Metsä Group's sales and operating result increased in Q1 2018 compared to Q1 2017, mainly due to higher delivery volumes and prices for pulp and paperboard. The profitability improvements were dampened by negative exchange rate changes and cost inflation. Looking forward, demand is expected to remain strong for wood products and pulp, while prices of paperboard are projected to remain stable or increase slightly. Metsä Group expects its operating result to remain similar to Q1 levels in Q2 2018.

2. Metsä Group
Interim report Q1/2018
Ilkka Hämälä
President and CEO
3 May 2018

3. • Sales EUR 1,428 million (Q1/2017: EUR 1,216 million)
• Operating result* EUR 208 million (EUR 128 million)
• Operating result of sales* 14.6% (10.5%)
• Return on capital employed* 16.6% (12.5%)
• The growth of sales and result was mainly due to higher
delivery volumes and higher pulp and paperboard prices
• Exchange rate changes and cost inflation had a negative effect
on the result
3 May 2018 Metsä Group3
Metsä Group’s profit-making ability
improved considerably
Metsä Group – Q1
*comparable

4. • The market prices of long-fibre and short-fibre pulp continued to
increase
• The market prices of folding boxboard and white kraftliner rose
compensating for the unfavourable exchange rate changes
• Metsä Group will pay double bonuses on pulpwood from
owner-members between 1 March and 31 May 2018
• Standard & Poor’s Ratings Services raised Metsä Board’s
credit rating to investment grade
• Ilkka Hämälä started as the President and CEO of Metsä Group
on 1 April 2018
3 May 2018 Metsä Group4
Events in the first quarter of 2018
Metsä Group – Q1

5. 3 May 2018 Metsä Group5
1 254 1 265
1 204
1 248 1 255
1 330
1 225 1 205
1 156 1 184 1 143 1 175 1 216 1 235 1 260
1 328
1 428
0
200
400
600
800
1 000
1 200
1 400
1 600
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 Q1/18
Sales quarterly
Metsä Group – Q1
EUR million

6. 3 May 2018 Metsä Group6
105
92
104
117
129
137
149
123
109
120
103 107
128
119
134
185
208
0
25
50
75
100
125
150
175
200
225
Q1/14
Q2
Q3
Q4
Q1/15
Q2
Q3
Q4
Q1/16
Q2
Q3
Q4
Q1/17
Q2
Q3
Q4
Q1/18
Q2
Q3
Q4
Comparable operating result
Metsä Group – Q1
EUR million

7. Change in comparable operating result
3 May 2018 Metsä Group7
Metsä Group – Q1
EUR million
Comparable operating result Q1/2017 127.9
Sales prices 141.8
Sales volumes 40.6
Exchange rates -41.7
Raw materials and energy -21.2
Employee costs -11.6
Maintenance and other fixed costs -19.8
Other -8.1
Comparable operating result Q1/2018 207.9

8. 3 May 2018 Metsä Group8
Comparable ROCE
Metsä Group – Q1
12.3
13.5
10.6
12.5
16.6
0
2
4
6
8
10
12
14
16
18
Q1/2014 Q1/2015 Q1/2016 Q1/2017 Q1/2018
%
Target >10%

9. 3 May 2018 Metsä Group9
Equity ratio
Metsä Group – Q1
37.9
43.2 43.9 45.0
46.5
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
50,0
12/2014 12/2015 12/2016 12/2017 3/2018
%

10. 3 May 2018 Metsä Group10
Interest-bearing net liabilities
Metsä Group – Q1
938
610
1,033
993
1,039
0
250
500
750
1 000
1 250
1 500
12/2014 12/2015 12/2016 12/2017 3/2018
EUR million

11. 3 May 2018 Metsä Group11
Capital expenditure
Metsä Group – Q1
143
492
758
608
480
100
200
300
400
500
600
700
800
1–12/2014 1–12/2015 1–12/2016 1–12/2017 1–3/2018
EUR million
Full year
estimate

12. 3 May 2018 Metsä Group12
Personnel
Metsä Group – Q1
10,410
9,599 9,300 9,126 9,281
0
2 000
4 000
6 000
8 000
10 000
12 000
12/2014 12/2015 12/2016 12/2017 3/2018

13. Metsä Group’s purchasing volumes of wood are
increasing
• Wood was harvested according to targets,
and deliveries to customers were smooth
• Metsä Forest delivered a total of 9.6 million
cubic metres (8.7) of wood
• Poor harvesting and transportation
conditions improved during the beginning
of the year
• More wood was purchased than the year
before by Metsä Forest
• A total of 30% of the wood was bought
digitally. In the sale of forest management
services, the figure was 45%
3 May 2018 Metsä Group13
Sales and comparable operating result
EUR million
Metsä Forest –Wood Supply and Forest Services
401
378
356
399
433
397
376
429
490
7.8
6.5
7.7
8.9 8.5
4.4
5.9
5.4
8.7
0
3
6
9
12
15
18
0
100
200
300
400
500
600
Q1/16 Q2 Q3 Q4 Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4
Sales Operating result

