Metsä Board Oyj — Interim / Quarterly Report 2021

Apr 28, 2021

Metsä Board’s comparable operating result in January–March 2021 was EUR 89 million

Metsä Board’s comparable operating result in January–March 2021 was EUR 89 million

Metsä Board Corporation Stock exchange release Interim report 28 April 2021 at
12 noon EEST

January–March 2021 (compared to 1–3/2020)

• Sales were EUR 493.7 million (472.1).

• Comparable operating result was EUR 88.8 million (33.8) or 18.0% (7.2) of
sales. Operating result was EUR 82.0 million (33.8).

• Comparable earnings per share were EUR 0.20 (0.06), and earnings per share
were EUR 0.18 (0.06).

• Comparable return on capital employed was 18.3% (7.6).

• Net cash flow from operations was EUR 16.8 million (80.0).

Impact of coronavirus pandemic on Metsä Board’s business operations

The coronavirus pandemic has increased demand for hygienic 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.

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 to the changes in demand resulting from 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.

Events in January–March 2021

• Demand for Metsä Board’s fresh fibre paperboards remained strong in all market
areas important for the company. The delivery volumes of paperboards were record
high.

• The prices of market pulp increased strongly in both China and Europe, having
a positive effect on Metsä Board’s profitability.

• The sale of a 30% share in the Husum pulp mill to Norra Skog was closed on 4
January 2021, and its impacts are included in Metsä Board’s financial reporting
as of this interim report. The transaction made Metsä Board free of net debt.
The company’s interest-bearing net debt at the end of the review period was EUR
-6.6 million.

• Metsä Board made an investment decision on the development programme for its
Kemi paperboard mill. The value of the investment is approximately EUR 67
million. The mill’s annual paperboard capacity will increase by approximately
40,000 tonnes.

• Metsä Board initiated pre-engineering on increasing the annual production
capacity of folding boxboard by approximately 200,000 tonnes at its Husum mill
in Sweden. The decision readiness for the potential investment is expected to be
reached in the summer of 2021. Should the investment be realised, the ramp-up of
the additional capacity would begin in 2023.

• The 2021 Annual General Meeting was held on 25 March 2021 in accordance with
exceptional procedures. The Annual General Meeting decided to distribute a
dividend of EUR 0.10 per share and a return of capital of EUR 0.16 per share,
totalling EUR 0.26 per share. The dividend payment and capital repayment date
was 7 April 2021.

• Metsä Board’s associated company Metsä Fibre made an investment decision on
the construction of Kemi’s new bioproduct mill.

Events after the review period

The estimated investment value of the first phase in the renewal of the Husum
pulp mill, comprising a new recovery boiler and turbine, was increased from EUR
320 million to EUR 360 million.

On 28 April 2021, Metsä Board announced changes in its Corporate Management
Team. Metsä Board’s CFO Jussi Noponen has been appointed Metsä Board’s SVP,
Sales and Supply Chain. Sari Pajari-Sederholm, Metsä Board’s SVP, Sales and
Marketing, has been appointed Metsä Group’s EVP, strategy. Henri Sederholm has
been appointed Metsä Board’s CFO. Sederholm and Noponen are members of Metsä
Board’s Corporate Management Team and report to CEO Mika Joukio. The changes are
effective as of 1 May 2021.

Result guidance for April–June 2021

Metsä Board’s comparable operating result in April–June 2021 is expected to
improve compared to January–March 2021 (EUR 88.8 million).

Near-term outlook

The duration of the coronavirus pandemic and its impacts on the world economy
and on Metsä Board’s business operations continue to be difficult to estimate.

Metsä Board’s paperboard delivery volumes in April–June 2021 are expected to
grow from the delivery volumes of January–March 2021 (491,000 tonnes).

The prices of folding boxboard and white kraftliners in local currencies are
expected to rise.

More planned maintenance shutdowns of mills will take place during the second
quarter compared to the first quarter.

The demand for long-fibre market pulp will be supported by the global demand
growth for tissue papers and paperboards. Pulp producers’ maintenance shutdowns
during the spring will translate into a seasonal decline in the supply of pulp.
The container shortage particularly in the traffic between Europe and Asia will
continue and have an impact on the deliveries of market pulp. The prices of
market pulp in Europe and China have continued to increase after the review
period.

Cost inflation accelerated during the first quarter, and costs are expected to
continue to increase to some degree during the second quarter. Cost inflation
for 2021 is expected to be around 3% compared to 2020.

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

Metsä Board’s CEO Mika Joukio:

“Metsä Board’s year got off to a brisk start. Demand was very strong in all our
products and in all our main markets. The delivery volumes of folding boxboard
and white kraftliners were record high in January–March, totalling 491,000
tonnes. At the end of the review period, the order backlog was at an
exceptionally high level, which indicates good paperboard sales for the second
quarter, too.

Thanks to the low number of maintenance shutdowns and the mills’ further
improved production efficiency, the production volumes of paperboard and market
pulp were also record high.

