Metsä Board Annual Review 2024

METSÄ BOARD Annual review 2024

Contents

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

2 4 6 8

Value creation

CEO’s review

Strategy and financial targets

Financial development 10 Key figures 12

Value creation

Financial development Key figures Report of the Board of Directors

Report of the Board of Directors

20 20 37 70 89 96

• Sustainability statement

10 12 20 20 37 70 89 96 98

General information

E – Environment

• Sustainability statement

S – Social responsibility

General information E – Environment

G – Governance

Annexes to the Sustainability statement

S – Social responsibility

G – Governance

98 Consolidated financial statements 102 Notes to the consolidated financial statements 150 Parent company financial statements 153 Notes to the parent company financial statements 166 The Board’s proposal to the Annual General Meeting for the distribution of funds 167 Auditor’s Report 171 Sustainability statement assurance report 173 Shares and shareholders 177 Ten years in figures 178 Taxes 179 Production capacities 181 Calculation of key ratios and comparable performance measures Corporate governance 183 Corporate governance statement 190 • Board of Directors of Metsä Board 194 • Corporate Management Team of Metsä Board

Annexes to the Sustainability statement

Consolidated financial statements

Notes to the consolidated financial statements

102 150 153 166 167 171 173 177 178 179

Parent company financial statements

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

Auditor’s Report

Sustainability statement assurance report

Shares and shareholders

Together with our customers and partners, we continuously develop solutions to replace fossil-based packaging materials and improve packaging recyclability. Our goal is to achieve fossil-free production and products by 2030, supporting our customers in reaching their sustainability targets.

Ten years in figures

Taxes

Production capacities

Calculation of key ratios and comparable performance measures

181

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

183 190 194 196 201

• Corporate Management Team of Metsä Board

Remuneration report

Investor relations and investor information

Metsä Board Sustainability Review 2024 presents Metsä Board’s key sus- tainability objectives and achievements in 2024. The review will be available in March 2025.

196 Remuneration report 201 Investor relations and investor information

Metsä Board Sustainability Review 2024

METSÄ BOARD ANNUAL REVIEW 2024

This is Metsä Board

METSÄ BOARD Annual review 2024

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

High-quality and lightweight fresh fibre paperboards

Strong position in a growing market

Financial development

Strategy and financial targets

SALES EUR million

COMPARABLE OPERATING RESULT EUR million % of sales

TOTAL INVESTMENTS EUR million

CASH FLOW FROM OPERATIONS EUR million

We focus on high-quality and recyclable fresh fibre board made of renewable wood fibre, which is mainly used in consumer packaging and retail packaging solutions. Good availability of Northern European wood fibre and high self-sufficiency in pulp and energy enable the growth and development of our paperboard business.

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 at an

Value creation

Financial development 10 Key figures 12

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

annual rate of slightly over 4%. (Source: Smithers Information Ltd.).

Report of the Board of Directors

20 20 37 70 89 96

• Sustainability statement

General information

E – Environment

20 21 22 23 24

Targeted investments for sustainable growth

Paperboards with low carbon footprint Our products promote the circular economy and help our customers to reduce the use of plastic. Lightweight paperboards produced resource- efficiently with mainly fossil-free energy enable reduction of the carbon footprint of packaging.

S – Social responsibility

G – Governance

INTEREST-BEARING NET DEBT/ COMPARABLE EBITDA

Annexes to the Sustainability statement

SALES SPLIT BY PRODUCT % of sales

SALES SPLIT BY REGION % of sales

Population growth, urbanisation and plastic replacement will increase the demand for fibre-based packaging materials in the long term. We respond to this demand with sustainable growth investments and innovative packaging solutions. With mill-specific investments we improve our competitiveness and accelerate our goal of fossil-free production and products by the end of 2030.

2.0 Target <2.5

Folding boxboard �� 57 White kraftliners �� 25 Market pulp �� 14 Other �� 4

EMEA �� 67 Americas �� 27 APAC �� 6

We are part of Metsä Group Metsä Group is largest purchaser of wood in Finland and responsible for Metsä Board’s wood procurement. As part of Metsä Group, we are committed to the principles of regenerative forestry . Our self-sufficiency in pulp is secured by our 24.9% ownership in Metsä Fibre, the global leading producer of market softwood pulp.

We are 2,290 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

tsagroup.com/sustainability/ d/regenerative-forestry/

METSÄ GROUP

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

Sales EUR 5.7 billion

Comparable operating result EUR 203 million

Personnel 9,600

Wood Products

Wood Supply and Forest Services

Pulp and sawn timber

Paperboard

Tissue and greaseproof papers

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

METSÄ WOOD

METSÄ FIBRE

METSÄ BOARD

METSÄ TISSUE

OWNERSHIP Metsäliitto Cooperative 100%

Metsäliitto Cooperative 100%

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

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

Metsäliitto Cooperative 100%

END USE OF FOLDING BOXBOARD

END USE OF WHITE KRAFTLINERS

SALES EUR 2.4 billion PERSONNEL 700

EUR 0.6 billion

EUR 2.3 billion

EUR 1.9 billion

EUR 1.2 billion

Various retail packaging solutions Other consumer product packaging E-commerce

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

196 Remuneration report 201 Investor relations and investor information

1,700

1,500

2,300

2,500

METSÄ SPRING Innovation company

Source: Metsä Board

| METSÄ BOARD ANNUAL REVIEW 2024

METSÄ BOARD Annual review 2024

Focus on profitability

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

We have proven evidence of low carbon footprint of our paperboards, which is becoming increasingly important for our customers.

