Metsä Board Corporation Investor presentation - January - December 2018
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Metsä Board Corporation Investor presentation January – December 2018
Contents
This is Metsä Board 3
Main contributors in Metsä Board’s profitability 15
Operating environment and demand drivers 21
Results for Q4 and FY 2018 26
Sustainability and product safety 38
Research and Development 51
Owners and management 61
Contact information 64
Investor presentation
2
1–12/2018
Investment highlights of Metsä Board
Sales split Sales split
by product by market area
• We are pure-play paperboard company
focused on premium fresh fibre Market APAC
Folding
paperboards pulp boxboard
8%
18 % 56 %
• Global trends, e.g. sustainability and
urbanization drive the demand for Americas
EMEA
FY 2018: 19 % FY 2018:
ecological and lightweight packaging EUR 1,944m EUR 1,944m 74 %
• We have a strong market position … White
kraftlainer
• … and good control of wood raw 26 %
material and self-sufficiency in pulp
Our total paperboard capacity is
2m tonnes/year
of which
1/3 are white kraftliners and
Investor presentation
3
1–12/2018 2/3 folding boxboard
Our light, pure and safe paperboards have various end-uses… Folding boxboards Food service boards White kraftliners Packaging solutions for Solutions for food service Retail-ready tray and consumer goods point-of-sale solutions
… and we have a broad customer base
BRAND OWNERS
CONVERTERS
CORRUGATED BOX
MANUFACTURERS
MERCHANTS
FOLDING BOXBOARD WHITE KRAFTLINERS
Investor presentation
5
1–12/2018
Global trends driving the demand for fresh fibre paperboards
Globalisation & Sustainability Food safety E-commerce
urbanisation
We use only We have good Our paperboards
We offer renewable fresh control of raw offer a strong
recyclable fibres from materials, which promotion and
products that are sustainably guarantees purity branding
ideal for the managed and safety in food experience
circular economy northern forests contact uses
We have a leading position in Europe in our
main products
Folding boxboard White kraftliner
• Regional sales split of
in Europe in Europe paperboard deliveries:
Total capacity 3.8m tonnes Total capacity 2.1m tonnes
• 70% EMEA
• 23% Americas
Others Metsä Others Metsä
• 7% APAC
Board #5 Board
#1 #1 • In APAC we focus on high-
#5
#4
35% #4
32% quality FBB segment
• We are the largest European
importer of FBB to US
#3
#3 • We are #1 in coated white
#2 #2
kraftliners globally
Investor presentation
7
1–12/2018
We have good control of wood raw materials,
from forests to pulp and board production
• High availability of northern wood
• Consistent quality of fibres that are tailor-made for the end products
METSÄ GROUP
METSÄLIITTO COOPERATIVE
Group’s parent company, owned by 104,000 Finnish forest owners
METSÄ METSÄ METSÄ METSÄ METSÄ
FOREST FIBRE WOOD BOARD TISSUE
Wood supply and Pulp and sawn Wood products Paperboard Tissue and
forest services timber cooking papers
METSÄ BOARD
OWNS 24.9%
Through Metsä Fibre’s ownership Metsä
Board’s annual net pulp balance is
Investor presentation
8
1–12/2018
600,000 tonnes long in 2019
Our production is close to our main raw material
Total paperboard capacity: Our net balance in pulp in 2019,
Folding boxboard (FBB): 1,345,000 t/a including the 24.9% ownership in
White kraftliner (WKL): 675,000 t/a Metsä Fibre, is 600,000 t/a
Wood sourced from
Finland, Sweden,
Kemi Baltics and Russia. Äänekoski
425,000 t/a WKL 255,000 t/a FBB
610,000 t/a Pulp* 1.3 million t/a Pulp*
Husum, SWE Simpele
400,000 t/a FBB 290,000 t/a FBB
250,000 t/a WKL
730,000 t/a Pulp
Kaskinen Joutseno
