Metsä Board Oyj — Audit Report / Information 2020

Feb 11, 2021

METSÄ BOARD FINANCIAL STATEMENTS BULLETIN

2020

METSÄ BOARD'S COMPARABLE OPERATING RESULT IN 2020 WAS EUR 221 MILLION

JANUARY–DECEMBER 2020 (compared to 1–12/2019)

• Sales were EUR 1,889.5 million (1,931.8).
• Comparable operating result was EUR 221.2 million (184.4) or 11.7% (9.5%) of sales. Operating result was EUR 227.3 million (180.8).
• Comparable earnings per share were EUR 0.46 (0.41), and earnings per share were EUR 0.48 (0.41).
• Comparable return on capital employed was 12.2% (10.4%).
• Net cash flow from operations was EUR 307.7 million (200.5).

OCTOBER–DECEMBER 2020 (compared to 10–12/2019)

• Sales were EUR 473.1 million (478.4).
• Comparable operating result was EUR 64.5 million (39.1), or 13.6% (8.2%) of sales. Operating result was EUR 64.5 million (20.0).
• Comparable earnings per share were EUR 0.14 (0.09), and earnings per share were EUR 0.14 (0.05).
• Comparable return on capital employed was 14.3% (8.9%).
• Net cash flow from operations was EUR 81.0 million (89.6).

IMPACT OF CORONAVIRUS PANDEMIC ON METSÄ BOARD'S BUSINESS OPERATIONS

The coronavirus pandemic has increased demand for clean and safe packaging materials, particularly for end uses in the food and pharmaceutical industries. On the other hand, the pandemic has weakened demand for the packaging materials of luxury items and graphic end uses.

Metsä Board's production and deliveries have not experienced any disruptions during the pandemic, and the annual maintenance shutdowns of the mills were carried out successfully. While no chains of coronavirus transmissions have occurred, the incidence of individual cases of infection has increased as the pandemic has progressed.

Metsä Board's financial position is good. The maturity structure of the loans is healthy, and the company has adequate liquidity. Metsä Board's paperboard product portfolio has responded well to changes in demand caused by the pandemic, and thus the cash flow, which has remained strong, supports financial headroom.

The company continues to employ substantial precautionary measures aiming to ensure the health of employees and the continuity of business operations and prevent the virus from spreading. Despite the precautionary measures, a prolonged pandemic could lead to disruptions in production and/or the supply chain. Furthermore, substantial weakening of the world economy attributable to the pandemic could also reduce demand for Metsä Board's products and thereby have a negative impact on the company's profitability.

EVENTS IN OCTOBER–DECEMBER 2020

• Demand for Metsä Board's fresh fibre paperboards remained good, and particularly the market situation of white kraftliners strengthened towards the end of the year. The decline in paperboard delivery volumes was, as expected, mainly caused by the seasonally slower December.
• In China, demand for market pulp remained good and dollar-denominated prices continued to rise. The pulp market in Europe also picked up slightly.
• Metsä Board's production volumes of white kraftliners and pulps were record high in October–December. Good material and production efficiency lowered production costs.
• Metsä Board announced that it would sell a 30% minority share of the Husum pulp mill to Norra Skog. The transaction was made on 4 January 2021, and it reduces Metsä Board's net debt by approximately EUR 260 million. The arrangement improves wood handling at the Husum mill and allows the company to focus a significant portion of its development investments on paperboard.
• Metsä Board obtained an approval for an amendment to Husum's environmental permit and made the final investment decision on the first phase of the pulp mill's renewal, which includes a new recovery boiler and turbine. The total value of the investment is around EUR 320 million, and the estimated start-up is in the first half of 2022.

• In December, Metsä Board was again recognised for its climate work when the company was included on CDP's Climate A and Water A lists for climate change mitigation and the sustainable use of water resources. In the sustainable use of forests, the company achieved grade A- from CDP's forest programme.

EVENTS AFTER THE REVIEW PERIOD

• The sale of a 30% share in the Husum pulp mill to Norra Skog was completed on 4 January 2021, and its impact will be included in Metsä Board's financial reporting as of the interim report concerning January–March 2021. The transaction will decrease Metsä Board's net debt by approximately EUR 260 million, and in addition it will reduce Metsä Board's financial contribution in the second phase of the Husum pulp mill renewal by approximately EUR 100 million.
• Metsä Board announced on 22 January 2021, that it has started pre-engineering for increasing the annual production capacity of folding boxboard at the Husum mill in Sweden by approximately 200,000 tonnes. The pre-engineering phase includes also an evaluation of the mill's port capacity for increased volumes of raw materials and finished goods. The readiness to make the final investment decision is expected to be achieved in the summer of 2021 and the ramp-up of the additional capacity would start in 2023.
• On 11 February 2021, Metsä Board's associated company Metsä Fibre made an investment decision on the construction of a new bioproduct mill in Kemi, Finland.
• On 11 February 2021, Metsä Board made an investment decision on the development programme for its Kemi paperboard mill.

RESULT GUIDANCE FOR JANUARY–MARCH 2021

Metsä Board's comparable operating result in January– March 2021 is expected to improve compared to October–December 2020.

BOARD OF DIRECTORS' PROPOSAL FOR DIVIDEND AND CAPITAL DISTRIBUTION

The Board of Directors proposes to the Annual General Meeting to be held on 25 March 2021 that a dividend of EUR 0.10 per share and a capital distribution of EUR 0.16 per share be paid for the 2020 financial period. The proposed dividend and capital distribution, totalling EUR 0.26 per share, corresponds to 54% of the result per share for 2020.

METSÄ BOARD'S CEO MIKA JOUKIO:

"The fourth quarter of the year went according to our expectations and our comparable operating result was EUR 64.5 million (10–12/2019: 39.1). The lower production costs for the paperboard business and the increased delivery volumes of market pulp improved our profitability. Our financial position remained strong: at the end of the period, our interest-bearing net debt was at EUR 236 million and its ratio to comparable EBITDA was clearly below one.

In December, we announced to sell a 30% share of the Husum pulp mill to the Swedish forest owner cooperative Norra Skog. The arrangement made Metsä Board practically a net debt free company, which means that we are in an excellent position to expand our core business – sustainable, high-quality fresh fibre paperboard. Also in December, we made a final investment decision on the first phase of the renewal of the Husum pulp mill.

The coronavirus pandemic's negative impact on our business remained smaller than expected throughout the year. Solid demand in food and pharmaceutical packaging, as well as in various packaging solutions in the retail sector, increased demand for our fresh fibre paperboards in our main markets. Our paperboard deliveries grew from the previous year and were 1,810,000 tonnes. Our growth continued, particularly in North America, where our sales are supported by competitive products, an efficient supply chain and superior customer service.

Our comparable operating result in 2020 improved by 20% from the previous year and was EUR 221.2 million. Our comparable return on capital employed, 12.2%, reached our long-term target level. Profitability improved due to lower production costs and a positive foreign exchange impact. Early in the year, our result was burdened by the paper industry strike that lasted more than two weeks. The strike concerned Metsä Board's mills in Finland and all of the pulp mills of our associated company Metsä Fibre. Pulp's overall impact on our operating result was neutral.

Our production and deliveries has not experienced any disruptions during the pandemic, and the annual maintenance shutdowns of the mills were carried out successfully. The production efficiency of our mills was at a high level in 2020 and we achieved new records in both paperboard and pulp production.

In the autumn, we opened a state-of-the-art Excellence Centre to accelerate paperboard and packaging innovations in cooperation with customers and technology partners all over the world. As part of Metsä Group, we also participate in large-scale collaborations which develop large-volume bioproducts with clearly lower carbon footprint than that of products currently on the market.

Our ambition is to be a forerunner in sustainability and we aim for entirely fossil free production and products by 2030. We received plenty of recognition for our sustainability this past year. Our recyclable paperboards made from renewable fresh fibres are ideal for sustainable packaging, which will also support their demand in the future.

The ultimate duration of the coronavirus pandemic is difficult to estimate, and we continue to follow appropriate precautionary measures. Most importantly, we must ensure the health and safety of employees, prevent the

virus from spreading and secure the continuity of our business. Our starting points for 2021 are nevertheless good: we have a favourable market situation, a strong financial position and highly competent and motivated personnel. I feel positive and confident about the future."

KEY FIGURES

	2020	2019	2020	2020	2019
	Q4	Q4	Q3	Q1–Q4	Q1–Q4
Sales, EUR million	473.1	478.4	471.2	1,889.5	1,931.8
EBITDA, EUR million	85.2	59.5	84.7	321.8	294.5
comparable, EUR million	85.2	59.4	84.7	315.8	279.0
EBITDA, % of sales	18.0	12.4	18.0	17.0	15.2
comparable, % of sales	18.0	12.4	18.0	16.7	14.4
Operating result, EUR million	64.5	20.0	62.5	227.3	180.8
comparable, EUR million	64.5	39.1	62.5	221.2	184.4
Operating result, % of sales	13.6	4.2	13.3	12.0	9.4
comparable, % of sales	13.6	8.2	13.3	11.7	9.5
Result before taxes, EUR million	61.5	17.0	58.1	212.3	165.6
comparable, EUR million	61.5	36.1	58.1	206.3	169.2
Result for the period, EUR million	49.3	16.2	47.0	170.1	144.6
comparable, EUR million	49.3	31.1	47.0	165.3	145.8
Earnings per share, EUR	0.14	0.05	0.13	0.48	0.41
comparable, EUR	0.14	0.09	0.13	0.46	0.41
Return on equity, %	14.6	4.9	14.6	12.5	10.9
comparable, %	14.6	9.5	14.6	12.1	11.0
Return on capital employed, %	14.3	4.6	14.3	12.6	10.2
comparable, %	14.3	8.9	14.3	12.2	10.4
Equity ratio1, %	60	59	59	60	59
Net gearing1, %	17	23	21	17	23
Interest-bearing net liabilities/comparable EBITDA	0.7	1.1	1.0	0.7	1.1
Shareholders' equity per share1, EUR	3.89	3.76	3.69	3.89	3.76
Interest-bearing net liabilities1, EUR million	235.5	307.8	277.3	235.5	307.8
Total investment, EUR million	48.9	56.7	44.3	166.4	98.9
Net cash flow from operations, EUR million	81.0	89.6	74.4	307.7	200.5
Personnel1	2,370	2,351	2,398	2,370	2,351

