Metsä Board Annual review 2023

Metsä Board has published its Annual Review 2023. The Review includes the Financial Statements, Report of the Board of Directors, Corporate Governance Statement and Remuneration Report for the financial period 1 January–31 December 2023. The Sustainability Statement is included in the Report of the Board of Directors.

METSÄ BOARD Annual review 2023

Contents

Metsä Board is a leading producer of high-quality and recyclable fresh fibre paperboards in Europe and a forerunner in sustainability.

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

Business operations and value creation This is Metsä Board

Strategy and financial targets

Value creation

2 4 6 8

Financial development 10 Key figures 12

CEO’s review

Strategy and financial targets

Report of the Board of Directors

Value creation

20 72

• Sustainability statement • Sustainability statement assurance report

Financial development Key figures Report of the Board of Directors

Consolidated financial statements

10 12 20 72 74 78

78 Notes to the consolidated financial statements 126 Parent company financial statements 129 Notes to the parent company financial statements 142 The Board’s proposal to the Annual General Meeting for the distribution of funds 143 Auditor’s Report 147 Shares and shareholders 151 Ten years in figures 152 Taxes 153 Production capacities 155 Calculation of key ratios and comparable performance measures Corporate governance 157 Corporate governance statement 165 • Board of Directors of Metsä Board 168 • Corporate Management Team of Metsä Board

• Sustainability statement

• Sustainability statement assurance report

Consolidated financial statements

Notes to the consolidated financial statements

Parent company financial statements

126 129

Notes to the parent company financial statements The Board’s proposal to the Annual General Meeting for the distribution of funds

142 143 147 151 152 153

Auditor’s Report

Shares and shareholders

Ten years in figures

Taxes

Production capacities

Calculation of key ratios and comparable performance measures

155

Corporate governance Corporate governance statement • Board of Directors of Metsä Board

157 165 168 170 174

170 Remuneration report 174 Investor relations and investor information

• Corporate Management Team of Metsä Board

Remuneration report

Investor relations and investor information

Metsä Board Sustainability review presents Metsä Board’s key sustainability objectives and achievements in 2023. The review will be available in spring 2024

Metsä Board Sustainability review 2023

METSÄ BOARD ANNUAL REVIEW 2023

This is Metsä Board

Financial development in 2023 Our profitability was affected by weakened paperboard and pulp market. We completed our investments as planned and secured cash flow from operations through efficient management of working capital. Our balance sheet remained strong.

METSÄ BOARD Annual review 2023

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

Focus on sustainable fresh fibre paperboards

Strong position in a growing market

SALES

COMPARABLE OPERATING RESULT EUR million % of sales

TOTAL INVESTMENTS

CASH FLOW FROM OPERATIONS

Strategy and financial targets

EUR million

We focus on premium and recyclable fresh fibre paperboards, that help our customers reduce their plastic use. Our paper- boards made from renewable wood fibre are mainly used in consumer packaging and retail packaging solutions.

We are a leading producer of folding boxboard and white kraftliners in Europe, and globally the biggest producer of coated white kraft- liners. In the USA, we are the largest supplier of folding boxboard. The global demand for paperboards is expected to grow faster than all packaging materials on average, at an annual rate of slightly over 4%. (Source: Smithers Information Ltd.).

Value creation

2,500 2,000 1,500 1,000 500 0

600 500 400 300 200 100 0

30 25 20 15 10 5 0

350 300 250 200 150 100 50 0

Financial development 10 Key figures 12

Report of the Board of Directors

19 20 21 22 23

20 72

• Sustainability statement • Sustainability statement assurance report

A forerunner in sustainability

Investing in sustainable growth

Consolidated financial statements

SALES SPLIT BY PRODUCT % of sales

SALES SPLIT BY REGION % of sales

Our products support the circular economy and they have a smaller carbon footprint compared to many other packaging materials. Our future growth is based on more efficient use of resources and raw materials. Our target is fossil free production and products by the end of 2030.

Population growth, urbanisation and the replacement of plastic will increase the demand for fibre-based packaging material in the long term. We respond to this demand with sustainable investments and innovative packaging solutions. We have ambitious, science-based sustainability targets and mill-specific investment plans to achieve the targets.

Interest-bearing net debt/ comparable EBITDA

Folding boxboard �� 59 White kraftliners �� 24 Market pulp �� 13 Other �� 4

EMEA �� 66 Americas �� 27 APAC �� 7

0.7 Target <2.5

We are 2,300 Metsä Board employees in 17 countries

We have 8 production units in Finland and Sweden. Our main market areas are Europe and North America

Our customers include international brand owners, packaging converters, manufacturers of corrugated products and merchants

We are part of Metsä Group All our wood supply is handled by Metsä Group. The wood we use is sourced from sustainably managed forests, mainly from Finland and Sweden where renewal of forests and the biodiversity of nature is secured. Our ownership (24.9%) in Metsä Fibre secures self-sufficiency in pulp and enables the growth of paperboard business.

METSÄ GROUP

The parent company Metsäliitto Cooperative is composed of over 90,000 Finnish forest owners.

