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• Increasing quality demands drive the demand of white
kraftliners
– Functionality, durability and consumer experience are the
key words
– Personalisation of boxes is supported by advanced
technology in digital printing
• The value of E-commerce is expected to grow by 20%
per year on average and its share of the retail trade is
estimated to grow from 10% to 18% in 2017-2021
Branding and personalisation
are growing their importance in
E-commerce
Investor presentation
1-9/201822 Sources: eMarketer, Smithers Pira
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Main contributors in Metsä Board’s profitability
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• Strong demand and limited supply in
fresh fibre paperboards have led to
increased price levels
• Our latest price increase
announcements:
– FBB: Europe EUR 80/t, valid 11/2018,
Americas USD 50/t, valid 9/2018
– WKL: Europe EUR 50/t, valid 10/2018
24
Our top priority is to secure a continuously healthy
price level
Market prices have increased in Europe since 2017
€/tonne
500
600
700
800
900
1000
1100
1200
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Folding boxboard White-top kraftliner
Investor presentation
1-9/2018
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Source: Foex Indexes Ltd
USD
Market pulp price is positively contributing to
our result
25
USD• In 2018, Metsä Board’s net pulp balance is
roughly 550,000 tonnes long, including our
share in Metsä Fibre
• Estimated net balance for 2019 is
approximately 600,000 tonnes long
• 24.9% of Metsä Fibre’s net result (post-tax)
is consolidated in Metsä Board’s EBITDA
Pulp prices (PIX) in Europe have risen by one third
in 1-9/2018 compared to last year
Investor presentation
1-9/2018
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We see cost inflation slowing down in
the near future
Metsä Board’s cost split in 2017 total EUR1.6 billion*
26
Wood26 %
Logistics16 %
Chemicals, pigments and fillers
14 %
Energy12 %
Other variables
3 %
Personnel14 %
Other fixed15 %
Cost component Near-term outlook
Wood Prices in Finland and Sweden are expected to remain stable.
In the Baltics, the price level will depend on the demand in
export markets (e.g. Sweden)
Logistics In line with general cost inflation
Chemicals In line with or below general cost inflation
Energy Stabilisation following the oil and electricity price hikes in
2018
Personnel Approximately +2% y-on-y, mainly based on collective
agreements
Other fixed In line with or below general cost inflation
* incl. the share of Metsä Fibre’s costsInvestor presentation
1-9/2018
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27
We estimate that profit improvement from Husum is
slightly higher than our previous estimates
New estimate in
2019 vs. 2016:
EUR 110–120 million
Original estimate in
2019 vs. 2016:
EUR 100 million
Achieved in
2018 vs. 2016:
EUR 90 million
Estimated profitability improvement in 2019 vs. 2016
Our estimate is based on
• Changed market environment since 2017
• Positive from market pulp prices and SEK/EUR
• Negative from wood costs and USD/EUR
• Estimated potential in 2019 through paperboard
pricing of EUR 20–30 million
• Gradual improvement potential also after 2019
Initial estimate communicated in 2017
Investor presentation
1-9/2018
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Component Change Impact on EBIT
Folding
boxboard
Price +/- 10% > EUR 100 million
White
kraftliners
Price +/- 10% > EUR 50 million
FX USD/EUR +/- 10% EUR 65 million
SEK/EUR +/- 10% EUR 40 million
Pulp Pix price of SW/HW
per tonne
+/- 10% EUR 25 million
Wood Price per m3 in
Finnish mills
+/-10% EUR 30 million*
Price per m3 in
Husum
+/-10% EUR 20 million
28
Our main profit components and sensitivities
Annual FX net transaction exposure is approximately
EUR1.1 bn, of which 55% USD, 36% SEK and 7% GBP
* incl. ownership in Metsä Fibre
Metsä Board is sourcing approximately 5.6 million m3 wood in
2018, of which 35% from Sweden, 35% Finland, 20% Baltics