1) At the end of the period

DELIVERY AND PRODUCTION VOLUMES

	2020	2020	2020	2020	2019	2019	2020
1,000 tonnes	Q4	Q3	Q2	Q1	Q4	Q1–Q4	Q1–Q4
Delivery volumes
Folding boxboard	297	318	310	298	300	1,207	1,223
White kraftliner	144	143	148	152	139	584	587
Metsä Board's market pulp1)	158	107	126	130	137	460	521
Metsä Fibre's market pulp2)	207	168	156	165	180	745	696
Production volumes
Folding boxboard	317	311	333	288	313	1,242	1,249
White kraftliner	168	137	156	130	155	574	591
Metsä Board's pulp1)	359	335	348	329	332	1,373	1,371
Metsä Fibre's pulp2)	174	188	193	148	186	734	702

1) includes chemical pulp and high-yield pulp (BCTMP)

2) equal to Metsä Board's 24.9% holding in Metsä Fibre.

4 6 8 10 12 14 16 4 6 8 10 12 14 16 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q4/20 Return on capital employed, % Long-term target > 12% Quaterly Rolling 12 months

FINANCIAL STATEMENTS BULLETIN FOR 1 January–31 December 2020

SALES AND RESULT

October–December 2020 (compared to 10– 12/2019)

Metsä Board's sales totalled EUR 473.1 million (478.4). Folding boxboard accounted for 56% of sales, while 23% of sales came from white kraftliner, 14% from market pulp and 6% from other operations.

The comparable operating result was EUR 64.5 million (39.1), and the operating result was EUR 64.5 million (20.0).

Total deliveries of paperboards were 441,000 (439,000) tonnes, of which 68% was delivered to the EMEA region, 28% to the Americas, and 4% to the APAC region. Metsä Board's market pulp deliveries were 158,000 tonnes (137,000).

The comparable operating result improved due to lower production costs, particularly in the paperboard business, and the increased deliveries of market pulp.

Exchange rate fluctuations, including hedges, had a positive impact of around EUR 6 million on the result compared to the corresponding period in the previous year.

The associated company Metsä Fibre's share of Metsä Board's comparable operating result in October–December was EUR -2.2 million (1.0).

Financial income and expenses totalled EUR -3.1 million (-3.1), including foreign exchange rate differences from trade receivables, trade payables, financial items and the valuation of currency hedging instruments, totalling EUR -0.2 million (-0.1).

The result before taxes was EUR 61.5 million (17.0). The comparable result before taxes was EUR 61.5 million (36.1). Income taxes amounted to EUR 12.2 million (0.8).

Earnings per share were EUR 0.14 (0.05). The return on equity was 14.6% (4.9%), and the comparable return on equity was 14.6% (9.5%). The return on capital employed was 14.3% (4.6%), and the comparable return on capital employed was 14.3% (8.9%).

Operating result in October–December 2020 in brief (compared to 7–9/2020)

The comparable operating result in October–December was EUR 64.5 million (62.5). Profitability improved due to increased deliveries of market pulp and the sale of emission allowances. Emission allowances were sold for a total of approximately EUR 6 million (0). The associated company Metsä Fibre's share of Metsä Board's comparable operating result in October–December was EUR -2.2 million (2.4).

January–December 2020 (compared to 1–12/2019)

Metsä Board's sales totalled EUR 1,889.5 million (1,931.8). Folding boxboard accounted for 59% of sales, while 25% of sales came from white kraftliner, 12% from market pulp and 5% from other operations.

Total deliveries of paperboards were 1,810 000 (1,791,000) tonnes, of which 68% was delivered to the EMEA region, 27% to the Americas, and 5% to the APAC region. Metsä Board's market pulp deliveries were 521,000 (460,000) tonnes.

The comparable operating result was EUR 221.2 million (184.4), and the operating result was EUR 227.3 million (180.8). Items affecting comparability during the review period were EUR 6.0 million and consisted of the sale of a land area not related to business operations.

The lower production costs of pulp and particularly of paperboard improved the comparable result of the review period. In Sweden, the price of imported wood decreased, and lower market prices of oil products caused energy costs to decline. The prices of other raw materials also declined.

The cheaper pulp improved the profitability of the paperboard business. However, accounting for the surplus in Metsä Board's pulp position, pulp's total impact on the comparable operating result was neutral.

Exchange rate fluctuations, including hedges, had a positive impact of around EUR 31 million on the operating result compared to the comparison period.

The associated company Metsä Fibre's share of Metsä Board's comparable operating result in January–December was EUR -2.4 million (45.3). In addition to the decline in market pulp prices, Metsä Fibre's profitability was burdened by lower delivery volumes than in the previous year. The decline in delivery volumes was attributable to the paper industry strike early in the year and the negative impact that the coronavirus pandemic had on the global demand for pulp.

The paper industry strike, which concerned Metsä Board's mills in Finland and all of Metsä Fibre's pulp mills, had a negative impact of around EUR 20 million on the comparable operating result of the review period.

Financial income and expenses totalled EUR -14.9 million (-15.4), including foreign exchange rate differences from trade receivables, trade payables, financial items and the valuation of currency hedging instruments, totalling EUR -3.4 million (-1.6).

The result before taxes was EUR 212.3 million (165.6). The comparable result before taxes was EUR 206.3 million (169.2). Income taxes amounted to EUR 42.2 million (21.0).

Earnings per share were EUR 0.48 (0.41). The comparable earnings per share were EUR 0.46 (0.41). The return on equity was 12.5% (10.9%), and the comparable return on equity was 12.1% (11.0%). The return on capital employed was 12.6% (10.2%), and the comparable return on capital employed was 12.2% (10.4%).

MARKET DEVELOPMENT

Sources: Fastmarkets FOEX, Fastmarkets RISI, CEPI Cartonboard, CEPI Containerboard, AFPA

October–December 2020 (compared to 10–12/2019)

Deliveries by European folding boxboard producers within Europe increased by 3%, and market prices decreased compared to the corresponding quarter in the previous year. Correspondingly, deliveries by producers of white kraftliner increased by 5%, and market prices decreased. In the United States, the production of solid bleached boxboard and food service paperboard for local consumption grew. The market prices of solid bleached boxboard decreased, while the market prices of food service paperboard remained stable.

In Europe, the dollar-denominated market price of longfibre pulp increased by 4%, calculated from the difference of the average prices of the quarters. The dollardenominated market price of short-fibre pulp decreased by 2%. In China, the dollar-denominated market price of long-fibre pulp increased by 10% and that of short-fibre pulp by 1%.

January–December 2020 (compared to 1–12/2019)

Deliveries by European producers of folding boxboard within Europe increased by 2%, while market prices decreased year-on-year. Correspondingly, deliveries by producers of white kraftliner increased by 3%, and market prices decreased.

Metsä Board's share of the total deliveries by European folding boxboard producers was 35% (36%), and 56% (59%) of exports from Europe.

In the United States, the production of solid bleached boxboard for local consumption increased, while the production of food service paperboard declined. The market prices of solid bleached boxboard decreased, while the market prices of food service paperboard remained stable.

In Europe, the dollar-denominated market price of longfibre pulp decreased by 14%, calculated from the difference of the average prices of the review periods. The dollar-denominated market price of short-fibre pulp decreased by 21%. In China, the dollar-denominated market price of long-fibre pulp declined by 7%, and that of short-fibre pulp by 19%.

BUSINESS DEVELOPMENT

Metsä Board produces high-quality, ecological fresh fibre paperboards, and is Europe's largest producer of folding boxboard and white kraftliners. Metsä Board's folding boxboard is mainly used in consumer product packaging, such as food and pharmaceutical packaging. Correspondingly, the end uses of white kraftliners are mainly related to the various packaging needs of the retail sector. More than half of the white kraftliners produced by Metsä Board are coated.

Metsä Board's annual pulp position in 2020 showed a surplus of approximately 600,000 tonnes, and consists mostly of long-fibre pulp. The company's total pulp position is composed of the difference between its own production and consumption of pulp, and its 24.9% holding in Metsä Fibre. In 2021 Metsä Board's annual pulp surplus will be approximately 400,000 tonnes, as the company sold a 30% stake in its Husum pulp mill to the forest owner cooperative Norra Skog .

Paperboard sales January–December 2020 (1–12/2019)

The paper industry strike at Finnish mills early in the year and the peak in the demand for packaging materials resulting from the coronavirus outbreak accelerated the order flows for paperboards, particularly in March– April. During the pandemic, the demand for food and pharmaceutical packaging in particular has remained good. At the same time, the pandemic has weakened demand in graphic end uses and the packaging materials for luxury items. Demand for coated white kraftliners has been supported by the brisk retail sector and the growth in e-commerce.

In 2020, Metsä Board's deliveries of folding boxboard were 1,223,000 (1,207,000) tonnes, of which 71% (71%) was delivered to the EMEA region, 22% (20%) to the Americas, and 7% (9%) to the APAC region. Deliveries of white kraftliner were 587,000 (584,000) tonnes, of which 63% (66%) was delivered to the EMEA region, 36% (33%) to the Americas, and 2% (1%) to the APAC region.

Deliveries of both folding boxboard and white kraftliners to the EMEA region grew from the previous year. Europe, the main market of uncoated white kraftliner, experienced occasional oversupply during the summer, but demand picked up towards the end of the year. The average prices of paperboards declined slightly.

