Metsa Board Oyj Class A · OMXHEX:METSA
Metsa Board Oyj Class A — Investor Presentation (March 2023)
72 slides from Metsa Board Oyj Class A's investor presentation, March 2023
Slide 1: Metsä Board Investor presentation January–March 2023
Metsä Board Investor presentation January–March 2023 1
Slide 2: Disclaimer
Disclaimer This presentation includes forward-looking statements. The words “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim”, “target”, “might” or in each case, their negative, or any similar expressions identify certain of these forward-lookin
Slide 3: Contents
Contents This is Metsä Board 4 Investments 13 January–March 2023 results 16 Profit drivers and cost structure 30 Operating environment 39 Sustainability 45 Innovation and R&D 62 Owners and management 69
Slide 4: Investment highlights
Investment highlights Focus on sustainable Strong position Leader in Investing in fresh fibre in a growing market sustainability sustainable and paperboards profitable growth • Premium paperboards from renewable • World class resource efficiency in • Significant ongoing and planned • #1 in folding b
Slide 5: Metsä Board in figures
Metsä Board in figures Sales Comparable operating result EUR 2,480 million FY2022: EUR 521 million or 21% of sales Split by product Split by region EUR million % Other 600 25 operations APAC 500 3% 20 Market pulp 8% 400 15% 15 Americas 300 10 26% 200 100 5 Folding White boxboard 0 0 kraftliners 57%
Slide 6: End-uses of our paperboards are defensive in nature
The end-uses of our paperboards are mainly in consumer products that are defensive in nature Various retail purposes Graphic (e.g. shelf-ready end uses solutions, point-of-sale E-commerce displays, fruit boxes) Other consumer Other Folding Food and goods White consumer boxboards food service goods k
Slide 7: Operating environment supports demand for fresh fibre paperboards
Operating environment supports the demand for fresh fibre paperboards Population growth, Regulation and The requirements of Availability Global urbanisation and consumer the circular economy and quality of e-commerce rising living preferences favour become more recycled fibre is continues standards
Slide 8: Our main markets are Europe and North America
Our main markets are Europe and North America Total paperboard deliveries in 2022 exceeded 1.8 million tonnes Regional focuses and key demand drivers EMEA Further strengthening our leading market position in EUROPE 68% • Environmental awareness and regulatory requirements 864,000t FBB support demand
Slide 9: Group structure provides a unique value chain from forests to end products
Group structure provides an unique value chain from forests to high-quality and sustainable end products METSÄ GROUP FY2022: Sales EUR 7.0 billion │ROCE 19.5%│ Personnel 9,500 Parent company: METSÄLIITTO COOPERATIVE owned by nearly 90,000 Finnish forest-owners METSÄ FOREST METSÄ WOOD METSÄ FIBRE MET
Slide 10: Our production is close to our main raw material
Total paperboard capacity: Folding boxboard (FBB): 1,360,000 t/a Our production is close to our main White kraftliner (WKL): 675,000 t/a raw material Total pulp/BCTMP capacity: 1,490,000 t/a **) Ownership in Metsä Fibre 24.9% Kemi Äänekoski 425,000 t/a WKL 260,000 t/a FBB 610,000 t/a pulp* 1.3 milli
Slide 11: Self-sufficiency in pulp secured through ownership of Metsä Fibre
Our self-sufficiency in pulp is Pulp sales split by region 2022 secured through our ownership of Market pulp, Metsä Group internal use Metsä Fibre APAC Market pulp, EMEA Metsä Fibre is globally #1 producer in softwood market pulp (NBSK) Pulp sales split by end-use 2022 – 3.3 million tonnes/year chem
Slide 12: Financial targets and dividend policy
