Metsa Board Oyj Class A · OMXHEX:METSA
Metsa Board Oyj Class A — Investor Day (2022)
75 slides from Metsa Board Oyj Class A's investor day presentation, 2022
Slide 1: Metsä Board Capital Markets Day 2022
Metsa Board Capital Markets Day 2022"
Slide 2: Capital Markets Day agenda
14:00 Opening remarks Katri Sundström, VP, Investor relations 14:05 Growing sustainably in fibre-based packaging materials Mika Joukio, CEO 14:30 Continuing growth in Americas Jussi Noponen, SVP, Sales and Supply Chain 14:50 Taking the resource efficiency to the next level for long-term perfomance A
Slide 3: Growing sustainably in fibre-based packaging materials
Growing sustainably in fibre-based packaging materials Mika Joukio CEO Metsä Board Capital Markets Day 2022
Slide 4: The world has changed in many ways
Global economy Geopolitical situation 2022 The world has changed in many ways Supply chain instability Consumer price inflation
Slide 5: Key takeaways from CMD 2020
Key takeaways from CMD 2020 01 02 03 Focus on Excellent Future growth is premium track record in secured with paperboards sustainability sustainable investments and innovations
Slide 6: Our strategy highlights sustainable growth
Our strategy highlights sustainable growth … PURPOSE: Advancing the bioeconomy and circular economy by sustainably and efficiently processing STRATEGY northern wood into first-class products. We grow in fibre-based packaging materials and renew our industrial operations. OUR STRATEGIC PROGRAMMES Pre
Slide 7: Strategy proven resilient and successful in a turbulent environment
.. and it has proven to be resilient and successful in a turbulent operating environment Sales Comparable EBIT Total investments EUR million EUR million and % of sales EUR million 2500 600 25,0 350 500 300 2000 20,0 250 400 1500 15,0 200 300 1000 150 10,0 200 100 500 5,0 100 50 0 0 0,0 0 2018 2019 2
Slide 8: Strong financial position and competitive dividends
Our goal remain to maintain a strong financial position and distribute competitive dividends EUR Earnings per share and dividend per share % 1,20 1,13 6,0 5,4 1,00 CAGR in 2015-21 4,8 0,82 EPS: 13% 4,2 0,80 DPS: 16% 3,6 0,60 0,57 3,0 0,48 0,42 0,41 0,41 2,4 Dividend policy: 0,39 0,40 0,29 1,8 To dis
Slide 9: Need for packaging is growing
Need for packaging is growing … Paperboard has the highest growth rate out of …and FBB & FSB are growing fastest in total total packaging… folding cartonboard +2.1%/a 60 000 2021–2026 +2.8%/a 2021–2026 50 000 CAGR 2020-35 Glass 4% FBB 3.4% Metal +5%/a 40 000 FSB 4.6% 13 % 2021–2026 Paperboard SBS 1.
Slide 10: Strong long-term demand drivers for fresh fibre paperboards
… and we see strong long-term demand drivers for fresh fibre paperboards Population growth, The requirements of Availability Global Regulation and urbanisation and the circular economy and quality of e-commerce consumer rising living become more recycled fibre is continues preferences favour standar
Slide 11: Industry-leading science-based target: zero fossil CO2 emissions
We have an industry-leading target based on science ZERO FOSSIL CO2 EMISSIONS Fossil free production and products by the end of 2030
Slide 12: Safety at work and resource efficiency on our agenda
Safety at work and resource efficiency are high on our agenda TARGET* 0 +10% -30% >90% Accidents at Energy Process water Certified wood work, TRIF efficiency used fibre ACTUAL 7.7 1-9/2022 +5.1% -13.6% 82% Q3 2022 Q3 2022 1-9/2022 All sustainability targets are set on 2030. On energy efficiency and
Slide 13: Commitments and recognition enhance leadership in sustainability
Our own commitments together with external recognition enhance our leadership in sustainability
Slide 14: We plan and implement growth over the long term
We plan and implement growth over the long term
Slide 15: Summary
01 Summary Our strategy has proven its resilience and success 02 03 Demand for Resource efficiency renewable is essential for packaging materials sustainable future is growing fast growth
Slide 16: Continuing growth in Americas