Strategy and financial targets

In 2024, we continued implementing our strategy through investments and development projects. In the current challenging market situation, securing the competitiveness and profitability is increasingly important. We have a strong foundation based on top professionals, high-quality products, and a solid financial position.

Value creation

Financial development 10 Key figures 12

Report of the Board of Directors

20 20 37 70 89 96

• Sustainability statement

General information

Volatility in the market The year 2024 started positively, as paperboard demand picked up from the previous year’s record low level. In the second half of the year, activity slowed down, and our total paperboard deliveries, roughly 1.5 million tonnes, remained below our capacity. Similar to the previous year, we adjusted our production at several mills to match low demand. Despite the slight increase in consumer purchasing power, demand for fresh fibre paperboards continued to be curbed by cautious purchasing behaviour and consumption focusing on services rather than products. The paperboard market has also been impacted by the strong growth in Asian paperboard capacity and increased paperboard imports, especially to Turkey, the Middle East and South America. Volatility was also seen in the pulp market. In Europe, demand was clearly stronger in the first half of the year compared to the second half. In China, market pulp purchases were at a near standstill from summer to early autumn. The increase in softwood market pulp prices was not enough to compensate for the negative impact of low delivery volumes and high production costs, and this was also reflected in the profitability of our associated company, Metsä Fibre. The second consecutive challenging year In 2024, our sales were EUR 1.9 billion, and our comparable operat- ing result was EUR 69 million. Our return on capital employed was around 3%, compared to our target of at least 12%. In addition to muted sales, our profitability was negatively affected by high-cost level, for which we must continue to prepare. The price level of pulpwood, our main raw material, has nearly doubled over the last three years. The supply of northern pulpwood has decreased con- siderably due to the discontinuation of wood imports from Russia, while wood consumption has at the same time increased. In 2024, unexpected events beyond our control also weighed on our results. In the first half of the year, political strikes in Finland stopped the transport of goods to our mills, and we had to halt production at nearly all our Finnish mills. In March, a gas explosion

occurred at Metsä Fibre’s Kemi bioproduct mill, shutting down the integrated mill’s pulp production for several weeks, which affected our linerboard production. Thanks to our organisation’s profes- sional action and cooperation with Metsä Group mills, we restarted linerboard production faster than expected and minimised the negative impact on our customers. Our financial position remains solid, although the ratio of net debt to comparable EBITDA rose to 2.0. However, this was mainly due to weaker profitability. The Board of Directors proposes that we pay a dividend of EUR 0.07 per share for 2024, which corre- sponds to 98% of our net result. Investments targeted at sustainable growth In 2023, we completed two significant investments in Husum and Kemi, which increased our annual paperboard capacity by 240,000 tonnes. This capacity is expected to be fully available to the market as of 2026. In 2024, we also decided not to invest in Kaskinen, where a pre-feasibility study was underway for a new folding boxboard mill with an annual capacity of 800,000 tonnes. Our decision was due to the high cost level, which clearly exceeded our original estimate and meant that the investment no longer met our financial targets. However, the pre-feasibility study results were useful for the investment programme we launched in 2024 to mod- ernise the Simpele board mill. We are also planning investments at our other mills to improve the competitiveness of our products and mills and achieve fossil-free production by the end of 2030. Ensuring profitability and competitiveness is increasingly important To secure profitability, we have adjusted our production to match weaker demand and have temporarily laid off some of our personnel. We have focused on the customer relationships that benefit most from the performance and added value offered by our premium paperboards. We have invested in the maintenance of our mills and made targeted investments to further improve our

E – Environment

S – Social responsibility

G – Governance

Annexes to the Sustainability statement

proven evidence of low carbon footprint of our paperboards, which is becoming increasingly important for our customers. International brand owners wish to reduce the use of plastic in their packaging materials and improve the recyclability of packaging. Our products and services help them in reaching their goals. Last year, our Excellence Centre in Äänekoski hosted a record number of customer cooperation projects aiming to improve the sustain- ability and performance of packaging. Lightweight, high-quality fresh fibre paperboard is well positioned to respond to increasing regulation. I feel confident about Metsä Board’s future. We have previously demonstrated our ability to tackle challenges in a changing operating environment and create added value for our various stakeholders. I want to thank Metsä Board’s employees for a job well done and all our customers, shareholders and other partners for their trust and good cooperation.