Strong performance supports our aim to grow in fibre-based packaging materials Financial targets and dividend policy Comparable ROCE: Net debt/comparable EBITDA: Dividend policy: Target at least 12% Maximum level 2.5x Payout ratio at least 50% of net result 20.9 59 18.7 Target <2.5x 13.9 Target 54 1
Slide 13: Ongoing and future investments support growth
Ongoing and future investments support our growth in fibre-based packaging materials Husum folding boxboard capacity Kemi white kraftliner development Pre-engineering for new folding expansion programme boxboard mill in Kaskinen • Start up in H2/2023 • Start up in H2/2023 • Pre-engineering based on
Slide 14: Strong financial situation creates platform for planned growth
Strong financial situation creates solid platform for planned growth Actual capital expenditure and depreciation Indicative timetable for ongoing and planned investments 300 EUR MILLION 200 100 0 2019 2020 2021 2022 Capex in growth and development Maintenance capex Depreciation 1) In addition, an in
Slide 15: Metsä Fibre is building a new bioproduct mill in Kemi
*) Metsä Board owns 24.9% of Metsä Fibre Metsä Fibre* is building a new bioproduct mill in Kemi, Finland • The new mill replaces current Kemi pulp mill (610,000 t/a) • New bioproduct mill – Annual pulp capacity 1.5 million tonnes – Annual pulpwood consumption 7.6 m3 – Self-sufficiency in electricity
Slide 16: Results for January–March 2023
Results for January–March 2023
Slide 17: Key financials
Key financials Change Q1/23 Q1/22 Q1/23 Q4/22 FY/22 vs Q1/22 Sales EUR, m 542 582 -7% 600 2,480 EBITDA* EUR, m 114 143 -20% 117 603 Operating result* EUR, m 89 121 -27% 101 521 % of sales* % 16.4 20.9 16.8 21.0 Metsä Fibre’s share of operating EUR, m 29 31 123 175 result* Earnings per share EUR 0.19
Slide 18: Q1 2023 in brief
Comparable Sales operating result Q1 2023 in brief 2,084 542 89 • Improved average sales price of EUR million EUR million paperboards (Q1 2022: EUR 582m) (Q1 2022: EUR 121m) • Total delivery volumes of paperboards decreased • Weakened market pulp demand • Production was adjusted to meet the Paperboa
Slide 19: Destocking in the value chain continued and reduced volumes
Destocking in the value chain continued and reduced volumes Q1 2022: Q1 2023: 473,000 tonnes -19% 380,000 tonnes White kraftliners Folding boxboard Q4 2022: Q1 2023: 418,000 tonnes -9% 380,000 tonnes 500 166 400 162 156 166 164 146 143 1,000 tonnes 133 1,000 tonnes 126 300 200 329 348 319 300 307 30
Slide 20: Paperboard deliveries by region
Paperboard deliveries by region FBB deliveries Q1 2023 (Q1 2022) WKL deliveries Q1 2023 (Q1 2022) total 255,000 tonnes (307,000) 126,000 tonnes (166,000) APAC APAC 11,000 1,000 (19,000) (1,000) Americas 59,000 1% (66,000) 4% EMEA EMEA Americas 73,000 185,000 52,000 41% (100,000) 23% 72% (221,000) (6
Slide 21: Reduced volumes reflected in sales, improved prices offset result impact
Reduced volumes reflected in sales, improved prices offset negative result impact Sales, quarterly Comparable operating result, quarterly EUR million EUR million and % of sales FY 2022: EUR 2,480 million FY 2022: 2 500 FY 2021: 600 EUR 521 million EUR 2,084 million margin 21% 600 FY 2021: 2 000 500
Slide 22: Main items affecting comparable operating result
Main items affecting comparable operating result Q1 2023 vs Q1 2022: -27% Q1 2023 vs Q4 2022: -12% EUR 89 million vs 121 EUR million EUR 89 million vs 101 EUR million Positives: Positives: • Higher sales prices for paperboards and market pulp • Higher sales prices for folding boxboards • FX after he
Slide 23: Market pulp
Market pulp Softwood pulp price (PIX) development in Europe and China • Market pulp deliveries (Q1 2023 vs Q1 2022) 1 600 1 400 – Metsä Board -32%: (83,000 vs 122,000 tonnes) – Metsä Fibre*) -14%: (647,000 vs 751,000 tonnes) 1 200 • Weakened demand in softwood market pulp 1 000 USD/tonnes – In Europ