and 10% Russia. Including the 24.9% share from Metsä Fibre,
the total sourcing is 10.7 million m3
Investor presentation
1-9/2018
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January–September 2018
Interim Report
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Investor presentation 1-
9/201830
Key financials
Q3/18 Q2/18Change
Q3/18
vs. Q2/181–9/18 1–9/17
Change
1–9/18 vs
1–9/17
FY
2017
Sales EUR, m 475 519 - 8% 1486 1397 6% 1,849
EBITDA* EUR, m 84 84 0% 263 211 24% 289
Operating result* EUR, m 64 59 8% 192 139 38% 194
% of sales % 13.4 11.4 12.9 10.0 10.5
Result before taxes* EUR, m 60 53 11% 174 110 58% 157
Earnings per share EUR 0.16 0.12 33% 0.43 0.30 43% 0.42
ROCE* % 15.0 13.9 14.7 10.6 11.2
Capex EUR, m 11 15 - 30% 36 39 - 6% 65
Cash flow from operations EUR, m 54 36 + 48% 121 130 - 7% 236
Net debt, at end of period EUR, m 344 388 - 11% 344 437 - 21% 358
*comparable
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• Our profitability improved due to higher
paperboard prices and strong pulp market
• Our paperboard delivery volumes were down
on record-high levels in Q2
• Wood costs remained high but steady
• We had planned maintenance shutdowns at
Kemi integrated mill and partly at Husum
integrated mill
31
Performance in Q3 2018
Investor presentation
1-9/2018
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Our total paperboard delivery volumes decreased
in Q3 from the high levels of H1 2018
227 250 266 245 265304 299 276 297 328 297
142148 148
143163
173 170152
171161
149
0
100
200
300
400
500
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
White kraftliner Folding boxboard
1,0
00 tonnes
32
1–12/2016
1,568k tonnes1–12/2017
1,802k tonnes
Annual global
demand
growth for
folding
boxboard and
white
kraftliners is
estimated to
be 3%
Source: Metsä
Board’s own
research
1–9/2017
1,375k tonnes1–9/2018
1,405k tonnes+2%
+15%Investor presentation
1-9/2018
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Year-to-date 2018 delivery volumes grew by 2%
compared to last year
Folding boxboard YTD 2018 (1–9/17) tonnes
EMEA637k (601)
Americas192k (179)
APAC92k (88)
↑
EMEA344k (350)
Americas 134k (145)
33
White kraftliner YTD 2018 (1–9/17)tonnes
69%
21%
10%
72%
28%
Total FBB deliveries
922k tonnes (868)Total WKL deliveries
481k (506)
↑
↑
↓
↓
Investor presentation
1-9/2018
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Our margins improved due to higher prices
SalesEUR million
445 474 479 451 492 519 4750
100
200
300
400
500
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18
45 44 50 54 69 59 64
10,2 %9,2 %
10,5 %
12,0 %
14,0 %
11,4 %
13,4 %
0%
4%
8%
12%
16%
0
20
40
60
80
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18
34
Comparable operating resultEUR million and % of sales
EU
R m
illio
n
EU
R m
illio
n
1–12/2017:
EUR 1,849 million
1–9/2017:
EUR 1,397 million
1–9/2018:
EUR 1,486 million
1–12/2017:
EUR 194 million
(10.5% of sales)
1–9/2017:
EUR 139 million
1–9/2018:
EUR 192 million
Investor presentation
1-9/2018
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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
Comparable ROCE-%, Quarterly
35
ROCE is above its target level of 12%12 month rolling ROCE was 14.1%
Target: 12%
Investor presentation
1-9/2018
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• FX impacted Q3 result negatively: EUR -4 million compared to Q2, mainly caused by USD/EUR
– YTD 2018 impact EUR -47 million compared to corresponding period last year
• Stronger USD and weaker SEK against EUR will support results from Q4 onwards
FX: Headwind from USD in Q3
54 %
36 %
8 % 2 %USD
SEK
GBP
Othercurrencies
Annual transaction exposure
total EUR 1.1 billion FX sensitivities excluding hedges
10% strengthening of foreign currency vs. EUR will have
an impact on Metsä Board’s EBIT of
Currency Next 12 months
USD, $ EUR +63 million
SEK EUR -41 million
GBP, £ EUR +9 million
36Investor presentation
1-9/2018
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-22
6755
2637
68
106
30 3654
-72
49 177
2
5979
20 2343
-100
-50
0
50
100
150
200
250
-100
-50
0
50
100
150
200
