investor presentation 2q 2010 version 2 - metsä board and other...investor presentation 2q 2010 19...

1.9.2010Investor presentation 2Q 20101

Contents

Investment highlights and update2 Investment Highlights3 Strategy14 Internal Profit Improvement Measures18 Financial Targets20 2Q 2010 Results & Outlook33 Price Development35 Dividend38 InvestmentsFunding and debt information41 Divestments42 Funding and Debt49 Credit Facilities50 Rating History

General presentation51 General Info58 Business Portfolio67 Operations73 Deliveries75 Sourcing83 Owners86 Market Position


Investment Highlights

• Strong core in high-quality cartonboards– M-real the European market leader in folding boxboard– Good growth potential

• Turn-around in profitability

• Significant net debt reduction in recent years

• Strategic review ongoing– M-real the forerunner in paper merchanting and coated papers industry

restructuring in Europe– Asset divestments– Extensive cost savings and cash flow improvement programmes

Strategy


Consistent Strategic Direction Since 2006

• Cartonboards for consumer packaging

the strategic core business

• Divestment of underperforming paper

businesses

• Major cost savings through complexity

reduction

• Responsible and proactive approach to

increase prices


Packaging Is One of the Biggest and FastestGrowing Businesses in the World

• One of the most important well-beingdrivers in the world

• Product safety issues are crucial

• Branding and information sharingincreasingly important

• Criticism against bad packagingincreasing

Flexible plastics

20 %

Metal15 %

Glass7 % Others

6 %

Board31 %

Rigid plastics

21 %

Sources: Pira & M-real

Global Packaging Market ($634 Billion)

Virgin fibrecartonboard ~7% of total


Several Megatrends Supporting GoodPackaging

• Demand for good packaging heavily increasing

• Good packaging is environmentally sustainable– Made out of renewable raw material and recyclable– High energy self-sufficiency in production– Low carbon footprint– Lightweight

• Good packaging is safe– Durable– No migration– Good printing surface

• Good packaging is economical


Virgin Fibre Board Is the Best Example of GoodPackaging – Lowest Carbon Footprint

• Virgin fibre based lightweight cartonboards the most environmentally sound packaging material

• Wood fibre based products replace non-renewable materials like plastic and aluminium

• Virgin fibre board replaces also recycled fibre based packaging materials

0

2000

4000

6000

8000

10000

12000

14000

M-real's CartaSolida

HDPE PET PLA (Biobasedpolymer)

Aluminium

kg/to

nne

Source: M-real and Sustainable Packaging Coalition - SPC

Cartonboard has the lowest carbon footprint


Watch Your Weight!

For an order of 50.000 sheets (520 x 720 mm) you will need 18.720 m2 of board:

~13 mNm CD stiffness, ~500 µm thickness

M-real lightweight paperboardAverage

FBB(folding boxboard)SBB

(solid bleached board)WLC(white lined chipboard)


M-real Targets Growth in Its Core Business Packaging

• Huge growth potential in wood fibre based packaging applications when replacing non-sustainable packaging materials

• M-real a strong producer of virgin fibre based cartonboard and white top linerboard as well as packaging related speciality papers

• Access to wood raw material, superior fibre knowhow and pulp self-sufficiency M-real’s important competitive advantages


M-real Well Equipped for Expansion of Cartonboard Business

• Excellent potential to increase the output of current machines with modest investments

– Significant amount of excess pulp currently

• Potential capacity expansion implemented in a way that is not disturbing demand-supply balance

• Investigations ongoing to benefit growth potential in Russia, Eastern Europe or Asia

– Alone and together with the best selected local partners


M-real Strategic Review- M-real’s Response to the Changes in Business Environment

• In March 2006, M-real's Board of Directors initiated a strategic review

• M-real was the first major paper company to emphasize the need forindustry consolidation and extensive restructuring

• M-real took the leading role in European paper merchantingrestructuring in 2007

• M-real also took the leading role in European coated paper industry restructuring in 2008

• Extensive internal profit improvement programmes


Strategic Review of the Paper Business Proceeds

• M-real in strong position in participating restructuring of the European uncoated fine paper business

