Metsä Board CorporationFY 2017 ResultsPresentation material

8 February 2018

FY 2017 Results2

Q4 2017 in summary(vs. Q3 2017)

• Paperboard delivery volumes were lower,mainly due to seasonality

• Increased average prices in folding boxboard and white kraftliners

• Strong pulp market supported profitability• Negative impact from maintenance

shutdown in Husum• Strong cash flow from operations

Dividend proposal for 2017 is EUR 0.21

January–December 2017: Increasing sales and improved operating result

SalesEUR million

436 423 440 422 445 474 479 4510

100

200

300

400

500

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

+7%

35 36 34 33 45 44 50 54

8,0 % 8,5 %7,7 % 7,8 %

10,2 %9,2 %

10,5 %

12,0 %

0%

2%

4%

6%

8%

10%

12%

14%

-5

5

15

25

35

45

55

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

+41%

FY 2017 Results3

Comparable operating resultEUR million and % of sales

FY 2016:EUR 1,720 million

EU

R m

illio

n

EU

R m

illio

n

FY 2017:EUR 1,849 million

FY 2016:EUR 138 million

FY 2017:EUR 194 million

Strong growth continued in Metsä Board’s paperboard deliveries

204 213 224 224 227 250 266 245 265 304 299 276

130 141 137 131 142148 148

143163

173 170152

0

100

200

300

400

500

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

White kraftliner Folding boxboard

1,00

0 to

nnes

4 FY 2017 Results

FY 2015:1,404 tonnes

FY 2016:1,568 tonnes

FY 2017:1,802 tonnes+12% +15%

Annual global demand growth for folding boxboard

and white kraftlinersis estimated to be

3–4%

Source: RISI, CEPI, Pöyry and trade statistics among others

Europe is the main market area for Metsä BoardAmericas is growing: FBB deliveries up by 54% in 2017 vs. 2016

Folding boxboard (FBB) deliveries in 2017 (2016)1,000 tonnes

EMEA796 (725)

Americas232 (151)

APAC116 (110)

EMEA457 (382)

Americas187 (191)

APAC14 (7)

FY 2017 Results5

White kraftliner (WKL) deliveries in 2017 (2016)1,000 tonnes

70%20%

10%

69%29%

2%

Total FBB deliveries grew by 16% in 2017 vs. 2016

Total WKL deliveries grew by 13% in 2017 vs. 2016

• Impacts of FX rate changes including hedges:– Q4 2017 vs. Q3 2017: EUR 4 million negative

– FY 2017 vs. FY 2016: EUR 13 million positive

• Hedging policy: 50% of annual transaction exposure and 100% of balance sheet position

Weakening USD causing headwind

57 %35 %

6 %2 %USD

SEK

GBP

Othercurrencies

Annual transaction exposureEUR 1.14 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 +65 million

SEK EUR -39 million

GBP, £ EUR +7 million

6 FY 2017 Results

0%

2%

4%

6%

8%

10%

12%

14%

Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17

Comparable Return on Capital Employed, %, QuarterlyFY 2017 Results7

ROCE is approaching its targeted levelFY 2017 Comparable ROCE was 11.2%

Target >12%Q4/17:12.4%

• Investments in 2017 were EUR 65 million (2016: EUR 162 million)

• Estimated capex in 2018 is roughly EUR 70 million

Clearly lower capex in 2017

0

30

60

90

120

150

180

2010 2011 2012 2013 2014 2015 2016 2017 2018E

Maintenance capex Growth capex Depreciation

EUR million

8 FY 2017 Results

Main growth in capex in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill

Cash flows clearly positive

3356

9366

-22 -22

67 55 2637

68

106

9 8 45 8

-76 -72

49 17 7 2559

79

247

78

236

70

-82

170

-100

-50

0

50

100

150

200

250

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

Cash flow from operations, quarterly Free cash flow, quarterlyCash flow from operations, rolling 12 months Free cash flow, rolling 12 months