Sales EUR 6.1 billion

Comparable operating result EUR 488 million

Personnel 9,500

We are committed to the ambitious and science-based 2030 sustainability targets that enable fossil free production and products and help our customers to con- tribute to their own goals. Read more about sustainable development and our goals .

Paperboard capacity 2.3 million tonnes/year

Pulp and BCTMP capacity 1.7 million tonnes/year

170 Remuneration report 174 Investor relations and investor information

Wood Products

Wood Supply and Forest Services

Pulp and sawn timber

Paperboard

Tissue and greaseproof papers

METSÄ WOOD

METSÄ FIBRE

METSÄ BOARD

METSÄ TISSUE

END USE OF FOLDING BOXBOARD

END USE OF WHITE KRAFTLINERS

OWNERSHIP Metsäliitto Cooperative 100%

Metsäliitto Cooperative 100%

Metsäliitto Cooperative 50.1% Metsä Board 24.9% Itochu Corporation 25.0%

Metsäliitto Cooperative 52% (69% of votes) The company is listed on Nasdaq Helsinki

Metsäliitto Cooperative 100%

Various retail packaging solutions Other consumer product packaging E-commerce

Food and food service packaging Other consumer product packaging Graphical end use

METSÄ SPRING Innovation company

Source: Metsä Board

| METSÄ BOARD ANNUAL REVIEW 2023

METSÄ BOARD Annual review 2023

Ready for sustainable growth

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

Strategy and financial targets

The year 2023 was challenging for Metsä Board. Our business was affected by the weaker pulp and paperboard market and high cost level. Over the year, we systematically implemented our strategic programmes and helped our customers reduce their use of plastics and the carbon footprint of packaging. The Kemi and Husum investment projects, completed in the second half of the year, and our strong financial position offer us excellent conditions for future sustainable growth. I am proud of every Metsä Board employee’s work and commitment to our company’s future.

Value creation

Financial development 10 Key figures 12

Report of the Board of Directors

20 72

• Sustainability statement • Sustainability statement assurance report

Consolidated financial statements

In our operations and development efforts, we

Competitiveness from energy and fibre self-sufficiency

The world around us has changed rapidly, and the changes have also had a strong impact on the paperboard market. The pandemic led to exceptionally steep growth in the demand for packaging materials, with restrictions on mobility shifting consumption from services to products. Since then, rising inflation and interest rates have affected consumers’ purchasing power and behaviour: prices of consumer products have increased, and people now consider their purchases more carefully. Weaker consumer demand has led to major inventory adjustments in the value chain. In addition, the overall market balance for paperboards, especially in Europe, has been affected by the discontinuation of sales to Russia and increased paperboard supply from Asia to the Middle East and South America. Notable year-over-year change in profitability Our sales were EUR 1.9 billion, and our comparable operating result was EUR 122 million. Our comparable return on capital employed was 5.1%, compared to a record high of over 20% the previous year. Paperboard and market pulp delivery volumes were well below capacity levels, and we adjusted our production to match the low demand level. Our performance was also impacted by high cost level and a significantly lower result from our associated company Metsä Fibre compared to the previous year. However, the average sales price of our paperboards improved from 2022. To safeguard profitability, we focused our paperboard sales on customers in our main market areas, who most benefit from sus- tainably produced premium fresh fibre paperboards. In the second half of the year, we temporarily laid off some of our personnel at our mills in Finland. Through efficient management of working capital, we managed to support our cash flow from operating activities, which amounted to EUR 343 million. Our balance sheet remained strong in the challenging market situation.

have systematically done the right things, which will have

The energy crisis in Europe highlighted the importance of energy self-sufficiency. Metsä Board’s energy self-sufficiency is already 90%, increased by the new recovery boiler in Husum and the additional production from the Olkiluoto 3 nuclear power plant. In addition to own production, our self-sufficiency in pulp is supported by 24.9% holding in Metsä Fibre. Wood, our main raw material, accounts for more than a quarter of our total costs. The discontinuation of wood supply from Russia led to a tighter wood market in the Baltic Sea region, and pulpwood prices increased in Finland and Sweden in 2023. Our wood supply is handled by Metsä Group, which is Finland’s largest buyer of wood. Wood is only procured from sustainably managed forests, where growth exceeds use. In the spring of 2023, Metsä Group adopted regenerative forestry principles which improve forests’ carbon storage, biodiversity and ability to adapt to climate change. In accordance with the principles, the state of forest nature is not only improved, but the improvement is also demonstrated with measurements. A year of significant investments Over the year, several significant investments were completed. At the Kemi kraftliner mill, we completed a development programme to increase the production capacity of the white kraftliner and improve the mill’s energy and water efficiency. Similarly, the modernisation of the folding boxboard production line in Husum will increase our annual folding boxboard capacity and improve the mill’s production efficiency. Moreover, Metsä Fibre’s new bio- product mill started up in Kemi. It is the largest investment in the history of the Finnish forest industry. The mill produces softwood and hardwood pulp more cost-effectively and offers world-class production, environmental and energy efficiency.

a positive impact on our business in the future.