competitiveness. Our high self-sufficiency in pulp and energy also offers us a significant advantage. However, our profitability is cur- rently unsatisfactory, and we must continue our efforts to improve it. It is a key priority to ensure that all our production units are cost-competitive in the prevailing market and economic situation. Heading into 2025, we announced our plans to shut down the Tako board mill and improve operational efficiency at the Kyro board mill. We have initiated change negotiations at both mills. No decisions concerning the mill’s shutdown and personnel reductions will be made until the change negotiations have been concluded. Long-term growth drivers remain strong In line with our strategy, we aim to grow in fibre-based packaging materials and renew our industrial operations. Population growth, urbanisation and plastic replacement remain strong trends that will increase long-term demand for fibre-based packaging. We will also continue our efforts to advance sustainability. Our aim of fossil-free production and products by the end of 2030 will also help our value chain operators achieve their sustainability targets. We have

196 Remuneration report 201 Investor relations and investor information

Mika Joukio CEO

CEO’s review | METSÄ BOARD ANNUAL REVIEW 2024

Our strategy highlights solutions that promote circular economy

METSÄ BOARD Annual review 2024

PACKAGING MATERIALS AND ANNUAL GROWTH

(+4.2%/y) (+3.2%/y) (+5.1%/y) (+3.5%/y) (+2.9%/y) (+2.8%/y)

Paperboard packaging �� 32% Other fibre-based packaging �� 14% Flexible plastic packaging �� 17% Rigid plastic packaging �� 19% Metal packaging �� 13% Glass packaging �� 5%

THE GLOBAL PACKAGING MARKET VALUE IS USD 1.175 BILLION AND IT IS GROWING BY 3.9% PER YEAR (2023– 2028) (Source: Smithers)

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

Strategy and financial targets

Our competitiveness is based on premium products and services, as well as on the efficiency of our industrial operations. Our strategy emphasises packaging solutions that promote circular economy, replacing use of plastic. In 2024, we implemented our strategy and vision through a number of measures.

THE DEMAND OUTLOOK FOR LIGHTWEIGHT FRESH FIBRE PAPERBOARDS IS GOOD IN THE LONG TERM

Value creation

Brand-owners set targets to reduce the carbon footprint of packaging

Financial development 10 Key figures 12

GLOBAL ANNUAL GROWTH RATE OF FOLDING BOXBOARD IS 4.2% AND OF WHITE KRAFTLINERS 2.2% (2023–2035) (Source: AFRY)

The availability and quality of recycled fibre decreases as paper consumption decreases

Report of the Board of Directors

Consumers prefer alternatives to fossil-based packaging materials

20 20 37 70 89 96

• Sustainability statement

Population growth, urbanisation and rising living standards increase the need for packaging

General information

Regulation favours recyclable packaging materials

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.

E – Environment

S – Social responsibility

G – Governance

Annexes to the Sustainability statement

Financial targets and dividend policy

COMPARABLE RETURN ON CAPITAL EMPLOYED, %

INTEREST-BEARING NET DEBT / COMPARABLE EBITDA

DIVIDEND / NET RESULT Target: at least 50% Actual 2024: 98%

Target > 12% Actual 2024: 3.2%

Target < 2.5 Actual 2024: 2.0

Values

2.5 2.0

100

1.5 1.0 0.5 0 -0.5

Reliability • Cooperation • Responsible profitability • Renewal

20 21 22 23 24

Strategic programmes We have five strategic programmes. Each programme has objectives and concrete measures that contribute to our growth in fibre-based packaging materials and the renewal of our industrial operations.

In 2024, profitability was weakened by lower prices for folding boxboard, as well as several unexpected events beyond our control. The cost level remained high.

Our financial position remains solid. The ratio of interest-bearing net debt to EBITDA has risen due to due to weaker profitability.

In 2024 we renewed our divdend policy. Metsä Board’s target is to distribute an annual dividend of at least 50% of the result for the financial period over time, taking into account the company’s future investment and development needs.

STRATEGIC PROGRAMME

TARGET

MAIN ACTIONS IN 2024

Premium supplier

High-quality and reliable products and services with excellent customer experience

- Sale of Husum and Kemi’s new paperboard capacity - Improving supply chain resilience - Customer satisfaction, Net Promoter Score of 33

Sustainable and profitable investments With targeted investments, we plan to implement our stra- tegy to grow in fibre-based packaging materials, increase the production and resource efficiency of our mills, and reduce the carbon footprint of our products. Over the past three years, we have completed significant development and gro- wth investments that have increased our production capacity and improved the cost competitiveness of our production units. We expect the investments to significantly improve our profitability in the coming years.

Effective innovation

Developing packaging solutions, lightweighting packaging and reducing plastic

- Customer workshops in Äänekoski, 49 workshops in total - Improving quality of folding boxboard produced at Simpele mill - Pre-engineering to improve performance of Kyro mill’s barrier boards

In 2024, we also decided not to invest in a new board mill in Kaskinen. The cost of the planned investment was signi- ficantly higher than our initial estimate, and the investment would not have achieved the profitability targets that were set. At the same time, we announced that we will launch several other investments to improve competitiveness that will support our targets for fossil-free production and reduce the use of plastic in packaging.

