Mets Board Corporation Half-Year Financial Report JanuaryJune 2019 - PowerPoint PPT Presentation

Metsä Board Corporation Half-Year Financial Report January–June 2019 Presentation material Metsä Board Corporation Half-Year Financial Report January–June 2020 Presentation material

COMPARABLE OPERATING TOTAL PAPERBOARD DELIVERIES OPERATING RESULT CASH FLOW INVESTMENTS 72 43 458,000 60 Q2 2020 in summary EUR million EUR million tonnes EUR million • Paperboard demand was at a good level, and prices remained fairly stable • All-time high production volume in paperboards • Strong cash flow generation continued • Slower than expected environmental permit process for the new recovery boiler at Husum pulp mill • Excellence Centre in Äänekoski was completed 2 H1 2020 Results

Covid-19 impacts on Metsä Board’s operations • Impacts on paperboard demand – Increased demand in food, beverage and pharmaceutical packaging – Decreased demand in graphic end uses and luxury products packaging • Substantial precautionary measures in place ensuring the safety of employees and business continuity • No impacts on production. Some of the planned maintenance works in Q2 have been postponed to H2 • Weakening of global economy hinders visibility and may negatively impact Metsä Board’s profitability 3 H1 2020 Results

Metsä Board’s new EXCELLENCE CENTRE in Äänekoski, Finland Boosting the development of new paperboard and packaging solutions 4

Total paperboard delivery volumes increased Q2 2020 vs. Q2 2019: +3% White kraftliner Folding boxboard H1 2020 vs. H1 2019: +3% 500 161 400 161 171 148 149 146 152 138 140 134 1,000 tonnes 1,000 tonnes 300 200 328 310 305 297 297 302 299 300 298 293 100 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 FY 2018: FY 2019: 1,830,000 tonnes 1,791,000 tonnes 5 H1 2020 Results

FBB deliveries in H1 2020 (H1 2019) total 608k tonnes (601k) Sales development by market APAC 42k area in H1 2020 (50k) 7% Americas EMEA 132k 434k EMEA (120k) (432k) 22% • Strong demand for food and pharma packaging 71% • Increased total delivery volumes • FBB prices stable, WKL prices slightly down from H1 2019 WKL deliveries in H1 2020 (H1 2019) AMERICAS total 300k tonnes (284k) • Strong demand for food, beverage and pharma packaging; APAC 5k (4k) EMEA growing e-Commerce boosting demand for WKL 195k 2% (183k) Americas • Increased total delivery volumes 101k 33% (97k) • Higher FBB and WKL euro prices compared to H1 2019 65% APAC • Lower delivery volumes in FBB FBB = Folding boxboard WKL = White kraftliners 6 H1 2020 Results

All-time high quarterly production volumes with improved safety • All-time high paperboard production volume in Q2 2020: 489,000 tonnes • Improved energy and material efficiency of the mills reduced production costs • Improved safety in H1 2020: – LTA1: 5.1 (FY 2019: 5.5) – TRIF: 6.8 (FY 2019: 10.2) LTA=Lost-time accident frequency per million hours worked TRIF=Total recordable injury frequency per million hours worked 7 H1 2020 Results

FX and lower production costs improved profitability Comparable operating result, quarterly Sales, quarterly EUR million EUR million and % of sales FY 2018 FY 2019 FY 2018 EUR 252 million EUR 1,932 EUR 1,944 margin: 13.0% Operating result: million million 2000 FY 2019 250 H1 2020: EUR 94m EUR 184 million 60 Sales: H1 2019: EUR 103m 458 Q4 478 Q4 margin: 9.5% 200 H1 2020: EUR 945m 1500 Operating margin: H1 2019: EUR 964m EUR million 39 64 H1 2020: 10.0% EUR million 475 Q3 Q3 489 150 H1 2019: 10.7% 1000 43 100 59 Q2 519 Q2 477 473 41 500 60 50 Q1 69 492 Q1 487 472 62 34 0 0 2018 2019 2020 2018 2019 2020 8 H1 2020 Results

Market pulp Pulp price (PIX) development in Europe and China • Pulp prices (PIX) in H1 2020 vs H1 2019 – European NBSK (USD) decreased by 24% * Long-fibre pulp, Europe Long-fibre pulp, China (net) – Chinese NBSK (USD) decreased by 17% * USD/tonne USD/tonne 1 400 1 400 • Pulp demand supported by increased demand in tissue 1 200 1 200 and hygiene products, with reduced availability of recycled paper but weakened by a sharp decline in 1 000 1 000 printing & writing paper consumption 800 800 600 600 • In H2, the pulp supply will decrease due to production curtailments announced by certain 400 400 producers and several annual maintenance 200 200 shutdowns 0 0 2014 2015 2016 2017 2018 2019 2020 Source: Fastmarkets Foex 9 H1 2020 Results *) calculated as the difference between half-year average prices

