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Metsä Board January-March 2017 results presentation

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Metsä Board's comparable operating result in January–March 2017 was EUR 45 million

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Metsä Board January-March 2017 results presentation

  1. 1. Metsä Board Interim report 1−3/2017 Presentation material
  2. 2. • Good demand for high-quality paperboards continued • Stable or rising market price levels • Metsä Board’s paperboard and market pulp deliveries grew from the previous quarter • All Finnish mills performed well, good momentum in linerboard business • No major maintenance shutdowns • Husum still had a negative impact on profitability Q1 2017 Interim report2 Q1 2017 in summary
  3. 3. Total paperboard deliveries grew All-time high monthly level in March 2017 210 203 204 213 224 224 227 250 266 245 265 120 111 130 141 137 131 142 148 148 143 163 0 60 120 180 240 300 360 420 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Folding boxboard White fresh fibre linerboard 1,000tonnes Growth in total paperboard deliveries: +10% Q1/17 vs. Q4/16 +16% Q1/17 vs. Q1/16 +12% FY16 vs. FY15 3 Q1 2017 Interim report FY 2015: 1.4 mill. tonnes FY 2016: 1.6 mill. tonnes
  4. 4. Sales increased and profitability improved Sales, EUR million 526 522 498 462 436 423 440 422 445 0 100 200 300 400 500 600 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 43 47 55 35 35 36 34 33 45 8,2 % 9,0 % 11,0 % 7,6 % 8,0 % 8,5 % 7,7 % 7,8 % 10,1 % 0% 2% 4% 6% 8% 10% 12% 0 10 20 30 40 50 60 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 2017 Interim report4 Comparable operating result, EUR million and % FY 2015: EUR 2,008 million FY 2016: EUR 1,720 million FY 2015: EUR 180 million FY 2016: EUR 137 million EURmillion EURmillion
  5. 5. 33 45 0 10 20 30 40 50 Q4 2016 Q1 2017 Operating result, EUR million Q4 2016 vs. Q1 2017 Q1 2017 Interim report5 Impact on Q1 2017 operating result vs. Q4 2016 and Q1 2016 35 45 0 10 20 30 40 50 Q1 2016 Q1 2017 Operating result, EUR million Q1 2016 vs. Q1 2017 + Growing delivery volumes in paperboard and market pulp, no major maintenance shutdowns, increased price levels in coated WTKL in the US and in market pulp - Geographic sales mix in Husum’s FBB and product mix in Husum’s white linerboards, increased latex price + Positive development at Finnish mills, discontinued paper operations, positive impact from FX rates after hedges - Increased latex price EBIT-% 8.0 EBIT-% 10.2 EBIT-% 7.8 EBIT-% 10.2 WTKL = white-top kraftliner FBB = folding boxboard
  6. 6. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 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 Comparable ROCE, % Q1 2017 Interim report6 Higher operating result improved ROCE-% Target >12% from 2017 onwards
  7. 7. • Investments in January– March were EUR 19 million (Q1/16: EUR 54 million) • Estimated capex in 2017 is EUR 65–70 million Clearly lower capex in 2017 0 30 60 90 120 150 180 2010 2011 2012 2013 2014 2015 2016 2017E Maintenance capex Growth capex Depreciation EUR million 7 Q1 2017 Interim report Main growth in capexes in 2015−2016: Husum investment programme, extrusion coating line and equity investment in Metsä Fibre’s bioproduct mill
  8. 8. Cash flows clearly positive Q1 2017 cash flow from operations impacted by changes in working capital, advance payments of employment pension contributions, and dividend from Metsä Fibre 33 56 93 66 -22 -22 67 55 269 8 45 8 -76 -50 49 17 7 250 214 256 247 193 115 89 78 126 188 119 118 70 -15 -73 -69 -60 23 -100 -50 0 50 100 150 200 250 300 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Cash flow from operations, quarterly Free cash flow, quarterly Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months EURmillion 8 Q1 2017 Interim report
  9. 9. Balance sheet remained stable 333 464 412 541 488 464 458 1,2 2.0 1,5 2,1 2,1 2.0 1,9 0 1 2 3 0 200 400 600 2015 2016 3/16 6/16 9/16 12/16 3/17 Interest-bearing net debt, EUR million Interest-bearing net debt / EBITDA (rolling 12-month) Interest-bearing net debt / comparable EBITDA 333 464 412 541 488 464 458 32% 44% 42% 54% 49% 44% 44% 0 0,1 0,2 0,3 0,4 0,5 0,6 0 200 400 600 2015 2016 3/16 6/16 9/16 12/16 3/17 Interest-bearing net debt, EUR million Net gearing, % Net gearing, % 9 Q1 2017 Interim report Financial target in net gearing is a maximum of 70%
  10. 10. • Rising capacity utilisation rate in the FBB production line (now 70%) will decrease production costs per tonne produced • FBB production line fully utilised by the end of 2018 • Total paperboard deliveries to Americas will increase • PE-coated paperboards generate sales in a new customer segment • The volumes of coated linerboards will grow Q1 2017 Interim report10 High potential to improve profitability in Husum
  11. 11. Q1 2017 Interim report11 New state-of-the-art extrusion coating line started up at Husum • EUR 38 million investment, capacity of 100,000 t/a • PE-coated*) paperboard is an alternative to plastics • Targeted mostly for food packaging and food service applications • In 2016, Metsä Board introduced PE-coated paperboards • Supports growth in a new customer segment • Metsä Board continues development work on other innovative barrier solutions including the use of bio- based materials *) PE=polyethylene, the most common barrier material used against moisture and grease