• M-real Zanders is a leading European speciality paper producer

• Potentially, also separate divestments of the non-profitable units


M-real the Forerunner in Re-Engineering of European Paper and Board Industry

Most extensive efficiency improvements in European paper and board industry

2006-2010

Divestment of Map Merchant Group 2007

Divestment of Graphic Papers,2008

New Metsä-Botnia ownership structure and divestment Uruguay pulp mill

2009

Need of structural changeAnd new strategic direction

2005

Pulp self-sufficiency2008

Internal Profit Improvement Measures


Main 2010 Profit Improvement Measures

• Profit improvement measures announced in December 2009– Permanent closure of Alizay pulp mill– EUR 22 million investment at Husum mill to improve its energy efficiency– New EUR 20 million internal profit improvement programme covering all M-real’s

business areas– Closures of two speciality paper machines in Reflex mill– The streamlining of the organizations in both Gohrsmühle and Reflex mills

• Total result improvement EUR 80 million

• Expected result improvement EUR 40 million in 2010


2010 Result Expected to Be Boosted by100 M€ Due to Own Measures

Cumulative

Profit impact vs. 2009, m€total target 2010 2011

1 Profit improvement programme 2010 80 40 802 Rollover impact of 2009 programme 60 50 603 Rollover impact of 2008 programme 20 10 20

Total 160 100 160


M-real Is a Responsible Company

Completed closures in 2007– Sittingbourne: coated fine paper 210 ktons/a– Gohrsmühle PM6 and PM7: coated fine paper 100 ktons/a– Wifsta: uncoated fine paper 175 ktons/a– Tako BM2: folding boxboard 70 ktons/a

Closures in 2008– Kangas PM2: coated magazine paper 100 ktons/a – Lielahti: BCTMP 105 ktons/a

– New Thames: uncoated fine paper (divestment, grade conversion) 230 ktons/a

Closures in 2009– Hallein paper mill: coated fine paper 310 ktons/a – Gohrsmühle: standard coated fine paper * 250 ktons/a

Closures in 2010– Two machines in Reflex: Speciality paper 80 ktons/a– Alizay pulp mill: Chemical pulp 310 ktons/a

Total paper capacity 1 465 ktons/a Total board capacity 70 ktons/a Total pulp (incl. BCTMP) capacity 415 ktons/a

*In Gohrsmühle the speciality paper and uncoated fine paper reel and folio sheet production expanded after the discontinuation of the standard coated fine paper production.

Financial Targets


Financial Targets

• ROCE target set at a minimum of 10% on average over the business cycle• Net gearing not to exceed 100%

Minimum ROCE 10%* Maximum net gearing 100%

* Excluding non-recurring items

13,5%

6,2%

2,1%1,6%0,5%0,9%2,8%

-0,5%

-5,6%

7,3%10,2%

7,6%

99 00 01 02 03 04 05 06 07 08 091-2

Q10

Minimum target 10%

184%

119%137%

82%95%

126%99%90%84%89%83%

145%

99 00 01 02 03 04 05 06 07 08 092Q

10

Target max. 100%

2Q 2010 results and Outlook


Key Events in 2Q 2010

• Good profitability trend continued

• M-real’s market leadership in FBB strengthened further in Europe

• Demand continued strong and M-real announced new price increases

• M-real announced to redeem the remaining part of the 2010 bond from the market

• Paper business profit improvement programme proceeded as planned

– Reduction of 220 jobs at M-real Zanders

– MoU to partially divest the Reflex mill to Metsä Tissue

– Permanent closure of Alizay pulp mill in July


623 585 618 606

859 829 826722

602 676

250

500

750

1000

I II III IV I II III IV I II

Sales Operating result excl. non-rec. itemsM€ M€

M€

Result before taxes excl. non-rec. items

Good Profitability Trend From Summer 2009

20092008

-65

714-22

-70

3-1

-51

39 43

-75

-50

-25

0

25

50


-21 -36 -34

-87

15-15

-70-83-62

24

-100

-75

-50

-25

0

25


2010


Working Capital Increased 71 M€ in 1H 2010

• Working capital increased due to accelerating business activity and fast increasing prices

– About 15% higher production volume and 15% higher average price (incl. pulp) vs. 1H 09

• Thanks to own actions ONWC* rotation has improved almost 10%– From 84 days to 77 days on average

• Main ONWC increase has materialized and it is targeted to be reduced in 2H – Volume growth stabilizing