Continuing growth in Americas Jussi Noponen SVP, Sales and Supply Chain Metsä Board Capital Markets Day 2022
Slide 17: Key takeaways from CMD 2020
Key takeaways from CMD 2020 01 02 03 We want to We create value Global trends support be #1 choice with innovative demand for fresh fibre for our and sustainable paperboards and customers packaging create new solutions business opportunities
Slide 18: Supply concerns driving demand and increasing prices
Supply concerns driving demand and increasing prices ” Inflation reduces consumer purchasing power and shifts consumption to more affordable items ” Customers’ continued focus on packaging solutions supporting ” circular economy Customers want to secure availability during the European energy crisis
Slide 19: End-uses are defensive in financial turmoil
The end-uses for our products are defensive in financial turmoil 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 kraftliners, and food coated
Slide 20: Our main markets are Europe and North America
Our main markets are Europe and North America Our total paperboard deliveries in 2021 exceeded 1.9 million tonnes (YTD 2022: 1.4 million tonnes) EMEA Our regional focuses • Further strengthening our 67% leading market position in 906,000t FBB Europe 385,000t WKL AMERICAS • Continuing growth in • Nor
Slide 21: Capacity additions strengthen our pole position in Europe
Upcoming capacity additions in Husum and Kemi strenghten our pole position in Europe Metsä Board’s share of European capacity accounts for about one third FBB producers in Europe WKL producers in Europe Total capacity 4.1 million tonnes Total capacity 2.5 million tonnes 1800 800 1600 700 Additional
Slide 22: The Americas is growing its significance
The Americas is growing its significance in our business Paperboard deliveries to Americas already exceed 500,000 tonnes per annum 300000 250000 200000 150000 100000 50000 0 Folding boxboard White kraftliners 2019 2020 2021
Slide 23: Consumers prefer sustainable brands and alternatives to plastics
Consumers prefer sustainable brands and alternatives to plastics
Slide 24: Dispersion barrier coated paperboard as alternative to plastics
Our 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 a rate of
Slide 25: Common Stock model offers instant product availability
Our Common Stock model offers instant product availability
Slide 26: Summary
01 Summary Healthy market situation despite of muted consumer demand 02 03 Plastic reduction Continued growth in provides growth Americas potential
Slide 27: Taking the resource efficiency to the next level
Taking the resource efficiency to the next level for long-term performance Ari Kiviranta SVP, Technology Metsä Board Capital Markets Day 2022
Slide 28: Key takeaways from CMD 2020
Key takeaways from CMD 2020 01 02 03 We invest in Our R&D work We aim for innovation is driven by significant scale and partner sustainability in innovations collaboration
Slide 29: Product development strengthening sustainable growth
We continue to focus on product development that strenghtens our sustainable growth Lightweight paperboards with Barrier paperboards as excellent printability and alternatives to plastics converting efficiency
Slide 30: R&D reduces carbon footprint of packaging
Our R&D work helps -40% reducing carbon footprint CO2 of packaging emissions/ package -80% CO2 emissions/ package -80% CO2 emissions/ package
Slide 31: 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 32: World-class resource efficiency in production
We aim for world-class resource efficiency in production
Slide 33: Production close to main raw material, self-sufficient in pulp
Our production is close to our main Total paperboard capacity: Folding boxboard (FBB): 1,360,000 t/a White kraftliner (WKL): 675,000 t/a raw material and we are over self-sufficient in pulp Total pulp/BCTMP capacity: 1,470,000 t/a **) Ownership in Metsä Fibre 24.9% Kemi Äänekoski 425,000 t/a WKL 260
Slide 34: Goal to be fossil free in production by end of 2030
Our goal is to be fossil free in production at the end of 2030 Based on scope 1 and 2 emissions