Concrete actions to ensure sustainability In the circular economy of fibre-based packaging materials, our task is to provide the market with fresh fibre paperboards as resource efficiently as possible, contribute to the replacement of fossil-based materials and reduce the carbon footprint of packag- ing. Lighter-weight paperboards and resource efficiency are the key areas in our product development, and they also form the basis for future investments. We aim to reduce wood, energy and water use per tonne of paperboard produced compared to our current pro- duction units. In 2023, we implemented measures and investments at our mills in line with our strategic programmes, which aim to make our production entirely fossil free by the end of 2030. These measures will continue as planned in the coming years. Ready for future growth Our goal is to continue to grow in fibre-based packaging materials and to renew our industrial operations. Population growth, urbanisation and plastic replacement remain strong trends that will increase demand for fibre-based packaging in the long term.

Consumer preferences favour fossil free packaging materials, and several brand owners are committed to ambitious targets to reduce plastic use in their packaging. Our competitiveness is boosted by high quality of our paperboards, reliable deliveries, and a service concept, which helps our customers improve their material efficiency and reduce the environmental impact of their packaging. Although our business environment still involves uncertainties, I am confident about Metsä Board’s future. In our operations and development efforts, we have systematically done the right things, which will have a positive impact on our business in the future. Our strong financial position will support us in this growth. The Board of Directors proposes a dividend of EUR 0.25 per share for 2023. I would like to thank Metsä Board’s employees for their great work and all our customers, shareholders and other partners for their trust and good cooperation.

170 Remuneration report 174 Investor relations and investor information

Mika Joukio CEO

CEO’s review | METSÄ BOARD ANNUAL REVIEW 2023

Our strategy highlights solutions that promote the circular economy

METSÄ BOARD Annual review 2023

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

Strategy and financial targets

Operating environment supports growing demand for fresh fibre paperboards • Population growth, urbanisation and rising living standards drive packaging • Regulation and consumer preferences favour fossil free packaging materials • The requirements of the circular economy become more specific and drive the development of the industry • Availability and quality of recycled fibre is declining • Global e-commerce continues to grow

We are a leading European producer of premium fresh fibre paperboards and a forerunner in sustainability. Our decision making is guided by our financial and sustainability targets and the ambition to increase shareholder value. Our goal is to maintain a strong financial position and distribute a competitive dividend to our owners.

Value creation

We invest in sustainable and profitable growth With the investments, we implement our strategy to grow in fibre-based packaging materials, improve the production and resource efficiency of our mills and reduce the carbon footprint of our products. We have set ambi- tious, science-based sustainability targets and mill-specific investment plans to achieve our goals by the end of 2030. Some of the invest- ments required by these plans have already been implemented. These measures will also help our customers to reduce their emissions and further increase our competitiveness. In 2023, we completed a development programme at our Kemi paperboard mill that will increase the annual production capacity of white kraftliner by 40,000 tonnes and improve the mill’s energy and water efficiency. As part of the development programme, we will purchase a modernised unbleached pulp production line from our associated company Metsä Fibre for use in paperboard production. At the same time, Metsä Fibre completed its new bioproduct mill in Kemi, which will increase our surplus in pulp by an amount corresponding our share of own- ership in Metsä Fibre. In Husum, an investment related to the modernisation of the production line for folding boxboard was completed, which will increase annual production capacity by 200,000 tonnes and improve the production efficiency of the mill. The increase in production capacity is expected to be fully available on the market in 2026. During the 2020s, we will make an invest- ment decision to renew the fibre line at the Husum pulp mill. In addition, we have pre-en- gineering ongoing for a new folding boxboard mill in Kaskinen. The pre-engineering work is still ongoing and an investment decision can be made in 2024 at the earliest.

Financial development 10 Key figures 12

Report of the Board of Directors

20 72

• Sustainability statement • Sustainability statement assurance report

Consolidated financial statements

Purpose Advancing the bioeconomy and circular economy by efficiently processing northern wood into first-class products. Vision Preferred supplier of innovative and sustainable fibre-based packaging solutions, creating value for customers globally. Strategy We grow in fibre-based packaging materials and renew our industrial operations.

Our strategic programmes We implement our strategy through five strategic programmes that drive sustainable growth in fibre-based packaging materials and industrial efficiency.

Premium supplier

Effective innovation

Values

Safe and efficient operations and organic growth

Reliability Cooperation Responsible profitability Renewal

Leader in sustainability

Motivated people

Our financial targets

Megatrends

170 Remuneration report 174 Investor relations and investor information

COMPARABLE RETURN ON CAPITAL EMPLOYED %

INTEREST-BEARING NET DEBT / COMPARABLE EBITDA

DIVIDEND / NET RESULT

Population growth Climate change Digitalisation Urbanisation Biodiversity loss

2.5 2.0

100

1.5 1.0 0.5 0 -0.5

19 20 21 22 23

Target > 12%

Target < 2.5

Target > 50%

Business operations and value creation | METSÄ BOARD ANNUAL REVIEW 2023

We create value and well-being for several stakeholders

METSÄ BOARD Annual review 2023

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

Strategy and financial targets

We are continuously looking for opportunities to grow profitably and sustainably, and to generate value for our stakeholders with our operations. We help our customers achieve their sustainability targets with our paperboards and our expert services that support the circular economy.