– Shortening of payment terms for customers the main reduction measure

* ONWC defined as accounts receivable and inventories less accounts payable


Heavy Measures in Underperforming PaperBusinesses Proceeding as Planned

Alizay

• Closure of the pulp mill completed in July

• Measures to improve the paper mill’s profitability continue

– Further focus on high value added products

– Increased production volumes– Price increases

Zanders

• Headcount reduction of 220 employees

• Expected annual profit improvement 18 M€ fully from 2011

• Zanders to continue development of new packaging related speciality grades

• Implementation of Paper Park concept at Reflex

– Partial divestment to Metsä Tissue– Other potential partners


M-real Continues Showing Market Leadership in Price Increases

• Average 2Q FBB price about 5% and liner 8% higher vs. end last year– Slight increase in average price expected in 3Q

• WFU price increased in excess of 10%– Average price continues to increase during 3Q

• Speciality papers prices about 4% higher – Slight increase in average price expected in 3Q

• In all businesses price increases continue to cover increased fibre costs


• M-real’s FBB market leadership strengthened further in Europe

• Profitability improved by increased delivery volumes, implemented price increases and weaker euro

• Profitability weakened mainly by the stevedore strike in Finland

• Demand continues strong in 3Q 2010. Somewhat more maintenance standstills in 3Q according to normal annual plan

• Long delivery times and fully booked capacity in FBB a challenge for daily business

• Actions to increase prices and shorten payment terms in process

39 38

0

10

20

30

40

EBIT, excl non-recurring itemsM€

257310

0

100

200

300

400

1Q 2010 2Q 2010

SalesM€

1Q 2010 2Q 2010

Consumer Packaging’s Profitability Remained Strong


• Result was hurt by investment standstill in Husum as well as maintenance standstills, strikes and short fibre pulp availability problems in Alizay

• Profitability improved due to implemented price increases

• Demand seems to continue strong in 3Q 2010


• If ongoing efficiency measures are not sufficient new actions will be introduced in Alizay

Office Papers Result Weakened Mainly Due to Standstills

0

-4

-20

-10

0

10

20


160 153

0

50

100

150

200SalesM€

1Q 2010 2Q 2010

1Q 2010 2Q 2010


Speciality Papers’ Loss Narrowed Further Despite High Pulp Price

• Profitability improved by implemented price increases and weaker euro

• Result was hurt by higher pulp price as well as decreased delivery volumes due to short fibre pulp shortage

• Demand expected to remain stable and delivery volumes to increase in 3Q


• Profit improvement trend started in summer 2009 expected to continue thanks to own measures

-6 -5

-20

-10

0

10

20


82 80

0

25

50

75

100SalesM€

1Q 2010 2Q 2010

1Q 2010 2Q 2010


Market Pulp and Energy’s Positive Profitability Trend Continued

• Profitability improved by increased pulp price and higher delivery volumes

• Profitability negatively impacted by Husum investment standstill

• Good results from own special measures in Kaskinen and Hallein

• Availability of short fibre pulp in the global market improving but is still tight

• Average pulp price expected to be higher in 3Q

917

-20

-10

0

10

20


95126

0

50

100

150SalesM€

1Q 2010 2Q 2010

1Q 2010 2Q 2010


Main Recent Steps in M-real and Sappi Cooperation

• Increased pulp deliveries from Husum and Kaskinen to Sappi

• M-real bought Kangas real estate in Finland to develop the property for non-industrial purposes for 13 M€

• M-real sold graphic paper patents which are not needed in M-real’s future business for 7 M€

• M-real decided supported by Sappi to modernise the Äänekoski paper sheeting operations


Current Focus Areas

• Price increases in all main grades

• Completion of improvement measures in underperforming paper units

• ONWC reduction focusing mainly on shortening payment terms for customers

• Development of cartonboard business

• Paper business strategic review


Positive Development Expected to Continue

• M-real’s 3Q 2010 operating result

excluding non-recurring items expected to

improve from 2Q 2010


EUR / tn Three month moving average

Folding Boxboard Market Price in Europe2000 – 6/2010

Source: M-real

400

600

800

1000

1200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


EUR / tn

Paper and Pulp Market Price in Europe1998 – 6/2010

Coated fine paper (100 g)

Uncoated fine paper (B-copy, 80 g)

Softwood pulp NBSK

Coated magazine paper LWC (60g)

