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

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

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