370,000 t/a BCTMP 330,000 t/a BCTMP
690,000 t/a Pulp
Kyro Tako
190,000 t/a FBB 210,000 t/a FBB
*Metsä Fibre mill
Investor presentation
9
1–12/2018
We have been growing well above average market growth rate
during past years …
Metsä Board’s annual paperboard deliveries, CAGR 2013–2017: 12%
2 000
1 500
Annual global
1,000 tonnes
demand growth for
1 000 folding boxboard
and white kraftliner
is estimated to be
500 3%
0
2013 2014 2015 2016 2017 2018
White kraftliner Folding boxboard Source: Metsä Board´s own research
Investor presentation
1–12/2018…driven by capacity increases
Capital expenditure and depreciation Investments in growth during 2011–2018:
180 2018 New baling line in Kaskinen BCTMP mill:
30,000 new BCTMP capacity
150
New sheeting line in Äänekoski (to be in
production 9/2019)
EUR million
120
90 2017 New extrusion coating line in Husum:
100,000 t/a PE coating capacity
60
2015–16 New folding boxboard production line in
30 Husum: 400,000 t/a of FBB and linerboard
production line conversion: 250,000 t/a of
0 WKL
2011 2012 2013 2014 2015 2016 2017 2018 2019E
2011–12 Debottlenecking in Simpele, Äänekoski and
Maintenance capex Growth capex
Kyro mills: total 150,000 t/a of FBB
Depreciation
Investor presentation
11
1–12/2018In medium term, we aim for moderate growth
with a strong focus on profitability
Financial targets:
Annual growth in total Comparable ROCE, % Net debt /
paperboard deliveries, % Target > 12% comparable EBITDA
Target is to exceed the relevant market Target < 2.5x
growth, 3% / year
15%
14,4 2,0
13% 1,8
12% 11,3 11,2
10%
9,1 1,2
8,1 1,2
1,0
2%
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Dividend policy
We aim to distribute at least 50% of our
12
Investor presentation result for the financial period in annual dividends
1–12/2018We have created shareholder value with focused
strategy
CAGR in dividend
+30%
Dividend, EUR and payout ratio, % in 2012–2018 Enterprise value, EUR million
0,30 100%
3500
0,25 3000
75%
0,20 2500
0,15 50% 2000
1500
0,10
25% 1000
0,05
500
0,00 0%
2012 2013 2014 2015 2016 2017 2018 0
2012 2013 2014 2015 2016 2017 2018
Dividend, EUR Dividend/EPS, %
Market capitalization, EUR million
Note! Year 2018 is a Board’s proposal to AGM
to be held on 28 March. Net debt, EUR million
Total distribution consists of a dividend of 0.10
Investor presentation and other distribution of equity of EUR 0.19
13
1–12/2018Our free cash flow weakened towards end of 2018
Free cash flow in EUR million and % of EBITDA
• Free cash flow
Comparable
– Since 2016 improved FCF as a result of improved EUR million EBITDA 2018 %
EUR 344 million
profitability, decreased capex and good working 200 80
capital discipline
150 60
– FCF weakened towards end of the 2018 as a result
of higher capex in Q4 and increased inventories
100 40
– Result share from Metsä Fibre is a non-cash item
50 20
• Our capital allocation in the near future
– Dividend: supported by good performance 0 0
– Capital structure: deleveraging continues to levels
below 1.0x -50 -20
– CAPEX: return-based allocation (ROCE above 12%) -100 -40
2013 2014 2015 2016 2017 2018
FCF, EUR million FCF/EBITDA,%
14
Investor presentation FCF=Cash flow from operations after investments
1–12/2018Main contributors in Metsä Board’s profitability
Favourable price development in paperboards
Market price development in Europe
Sources: Fastmarkets RISI & Fastmarkets FOEX
• Strong demand and limited supply in fresh
EUR / tonne
fibre paperboards have led to increased
price levels 1200
• Metsä Board’s announced price increases in 1100
2018 1000
– FBB: Europe EUR 80/tonne, effective mainly
900
from 2019.