Our comparable operating result in January–March was EUR 88.8 million, i.e.
clearly better than during the comparison period (1–3/2020: EUR 33.8 million).
The profitability of the comparison period was burdened by the paper industry
strike in Finland, which had a roughly EUR 15 million negative impact on the
operating result. The operating result of the review period improved due to
higher delivery volumes of paperboard and the rapidly increased prices of market
pulp in Europe and particularly in China. At the same time, a growing shortage
of containers in the traffic between Europe and Asia has resulted in challenges
and will continue to impact deliveries, especially in market pulp.

At the beginning of the year, we sold a 30% share of our Husum pulp mill to
Norra Skog. The transaction made us a net debt free company. At the end of the
review period, our interest-bearing net debt was EUR -6.6 million. Our
cooperation with Norra Skog will reduce the amount of wood delivered to the
Husum pulp mill from the Baltic countries, as it will be replaced by local
pulpwood. This will, in turn, increase the share of certified wood fibre out of
all wood fibre we purchase. Our target is, that more than 90% of all the wood
fibre we purchase will be certified by 2030.

Our strong financial position and the growing demand for sustainable fresh fibre
paperboard provides us with an excellent basis for the growth and development of
our paperboard business. During the review period, we initiated pre-engineering
on increasing the annual production capacity of Husum’s folding boxboard machine
by some 200,000 tonnes. The decision readiness for the investment is expected to
be reached in the summer of 2021, in which case the planned increase of
production could start in 2023. In addition, we launched a development programme
at the Kemi paperboard mill in which the annual production capacity of white
kraftliner will be increased by 40,000 tonnes and the mill’s water and energy
efficiency will be improved considerably.

We continue to invest in product development and innovations, and have an
excellent platform for doing so in the Excellence Centre we opened last year.
The centre manages development work globally in cooperation with our customers
and technology partners.

Our ambition is to be a forerunner in sustainability, and we aim for entirely
fossil free production and products by 2030. During the review period, Metsä
Board was included on CDP’s Supplier Engagement Rating Leaderboard for supply
chain engagement on climate issues. Our recyclable paperboards made from
renewable wood fibre are ideal for sustainable packaging, which will also
support the demand for them in the future.”

KEY FIGURES

                           2021 Q1  2020 Q1  2020 Q4  2020 Q1–Q4

Sales, EUR million 493.7 472.1 473.1 1,889.5
EBITDA, EUR million 105.6 59.3 85.2 321.8
  comparable, EUR million 112.5 59.3 85.2 315.8
EBITDA, % of sales 21.4 12.6 18.0 17.0
  comparable, % of sales 22.8 12.6 18.0 16.7
Operating result, EUR 82.0 33.8 64.5 227.3
million
  comparable, EUR million 88.8 33.8 64.5 221.2
Operating result, % of 16.6 7.2 13.6 12.0
sales
  comparable, % of sales 18.0 7.2 13.6 11.7
Result before taxes, EUR 78.9 28.9 61.5 212.3
million
  comparable, EUR million 85.7 28.9 61.5 206.3
Result for the period, 64.2 22.1 49.3 170.1
EUR million
  comparable, EUR million 71.1 22.1 49.3 165.3
Earnings per share, EUR 0.18 0.06 0.14 0.48
  comparable, EUR 0.20 0.06 0.14 0.46
Return on equity, % 17.3 6.7 14.6 12.5
  comparable, % 19.2 6.7 14.6 12.1
Return on capital 16.9 7.6 14.3 12.6
employed, %
  comparable, % 18.3 7.6 14.3 12.2
Equity ratio, % 60 59 60 60
Net gearing, % 0 20 17 17
Interest-bearing net 0.0 1.0 0.7 0.7
liabilities/comparable
EBITDA
Shareholders’ equity per 4.09 3.71 3.89 3.89
share, EUR
Interest-bearing net -6.6 260.1 235.5 235.5
liabilities, EUR million
Total investments, EUR 35.0 29.8 48.9 166.4
million
Net cash flow from 16.8 80.0 81.0 307.7
operations, EUR million
Personnel 2,390 2,376 2,370 2,370

METSÄ BOARD CORPORATION

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 23377269#.

Metsä Board
www.metsaboard.com (https://www.metsaboard.com/Pages/default.aspx)
Metsä Board is a leading European producer of premium fresh fibre paperboards.
We focus on lightweight and high-quality folding boxboards, food service boards
and white kraftliners. The pure fresh fibres we use in our products are a
renewable resource, traceable to origin in sustainably managed northern forests.
We are a forerunner in sustainability, and  we aim for completely fossil free
mills and raw materials by 2030.
Together with our customers we develop innovative packaging solutions to create
better consumer experiences with less environmental impact. In 2020, our sales
totalled EUR 1.9 billion, and we have about 2,400 employees. Metsä Board, part
of Metsä Group, is listed on the Nasdaq Helsinki
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