Value creation

Financial development 10 Key figures 12

Report of the Board of Directors

Resources

Business model

Outputs

Impacts

20 72

• Sustainability statement • Sustainability statement assurance report

We produce resource-efficient fresh fibre paperboards from renewable raw materials, which support the principles of the circular economy and offer an alternative to fossil-based packaging materials. We are part of Metsä Group, and benefit from its unique value chain, from pure northern fibre to premium end products. We have high energy self-sufficiency, and our holding in our associated company Metsä Fibre ensures our over self-sufficiency in pulp. Our production is located in Finland and Sweden, and we have sales around the world. Our main markets are Europe and North America.

Consolidated financial statements

People and partnerships

Sustainable products and services

Customers

• 2,300 employees in 17 countries • 36 apprentices • Active cooperation with local communities and educational institutions

• 1.3 million tonnes of premium fresh fibre paperboards • 1.0 million tonnes of pulp and BCTMP • 5 service entities that generate benefits throughout the packaging value chain (360 Services) • Common stock service improves availability and enables fast delivery to the customer

• Recyclable and sustainably produced products with a smaller carbon footprint 1) • Innovative and material-efficient packaging solutions that help reduce the use of plastic • Customer satisfaction NPS (Net Promoter Score) 40

Production and supply chain

Suppliers

• More than 3,400 suppliers • 8 production units in Finland and Sweden • Deliveries to approximately 100 countries

Emissions and side streams

• EUR 1.6 billion purchases from suppliers • 99% of suppliers are committed to the Supplier Code of Conduct • 19% of target group suppliers have set their own SBTi targets Personnel • EUR 200 million paid to employees as wages and benefits • 98% of the personnel have completed the Code of Conduct training

• 184,713 tonnes of fossil-based carbon dioxide emissions (Scope 1 + Scope 2 market-based) • 96% of the used water is returned to the waterbodies after treatment • 149,000 tonnes of by-products and waste most of which used as materials or energy

OUR SALES IN 2023 EUR 1,942 million

Natural resources • 6,3 million m 3 of sourced wood of which 91% is certified • Total energy consumption 7.6 TWh of which 90% is fossil free • Water intake 102 million m 3 • 254,000 dry tonnes of purchased pigments, adhesives and other raw materials

FOLDING BOXBOARD 59% (of sales) WHITE KRAFTLINERS 24% (of sales)

Shareholders

Intangible assets

• A sustainable investment; several recognitions from ESG evaluations conducted by third parties • EUR 89 million distributed to shareholders of the parent company as dividends • 5.1% comparable return on capital employed

MARKET PULP 13% (of sales)

• R&D expenditure EUR 7.3 million • An Excellence Centre in Äänekoski, Finland, and a satellite centre in Norwalk, the United States • Recoqnition for premium quality paperboards

170 Remuneration report 174 Investor relations and investor information

OTHER 4% (of sales)

Common value creation

Economic capital

• Taxes paid EUR 65 million • Total investments EUR 229 million • Aiming for 100% fossil free products and production, with science-based targets

• Capital invested EUR 2.5 billion • Approximately 62,000 shareholders in B series and 10,000 in A series

Further information on taxes on p. 152

1) based on third-party verified EPD reports, life cycle database values for alternative packaging materials and a series of life cycle and carbon footprint calculations carried out for customers in 2023

Business operations and value creation | METSÄ BOARD ANNUAL REVIEW 2023

Report of the Board of the Directors and financial statements

METSÄ BOARD Annual review 2023

Key figures

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

SALES

PAPERBOARD DELIVERIES

METSÄ BOARD’S MARKET PULP DELIVERIES 1) 1,000 tonnes

EUR million

1,000 tonnes

Contents

2,500 2,000 1,500 1,000 500 0

2,000

600 500 400 300 200 100 0

Strategy and financial targets

1,500

■ Report of the Board of Directors

■ Parent company

Value creation

1,000

financial statements

126

Sustainability statement

20 70 72

500

1) includes chemical pulp and high-yield pulp (BCTMP)

Financial development 10 Key figures 12

Annexes to the Sustainability statement Sustainability statement assurance report

Parent company income statement Parent company balance sheet Parent company cash flow statement

126 127 128 129 129 130 130 130 130 131 131 131 132 134 135 136 137 137 137 138 139 140 140