– WKL: Twice in Europe and once in the 800
Americas
700
600
500
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Folding Boxboard White-top kraftliner
Investor presentation
16
1–12/2018Strong pulp market supported profitability in 2018
Pulp price (PIX) development in Europe
• Higher production and delivery volumes Source: FOEX Indexes Ltd
from Metsä Fibre supported Metsä
Board’s result in 2018 USD ------ NBSK PIX Softwood ----- BHKP PIX Hardwood USD
• In the long-term, pulp demand is
supported by
• Limited new capacity in the coming years
• Restrictions on recycled paper imports in
China
• Metsä Board’s annual net position in pulp
is roughly 600,000 tonnes long in 2019
Investor presentation
17
1–12/2018We see cost inflation slowing down
Metsä Board’s cost split in 2018
incl. 24.9% share from Metsä Fibre’s costs
Cost Near-term outlook
component
Other fixed
Wood Prices in Finland and Sweden are expected to remain 14 %
stable. In the Baltics, the price level will depend on the Wood
demand in export markets 28 %
Logistics In line with general cost inflation Personnel
13 %
Chemicals In line with or below general cost inflation
Energy Stabilisation following the oil and electricity price hikes in
Energy
2018 14 %
Logistics
Personnel Approximately +2% y-on-y, mainly based on collective 16 %
agreements Chemicals
15 %
Other fixed In line with or below general cost inflation
Total costs in 2018: EUR 1.7 billion
(2017: EUR 1.6 billion)
Investor presentation
18
1–12/2018We estimate that profit improvement from Husum is
slightly higher than our previous estimates
Estimated profitability improvement in 2019 vs. 2016
Original estimate in Achieved in New estimate in
2019 vs. 2016: 2018 vs. 2016: 2019 vs. 2016:
EUR 100 million EUR 90 million EUR 110–120 million
Our estimate is based on
Initial estimate communicated in 2017
• Changed market environment since 2017
• Positive from market pulp prices and SEK/EUR
• Negative from wood costs and USD/EUR
• Estimated potential in 2019 through paperboard pricing
of EUR 20–30 million
• Gradual improvement potential also after 2019
Investor presentation
19
1–12/2018Our main profit components and sensitivities
Component Change Impact on EBIT
Folding Price +/- 10% > EUR 100 million
boxboard
White Price +/- 10% > EUR 50 million
kraftliners
FX USD/EUR +/- 10% EUR 74 million
Annual FX net transaction exposure is approximately
EUR1.35 bn, of which 55% USD, 37% SEK and % GBP
SEK/EUR +/- 10% EUR 50 million
Pulp Pix price of SW/HW +/- 10% EUR 25 million
per tonne
Wood Price per m3 in +/-10% EUR 30 million*
In 2018, Metsä Board sourced 5.5 million m3 wood, of which
Finnish mills
37% from Sweden, 28% Finland, 20% Baltics and 15%
Price per m3 in +/-10% EUR 20 million Russia. Including the 24.9% share from Metsä Fibre, the total
Husum sourcing was 8.5 million m3
* incl. ownership in Metsä Fibre
Investor presentation
20
1–12/2018Operating environment and demand drivers
Paperboard is the packaging material of the future
Growing by 3% per year
The total packaging market is USD 850 billion Average annual growth rate of paperboard packaging
Glass 350
Paperboard +3% per year 2017–2022
Metal 7% 300
13% 250
36%
USD bn
USD 200
300 bn
150
34%
100
10%
Plastic Other 50
fibre-
based 0
2012 2013 2014 2015 2016 2017 2022F
Source: Smithers Pira
Investor presentation
1–12/2018We have good growth opportunities in premium
paperboards
FSB
36%
Americas EMEA FBB APAC
Annual global
Other demand
fresh fibre
grades growth for
FSB
FBB, FSB and
