Metsä Board Oyj — Earnings Release 2016

Feb 2, 2017

Metsä Board's comparable operating result in 2016 was EUR 137 million

Metsä Board's comparable operating result in 2016 was EUR 137 million

Financial statements bulletin for 1 January – 31 December 2016, 2 February 2017
at 12 noon

January–December 2016 (1–12/2015)

• Sales amounted to EUR 1,720.3 million (2,007.5).

• Comparable operating result was EUR 137.5 million (179.9), or 8.0 per cent
(9.0) of sales. Operating result was EUR 132.3 million (199.0).

• Comparable result before taxes was EUR 106.8 million (150.2). Result before
taxes was EUR 101.6 million (167.1).

• Comparable earnings per share were EUR 0.26 (0.34), and earnings per share
were EUR 0.25 (0.39).

October–December 2016 (7–9/2016)

• Sales amounted to EUR 421.8 million (440.0).

• Comparable operating result was EUR 32.8 million (34.0), or 7.8 per cent
(7.7) of sales. Operating result was EUR 38.5 million (26.6).

• Comparable result before taxes was EUR 22.8 million (27.1). Result before
taxes was EUR 28.6 million (19.8).

• Comparable earnings per share were EUR 0.05 (0.07), and earnings per share
were EUR 0.07 (0.05).

Essential in October–December 2016

• Paperboard deliveries fell short of the previous quarter due to seasonality.

• At the Husum integrated mill, the annual maintenance shutdown in October was
extended by a week to resolve the pulp mill's technical problems. Following the
shutdown, pulp production has continued normally.

• The average price of orders for Husum's new folding boxboard increased, and
deliveries remained roughly on par with the previous quarter.

• CDP recognised Metsä Board's responsibility in a notable way. The company was
included on the A List in the Climate and Water programmes and received
Leadership status in the Forests programme.

Profit guidance for January–March 2016

Metsä Board's comparable operating result in the first quarter of 2017 is
expected to improve compared to the fourth quarter of 2016.

Dividend proposal

The Board of Directors proposes to the Annual General Meeting to be held on 23
March 2017 that a dividend of EUR 0.19 per share be paid for the 2016 financial
period. The proposed dividend is equal to 76 per cent of the earnings per share
for 2016 and 73 per cent of the comparable earnings per share.

Mika Joukio, CEO:

“Our paperboard deliveries in 2016 grew by 12 per cent, which clearly exceeds
the average growth rate of the premium fresh fibre paperboard market growth.
Our sales declined as planned due to the reduced paper business. Our comparable
operating result weakened compared to the previous year and was EUR 137
million. The profit development of our Finnish mills was stable overall, and
five mills out of seven achieved new records in their annual production. Our
operating result was burdened by the start-up of Husum's new folding boxboard
production line, the technical issues in the new production line and the pulp
mill, as well as the lower price level of the start-up volumes of the new
folding boxboard. The decline in the pulp market price also had a negative
impact on our result.

The restructuring work, which has lasted for several years, was concluded when
the last fine paper reels were produced at the Husum mill in Sweden. We also
discontinued the loss-making wallpaper base business at the Kyro mill in
Hämeenkyrö, Finland. From now on, we will produce only premium fresh fibre
paperboard for consumer goods, retail-ready and food service packaging.

At Husum, we started the installation of the extrusion coating line for food
service packaging. The line will be commissioned in 2017. We will also
continue the development of other barrier solutions. We will closely evaluate
their commercial potential.

Technical problems in the folding boxboard production line at Husum have now
been solved. With determined work carried out over several years, we have
created for ourselves a growing market position in North America, where there
is good demand for Metsä Board's premium paperboards. We are therefore ideally
placed for continued profitable growth and increasing our market share in North
America. Europe will continue to be our biggest and most important market;
here, we aim to keep our leading position as a producer of folding boxboard
with healthy pricing.”

