Metsä Board
Annual Report 2020
METSÄ GROUP SUSTAINABILITY REPORT 2020
Metsä Group
Sustainability Report 2020
METSÄ BOARD ANNUAL REPORT 2020
The cover of this annual report is MetsäBoard Prime FBB Bright folding boxboard. The pure fresh fibre used in our lightweight
premium paperboards is a renewable raw material, fully traceable to sustainably managed northern forests.
PUBLISHER
Metsä Board Corporation, Communications
metsaboard.communications@metsagroup.com
Metsä Board’s Annual Report is published in English and in Finnish. Metsä Board
publishes also a Remuneration Report. Reports are available in pdf format at
www.metsaboard.com
Metsä Group
Brochure
2020
Metsä Group
Annual Review
2020
Metsä Board
Annual Report
2020
Metsä Board is a leading European producer of premium fresh fibre
paperboards and a forerunner in sustainability. Metsä Board is part of
Metsä Group.
Contents
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate and environment
34 We create well-being
40 Mill-specific information
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s Board of Directors
142 Metsä Board Corporation’s Corporate Management Team
144 Investor relations and investor information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated financial statements
107 Parent company financial statements
110 Notes to the parent company financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
FUTURE GROWTH IS
ENSURED THROUGH R&D
AND INNOVATION WORK
The new state-of-the-art Excellence Centre
accelerates paperboard and packaging innovation.
16
METSÄ BOARD
CREATES VALUE FOR
ITS STAKEHOLDERS
We are continuously looking for opportu-
nities to grow profitably and sustainably
and generate value for all of our stake-
holders through our operations.
Combating climate change
and resource scarcity require
sustainable solutions. Recyclable
packaging materials made
from certified wood fibre and
carbon-neutral production are
strong competitive advantages.
Through collaboration we can
create new packaging solutions
for the future.
The role of
sustainable and
safe packaging is
more important
than ever
10
METSÄ BOARD ANNUAL REPORT2020
Metsä Group
Annual Review 2020
Metsä Board
Annual Report 2020
METSÄ BOARD ANNUAL REPORT 2020
Metsä Group
Brochure 2020
1
Metsä Group
Sustainability
Report 2020
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
METSÄ BOARD ANNUAL REPORT 2020
BUSINESS OPERATIONS
AND VALUE CREATION
Metsä Board is a leading European producer of premium
fresh fibre paperboards and a forerunner in sustainability.
* excluding PE-coated paperboards
This is
Metsä Board
Metsä Board is part of Metsä Group, whose parent company is Metsäliitto Cooperative. Metsäliitto Cooperative owns 48% of Metsä Board’s shares and 67% of
the voting rights. Metsä Board owns 24.9 per cent of its associated company Metsä Fibre. Taking this holding into account, Metsä Board’s annual pulp surplus is
approximately 400,000 tonnes from 2021 onwards. Metsä Group’s wood procurement is operated centrally through Metsä Forest from Finland, Sweden, the Baltic
countries and Russia.
Metsä Board’s total annual paperboard capacity is 2 million tonnes.
Sales split
SALES SPLIT
BY PRODUCT
% of sales
SALES SPLIT
BY REGION
% of sales
Folding boxboard 59
White kraftliner 25
Market pulp 12
Other 5
EMEA 68
Americas 23
APAC 9
2020 key figures
Source: Metsä Board’s estimates
Paperboard end-uses
END-USES OF
FOLDING BOXBOARDS
%
END-USES OF
WHITE KRAFTLINERS
%
Food and food
service packaging
Other consumer products
(pharma and cosmetics
packaging among others)
Graphic end-uses
Shelf-ready packaging
and point-of-sale
solutions
Other consumer
products
E-commerce
METSÄ GROUP
METSÄ FOREST
Wood supply and forest
services
METSÄ WOOD
Wood products
METSÄ FIBRE
Pulp and sawn timber
METSÄ BOARD
Paperboard
METSÄ TISSUE
Tissue and greaseproof
papers
Metsäliitto Cooperative 100% Metsäliitto Cooperative 100% Metsäliitto Cooperative 50.1%
Metsä Board 24.9%
Itochu Corporation 25.0%
Metsäliitto Cooperative 48%
Metsä Board is listed on
Nasdaq Helsinki
Metsäliitto Cooperative 100%
Parent company Metsäliitto Cooperative,
formed by 100,000 forest owners in Finland
Sales EUR
5.1 billion
Personnel
9,200
1,890
SALES
EUR million
221
OPERATING RESULT,
COMPARABLE
EUR million
12.2
COMPARABLE ROCE
%
166
INVESTMENTS
EUR million
80
SHARE OF CERTIFIED
WOOD FIBRE
%
83
SHARE OF FOSSIL
FREE ENERGY
%, of total energy use
2,370
PERSONNEL
8
PRODUCTION UNITS
IN FINLAND AND SWEDEN
#
1
Our customers include brand owners, con-
verters, corrugated box manufacturers and
merchants.