Source: Foex, ReutersEUR/USD

EUR/USD

400

500

600

700

800

900

1000

1100

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100,8

0,9

1

1,1

1,2

1,3

1,4

1,5

1,6

1,7

Dividend


Dividend Policy

• Future dividends will take into account the need to achieve and maintain sufficient financial flexibility

• The Company remains committed to an attractive and competitive dividend

M-real's dividend policy is stable and rewarding to shareholders, and aims at paying a dividend of at least 1/3 of the Company's EPS on average over the business cycle, nonetheless taking into account the Company's gearing target


0,50

1,09 1,13

1,85

0,460,30

-0,79

-1,58

-1,09

0,26 0,37 0,380,51 0,51 0,51

0,25 0,00 0,00

-0,59

-1,21

-0,25-0,430,23 0,060,060,14 0,12 0,12

0,0%

4,3%

0,0%1,3%1,4%

2,1%2,8%3,3%

4,1%

5,6% 5,5%6,9%

8,6%

7,2%

-2

-1,5

-1

-0,5

0

0,5

1

1,5

2

2,5

3

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

€ pe

r sha

re

-8 %

-6 %

-4 %

-2 %

0 %

2 %

4 %

6 %

8 %

10 %

12 %

Div

iden

d yi

eld,

%

Earnings per share Dividend per share Dividend yieldDividend yield calculated from annual average B-share volume weighted price

Dividend Yield

Investments


Capital Investments

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

2 500

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

E

Mill

ion

€

Disposals

Acquisitions

Capitalexpenditure onfixed assets

Capital Investments about 70 m€ in 2010

*Indicative level for 2010

Funding and debt information


Significant Divestments- EUR 3.4 billion in assets divested since 2001

2004 Metsä Tissue 570

2002 Papierfabrik Albbruck 235

2001 MD Papier 300

2001 Noviant (19%) 41

3,387

Year Divestiture Enterprise Value

EUR millions

2005 Savon Sellu 20

2005 Forestia (95%) 163

2005 Botnia (8%) 164

2007 Botnia (9%) 2402007 Folding carton plants 602007 Map Merchant Group 3822008 New Thames mill 82**2008 100 000 B2 shares in PVO 802008 Graphic Papers 750

* Cash portion

**Incl. pension liabilities

2009 Metsä-Botnia’s Uruguayn operations 300*


Loans and Interest Rate

At the end of 2Q 2010• Average maturity of long term loans 2,9 years• Average interest rate of loans (including derivatives) 5,5 %• Interest rate maturity of loans (including derivatives) 9,6 months

• Of the loans about 79 per cent was subject to variable interest rates and 21 per cent to fixed interest rates


Total 1 222 m€ 30.6.2010

Long-term Interest Bearing Liabilities

4 %4 %2 %6 %

19 %

65 %

MTN ProgrammeBondsPension premium loansLoans from financial institutionsFinance leasesOther interest bearing liabilities


Short term interest bearing liabilities

Total 114 m€ 30.6.2010

Short-term Interest Bearing Liabilities4 %

96 %

Metsäliitto GroupShort-term bank loans and other


Interest bearing net liabilities 31.12.2003Interest Bearing Net Liabilities 30.6.2010

• Long-term 1 222• Short-term 114Total interest bearing liabilities 1 336

• Liquidity and other interest bearing receivables 491

• Interest bearing net liabilities 845


The Financial Structure Has Improved Consistently And Is on Sound Basis

• M-real redeemed early the entire 400 M€eurobond due in Dec. 2010

• M-real drew 135 M€ in pensions loans with ten year maturity in June

– Undrawn portion of pension loans 144 M€

• Strong liquidity at about 400 M€ currently

• Net debt 845 M€ at end 2Q


Long-term Interest Bearing Liabilities 30.6.2010

12394

160

600

127

18 18

81

0

100

200

300

400

500

600

700

2010 2011 2012 2013 2014 2015 2016 >2 016

EUR, million


Liquidity

M€Committed credit facilitiesLiquid funds

0

200

400

600

800

1000

1200

1400

I/09 II/09 III/09 IV/09 I/10 II/10


Debt Programs

The following table sets forth the significant debt securities issued and outstanding of M-real as at June 30, 2010:

Average

Long-term borrowings Total amount Outstanding Interest Rate Maturity

USD 350 million Private Note Issue USD 350 USD 224 5.8% (1) 2012–2014

EUR 500 mil lion Bond Issue EUR 500 EUR 500 7.0% (1) 2013

EUR 400 mil lion Bond Issue EUR 400 EUR 90 5.9% (1) 2010

Global Medium-Term Note Program EUR 1 500 EUR 192 million private placements EUR 52 3,1 % 2011

EUR 132 mil lion bilateral loans EUR 132 EUR 132 1,4 % 2010–2013

EUR 30 mil lion finance leases EUR 30 EUR 30 4,9 % 2010–2014

EUR 370 mil lion pension loans EUR 370 EUR 222 5.4% (1) 2010–2020

Short-term funding programmes

EUR 350 mil lion domestic CP-program EUR 350 EUR 0 – –

EUR 150 mil j. Belgian CP-program EUR 150 EUR 0 – –

Average interest rate of all M-real Group interest bearing liabilities including interest rate derivatives per 30.6.2010 is 5,5 %.

The following table sets forth M-real´s principal long-term liquidity reserves as at June 30, 2010:

Average Liquidity reserves Total amount Outstanding Interest Rate Maturity

Pension loan facilities EUR 370 EUR 222 5.4% (1) -

(1) The average interest rates take into account outstanding interest rate swaps and amortised arrangement fees.

(currency in millions)

(EUR in millions)


Ratings’ History2000

S&P: Short term ratings lowered to A3, Long term ratings placed to credit watch negativeMoody’s: Long and short term ratings outlook changed from stable to negative

2001S&P: Long term ratings lowered to BBB-,stable outlookMoody’s: Long and short term ratings lowered to Baa3/P3, negative outlook

2003S&P: Downgrade to BB+, stable outlookMoody’s: Downgrade to Ba1, negative outlook

2004S&P: Outlook changed from stable to negative, ratings affirmedMoody’s: Downgrade to Ba2, stable outlook

2005S&P: Downgrade to BB, stable outlookMoody’s: Outlook changed from stable to negative,

ratings affirmed2006

S&P: Downgrade to BB-, negative outlookMoody’s: Downgrade to Ba3, negative outlookMoody’s: Downgrade to B2, negative outlookS&P: Downgrade to B+, negative outlook

2007Moody’s: Downgrade to B3, negative outlookS&P: Downgrade to B, negative outlookS&P: Downgrade to B-, stable outlook

2008S&P: Outlook to negative

2009S&P: Downgrade to CCC+, negative outlook Moody’s: Downgrade to Caa1, outlook negative

2010S&P: Outlook to stableMoody’s: Outlook to stableS&P: Upgrade to B-, stable outlookMoody’s: Upgrade to B3, positive outlook

General presentation


M-real in Brief

• Annual sales about EUR 2.5 billion.• Approximately 4,900 employees.• Present in over 70 countries.• 13 production units in 5 European

countries.• Part of Metsäliitto Group and listed on

the NASDAQ OMX Helsinki Ltd.• Metsäliitto Group is one of the largest

forest industry groups in the world, owned by a cooperative of 130.000 private Finnish forest owners.

Consumer Packaging 40%Paper 40%Market pulp and energy 20%

Sales breakdown 2009


Offering for Consumer Packaging, Communications and Advertising

• Cartonboards and white-top kraftliners for packaging beautycare, healthcare, cigarettes, food, consumer durables etc.

• Graphic boards e.g. for book covers, postcards, greeting cards, CD or DVD covers

• Office papers from high-volume copying and printing to high-quality color presentations

• Speciality papers for advertising and corporate materials,flexible packaging, creative designs, labeling, self-adhesive laminates and for wallcovering industry


M-real’s Customers

Office product resellers

Publishers

Brand owners

Printers and converters

Advertising and design agencies

Office paper users

Paper merchants


17 %

32 %

12 %

9 %

12 %

6 %

9 %3 %

Paper PulpPaperboard PackagingTissue Mechanical Forest ProductsMerchanting Chemicals

40 % 40 %

20 %

Focus on Core Businesses1995 Sales€2.3 billion

2009 Sales€2.4 billion

8 Businesses 3 Businesses


19971996 20001995 1998 1999

Acquisitions

Divestments

Kyro Board Mill

Biberist Paper Mill

SimpeleMill UK Paper

Modo Paper

Zanders

Sawn Goods &Building Materials

ChemicalsBusiness

Botnia Wood

CorrugatedPackaging

MD Papier MetsäTissue

2001 2002

Albbruck

2003 2004

M-real Restructuring Story

2005

SavonSellu

Forestia

KemiartLiners (53 %)