FSB
28% WKL is
FBB FBB 41% estimated to be
Other Other Recycled 3%
fresh fibre fresh fibre CWKL grades
grades 38%
grades WKL
Recycled WKL
Recycled CWKL White
77% grades White
grades WKL testliner testliner
White testliner
Cartonboard White linerboard Cartonboard White linerboard Cartonboard White linerboard
Total annual 10 million 3 million 10 million 5 million 22 million 3 million
demand: tonnes tonnes tonnes tonnes tonnes tonnes
FSB = food service board, FBB = folding boxboard, SBS & CUK = other fresh fibre grades, WLC = recycled grades
WKL = uncoated white kraftliner, CWKL=coated white kraftliner
Investor presentation
23 Source: Metsä Board research based on several sources,
1–12/2018
e.g. CEPI Cartonboard and Containerboard, RISIWe sell globally, but have a regional approach
The Americas is the biggest growth area
AMERICAS EMEA APAC
SHARE OF TOTAL PAPERBOARD SHARE OF TOTAL PAPERBOARD SHARE OF TOTAL PAPERBOARD
DELIVERIES IN 2018 DELIVERIES IN 2018 DELIVERIES IN 2018
23% 70% 7%
Demand drivers: Demand drivers: Demand drivers:
• Emerging environmental • Acceleration in • Growing upper and middle
considerations environmental classes, and increased
commitments and purchasing power
• Trend for lightweight regulations
packaging – but limited • More brand-aware
local capacity in FBB • Stricter food safety consumers
requirements • Continued shift to modern
retail and mobile
commerce
Investor presentation
24
1–12/2018Branding and personalisation
becoming more important in
E-commerce
• Functionality, durability and consumer experience are
the key words
• Demand for white kraftliner driven by
– Increasing branding of the packaging
– Trend towards shipping the product in its own container
– Personalisation of boxes, supported by advanced
technology in digital printing
• The global value of E-commerce is expected to grow by
20% per year on average, increasing its share of the
retail trade from 10% to 18% in 2017–2021
Investor presentation Sources: eMarketer, Smithers Pira
25
1–12/2018Results for Q4 and FY 2018
Key financials
Change Change
Q4/18 Q3/18 Q4/18 2018 vs
vs. Q3/18 2018 2017 2017
Sales EUR, m 458 475 -4% 1,944 1,849 5%
EBITDA* EUR, m 81 84 -4% 344 289 19%
Operating result* EUR, m 60 64 -6% 252 194 30%
% of sales % 13.1 13.4 13.0 10.5
Result before taxes* EUR, m 56 60 -6% 230 157 46%
Earnings per share EUR 0.14 0.16 -13% 0.57 0.42 36%
ROCE* % 13.7 15.0 14.4 11.2
Capex EUR, m 34 11 219% 70 65 7%
Cash flow from operations EUR, m 30 54 -44% 151 236 -36%
IB Net debt, at end of period EUR, m 335 344 -3% 335 358 -7%
*comparable
Investor presentation 1–
27
12/2018Q4 2018 in summary
(vs. Q3 2018)
• Paperboard delivery volumes decreased due to
seasonality
• Average selling prices of folding boxboard and white
kraftliners rose slightly
• Increased uncertainty in the pulp market weakened
pulp prices and decreased delivery volumes,
particularly in China
• Machinery breakdown in Husum pulp mill had an
impact also on paperboard production
• New baling line was taken in use at Kaskinen BCTMP
mill
Investor presentation
28
1–12/2018Seasonality impacted on Q4 paperboard delivery
volumes
White kraftliner Folding boxboard
500
400 161
173 170 171 149 134
163 152
1,000 tonnes
300
200
304 299 297 328 297
265 276 293
100
0
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
1–12/2017: 2018 vs. 2017 : 1–12/2018:
FBB: 1,144,000 tonnes FBB: +6% FBB: 1,215,000 tonnes
WKL: 658,000 tonnes WKL: -7% WKL: 615,000 tonnes
29