EUR

milli

on

9 FY 2017 Results Free cash flow = Cash flow from operations - investments

333 412 541 488 464 458 495 437 358

1,21,5

2,1 2,1 2 1,9 21,7

1,2

0,0

0,5

1,0

1,5

2,0

2,5

3,0

0

100

200

300

400

500

600

12/2015 3/2016 6/2016 9/2016 12/2016 3/2017 6/2017 9/2017 12/2017

Net debt, EUR million Net debt to comparable EBITDAFY 2017 Results10

Strong financial positionNet debt reduced nearly EUR 80 million in the Q4, leverage at 1.2x

Net debt/EBITDA target level <2.5

EU

R m

illio

n

• Capacity utilisation rate in 2017 was 71%– Target is to have capacity in full use by the end of 2018

• Improved sales mix towards the end of the year 2017• Average sales price still below target• Potential to improve operating profit in Husum by

EUR 100 million from 2016 to 2019

11

Update on Husum’s folding boxboard

FY 2017 Results

• Metsä Board’s raw material, fresh fibres, is 100% traceable to sustainably managed forests

• Production of strong but lightweight paperboards requires less energy and water

• Metsä Board received several recognitions for sustainability in 2017:• CDP: A Lists in Climate and Water,

Leadership status in Forest programme• Gold rating from EcoVadis

FY 2017 Results12

Sustainability is at the core of Metsä Board’s operations

• Biobased, fully recyclable and biodegradable paperboard

• Developed especially for food service use with short food contact time and when light grease resistance is sufficient

• Metsä Board continues to develop other barrier solutions, and is investigating the utilization of dispersion and biobased coatings, and their commercial potential

FY 2017 Results13

Metsä Board launched an innovative eco-barrier paperboard

FY 2017 Results14

Near-term outlook

• Total paperboard delivery volumes are expected to increase in Q1 2018 compared to Q4 2017

• Market prices in fresh fibre paperboards are expected to rise

• Negative impact from weakened USD• Production costs estimated to rise in 2018• Target is to continue to improve the average

price of FBB from Husum and increase sales to Americas

Metsä Board’s comparable operating result in the first quarter of 2018 is expected to improve slightly compared to the fourth quarter of 2017.

FY 2017 Results15

Result guidance for January–March 2018

• First year as a pure-play paperboard company: strong growth and improved profitability in 2017

• Dividend proposal EUR 0.21• Good overall market situation for 2018…• …but negative impact from weakened

USD

FY 2017 Results16

Summary

Appendix

FY 2017 Results18

Key financials

Q4/17 Q3/17ChangeQ4/17

vs. Q3/172017 2016

Change2017

vs. 2016

Sales EUR, m 451 479 -6% 1,849 1,720 7%

EBITDA* EUR, m 78 75 4% 289 231 25%

Operating result* EUR, m 54 50 8% 194 138 41%

% of sales % 12.0 10.5 10.5 8.0

Result before taxes* EUR, m 47 34 40% 157 107 47%

Earnings per share EUR 0.12 0.11 9% 0.42 0.25 68%

ROCE* % 12.4 11.5 11.2 8.1

Capex EUR, m 27 7 264% 65 162 -60%

Cash flow from operations EUR, m 106 68 57% 236 77 207%

IB Net debt, at end of period EUR, m 358 437 -18% 358 464 -23%

*comparable

Financial targets and actuals

Comparable ROCE, %

6,4

9,1

11,3

8,1

11,2

2013 2014 2015 2016 2017

2,9

1,8

1,2

2,0

1,2

2013 2014 2015 2016 2017

Net debt / Comparable EBITDA, %

7%

10%

13% 12%15%

2013 2014 2015 2016 2017

Annual growth in total paperboard deliveries, %

Target is to exceed relevant market growth*

Dividend policy: Metsä Board aims to distribute at least 50% of its result for the financial period in annual dividends to its shareholders