Slide 35: Renewing industrial operations and growing in fibre-based packaging
We are renewing our industrial operations and growing in fibre-based packaging … +200,000 t/a FBB +40,000 t/a WKL EUR 380 million EUR 210 million EUR 67 million Metsä Board Husum pulp mill renewal Metsä Board Husum FBB capacity Metsä Board Kemi WKL capacity expansion* expansion Increased bioenergy p
Slide 36: Planning to invest in new folding boxboard mill in Kaskinen
… and we are planning to invest in new folding boxboard mill in Kaskinen, Finland • Possible investment decision could be made in 2024 at the earliest • Pre-engineering has started, based on • Annual capacity of 800,000 tonnes • 100% fossil-free mill • World-class resource and operational efficiency
Slide 37: Estimated timetable for Kaskinen investment
Estimated timetable for Kaskinen investment Pre-engineering Construction Ramp-up 1−2 years ~2 years 1−2 years • Technical design • New folding boxboard mill and • Full production capacity in the • Design of infrastructure and power plant market in 2027 at the earliest logistics solutions • Capacity
Slide 38: Key elements for world-class resource efficiency
Wood consumption Reduced water Key elements 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 39: Summary
01 02 Sustainability and We have a clear Summary resource efficiency roadmap in order are driving our R&D to be 100% fossil work free in production in 2030 03 04 Our ambition is … which is the to take the key success resource factor efficiency to the in future next level … investments
Slide 40: Strong financial position and self-sufficiency in pulp
Strong financial position and self-sufficiency in pulp create solid platform for future growth Henri Sederholm CFO Metsä Board Capital Markets Day 2022
Slide 41: Key takeaways from CMD 2020
Key takeaways from CMD 2020 01 02 03 Exceptional Solid paperboard We invest in business business and sustainable environment strong financial growth creates challenges position and opportunities
Slide 42: Strong performance in a turbulent business environment
Strong performance in a turbulent business environment 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 23.0 59 18.7 Target 12.2 <2.5x 54 10.4 Target 51 >12% 50 1.1 0.7 0
Slide 43: Higher prices more than offset cost inflation
Increased paperboard prices have more than offset negative impacts from rapid cost inflation Market price development in Europe Metsä Board’s cost split In 2021 Folding boxboard and white kraftliners 1 600 1 600 1 500 1 500 Other fixed 1 400 1 400 Wood 9% 15% 1 300 1 300 Personnel 1 200 1 200 12% 1
Slide 44: Tailwind from strong US dollar and weak Swedish krona
Tailwind from strong US dollar and weak Swedish krona Outlook Annual FX transaction exposure total EUR 2.0 billion • For 2023, effective USD/EUR rate is estimated 1.02 and SEK/EUR is estimated 10.8 with spot rates of 30 September 2022 • Current hedges are up until August 2023 GBP Other currencies 5%
Slide 45: Comparable operating result and pulp price development
Comparable operating result and pulp price (PIX) development 700 1 600 600 1 400 Comparable operating result, EUR million Strong pulp 500 1 200 Pulp price, USD/tonne market boosts 400 1 000 results through 300 200 800 600 the ownership in 100 400 Metsä Fibre 0 200 -100 2016 2017 2018 2019 2020 2021
Slide 46: Self-sufficiency in fibres will remain high
Self-sufficiency in fibres will remain high in the coming years Estimated pulp price sensitivity to profitability Metsä Board’s mills +10% change in PIX price impacts EBIT 2021 TOTAL 2022: EUR +30 million in tonnes 2023-24: EUR +35-40 million Capacity +1,470,000 2025: EUR +30-35 million Consumption
Slide 47: Our energy self-sufficiency is high
Electricity Fuels (heat) Our energy self-sufficiency 85% self-sufficient 75% self-sufficient is high Annual consumption is based on 2021 Own generation, 35% Biomass, own generation, 70% Sourced from PVO at cost price, 40% Biomass, sourced from Metsä Group, 5% Sourced from Metsä Fibre, 10% Sourced fr