Slide 24: Q1 2023 comparable ROCE at 13.9%
Q1 2023 comparable ROCE at 13.9% Comparable return on capital employed, % Quarterly and rolling 12 months 26% 26% 24% 24% 22% 22% 20% 20% 18% 18% 16% 16% 14% 14% Target > 12% 12% 12% 10% 10% 8% 8% 6% 6% Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q
Slide 25: Strong cash flow in Q1 2023
Strong cash flow in Q1 2023, supported by dividend from Metsä Fibre 400 400 300 300 EUR million EUR million 200 200 134 126 120 93 100 72 70 69 100 59 66 37 23 17 24 19 3 0 0 -17 -10 -100 -73 -100 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Free cash flow = cash flow from operations - inve
Slide 26: Balance sheet remained strong
Balance sheet remained strong Net debt, EUR million Net debt to comparable EBITDA (last 12 months) 400 1 Financial target: 300 Net debt to comparable 0,75 0.7 EBITDA <2.5 236 200 0,5 109 94 0.2 91 0.2 0.2 100 0,25 9 0 4 0 0 0 0 -7 -0.1 -25 -0.2 -0.2 -100 -78 -0,25 -100 -200 -0,5 12/2020 3/2021 6/202
Slide 27: Debt structure and liquidity on 31 March 2023
Debt structure and liquidity on 31 March 2023 Interest-bearing debt Liquidity EUR 451 million EUR 640 million Financial leases and other loans 14 Syndicated credit facility (RCF) Loans from 200 financial 188 249 institutions 440 Bonds Liquid assets and investments Liquidity is complemented by • Mets
Slide 28: Debt maturity and credit ratings
Debt maturity and credit ratings Maturity of interest-bearing debt Total EUR 451 million EUR million 31 March 2023 300 250 • Total interest-bearing debt was EUR 451 200 million, and net debt was EUR 9 million 150 100 • The average interest rate on loans at the end 50 of the review period was 2.5%, a
Slide 29: Near-term outlook
Near-term outlook April–June 2023 • Outlook for sales development remains weak • Paperboard delivery volumes and average sales prices expected to remain stable compared to Q1 • Muted demand with weakening prices for market pulp • Total costs expected to remain stable • Several annual maintenance shu
Slide 30: Cost structure and profit drivers
• Cost structure and profit drivers 30
Slide 31: Main profit drivers and sensitivities
Main profit drivers and sensitivities Component Unit Change Impact on EBIT, approximately Folding boxboard Price / tonne +/- 10% >EUR 150 million White kraftliners Price / tonne +/- 10% >EUR 50 million FX USD/EUR +/- 10% EUR 100 million SEK/EUR +/- 10% EUR -50 million Pulp PIX price of SW/HW per ton
Slide 32: Cost inflation +15%
Cost inflation +15% Metsä Board’s cost structure in 2022 Total costs EUR 2,122 million (1,747) • In Q1 2023, total costs, excluding pulp, were Other fixed Wood 8% roughly 15% higher compared to Q1 2022 Personnel 14% 10% • In chemicals, prices increased especially in caustic soda, peroxides, starch a
Slide 33: Wood is Metsä Board's main raw material
Wood is Metsä Board’s main raw material • Wood represents 25% of Metsä Board’s total costs1) • In 2022, Metsä Board used 8.3 million m3 wood1) of which 83% of was certified • Metsä Group is responsible of Metsä Board’ s wood sourcing – Metsä Group’s annual wood sourcing is ~35 million m3 • Majority
Slide 34: FX sensitivity and exposure
FX sensitivity and exposure Result sensitivity to FX fluctuations Annual FX transaction exposure total EUR 1.5 billion Currency Change Impact on annual EBIT USD/EUR Strenghtening by 10% EUR +100 million Other GBP currencies GBP/EUR Strenghtening by 10% EUR +10 million 7% 2% SEK/EUR Weakening by 10%
Slide 35: Price development of folding boxboard and white kraftliners in Europe
Price development of folding boxboard and white kraftliners in Europe EUR/ tonne EUR/ tonne 1 600 1 600 1 500 Folding boxboard 1 500 1 400 1 400 1 300 1 300 1 200 1 200 1 100 1 100 1 000 1 000 900 900 800 800 700 700 White top kraftliners 600 600 500 500 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 36: Price development of pulp (PIX)