Demand for Metsä Board's paperboards in the Americas region, and particularly in in the United States, remained strong. The total delivery volume was 484,000 tonnes (432,000). The dollar-denominated average prices of paperboard remained stable.

In the APAC region, paperboard deliveries declined from the previous year.

Market pulp sales January–December 2020 (1–12/2019)

In 2020, Metsä Board's market pulp deliveries increased and were 521,000 (460,000) tonnes. The paper industry strike early in the year did not concern Metsä Board's Husum pulp mill in Sweden.

The associated company Metsä Fibre's total pulp deliveries declined and totalled 2,796,000 (2,994,000) tonnes. Around 50% of Metsä Fibre's market pulp is sold in the EMEA region and 50% in the APAC region, where China accounts for a significant share.

The dollar-denominated prices of long-fibre pulp in Europe and China were at a lower level compared to the previous year. Prices in China nevertheless began to rise during the second half of the year. In Europe, this happened during the fourth quarter.

While the worldwide increase in the demand for tissue paper has supported demand for pulp and high-yield pulp (BCTMP), the coronavirus pandemic has accelerated the decline in the production of printing papers. In China, demand for pulp in the second half of the year was strengthened by paper and paperboard production, which increased from the first half of the year. Late in the year, a shortage of containers in the traffic between Europe and Asia strained the situation in the pulp market. Globally, the second half of the year saw a decline in the supply of long-fibre market pulp because of the maintenance and market shutdowns of several pulp producers.

Production January–December 2020 (1–12/2019)

The production volume of Metsä Board's paperboards during the review period totalled 1,840,000 tonnes (1,816,000), while the combined production volume of pulp and high-yield pulp amounted to 1,371,000 tonnes (1,373,000).

Production in the first half of the year was limited by the paper industry's strike, which lasted for more than two weeks and concerned all of Metsä Board's paperboard and BCTMP mills in Finland. The loss in paperboard production was roughly 65,000 tonnes and the loss in BCTMP production some 34,000 tonnes. Despite the production losses, the full-year production volumes of paperboards and BCTMP grew from the year before.

During the second quarter, the total production volume of paperboards was record high. Correspondingly, the production volumes of white kraftliners and pulps reached record highs during the fourth quarter.

Production at Metsä Board's mills and the mills' annual maintenance works have proceeded normally during the coronavirus pandemic.

CASH FLOW

Net cash flow from operations in 2020 was strong at EUR 307.7 million (1‒12/2019: 200.5). Working capital decreased by EUR 37.9 million (increased by 43.0). The lower price of pulp has increased the share of Metsä Board's paperboard business in the cash flow from operating activities. Correspondingly, the associated company Metsä Fibre's impact on cash flow has decreased. In the fourth quarter, the cash flow was reduced by the payment of EUR 35 million in corporate income taxes.

BALANCE SHEET AND FINANCING

Metsä Board's equity ratio at the end of the review period was 60% (31 December 2019: 59%) and the net gearing ratio was 17% (23%). The ratio of interest-bearing net liabilities to comparable EBITDA in the previous 12 months was 0.7 (1.1).

At the end of the review period, interest-bearing liabilities totalled EUR 452.4 million (31 December 2019: 444.9). Non-euro-denominated loans accounted for 1.9% of loans and floating-rate loans for 12.5%, with the rest being fixed-rate loans. The average interest rate on liabilities was 2.3% (2.5%), and the average maturity of non-current liabilities was 5.7 years (6.4). The interest rate maturity of loans was 52.0 months (56.0).

At the end of the review period, net interest-bearing liabilities totalled EUR 235.5 million (31 December 2019: 307.8).

Metsä Board's liquidity has remained strong. At the end of the review period, the available liquidity was EUR 605.8 million (31 December 2019: 334.2), consisting of the following items: liquid assets and investments of EUR 214.0 million, a syndicated credit facility (revolving credit facility) of EUR 200.0 million, and other committed credit facilities of EUR 191.8 million. As of 2020, the company will no longer include undrawn pension premium (TyEL) funds in available liquidity. Of the liquid assets, EUR 204.7 million consisted of short-term deposits with Metsä Group Treasury, and EUR 9.3 million were cash funds and investments. Other interest-bearing receivables amounted to EUR 2.9 million. In addition, Metsä Board's liquidity reserve is complemented by Metsä Group's internal undrawn short-term credit facility of EUR 150.0 million and undrawn pension premium (TyEL) funds of EUR 212.3 million

The fair value of long-term investments was EUR 186.9 million at the end of the review period (31 December 2019: 255.1). The change in the fair value is related to the decrease in the fair value of Pohjolan Voima Oyj's shares. The greater-than-usual change in the fair value was mainly attributable to changes made to the valuation model during the second quarter. Metsä Board discontinued the use of previous benchmark transactions in Pohjolan Voima Oyj's shares as a valuation basis and increased the discount rates used in the valuation model based on projected cash flows.

At the end of the review period, an average of 7.9 months of the net foreign currency exposure was hedged, including the hedging of the balance sheet position of trade receivables and trade payables (31 December 2019: 7.8). The degree of hedging during the period varied between seven and nine months, on average. In addition to the balance sheet position, half of the projected annual net foreign currency exposure at the normal level is hedged. The amount of hedging may deviate from the normal level by 40% in either direction. When hedging is at the normal level, the aim is to allocate the hedges primarily to the following two quarters.

Metsä Board has investment grade credit ratings by S&P Global and Moody's Investor Service. The company's rating by S&P Global is BBB-, with a stable outlook. The company's rating by Moody's is Baa3, with a stable outlook.

DIVESTMENT OF A MINORITY STAKE IN THE HUSUM PULP MILL

On 1 December 2020 Metsä Board signed an agreement with which it agreed to sell a 30% holding in the Husum pulp mill in Sweden to the forest owner cooperative Norra Skog. At the same time, Metsä Forest Sverige, responsible for Metsä Board's wood supply in Sweden, made a long-term wood delivery agreement with Norra Skog. The transaction was closed on 4 January 2021.

The transaction reduces Metsä Board's net debt by approximately EUR 260 million. It also reduces Metsä Board's share of financing the pulp mill's renewal during the second phase by about EUR 100 million. The transaction will not result in capital gain to be reported in the income statement; rather, its positive effects are shown directly in equity.

Metsä Board will continue to consolidate the Husum pulp mill as a subsidiary in the consolidated financial statements, so the operating result's sensitivity to changes in the market prices of pulp will remain

unchanged. The arrangement reduces Metsä Board's annual net surplus in pulp by approximately 210,000 tonnes.

The long-term wood delivery agreement made between the parties increases the share of certified wood purchased from Sweden and will clearly reduce the volume of wood imported from the Baltic countries. The increase in the share of wood purchased from Sweden will reduce the mill's cost volatility.

The cash released by the arrangement together with avoided investments in the coming years, totalling more than EUR 350 million, allow the company to allocate a significant portion of its development investments in paperboard.

INVESTMENTS

Total investments during the review period were EUR 166.4 million (98.9), of which investments in own property, plant and equipment were EUR 159.4 million (94.9) and investments in leased property, plant and equipment were EUR 7.0 million (4.1). Maintenance investments and development investments account for approximately 32% and 68%, respectively, of the total investments. The share of the first phase of the Husum's pulp mill investment was around EUR 103 million in 2020.

Renewal of the Husum pulp mill

In the fourth quarter of the year, Metsä Board obtained an approval for an amendment to the environmental permit of the Husum mill and made the final investment decision on the first phase of the pulp mill's renewal. The investment's pre-engineering phase began in 2019 and the preparatory construction work got underway in the first quarter of 2020.

The first phase of the investment will include the renewal of the pulp mill's recovery boiler and turbine. The total value of the first phase is roughly EUR 320 million, and the start-up of the new recovery boiler and turbine is estimated in the first half of 2022. It is planned that in the second phase of the investment, during the 2020s, the current fibre lines will be replaced with a new fibre line.

The pulp mill's renewal will enable the long-term development and growth of competitive paperboard business operations at the Husum integrated mill over the coming years. In addition, the investment aims to develop Metsä Board's pulp and energy production and promote a shift towards fossil free mills.

Development programme of Kemi paperboard mill

After the review period, on 11 February 2021, Metsä Board started a development programme for its Kemi paperboard mill, which produces white-top kraftliner. The investment value of the programme is approximately EUR 67 million and the mill's annual paperboard capacity will increase by approximately 40,000 tonnes. The programme includes a series of modernisation and bottleneck investments in the paperboard production line and as part of the programme, Metsä Board will purchase the modernised unbleached pulp production line with annual capacity of approximately 180,000 tonnes from Metsä Fibre. The investments are scheduled for 2021-2023, and mainly for 2023. The development programme is a significant step towards the company's sustainability targets for 2030.

Associated company Metsä Fibre's Kemi bioproduct mill and Rauma pine sawmill

Metsä Fibre's Kemi bioproduct mill received an environmental permit in December 2020 and the investment decision was made after the review period on 11 February 2021.

The investment value is approximately EUR 1.6 billion and the construction of the mill will take about two and a half years. The bioproduct mill will produce approximately 1.5 million tons of softwood and hardwood pulp and other bioproducts annually. The pulp production capacity includes the current unbleached pulp production line, used in the production of white-top kraftliner, with an annual capacity of approximately 180,000 tonnes. The bioproduct mill does not use fossil fuels at all and has a high electricity self-sufficiency of 250%. The new mill will replace the current pulp mill in Kemi with an annual capacity of approximately 620,000 tonnes. Financing for Metsä Fibre's bioproduct mill consists of funds generated from operations, and debt. Metsä Board will not invest equity in Metsä Fibre to finance the project.