Slide 48: We have accumulated strong cash flow
We have accumulated strong cash flow… Operating cash flow and free cash flow Change in working capital EUR million EUR million 400 100 50 300 34 38 50 0 -62 -43 -172 200 -50 100 -100 237 170 150 83 201 107 307 150 330 116 162 0 -32 -150 -100 -200 2017 2018 2019 2020 2021 YTD 2022 2017 2018 2019 2020
Slide 49: Cash flow has supported ongoing investments
… which has supported our ongoing investments Ongoing investments Planned investments, no investment decision made Husum FBB expansion EUR 210 million Kaskinen FBB mill Husum pulp mill renewal, Phase 1 > EUR 1 billion EUR 380 million 2022 2023 2024 2025 2026 2027 2028 2029 Kemi WKL expansion > EUR 3
Slide 50: Low leverage enables renewing industrial operations
Low leverage enables renewing our industrial operations also in the future Maturity of interest-bearing debt Net debt/comparable EBITDA Total EUR 464 million Maximum level 2.5x EUR million 1.1 300 0.7 250 0.2 200 -0.2 150 100 2019 2020 2021 1-9/2022 50 Metsä Board’s credit ratings are investment gra
Slide 51: Summary
01 Summary Strong performance in a turbulent environment 02 03 High self-sufficiency Strong financial in fibres and energy position supports sustainable growth
Slide 52: Sustainable growth in wood-based bioproducts
Sustainable growth in wood-based bioproducts Ismo Nousiainen, CEO Metsä Fibre Metsä Board Capital Markets Day 2022
Slide 53: A lot of turbulence since last CMD in 2020
Logistic constraints Extreme weather conditions A lot of turbulence since last CMD in 2020 Increased sustainability Unplanned production shutdowns requirements
Slide 54: Metsä Fibre's growth based on wood-based bioproducts
Metsä Fibre’s sustainable growth is based on wood-based bioproducts Pulp Sawn timber Biochemicals Bioenergy Annual capacity 3.3 million tonnes, Annual capacity 2.1 million m3 Tall oil 120,000 t/a Metsä Fibre produces 11% of which 80% SW and 20% HW of which 40% spruce and Turpentine 7,000 t/a of the
Slide 55: Strong performance supported by improved sales prices
Strong performance supported by improved sales prices Metsä Fibre’s key figures Sales split by region 2021 YTD 2022 FY 2021 FY 2020 Metsä Group internal use Sales, EUR million 2,315 2,628 1,826 Market pulp, APAC EBITDA*, EUR million 767 772 128 Market pulp, Operating result*, EUR million 679 648 3.9
Slide 56: Globally #1 producer in softwood market pulp
We are globally #1 producer in softwood market pulp with most energy efficient and sustainable assets Market softwood pulp producers 1200 STRONG Metsä 1000 Fibre Average mill capacity**, 1 000 t/a 800 600 Weighted average capacity 652 000 t/a 400 200 Weighted average technical age 26.4 years WEAK 0
Slide 57: New Kemi bioproduct mill meets growing demand for softwood pulp
New Kemi bioproduct mill meets the growing demand for softwood pulp Mill facts • Annual pulp capacity 1.5 million tonnes • Market pulp: 1 million tonnes SW and 100 000 tonnes HW • Investment value EUR 1.85 billion • 2.0 TWh renewable energy per year, representing 2.5% of the electricity production i
Slide 58: World-class environmental, energy and material efficiency
World-class environmental, energy and material efficiency • Operates within the emissions limits for Kemi’s current pulp mill environmental permit • No fossil fuels • Electricity self-sufficiency rate 250 % • Wood raw material utilization rate 100 % The most modern softwood pulp mill in the world is
Slide 59: Market pulp outlook
Market pulp outlook
Slide 60: Steadily growing demand expected for softwood pulp
Steadily growing demand expected for softwood pulp Demand for Softwood Pulp Demand for Hardwood Pulp 50 50 45 45 46,4 45,0 43,6 40 40 42,3 41,0 39,0 40,0 Million tonnes Million tonnes 35 35 37,9 37,8 35,8 36,8 30 27,2 27,6 30 26,0 24,9 24,9 25,4 25,7 26,0 26,2 26,5 26,9 25 25 20 20 15 15 10 10 5 5 0
Slide 61: Growth in packaging and tissue compensates decline in printing & writing