We are a leading producer of folding boxboard
and white kraftliners in Europe, and globally in
coated white kraftliners.
Strong market position Long-term customers
METSÄ SPRING Innovation company
Focus on sustainable
fresh fibre paperboards
We focus on recyclable, premium fresh fibre paperboards used primarily in
consumer goods packaging as well as in various retail packaging solu-
tions. The demand for these products is stable, regardless of economic
cycles. Our main products include folding boxboards and food service
boards as well as white kraftliners.
Strong position
in a growing market
We are Europe’s leading producer of folding boxboard and white kraftlin-
ers, and globally the biggest producer of coated white kraftliners. In the
United States, we are the largest supplier of folding boxboard. We estimate
the global demand for our main products will grow by an annual rate of
roughly 2–3% in the long term.
We are part of
Metsä Group
Metsä Board is part of Metsä Group, and benefits from the good availabil-
ity of the main raw material, northern wood. Our self-suciency in pulp
guarantees the consistent and high quality of the fibre and enables the
growth of our paperboard business. Metsä Group’s value chain from the
forest to the end products and further to the customer operates according
to the principles of sustainability and is a circular economy at its best.
Aiming for a
fossil free future
We want to be a forerunner in sustainability. Our products support the
circular economy and provide alternatives to plastic: they are light, recy-
clable and compostable*. We aim for fossil free production and products
by 2030. This requires investments and the exploration of alternative raw
materials in cooperation with our partners.
HOLDING
32
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
CEO’S REVIEW
|
METSÄ BOARD ANNUAL REPORT 2020
BUSINESS OPERATIONS
AND VALUE CREATION
e past year has been exceptional. In spring, the eects of the coronavirus
pandemic, which are still present, shook the whole world. e top priority in
our operations has been to ensure the safety of our employees, prevent the
virus from spreading and secure the continuity of our business. I think we have
succeeded well in achieving these aims. We have avoided cluster infections and
our deliveries have continued without disruption during the pandemic. e
annual maintenance shutdowns at our mills were also carried out successfully.
e production eciency of our mills was at a high level and we achieved
new production records. I have seen positive attitudes, great teamwork and
commitment in daily work – in line with precautionary measures and safety
instructions. I would like to express my sincere thanks to our personnel for their
excellent performance during these dicult times.
e coronavirus pandemic has increased the demand for pure and safe
packaging materials, particularly in the food, beverage and pharmaceutical
industries. Our product portfolio responds well to this demand, and our ecient
supply chain has ensured continuous and reliable deliveries to our customers.
Our paperboard deliveries in 2020, totalling 1,810,000 tonnes, were at a higher
level than in the previous year. is is an excellent achievement considering
that our business, and particularly our results early in the year, were burdened
the paper industry strike in Finland, which lasted for more than two weeks.
Our comparable operating result in 2020 was EUR 221 million and the return
on capital employed was 12.2%. Cash ow from operations was strong, EUR
308 million. In accordance with our dividend policy, the Board of Directors
proposes a distribution of EUR 0.26 per share.