At the beginning of 2020, Metsä Fibre made an investment decision to build a pine sawmill in connection with the Rauma pulp mill. Construction work began in spring 2020 and production is scheduled to start in the third quarter of 2022. The value of the investment is approximately EUR 200 million.

Metsä Board owns 24.9% of Metsä Fibre.

PERSONNEL

At the end of the review period, the number of personnel was 2,370 (31 December 2019: 2,351), of whom

1,422 (1,414) were based in Finland. In January–December, Metsä Board employed 2,455 people on average (1–12/2019: 2,433). Personnel expenses in January–December totalled EUR 196.9 million (194.9).

and efficient use of resources are strong drivers of the company's operations.

SUSTAINABILITY

Metsä Board aims to be a forerunner in sustainability. Climate change mitigation as well as the sustainable

Key sustainability figures

	2020 Q4	2019 Q4	2020 Q1–Q4	2019 Q1–Q4	Target year 2030
Lost-time accidents frequency LTA11) Total Recordable Incident Frequency TRIF1)	4.6 6.4	5.7 9.5	5.7 8.4	5.5 10.2	0 0
Share of certified wood fibre, %	82%	78%	80%	76%	>90%
Energy efficiency improvement2) Reducing consumption of process water2)			+2.1% -7.7%	-0.7% -10.8%	+10% -30%

1) per million hours worked

2) change from comparison year 2018, per tonne produced

Metsä Board aims for zero accidents. Occupational safety at work is developed with proactive measures, a common way of working and by following a standardised management system. While safety at the mills improved in 2020, accident frequency in the port operations of Hangö Stevedoring increased from the previous year. The most typical accidents included slips and injuries of hands and feet.

All of the wood used by Metsä Board comes from sustainably managed northern forests. Certified wood fibre accounted for 80% of wood fibre procurement in 2020. In the future, the long-term wood delivery agreement between Metsä Forest Sverige and Norra Skog will increase the share of certified wood purchased from Sweden.

Metsä Board aims to abandon the use of fossil-based energy by 2030. The raw materials and packaging materials used by the company must also be fossil-free. In 2020, fossil-free energy accounted for 83% of Metsä Board's total energy consumption (2019: 83%). The majority of this was bioenergy produced from the woodbased side streams of the company's own processes.

In 2020, energy efficiency improved by 2.1% and the use of process water decreased by 7.7% compared to base year of 2018. Metsä Board has financing arrangements whose pricing is tied to sustainability targets, such as reducing the specific consumption of energy and water.

Metsä Board's targets for reducing greenhouse gas emissions have been approved by The Science Based Targets Initiative (SBTi). The company's emission reduction targets meet the strictest requirements of the Paris Agreement, which aim to limit global warming to 1.5 degrees. Metsä Board's emission reduction targets for the company's value chain (Scope 3) also meet SBTi's strictest criteria and accord with current best practices.

Metsä Board has also achieved the most prestigious level, Platinum, in EcoVadis's sustainability and social responsibility evaluation. According to the evaluation, Metsä Board is among the top 1% of paper, paperboard and packaging manufacturers.

In December 2020, Metsä Board was again recognised for its climate work when the company was included on CDP's Climate A and Water A lists for climate change mitigation and the sustainable use of water resources. In the sustainable use of forests, the company achieved grade A- from CDP's forest programme.

Sustainability is discussed in more detail on the company's website at www.metsaboard.com/sustainability.

R&D AND INNOVATION

In September, Metsä Board opened a new Excellence Centre in Äänekoski's unique bioeconomy ecosystem. The new Excellence Centre will combine expertise in

packaging design with research and development, facilitating the development of future paperboards and packaging solutions. The Excellence Centre held a number of virtual workshops during the autumn, with customers and partners attending from all over the world. The Excellence Centre brings together Metsä Board's own expertise and the expertise of its partners in an entirely new way.

Metsä Group's innovation company Metsä Spring and Valmet are building a demo plant in Äänekoski with the aim of developing a 3D fibre product which can replace packaging made from fossil-based raw materials, for example. The plant will produce 3D fibre products out of wet wood-fibre pulp directly, without intermediary phases, and the products will be ready for delivery to end customers as such. The project's total value is approximately EUR 20 million, and it is part of the worldclass ExpandFibre programme. The four-year Expand-Fibre is Metsä Group and Fortum's joint, roughly EUR 50 million R&D programme promoting the circular bioeconomy. It focuses on pulp fibre made from renewable and sustainable sources.

At the Kyro mill, the company relies on artificial intelligence in the quality control of the folding boxboard machine. The Kemi mill uses customer data to increase the runnability of white kraftliner on the customer's corrugated board line. Metsä Board continues to explore options for making use of artificial intelligence on other production lines as well.

The company participates in the 4evergreen initiative, which aims to secure and develop the circular economy of fibre-based packaging.

In consumer packaging board, Metsä Board continues the development work aiming to reduce the weight of paperboard while not compromising on its strength and conversion properties. The company also continues to develop barrier solutions and is investigating their commercial potential in food and food service applications.

Metsä Board's research and development costs in 2020 were approximately EUR 8.6 (8.7) million, or approximately 0.5% (0.4%) of net sales. In 2020, the reporting of research and development expenses has been clarified and the figures for the comparison year have been adjusted accordingly. Research and development expenses include direct costs without depreciation and capital expenditures.

STRATEGY AND FINANCIAL TARGETS

Metsä Board is a leading European producer of fresh fibre paperboards and a forerunner in sustainability. The company focuses on premium lightweight fresh fibre

paperboards, used primarily in consumer product packaging and in the various packaging solutions of the retail sector.

Metsä Board expects global demand for premium fresh fibre paperboard to grow by around 2–3% a year. In the

medium-term, Metsä Board aims to grow in a controlled manner, accounting for the prevailing market situation. This growth will be based on skilled people, the industry's leading products and innovative packaging solutions. Decision-making is guided by internal profitability targets and the increase of shareholder value. Metsä Board focuses on the continuous improvement of costeffectiveness and on customer accounts which benefit from the high performance of the company's products and services. The company also aims to retain a strong balance sheet.

In 2020, the company's financial targets and dividend policy remained unchanged.

• The comparable return on capital employed (ROCE) is, at minimum, 12%. Actual in 2020 was 12.2%.
• The ratio of interest-bearing net liabilities to comparable EBITDA of, at maximum, 2.5. Actual in 2020 was 0.7.

Metsä Board aims to distribute at least 50% of the result for the financial period in dividends every year. The Board of Directors' proposal to the Annual General Meeting concerning the dividend and capital distribution to be paid for the 2020 financial year corresponds with 54% of the result for the financial period.

RESOLUTIONS OF THE 2020 ANNUAL GENERAL MEETING

The Annual General Meeting held on 11 June 2020 adopted the company's financial statements for the financial year 2019, and decided to distribute a dividend of EUR 0.10 per share and capital in the amount of EUR 0.14 per share from the reserve for invested nonrestricted equity, totalling EUR 0.24 per share.

The Annual General Meeting decided to keep the Board of Directors' annual remuneration unchanged in such a way that the Chair of the Board of Directors is paid annual remuneration of EUR 95,000, the Deputy Chair is paid EUR 80,000 and each member of the Board is paid EUR 62,500, and that a meeting fee of EUR 700 is paid for each meeting of the Board and committees of the Board that a member attends. The Annual General Meeting decided to pay roughly half of the remuneration in the form of the company's B shares acquired through

public trading. Furthermore, the Annual General Meeting decided to pay the Chair of the Audit Committee monthly remuneration of EUR 800.

The Annual General Meeting confirmed the number of Board members as nine (9) and elected the following persons as members of the Board of Directors: Hannu Anttila, M.Sc. (Economics); Ilkka Hämälä, M.Sc. (Technology); Kirsi Komi, LL.M.; Kai Korhonen, M.Sc. (Technology); Liisa Leino, M. Ed.; Jussi Linnaranta, M.Sc. (Agriculture); Jukka Moisio M.Sc. (Economics); Timo Saukkonen M.Sc. (Agriculture); and Veli Sundbäck, LL.M. The Board members' term of office expires at the end of the next Annual General Meeting.

More information about the decisions made by the Annual General Meeting and materials related to the meeting are available on the company's website at www.metsaboard.com/Investors/General-Meeting/General-Meeting-2020/.

LEGAL PROCEEDINGS

In the autumn of 2015, the Finnish Tax Administration, in its assessment of the 2014 taxation, refused the deductibility of certain losses related to the cross-border merger of a French subsidiary in Metsä Board Corporation's 2014 taxation. Metsä Board believes the losses to be deductible and has appealed the Tax Administration's decision. The Board of Adjustment dismissed the company's appeal in March 2018. The company has appealed the decision to the Administrative Court of Helsinki.

SHARES

At the end of the financial period, the price for Metsä Board's B share on the Nasdaq Helsinki was EUR 8.62. The share's highest and lowest prices in 2020 were EUR 8.79 and EUR 4.47, respectively. At the end of the financial period, the price for Metsä Board's A share on the Nasdaq Helsinki was EUR 8.64. The share's highest and lowest prices in 2020 were EUR 8.80 and EUR 4.80, respectively. In 2020, the average daily trading volumes of the B and A shares on the Nasdaq Helsinki were 616,002 shares and 6,980 shares, respectively. The total trading volumes of the B and A shares were EUR 950 million and EUR 12 million, respectively.

In addition to the Nasdaq Helsinki, Metsä Board's shares are also traded on other marketplaces. The Nasdaq Helsinki's share of total trading during the review period was around 82%.

During the review period, a total of 200,496 of Metsä Board Corporation's A shares were converted to B shares. At the end of the review period, the total number of Metsä Board shares was 355,512,746, of which 32,887,151 were A shares and 322,625,595 were B shares.

At the end of the review period, the market value of all Metsä Board shares was EUR 3.1 billion, of which the market value of the B shares and the A shares accounted for EUR 2.8 billion and EUR 0.3 billion, respectively.