Investor presentation Total: 1,803,000 tonnes Total: +1.6% Total: 1,830,000 tonnes
1–12/2018Delivery volumes in folding boxboard increased
year-on-year
Folding boxboard (FBB) deliveries in 2018 (2017) White kraftliner (WKL) deliveries in 2018 (2017)
tonnes tonnes
APAC
4k (14) ↓
APAC
119k ↑
(116) Americas
Americas 10%
173k
(187)
↓
252k
(232) ↑ EMEA 28% EMEA
21% 844k ↑ 439k ↓
(796) 72% (457)
69%
Total FBB deliveries Total WKL deliveries
1,215,000 (1,144,000) tonnes 616,000 (658,000) tonnes
Investor presentationTotal FBB capacity 1,345,000 tonnes in 2019 Total WKL capacity 675,000 tonnes in 2019
30
1–12/2018Weakened pulp market impacted negatively on Q4 result
Sales Comparable operating result
EUR million EUR million and % of sales
80 14,0 % 16%
500 13,4 % 13,1 %
12,1 %
11,4 %
400 60 10,2 % 10,5 % 12%
9,2 %
EUR million
EUR million
300
40 8%
200
20 4%
100
445 474 479 451 492 519 475 458 45 44 50 54 69 59 64 60
0 0 0%
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
1–12/2017: 1–12/2018: 1–12/2017: 1–12/2018:
EUR 1,849 million EUR 1,944 million EUR 194 million EUR 252 million
(10.5% of sales) (13.0% of sales)
Investor presentation
31
1–12/2018ROCE is above the target level
FY 2018 ROCE was 14.4% (2017: 11.2)
16%
14%
Target: 12%
12%
10%
8%
6%
4%
2%
0%
Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18
Comparable ROCE-%, Quarterly
Investor presentation
32
1–12/2018Capex and increased inventories had a negative
impact on cash flows in Q4 2018
250
250
200 200
150 150
106
EUR million
EUR million
100 79 100
67 68 59
49 55 54
37 36 43 50
50 26 2 30 23 30
17 20
7
0 0
-3
-50 -22 -50
-72
-100 -100
Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18
Cash flow from operations, quarterly Free cash flow, quarterly
Cash flow from operations, rolling 12 months Free cash flow, rolling 12 months
Investor presentation
33
1–12/2018 Free cash flow = Cash flow from operations - investmentsNet debt at the year end was EUR 335 million and
leverage at 1.0x
600 3,0
Net debt / EBITDA target level:Debt and its maturity
Metsä Board’s both credit ratings are investment grade
31 December 2018
Rating agency Rating and Last update
• Total interest-bearing debt on 31 December was outlook
EUR 447 million (12/2017: EUR 577 million) S&P Global BBB- 02/2018
stable Upgrade from BB+
• On January 2019 Moody’s upgraded Metsä Board to Moody‘s investor Baa3 01/2019
investment grade, Baa3, outlook stable services stable Upgrade from Ba1
Interest-bearing debt maturity profile 31 December 2018
250
200
EUR million
150
100
50
0
2019 2020 2021 2022–26 2027
Bonds Loans from financial institutions Pension loans Other loans
Investor presentation
35
1–12/2018 Company has an undrawn revolving credit facility of EUR 150 million maturing in 2020Metsä Board’s rating history 2011–2017
Also Moody’s upgraded to investment grade in 2019
Investment grade
Investor presentation
36
1–12/2018Near-term outlook
Q1 2019 vs. Q4 2018
• Paperboard delivery volumes are expected to
increase slightly
• FBB prices are expected to rise
• Positive impact from FX
• Lower average pulp prices
• Planned maintenance shutdown in Q1 at
Metsä Fibre’s Bioproduct mill in Äänekoski
• Uncertainty continues in the global economy
Investor presentation
37
1–12/2018Sustainability and
product safety
Investor presentation 1–12/2018By 2030 we Cities cover 2% of
300 million tons of
will be 8.6 theBy 2030
land webut
area
billion will be 8.5 plastic produced
create 70% of the
billion
people on every year
this planet waste globally
Outlook for our future?
