METSÄ BOARD Annual review 2024
Credit risks The management of credit risks related to commercial operations is the responsibility of Metsä Board’s executive management and Metsä Group’s centralised credit control. Metsä Board’s management determines the lim- its on credit extended to customers and the applicable terms of payment in cooperation with the centralised credit control. As a rule, credit insurance covers nearly all credit risks. Metsä Board’s customer credit risk was at a normal level in 2024. The main principles of credit control are defined in the credit guidelines of the risk management policy approved by the compa- ny’s Board of Directors. Metsä Board’s financial risks and their management are described in more detail in Note 5.6 (Management of financial risks) to the consolidated financial statements in the 2024 Annual Review. Shares and trading Metsä Board has two series of shares. Each series A share entitles its holder to twenty (20) votes at a General Meeting of Shareholders, and each series B share entitles the holder to one (1) vote. All shares carry the same right to receive a dividend. Metsä Board’s shares are listed on the Nasdaq Helsinki. At the end of December 2024, closing price of Metsä Board’s B share on the Nasdaq Helsinki was EUR 4.24. The share’s highest and lowest prices were EUR 8.11 and EUR 3.97, respectively. Correspondingly, the closing price of the A share was EUR 5.60; the share’s highest and lowest prices were EUR 9.62 and EUR 5.40, respectively. In January–December, the average daily trading volumes of the B and A shares on the Nasdaq Helsinki were around 379,200 shares and around 2,000 shares respectively. The total trading volume of the B share was EUR 603 million, and the total trading volume of the A share was EUR 4 million. At the end of December 2024, the market value of all Metsä Board shares was EUR 1.6 billion, of which the market value of the B shares and the A shares accounted for EUR 1.4 billion and EUR 0.2 billion respectively. Metsä Board’s major shareholder Metsäliitto Cooperative holds approx- imately 52% of Metsä Board’s shares and approximately 69% of votes. As Metsä Board is an entity controlled by Metsäliitto Cooperative, Metsäliitto Cooperative’s ownership also includes the 466,496 own shares held by Metsä Board. International and nominee-registered investors held approximately 9% (9) of all shares Governance Metsä Board’s statutory administrative bodies are the Annual General Meeting, the Board of Directors and the CEO. The Board of Directors has general authority and, accounting for the scope and quality of the compa- ny’s operations, it is responsible for matters that are strategic, far-reaching and unusual in nature, and therefore not part of the company’s day-to-day business operations. The company’s operational management is handled by the CEO, supported by the Corporate Management Team, the members of which are not members of the Board of Directors. The tasks and respon- sibilities of the different corporate bodies are determined in accordance with the Finnish Limited Liability Companies Act.
or commercial objectives are not met, this could negatively affect the company’s profitability.
Metsä Board’s Board of Directors has nine members, four of whom are women. A majority of Board members (six of nine) are independent of both the company and its biggest shareholders. Three members of the Board of Directors are not independent of Metsäliitto Cooperative. During the 2024 financial period, the Board of Directors held a total of 15 meetings, at which the attendance of Board members was 96% (97 in 2023). Resolutions of the Annual General Meeting and the Board or Directors’ authority to issue shares The 2024 Annual General Meeting (AGM) was held on 26 March 2024 in Espoo. The AGM supported all the proposals made by the Board of Directors. The General Meeting resolved that a dividend of EUR 0.25 would be distributed per share. The dividend was paid on 9 April 2024. The AGM resolved to remove the requirement to publish the notice of a general meeting in a Finnish newspaper of general circulation from the Articles of Association. The AGM also resolved to fully remove the section on matters discussed at a general meeting and the section concerning the auditor deeming them to be unnecessary provisions in the Articles of Association The AGM resolved to keep the annual remuneration of the members of the Board of Directors unchanged, so that the Chair would be paid EUR 99,000, the Vice Chair EUR 85,000, and ordinary members EUR 67,000 per year. The AGM resolved that approximately half the annual remuner- ation would be paid in the company’s series B shares to be acquired from public trading. The transfer of such shares is restricted for a two-year period. Meeting fees were increased to EUR 1,000 (from EUR 800) for each meeting of the Board of Directors and its Committees that a member attends. Meeting fees are paid in cash. Furthermore, the AGM resolved to keep the monthly remuneration paid to the Chair of the Audit Committee unchanged at EUR 900. The AGM confirmed the number of members of the Board of Directors as nine (9) and elected the following persons as Board members: Raija-Leena Hankonen-Nybom, MSc (Economics); Erja Hyrsky, MSc (Economics); Ilkka Hämälä, MSc (Engineering); Mari Kiviniemen, MSocSc (Economics); Jussi Linnaranta, MSc (Agriculture and Forestry); Jukka Moisio, MSc (Economics); Mikko Mäkimattila, MSc (Agriculture and Forestry); Juha Vanhainen, MSc (Engineering); and Leena Craelius, MSc (Economics). The term of office of the members of the Board of Directors expires at the end of the next AGM. At its first meeting, the Board of Directors elected Ilkka Hämälä as its Chair and Jussi Linnaranta as its Vice Chair. The Board of Directors made the following decisions on committees: Raija-Leena Hankonen-Nybom was elected Chair of the Audit Committee, and Leena Craelius, Mari Kiviniemi, Jukka Moisio and Juha Vanhainen were elected members of the Audit Committee. Ilkka Hämälä was elected Chair of the Nomination and HR Committee, and Erja Hyrsky, Jussi Linnaranta and Mikko Mäkimattila were elected as members of the Committee. The AGM resolved to authorise the Board of Directors to decide on the issuance of shares, the transfer of treasury shares and the issuance of
special rights referred to in chapter 10, section 1 of the Finnish Companies Act. The authorisation applies to B-shares. By virtue of the authorisation the Board is entitled to issue up to 35,000,000 new B-series shares, including shares to be issued pursuant to rights entitling to shares. The number of shares corresponds to approximately 10% of all current shares The authorisation is effective until 30 June 2025. The AGM resolved to authorise the Board to decide on the repurchase of the company’s own series B shares. The number of the company’s own shares to be repurchased under the authorisation will not exceed 1,000,000 series B shares, which corresponds to approximately 0.3% of all shares in the company. The authorisation is effective until 30 June 2025. Near-term outlook The overall demand for consumer products and fresh fibre paperboards is influenced by the development of consumers’ purchasing power and general purchasing behaviour. Paperboard capacity, which is growing faster than demand, may cause imbalances, especially in the European paperboard market. In January–March 2025, Metsä Board’s paperboard delivery volumes are expected to increase from the previous quarter (10–12/2024: 342,000 tonnes). Sales prices in local currencies are expected to remain stable. Total costs, excluding pulp costs, are expected to remain at the previous quarter’s level. There are no planned annual maintenance shutdowns at the mills in January–March. Demand for softwood market pulp is expected to remain stable in Europe and China. Pulp capacity closures and restrictions related to the availability of wood raw material in North America, announced last year, will continue to reduce the supply of softwood market pulp. Demand for sawn timber is expected to remain at the current level. Associated company Metsä Fibre’s result share is expected to improve from the previous quarter. In January–March 2025, exchange rate fluctuations, including the impact of hedges, will have a flat impact on the result compared to October–December 2024 and slightly positive impact compared to January–March 2024. Board of Directors’ proposal for the distribution of profits The distributable funds of the parent company on 31 December 2024 were EUR 479.0 million, of which the retained earnings for the financial year are EUR 268.4 million. The Board of Directors proposes to the Annual General Meeting conven- ing on 20 March 2025 that a dividend of EUR 0.07 per share be distributed for the 2024 financial period. The proposed dividend corresponds to 98% of the earnings per share for 2024. The amount of dividend totals approximately EUR 25 million. The dividend will be paid to shareholders who are registered in the com- pany’s shareholders register held by Euroclear Finland Oy on the dividend payment record date of 24 March 2025. The Board of Directors proposes 31 March 2025 as the dividend payment date.
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Corporate and security risks Risks to corporate security include shortcomings and neglect in personal safety and security and safety at work and in the management of financial misconduct, any negative information manipulation and cyber threats, threats affecting the supply chains, and the adequacy of internal control. A cyberattack on information systems could lead to a leak of sensitive information and damage the company’s reputation. Operating processes related to corporate security and the guidelines, training and internal control related to the management of threat factors are developed contin- uously, and exercises on the management of crisis situations are organised on a regular basis. Personnel availability and retention Metsä Board pays attention to ensuring the availability and retention of competent personnel through various personnel development pro- grammes and successor plans, and by investing in its employer image. Metsä Board also prepares for retirements and other personnel risks through the promotion of multiple skills and work ability as well as through job rotation. Liability risks Metsä Board’s business involves liability risks, such as contractual, envi- ronmental and product liability risks. Liability risks are managed by way of efficient business processes, contract training, management practices, quality control and transparent operations. Some of the operational liabil- ity risks have been hedged with insurance policies. Business ethics Risks related to business ethics are discussed in this report’s Sustainability statement.
Strategy and financial targets
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Value creation
Financial development 10 Key figures 12
Report of the Board of Directors
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• 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
Financial risks
Financial and exchange rate risks As a result of potential financial market disturbance, the operations of credit and bond markets may become more difficult, which may affect the company’s ability to acquire long-term debt financing at a competitive price. The financial risks are managed in accordance with the treasury policy approved by Metsä Board’s Board of Directors. The purpose is to hedge against considerable financial risks, balance cash flow and give the business enough time to adjust to changing conditions. Metsä Board sells its products in several countries and is therefore susceptible to fluctuations in exchange rates. The US dollar strengthening by 10% against the euro would have a positive impact of approximately EUR 85 million on Metsä Board’s annual operating result. Correspondingly, the Swedish krona strengthening by 10% would have a negative impact of approximately EUR 55 million. The British pound strengthening by 10% would have a positive impact of approximately EUR 15 million. The impact of weakened exchange rates would be the opposite. The sensitivities do not include the impact of hedging.
196 Remuneration report 201 Investor relations and investor information
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Report of the Board of Directors | METSÄ BOARD ANNUAL REVIEW 2024
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