250
Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18
Cash flow from operations, quarterly Free cash flow, quarterly
Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months
EU
R m
illio
n
37Free cash flow = Cash flow from operations - investments
Our cash flow generation is back on track after the
heavy investment years of 2015–2016
EU
R m
illio
n
Investor presentation
1-9/2018
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38
Near-term outlook
• Market prices are expected to be stable or rise slightly
• Pulp market is expected to remain strong
• FX will have a positive impact on Q4 result
• Metsä Board’s paperboard delivery volumes in Q4 will remain flat
or decline slightly compared to Q3 due to seasonality
• Cost inflation has slowed down, no significant changes to
production costs expected
• Net impact of energy costs and sale of emission rights will have a
positive impact in Q4 compared to Q3
• Part of Husum shutdown took place at start of October
• Comparable operating result in Q4 2018 is expected to improve
compared to the Q3 2018
Investor presentation
1-9/2018
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Balance sheet and financing
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541 488 464 458 495 437 358 335 388 344
2,1 2,12,0
1,92,0
1,7
1,21,1
1,21,0
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
Net debt, EUR million Net debt to comparable EBITDA (12 months)
40
We have a strong financial position –
leverage at 1.0x
Net debt / EBITDA target level: <2.5
EU
R m
illio
n
Investor presentation
1-9/2018
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0 50 100 150 200 250
2018
2019
2020
2021
2022–26
2027
Bonds Loans from financial institutions Pension loans Other loans
41
We have a balanced debt portfolio
Maturity profile of interest-bearing debt, total EUR 469 million
30 September 2018
EUR million
Rating agency Rating and
outlook
Latest
update
Standard & Poor‘s BBB-
stable
02/2018
Moody‘s Ba1
positive
04/2018
Metsä Board’s credit ratings
2027 Notes’ annual coupon is 2.75%
Investor presentation
1-9/2018
In addition company has undrawn credit facility EUR 150 million, maturing in 03/2020
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Investor presentation
1-9/201842
Net financial costs January–September 2018
39 32 31 36 18
4,2
3,8
3,3 3,3 3,3
2,0
2,5
3,0
3,5
4,0
4,5
5,0
0
10
20
30
40
50
2014 2015 2016 2017 1-9/2018
Net financial costs, EUR million
Average interest rate at the end of period, %
EUR million %
• Net financial costs (including
foreign exchange differences) in
1–9/2018 were EUR 18 million
(1–9/17: EUR 29 million)
• Average interest rate at the end
of review period was 3.3%
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Sustainability and food safety
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Replacing fossil-based materials, i.e. plasticsThe solution: renewable and biodegradable wood fibre
Increased waste generation due to urbanisationThe solution: circular economy and bio-based packaging
Reducing carbon footprintThe solution: bio-based fuels, lower production emissions and lighter paperboards
Consumer expectations on safer products– especially in food packagingThe solution: pure and safe fresh fibres
Fresh fibre paperboards offer solutions to major challenges
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Finland – the largest forest cover in Europe
45
100+MILLION M3
Annual growth of Finnish forests is
over 100 million m3 – more than ever
Forests grow more than they are used,
annual harvesting 71 million m3 (2017)
Four seedlings are planted for each
harvested tree
Over 20% of the Finnish export comes
from forest-based products
The area of Finland
Cities, villages and roads
Fields and agricultural use
Lakes and rivers
Forest
10%
10%
75%
5%
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Wood is the main raw
material for Metsä Board
• Metsä Board sources its
wood mainly from Finland
and Sweden (75 %)
• All wood used is 100%
traceable and comes from
sustainably managed forest
sources ensuring the bio-