At least 8 million Only 14% of Curbing global
tons of plastics plastic warming requires
dumped into packaging a drastic
oceans every collected for reduction in
3
year
Investor
presentation
recycling emissions
9
1–12/2018“Our comprehensive approach
to reducing our environmental
Sustainability is on impact means looking at all
everybody’s agenda aspects of our business, how
they intersect and how we can
integrate new solutions to
create meaningful and
sustained change.”
• Growing consumer awareness:
– Starbucks website
Origin and transparency of
materials, renewability, resource
efficiency and recylability
• Brand owners are committed to
reducing their carbon footprints: “We want low-carbon to become
the new normal, so we’re taking
Lighter packaging reduces CO2 action to reduce GHG emissions
emissions across the value chain throughout our value chain.”
– Unilever website
Investor presentation
40
1–12/2018Fresh fibre paperboards offer solutions to major challenges Increased waste Replacing fossil- Reducing carbon Ensuring food generation due to based materials, footprint safety urbanisation i.e. plastics The solution: The solution: The solution: The solution: renewable pure and safe Paperboard is renewable and energy, efficient fresh fibres in recyclable biodegradable energy and water food packaging – and widely wood fibre usage in recycled production
Wood is the main raw
material for Metsä Board
• Metsä Board sources its
wood mainly from Finland
and Sweden (65 %)
• All wood used is 100%
traceable and comes from
sustainably managed forest
sources ensuring the bio-
diversity and recreational use
of forests
• 79% of wood sourced is
certified (remaining 21 % from
controlled forest sources)
Investor presentation
1–12/2018Finland – the largest forest cover in Europe
The area of Finland
5% Cities, villages and roads
Annual growth of Finnish forests is 10%
100+
MILLION M3
over 100 million m 3 – more than ever
10%
Fields and agricultural use
Lakes and rivers
Forests grow more than they are used,
annual harvesting 72 million m 3 (2017)
Four seedlings are planted for each
harvested tree 75% Forest
Over 20% of the Finnish export comes
from forest-based products
Investor presentation
43
1–12/2018Metsä Board has decreased its process water use by 20% since 2010 • Metsä Board uses only surface water in its processes • Water is been recirculated in processes several times • 99% of the water used is returned back to the close-by waterways after thorough purification
Lighter packaging reduces CO2 emissions across the
value chain – Our fossil CO2 emissions per product tonne
have reduced by almost 50% since 2009
Less energy, water and
raw material consumed
Less waste
generated
Less
transport
weightPrimary energy used in 2018
(total 12.0 TWh)
Our energy efficiency has improved
Fossil-based
by almost 12% during 2009-2018 18 %
Renewable,
mainly
wood-based
Nuclear
55 %
power
• Over 80% of primary energy we use is fossil free 27 %
• After OL31) starts up, we will be nearly self-sufficient in
electricity in Finland
Electricity sourced in 2018
− Including the electricity used in Husum mill, (total 2.4 TWh)
self-sufficiency will be nearly 80% Outsourced
generation
• Metsä Board’s shareholding in PVO2) is 3.2% 3% Own
generation
− Fair value as per 31 December 2018 was EUR 266 million 3)
21 %
Purchased
electricity
44 %
Through
1) Olkiluoto Nuclear Power Plant PVO
shareholding
2) Pohjolan Voima Oyj is a non-listed public limited liability company. 32 %
It supplies electricity and heat for its shareholders at cost price
Investor presentation 3) Out of 44% share of purchased energy, 14% is from Metsä Fibre
46
1–12/2018We are committed to high performance on sustainability
RAW MATERIALS AND RESOURCE EFFICIENCY STAKEHOLDERS
SUPPLY CHAIN AND ENVIRONMENTAL AND SOCIAL IMPACTS
IMPACTS
Share of certified wood: Fossil CO2 emissions per product tonne
2009–2020: Coverage of Code of Conduct training:
TARGET PERFORMANCE 2018
TARGET PERFORMANCE 2018 TARGET PERFORMANCE 2018
>80% 79% -30% -48% 100% 97%
Energy efficiency improvement Lost-time accidents frequency annually
2009–2020: (LTA1: 7.5): *
TARGET PERFORMANCE 2018 TARGET PERFORMANCE 2018
12% 11.7% -10% +15.9%
*Long-term target is zero accidents.