Growth in packaging and tissue compensate the decline in printing & writing in NBSK* Board & Packaging Printing & Writing Specialty Paper Tissue & Hygiene 8.7 Estimated demand for 7.1 NBSK* by 5.4 end use, 4.6 million tonnes 3.9 3.3 3.8 2.8 3.1 2.4 1.6 0.7 2010 2020 2030E 2010 2020 2030E 2010 2020 2
Slide 62: Limited new softwood capacity keeps demand-capacity ratio stable
Limited new capacity in softwood pulp keeps the demand-capacity ratio stable Demand/Capacity Rate% in Softwood Demand/Capacity Rate% in Hardwood 100% 100% 99% 95% 95% 97% 95% Balanced market at 90% 94% 93% 94% 92% Balanced market at 90% 90% 91% 91% 90% 91% 91% 91% 90% 90% 89% 89% 89% 88% 88% 87% 88%
Slide 63: Key factors affecting global softwood pulp supply
Key factors affecting global softwood pulp supply in the future • Extreme weather conditions • Globally high average technical age of capacity, more unplanned production losses • Capacity shift from paper grade • Cost inflation • Shortage of wood raw material • Increasing sustainability requirements
Slide 64: Summary
01 Summary Metsä Fibre is #1 globally in market softwood pulp 02 03 New Kemi Demand for bioproduct mill market softwood further improves pulp continues efficiency and to grow with sustainability limited new capacity
Slide 65: Metsä Group's unique ownership base secures wood supply
Metsä Group’s unique ownership base secures sustainable, long-term wood supply Juha Jumppanen EVP, Metsä Forest Metsä Board Capital Markets Day 2022
Slide 66: Finnish forests are healthy and growing
Finnish forests are healthy and growing…
Slide 67: Annual growth clearly exceeds the felling
… and the annual growth clearly exceeds the felling Total forest growth and use of wood in Finland Total area of forest land is 20 million hectares Forest growth Use of domestic wood Total industry use of wood Others Sustainable harvesting level 7% Corporates 8% Finnish state Private 26 % owners 59
Slide 68: Unique value chain from forests to end products
Metsä Group has an unique value chain from forests to high-quality end products METSÄ GROUP FY2021: Sales EUR 6.0 billion │ROCE 16.2%│ Personnel 9,500 Parent company: METSÄLIITTO COOPERATIVE owned by nearly 100,000 Finnish forest-owners METSÄ FOREST METSÄ WOOD METSÄ FIBRE METSÄ BOARD METSÄ TISSUE WO
Slide 69: Safeguarding biodiversity is a strategic sustainability objective
Safeguarding biodiversity is one of Metsä Group’s strategic sustainability objectives • Biodiversity is enhanced by retention trees, buffer zones and preservation of valuable habitats as well as standing and fallen decayed wood Recent steps in Ecological Säästöpuu- Sustainability Programme • We syst
Slide 70: Metsä Group is the largest purchaser of wood in Finland
Sourcing areas in 2021 Metsä Group is the largest purchaser of wood in Finland Baltics Russia Sweden • Wood supply totalled 35 million m3 in 2021 • In Finland, majority of wood is sourced from the members of Metsäliitto Cooperative • In Sweden, we have a long-term wood supply Finland agreement with
Slide 71: Annual wood supply to own mills will increase by ~6 million m3
In 2022-2025 our annual wood supply to our own mills will increase by ~6 million m3
Slide 72: Comprehensive benefits to our owner-members
We provide comprehensive benefits to our owner-members • First-class forest services, member benefits and superior customer experience • Market leader in online services • Wood trade income can be invested • Average interest rate paid to investments 5–7% during past decade • In 2021 total distributi
Slide 73: Tightened market reflected in pulpwood prices
Tightened market situation is reflected in pulpwood prices Price (delivery at roadside, on bark) of pulpwood in Price (delivery at roadside, under bark) of pulpwood in Finland Sweden EUR/m3 SEK/m3 40 400 35 350 30 300 25 250 20 200 2018 2011 2012 2013 2014 2015 2016 2017 2019 2020 2021 2022 2010 201
Slide 74: Summary
01 Summary Our unique ownership base secures sustainable, long-term wood supply 02 03 Protecting Competition for biodiversity and wood raw maintaining forests material will as carbon sink are intensify essential to us
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