8% in Botnia

2006

PSM

2007

9% in Botnia

Cartonplants

Map

100 000 B2 shares

in PVO

20092008

New Thames

MB Uruguay

Graphic Papers


Annual Sales Development

2432

3236

4440

56245241

54606044

65646923

5898

33193014

2313

4044

0

1000

2000

3000

4000

5000

6000

7000

8000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

EUR, million

Business Portfolio


Business Portfolio

Consumer Packaging Speciality Papers

Office Papers Market Pulp and Energy


Consumer PackagingMainly Folding Boxboard and Linerboard

• Fibre-based high value-added packaging solutions for global brand owners in beautycare, healthcare, cigarette, food and consumer electronics industries as well as for graphical end-uses

• Relatively high earnings stability• High segment consolidation• Competitive folding boxboard mills with end use specified production

Capacity Share (%)

8 %

9 %

10 %

25 %

32 %

0 % 5 % 10 % 15 % 20 % 25 % 30 % 35 %

IP

Careo

Mayr-Melnhoff

Stora Enso

M-real

No. 1 Folding Boxboard Producer in Europe


Office PapersMainly Uncoated Fine Paper

Capacity Share (%)

9 %

10 %

11 %

14 %

14 %

0 % 5 % 10 % 15 %

M-real

UPM-Kymmene

Mondi

Stora Enso

Portucel

No. 5 Uncoated Fine Paper Producer in Europe

• High quality uncoated fine papers for printing and photocopying as well as for forms, envelopes, manuals and communication purposes

• Diversified customer base, e.g. merchants, retail chains, officeequipment manufacturers and corporations

• Leading European office paper brands like DataCopy and Evolve


Speciality Papers

• Leading European speciality paper producer with strong focus on packaging applications

• Packaging specialities• Flexible packaging• Luxury packaging• Labels

• Graphical specialities• Premium fine papers • Carbonless papers• Digital imaging papers

• Uncoated fine papers Packaging specialities 50%Graphical specialities 30%WFU 20%

Speciality paper sales


Sales by Business Area

M€

82

160

95

257

126

80

153

310

0

50

100

150

200

250

300

350

Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy

2Q 20101Q 2010


Operating Result by Business Area*

* excl. non-recurring items

-6

0 9

39

16

-5

-4

38

-20

-10

0

10

20

30

40

50


M€

2Q 20101Q 2010


Sales by Business Area

M€

199

278250

463

221

162

313

567

0

100

200

300

400

500

600


1-2Q 20101-2Q 2009


Operating Result by Business Area*

* excl. non-recurring items

M€

-34-35-31

4 25

-11-4

77

-40

-20

0

20

40

60

80

100


1-2Q 20101-2Q 2009

Operations


1 800

1 200

2 100

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Paper Board Pulp and BCTMP

1000 tons/a

Production Capacity


M-real Production LocationsConsumer Packaging:• Simpele• Äänekoski board and paper• Kyro• Tako• Kemi• Joutseno

Office Papers: • Alizay• Husum paper and pulp

Speciality Papers: • Gohrsmühle• Reflex

Market Pulp and Energy:• Kaskinen• Hallein

Alizay

Hallein

Husum

Gohrsmühleand Reflex

ÄänekoskiSimpele

Joutseno

Kemi

TakoKyro

Kaskinen


Paper and Board Capacity by Grade(1000 t/a)

BOARD MILLS

Board Mill Country Machines FoldingBoxboard Liner Total

Tampere Finland 2 205 205Kyröskoski Finland 1 160 160

Äänekoski Finland 1 210 210

Simpele Finland 1 220 220

Kemi Finland 1 375 375

Total 6 795 375 1170

PAPER MILLS

Paper Mill Country Machines Coated Coated UncoatedMagazine Fine Fine Specialty

Paper Paper Paper Paper Total

Äänekoski Finland 1 180 180

Simpele Finland 1 55 55

Kyröskoski Finland 1 105 105

Bergisch Gladbach Germany 2 180 80 260

Düren Germany 2 20 20

Husum Sweden 3 275 435 710Alizay France 1 310 310

Total 11 275 180 925 260 1640


Pulp Capacity(1000 t/a)