19 20 21 22 23

Report of the Board of Directors

■ Consolidated financial statements

20 72

• Sustainability statement • Sustainability statement assurance report

Notes to the parent company financial statements

COMPARABLE EBITDA EUR million, % of sales

COMPARABLE OPERATING RESULT EUR million, % of sales

CAPITAL EMPLOYED, EUR million RETURN ON CAPITAL EMPLOYED, %

Accounting policies

Consolidated statement of comprehensive income

74 75 76 77 78 78 80 80 81 82 82 83 83 83 85 89 92 92 95 98 99 99

2 3 4 5 6 7 8 9

Sales

Consolidated balance sheet

Exceptional items

Consolidated financial statements

Statement of changes in shareholders’ equity

600 500 400 300 200 100 0

30 25 20 15 10 5 0

600 500 400 300 200 100 0

30 25 20 15 10 5 0

2,500 2,000 1,500 1,000 500 0

25 20 15 10 5 0

Other operating income Operating expenses

Consolidated cash flow statement

Depreciation and impairment charges

Notes to the consolidated financial statements

Financial income and expenses

Accounting policies

Income taxes

Profitability

Intangible and tangible assets

2.1 Segment information

19 20 21 22 23

10 Investments

2.2 Sales

Receivables

2.3 Other operating income 2.4 Operating expenses

12 Shareholders’ equity 13 Mandatory provisions

Remuneration

14 Deferred tax assets and liabilities

CASH FLOW FROM OPERATIONS

TOTAL INVESTMENTS

INTEREST-BEARING NET DEBT, EUR million INTEREST-BEARING NET DEBT / EBITDA, COMPARABLE

3.1 Employee costs

15 Non-current liabilities

3.2 The management’s salaries, remuneration and pension expenses

EUR million

16 Current liabilities

17 Financial instruments

3.3 Share-based payment

350 300 250 200 150 100 50 0

400 300 200 100 0 -100

2.0 1.5 1.0 0.5 0 -0.5

18 Disputes, legal proceedings and commitments

3.4 Retirement benefit obligations

19 Shares and holdings

Capital employed

4.1 Intangible assets

The Board’s proposal to the Annual General Meeting for the distribution of funds

4.2 Property, plant and equipment

142 143

4.3 Other investments

Auditor’s report

19 20 21 22 23

4.4 Inventories

Shares and shareholders *

4.5 Trade receivables and other receivables

147 151 152 153 155 156

4.6 Other liabilities

100 100 101 102 102 105 105 106 106 108 114 119 121 121 124 124 125 125 125

Ten years in figures

4.7 Trade payables and other liabilities

Taxes

4.8 Provisions

TOTAL COSTS 2023

PERSONNEL AT THE END OF PERIOD

TOTAL RECORDABLE INJURY FREQUENCY (TRIF) per million hours worked

Production capacities Calculation of key ratios *

Capital structure and financial risks

5.1 Shareholders’ equity

EUR 1.7 billion

Comparable performance measures *

5.2 Financial income and expenses 5.3 Other financial assets 5.4 Cash and cash equivalents 5.5 Borrowings and net debt 5.6 Management of financial risks

2,500 2,000 1,500 1,000 500 0

Wood �� 17% Pulp * �� 16% Logistics �� 15% Chemicals �� 14% Personnel �� 12% Energy �� 11% Other fixed �� 10% Other variable �� 4%

■ Corporate governance

157

170 Remuneration report 174 Investor relations and investor information

Corporate governance statement • Board of Directors of Metsä Board

157 165 168 170 174

5.7 Classification and fair values of financial assets and liabilities

• Corporate Management Team of Metsä Board

19 20 21 22 23

6 7

Income taxes Group structure

Remuneration report

Investor relations and investor information

7.1 Group companies

*) Pulp: Metsä Board purchases all external pulp from its associated company Metsä Fibre, of which Metsä Board owns 24.9%. Metsä Fibre’s pulp cost structure in 2023: Wood 56%, Chemicals 13%, Logistics 9%, Personnel 6%, Other 16%.

Development of key figures per share can be found on page 150.

7.2 Acquisitions and operations disposed of

7.3 Related party transactions

* part of the Report of the Board of Directors

Other notes

8.1 Contingent liabilities, assets and commitments

8.2 Events after the financial period

This PDF is not official ESEF report

Financial development | METSÄ BOARD ANNUAL REVIEW 2023

METSÄ BOARD Annual review 2023

Report of the Board of Directors 2023

Key figures

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

2023

2022

2021

Sales, EUR million EBITDA, EUR million

1,941.9

2,479.6

2,084.1

Metsä Board’s business Metsä Board produces recyclable premium fresh fibre paperboards and is Europe’s largest producer of folding boxboard and white kraftliners. The company’s folding boxboard is mainly used to package consumer products such as food and pharmaceuticals, while its white kraftliners are mainly used for various packaging needs in the retail sector. The total annual paperboard capacity is approximately 2.3 million tonnes. Metsä Board’s main market areas are Europe and North America. In addition to paperboard, the company produces chemical pulp and bleached high-yield pulp (BCTMP), which are used in its own paperboard production, with some sold as market pulp. The annual capacity for pulp and BCTMP is roughly 1.7 million tonnes. Metsä Board owns 24.9% of its associated company Metsä Fibre, a global leader in the production of softwood market pulp. Metsä Board covers its energy consumption with its own production and supplementary purchases from the market. Most of the electricity con- sumption is covered by the company’s own production and by electricity purchased from Pohjolan Voima and Metsä Fibre. Metsä Board has a 2.6% holding in Pohjolan Voima, from which it purchases electricity at cost price. Strategy and financial targets According to its strategy, Metsä Board aims to grow in fibre-based packaging materials and renew its industrial operations. The company implements its strategic programmes, including growth and development investments, to improve the mills’ production and resource efficiency and reduce the carbon footprint of products. The company’s production is located near the most important raw material, high-quality northern fibre. Metsä Board aims to maintain high self-sufficiency in pulp and energy. Its decision-making is steered by profitability and sustainability targets and by the long-term increase of shareholder value. The company focuses on the continuous improvement of cost-effectiveness and on customer accounts which benefit from the high performance of the company’s products and services. The objective is to distribute a competitive dividend and retain a strong balance sheet.