14. Demand for engineered wood products remained good
despite of the UK
• The decline of sales was mainly attributable
to smaller delivery volumes to the UK
• Metsä Wood’s profitability declined due to
the decline in the result of the UK operations
and the costs of the new mills
• The investment at Kerto mill in Lohja has
progressed to the normal production phase
• The start-up of equipment at the plywood
mill in Pärnu has begun as planned
• The construction work for the new Kerto
production line at Punkaharju mill has
started
3 May 2018 Metsä Group14
Sales and comparable operating result
EUR million
Metsä Wood –Wood Products Industry
121
130
115 115
120 122
110 108 109
8.2
13.2
9
8.3
10.7
8.4
7.6
6.9
6.2
0
3
6
9
12
15
0
30
60
90
120
150
Q1/16 Q2 Q3 Q4 Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4
Sales Operating result

15. Strong financial performance in Pulp Industry
• Demand for pulp remained strong
• Market price of long-fibre and short-fibre
pulp increased by 10% and 18%,
respectively, compared to last year
• The sales volume of pulp was
approximately 28% higher than in the
corresponding period in the previous year
due to Äänekoski bioproduct mill’s
growing volumes
• The balance between supply and demand
in sawn timber has improved, and average
prices increased by 14% compared to
previous year
3 May 2018 Metsä Group15
Sales and comparable operating result
EUR million
Metsä Fibre – Pulp and Sawn Timber Industry
409 423
389
416 422 427
475
552
601
61.2
53.2
46.4
53.7 54.5
70.8 68.4
125.9
144.9
0
25
50
75
100
125
150
175
0
100
200
300
400
500
600
700
Q1/16 Q2 Q3 Q4 Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4
Sales Operating result

16. 3 May 2018 Metsä Group16
Price of pulp (PIX) 2010–Q1/2018
Metsä Fibre – Pulp and Sawn Timber Industry
450
550
650
750
850
950
1050
1150
450
550
650
750
850
950
1050
1150
´10 ´11 ´12 ´13 ´14 ´15 ´16 ´17 ´18
Hardwood/EUR Softwood/EUR Hardwood/USD Softwood/USD
USD EUR
Source: Foex

17. Paperboard Industry had a strong start for the year
• The sales and operating result improved
due to the increased delivery volumes and
higher sales prices of paperboard and
market pulp
• Especially market prices of white kraftliner
increased in local currencies
• Exchange rate changes had a negative
impact on the result
• Production efficiency was good, and
several units set new production records
3 May 2018 Metsä Group17
Sales and comparable operating result
EUR million
Metsä Board – Paperboard Industry
436 423
440
422
445
474 479
451
492
35 35.8 34 32.8
45.2 43.5
50.4
54.4
69
0
15
30
45
60
75
90
0
100
200
300
400
500
600
Q1/16 Q2 Q3 Q4 Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4
Sales Operating result

18. 3 May 201818
600
700
800
900
1000
1100
1200
2011 2012 2013 2014 2015 2016 2017 2018
Folding boxboard White-top kraftliner Sources: RISI, Inc. & FOEX Indexes Ltd
Prices of folding boxboard and white-top kraftliner in
Europe 2011–Q1/2018
EUR/ tonne
Metsä Group

19. Tissue and Cooking Papers’ production efficiency
is being improved
• The sales of Metsä Tissue grew due to
increased sales volumes
• The result was weakened by the price of
pulp, the exchange rate changes of the
Norwegian krone, Swedish krona and UK
pound against euro
• There are several ongoing investments in
the internal efficiency and product portfolio
of tissue and cooking papers
3 May 2018 Metsä Group19
Sales and comparable operating result
EUR million
Metsä Tissue – Tissue and Cooking Papers
246 249 247 249 252 251 250
261 259
13.5 13.2
15.8
20.6
17.6
16.3 16.8
23.3
12.3
0
5
10
15
20
25
30
0
50
100
150
200
250
300
Q1/16 Q2 Q3 Q4 Q1/17 Q2 Q3 Q4 Q1/18 Q2 Q3 Q4
Sales Operating result

20. • Demand for wood will focus on regeneration and thinning felling
that can be harvested in the summer and, in energy wood,
primarily on crown wood
• Market demand for wood products is expected to remain
strong, which improves order book levels, particularly in
plywood. Uncertainty in the UK market is expected to continue
• The pulp market is expected to remain at its current, good level.
Demand for sawn timber is also expected to remain good
• Demand for consumer packaging paperboard is expected to
continue to grow. The market prices of folding boxboard in local
currencies are expected to remain stable or to rise slightly
• In the tissue and cooking paper markets, demand is expected
to remain stable in all market areas
3 May 2018 Metsä Group20
Summary
Outlook for the business areas

21. • Metsä Group’s comparable operating
result in the second quarter of 2018
expected to be roughly at the same
level as in the first quarter of 2018
3 May 2018 Metsä Group21
Near-term outlook
Summary