During the review period, Metsä Board received a notification of major holdings according to which Metsäliitto Cooperative's combined share of votes in Metsä Board Corporation exceeded the limit of two-thirds (2/3).

At the end of the review period, Metsäliitto Cooperative held 48% (31 December 2019: 46%) of all shares, and the votes conferred by these shares was 67% (66%). International and nominee-registered investors held approximately 16% (15%) of all shares. The company does not hold any treasury shares.

NEAR-TERM RISKS AND UNCERTAINTIES

A prolongation of the coronavirus pandemic may cause disruptions in Metsä Board's production and supply chains. The slowdown of the global economy resulting from the pandemic may reduce demand for Metsä Board's products and have a negative impact on the company's profitability in the near future. In addition, customers' weaker cash position or slower payment behaviour may have an impact on Metsä Board's cash flow and lead to credit losses. The pandemic may also incur additional costs, should the availability of transport capacity weaken, for example.

There are also other considerable uncertainties in the global economy. If realised, they may result in weakened demand and reduced prices for paperboard and pulp products. An imbalance in supply and demand may impact the prices of end products and Metsä Board's profitability.

Various countries have imposed import duties and other trade restrictions on each other's products, but these have not had a direct impact on Metsä Board's business operations so far. Negative developments in world trade could, if continued, weaken Metsä Board's result.

There are several geopolitical risk concentrations around the world, and forecasting developments in them is difficult. Changes in these areas may be very sudden and unpredictable. There have been, and will continue to be, international sanctions related to these crises, and they may also have a direct or indirect impact on the demand for paperboards and, therefore, on Metsä Board's result.

Metsä Board is focusing on the active development and growth of its paperboard business. The growth of the

paperboard business and the introduction of new products to the markets depend on the success of sales. Increasing sales on a global scale also involves cost and exchange rate risks. In addition, the acceptability and taxation of various packaging materials involve regulatory risks.

A majority of Metsä Board's production is located in Finland. Finland has a history of labour disputes in both the forest industry and the distribution chain of forest industry products. These may have a negative impact on production volumes and customer deliveries, and weaken the company's competitiveness and profitability.

Wood accounts for more than a quarter of Metsä Board's total costs. The availability of the wood raw material becoming more difficult or a sudden increase in prices would have a weakening effect on Metsä Board's result.

Metsä Board's climate risks concern particularly forests, as well as the use of energy and water. Regulation may steer the future use of forests. Increased regulation aiming to mitigate climate change and reduce greenhouse gas emissions may, furthermore, increase costs and result in substantial change requirements applicable to production technology. The supply and demand of products in a low-carbon economy may differ from the current situation. Climate change may cause an increasing number of extreme weather phenomena, such as storms, floods and drought, and weaken the availability of the process water and electricity required by mills and result in breaks in production. Extreme weather conditions may also limit the availability of the wood raw material. Should they materialise, climate risks could have a negative impact on Metsä Board's profitability.

Changes in the market price of pulp have a significant impact on Metsä Board's profitability. Metsä Board's annual pulp position from 2021 onwards shows a surplus of roughly 400,000 tonnes. A 10% decline (increase) in the price of market pulp would have an approximately EUR 30 million negative (positive) impact on the company's annual operating result.

The US dollar strengthening by 10% against the euro would have a positive impact of approximately EUR 62 million on Metsä Board's annual operating result. Correspondingly, the Swedish krona strengthening by 10% would have a negative impact of approximately EUR 42 million. The British pound strengthening by 10% would have a positive impact of approximately EUR 9 million. The impact of weakened exchange rates would be the opposite. The sensitivities do not include the impact of hedging.

The forward-looking estimates and statements in this financial statements bulletin are based on current plans and estimates. For this reason, they contain risks and

other uncertainties that may cause the results to differ from the statements concerning them. In the short term, Metsä Board's result will be particularly affected by the price of and demand for finished products, raw material costs, the price of energy, and the exchange rate development of the euro compared to the company's other main currencies.

Further information on long-term risks and risk management is available on pages 44–47 of Metsä Board's 2019 Annual Report.

NEAR-TERM OUTLOOK

The duration of the coronavirus pandemic and the scope of its negative impact on the world economy and on Metsä Board's business operations continue to be difficult to estimate.

Metsä Board's paperboard deliveries in January–March 2021 are expected to grow from the delivery volumes of October–December 2020 (441,000 tonnes).

The prices of white kraftliner in local currencies are expected to increase slightly, while the prices of folding boxboard are expected to remain stable.

No significant annual maintenance shutdowns at mills are set to take place in January–March 2021.

Demand for long-fibre pulp will be supported by increased economic activity, particularly in Asia. Supply has recently reduced due to producers' annual maintenance shutdowns, the production curtailments announced by some parties and a shortage of containers in the traffic between Europe and Asia. The improved market situation in Asia has reflected to Europe and market pulp prices are increasing.

Exchange rates, accounting for the effect of hedging, in January–March 2021 will have a negative impact on results compared to October–December 2020 and a negative impact on results compared to January–March 2020.

Energy costs are expected to increase in January– March. The other production costs of paperboard and pulp are expected to remain fairly stable.

EVENTS AFTER THE REVIEW PERIOD

The sale of a 30% share in the Husum pulp mill to Norra Skog was completed on 4 January 2021, and its impact will be included in Metsä Board's financial reporting as of the interim report concerning January– March 2021. The transaction will decrease Metsä Board's net debt by approximately EUR 260 million, and in addition it will reduce Metsä Board's financial contribution in the second phase of the Husum pulp mill renewal by approximately EUR 100 million.

Metsä Board announced on 22 January 2021, that it has started pre-engineering for increasing the annual production capacity of folding boxboard at the Husum mill in Sweden by approximately 200,000 tonnes. The pre-engineering phase includes also an evaluation of the mill's port capacity for increased volumes of raw materials and finished goods. The readiness to make the final investment decision is expected to be achieved in the summer of 2021 and the ramp-up of the additional capacity would start in 2023.

On 11 February 2021, Metsä Board's associated company Metsä Fibre made an investment decision on the construction of a new bioproduct mill in Kemi, Finland.

On 11 February 2021, Metsä Board made an investment decision on the development programme for its Kemi paperboard mill.

ANNUAL MAINTENANCE AND INVESTMENT SHUTDOWNS IN 2021

The annual maintenance shutdowns of individual paperboard and BCTMP mills in Finland are spread evenly over the second, third and fourth quarters of 2021.

A renewal of the finishing area will be carried out at the Kyro paperboard mill in the fourth quarter. This will result in a 2–3 week loss in production.

Most significant scheduled annual maintenance and investment shutdowns at mills in 2021

Q1/2021	No significant maintenance shutdowns
Q2/2021	Metsä Fibre's Rauma pulp mill
Q3/2021	Kemi mill integrate
Q4/2021	Metsä Board's Husum mill integrate, Kyro paperboard mill, Metsä Fibre's Äänekoski bioproduct mill

The Kemi mill integrate includes Metsä Board's paperboard mill and Metsä Fibre's pulp mill

RESULT GUIDANCE FOR JANUARY– MARCH 2021

Metsä Board's comparable operating result in January– March 2021 is expected to improve compared to October–December 2020.

BOARD OF DIRECTORS' PROPOSAL FOR DIVIDEND AND CAPITAL DISTRIBUTION

The distributable funds of the parent company on 31 December 2020 were EUR 640.2 million, of which the retained earnings for the financial year are EUR 372.7 million.

The Board of Directors proposes to the Annual General Meeting to be held on 25 March 2021 that a dividend of EUR 0.10 per share and a capital distribution from the reserve for invested non-restricted equity of EUR 0.16 per share, totalling EUR 0.26, be paid for the 2020 financial period.

The proposed dividend and capital distribution, totalling EUR 0.26 per share, corresponds to 54% of the result per share for 2020. The amount of dividend and capital distribution totals EUR 92.4 million.

The dividend and capital distribution will be paid to shareholders who are registered in the company's shareholders register held by Euroclear Finland on the dividend payment and capital distribution record date of 29 March 2021. The Board of Directors proposes 7 April 2021 as the dividend payment and capital distribution date.

METSÄ BOARD CORPORATION

Espoo, Finland, 11 February 2021 BOARD OF DIRECTORS

Further information:

Jussi Noponen, CFO tel. +358 10 465 4913

Katri Sundström, VP, Investor Relations, tel. +358 10 462 0101

A conference call held for investors and analysts in English will begin at 3 p.m. Conference call participants are requested to dial in and register a few minutes earlier on the following numbers:

Finland: +358 981 710 310 Sweden: +46 856 642 651 The United Kingdom: +44 333 300 0804 The United States: +1 631 913 1422

The conference call ID is 45329297#.

Metsä Board's financial reporting and Annual General Meeting in 2021

28 April 2021: Interim Report for January–March 2021 28 July 2021: Half-year Financial Report for January– June 2021

27 October 2021: Interim Report for January–September 2021

25 March 2021: 2021 Annual General Meeting

CALCULATION OF KEY RATIOS

Operating result	= Result before income tax, financial income and expenses, exchange gains and losses share of results from associated companies and joint ventures
EBITDA	= Operating result before depreciation, amortisation and impairment losses
Return on equity (%)	= (Result before income tax - income taxes) per (Shareholder's equity (average))
Return on capital employed (%)	= (Result before income taxes + net exchange differences and other financial expenses) (Balance total + non-interest bearing liabilities (average))
Equity ratio (%)	= (Shareholder's equity) per (Balance total - advance payments received)
Net gearing ratio (%)	= (Interest-bearing net liabilities) per (Shareholder's equity)
Interest-bearing net liabilities	= Interest-bearing liabilities – cash and cash equivalents and interest-bearing receivables
Total investments	= Investments in owned and leased fixed assets and investments in business combinations
Earnings per share	= (Profit attributable to shareholders of parent company) per (Adjusted number of shares (average))
Shareholders' equity per share	= (Equity attributable to shareholders of parent company) per (Adjusted number of shares at the end of the period)
Adjusted average share price	= (Total traded volume per share (EUR)) per (Average adjusted number of shares traded during the financial year)
Market capitalisation	= (Number of shares) x (market price at the end of period)

COMPARABLE KEY RATIOS

According to the guidelines of the European Securities and Markets Authority (ESMA), alternative performance measures are key figures concerning historical or future financial performance, financial standing or cash flows that are not determined by the financial reporting framework applied by the company. Metsä Board's financial reporting framework consists of the IFRS standards in the form in which they were adopted by the EU in line with Regulation (EC) No. 1606/2002. With the exception of earnings per share, which have been defined in standard IAS 33 (Earnings per Share), the key figures presented in this financial statement bulleting meet ESMA's criteria for alternative performance measures.