PULP MILLS

Pulp Mill Country ChemicalPulp BCTMP Total

Husum Sweden 690 690Hallein Austria 160 160

Joutseno Finland 280 280

Kaskinen Finland 300 300

Total 850 580 1430

BOTNIA *

Mill Country ChemicalPulp Total

Äänekoski Finland 500 500

Kemi Finland 590 590

Rauma Finland 630 630

Joutseno Finland 650 650

Total 2370 2370

* M-real share is 30% of the capacity


Personnel Development

49464903

6546

9508

1412515154

16490

203722107022237

17351

1388512637

11463

15572

0

5000

10000

15000

20000

25000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10

Deliveries


Uncoated fine paperCartonboard

Annual Deliveries*

32 %

6 %

18 %

44 %

Western- Europe Eastern- Europe Americas Asia & Pacific

8 %

86 %

5 %1 %

* Indicative numbers

Sourcing


Personnel 18 %

Other fixed13 %

Delivery costs16 %

Wood21 %

Chemicals, pigments and

fillers15 %

Other variables

7 %

Energy10 %

M-real Cost Structure 2009* (total annual costs in industrial operations ~ EUR 2 Billion)

Fixed costs

Variable costs

* Percentage of annual costs in industrial operations


Electricity Sourcing 2009 (total 3 400 GWh)

Associated company

(PVO)29 %

Outsourced generation

2 %

Own generation

43 %

Purchased energy26 %


Fuels Used 2009 (total 19,6 TWh)

Wood-based60 %

Natural gas13 %

Coal9 %

Oil4 %

Peat1 %Hydropower4 %

Nuclear power9 %


Wood Sourcing by Country

7459Total47Lithuania204Estonia228Latvia524Austria133France563Russia2272Sweden3488Finland20091 000 m3


Development of Softwood PulpwoodCost at Mill, Wood for Chemical Pulping

1980 – 3Q 2009

Source: Pöyry

0

10

20

30

40

50

60

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

q 3

EUR/m3sob, nominal

Finland, south, pineSweden, south, pineGermany, south, pineChile, radiata pineUSA South, SYPCanada East, SPF


Development of Softwood PulpwoodCost at Mill, Wood for Mechanical Pulping

1980 – 3Q 2009

Source: Pöyry

0

10

20

30

40

50

60

70

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

q 3

EUR/m3sob, nominal

Finland, south, spruceSweden, south, spruceGermany, south, spruceAustria, spruceCanada East, SPFUSA Great Lakes, spruce


Development of Hardwood PulpwoodCost at Mill, Wood for Chemical Pulping

1980 – 3Q 2009

Source: Pöyry

0

10

20

30

40

50

60

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

q 3

EUR/m3sob, nominal

Finland, south, birchSweden, south, birchPortugal, E. globulusBrazil, E. grandisSouth Africa, E. grandisUSA South, mixed hw

Owners


M-real Shareholders 30.6.2010

Non-Finnish nationals; 21 %

Non-profitmaking organizations; 3 %

Other companies; 3 %

Metsäliitto; 39 %

Households; 24 %

Public communities; 7 %

Financial and insurance institutions;

3 %


M-real Voting Rights 30.6.2010

Non-Finnish nationals; 7 %

Non-profitmaking organizations; 4 %

Other companies; 1 %

Metsäliitto; 61 %

Households; 12 %

Public communities; 14 %

Financial and insurance institutions;

1 %

Market Position


0 100 200 300 400 500 600 700 800 900

Others

Holmen

IP

Careo

Mayr-Melnhof

Stora Enso

M-real

Folding Boxboard Capacities in Europe BIG-5 = 84% of total

Source: Pöyry Forest Industry Consulting

Capacity: tons/year (million)

32%

25%

10%

9%

8%

8%

8%


0 500 1000 1500 2000 2500 3000 3500

Others

Sappi

Arctic Paper

International Paper

M-real

UPM

Mondi

Stora Enso

Portucel

Uncoated Fine Paper Capacities in EuropeBIG-5 = 57% of total

14%

14%

11%

10%

8%

8%

3%

3%

28%

Source: Pöyry Forest Industry Consulting, M-real

Capacity: tons/year (million)

Thank youwww.m-real.com

investor presentation 2q 2010 version 2 - metsä board and other...investor presentation 2q 2010 19...

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