diversity and recreational use
of forests
• 80% of wood sourced is
certified (remaining 20 % from
controlled forest sources)
46
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Metsä Board has
decreased its water use
by 17% since 2010
• Metsä Board uses only
surface water in its
processes
• Water is been recirculated
in processes several times
• 99% of the water used is
returned back to the close-by
waterways after thorough
purification
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Metsä Board Tako is located
in the middle of the city
• Tako mill follows very tight
environmental and noise
permits
• The most efficient mill in
water use of all Metsä
Board’s mills
• Efficiently planned logistics
chain
City of Tampere
• The most populous inland
city of the Nordic countries
• Over 230 000 inhabitants
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Lighter packaging reduces CO2 emissions across the
value chain – Our fossil CO2 emissions per product tonne
have reduced by almost 50% since 2009
Less energy, water and
raw material consumed
Less
transport
weight
Less waste
generated
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Own generation22 %
Through PVO shareholding29 %
Purchased electricity
46 %
Outsourced generation
3 %
Electricity sourced in 2017 (total 2.4 TWh)
50
Our energy efficiency has improved
by over 10% during 2009-2017
Wood-based52 %
Nuclear power28 %
Gas8 %
Others12 %
Primary energy used in 2017(total 12.0 TWh)
• 80% of primary energy we use is fossil free
• After OL31) starts up, we will be nearly self-sufficient in
electricity in Finland
− Including the electricity used in Husum mill,
self-sufficiency will be nearly 80%
• Metsä Board’s shareholding in PVO2) is 3.2%
− Fair value as per 30 September 2018 was EUR 270 million
1) Olkiluoto Nuclear Power Plant
2) Pohjolan Voima Oyj is a non-listed public limited liability company.
It supplies electricity and heat for its shareholders at cost price
3) Out of 46% share of purchased energy, 8% is from Metsä Fibre
3)
Investor presentation
1-9/2018
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RAW MATERIALS AND SUPPLY CHAIN
We are committed to high performance on sustainability
Share of certified wood:
PERFORMANCE 2017
80%TARGET
>80%
Ensure sustainability of the main logistics
flows:
TARGET
100%
Fossil CO2 emissions per product tonne
2009–2020:
PERFORMANCE 2017
-47%TARGET
-30%
Energy efficiency improvement
2009–2020:
PERFORMANCE 2017
10.2%TARGET
12%
Process water use per product tonne
2010–2020:
PERFORMANCE 2017
-17%TARGET
-17%
Coverage of Code of Conduct training:
PERFORMANCE 2017
79%TARGET
100%
Lost-time accidents frequency annually
(LTA1: 6.4):
PERFORMANCE 2017
-28.4%TARGET
-10%
Sickness absenteeism:
PERFORMANCE 2017
3.9%TARGET
<3%
RESOURCE EFFICIENCY AND ENVIRONMENTAL IMPACTS
STAKEHOLDERS AND SOCIAL IMPACTS
PERFORMANCE 2017
100%
External recognitions and commitments in sustainability:
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 Oekom
corporate responsibility rating in
May 2018
Investor presentation
1-9/201851
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EU Commission
– Announced plans to regulate printed food contact materials (FCMs)
on EU level
Food Contact Material legislation in Switzerland
– Part of Swiss Food law
– Recycled paper cannot be used as FCM, if direct contact with food
products
– Concentration limits of certain polyaromatic hydrocarbons
micrograms/kg food has been set
Draft German mineral oil regulation
– 4th ordinance draft published in March 2017
– The draft focuses on mineral oil migration from recycled fibre based
packaging materials to food
52
Increased regulation to ensure
product safety
Investor presentation
1-9/2018
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Metsä Board has goodcontrol over raw materials– from forests to pulpand board production
This ensures a uniquelysafe and unbroken productchain
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• Metsä Board’s fresh fibre paperboards do
not change the taste, smell, colour or
composition of the food..