Metsä Board believes that the presentation of alternative performance measures provides users of financial statements with a better understanding of the company's financial performance and standing, including its use of equity, operational profitability and ability to service debt.

The reconciliation of the operating result and the comparable operating result as well as the EBITDA and the comparable EBITDA is presented in this financial report. The comparable return on capital employed has

been calculated using the same adjustments as the comparable operating result, and has been further adjusted for financial items affecting comparability when applicable. Metsä Board considers that the key figures derived in this manner improve the comparability of reporting periods.

None of these key figures with items affecting comparability eliminated are key figures used in IFRS reporting, and they cannot be compared with other companies' key figures identified by the same names. Items affecting comparability include material gains and losses on disposals of assets, impairment and impairment reversals in accordance with IAS 36 "Impairment of Assets", costs arising from acquisitions and divestments, adjustment measures and other restructuring, as well as adjustments thereof as well as items arising from legal proceedings.

Metsä Board considers comparable key figures to better reflect its operational performance, as they eliminate the effect on the result of items and business transactions arising from outside normal business operations.

FINANCIAL REPORT

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Q4	Q4	Q1–Q4	Q1–Q4
EUR million	Note	2020	2019	2020	2019
Sales	2, 6	473.1	478.4	1,889.5	1,931.8
Change in stocks of finished goods and
work in progress		-29.3	-6.3	-38.7	3.8
Other operating income	2, 6	18.7	17.3	33.3	51.7
Material and services	6	-286.2	-339.6	-1,225.4	-1,389.8
Employee costs		-52.7	-51.4	-196.9	-194.9
Share of result of associated company	6	-2.2	1.0	-2.4	43.1
Depreciation, amortisation and impairment losses		-20.6	-39.4	-94.5	-113.7
Other operating expenses		-36.1	-39.9	-137.5	-151.1
Operating result	2	64.5	20.0	227.3	180.8
Share of results of associated companies
and joint ventures		0.0	0.0	-0.1	0.1
Net exchange gains and losses		-0.2	-0.1	-3.4	-1.6
Other net financial items	2, 6	-2.8	-3.0	-11.5	-13.8
Result before income tax		61.5	17.0	212.3	165.6
Income taxes	3	-12.2	-0.8	-42.2	-21.0
Result for the period		49.3	16.2	170.1	144.6

		Q4	Q4	Q1–Q4	Q1–Q4
EUR million	Note	2020	2019	2020	2019
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gains/losses on defined pension plans		-6.1	3.9	-3.7	-3.5
Financial assets valued at fair value through other comprehensive income	8	-4.8	-4.5	-70.3	-14.7
Share of other comprehensive income of associated company		0.1	0.0	0.4	0.2
Income tax relating to items that will not be reclassified		2.3	-0.9	15.0	2.8
Total		-8.5	-1.5	-58.6	-15.1
Items that may be reclassified to profit or loss
Cash flow hedges		17.5	17.6	17.6	-10.1
Translation differences		15.2	6.0	6.2	-3.4
Share of other comprehensive income of associated company		1.3	4.1	0.7	1.7
Income tax relating to components of other comprehensive income		-3.5	-3.5	-3.4	2.2
Total		30.5	24.3	21.1	-9.6
Other comprehensive income, net of tax		22.0	22.8	-37.5	-24.8
Total comprehensive income for the period		71.3	39.0	132.6	119.8
Result for the period attributable to
Shareholders of parent company		49.3	16.2	170.1	144.6
Non-controlling interests					0.0
Total		49.3	16.2	170.1	144.6
Total comprehensive income for the period attributable to
Shareholders of parent company		71.3	39.0	132.6	119.8
Non-controlling interests					0.0
Total		71.3	39.0	132.6	119.8
Earnings per share for result attributable to share holders of parent company (EUR/share)		0.14	0.05	0.48	0.41

CONDENSED CONSOLIDATED BALANCE SHEET

		31 Dec.	31 Dec.
EUR million	Note	2020	2019
ASSETS
Non-current assets
Goodwill		12.4	12.4
Other intangible assets		6.7	8.8
Tangible assets	4	824.7	742.0
Investments in associated companies
and joint ventures		369.0	392.4
Other investments	8	186.9	255.1
Other non-current financial assets	6, 8	10.8	16.6
Deferred tax receivables	2	7.5	6.7
		1,417.9	1,434.0
Current assets
Inventories		360.0	379.5
Accounts receivables and other receivables	6, 8	310.6	322.8
Cash and cash equivalents	6, 8	214.0	134.2
		884.6	836.4
Total assets		2,302.5	2,270.4
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Equity attributable to shareholders of parent company		1,383.8	1,338.0
Total equity		1,383.8	1,338.0
Non-current liabilities
Deferred tax liabilities		97.5	105.6
Post-employment benefit obligations	2	13.4	13.8
Provisions	5	3.7	4.2
Borrowings	8	444.8	412.9
Other liabilities	8	5.3	4.9
		564.7	541.5
Current liabilities
Provisions	5	1.0	1.6
Current borrowings	6, 8	7.6	32.0
Accounts payable and other liabilities	6, 8	345.4	357.4
		354.0	391.0
Total liabilities		918.7	932.4
Total shareholders' equity and liabilities		2,302.5	2,270.4

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

EUR million	Note	Share capital	Trans lation differ ences	Fair value and other reserves	Reserve for invested unre stricted equity	Retained earnings	Total	Non-con trolling inter ests	Equity Total
Shareholders' eq uity, 1 January 2019 Comprehensive income for the pe riod		557.9	-26.4	194.0	383.1	214.4	1,322.9	0.0	1,322.9
Result for the period						144.6	144.6	0.0	144.6
Other comprehen sive income net of tax total			-2.7	-18.4		-3.6	-24.8		-24.8
Comprehensive income total			-2.7	-18.4		140.9	119.8	0.0	119.8
Share based pay ments						-1.6	-1.6		-1.6
Related party transactions Dividend and capi
tal distribution					-67.5	-35.6	-103.1		-103.1
Shareholders' eq uity, 31 December 2019		557.9	-29.1	175.5	315.5	318.2	1,338.0	0.0	1,338.0

		Share	Trans lation differ	Fair value and other	Reserve for invested unre stricted	Retained		Non-con trolling inter
EUR million	Note	capital	ences	reserves	equity	earnings	Total	ests	Equity Total
Shareholders' eq uity, 1 January 2020 Comprehensive income for the period		557.9	-29.1	175.5	315.5	318.2	1,338.0		1,338.0
Result for the period						170.1	170.1		170.1
Other compre hensive income net of tax total			4.2	-38.9		-2.8	-37.5		-37.5
Comprehensive income total			4.2	-38.9		167.3	132.6		132.6
Share based pay ments						-1.5	-1.5		-1.5
Related party transactions
Dividend and capital distribu tion					-49.8	-35.6	-85.3		-85.3
Shareholders'
equity, 31 December 2020		557.9	-24.9	136.6	265.8	448.4	1,383.8		1,383.8

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

		Q1–Q4	Q1–Q4	Q4
EUR million	Note	2020	2019	2020
Result for the period		170.1	144.6	49.3
Total adjustments	7	140.6	70.6	31.8
Change in working capital		37.9	-43.0	40.1
Net financial items	7	4.2	46.4	-5.2
Income taxes paid		-45.2	-18.1	-35.0
Net cash flow from operations		307.7	200.5	81.0
Investments in intangible and tangible assets		-154.2	-94.3	-41.2
Disposals and other items	6, 7	12.2	28.0	4.1
Net cash flow from investing		-142.0	-66.3	-37.0
Changes in non-current loans and in other financial items	6	1.0	-7.5	-10.7
Paid dividend and capital distribution		-85.3	-103.1
Net cash flow from financing		-84.4	-110.6	-10.7
Changes in cash and cash equivalents		81.3	23.6	33.3
Cash and cash equivalents at beginning of period	6	134.2	109.7	180.6
Translation difference in cash and cash equivalents		-1.5	0.9	0.2
Changes in cash and cash equivalents		81.3	23.6	33.3
Cash and cash equivalents at end of period	6	214.0	134.2	214.0

NOTES TO THE FINANCIAL REPORT

NOTE 1 – BACKGROUND AND BASIS OF PREPARATION

Metsä Board Corporation and its subsidiaries comprise a forest industry group whose main product areas are fresh fibre cartonboards and linerboards. Metsä Board Corporation, the parent company, is domiciled in Helsinki and the registered address of the company is Revontulenpuisto 2, 02100 Espoo, Finland. Metsä Board's ultimate parent company is Metsäliitto Cooperative.

This financial report has been prepared in accordance with IAS 34, Interim Financial Reporting, and it should be read in conjunction with the 2019 IFRS financial statements. The effects of foreign exchange changes on review period operating result vis-à-vis comparison period result have been calculated based on estimated review period net cash flows in relevant currencies and taking into account the realized effects of foreign exchange hedges. The figures in this financial statement bulletin are based on the audited figures in the 2020 financial statements.