Safe and efficient operations and organic growth

Continuous improvement of occupational safety and opertional efficiency, growth investments

- Targeted programmes to improve occupational safety - Implementation of Simpele mill investment plan and planning of future investments

Leader in sustainability

Fossil-free production and products by 2030 - Definition and prioritisation of planned investments to achieve taget of fossil-free production and products - Renewed turbine of Kyro bioenergy plant

196 Remuneration report 201 Investor relations and investor information

Motivated people

A diverse, equal and inclusive culture with well- being at work and continuous skills development

- Anonymous recruitment as main recruitment method - Personnel survey combined with ethics barometer - Metsä Group’s internal academy trainings

Business operations and value creation | METSÄ BOARD ANNUAL REVIEW 2024

We create value and well-being for several stakeholders

METSÄ BOARD Annual review 2024

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 20 37 70 89 96

• Sustainability statement

General information

E – Environment

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.

S – Social responsibility

People and partnerships

Products and services

Customers

G – Governance

• Around 2,300 employees in 17 countries • 60 apprentices, around 270 summer employees, thesis workers and trainees • Active cooperation with local communities and educational institutions

• 1.5 million tonnes of premium fresh fibre paperboards • 1.1 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 products with low carbon footprint 1) • Innovative and material-efficient packaging solutions that help reduce the use of plastic • Customer satisfaction NPS (Net Promoter Score) 33

Annexes to the Sustainability statement

Suppliers

Production and supply chain

• EUR 1.7 billion purchases from suppliers • 99% of suppliers are committed to the Supplier Code of Conduct • 24% of target group suppliers have set their own SBTi targets 2) Personnel • EUR 202 million paid to employees as wages and benefits • 99% of the personnel have completed the Code of Conduct training

Emissions and waste

• Approximately 3,100 suppliers • 8 production units in Finland and Sweden • Deliveries to around 90 countries

• 277,087 tonnes of greenhouse gas emissions from our own operations (Scope 1, Scope 2 market-based) • 1,789,138 tonnes of greenhouse gas emissions from the value chain • 95% of the used water is returned to the waterbodies. All process water is treated carefully • 167,000 tonnes of by-products and waste most of which is used as materials or energy

OUR SALES IN 2024 EUR 1,939 million

Natural resources • 6.8 million m 3 of sourced wood of which 92% is certified • Total energy consumption 8.3 TWh of which 89% is fossil-free • Water withdrawals 106 million m 3 • 335,000 tonnes of purchased pigments, binders, other raw materials and packaging materials

OTHER 4% (of sales) MARKET PULP 14% (of sales) FOLDING BOXBOARD 57% (of sales) WHITE KRAFTLINERS 25% (of sales)

Shareholders

• A sustainable investment; several recognitions from ESG evaluations conducted by third parties • EUR 25 million distributed to shareholders of the parent company as dividends 3) • 3.2% comparable return on capital employed

Intangible assets

• R&D expenditure EUR 7.4 million • An Excellence Centre in Äänekoski, Finland, and a satellite centre in Norwalk, the United States • Recognition for premium quality paperboards

Common value creation

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 2024.

• Taxes paid EUR 23 million • Total investments EUR 175 million • Aiming for 100% fossil-free products and production, with science-based targets

Economic capital

• Capital invested EUR 2.4 billion • Approximately 64,000 shareholders in B series and 11,000 in A series

2) 70% of our non-fibre suppliers and the logistics operators related to our customer deliveries, measured as a share of our total purchases, set themselves targets in accordance with the SBTi by 2024.

196 Remuneration report 201 Investor relations and investor information

Further information on taxes on p. 178

3) The Board’s proposal to AGM: A dividend of EUR 0.07/share from 2024

Reported figures are from 2024

Business operations and value creation | METSÄ BOARD ANNUAL REVIEW 2024

Report of the Board of the Directors and financial statements

METSÄ BOARD Annual review 2024

Key figures

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

SALES EUR million

PAPERBOARD DELIVERIES 1,000 tonnes

METSÄ BOARD’S MARKET PULP DELIVERIES 1) 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 financial statements 150 Parent company income statement 150 Parent company balance sheet 151 Parent company cash flow statement 152

Value creation

1,000

Sustainability statement

20 96

500

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

Financial development 10 Key figures 12

Annexes to the Sustainability statement

20 21 22 23 24

Consolidated financial statements

Report of the Board of Directors

Notes to the parent company financial statements

153 153 154 154 154 154 155 155 156 156 158 159 160 161 161 161 162 163 164 164 166 167 171 173 177 178 179 181 182