• ..and barriers protect the board from
foods like beverages
• Food packaging made from recycled
fibres includes mineral oil migration risk ..
• .. and food needs to be protected from
board
Packaging should not
harm food
Investor presentation
1-9/201854
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We promote
circular
economy
providing vital
material
to the recycling
loop
Recycled fibre
packaging is
suitable for
many goods
In food
packaging
mineral oil
migration pose
a health hazard
in recycled fibre
Global
restrictions in
the use of
recycled fibres in
direct food
contact
Packaging made from recycled material
Recycling would
end in few
months without
fresh fibre inflow
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Sustainability guides our R&D work
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Our key product development focus areas
LIGHTWEIGHTING
57
BARRIER BOARDS
• Improved BCTMP
• Microfibrillated cellulose (MFC)
• Strength additives
• Dispersion barriers
• Bio-based raw materials
Investor presentation
1-9/2018
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58
We achieve high bending stiffness
from a strong outer layers and a
thick and light inner layer
Bleached chemical pulp
High yield pulp (BCTMP) or groundwood pulp
Bleached chemical pulp
Top coating
Investor presentation
1-9/2018
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PR
OM
OT
ION
Bri
gh
tne
ss
PROTECTIONStiffness
Folding boxboard
(FBB)
White lined chipboard
(WLC)
Metsä Board’s
folding boxboard
Coated unbleached kraft
(CUK)
The role of packaging is to promote the brand and
protect the product – in a cost-effective way
Solid bleached board
(SBB)
Investor presentation
1-9/201859
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Light weight – better yield and sustainability
High strength and bending stiffness – secure protection
High brightness and smoothness – excellent printability
Consistent quality – improved production efficiency
High-yield pulp makes the difference between folding boxboard and other grades …
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SBS
(100% chemical pulp)
Metsä Board FBB
(up to 70% BCTMP,
30% chemical pulp )
… and leave more trees standing
5 m3 of wood per tonne of pulp
3.4 m3 of wood per tonne of pulp
=
=
Investor presentation
1-9/2018
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Lighter-weight paperboards: Better with Less
Metsä Board
lightweight paperboard
Average FBB –
Folding boxboard
SBB –
Solid bleached board
WLC –
White lined chipboard
62
The weights equal to a print job of 30 000 sheets on a standard size printing press
Investor presentation
1-9/2018
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• Made from bio-based, recyclable and
biodegradable fresh fibres
• Developed especially for food service use
with short food contact time and when light
grease resistance is sufficient
• We constantly develop other barrier solutions,
and investigate the utilization of dispersion
and biobased coatings, and their commercial
potential
Investor presentation
1-9/201863
Metsä Board has launched an
innovative eco-barrier paperboard
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Barriers preserve packed products and the package
Barriers reducing waste have a
huge positive total effect on
environment
Barriers are inbuild in many competing
materials e.g. plastics, metals but those
have other issues
Often needed are water, moisture and
grease barriers and they are in the focus
of Metsä Board’s development
64
Packed product
Influence from
environment
Light, O2, H2O
Light, O2, H2O, Aromas/Odor
Monomers, additives,
oxidation products
CO2, H2O, N2, Aromas/Flavor
H2O, Fats, CO2, Acids,
Alcohols, Aromas
Packaging material
Barriers protect product
and/or packaging
Investor presentation
1-9/2018
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65
Getting familiar with terminology:
Barrier boards types
NO
N-R
EN
EW
AB
LE
BIODEGRADABLE
RE
NE
WA
BL
E
NON-BIODEGRADABLE
Biobased,
biodegradable
coating, i.e. starch,
PLA etc.
