Metsä Group financial results 2015

Metsä Group
Results 2015
Kari Jordan
President & CEO
3.2.2016

• Sales EUR 5,016 million (EUR 4,970 million).
• Operating result* EUR 537 million (EUR 418 million).
• Operating result*, 10.7% of sales (8.4%)
• Return on capital employed* 13.6% (11.4%)
• Pulp Industry and Paperboard Industry accounted for the most
significant result improvement
3/2/2016 Metsä Group3
Year of strong results
Metsä Group –Results 2015
*excluding non-recurring items

• The construction of Metsä Fibre's bioproduct mill in Äänekoski
progressed as planned
• Metsä Board began the installation of the new folding boxboard
machine at the Husum mill in Sweden
• Metsä Board announced it would expand its range of
paperboard for food service packaging by investing EUR 38
million in extrusion coating at the Husum mill in Sweden
• The sale of the share capital of Metsä Wood's French timber
upgrading company, Metsä Wood France SAS, to mutares AG
was completed
Events during the last quarter of the
year
Metsä Group – Results 2015

Annual sales
EUR million
5,346
5,001 4,939 4,970 5,016
0
1000
2000
3000
4000
5000
6000
2011 2012 2013 2014 2015

Quarterly sales
EUR million
1.284
1.247 1.242 1.228
1.264 1.242 1.214 1.219
1.254 1.265
1.204
1.248
1.330
1.225 1.205
0
200
400
600
800
1 000
1 200
1 400
Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
1.255

Operating result excl. non-recurring items
EUR million
314
256
343
418
537
0
50
100
150
200
250
300
350
400
450
500
550
600
2011 2012 2013 2014 2015

Operating result
53
64 68 71
89
94
73
87
105
92
104
117
129
137
149
123
45
62 57
77
94
89
63
88
70
160
103
84
118
154
142
128
0
20
40
60
80
100
120
140
160
180
Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Excl. non-recurring items Incl. non-recurring items
EUR million

96
154 155
142
130
119
63
3
53
64 68 71
89
94
73
87
105
92
104
117
129
137
149
123
0
20
40
60
80
100
120
140
160
180
Q1/10
Q2/10
Q3/10
Q4/10
Q1/11
Q2/11
Q3/11
Q4/11
Q1/12
Q2/12
Q3/12
Q4/12
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Q3/15
Q4/15
EUR million

Change in operating result
EUR million
Operating result excl. non-recurring items 1–12/2015 418
Sales prices -182
Sales volumes -19
Exchange rates 222
Raw materials 80
Energy 13
Employee costs 10
Write-offs and others, total -5 +119
Operating result excl. non-recurring items 1–12/2015 537

Non-recurring items in 2015
EUR million 2015
Operating result incl. non-recurring items 542.1
Non-recurring items:
Sale of Finsilva shares 20.8
Sale of Gohrsmühle mill 17.5
Sale of Metsä Wood France SAS -21.4
Metsä Tissue’s efficiency programme in the German napkin business
and changes in operations in Russia
-11.7
Write-off of Metsä Tissue’s B&C upgrading line in Düren -1.8
Other items 1.3
Non-recurring items total +4.7
Operating result excl. non-recurring items 537.4

Metsä Group12 3/2/2016 Metsä Group12
Return on capital employed excl. non-recurring items
8.5
7.1
9.1
11.4
13.6
0
2
4
6
8
10
12
14
16
2011 2012 2013 2014 2015
%
Target >10%

Equity ratio on 31.12.
28.1
34.7
37.9 37.9
43.2
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
2011 2012 2013 2014 2015
%

Interest-bearing net liabilities on 31.12.
1,953
1,609
1,510
938
610
0
250
500
750
1 000
1 250
1 500
1 750
2 000
2011 2012 2013 2014 2015
EUR million

Capital expenditure
227
204 214
143
492
0
100
200
300
400
500
600
2011 2012 2013 2014 2015
EUR million

Income Statement
EUR million 2015 2014 Change
Sales 5,016.0 4,970.3 45.7
Other operating income 95.7 170.3 -74.6
Operating expenses -4,311.4 -4,447.5 136.2
Depreciation and impairment losses -258.2 -276.5 18.0
Operating result 542.1 416.9 125.2
Operating result exclunding non-recurring items 537.4 418.1 119.3
Share of results from associated companies and joint ventures 11.2 16.4 -5.2
Exchange gains and losses -1.2 2.7 -3.9
Other net financial items -83.8 -106.1 22.3
Result before income tax 468.4 329.9 138.4