20 20 37 70 89 96

• Sustainability statement

Accounting policies

Consolidated statement of comprehensive income

98 99

COMPARABLE EBITDA EUR million, % of sales

COMPARABLE OPERATING RESULT EUR million, % of sales

CAPITAL EMPLOYED, EUR million RETURN ON CAPITAL EMPLOYED, %

General information

2 3 4 5 6 7 8 9

Sales

Consolidated balance sheet

Exceptional items

Statement of changes in shareholders’ equity

100 101

E – Environment

Other operating income Operating expenses

Consolidated cash flow statement

S – Social responsibility

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

G – Governance

Depreciation and impairment charges

Notes to the consolidated financial statements

102 102 105 105 106 107 107 108 108 108 110 113 116 116 119 122 123 123 124 124 125 126 126 129 129 130 130 132 138 143 145 145 146 147 148 148 149 149 149

Financial income and expenses

Annexes to the Sustainability statement

Accounting policies

Income taxes

Profitability

Intangible and tangible assets

2.1 Segment information

10 Investments

2.2 Sales

20 21 22 23 24

Receivables

2.3 Other operating income 2.4 Operating expenses

12 Shareholders’ equity 13 Mandatory provisions

Remuneration

14 Deferred tax assets and liabilities

3.1 Employee costs

15 Non-current liabilities

CASH FLOW FROM OPERATIONS EUR million

TOTAL INVESTMENTS EUR million

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

3.2 The management’s salaries, remuneration and pension expenses

16 Current liabilities

3.3 Share-based payment

17 Financial instruments

3.4 Retirement benefit obligations

18 Disputes, legal proceedings and commitments

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

Capital employed

19 Shares and holdings

4.1 Intangible assets

4.2 Property, plant and equipment

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

4.3 Other investments

4.4 Inventories

Auditor’s report

4.5 Trade receivables and other receivables

Assurance Report on the Sustainability Statement

20 21 22 23 24

4.6 Other non-current liabilities

Shares and shareholders *

4.7 Trade payables and other liabilities

4.8 Provisions

Ten years in figures

Capital structure and financial risks

Taxes

TOTAL COSTS 2024 EUR 1.7 billion

PERSONNEL AT THE END OF PERIOD

TOTAL RECORDABLE INJURY FREQUENCY (TRIF) per million hours worked

5.1 Shareholders’ equity

Production capacities Calculation of key ratios *

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

Comparable performance measures *

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

Wood �� 20% Pulp * �� 16% Logistics �� 15% Chemicals �� 15% Energy �� 10% Other variable �� 2% Personnel �� 11% Other fixed �� 10%

Corporate governance

183

5.7 Classification and fair values of financial assets and liabilities

Corporate governance statement • Board of Directors of Metsä Board

183 190 194 196 201

6 7

Income taxes Group structure

• Corporate Management Team of Metsä Board

20 21 22 23 24

Remuneration report

7.1 Group companies

Investor relations and investor information

7.2 Non-controlling interest’s shares 7.3 Associate companies and joint ventures 7.4 Acquisitions and operations disposed of

*) 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 2024: wood 57%, chemicals 11%, logistics 9%, energy 5%, personnel and other fixed 17%.

Development of key figures per share can be found on page 176.

196 Remuneration report 201 Investor relations and investor information

* part of the Report of the Board of Directors

7.5 Related party transactions

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 2024

METSÄ BOARD Annual review 2024

Report of the Board of Directors 2024

Key figures

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

2024

2023

2021

Sales, EUR million EBITDA, EUR million

1,938.6

1,941.9

2,479.6

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. Metsä Board’s main market areas are Europe and North America. The company also produces chemical pulp and bleached high-yield pulp (BCTMP), which are used in its own paperboard production, with some sold as market pulp. Metsä Board owns 24.9% of its associated company Metsä Fibre, a global leader in the production of long-fibre market pulp. In 2024, Metsä Board’s total paperboard capacity was around 2.3 million tonnes, and its pulp and BCTMP capacity was 1.7 million tonnes. The company covers its energy consumption with its own production and supplementary purchases from the market. Most of the electricity consumption 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. Metsä Board’s production is located near the most important raw material, high-quality northern fibre. The company’s high self-sufficiency in pulp and energy offers a competitive advantage. Metsä Board’s decision-making is guided by financial and sustainability targets. 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. Financial targets and dividend policy Metsä Board aims for a comparable return on capital employed of at least 12%. In 2024, the realisation was 3.2% (2023: 5.1%) Another target is for the ratio of interest-bearing net liabilities to comparable EBITDA (rolling 12 months) to be a maximum of 2.5. In 2024, the actual value was 2.0 (2023: 0.7). In 2024, Metsä Board revised the company’s dividend policy. According to the new dividend policy, Metsä Board aims to distribute a dividend of at least half the result for the financial period over time, taking the company’s