According to the dividend policy, at least 50% of the result for the financial period is distributed as dividends. • In 2023: 95% (dividend: EUR 0.25 per share) Market environment ■ Paperboards Population growth, urbanisation and replacing plastics are global trends that will increase demand for fibre-based packaging in the long term. Consumer preferences favour fossil free packaging materials, and several brand owners are committed to ambitious targets to reduce plastic use in their packaging. Lightweight fresh fibre paperboards produced from renewable raw materials are material-efficient and have a smaller environ- mental impact than many corresponding packaging materials. Rising inflation and a higher price level have eroded consumers’ purchasing power and affected general demand for consumer products. In 2023, the demand for fresh fibre paperboards decreased rapidly, leading to considerable inventory adjustments in the value chain. In addition, the overall market balance for paperboards, especially in Europe, was affected by the discontinuation of sales to Russia and increased paperboard supply from Asia to Turkey, the Middle East and South America. In 2023, the deliveries of European folding boxboard and white kraft- liners to Europe decreased significantly from the previous year. Folding boxboard market prices remained stable, while those of white kraftliners declined. Metsä Board accounted for 32% (33) of the overall deliveries of Euro- pean folding boxboard producers and for 50% (57) of exports from Europe. At the end of 2023, Metsä Board accounted for 39% of folding boxboard production capacity and for 33% of white kraftliner production capacity in Europe (Sources: Fastmarkets FOEX, Fastmarkets RISI, CEPI Cartonboard, CEPI Containerboard, websites of benchmark companies). ■ Market pulp Metsä Board and its associated company Metsä Fibre sell mainly long-fibre pulp to Europe and Asia. Global demand for market pulp is supported by the global growth in demand for packaging and hygiene products made from renewable materials. In 2023, global demand for market pulp decreased, and the price level (PIX) declined from the previous year. In Europe, demand was constrained by production shutdowns by paperboard and paper producers due to the weak market situation. In China, demand picked up in the second half of the year. The global supply of long-fibre pulp was restricted by several production capacity closures, the limited availability of raw material in North America, and global production curtailments.

214.6 216.0

614.6 602.8

466.0 472.2

comparable, EUR million

Strategy and financial targets

EBITDA, % of sales

11.1 11.1

24.8 24.3

22.4 22.7

comparable, % of sales

Value creation

Operating result, EUR million comparable, EUR million Operating result, % of sales comparable, % of sales Result before taxes, EUR million

120.8 122.2

531.5 520.7

375.9 386.6

Financial development 10 Key figures 12

6.2 6.3

21.4 21.0

18.0 18.6

120.9 122.6 101.6 103.8

524.9 514.6 461.3 451.4

365.8 376.6 314.0 326.6

Report of the Board of Directors

comparable, EUR million

Result for the period, EUR million

20 72

• Sustainability statement • Sustainability statement assurance report

comparable, EUR million Earnings per share, EUR

0.27

1.15

0.82

comparable, EUR

0.27

1.13

0.85

Consolidated financial statements

Return on equity, %

4.7 4.8 5.0 5.1

22.5 22.0 21.4 20.9

19.4 20.2 18.2 18.7

comparable, %

Return on capital employed, %

comparable, % Equity ratio 1) , % Net gearing 1) , %

-4

Interest-bearing net liabilities/comparable EBITDA Shareholders’ equity per share 1) , EUR Interest-bearing net liabilities 1) , EUR million

0.7

0.2

-0.2 4.78

5.35

5.86 94.5

144.0 228.7 342.8 2,240

-78.4 220.2 329.6 2,389

Total investment, EUR million

304.1 232.0 2,248

Net cash flow from operations, EUR million

Personnel 1)

at the end of the period

Delivery and production volumes

1,000 tonnes

2023

2022

2021

Delivery volumes

Folding boxboard White kraftliner

906 467 394 684

1,208

1,296

609 503

627 496 762

Metsä Board’s market pulp 1) Metsä Fibre’s market pulp 2)

717

Production volumes Folding boxboard

859

1,272

White kraftliner

450

605

634

Metsä Board’s pulp 1) Metsä Fibre’s pulp 2)

996 685

1,409

1,362

Financial targets, dividend policy and actual figures for 2023: The comparable return on capital employed is at least 12%. • In 2023: 5.1%

731

747

170 Remuneration report 174 Investor relations and investor information

1) Includes chemical pulp and high-yield pulp (BCTMP). 2) Equal to Metsä Board’s 24.9% holding in Metsä Fibre.