Key figures
2015 2014 Change
ROCE, % 13.7 11.1 2.6
excluding non-recurring items 13.6 11.4 2.2
ROE, % 15.9 13.0 2.9
excluding non-recurring items 15.8 13.4 2.4
Equity ratio, % 43.2 37.9 5.3
Net gearing ratio, % 25 46 -21
Interest-bearing net liabilities, EUR million 610 938 -328
Investments, EUR million 492 143 349
Personnel at the end of period 9,599 10,410 -811

Cash Flow Statement I
EUR million 2015 2014
Cash flow from operating activities
Result for the period 355.7 260.3
Adjustments to result for the period 387.2 305.0
Interest received 4.0 5.6
Interest paid -68.9 -91.9
Dividends received 5.7 3.3
Taxes -97.3 -52.7
Other financial items, net -11.9 -11.0
Change in working capital 221.3 198.6
Cash flow arising from operating activities 796.0 617.3

Cash Flow Statement II
EUR million 2015 2014
Net cash flow from operating activities 796.0 617.3
Purchase of shares -2.4 -3.4
Acquired shares from non-controlling interest 0.0 -20.9
Investments -491.6 -143.0
Sales of assets and others 40.2 145.5
Changes in members' capital and in other equity 106.4 67.8
Interest on members' capital and dividends paid -94.9 -87.9
Change in long-term loans and other financial items -180.8 -79.5
Change in cash and cash equivalents 172.8 495.8
Cash and cash equivalents at beginning of period 947.9 454.4
Translation differences and others 0.1 -2.3
Change in cash and cash equivalents 172.8 495.8
Cash and cash equivalents at end of period 1,120.8 947.9

Personnel on 31.12.
12,525
11,447
10,736
10,410
9,599
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
2011 2012 2013 2014 2015

Wood supply and
Forest services

Wood supply and Forest services
Metsä Forest – Wood supply and forest services
Sales 1,518.1 1,575.0 -56.9
Other operating income 7.4 6.7 0.7
Depreciation and impairment losses -3.5 -3.0 -0.5
Non-recurring items, total - 1.5 -1.5
Operating result excluding non-recurring items 29.0 28.2 0.8
% of sales 1.9 1.8 0.1

Continued good growth in sales of forest services
• Supply of wood remained good throughout the
year and the stumpage prices were stable
• Metsä Forest delivered 30.0 million cubic
metres of wood to customers (30.2)
• Mild weather in the last quarter made
harvesting stands and delivering wood more
difficult
• Sales of forest management services
continued to grow during the year
• Electronic services related to wood trade and
forest management were well-received
• Metsä Group increased bonuses payable to
owner-members from wood trade
EUR million
Metsä Forest – Wood supply and Forest services
7.4
7.7
5.5
7.1
8.6
7.0
4.5
8.1
8.7
6.9 7.0
6.3
0
1
2
3
4
5
6
7
8
9
10
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Q3/15
Q4/15

Wood Products Industry
Metsä Wood – Wood Products Industry
Sales 852.2 896.9 -44.7
Operating expenses -820.3 -842.5 22.2
Operating result 10.0 34.1 -24.1
Non-recurring items, total 21.4 3.1 18.3
Operating result excluding non-recurring items 31.4 37.2 -5.8
% of sales 3.7 4.1 -0.4

4.4
11.9
-2.9
2.0
8.6
14.4
6.2
8.0 7.9
10.2
5.9
7.5
-4
-2
0
2
4
6
8
10
12
14
16
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Q3/15
Q4/15
Slight growth in delivery volumes
• Metsä Wood's comparable delivery volumes grew
slightly from the previous year due to the
increased deliveries of sawn timber
• Oversupply of Nordic sawn timber continued
throughout the year, which manifested in prices
that were clearly lower than in the previous year
• Metsä Wood adjusted the sawing volume during
the autumn
• Delivery volumes of birch and spruce plywood
were at the previous year's level and market
prices increased mainly due to changes in
exchange rates
• Metsä Wood France SAS and pole business Burt
Boulton and Haywood Ltd. were divested
EUR million
Metsä Wood – Wood Products Industry

Pulp Industry
Metsä Fibre – Pulp Industry
EUR million 2015 2014 Muutos
Sales 1,444.6 1,295.7 148.9
Operating expenses -1,060.2 -1,039.2 -21.0
Operating result 3 37.2 227.9 109.3
Non-recurring items, total - -20.3 20.3
% of sales 23.3 16.0 7.3

3/2/201629
Price of pulp (PIX) 2007–2015
USD EUR
Source: FOEX Indexes Ltd
350
450
550
650
750
850
950
1050
350
450
550
650
750
850
950
1050
'07 '08 ´09 ´10 ´11 ´12 ´13 ´14 ´15
Hardwood/EUR Softwood/EUR Hardwood/USD Softwood/USD