Process water use per product tonne
2010–2020: Sickness absenteeism:
TARGET PERFORMANCE 2018 TARGET PERFORMANCE 2018
-17% -20%Food safety is growing its
importance
• Health and safety aspects are strongly emerging in
food packaging
• Purity and safety have become critical factors, also for
consumers
• Growing worry about e.g. fluorochemicals or mineral oil
migration from recycled packaging into foodstuffs set
stricter demands on packaging materials
• Packaging’s strength and durability are non-negotiables
to reduce food waste
Investor presentation
48
1–12/2018Packaging made from recycled material
Global
restrictions in
the use of
Recycled fibre Recycling would recycled fibres in
packaging is end in few direct food
suitable for months without In food contact
We promote packaging
many goods fresh fibre inflow
circular mineral oil
economy migration pose
providing vital a health hazard
material in recycled fibre
to the recycling
loopPaperboard adds value to packaging
A detailed consumer study with cherry tomatoes was carried out in Finland by Sense N Insight,
Luke (Natural Resources Institute Finland) and Metsä Board
Results and findings:
• Consumers regard paperboard as a more responsible choice than plastic packaging - willingness to pay more for it
• Paperboard cartons preserved the cherry tomatoes at least as well as the plastic equivalent
• The climate effect of a recycled PET container was calculated at six times higher than the average value for the
paperboard cartons
Investor presentation
50
1–12/2018Research and Development
Our key product development focus areas
LIGHTWEIGHTING BARRIER BOARDS
• Improved BCTMP • Dispersion barriers
• Microfibrillated cellulose (MFC) • Bio-based raw materials
• Strength additives
Investor presentation
52
1–12/2018We achieve high bending stiffness
from a strong outer layers and a
thick and light inner layer
Top coating
Bleached chemical pulp
High yield pulp (BCTMP)
or groundwood pulp
Bleached chemical pulp
Investor presentation
53
1–12/2018The role of packaging is to promote the brand and
protect the product – in a cost-effective way
Metsä Board’s
Solid bleached board folding boxboard
(SBB)
PROMOTION
Brightness
Folding boxboard
(FBB)
Coated unbleached kraft
(CUK)
White lined chipboard
(WLC)
PROTECTION
Investor presentation Stiffness
54
1–12/2018High-yield pulp makes the difference between folding boxboard
and other grades …
Light weight High strength and High brightness Consistent quality
– better yield bending stiffness and smoothness – improved
and sustainability – secure – excellent production
protection printability efficiency… and leave more trees standing
SBS =
(100% chemical pulp)
5 m3 of wood per tonne of pulp
Metsä Board FBB
(up to 70% BCTMP, =
30% chemical pulp )
3.4 m3 of wood per tonne of pulp
Investor presentation
1–12/2018Lighter-weight paperboards: Better with Less
The weights equal to a print job of 30 000 sheets on a standard size printing press
Metsä Board
lightweight paperboard
Average FBB –
Folding boxboard
SBB –
Solid bleached board
WLC –
White lined chipboard
Investor presentation
57
1–12/2018Brand-owners seek more
sustainable packaging solutions
• Fresh fibre paperboards can help replace non-
renewable packaging materials
• Metsä Board launched a new eco-barrier paperboard in
2018
– Developed especially for food service use with short food
contact time and when light grease resistance is sufficient
– The board recently achieved an industrial compostability
certification
Investor presentation
58
1–12/2018Barriers preserve packed products and the package
Packed product
Barriers reducing waste have a
H2O, Fats, CO2, Acids,
huge positive total effect on Light, O2, H2O Alcohols, Aromas
environment
Light, O2, H2O, Aromas/Odor
Barriers are inbuild in many competing Influence from
materials e.g. plastics, metals but those environment Monomers, additives,
oxidation products
have other issues
CO2, H2O, N2, Aromas/Flavor
Often needed are water, moisture and
grease barriers and they are in the focus
of Metsä Board’s development Packaging material
Barriers protect product
and/or packaging
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1–12/2018Getting familiar with terminology:
Barrier boards types
Examples of materials used in coating
BIODEGRADABLE Note!