The ratio of interest-bearing net liabilities to comparable EBITDA is at most 2.5. • In 2023: 0.7.

Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2023

METSÄ BOARD Annual review 2023

■ Capacity expansion of folding boxboard in Husum

Sales and result

and Husum paperboard mills. The completion of investments increased depreciation by around EUR 12 million from the previous year. Unused emissions allowances were sold for approximately EUR 55 million (EUR 29 million). The associated company Metsä Fibre’s share of Metsä Board’s com- parable result in January–December was EUR 28.2 million (174.7). Metsä Fibre’s result was weakened by the lower sales prices of end products, especially pulp. Pulp delivery volumes fell by around 5% from the previous year. The performance of the sawn timber business was also clearly weaker than in the previous year. Profitability was also impacted by higher wood costs and increased depreciation resulting from the completion of the Kemi bioproduct mill. Financial income and expenses totalled EUR 0.1 million (-6.6), including foreign exchange rate differences from accounts receivable, accounts payable, financial items and the valuation of currency hedging instruments, totalling EUR 2.6 million (-5.0). The result before taxes was EUR 120.9 million (524.9). The comparable result before taxes was EUR 122.6 million (514.6). Income taxes amounted to EUR 19.3 million (63.5). Earnings per share were EUR 0.27 (1.15), and comparable earnings per share were EUR 0.27 (1.13). The return on equity was 4.7% (22.5), and the comparable return on equity was 4.8% (22.0). The return on capital employed was 5.0% (21.4), and the comparable return on capital employed was 5.1% (20.9). Cash flow Net cash flow from operations in January–December 2023 was EUR 342.8 million (1–12/2022: 232.0). Working capital decreased by EUR 105.8 million (an increase of 151.4). Cash flow was supported by efficient use of working capital. Due to the weakened demand situation, the company adjusted its production to prevent an increase in inventories. In the corre- sponding period, working capital was increased by higher inventory levels of paperboard and higher inventory values due to cost inflation. Balance sheet and financing Metsä Board’s equity ratio at the end of the financial period was 67% (31 December 2022: 66), and the net gearing ratio was 7% (4). The ratio of interest-bearing net liabilities to comparable EBITDA in the previous 12 months was 0.7 (0.2). Interest-bearing liabilities totalled EUR 438.1 million (31 December 2022: 453.0). Non-euro-denominated loans accounted for 2.0% of loans, and floating-rate loans for 15.3%, the rest being fixed-rate loans. The average interest rate on liabilities was 2.6% (2.2), and the average maturity of non-current liabilities was 3.1 years (4.0). The interest rate maturity of loans was 30.6 months (36.1). Interest-bearing net debt totalled EUR 144.0 million (31 December 2022: 94.5). Metsä Board’s liquidity is good. At the end of the financial period, the available liquidity was EUR 491.6 million (31 December 2022: 556.2),

consisting of the following items: liquid assets and investments of EUR 291.6 million and a syndicated credit facility (revolving credit facility) of EUR 200.0 million. Of the liquid assets, EUR 278.4 million consisted of short-term deposits with Metsä Group Treasury, and EUR 13.2 million was cash funds and investments. Other interest-bearing receivables amounted to EUR 2.5 million. In addition to items reported as liquidity, the liquidity reserve is complemented by the EUR 200 million commercial paper pro- gramme signed in December, Metsä Group’s internal undrawn short-term credit facility of EUR 150.0 million and undrawn pension premium (TyEL) funds of EUR 229.7 million. The fair value of other non-current investments was EUR 254.4 million (31 December 2022: 345.4). The change in value was related to the change in the fair value of Pohjolan Voima Oyj’s shares. At the end of the financial period, an average of 8.6 months of the net for- eign currency exposure was hedged, including the hedging of the balance sheet position of trade receivables and trade payables. Metsä Board has investment grade credit ratings from S&P Global and Moody’s Investor Service. Metsä Board’s rating by S&P Global is BBB-, with a stable outlook. The company’s rating by Moody’s is Baa2, with a stable outlook. Investments Investments during the financial period totalled EUR 228.7 million (1–12/2022: 304.1), with growth and development investments accounting for 74%, and maintenance investments for 26%. Of total investments, the company’s own property, plant and equipment amounted to EUR 223.0 million (278.1), and leased property, plant and equipment to EUR 5.7 (26.1). In the latter, the most significant item in the previous year was the machinery and equipment for the boiler plant from the acquisition of Hämeenkyrön Voima Oy, totalling EUR 18.0 million. Metsä Board group companies are parties to legal proceedings concern- ing disputes related to obligations and liabilities under delivery contracts for major investment projects. In addition, these investment projects involve outstanding disputes, which may also lead to the initiation of new arbitration or litigation.

Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6

In November, the investment was completed at the Husum paperboard mill that will increase the annual production capacity of folding boxboard by 200,000 tonnes. After the investment, the folding boxboard production capacity of the BM 1 will be 600,000 tonnes per year, and it is expected to be fully available on the market in 2026. The total value of the investment is approximately EUR 230 million. The investment is expected to increase Metsä Board’s annual sales by approximately EUR 200 million and improve annual comparable EBITDA by approximately EUR 50 million. The company expects to achieve the growth and improved result in full in 2026. Due to the growing logistics volumes of the Husum integrated mill, the port concept will also be renewed. The value of the investments is approxi- mately EUR 20 million and will mainly include new warehouse capacity, with completion expected in 2024. ■ ERP project As part of Metsä Group, Metsä Board is modernising its information (ERP) systems. The project will gradually improve Metsä Group’s operational efficiency and ability to create new data-driven functions, primarily for business management and customer support. For Metsä Board, the design phase started in 2021, and the system is expected to be implemented by the end of 2025. In 2023, Metsä Group’s common financial system was implemented. Metsä Board’s share of the total project value is at least EUR 80 million, most of which will be booked as investments during 2024 and 2025.

Metsä Board’s sales were EUR 1,941.9 million (2,479.6).

Strategy and financial targets

SALES SPLIT BY PRODUCT %

SALES SPLIT BY REGION %

Value creation

100 80 60 40 20 0

Financial development 10 Key figures 12

Report of the Board of Directors

20 72

• Sustainability statement • Sustainability statement assurance report

21 22 23

Folding boxboard White kraftliner Market pulp Others

EMEA Americas APAC

Consolidated financial statements

The comparable operating result was EUR 122.2 million (520.7), and the operating result was EUR 120.8 million (531.5). Items affecting compa- rability totalled EUR -1.4 million in the review period. They comprised Metsä Board’s capital gains of EUR 2.7 million from the sale of a land area unrelated to business operations, and items related to the business of the associated company Metsä Fibre: A write-down related to the closure of the old Kemi pulp mill; translation differences from discontinued operations in Russia; the loss on sale of fixed asset items, and other items, totalling EUR -4.1 million. Total deliveries of paperboards were 1,373,000 (1,817,000) tonnes, of which 67% was delivered to the EMEA region, 30% to the Americas, and 4% to the APAC region. Metsä Board’s deliveries of market pulp were 394,000 (503,000) tonnes, of which 67% was delivered to the EMEA region and 33% to the APAC region. The comparable operating result was weakened by the lower price level of market pulp and lower delivery volumes. The delivery volumes of paper- board also fell significantly. Metsä Board adjusted its paperboard, pulp and BCTMP production to match the low level of demand, and production volumes remained well below capacity levels. Profitability was supported by improved average prices for paperboards, especially folding boxboard. Exchange rate fluctuations, including hedges, had a positive impact of approximately EUR 95 million on the operating result compared to the previous year. The cost level was higher than in the previous year. The greatest increase during the year was in wood costs, due to higher stumpage prices in Finland and Sweden. The change in the costs of chemicals and energy was less significant. In the second half of the year, the result was affected by major annual maintenance and investment shutdowns at the Kemi

■ Pre-engineering for folding boxboard mill in Kaskinen

Metsä Board has started pre-engineering for a new folding boxboard mill with an annual capacity of approximately 800,000 tonnes in Kaskinen, Finland. The pre-engineering includes technical design, infrastructure and logistics solutions, and tendering for the main equipment. The environmen- tal impact assessment (EIA) for the project was completed in September. The environmental permit process is ongoing. A potential investment decision could be made in 2024 at the earliest. ■ Associated company Metsä Fibre’s Kemi bioproduct mill Associated company Metsä Fibre’s new bioproduct mill in Kemi, Finland, started up in September. The new mill will produce some 1.5 million tonnes of softwood and hardwood pulp annually, as well as other bioproducts. The pulp production capacity of 1.5 million tonnes includes the existing unbleached pulp production line for white kraftliners, which will be trans- ferred to Metsä Board, with an annual capacity of approximately 180,000 tonnes. The new bioproduct mill replaced the old pulp mill in Kemi, with an annual capacity of 610,000 tonnes. The bioproduct mill will not use any fossil fuels, and its electricity self-sufficiency is 250%.

■ Development programme of Kemi paperboard mill

In September, the Kemi paperboard mill completed a development pro- gramme launched in 2021, which will increase the mill’s annual production capacity of the white kraftliner by around 40,000 tonnes. After the programme, the mill’s annual production capacity will be around 465,000 tonnes, which is expected to be fully available on the market in 2025. The programme also included a series of modernisation and bottleneck investments in the paperboard machine, which will reduce the mill’s water use by 40% and energy use by 5% per tonne of paperboard produced. As part of the programme, Metsä Board will purchase a modernised unbleached pulp production line used in kraftliner production from Metsä Fibre. The production line’s annual capacity is roughly 180,000 tonnes. The total investment value is approximately EUR 110 million.

170 Remuneration report 174 Investor relations and investor information

Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2023

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