47.3 47.5
50.8 51.0
54.9
36.3
51.8
64.5
78.7
92.5
85.5
80.5
0
10
20
30
40
50
60
70
80
90
100
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Q3/15
Q4/15
Positive effect from higher delivery volume and
favourable USD exchange rate
• Operating result improved compared to
previous year due to higher delivery volume,
favourable US dollar rate as well as
decrease in raw material costs
• Euro-denominated prices of pulps increased
compared to the previous year due to the
stronger US dollar
• Bioproduct mill project progresses as
planned
– More than 10% of the mill is ready
– Equipment installation has started
– Capital investments in 2015 were over EUR
220 million
EUR million

Paperboard Industry
Metsä Board – Paperboard Industry
Sales 2,007.5 2,008.4 -0.9
Non-recurring items, total -19.2 19.9 -39.1
% of sales 9.0 6.8 2.2

Market prices of folding boxboard and white-top
kraftliner in Europe 2010–2015
EUR/tonne
Source: Pöyry Management Consulting and FOEX Indexes Ltd
600
650
700
750
800
850
900
950
1000
1050
1100
2010 2011 2012 2013 2014 2015
Folding boxboard White-top kraftliner

30.2
26.0
18.9
29.3
36.1
28.3
35.2
36.9
43.2
47.0
54.6
35.1
0
10
20
30
40
50
60
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Q3/15
Q4/15
Clear profitability improvement
• Operating result was improved by increased
paperboard deliveries, favourable exchange rate
changes, and divestment of the loss-making
Gohrsmühle mill
• Metsä Board's transformation from a paper
company to a leading paperboard company,
launched in 2005, was completed.
– Husum’s new folding boxboard production
line is in a start up phase
– Production of printing paper at Husum came
to an end almost in its entirety by end 2015
• Range of paperboard for food service packaging
was decided to be expanded by investing EUR
38 million in extrusion coating at Husum
EUR million

Tissue and Cooking papers
Metsä Tissue – Tissue and Cooking papers
Sales 1,015.8 1,012.8 2.9
Operating expenses -938.5 -921.6 -16.9
Operating result 41.6 .61.8 -20.2
Non-recurring items, total 13.5 0.4 13.1
Operating result excluding non-recurring items 55.1 62.2 -7.1
% of sales 5,4 6.1 -0.7

13.2
13.8
12.6
15.1
11.8
9.7
19.6
21.1
15.8
7.6
13.2
18.6
0,0
5,0
10,0
15,0
20,0
25,0
Q1/13
Q2/13
Q3/13
Q4/13
Q1/14
Q2/14
Q3/14
Q4/14
Q1/15
Q2/15
Q3/15
Q4/15
Sales Growth
• Slight growth in sales due to price increases
• Operating result was weakened by higher
pulp and recycled fibre prices, as well as the
weakening of the Norwegian krone against
the euro
• At Raubach, renewal of the production line
was started to improve tissue paper quality
• New product launches and product
development have strengthened the position
of company's own brands in the Nordic
countries and eastern Central Europe
EUR million
Metsä Tissue – Tissue and Cooking papers

Outlook for the business areas 1/2
Wood Supply and Forest services
• Wood demand is focusing on felling sites to be harvested when the ground is unfrozen and, in terms of energy
wood, on crown wood
• Sales of forest management services are expected to grow
Wood Products Industry
• Sales are expected to be on a similar level as previous year’s first quarter
• In the first quarter, the sawn timber market balance is expected to improve for spruce sawn timber. For pine
sawn timber, oversupply is expected to continue due to weak demand in the EMEA sales region
• Shutdowns are possible in birch plywood production, depending on the market situation
• Demand for other wood products is expected to continue stable
Pulp Industry
• Global economic uncertainty and changes in the currency market will impact Metsä Fibre's operating
environment
• Global demand for pulp has remained stable, and there are no signs of material changes in the market situation
Summary

Outlook for the business areas 2/2
Paperboard
• Metsä Board's paperboard deliveries in January–March are expected to grow from the last quarter of 2015
• The new paperboard production line at Husum, still in the start-up phase, will have an effect of decreasing
the average price of folding boxboard. The required quality objectives are expected to be reached latest by
the third quarter of 2016, according to the original plan
Tissue and Cooking papers
• In the tissue and cooking paper markets, demand is expected to continue stable in all market areas
• Demand for tissue paper is expected to grow in particular in eastern Central Europe and for cooking papers
in Asia
Summary

• Metsä Group’s operating result
excluding non-recurring items is in
the first quarter of 2016 expected to
be approximately on the same level
as in the fourth quarter of 2015
Near-term outlook
Summary

Metsä Group financial results 2015

Metsä Group financial results 2015

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