Biobased material
PVA (polyvinyl alcohol) =
PLA (polylactide): often
NON-BIOBASED
PBS (polybutylene Renewable material
based on corn starch
succinate)
BIOBASED
≠
Compostable
≈
PE: made from fossil raw
Green PE: made from
materials, used in Biodegradable
biomaterials
extrusion coating
NON-BIODEGRADABLE
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1–12/2018Owners and management
Market cap and ownership distribution
Metsä Board shares (METSB, METSA) are listed on Nasdaq Helsinki
Market cap and share of foreign owners Ownership distribution
31 December 2018 31 December 2018
EUR million %
Foreign
3 000 25 owners
21 %
2 500 20
2 000 Metsäliitto
15
1 500 Cooperative
41 %
10 Domestic
1 000
private
500 5 investors
18 %
0 0
2013 2014 2015 2016 2017 2018
Market cap, EUR million Domestic
institutional
Share of foreign owners, % investors
20 %
Investor presentation
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1–12/2018Metsä Board Corporate Management Team
Mika Joukio Jussi Noponen Sari Pajari
CEO CFO SVP, Marketing and Sales
Chairman of CMT since 2014 Member of CMT since 2016 Member of CMT since 2011
MG employee since 1990 MG employee since 2000 MG employee since 2007
Share ownership: 250,000 Share ownership: 58,000 Share ownership: 51,500
Harri Pihlajaniemi
Ari Kiviranta SVP, Production Susanna Tainio
SVP, Development SVP, HR
Member of CMT since 2017
Member of CMT since 2014 MG employee in 2001-2004 Member of CMT since 2015
MG employee since 1993 and since 2017 MG employee since 2011
Share ownership: 40,000 Share ownership: no ownership Share ownership: 31,358
Share ownerships are B-shares.
Investor presentation MG = Metsä Group
63
1–12/2018Contact information
Katri Sundström
Vice President, Investor relations
Tel +358 400 976 333
katri.sundstrom@metsagroup.com
Metsä Board Corporation
P.O. Box 20
02020 Metsä, Finland
www.metsaboard.com
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1–12/2018Disclaimer
This presentation includes forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,”
“estimate,” “will,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or any similar expressions
identify certain of these forward-looking statements. Others can be identified from the context in which the statements are
made. By their nature, forward-looking statements are subject to assumptions, risks and uncertainties. Although we
believe that the expectations reflected in these forward-looking statements are reasonable, actual results may differ, even
materially, from those expressed or implied by these forward-looking statements. We urge presentation participants not to
place undue reliance on such statements.
The information and views contained in this presentation are provided as at the date of this presentation and are subject to
change without notice. Metsä Board does not undertake any obligation to publicly update or revise forward-looking
statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
Viewers should understand that this presentation does not constitute, and should not be construed as, an offer to buy or
subscribe for Metsä Board’s securities anywhere in the world or an inducement to enter into any investment activity
relating to the same. No part of this presentation should form the basis of, or be relied on in connection with, any contract
or commitment or decision to invest in Metsä Board securities whatsoever. Potential investors are instructed to acquaint
themselves with Metsä Board’s annual accounts, interim reports and stock exchange releases as well as other information
published by Metsä Board to form a comprehensive picture of the company and its securities.
Metsä Board publishes inside information according to Market Abuse Regulation (MAR) and rules of the Nasdaq Helsinki.
Investor presentation
65
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