WE GAIN A COMPETITIVE ADVANTAGE BY BEING
A FORERUNNER IN SUSTAINABILITY AND
COLLABORATING IN INNOVATIONS
We aim to be a forerunner in sustainability. For us, this means investing in
resource eciency and combating climate change, in sustainable products and
the supply chain, and in the sustainable use of forests. We aim for entirely fossil
free production and products by 2030. Our sustainability targets have been
approved by the Science Based Targets initiative, and they meet the strictest
requirements of the Paris Agreement, aiming to limit global warming to 1.5
degrees Celsius. In recognition of the control of greenhouse gas emissions and
the sustainable use of water resources, Metsä Board was again accepted on to
the CDP’s respected Climate A and Water A lists in 2020. In the CDP’s forest
programme, we achieved level A-.
Growing consumption and the increased demand for sustainable packaging
solutions are accelerating the need for innovations and close cooperation with
customers and technology partners. e new state-of-the-art Excellence Centre
in the bioeconomy ecosystem of Äänekoski, which we opened in September,
The paperboard market has been strong and the
operational eciency of our mills has been high,
even in the challenging year of the coronavirus
pandemic. Our strategy to focus on profitable
growth in fresh fibre paperboards has proven to
work and we are now in an even stronger position
to develop our core business.
A strong year
for Metsä Board
provides an excellent platform for development collaboration. As part of Metsä
Group, we participate in large-scale collaboration projects which aim to develop
high-volume bioproducts with a signicantly lower carbon footprint compared
to products currently on the market. An example of this is the 3D bre product
presently under development.
OUR STRATEGY EMPHASISES CLEAR CHOICES
WHICH ENABLE OUR SUSTAINABLE GROWTH
Our strategy to focus on premium and recyclable fresh bre paperboards
has proven correct, and we will continue to implement it. Customers value
our services and the high and consistent quality of our products, based on
the excellence of our mills and tailor-made high-quality pulp. Late last year,
we announced a cooperation arrangement with the Swedish forest owners’
cooperative Norra Skog, which will enable us to allocate more capital to the
The new state-of-the-
art Excellence Centre
in the bioeconomy
ecosystem of
Äänekoski provides
an excellent platform
for development
collaboration.
development of the paperboard business in the coming years. Self-suciency
in pulp and the stable market situation in the paperboard business support our
future investment plans.
Population growth, urbanisation and climate change continuously set more
requirements for packaging in terms of sustainability, recyclability and product
safety. I see these as excellent opportunities to develop our business operations,
grow protably and create value for our shareholders.
Finally, I would like to thank our customers, employees and other partners
for their trust and cooperation in 2020. We have a good starting point for
2021 – a favourable market situation, a strong nancial position, and safe and
sustainable products that meet growing global consumer demand. I am positive
and condent about the future.
Mika Joukio
CEO
CEO’s review
54
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
BUSINESS OPERATIONS
AND VALUE CREATION
BUSINESS OPERATIONS AND VALUE CREATION
|
METSÄ BOARD ANNUAL REPORT 2020
Highlights
in 2020
During the exceptional year marked by the
coronavirus pandemic, we adopted strict operating
methods, updated to meet the requirements of the
new situation, to secure the health of our personnel
and avoid chains of infection. The year highlighted
the importance of the uninterrupted operation of
the supply chains for food and pharmaceuticals.
Keeping these supply chains as smooth as possible
has required reliable paperboard deliveries and good
cooperation with our customers.
In December, we announced our intention to sell 30% of the Husum pulp
mill to Norra Skog. e transaction will increase Husum’s share of certied
wood procured from Sweden. It will also enable a signicant reallocation of
the company’s development investments to paperboard. We also made a nal
investment decision on the rst phase of the renewal of the Husum pulp mill.
e rst phase includes a new recovery boiler and turbine.
Our ambitious targets for reducing greenhouse gas emissions were approved by
the Science Based Targets initiative in February. Our targets meet the strictest
requirements of the Paris Agreement, which aims to limit global warming to
1.5degrees.
In recognition of the management of greenhouse gas emissions and the
sustainable use of water resources, Metsä Board was again accepted on to
the CDP’s respected Climate A and Water A lists in 2020. In the CDP’s forest
programme, the company achieved the level A-. In addition, Metsä Board was
selected on CDP’s Supplier Engagement Rating Leaderboard for supply chain
engagement on climate issues. In the spring, we achieved the highest level,
Platinum, in EcoVadis’ corporate social responsibility assessment.
