Published:

2016-08-04 11:01:01 CEST

Registered:

2016-08-04 11:01:01 CEST

REGULATED INFORMATION

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Metsäliitto Osuuskunta - Half Year financial report

Metsä Group’s operating result excluding non-recurring items in January–June 2016 was EUR 229 million

Metsä Group Half Year Financial Report 2016 4 August 2016 at 12:00 noon EET

January–June 2016 (1–6/2015)

-- Sales were EUR 2,339 million (EUR 2,585 million).
-- Operating result excluding non-recurring items was EUR 229 million (266).
Operating result including non-recurring items was EUR 225 million (272).
-- Result before taxes excluding non-recurring items was EUR 190 million
(230). Result before taxes including non-recurring items was EUR 186
million (234).
-- Return on capital employed excluding non-recurring items was 11.0 per cent
(13.7). Return on capital employed excluding non-recurring items and
excluding assets under construction related to strategic investment
projects was 12.2 per cent (13.9).
-- Cash flow from operations was EUR 121 million (333).

April–June 2016 (4–6/2015)

-- Sales were EUR 1,184 million (EUR 1,330 million).
-- Operating result excluding non-recurring items was EUR 120 million (137).
Operating result including non-recurring items was EUR 119 million (154).
-- Result before taxes excluding non-recurring items was EUR 100 million
(114). Result before taxes including non-recurring items was EUR 98 million
(128).
-- Return on capital employed excluding non-recurring items was 11.5 per cent
(13.8). Return on capital employed excluding non-recurring items and
excluding assets under construction related to strategic investment
projects was 12.6 per cent (14.0).
-- Cash flow from operations was EUR 152 million (266).

Events during the second quarter of 2016

-- The bioproduct mill project proceeded according to the planned schedule and
reached its halfway point in June.
-- The market price of long-fibre pulp increased by one per cent. The price of
short-fibre pulp decreased by 9 per cent compared to the previous quarter.
-- The demand for paperboards remained stable in both Europe and the Americas.
Price levels were stable. Metsä Board announced it will increase the price
of white fresh forest fibre linerboard and folding boxboard in Europe.
-- Metsä Wood announced it will launch an investment programme of
approximately EUR 100 million in the plywood and Kerto® LVL
operations.Metsä Group announced that its sawmills in Finland will be
transferred from Metsä Wood to Metsä Fibre through an internal transaction
by the end of 2016.

Events after review period

Metsä Board is planning to close down its wallpaper base machine PM3 and
discontinue its loss-making wallpaper base manufacturing at the Kyro mill in
Hämeenkyrö, Finland. In addition, the company adjusts and improves operations
at the Kyro mill in order to increase its competitiveness. The company will
commence related statutory labour negotiations covering all employees at the
mill. The estimated personnel effect is up to 100 employees.

Profit guidance for July–September 2016

Metsä Group’s operating result excluding non-recurring items in the third
quarter of 2016 is expected to be slightly weaker than in the second quarter of
2016.

President and CEO Kari Jordan:

“Metsä Group’s second quarter in 2016 was as we expected. The operating result
compared to the previous year was affected by the lower market price of pulp
and the start-up phase of the new folding boxboard production line at Husum.

The production volumes of Husum’s new folding boxboard production line have
increased and its operational reliability has clearly improved. Full production
capacity is expected to be achieved by the end of this year. The printing paper
production at the Husum mill and in the entire Metsä Group came to an end in
its entirety in July.

The construction of the bioproduct mill in Äänekoski is progressing according
to the planned schedule and on budget. More than half of the mill, to be
started up in the third quarter of 2017, is currently complete.

In June, we announced a development programme of approximately EUR 100 million
in the plywood and Kerto® LVL operations, which will enable us to better meet
the globally growing demand and improve our competitiveness. The programme
includes investments in both Finland and Estonia, and it will be implemented in
steps by the end of 2018.

As economic growth in Europe continues to be sluggish, our focus areas for
sales growth are in North America, Asia, and Oceania.”

Key figures

2016 2015 2016 2015 2015
Condensed income statement, EUR 1–6 1–6 4–6 4–6 1–12
million
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Sales 2 339.5 2 585.3 1 183.9 1 330.2 5 016.0
Other operating income 25.2 68.2 16.8 52.9 95.7
Operating expenses -2 -2 -1 -1 -4
013.6 245.1 022.8 161.9 311.4
Depreciation and impairment losses -125.8 -136.5 -59.5 -67.1 -258.2
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Operating result 225.3 271.9 118.5 154.0 542.1
Share of results from associated -0.9 9.3 -0.8 3.2 11.2
companies and
joint ventures
Exchange gains and losses -0.5 -3.2 0.5 -6.7 -1.2
Other net financial items -37.9 -43.7 -20.0 -22.4 -83.8
--------------------------------------------------------------------------------
Result before income tax 186.0 234.3 98.2 128.2 468.4
Income tax -42.1 -53.0 -22.6 -35.5 -112.6
--------------------------------------------------------------------------------
Result for the period 143.9 181.3 75.7 92.7 355.7
--------------------------------------------------------------------------------

2016 2015 2016 2015 2015
Profitability 1–6 1–6 4–6 4–6 1–12
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Operating result, EUR million 225.3 271.9 118.5 154.0 542.1
excluding non-recurring items 229.3 265.8 119.8 137.1 537.4
% of sales 9.8 10.3 10.1 10.3 10.7
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Return on capital employed, % 10.8 14.0 11.4 15.5 13.7
excluding non-recurring items 11.0 13.7 11.5 13.8 13.6
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----------------------------------------------------------------
Return on equity, % 11.8 16.6 12.4 16.5 15.9
excluding non-recurring items 12.1 16.3 12.6 13.9 15.8
----------------------------------------------------------------

2016 2015 2016 2015 2015
Financial position 30.6. 30.6. 31.3. 31.3. 31.12.
--------------------------------------------------------------------------------
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Equity ratio, % 44.8 41.9 42.8 39.0 43.2
Net gearing ratio, % 38 34 35 41 25
Interest-bearing net liabilities, EUR 945 779 847 887 610
million
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Segments

Sales and Wood Supply Wood Pulp Paperboard Tissue and
Operating result and Forest Products Indust Industry Cooking
1–6/2016, EUR Services Industry ry Papers
million
Sales 779.0 437.9 648.9 858.5 495.1
Other operating 3.7 5.2 5.7 14.3 1.6
income
Operating -766.6 -411.3 -503.6 -757.7 -450.1
expenses
Depreciation and -1.7 -17.1 -35.3 -48.0 -19.8
impairment
losses
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating result 14.3 14.7 115.7 67.2 26.7
Non-recurring - 5.5 - 3.6 -
items
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--------------------------------------------------------------------------------
Operating result 14.3 20.2 115.7 70.8 26.7
excluding
non-recurring
items

Near-term outlook

Wood demand will target felling sites to be harvested when the ground is
unfrozen and, in terms of energy wood, crown wood. The uncertainties related to
the Act on the Financing of Sustainable Forestry will have a negative impact on
the demand for forest management services.

The market balance and sales prices of sawn timber are expected to improve as a
whole. The market situation in North Africa will create uncertainty in the
demand for pine sawn timber. Demand in the Chinese market is expected to quiet
down seasonally. The demand for Kerto® LVL wood products is expected to
continue to be brisk, but competition in plywood products will remain fierce.

The demand for long-fibre pulp is expected to continue to grow moderately
globally. The annual maintenance shutdowns of two of Metsä Fibre’s pulp mills
are scheduled for the third quarter.

Metsä Board’s paperboard deliveries are expected to grow in July–September from
the second quarter of 2016. Demand for paperboard is expected to remain stable
in both Europe and the Americas.

The market prices of folding boxboard and white fresh forest fibre linerboard
are expected to remain stable or increase slightly. Metsä Board has announced
an increase in the price of white fresh forest fibre linerboard and folding
boxboard in Europe. The result development will continue to be affected by the
start-up volumes of folding boxboard at Husum, which will reduce the average
price of folding boxboard.

In the tissue and cooking paper markets, demand is expected to continue to be
stable in all market areas. Demand for tissue paper is expected to increase in
eastern Central Europe, in particular, and demand for cooking papers is
expected to grow in Asia.

Disclosure procedure

Metsä Group follows the disclosure procedure enabled by Standard 5.2b published
by the Finnish Financial Supervision Authority and hereby publishes its Half
Year Financial Report for January–June 2016 enclosed to this stock exchange
release. Metsä Group’s complete Half Year Financial Report is attached to this
release in pdf-format and is also available on the company's web site at
www.metsagroup.com.

METSÄ GROUP

For further information, please contact:
Vesa-Pekka Takala, CFO, Metsä Group, tel. +358 (0)10 465 4260
Juha Laine, SVP, Communications, Metsä Group, tel. +358 (0)10 465 4541

Metsä Group will publish its Interim Report for January–September 2016 on 2
November, 2016.

www.metsagroup.com

Metsä Group is a forerunner in bioeconomy utilising renewable wood from
sustainably managed northern forests. Metsä Group focuses on wood supply and
forest services, wood products, pulp, fresh forest fibre paperboards and tissue
and cooking papers.

Metsä Group’s sales totalled EUR 5.0 billion in 2015, and it employs
approximately 9,600 people. The Group operates in some 30 countries.
Metsäliitto Cooperative is the parent company of Metsä Group and owned by
approximately 116,000 Finnish forest owners.

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Attachments:

Metsa-Group-Half-Year-Financial-Report-Q2-2016.pdf