future investment and development needs into account. According to the previous dividend policy, Metsä Board aimed to distribute at least 50% of the result for the financial period in dividends every year. For 2024, the Board of Directors proposes a dividend of EUR 0.07 per share, correspond- ing to 98% of the result for the financial period. (2023: EUR 0.25 per share, 94% of the result) Business environment Paperboards Population growth, urbanisation and replacing plastic 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. Premium fresh fibre paperboards are lightweight and fully recyclable, making them a very suitable match for the EU’s more stringent regulation. The carbon footprint of material-efficient fresh fibre paper- boards mainly produced with fossil-free energy is also smaller than that of many other packaging materials. In the first half of 2024, demand for paperboards picked up from the record-low level of 2023 caused by considerable inventory adjustments in the value chain. However, growth subsided towards the end of the year. Slowing inflation and decreasing interest rates have boosted consumers’ purchasing power to some extent, but consumers remain cautious in their purchase decisions. In addition, consumption focuses on products rather than services. The folding boxboard market has been shaken by strong growth in Asian paperboard capacity and the resulting increase in paperboard imports, especially to the EMEA region and South America. In 2024, European folding boxboard producers’ deliveries to Europe increased from the previous year. Meanwhile, the deliveries of white kraft- liners remained stable. The market prices of white kraftliners were stable, while those of folding boxboard declined from the previous year. Metsä Board accounted for 32% (32) of the overall deliveries of Euro- pean folding boxboard producers and for 55% (50) of exports from Europe. At the end of 2024, Metsä Board accounted for 38% of folding boxboard production capacity and for 33% of white kraftliner production capacity in Europe. (Sources: Fastmarkets FOEX, Fastmarkets RISI, Pro Carton, Cepi Containerboard, websites of benchmark companies) Market pulp Metsä Board and its associated company Metsä Fibre sell mainly long-fibre market pulp to Europe and Asia. Demand for market pulp in Europe was stronger in the first half of the year than in the second. In China, demand for market pulp was at the nor- mal level in early and late 2024, but at a near standstill from the summer to

175.9 175.0

214.6 216.0

614.6 602.8

comparable, EUR million

Strategy and financial targets

EBITDA, % of sales

9.1 9.0

11.1 11.1

24.8 24.3

comparable, % of sales

Value creation

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

62.3 69.0

120.8 122.2

531.5 520.7

Financial development 10 Key figures 12

3.2 3.6

6.2 6.3

21.4 21.0

51.4 58.2 39.4 44.6 0.07

120.9 122.6 101.6 103.8

524.9 514.6 461.3 451.4

Report of the Board of Directors

comparable, EUR million

Result for the period, EUR million

20 20 37 70 89 96

• Sustainability statement

comparable, EUR million Earnings per share, EUR

General information

0.27

1.15

E – Environment

comparable, EUR

0.09

0.27

1.13

S – Social responsibility

Return on equity, %

2.0 2.3 2.9 3.2

4.7 4.8 5.0 5.1

22.5 22.0 21.4 20.9

comparable, %

G – Governance

Return on capital employed, %

Annexes to the Sustainability statement

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

64 18

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

2.0

0.7

0.2

4.91

5.35

5.86 94.5

344.9 175.4

144.0 228.7 342.8 2,240

Total investment, EUR million

304.1 232.0 2,248

Net cash flow from operations, EUR million

37.8

Personnel 1)

2,290

at the end of the period

Delivery and production volumes

1,000 tonnes

2024

2023

2021

Delivery volumes

Folding boxboard White kraftliner

992 480 400 618

906 467 394 684

1,208

609 503

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

717

Production volumes Folding boxboard

1,044

859

1,272

White kraftliner

484

450

605

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

1,123

996 685

1,409

652

731

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

196 Remuneration report 201 Investor relations and investor information

Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2024

METSÄ BOARD Annual review 2024

Renewal of the Husum port concept Due to the growing logistics volumes of the Husum integrated mill, the Husum port concept has been renewed. The value of the investment, mainly consisting of new warehouse capacity, was approximately EUR 20 million, and it was completed in 2024. ERP investment As part of Metsä Group, Metsä Board is modernising its ERP system. The investment will gradually improve Metsä Group’s operational efficiency and ability to create new data-driven functions in areas such as business management and customer support. Metsä Wood, Metsä Group’s wood products industry, successfully deployed the system in early 2025. Metsä Board’s share of the total value of the ERP investment is at least EUR 80 million, and the schedule for the system’s deployment will be specified during the first quarter of 2025. Planned investments Metsä Board is planning development investments at its current mills to further improve the competitiveness of its mills and products and support its target of fossil-free production by the end of 2030. The following phases of the investment programme aimed at modern- ising the Simpele paperboard mill involve renewals to mechanical pulp production and paperboard finishing, as well as a new power plant. At the Kyro board mill, plans are being made to improve the performance of barrier boards and expanding end-use areas. The total cost of investments in the Simpele and Kyro paperboard mills is expected to be EUR 250 million in the next ten years. At the Husum pulp mill, plans are continuing for the renewal of the drying machine and the fibre line. At the Husum integrated mill in Sweden, a programme is underway to introduce new products on the current white kraftliner production line (BM 2). The goal is to find innovative solutions for the growing food and food service packaging segment. Metsä Board will regularly report on the progress of the investments in its interim reports and in separate releases if required. R&D activities In the circular economy for fibre-based packaging material, Metsä Board’s task is to provide markets with premium fresh fibre paperboards as resource efficiently as possible, help replace fossil-based materials and reduce the carbon footprint of packaging. Ensuring and developing the recyclability and compostability of paperboards is of key importance Reducing the weight of paperboard is one of the focal areas of Metsä Board’s product development. Apart from the use of fossil free energy in production, the light weight of paperboard plays a significant role in reduc- ing the carbon footprint. In 2024, a carbon footprint report comparing dif- ferent paperboard grades in medical packaging, validated by a third party, was published, according to which, Metsä Board’s paperboards enabled a carbon footprint considerably smaller than that of grades representative of European paperboards on average. The development of bio-based barrier coating for end uses in food packaging is another focal area in product development. At the Kyro board