The same accounting policies have been applied as in the 2019 IFRS financial statements with the following exception:

Depreciation of machinery and equipment during the financial year has been adjusted between the quarters when applicable in order to correspond with the distribution of the economic benefit of the asset between quarters.

The amendments to the standards that came into force at the beginning of 2020 do not have a material effect on the Group's financial report.

The impact of the coronavirus on Metsä Board's business is described in more detail in the explanatory part of this financial report.

All amounts in the financial report are presented in millions of euros, unless otherwise stated.

This financial report was authorised for issue by the Board of Directors of Metsä Board on 11 February 2021.

NOTE 2 – SEGMENT INFORMATION

The Corporate Management Team is the chief operational decision-maker monitoring business operations performance based on the operating segments. Metsä Board's business operations consist solely of folding boxboard, fresh fibre linerboard and market pulp businesses. Metsä Board reports on its financial performance in one reporting segment.

GEOGRAPHICAL DISTRIBUTION OF SALES

	Q4	Q4	Q1–Q4	Q1–Q4
EUR million	2020	2019	2020	2019
EMEA	314.2	334.5	1,281.8	1,369.1
Americas	108.0	95.3	440.7	403.5
APAC	50.9	48.6	167.0	159.3
Total	473.1	478.4	1,889.5	1,931.8

RECONCILIATION OF OPERATING RESULT AND EBITDA

	Q4	Q4	Q1–Q4	Q1–Q4
EUR million	2020	2019	2020	2019
Operating result	64.5	20.0	227.3	180.8
Depreciation, amortisation and impairment losses	20.6	39.4	94.5	113.7
EBITDA	85.2	59.5	321.8	294.5
Items affecting comparability:
Gains and losses on disposal in other operating in come and expenses		0.0	-6.0	-17.8
Share of results of associated companies				2.2
Total			-6.0	-15.5
EBITDA, comparable	85.2	59.5	315.8	279.0
Depreciation, amortisation and impairment losses	-20.6	-39.4	-94.5	-113.7
Items affecting comparability:
Impairment charges and reversals of impairments		19.1		19.1
Operating result, comparable	64.5	39.1	221.2	184.4

"+" sign items = expense affecting comparability "-" sign items = income affecting comparability

Items affecting comparability in 2020 totalled EUR 6.0 million and comprised disposal gains from sold nonbusiness related land area.

Items affecting comparability in 2019 totaled EUR -3.6 million and comprised disposal gains from non-operative share investment (EUR 3.3 million), Äänevoima Oy shares sold to Metsä Fibre (net effect on operating result EUR 6.8 million), disposal gains from sold nonbusiness related land area (EUR 5.5 million) as well as the EUR -19.1 million impairment recognised in the assets of the Husum pulp mill.

NOTE 3 – INCOME TAXES

	Q1–Q4	Q1–Q4
EUR million	2020	2019
Taxes for the current period	41.8	16.9
Taxes for the prior periods	0.2	0.1
Change in deferred taxes	0.2	4.1
Total income taxes	42.2	21.0

NOTE 4 – CHANGES IN PROPERTY, PLANT AND EQUIPMENT

	Q1–Q4	Q1–Q4
EUR million	2020	2019
Carrying value at beginning of period	742.0	753.2
IFRS 16 implementation		16.9
Investments to owned property, plant and equipment	161.1	93.4
Investments to leased property, plant and equipment	4.5	4.1
Decreases	-2.4	-7.1
Depreciation, amortization and impairment losses	-92.4	-111.2
Translation difference	11.9	-7.3
Carrying value at end of the period	824.7	742.0

There were no impairment losses recognised in 2020.

In late 2019 Metsä Board started to invest in modernisation of the Husum pulp mill where the company plans to replace the recovery boiler and turbine. When the investment is completed, some of the pulp mill's old machinery and equipment will be taken out of service. The company recognised a EUR 19.1 million impairment in the old assets of the Husum pulp mill to the 2019 financial statements.

NOTE 5 – PROVISIONS

			Environmetal	Other
EUR million		Restructuring	obligations	provisions	Total
	1 January 2020	1.2	3.5	1.2	5.8
Translation differences		0.0		0.0	0.1
Increases			0.0		0.0
Utilised during the year		-1.0		-0.2	-1.2
Unused amounts reversed			-0.1		-0.1
	31 December 2020	0.2	3.4	1.0	4.7

The non-current part of provisions was EUR 3.7 million and the current part EUR 1.0 million, total provisions

amount to EUR 4.7 million. Half of non-current provisions are estimated to be utilised by the end of 2025 and the rest in 2030s.

NOTE 6 – RELATED PARTY TRANSACTIONS

Related parties include Metsä Board's ultimate parent company Finnish Metsäliitto Cooperative, other subsidiaries of Metsäliitto, associated companies and joint ventures as well as Metsäliitto Employees' Pension Foundation until 31 December 2019. The members of The Board of Directors and Metsä Group's Executive Management Team and Metsä Board's Corporate Management Team as well as their close family members are also included in related parties.

Metsä Board enters into a significant number of transactions with related parties for the purchases of inventories, sale of goods, corporate services as well as financial transactions. Arm's length pricing has been followed in product and service transactions undertaken and interest rates set between Metsä Board and the related parties.

Transactions with parent and sister companies

	Q1–Q4	Q1–Q4
EUR million	2020	2019
Sales	75.4	101.1
Other operating income	4.0	14.2
Purchases	598.7	682.5
Share of result from associated company	-2.4	43.1
Interest income	0.1	0.1
Interest expenses	0.9	1.9
Accounts receivables and other receivables	50.2	32.8
Cash and cash equivalents	204.7	127.1
Accounts payable and other liabilities	54.8	54.6

Metsä Fibre's net result is included within operating result line item "Share of result from associated company" and transactions with Metsä Fibre are included in transactions with sister companies.

disposal to Metsä Fibre of shares in Äänevoima Oy and a related adjustment of EUR -2.2 million to share of result from associated company.

Cash and cash equivalents include interest-bearing receivables comparable to cash funds and available from Metsä Group's internal bank Metsä Group Treasury Oy.

Metsä Board in the review period. In the comparison period Metsä Board recognised a gain of EUR 9.0 million in other operating income on

Metsä Fibre paid a dividend of EUR 21.8 million to

Transactions with associated companies and joint ventures

	Q1–Q4	Q1–Q4
EUR million	2020	2019
Sales	0.5	0.5
Purchases	3.0	5.3
Other non-current financial assets
Accounts receivables and other receivables	0.2	0.4
Accounts payable and other liabilities	0.6	0.6

NOTE 7 – NOTES TO CONSOLIDATED CASH FLOW STATEMENT

ADJUSTMENTS TO THE RESULT FOR THE PERIOD

	Q1–Q4	Q1–Q4	Q4
EUR million	2020	2019	2020
Taxes	42.2	21.0	12.2
Depreciation, amortization and impair ment charges	94.5	113.7	20.6
Share of result from associated companies and joint ventures	2.5	-43.2	2.2
Gains and losses on sale of fixed assets	-14.0	-33.3	-6.7
Finance costs, net	14.9	15.5	3.1
Pension liabilities and provisions	-1.0	-3.5	-0.2
Other adjustments	1.5	0.5	0.6
Total	140.6	70.6	31.8

Net financial items

Net financial items in consolidated cash flow statement for the review period include a dividend of EUR 21.8 million paid by Metsä Fibre (1–12/2019: EUR 63.3 million).

Disposals and other items

Disposals and other items reported in 2020 were EUR 12.2 million in total. They consisted of sales proceeds of EUR 7.1 million from sale of non-business related land area, proceeds amounting to EUR 6.2 million from emission right sales, investment in Pohjolan Voima Ltd

EUR -2.2 million as well as other sale proceeds and other items amounting to EUR 1.1 million.

In 2019 disposals and other were EUR 28.0 million in total. They consisted of proceeds amounting to EUR 14.1 million from emission right sales, sales proceeds of EUR 5.6 million from sale of non-business related land area, cash flow effect of EUR 4.2 million from divestment of Äänevoima Oy shares, EUR 3.3 million from sale of non-operative share investment as well as other sale proceeds and other items amounting to EUR 0.9 million.

NOTE 8 – FINANCIAL INSTRUMENTS

Classification of financial assets and liabilities and their fair values

Financial assets 31 December 2020

EUR million	Fair value through profit and loss	Fair value through other comprehen sive income	Amortised cost	Total carrying amount
Other non-current investments	3.5	183.4		186.9
Other non-current financial assets			10.8	10.8
Accounts receivables and other receivables			276.7	276.7
Cash and cash equivalent	0.0		214.0	214.0
Derivative financial instruments	0.6	32.6		33.3
Total carrying amount	4.1	216.0	501.5	721.6
Total fair value	4.1	216.0	501.5	721.6

Financial liabilities 31 December 2020

EUR million	Fair value through profit and loss	Fair value through other comprehen sive income	Amortised cost	Total carrying amount
Non-current interest-bearing financial liabilities			444.8	444.8
Other non-current financial liabilities			0.4	0.4
Current interest-bearing financial liabilities			7.6	7.6
Accounts payable and other financial liabilities			306.0	306.0
Derivative financial instruments	1.1	7.2		8.4
Total carrying amount	1.1	7.2	758.7	767.1
Total fair value	1.1	7.2	791.7	800.1

Classification of financial assets and liabilities and their fair values

Financial assets 31 December 2019

EUR million	Fair value through profit and loss	Fair value through other comprehen sive income	Amortised cost	Total carrying amount
Other non-current investments	3.7	251.4		255.1
Other non-current financial assets			15.2	15.2
Accounts receivables and other receivables			303.8	303.8
Cash and cash equivalent	0.0		134.2	134.2
Derivative financial instruments	0.7	17.9		18.6
Total carrying amount	4.4	269.4	453.2	726.9
Total fair value	4.4	269.4	453.2	726.9

Financial liabilities 31 December 2019

EUR million	Fair value through profit and loss	Fair value through other comprehen sive income	Amortised cost	Total carrying amount
Non-current interest-bearing financial liabilities			412.9	412.9
Other non-current financial liabilities			0.3	0.3
Current interest-bearing financial liabilities			32.0	32.0
Accounts payable and other financial liabilities			315.4	315.4
Derivative financial instruments	0.3	10.6		10.9
Total carrying amount	0.3	10.6	760.6	771.4
Total fair value	0.3	10.6	789.4	800.3

Accounts receivables and other receivables do not include advance payments, accrued tax receivables and periodisations of employee costs.