Metsä Group’s innovation company Metsä Spring and Valmet are
building a pilot plant in Äänekoski for a 3D bre product, which
could replace packaging made from fossil-based raw materials.
e project is part of the larger ExpandFibre programme, which
is an approximately EUR 50 million R&D programme promoting
the circular bioeconomy. e programme, in which Metsä Board
participates, was established by Metsä Group and Fortum.
New targets
promote equality
As part of Metsä Group, Metsä Board is committed to the
development of a culture of equal opportunities. To develop
equality, we have set targets of increasing the share of
women in management to 25% by 2025 and ensuring equal
pay between genders. To promote these targets, we carried
out equality training and an equal pay survey in 2020.
In September, Metsä Board opened a state-of-the-art Excellence
Centre in the unique bioeconomy ecosystem of Äänekoski. e
Excellence Centre aims to accelerate material and packaging
innovations by making use of cutting-edge technology in
research and development. It provides a collaboration platform
for customers and technology partners globally.
e coronavirus pandemic increased the demand for our pure and safe paperboards,
particularly in the food, beverage and pharmaceutical packaging sectors. We
succeeded in maintaining our customer service at an excellent level and increasing our
paperboard sales in both Europe and North America. Our mills performed excellently
during the pandemic by adhering to strict safety measures. In April–June, the total
production volume of our paperboards reached an all-time high.
We performed well during the
coronavirus pandemic
Cooperation with Norra Skog releases
capital for growth in paperboard
Recognition for our
sustainability work
The state-of-the-art Excellence
Centre accelerates paperboard
and packaging innovations
R&D programme pursues technologies
and concepts of the future
Business operations and value creation
76
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
BUSINESS OPERATIONS
AND VALUE CREATION
BUSINESS OPERATIONS AND VALUE CREATION
|
METSÄ BOARD ANNUAL REPORT 2020
Growth
We grow globally together with
our existing and new customers
by oering sustainable, safe and
high-performing products. Our
growth is based on skilled people,
industry-leading products and
new, innovative, packaging
solutions.
Profitability
Our profitability is based on the
eciency of our operations and
the prioritisation of businesses
that benefit from the high
performance of our products
and services.
Financial
targets
Dividend
policy
Strategy and
financial targets
We are a leading European producer of premium fresh fibre paperboards and a
forerunner in sustainability. Our decision making is guided by our profitability
targets and the ambition to increase shareholder value. Our goal is to distribute
a competitive dividend to our owners and maintain our strong financial position.
The excellent performance of our paperboard business in 2020
oset the weakness of the pulp market, and the return on capital
employed reached our long-term target level. Our strong financial
position enables future growth and development investments
as well as continued dividends. Our aim is to distribute at least
50% of the profit for the financial period as dividend every year.
In 2020, we paid dividends in accordance with the Board of
Directors’ original proposal.
PREMIUM
SUPPLIER
The high performance and
continuous
development of our
premium products and
services bring added
value to our customers’
businesses and promote
the sustainability of
packaging.
LEADER
IN SUSTAINABILITY
Our long-term and
systematic sustainability
work is in line with the
industry’s most ambitious
goals, one of them being
fossil free mills by 2030.
We have excellent grades
in ESG assessments
covering the environment,
social responsibility and
good governance.
EFFECTIVE
INNOVATION
The active development of
new products and
services in cooperation
with our innovation
network and customers
to replace fossil-based
materials, improves the
consumer experience and
promotes the recyclability
of packaging.
We aim for global impact
for all our innovations.
SAFE AND EFFICIENT
OPERATIONS
We are harmonising and
increasing the eciency
of production and supply
chain processes. with
occupational safety as a
key priority. Metsä Board
utilises new technologies
to improve production
eciency and the
quality of products and
operations.
MOTIVATED
PEOPLE
We enable meaningful
work for all of our employ-
ees and continuous
competence
development in an ethical
and respectful corporate
culture.