Price development of pulp (PIX) Long-fibre (SW) and short-fibre (HW) pulp 1 600 1 600 1 500 Long-fibre Europe, USD 1 500 1 400 1 400 1 300 1 300 1 200 Short-fibre Europe, USD 1 200 USD or EUR USD or EUR 1 100 1 100 1 000 1 000 900 900 800 800 700 700 600 600 500 500 400 400 Short-fibre Europe, EUR L
Slide 37: Price development of pulpwood in Finland and Sweden
Price development of pulpwood in Finland and Sweden Delivery at roadside Price (on bark) of pulpwood in Finland Price (under bark) of pulpwood in Sweden EUR/m3 SEK/m3 50 500 45 450 40 400 35 350 30 300 25 250 20 200 2012 2015 2018 2021 2010 2011 2013 2014 2016 2017 2019 2020 2022 2023 2010 2011 2012
Slide 38: FX rates development: EUR/USD and EUR/SEK
FX rates development: EUR/USD and EUR/SEK EUR/USD EUR/SEK 1,25 11,4 1,2 11,2 11 1,15 10,8 1,1 10,6 10,4 1,05 10,2 1 10 0,95 9,8 38
Slide 39: Operating environment
Operating environment
Slide 40: Paperboard is the fastest growing packaging material
Paperboard is the fastest growing packaging material The size of the global packaging market, measured by end value, FBB and FSB have fastest growth rates of all cartonboards is USD 1,015 billion and it’s growing by ~4% per year 60 000 Glass 50 000 +2,8%/a CAGR 2020-35 4% 2021–2026 ’000 metric tonne
Slide 41: Global annual demand for cartonboards
Global annual demand for cartonboards SBB = solid bleached board WLC FBB CUK = coated unbleached SBB CUK kraftboard white-lined chipboard folding boxboard 20 Mt 3 Mt 3 Mt FSB = foodservice board 12 Mt LPB = liquid packaging board Grey board Folding & graphic boards FSB LPB 10 Mt 38 Mt 4 Mt 4 Mt Cart
Slide 42: Global annual demand for containerboards
Global annual demand for containerboards Metsä Board’s linerboards are at the top of the quality pyramid – in a very niche market Coated white Uncoated white fresh fibre fresh fibre linerboard linerboard 1 Mt 3.5 Mt White fresh fibre linerboard White recycled Brown kraftliner Brown testliner linerbo
Slide 43: Global annual demand for folding cartonboards and white linerboards
Global annual demand for folding cartonboards and white linerboards FSB Americas EMEA FBB APAC Other fresh fibre grades FSB FSB FBB FBB Other fresh fibre Other CWKL grades fresh fibre Recycled grades WKL grades CWKL White WKL Recycled WKL Recycled testliner White grades grades testliner White testli
Slide 44: Metsä Board's share of European capacity accounts for about one third
Metsä Board’s share of European capacity in both grades accounts for about one third FBB producers in Europe WKL producers in Europe Total capacity 3.9 million tonnes Total capacity 2.1 million tonnes 1800 800 Additional capacity of 200,000 tonnes/year from Husum Additional capacity of 40,000 tonnes
Slide 45: Sustainability
Vitae : Sustainab
Slide 46: Our 2030 sustainability targets
Our 2030 sustainability targets Environment Social We do the right thing. And promote safety and wellbeing at work. We safeguard We mitigate We use natural biodiversity climate change resources Governance and reduce efficiently and We know the origin of our raw emissions reduce waste materials. We f
Slide 47: Strong evidence of sustainability leadership
Strong evidence of sustainability leadership Metsä Board is among the top Metsä Board again scored ‘Platinum’ Metsä Board’s GHG emission Metsä Board, as part of Metsä Group, is committed companies to have received an ‘A’ in the EcoVadis sustainability rating reduction targets are approved by the to
Slide 48: Material topics reported in line with common frameworks
Material topics are reported in line with common frameworks SASB TCFD • Metsä Board reports in accordance with the SASB • Metsä Board’s reporting on climate-related risks and Standard for Pulp and Paper Products within SASB’s opportunities complies with the TCFD’s Renewable Resources and Alternative