Accounts payable and other financial liabilities do not include advance payments, accrued tax liabilities and periodisations of employee costs.

In Metsä Board, all interest-bearing liabilities are valued in the balance sheet at amortised cost based on effective interest method.

Fair values in the table are based on present value of cash flow of each liability or assets calculated by market rate. The discount rates applied are between 0.3– 1.5% (31 December 2019: 0.3–2.1). The fair values of accounts and other receivables and accounts payable and other liabilities do not materially deviate from their carrying amounts in the balance sheet.

Fair value hierarchy of financial assets and liabilities as of 31 December 2020

EUR million	Level 1	Level 2	Level 3	Total
Financial assets at fair value
Other non-current investments	0.0		186.9	186.9
Derivative financial assets	2.3	30.9		33.3
Financial liabilities measured at fair value
Derivative financial liabilities	0.4	8.0		8.4
Financial assets not measured at fair value
Cash and cash equivalent		214.0		214.0
Financial liabilities not measured at fair value
Non-current interest-bearing financial liabilities		477.8		477.8
Current interest-bearing financial liabilities		7.6		7.6

Fair value hierarchy of financial assets and liabilities as of 31 December 2019

EUR million	Level 1	Level 2	Level 3	Total
Financial assets at fair value
Other non-current investments	0.0		255.1	255.1
Derivative financial assets	8.1	10.6		18.6
Financial liabilities measured at fair value
Derivative financial liabilities	2.0	8.8		10.9
Financial assets not measured at fair value
Cash and cash equivalent		134.2		134.2
Financial liabilities not measured at fair value
Non-current interest-bearing financial liabilities		441.4		441.4
Current interest-bearing financial liabilities		32.3		32.3

Other non-current investments at fair value based on Level 3

	Q1–Q4	Q1–Q4
EUR million	2020	2019
Carrying value at beginning of period	255.1	270.1
Total gains and losses in profit or loss	-0.1	3.2
Total gains and losses in other comprehensive income	-70.3	-14.7
Purchases	2.2	0.0
Disposals	-0.1	-3.5
Carrying value at end of the period	186.9	255.1

Financial assets and liabilities measured at fair value have been categorised according to IFRS 7 Financial Instruments: Disclosures.

Level 1

Fair value is based on quoted prices in active markets.

Level 2

Fair value is determined by using valuation techniques that use observable price information from market.

Level 3

Fair value are not based on observable market data, but company's own assumptions.

The fair values of electricity, natural gas, propane, fuel oil derivatives are determined by using public price quotations in an active market (Level 1).

The fair values of currency forwards and options are determined by using the market prices of the closing date of the reporting period. The fair values of interest rate swaps are determined by using the present value of expected payments, discounted using a risk adjusted discount rate, supported by market interest rates and other market data of the closing date of the reporting period (Level 2).

For financial instruments not traded on an active market, the fair value is determined by valuation techniques. Judgment is used when choosing the different techniques and making assumptions, which are mainly based on circumstances prevailing in the markets on each closing date of the reporting period (Level 3).

The valuation techniques are described in more detail in the Annual report.

The most significant asset at fair value not traded on an active market is the investment in Pohjolan Voima Oyj shares classified as a financial asset at fair value through other comprehensive income. The value of investment is determined based on the present value of discounted cash flows. Key factors affecting cash flows include the price of electricity, inflation expectations and the discount rate. The 12-month moving average of electricity futures prices has been used as the energy

price for the first six years. Subsequent prices are based on a long-term market price forecast. The change in the fair value of Pohjolan Voima Oyj's shares in the second quarter was larger than usual. This was mainly due to changes in the valuation model. Metsä Board discontinued the use of previous benchmark transactions in Pohjolan Voima Oyj's shares as a valuation basis and increased the discount rates used in the valuation model based on projected cash flows to reflect prevailing circumstances.

In November 2020, Metsä Board participated in the shareholder loan of Pohjolan Voima Oyj with EUR 2.2 million, corresponding to its holding, to fund the completion of the Olkiluoto 3 project. The loan retains the current level of Metsä Board's portion of OL3 power. The unsecured loan does not have a maturity date, its repayment and interest payments depend on a decision of the debtor company's Board of Directors, and the loan capital can be converted into 40,011 new B2 series shares in Pohjolan Voima Oyj. The loan capital is repayable in the event of bankruptcy only with a priority poorer than that of all other creditors.

The shareholder loan is recognised in Metsä Board's financial statements as an equity investment in Pohjolan Voima Oyj and measured at fair value in the same manner as a shareholding through other comprehensive income.

The WACC used in Pohjolan Voima share valuation on 31 December 2020 was 2.87% (31 December 2019: 1.37) and 3.87% (2.37) for the Olkiluoto 3 power plant under construction. The acquisition cost of shares in Pohjolan Voima Oyj on 31 December 2020 is EUR 40.2 million (38.0) and fair value EUR 183.4 million (251.4).

The carrying value of other investments as of 31 December 2020 is estimated to change by EUR -8.6 million and EUR 9.3 million should the rate used for discounting the cash flows change by 0.5 percentage points from the rate estimated by the management. The carrying value of other investments is estimated to change by EUR 79.1 million should the energy prices used in calculating the fair value differ by 10% from the prices estimated by the management.

Derivatives 31 December 2020

EUR million	Nominal value	Fair value		Fair value
			Derivative	Fair value	Fair value	Fair value through
		Assets	Liab.	Net	through profit and loss	other comprehen- sive income
Interest rate swaps	100.0		3.4	-3.4		-3.4
Interest rate derivatives	100.0		3.4	-3.4		-3.4
Currency forward contracts	959.1	29.0	4.6	24.4	-0.5	24.9
Currency derivatives	959.1	29.0	4.6	24.4	-0.5	24.9
Electricity derivatives	9.8	0.6	0.3	0.3		0.3
Oil derivatives	12.3	1.3	0.1	1.2		1.2
Other commodity derivatives	8.3	2.4	0.0	2.3		2.3
Commodity derivatives	30.4	4.3	0.4	3.9		3.9
Derivatives total	1,089.4	33.3	8.4	24.9	-0.5	25.4

Derivatives 31 December 2019

EUR million	Nominal value	Fair value		Fair value
			Derivative	Fair value	Fair value through profit	Fair value through other comprehen
		Assets	Liab.	Net	and loss	sive income Assets
Interest rate swaps	100.0		3.1	-3.1		-3.1
Interest rate derivatives	100.0		3.1	-3.1		-3.1
Currency forward contracts	959.9	10.3	4.7	5.6	0.4	5.2
Currency option contracts	480.3	0.2	0.1	0.1		0.1
Currency derivatives	1,440.2	10.6	4.8	5.8	0.4	5.3
Electricity derivatives	17.1	7.5	1.4	6.1		6.1
Oil derivatives	7.6	0.5	0.5	0.0		0.0
Other commodity derivatives	8.5	0.1	1.1	-1.0		-1.0
Commodity derivatives	33.2	8.1	3.0	5.1		5.1
Derivatives total	1,573.4	18.6	10.9	7.8	0.4	7.3

NOTE 9 – COMMITMENTS AND GUARANTEES

EUR million	31 Dec. 2020	31 Dec. 2019
Liabilities secured by collateral		24.1
Pledges granted		138.7
Real estate mortgages	192.8	232.8
Total pledges and mortgages	192.8	371.5
Guarantees and counter-indemnities	2.8	9.1
Commitments on behalf of associated companies and joint ventures	0.1	0.1
Total	195.7	380.5

Securities and guarantees include pledges, real estate mortgages and guarantee liabilities.

COMMITMENTS RELATED TO PROPERTY, PLANT AND EQUIPMENT

EUR million	31 Dec. 2020	31 Dec. 2019
Payments due in following 12 months	60.4	60.2
Payments due later
Total	60.4	60.2

Commitments related to property, plant and equipment concern the first phase of the modernisation of the Husum pulp mill.

NOTE 10 – EVENTS AFTER THE REVIEW PERIOD

The sale of a 30% share in the Husum pulp mill to Norra Skog was completed on 4 January 2021, and its impact will be included in Metsä Board's financial reporting as of the interim report concerning January– March 2021. The transaction will decrease Metsä Board's net debt by approximately EUR 260 million, and in addition it will reduce Metsä Board's financial contribution in the second phase of the Husum pulp mill renewal by approximately EUR 100 million.

Metsä Board announced on 22 January 2021, that it has started pre-engineering for increasing the annual production capacity of folding boxboard at the Husum mill in Sweden by approximately 200,000 tonnes. The pre-engineering phase includes also an evaluation of the mill's port capacity for increased volumes of raw materials and finished goods. The readiness to make the final investment decision is expected to be achieved in the summer of 2021 and the ramp-up of the additional capacity would start in 2023.

On 11 February 2021, Metsä Board's associated company Metsä Fibre made an investment decision on the construction of a new bioproduct mill in Kemi, Finland.

On 11 February 2021, Metsä Board made an investment decision on the development programme for its Kemi paperboard mill.