Update on Husum pulp mill renewal • Foundation work for the recovery boiler started in March 2020 • The processing of the environmental permit has progressed slightly slower than expected • Metsä Board estimates that the new recovery boiler will start up in H1 2022 at the earliest • Investment value for the first phase EUR 320 million First phase: New recovery boiler and turbine Foundation work for Company New recovery new expects to boiler and Pre- recovery make the final First turbine engineering investments boiler investment phase expected to be made started decision in operation launched 2019 2020 2021 2022 Second phase : New fibre line. To be implemented during the 2020s after the first phase is fully completed 10 H1 2020 Results

Strong development in operating cash flow continued 300 300 250 250 200 200 150 150 EUR million EUR million 90 100 100 80 72 54 50 44 43 37 36 36 29 34 50 50 30 30 31 26 23 20 13 0 0 -3 -50 -50 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Cash flow from operations, quarterly Free cash flow, quarterly Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months 11 H1 2020 Results Free cash flow = cash flow from operations − total investments

Long-term financial targets Comparable ROCE: Net debt/comparable EBITDA: Dividend policy: Target at least 12% Maximum level 2.5x Payout ratio at least 50% of net result 76 59 14.4 Target Target 51 50 10.4 10.7 11.2 > 12% < 2.5x 1.2 1.1 1.1 1.0 2017 2018 2019 H1 2020 2016 2017 2018 2019 2017 2018 2019 H1 2020 12 12 H1 2020 Results

Near-term outlook July–September 2020 • Paperboard delivery volumes in Q3 are estimated to decline from Q2. Price levels are expected to remain stable. • Profitability will be weakened by major planned maintenance shutdowns, e.g. at the Kemi and Husum * integrate mills. Some smaller maintenance works have also been postponed from Q2 to Q3. • Metsä Board’s market pulp deliveries in Q3 are expected to decline from Q2 • Production costs are not expected to decline further 13 H1 2020 Results *shutdown in Husum in September-October

Result guidance for July–September 2020 Metsä Board’s comparable operating result for the third quarter of 2020 is expected to weaken compared to the second quarter of 2020. 14 H1 2020 Results

Summary • Our business has performed well during the corona pandemic – Good demand for Metsä Board’s pure and safe paperboards – High paperboard production volumes – Good profitability with strong cash flow generation • The extent of negative impacts of the pandemic on global economy and Metsä Board’s business still difficult to estimate 15 H1 2020 Results

Appendix

Key financials Change Change Q2/20 Q2/19 Q2/20 H1/20 H1/19 H1/20 FY 2019 vs. Q2/19 vs. H1/19 Sales 473 477 - 0.8% 945 964 - 2.0% 1,932 EUR, m EBITDA* EUR, m 87 68 + 27% 146 157 - 7% 279 Operating result* EUR, m 60 41 + 48% 94 103 - 8% 184 % of sales* % 12.8 8.6 10.0 10.7 9.5 Metsä Fibre’s share of EUR, m 1.6 15.6 - 90% -2.6 36 - 107% 43 operating result* Earnings per share 0.15 0.10 + 43% 0.21 0.27 - 23% 0.41 EUR ROCE* 13.9 9.7 10.7 11.7 10.4 % Total investments EUR, m 43 18 + 142% 73 24 + 201% 99 Cash flow from operations EUR, m 72 31 + 135% 152 67 + 127% 201 IB Net debt, at end of period EUR, m 306 380 - 20% 306 380 - 20% 308 *comparable 18 H1 2020 Results

Metsä Board’s pure and safe paperboards are mainly used for consumer goods packaging and various retail needs Folding boxboards, incl. food service boards White kraftliners, coated and uncoated White kraftliner end uses* Folding boxboard end uses* E-commerce Graphic end-uses Other Various retail Other Food and consumer needs (e.g. consumer food service goods (e.g. shelf-ready goods (e.g. electronics) solutions, point-of- pharma, sale displays, cosmetics) fresh fruit boxes *) all data is indicative and based on Metsä Board’s own estimates 19 H1 2020 Results

Comparable operating result Q2 2020 vs. Q2 2019 H1 2020 vs. H1 2019 EUR 60 million vs EUR 41 million EUR 94 million vs EUR 103 million Positive: Positive: + lower production costs especially in + lower production costs in pulp paperboard business due to higher and paperboard business energy and material efficiency + higher delivery volumes + lower raw material and energy costs + FX + FX Negative: Negative: - strikes at Finnish mills - strikes at Finnish mills - Metsä Fibre’s result share - weakened market pulp prices - Metsä Fibre’s result share 20 H1 2020 Results