Oil-based,
biodegradable
coating
Bioplastic coating,
i.e. green PE
Latex based
dispersion coating
PE extrusion
coating
Investor presentation
1-9/2018
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Owners and management
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Market cap and foreign owners30 September 2018
Ownership distribution30 September 2018
Market cap and ownership distributionMetsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki
0
5
10
15
20
25
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2013 2014 2015 2016 2017 9/2018
Market cap, EUR million
Share of foreign owners, %
41 %
19 %
17 %
23 %
MetsäliittoCooperative
Domesticinstitutionalinvestors
Domestic privateinvestors
Foreign owners
EUR million
67
%
Investor presentation
1-9/2018
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Investor presentation
1-9/201868
Metsä Board Corporate Management Team
Mika JoukioCEO
Chairman of CMT since 2014
MG employee since 1990
Share ownership: 250,000
Jussi NoponenCFO
Member of CMT since 2016
MG employee since 2000
Share ownership: 54,000
Sari PajariSVP, Marketing and Sales
Member of CMT since 2011
MG employee since 2007
Share ownership: 51,500
Ari KivirantaSVP, Development
Member of CMT since 2014
MG employee since 1993
Share ownership: 40,000
Harri PihlajaniemiSVP, Production
Member of CMT since 2017
MG employee in 2001-2004
and since 2017
Share ownership: no ownership
Susanna TainioSVP, HR
Member of CMT since 2015
MG employee since 2011
Share ownership: 31,358
Share ownerships are B-shares.
MG = Metsä Group
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METSÄ TISSUE
Tissue and cookingpapers
Sales 2017:
EUR 1.0 billion
Personnel:
2,800
METSÄ WOOD
Wood Products
Sales 2017:
EUR 0.5 billion
Personnel:
1,400
METSÄ FOREST
Wood Supply and ForestServices
Sales 2017:
EUR 1.6 billion
Personnel:
850
Investor presentation
1-9/201869
Metsä Board is part of Metsä Group (Metsäliitto Cooperative)
METSÄ BOARD
Paperboard
Sales 2017:
EUR 1.8 billionPersonnel:
2,350
Metsäliitto Cooperative
holding 42% of shares,
61% of votes
METSÄ FIBRE
Pulp and SawnTimber
Sales 2017:
EUR 1.9 billion
Personnel:
1,200
Metsäliitto Cooperative
holding 50.1%,
Itochu Corporation 25.0%
Metsä Board 24.9%
METSÄLIITTO COOPERATIVE Owned by 104,000 Finnish forest owners
Metsä Board is listed
on the Nasdaq Helsinki
Metsäliitto Cooperative holding 100%
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Katri Sundström
Vice President, Investor relations
Tel +358 400 976 333
Metsä Board Corporation
P.O. Box 20
02020 Metsä, Finland
www.metsaboard.com
70
Contact information
Investor presentation
1-9/2018
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This presentation includes forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,”
“estimate,” “will,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or any similar expressions
identify certain of these forward-looking statements. Others can be identified from the context in which the statements are
made. By their nature, forward-looking statements are subject to assumptions, risks and uncertainties. Although we
believe that the expectations reflected in these forward-looking statements are reasonable, actual results may differ, even
materially, from those expressed or implied by these forward-looking statements. We urge presentation participants not to
place undue reliance on such statements.
The information and views contained in this presentation are provided as at the date of this presentation and are subject to
change without notice. Metsä Board does not undertake any obligation to publicly update or revise forward-looking
statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
Viewers should understand that this presentation does not constitute, and should not be construed as, an offer to buy or
subscribe for Metsä Board’s securities anywhere in the world or an inducement to enter into any investment activity
relating to the same. No part of this presentation should form the basis of, or be relied on in connection with, any contract
or commitment or decision to invest in Metsä Board securities whatsoever. Potential investors are instructed to acquaint
themselves with Metsä Board’s annual accounts, interim reports and stock exchange releases as well as other information
published by Metsä Board to form a comprehensive picture of the company and its securities.
Metsä Board publishes inside information according to Market Abuse Regulation (MAR) and rules of the Nasdaq Helsinki.
Investor presentation
1-9/201871
Disclaimer
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