– Jussi Noponen, CFO
Focus
We are the leader in sustainabil-
ity, focusing on premium fresh
fibre paperboards for consumer
and retail packaging. The high
performance of our products is
based on technical excellence
and tailor-made high-quality
northern pulp.
Strategy
Mission Vision
Reliability
Renewal
Critical success factors
Our critical success factors are the areas we must focus on and in which we must perform well to ensure the success of our business. All of our work is linked to these
critical success factors. We encourage managers to discuss with their teams how strategy and the critical success factors impact the work of the team and the work
and targets of each Metsä Board employee. Updates and concrete examples of critical success factors are shared within the company, showing how we implement
strategy in daily work.
Packaging solutions
that respect nature
To be the preferred supplier of inno-
vative and sustainable fibre-based
packaging solutions, creating value
for customers globally
Values
––– Target < 2,5
2,5
2,0
1,5
1,0
0,5
0
NET DEBT /
COMPARABLE
EBITDA
––– Target > 50%
DIVIDEND /
NET RESULT
%
––– Target > 12%
COMPARABLE
ROCE
%
Cooperation
Responsible profitability
Read more
We oer sustainable
choices
pp. 26–29
Read more
Our sustainability targets take
us towards a fossil free future
pp. 20–23
Read more
Collaborative innovative product
and service development
pp. 16–17
Read more
Aiming for
zero accidents
pp. 36–37
Read more
Strategy is implemented
in daily work
pp. 38–39
98
16 17 18 19 20
80
60
40
20
0
16 17 18 19 20
15
12
9
6
3
0
16 17 18 19 20
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
BUSINESS OPERATIONS
AND VALUE CREATION
BUSINESS OPERATIONS AND VALUE CREATION
|
METSÄ BOARD ANNUAL REPORT 2020
We create value and well-being
with respect for nature
Metsä Board is part of Metsä Group and benefits from Metsä Group’s unique value chain,
from pure northern fibre to high-quality end products. We are continuously looking
for opportunities to grow profitably and sustainably, and to create value for all of our
stakeholders through our operations. All figures are from 2020 or as per 31 December 2020.
RESOURCES VALUE CREATIONBUSINESS MODEL
Social
• 2,370 employees in 18 countries
• Apprenticeship training programmes
(58 apprentices)
• Active cooperation with local communities and
educational institutes
• Nearly 4,000 suppliers
• Deliveries to approximately 100 countries
Environmental
• 8.2 million cubic metres of purchased wood,
of which 80% is from certified and 20%
from controlled, sustainably managed forests
• 483,000 dry tonnes of purchased pigments,
adhesives and other raw materials
• Total energy consumption as primary energy
11.8 TWh, of which 83% is fossil free
• Water intake 114 million cubic metres,
of which 62 million cubic metres is process water
Economic
• 8 production units in Finland and Sweden
• Capital employed EUR 1,836 million
• 55,000 shareholders, includes shareholders in
both A and B series
• Research and development expenditure
EUR 8.6 million
EUR 47 million
of paid income and
property taxes
EUR 92 million
of dividends and capital
distribution to shareholders
EUR 1,353 million
in payments to suppliers
Consumers daily use
approximately
160 million
packages made of Metsä
Board’s folding boxboard
By reducing paperboard
weight by 1%, material
savings equivalent to
1.6 million
packages per day
can be achieved
EUR 197 million
in employees’ salaries
and benefits
12.2%
return on capital employed
40 customer satisfaction
NPS (Net Promoter Score)
99%
of personnel have completed
training on the Code
of Conduct
and
96%
of suppliers have committed
themselves to the Supplier
Code of Conduct
Our capacity is practically at full utilisation
In 2020, we produced 1.8 million tonnes of premium fresh fibre
paperboard and 1.4 million tonnes of pulp and BCTMP.
Our production emissions in 2020
• Our emissions into air include, for example, 512,151 tonnes
of fossil-based carbon dioxide emissions (Scope 1 and 2,
market-based)
• Approximately 99% of the water we use is returned to
waterways. Process waters are always carefully purified
• 99% of production side streams are utilised as materials
or energy. Side streams consist of production waste and
by-products, such as ash used in fertilisers
Fast and ecient supply chain
An ecient and global supply chain is a prerequisite for a profitable
business. We develop our supply services continuously,
thereby improving our customers’ competitiveness. We work
closely with international brand owners, converters, corrugated
box manufacturers and merchants globally.