early autumn. In China, market pulp demand has been reduced by paper and paperboard producers’ production curtailments. In 2024, the supply of long-fibre market pulp was restricted by the polit- ical strikes in Finland, Metsä Fibre’s planned and unplanned production shutdowns, global bottlenecks in logistics, and the capacity shutdowns carried out in 2023. In Europe, the market price of long-fibre pulp (PIX) increased rapidly in the first half of 2024, declining slightly in the second half. In China, the price level of long-fibre pulp remained at nearly the same level as the previous year. The market prices of short-fibre pulp decreased sharply in the second half of the year in both China and Europe. Sales and result Metsä Board’s sales were EUR 1,938.6 million (1,941.9). Folding boxboard accounted for 57% (59) of sales, while 25% (24) of sales came from white kraftliner, 14% (13) from market pulp, and 4% (4) from other operations. By region, 67% (66) of sales came from EMEA, 27% (27) from Americas and 6% (7) from APAC.

In January–December, the comparable operating result was weakened especially by the lower average price of folding boxboard. In turn, profita- bility improved due to higher paperboard delivery volumes. The average market pulp prices were higher than in the previous year. Exchange rate fluctuations, including hedges, had a positive impact of approximately EUR 5 million on the result compared to the comparison period. Chemicals and energy costs decreased, but wood costs increased. Logistics costs and fixed costs were higher than in the previous year. Unused emissions allowances were sold for approximately EUR 35 million (55) in the financial period. Depreciation increased due to the significant investments at the Husum and Kemi paperboard mills, which were completed in 2023. The associated company Metsä Fibre’s share of Metsä Board’s com- parable result in January–December was EUR -10.2 million (28.2). Metsä Fibre’s comparable operating result was weakened by the gas explosion at the Kemi bioproduct mill and the political strikes in Finland. Profitability was also negatively affected by high wood costs and depreciation that increased from the previous year. Average market pulp prices increased but the average prices of other end products such as electricity and pulp production by-products decreased. Financial income and expenses totalled EUR -10.8 million (0.1), including foreign exchange rate differences from trade receivables, trade payables, financial items and the valuation of currency hedging instruments, totalling EUR -2.8 million (2.6). The result before taxes was EUR 51.4 million (120.9). The comparable result before taxes was EUR 58.2 million (122.6). Income taxes amounted to EUR -12.0 million (-19.3). Earnings per share were EUR 0.07 (0.27), and comparable earnings per share were EUR 0.09 (0.27). The return on equity was 2.0% (4.7), and the comparable return on equity was 2.3% (4.8). The return on capital employed was 2.9% (5.0), and the comparable return on capital employed was 3.2% (5.1). Cashflow Net cash flow from operations in January–December 2024 was EUR 37.8 million (1–12/2023: 342.8). Working capital increased by EUR 96.3 million (a decrease of 105.8). Working capital increased due to higher production and sales volumes. Cash flow for the financial period includes a dividend of EUR 9.8 million from the associated company Metsä Fibre (EUR 82.8 million). Balance sheet and financing Metsä Board’s equity ratio at the end of the review period was 64% (31 December 2023: 67) and the net gearing ratio was 18% (7). The ratio of interest-bearing net liabilities to comparable EBITDA in the previous 12 months was 2.0 (0.7). At the end of the financial period, interest-bearing liabilities totalled EUR 527.4 million (31 December 2023: 438.1). Non-euro-denominated loans accounted for 9.2 % of loans, and floating-rate loans for 40.9 %, the rest being fixed-rate loans. The average interest rate on liabilities was 2.7 %