  12. 12. Q1 2017 Interim report12 Near-term outlook • Good demand for fresh fibre paperboards, pulp market expected to remain healthy • Price levels in FBB are expected to be stable, several linerboard producers have announced price increases • Metsä Board’s paperboard delivery volumes are expected to increase • Several maintenance shutdowns at the Finnish mills in Q2, rising latex price increasing production costs
  13. 13. Metsä Board's comparable operating result for the second quarter of 2017 is expected to remain roughly on the same level as in the first quarter of 2017. Q1 2017 Interim report13 Profit guidance
  14. 14. • Good overall performance in the first quarter of 2017 • High potential to improve profitability in Husum • Extrusion coating line in Husum offers improved availability and competitive products, especially in the food and food service segments • In 2017, focus is on sales of new paperboard capacity Q1 2017 Interim report14 Summary
  15. 15. Metsä Board’s 2017 Capital Markets Day 1 June 2017 in Helsinki More info: www.metsaboard.com/investors Metsä Board’s 2017 Capital Markets Day 1 June 2017 in Helsinki More info: www.metsaboard.com/investors Metsä Board’s 2017 Capital Markets Day 1 June 2017 in Helsinki More info: www.metsaboard.com/investors
  16. 16. Appendix
  17. 17. Q1 2017 Interim report17 Key financials Q1/17 Q4/16 Change Q1/17 vs. Q4/16 Q1/16 Change Q1/17 vs. Q1/16 2016 Sales EUR million 445 422 +5% 436 +2% 1,720 EBITDA, comparable EUR million 69 53 +30% 58 +19% 231 Operating result, comparable EUR million 45 33 +36% 35 +29% 138 % of sales % 10.2 7.8 8.0 8.0 Result before taxes, comparable EUR million 40 23 +74% 30 +33% 107 Earnings per share EUR 0,10 0,05 +100% 0.07 +43% 0.26 ROCE, comparable % 10.6 7.7 8.3 8.1 Capex EUR million 19 43 -56% 54 -65% 162 Cash flow from operations EUR million 26 55 -53% -22 77 IB Net debt, at the end of period EUR million 458 464 -1% 412 +11% 464
  18. 18. Comparable EBITDA 52 62 61 70 73 81 60 58 61 59 53 69 11% 12% 12% 13% 14% 16% 13% 13% 14% 14% 13% 16% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 0 20 40 60 80 100 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 EBITDA, EUR million EBITDA, % 18 Q1 2017 Interim report
  19. 19. • Impact of FX rate changes after hedges in Q1 2017: flat in Q1/17 vs. Q4/16, EUR 5 million positive in Q1 2017 vs. Q1 2016 • Hedging policy from 1 January 2017 onwards – 100% of balance sheet position – 50% of annual net FX flows FX exposure and sensitivities 58 %34 % 6 %2 % USD SEK GBP Other currencies Annual transaction exposure EUR 1.2 billion FX sensitivities before hedges 10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s EBIT of Currency Next 12 months USD, $ EUR +70 million Swedish krona EUR -40 million GBP, £ EUR +7 million 19 Q1 2017 Interim report
  20. 20. Debt structure and liquidity 31 March 2017 223 149128 23 137 Bonds Loans from financial institutions Pension loans Finance leases and other loans Other short-term loans 199 100 102 Cash and cash equivalents Revolving credit facility Unraised pension loans Interest-bearing debt, total EUR 660 million Available liquidity, total EUR 401 million Average maturity of long-term loans on 31 March 2017 was 2.2 years. 20 Q1 2017 Interim report
  21. 21. Long-term debt and financial costs Net financial costs (EUR million) and average interest rate (%) Maturity schedule in long-term IB debt EUR million 105 35 257 174 1 2 100 102 0 50 100 150 200 250 300 2017 2018 2019 2020 2021 >2022 Long-term interest bearing liabilities, EUR million Committed undrawn credit facilities, EUR million 21 Q1 2017 Interim report 56 39 32 31 5 4,6 4,2 3,8 3,3 3,3 3,0 3,2 3,4 3,6 3,8 4,0 4,2 4,4 4,6 4,8 0 20 40 60 2013 2014 2015 2016 Q1/2017 Net financial costs, EUR million Average interest rate at the end of period, %
  22. 22. 500 600 700 800 900 1000 1100 2010 2011 2012 2013 2014 2015 2016 2017 Folding boxboard White‐top kraftliner Market price development in folding boxboard and white-top kraftliner in Europe Sources: Pöyry Management Consulting & FOEX Indexes Ltd EUR/ tn 22 Q1 2017 Interim report
  23. 23. Source: Foex Indexes Ltd Softwood, USD Softwood, EUR Hardwood, EUR Hardwood, USD USDEUR Pulp price development (PIX) 23 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 '10 '11 '12 '13 '14 '15 '16 '17 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 Q1 2017 Interim report
  24. 24. • Metsä Board’s dividend payout target is at least 1/3 of EPS • Dividend for 2016: – EUR 0.19 per share – Totalling EUR 68 million – Corresponds to 76% of EPS 0 0,1 0,2 0,3 0,4 0,5 2012 2013 2014 2015 2016 Earnings per share Dividend per share Q1 2017 Interim report24 Steadily growing dividends EUR
  25. 25. Market cap and foreign owners 31 March 2017 Ownership distribution 31 March 2017 Market cap and ownership distribution 0 4 8 12 16 20 24 0 500 1 000 1 500 2 000 2 500 2012 2013 2014 2015 2016 3/2017 Market cap, EUR million Share of foreign owners, % 42 % 25 % 18 % 15 % Metsäliitto Cooperative Domestic institutional investors Domestic private investors Foreign owners EUR million *) Metsäliitto Cooperative has 61% of voting rights *) 25 % Q1 2017 Interim report

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