Slide 49: Zero fossil CO2 emissions
Metsä Board’s 1.5°C aligned Science Based target ZERO FOSSIL CO2 EMISSIONS Fossil free production* and products by the end of 2030 *including Scope 1 and Scope 2
Slide 50: Transition plan towards fossil free production
Transition plan towards fossil free production 100% TAKO Target: In steam production, natural gas is replaced 100% JOUTSENO by, e.g. electricity Natural gas is replaced by biogas or electricity SIMPELE HUSUM, KASKINEN, KYRO, SIMPELE Peat is replaced by The power plant’s backup fuels will be replaced
Slide 51: Reduced fossil-based CO2 emissions per tonne by 33% since 2018
Metsä Board has reduced its fossil-based CO2 emissions per tonne by 33% since 2018 Target is to reduce fossil-based CO2 emissions by 100% by the end of 2030 Fossil-based CO2 emissions, Scope 1+2 Emission allowances t CO2 Kg CO2 / t • Metsä Board has received emission allowances in 600 000 200 accord
Slide 52: Indirect emissions included in Science Based Targets
Indirect emissions from value chain are included in our Science Based Targets to reduce GHG emissions Total greenhouse gas emissions (CO2e) ca. 2.2 million tonnes Upstream – Scope 3 Purchased electricity and heat – Scope 2 Own processes and Downstream – Scope 3 799,895 tonnes market-based power plan
Slide 53: Energy consumption by sourcing method
Energy consumption by sourcing method Electricity Fuels (Heat) total 2.4 TWh Total 6.2 TWh Gas, oil, waste, peat, sourced from market 10 % Sourced from Own market generation 36 % 21 % Biomass, sourced from Metsä Fibre 13 % Biomass, own generation 77 % Sourced from PVO Sourced from at cost price Mets
Slide 54: Forest management plan as part of regenerative forestry
Forest management plan as a part of Metsä Group’s regenerative forestry AT TYPICAL FOREST STAND AT BIODIVERSITY HOT SPOT 1 2 3 4 5 More diverse tree Increased dead More diverse Protected valuable Habitat restoration at species composition wood volumes forest structure habitats e.g. threatened specie
Slide 55: Our paperboards contribute to circular bioeconomy
Our paperboards contribute to circular bioeconomy • Packaging is needed to protect the product and to reduce wastage • Packaging accounts for only few percent 1. Design out waste of the total environmental impact of a and pollution food product’s entire life cycle 2. Keep products and • Paperboard i
Slide 56: Fresh and recycled fibres equally good for circular economy
Fresh and recycled fibres are equally good in terms of the circular economy 82% of paper and board 100% recovery of wood fibres packaging is not possible because is collected part of the fibre is lost for recycling during a cycle, or is contaminated Fresh fibre is needed in the recycling loop to mai
Slide 57: Switching from WLC to FBB reduces carbon footprint by 53%
Switching from WLC to FBB Thanks to reduces the carbon footprint by 53% the strength and bulk of fresh fibre Carbon Footprint * boards, lighter kg CO2 eq./200 000 cartons basis weights can be used. WLC MetsäBoard 53% Pro FBB Bright Lower carbon footprint GaBi is a Life Cycle Assessment (LCA) modelli
Slide 58: Two major factors influencing CO2 of packaging
Two major factors influencing CO2 of packaging 1 2 Fossil or non-fossil-based Efficient material use, energy light-weighting Nordic fresh fibre paperboard Using less material to produce a production uses mainly renewable required type of packaging energy Less weight to be transported In Central and
Slide 59: Brand owners' commitments and consumer preferences favor fiber-based packaging