Target: >12%

Target: <2.5

* Global fresh fibre paperboard demand growth 3-4%/a

FY 2017 Results1919

0

50

100

150

200

250

2018 2019 2020 2021 2022–26 2027

Bonds Loans from financial institutions Pension loans Other loansFY 2017 Results20

Debt maturity lengthened due to new 10-year bond

Interest-bearing debt maturity profile 31 December 2017

EUR

milli

on

• Total interest-bearing debt on 31 December was EUR 577 million (31 Dec 2016: EUR 688 million)

• In 2017, Metsä Board issued new 10-year EUR 250 million bond with 2.75% annual coupon

Rating agency Rating andoutlook

Last update

Standard & Poor‘s

BB+ (positive) 02/2017

Moody‘s Ba1 (stable) 08/2017Upgrade from Ba2

Metsä Board‘s credit ratings

Debt structure and liquidity31 December 2017

308163

95

92

Bonds

Loans fromfinancial institutions

Pension loans

Finance leases andother loans

Other short-termloans

215

100

134

Cash and cashequivalentsRevolving creditfacilityUnraised pensionloans

Interest-bearing debt, total EUR 577 million

Available liquidity, total EUR 449 million

Average maturity of long-term loans on 31 December 2017 was 5.4 years. 21

* Of which EUR 248 million due 2027 and EUR 60 million due 2019

*

FY 2017 Results

FY 2017 Results22

Increased financial costs due to the financing arrangements in September

56 39 32 31 36

4,6

4,2

3,8

3,3 3,3

3,0

3,5

4,0

4,5

5,0

0

10

20

30

40

50

60

2013 2014 2015 2016 2017

Net financial costs, EUR millionAverage interest rate at the end of period, %

EUR million %• Net financials in 1–12/2017

were EUR -36 million (1–12/16: EUR -31 million)

• Full-year financial expenses include EUR 11 million of costs related to the early repurchase of the bond maturing in 2019

Market cap and foreign owners31 December 2017

Ownership distribution31 December 2017

Market cap and ownership distributionMetsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki

0

4

8

12

16

20

24

0

500

1 000

1 500

2 000

2 500

2012 2013 2014 2015 2016 2017

Market cap, EUR million

Share of foreign owners, %

42 %

20 %

18 %

20 % MetsäliittoCooperative

Domestic institutionalinvestors

Domestic privateinvestors

Foreign owners

EUR million

* Metsäliitto Cooperative has 61% of voting rights

*

23

%

FY 2017 Results

FY 2017 Results24

Market price development in folding boxboard and white-top kraftliner in Europe

EUR/t

Sources: RISI, Inc. & FOEX Indexes Ltd

500

600

700

800

900

1000

1100

1200

2009 2010 2011 2012 2013 2014 2015 2016 2017

Folding boxboard White-top kraftliner

350400

450500550

600650700

750800

850900950

10001050

'10 '11 '12 '13 '14 '15 '16 '17350400

450500550

600650700

750800

850900950

10001050

Source: Foex Indexes Ltd

Softwood, USD

Softwood, EUR

Hardwood, EUR

Hardwood, USD

USDEUR

Pulp price development (PIX)

25 FY 2017 Results

Metsä Board’s growth clearly exceeds averagemarket growth

26

0

500

1 000

1 500

2 000

2013 2014 2015 2016 2017 2018 target

Fresh fibre linerboard Folding boxboard

Metsä Board’s annual paperboard deliveries 1,000 tonnes

FY 2017 Results

Annual global demand growth for folding boxboard

and white kraftliners is

estimated to be 3–4%

Source: RISI, CEPI, Pöyryand trade statistics among

others

Metsä Fibre’s new bioproduct mill in Äänekoski started in AugustStart-up as scheduled, costs within budget and higher than expected production volumes

Total investmentEUR 1.2 billion

Annual pulp capacity1.3 million tonnes

Metsä Board investedEUR 24.9 million

Metsä Board’s annualpulp balance grows by

200,000 tonnes*

* According to Metsä Board’s 24.9% ownership of Metsä Fibre