FINANCIAL KEY FIGURES

                          2016   2016   2016   2016   2015     2016     2015
                            Q4     Q3     Q2     Q1     Q4    Q1–Q4    Q1–Q4
                        ----------------------------------------------------

Sales, EUR million 421.8 440.0 422.9 435.6 462.2 1,720.3 2,007.5

EBITDA, EUR million 58.9 60.6 59.6 55.5 59.1 234.6 302.5
comparable, EUR million 53.1 59.4 60.7 57.8 59.7 231.1 283.3
EBITDA, % of sales 14.0 13.8 14.1 12.7 12.8 13.6 15.1
comparable, % of sales 12.6 13.5 14.4 13.3 12.9 13.4 14.1

---

Operating result, EUR 38.5 26.6 34.5 32.7 34.1 132.3 199.0
million
comparable, EUR million 32.8 34.0 35.8 35.0 35.1 137.5 179.9
Operating result, % of 9.1 6.0 8.2 7.5 7.4 7.7 9.9
sales
comparable, % of sales 7.8 7.7 8.5 8.0 7.6 8.0 9.0

---

Result before taxes, EUR 28.6 19.8 25.5 27.7 29.4 101.6 167.1
million
comparable, EUR million 22.8 27.1 26.8 30.0 30.4 106.8 150.2

---

Result for the period, EUR 24.7 18.6 23.2 23.9 26.5 90.4 137.3
million
comparable, EUR million 19.2 24.1 24.6 25.7 27.5 93.6 120.2

---

Result per share, EUR 0.07 0.05 0.06 0.07 0.07 0.25 0.39
comparable, EUR 0.05 0.07 0.07 0.07 0.07 0.26 0.34

---

Return on equity, % 9.6 7.4 9.4 9.5 10.4 8.7 14.7
comparable, % 7.5 9.6 9.9 10.2 10.8 9.0 12.9

---

Return on capital employed, 9.0 6.3 8.2 7.8 8.1 7.8 12.5
%
comparable, % 7.7 8.0 8.5 8.3 8.3 8.1 11.3

---

Equity ratio at end of 48 48 47 44 46 48 46
period, %
Net gearing ratio at end of 44 49 54 42 32 44 32
period, %
Interest-bearing net 2.0 2.1 2.1 1.5 1.2 2.0 1.2
liabilities/EBITDA1)
Shareholders' equity per 2.96 2.82 2.81 2.77 2.89 2.96 2.89
share at end of period,
EUR
Interest-bearing net 463.8 487.6 541.4 412.3 333.4 463.8 333.4
liabilities, EUR million
Gross investments, EUR 43.3 16.4 48.3 54.3 60.8 162.4 177.8
million
Net cash flow from 54.6 67.0 -22.2 -22.3 65.9 77.0 246.7
operating activities, EUR
million

---

Personnel at the end of 2,466 2,493 2,762 2,573 2,601 2,466 2,601
period

---

1) Ratio of end of period interest-bearing net liabilities to 12-month rolling
comparable EBITDA

Near-term outlook

Metsä Board's paperboard deliveries in January–March are expected to grow from
the previous quarter. The growth is supported by Husum's new folding boxboard
production, primarily sold to the Americas.

The profit development of Finnish mills is expected to remain stable, and the
production costs of paperboards in January–March are expected to remain at the
level of the fourth quarter in 2016.

No planned maintenance shutdowns are set to take place in January–March; this
will have a positive impact on the result of the first quarter compared to
other quarters.

Demand for premium fresh fibre paperboards is expected to remain good in both
Europe and the Americas. The market prices of folding boxboard and white fresh
fibre linerboard are expected to remain stable. Global demand and supply for
long-fibre and short-fibre pulp is expected to remain stable.

METSÄ BOARD CORPORATION

Espoo, Finland

2 February 2017

BOARD OF DIRECTORS

Further information:

Jussi Noponen, CFO, tel. +358 10 465 4913

Katri Sundström, Head of Investor Relations, tel. +358 400 976 333

More information will be available as of 1 p.m. on 2 February 2017. 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 9 7479 0361

Sweden +46 8 5033 6574

United Kingdom +44 330 336 9105

United States: +1 719-457-1036

The conference ID is 2804193.

Attachments: