1

Financial Update and Competitor Benchmarking

Matti Mörsky

Capital Markets’ Day 10 June 2010

10.6.20102

Content

1. Profitability Development2. Benchmarking3. Profit Improvement Programme 20104. Price Increases5. Financing

3

Profitability Development

10.6.20104

Key Figures – Quarterly

Operating result excl. non-rec. itemsSales

623 585 618 606

859 829 826722

602

250

500

750

1000

I II III IV I II III IV I

M€ M€

M€Result before taxes excl. non-rec. items

20092008

-65

714-22

-70

3-1

-51

39

-75

-50

-25

0

25

50

I II III IV I II III IV I

-21 -36 -34

-87

15

-62-83 -70

-15

-100

-75

-50

-25

0

25

I II III IV I II III IV I

2010

10.6.20105

Balance Sheet Ratios

34,4 32,736,637,5

30,9 30,8 29,6

0

5

10

15

20

25

30

35

40

2004 2005 2006 2007 2008 2009 1Q10

8995

86

99

8490

126

0

20

40

60

80

100

120

140

2004 2005 2006 2007 2008 2009 1Q10

Equity Ratio Net gearing

6

Benchmarking

10.6.20107

EBITDA Comparison – Significant Improvement in M-real’s Profitability

-10 %

-5 %

0 %

5 %

10 %

15 %

20 %

25 %

30 %

35 %

2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010

M-real

Stora Enso

Holmen

Norske Skog

Portucel

*) Excluding one-offs; Stora Enso 2006 with old structure

10.6.20108

EBIT Comparison

-15 %

-10 %

-5 %

0 %

5 %

10 %

15 %

20 %

25 %

2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010

M-real

Stora Enso

Holmen

UPM

Norske Skog

Portucel

*) Excluding one-offs; Stora Enso 2006 with old structure

10.6.20109

M-real’s Net Gearing Close to Satisfactory Level

0 %

20 %

40 %

60 %

80 %

100 %

120 %

140 %

2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010

M-real

Stora Enso

Holmen

UPM

Norske Skog

*) Stora Enso 2006 with old structure

10.6.201010

Also Equity Ratio Improving

25 %

30 %

35 %

40 %

45 %

50 %

55 %

2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010

M-real

Stora Enso

Holmen

Norske Skog

Portucel

*) Stora Enso 2006 with old structure

10.6.201011

M-real the Most Profitable Cartonboard Company in the 1Q 2010

-2 %

0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

16 %

18 %

2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010

M-real ConsumerPackaging

Stora EnsoConsumer Board

Holmen Iggesund

IP - ConsumerPackaging

Mayr-Melnhof MMKarton

*) Excluding one-offs

10.6.201012

Competitiveness in Uncoated Fine Paper Not YetSatisfactory

-16 %

-12 %

-8 %

-4 %

0 %

4 %

8 %

12 %

16 %

20 %

24 %

28 %

2006 2007 2008 Q1 / 2009 Q2 / 2009 Q3 / 2009 Q4 / 2009 Q1 / 2010

M-real Office Papers

Stora Enso FinePaper

Portucel

Mondi UncoatedFine Paper (half-yearly)

*) Excluding one-offs

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Profit Improvement Programme 2010

10.6.201014

M-real’s Recent Profit Improvement Programmes

Cumulative

Profit impact vs. 2009, m€total target 2010 2011

1 Profit improvement programme 2010 80 40 802 Rollover impact of 2009 programme 60 50 603 Rollover impact of 2008 programme 20 10 20

Total 160 100 160

10.6.201015

Main 2010 Profit Improvement Measures

• Profit improvement measures announced in December 2009– Plan to permanently shut down the Alizay pulp mill– EUR 22 million investment at Husum mill to improve its energy efficiency– New EUR 20 million internal profit improvement programme covering all M-real’s

business areas– The planned closures of two speciality paper machines in Reflex mill– The streamlining of the organizations in both Gohrsmühle and Reflex mills

• Total result improvement EUR 80 million

• Expected result improvement EUR 40 million in 2010

10.6.201016

Value of Action per Business Area – Total 80 M€

5 %3 %

28 %

64 %

Consumer Packaging Office Papers Speciality Papers Market Pulp & Energy

10.6.201017

EBITDA Impact 2010 – Total 40 M€

2

10

28

Consumer Packaging Office Papers Speciality Papers Market Pulp & Energy

18

Price Increases

10.6.201019

M-real Shows Market Leadership in Price Increases

• Price increases of about 10% in FBB and linerboard in process– Slight improvement in average price expected by end 2Q– Prices for customers with long-term contracts increased at around year end

• WFU price increase of about 8% implemented in March– Additional 15% from May in negotiations – In total about 10% improvement in average price expected by end 2Q

• Price increases in speciality papers up to 10% in process– At least 3% improvement in average price expected by end 2Q

Increase estimates based on current sales mix and exchange rates

20

Financing

10.6.201021

Interest-Bearing Net Debt

821

1867

777

1254

2403

0

500

1000

1500

2000

2500

3000

2006 2007 2008 2009 1Q 2010

10.6.201022

Long-Term Interest Bearing Liabilities 31.3.2010

155

94

149

583

101

1 122

0

100

200

300

400

500

600

700

2010 2011 2012 2013 2014 2015 2016 >2 016

10.6.201023

Next Steps in Financing

• Near-term maturities to be handled with cash and pension loan facilities

• Next major financing arrangements in coming years will include– A new back-up liquidity facility– Refinancing of the EUR 500 million bond (due 2013)

• The timing of new arrangements will be dependent on marketenvironment and overall liquidity situation

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Thank You!