(2.6), and the average maturity of non-current liabilities was 2.2 years (3.1). The interest rate maturity of loans was 19.8 months (30.6). Interest-bearing net liabilities totalled EUR 344.9 million (31 December 2023: 144.0). The available liquidity was EUR 382.6 million (31 December 2023: 491.6), consisting of the following items: liquid assets and investments of EUR 182.6 million; and a syndicated credit facility (revolving credit facility) of EUR 200.0 million. Of the liquid assets, EUR 179.2 million consisted of short-term deposits with Metsä Group Treasury, and EUR 3.4 million consisted of cash funds and investments. In addition to items reported as liquidity, the liquidity reserve is complemented by Metsä Group’s internal short-term credit facility of EUR 150 million and a EUR 200 million commer- cial paper programme, of which EUR 30 million was issued at the end of the review period. The fair value of other non-current investments was EUR 219.7 million (31 December 2023: 254.4). The change in value was related to the change in the fair value of Pohjolan Voima Oyj’s shares. An average of 7.9 months of the net foreign 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 In 2024, overall investments totalled EUR 175.4 million (1–12/2023: 228.7), with growth and development investments accounting for 71%, and main- tenance investments for 29%. Of total investments, the company’s own property, plant and equipment amounted to EUR 163.8 million (223.0), and leased property, plant and equipment to EUR 11.6 million (5.7). In 2023, two significant investments were completed at the Kemi and Husum paperboard mills, which will increase Metsä Board’s annual paperboard capacity by approximately 240,000 tonnes. The total value of the investments was EUR 340 million, divided across 2022–2024. 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. Renewal of the Simpele paperboard mill Metsä Board is renewing the folding boxboard machine at its Simpele mill to improve the quality of folding boxboard, increase production efficiency and enable the replacement of fossil fuels in paperboard production. The renewal will also increase the mill’s annual production capacity by around 10,000 tonnes. The value of the investment is approximately EUR 60 million. It will be spread across 2024–2026. The investment is expected to be completed in the second half of 2025.

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

Strategy and financial targets

Value creation

Financial development 10 Key figures 12

Report of the Board of Directors

20 20 37 70 89 96

• Sustainability statement

General information

E – Environment

S – Social responsibility

G – Governance

Annexes to the Sustainability statement

SALES AND COMPARABLE OPERATING RESULT-%

3,000 2,500 2,000 1,500 1,000 500 0 EUR million

25 20 15 10 5 0

BLE

25 20 15 10 5 0

22 23 24

Sales, EUR million Comparable operating result, % of sales

The comparable operating result was EUR 69.0 million (122.2), and the operating result was EUR 62.3 million (120.8). Items affecting compara- bility totalled EUR -6.7 million in the financial period. They comprised a write-down of EUR -7.6 million for the prefeasibility study of the Kaskinen folding boxboard mill, EUR -0.5 million for the sale of the discontinued sales company in Russia and EUR 1.4 million for items related to the business of the associated company Metsä Fibre. Total paperboard deliveries were 1,472,000 (1,373,000) tonnes, of which 65% was delivered to the EMEA region, 31% to the Americas, and 4% to the APAC region. Metsä Board’s deliveries of market pulp were 400,000 (394,000) tonnes, of which 78% was delivered to the EMEA region, and 22% to the APAC region. The gas explosion at Metsä Fibre’s Kemi bioproduct mill was estimated to have a negative impact of roughly EUR 40 million, and the political strikes in Finland were estimated to have a negative impact of roughly EUR 25 million, on Metsä Board’s comparable operating result in January– December. The comparable operating result for July–December includes EUR 30.5 million in insurance compensation received in relation to the gas explosion. All these figures include the impact from Metsä Fibre’s share of the result.

ult, % of sales

196 Remuneration report 201 Investor relations and investor information

Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2024

Page 1 Page 2-3 Page 4-5 Page 6-7 Page 8-9 Page 10-11 Page 12-13 Page 14-15 Page 16-17 Page 18-19 Page 20-21 Page 22-23 Page 24-25 Page 26-27 Page 28-29 Page 30-31 Page 32-33 Page 34-35 Page 36-37 Page 38-39 Page 40-41 Page 42-43 Page 44-45 Page 46-47 Page 48-49 Page 50-51 Page 52-53 Page 54-55 Page 56-57 Page 58-59 Page 60-61 Page 62-63 Page 64-65 Page 66-67 Page 68-69 Page 70-71 Page 72-73 Page 74-75 Page 76-77 Page 78-79 Page 80-81 Page 82-83 Page 84-85 Page 86-87 Page 88-89 Page 90-91 Page 92-93 Page 94-95 Page 96-97 Page 98-99 Page 100-101 Page 102-103 Page 104-105 Page 106-107 Page 108-109 Page 110-111 Page 112-113 Page 114-115 Page 116-117 Page 118-119 Page 120-121 Page 122-123 Page 124-125 Page 126-127 Page 128-129 Page 130-131 Page 132-133 Page 134-135 Page 136-137 Page 138-139 Page 140-141 Page 142-143 Page 144-145 Page 146-147 Page 148-149 Page 150-151 Page 152-153 Page 154-155 Page 156-157 Page 158-159 Page 160-161 Page 162-163 Page 164-165 Page 166-167 Page 168-169 Page 170-171 Page 172-173 Page 174-175 Page 176-177 Page 178-179 Page 180-181 Page 182-183 Page 184-185 Page 186-187 Page 188-189 Page 190-191 Page 192-193 Page 194-195 Page 196-197 Page 198-199 Page 200-201 Page 202-203 Page 204-205 Page 206 Page 207 Page 208