We create value with our services
We accelerate material and packaging innovations by making use of
cutting-edge technology in research and development and packaging
design, and by improving the functionality of packaging. We engage in
continuous cooperation with our customers and technology partners
globally.
As part of Metsä Group, we are self-sucient in pulp
and we have good availability of raw material
Our production is located near our most important raw material,
high-quality northern fibre. The high performance of our products is
based on our tailor-made pulps and technical excellence.
We focus on high-quality, ecological fresh fibre paperboards
and sustainable packaging solutions.
OTHER
5% of sales
MARKET PULP
12% of sales
FOLDING BOXBOARD
59% of sales
WHITE KRAFTLINER
25% of sales
Our sales in 2020:
EUR 1,890 million
1110
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
2016 2017 2018 2019 2020
12
10
8
6
4
2
0
-2
-4
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
BUSINESS OPERATIONS
AND VALUE CREATION
BUSINESS OPERATIONS AND VALUE CREATION
|
METSÄ BOARD ANNUAL REPORT 2020
Basic growth rate
2–3%/year
IN THE LONG TERM, GLOBAL DEMAND FOR
FRESH FIBRE PAPERBOARDS IS SUPPORTED BY
TRENDS ACCELERATED BY THE PANDEMIC
Megatrends create the basis
for long-term business
development
Global megatrends influence companies’ actions, and set safety, quality, sustainability and recyclability
requirements for packaging. The changing operating environment creates challenges, but also opportunities,
for business growth and long-term development.
Population growth
and higher average income
increase consumption
• Modern retail and increased
consumption of packaged
consumer goods
• Resource eciency
• Minimisation of packaging waste
and optimisation of recycling
Globalisation
Creates world-wide markets and tightens
competition
• Global brands
• New markets
• Sturdy and lightweight packaging
• Trade disputes, protectionism
• Long and complex supply chains
require good protection properties
from packaging, but over-packaging
should be avoided
Urbanisation
Over half of the world’s population lives in
cities, covering only 2% of the globe’s land
area, but creating 70% of world GDP, waste
and greenhouse gases
• Packaging solutions for dierent kinds of
consumers and for a variety of occasions
• Solutions to ease everyday life, such as
e-commerce, take-away food and meal
kits
• Recyclable and compostable packaging
• Restrictions for single-use packaging
• Consumers are confused about
dierent kinds of recycling schemes
and sorting instructions
Climate change
Aects all geographical areas, states,
businesses and individuals. Limiting climate
change and moving to a low-carbon econo-
my requires adaptation
• Packaging helps to reduce food waste
and other product waste
• Resource-ecient packaging:
renewable raw materials, light weight,
well established recycling infrastructure
• Well managed and growing forests act as
an ecient carbon sink
• Requires new investments in new
technology
• Weather-related disruptions
in production and wood fibre
availability
• Changing consumer habits to slow
down climate change
• Forests as a carbon sink rather than
as a raw material
Digitalisation
Oers solutions for challenges
created by other megatrends
• Utilisation of artificial intelligence in
production quality, eciency and
environmental aspects
• Development of services
• Demand for e-commerce packaging
• Data protection
• Vulnerability of data networks
Metsä Board follows closely the development of sustainability and packaging related regulation, such as the EU Green Deal, including the Circular
Economy Action Plan as well as the Single Use Plastics Directive.
THE CORONAVIRUS PANDEMIC INFLUENCED METSÄ
BOARD’S OPERATING ENVIRONMENT IN 2020
e coronavirus pandemic has increased demand for clean and safe packaging
materials, especially in food and healthcare end uses. At the same time, demand
for luxury packaging and graphic end uses has fallen. Food service packaging
has decreased due to less movement of people in public places.