Brand owners’ commitments and consumers’ preferences favor fiber-based packaging • Several brand owners have committed to get rid of unnecessary plastic and to have 100% reusable, recyclable and compostable (plastic) packaging by 2025 • Paper/cardboard is the preferred packaging material by consumer
Slide 60: Paperboard provides an alternative to plastics
Paperboard provides an alternative to plastics PET MetsäBoard Prime FBB EB • Made of fossil oil-based materials with fossil-based energy • Made from renewable fresh wood fibre with a high share of fossil free energy • Recycling rate of PET is low • Easy to recycle (Eurostat: In the EU, recycling rat
Slide 61: Plastic replacement potential
Plastic replacement potential roughly 2 million tonnes Cartonboard and rigid plastic packaging market size in selected food categories, excluding cupstock and liquid packaging 5 Mt 1 Mt Plastic ~6M Technical complexity Board 2 Mt Plastic Board tonnes Potential ~2M plastic replacement ~2M tonnes Plas
Slide 62: Innovation and R&D
Innovation and R&D 62
Slide 63: Goal of R&D is world class resource efficiency and lower carbon footprint
The goal of our R&D work is world class resource efficiency and reducing the carbon footprint Lightweight paperboards with Barrier paperboards as excellent printability and alternatives to plastics converting efficiency 63
Slide 64: High-yield pulp makes the difference in folding boxboard
High-yield pulp makes the difference between folding boxboard and other grades Lightweight yet strong and stiff Improved yield Improved sustainability = = = paperboard for cost-efficient, more cartons per tonne less natural resources used, sustainable and sturdy packaging lower carbon footprint 64
Slide 65: Key elements for world-class resource efficiency
Reduced water Key elements Wood consumption depends on right use through a for world-class fibre-mix. closed water Less wood needed circulation and resource in the production of reduction of efficiency mechanical pulp process water New technology, Resource and development of operational energy recov
Slide 66: Dispersion barrier coated paperboard an alternative to plastics
Metsä Board’s dispersion barrier coated paperboard has been a success providing an alternative to plastics Launched in 2019 Produced at Strong interest from customers, to answer the market need for Kyro mill in Finland, annual sales growing at plastic-reducing solutions targeted volume 50% of mill’s
Slide 67: R&D results in a smaller carbon footprint
Our R&D work results in a -40% smaller carbon footprint CO2 emissions/ package -80% CO2 emissions/ package -80% CO2 emissions/ package 67
Slide 68: Looking for new growth opportunities as part of Metsä Group
As part of Metsä Group, we are looking for new growth opportunities Metsä Spring* invests expertise and financial resources into initiatives with the ambition to reshape the forest-based bioeconomy Wood-based 3D products Wood-based textile fibres Wood composite products Bioactive products from birch
Slide 69: Owners and management
Owners and management
Slide 70: Market cap and ownership distribution
Market cap and ownership distribution Metsä Board has two share series, A and B shares Market cap and foreign owners Ownership distribution 31 March 2023 EUR million % 3 500 25 Foreign owners 11% 3 000 20 2 500 15 Domestic 2 000 Metsäliitto private owners Cooperative 20% 1 500 50% 10 1 000 5 500 Dom
Slide 71: Metsä Board Corporate Management Team
Metsä Board Corporate Management Team Henri Sederholm, CFO Ari Kiviranta, SVP, Technology Markku Leskelä, SVP, Development Member of CMT since 5/2021 Member of CMT since October 2021 Member of CMT since 2014 At Metsä Group since 2003 At Metsä Group since 1993 At Metsä Group since 1993 Shares 52,342
Slide 72: Together we make the perfect package
72 72 Together we make the perfect package Katri Sundström Vice President, Investor relations +358 10 462 0101 [email protected]