THE PANDEMIC SLOWS DOWN GLOBAL ECONOMY
BUT CREATES NEW BUSINESS OPPORTUNITIES
e broad-based restrictions to hinder the pandemic around the world have
muted economic activity. Growing unemployment decreases consumers’
purchasing power, while weakening condence in the economy increases
savings rates. Decreasing consumption has a negative impact on demand for
packaging materials, including fresh bre paperboards. Demand for high quality
fresh bre paperboards might temporarily drop below the anticipated long term
growth rate, which has been 2–3% per year. At the same time, the pandemic
boosts and changes consumer and corporate behaviour in a way that could have
a signicant positive impact on fresh bre paperboards demand in the future.
Online shopping has grown during the pandemic and this development is
expected to continue. High quality white kraliners support sales promotion
and dierentiation in the growing e-commerce segment, where durability and
light weight are key requirements for packaging.
During the pandemic, safety and hygiene requirements have also grown,
supporting the use of pure and ecological packaging materials. Consumers
prefer packaged food instead of loose produce.
e downward trend in printing and writing paper demand has accelerated
during the pandemic and this has tightened the availability of high quality
MEGATREND OPPORTUNITIES CHALLENGES
Megatrends’ eect on Metsä Board business
Ready meals
Breakfast cereals
Frozen processed
meat
Frozen processed
seafood
Rice, pasta and
noodles
YEAR-ON-YEAR SALES GROWTH
IN PACKAGED FOOD GLOBALLY
%
Source: Euromonitor from trade sources/national statistics
Growth in global
e-commerce
increases packaging
quality and strength
requirements.
In the short term, weakening purchasing power caused by the pandemic might slow down the demand for fresh fibre paperboards.
Safety and hygiene
concerns increase
the demand for
packaging.
Rapid decline in
graphic paper
consumption and
growth in e-
commerce reduce
the availability of
recycled fibre.
Securing supply chains
and automation might
partly move production
and packaging demand
back to Europe and North
America.
recycled bres. is creates an increasing need for fresh bre based packaging
materials. Aer their use, high-quality paperboards are a valuable raw material
for recycled bre based packaging where quality and hygiene requirements are
less strict.
e pandemic has caused disruptions in supply chains of products and raw
materials, forcing companies to re-evaluate their continuity management plans,
especially regarding so-called critical products. As automation diminishes the
benets of moving operations into low-cost countries, it is possible that we will
see production reshoring back to Europe and North America.
1312
12
10
8
6
4
2
0
-2
-4
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
2016 2017 2018 2019 2020
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
BUSINESS OPERATIONS
AND VALUE CREATION
BUSINESS OPERATIONS AND VALUE CREATION
|
METSÄ BOARD ANNUAL REPORT 2020
PAPERBOARD MARKET
Paperboard and pulp market
AMERICAS EMEA APAC
Share of Metsä Board’s
paperboard deliveries in
2020
27% 68% 5%
Delivery volumes
in 2020
• 274,000 tonnes of folding boxboard
• 210,000 tonnes of white kraftliner
• 866,000 tonnes of folding boxboard
• 369,000 tonnes of white kraftliner
• 83,000 tonnes of folding boxboard
• 9,000 tonnes of white kraftliner
Regional focus
• Continued growth in North America • Maintaining strong market
position in Europe
• Focus on high quality packaging
in selected end use segments
Demand outlook for
folding boxboard
• Limited local availability of high-
quality lightweight cartonboard,
such as folding boxboard
• Growth in ecological packaging
for food and food service
• Environmental awareness and
regulatory requirements support
demand for recyclable packaging
materials
• Food safety requirements favour
pure fresh fibre-based cartonboards
• Middle class growth increases
purchasing power and demand for
packaged consumer goods
Demand outlook for
white kraftliners
• Limited local availability of high-
quality coated white kraftliners
• A growing demand for retail-ready
packaging
• Product brand promotion
and dierentiation in growing
e-commerce
• Continued growth of retail-ready
packaging
• Growing e-commerce
Geographical split of Metsä Board’s paperboard deliveries and demand outlook
Metsä Board has a leading market position in Europe Metsä Board’s annual pulp surplus is approximately 400,000 tonnes as of 2021
The global packaging market value is nearly 800 billion euros, of which paperboard packaging accounts for roughly a third. Depending
on the packaging end use, paperboard can be produced either from fresh or recycled fibre. The decision is based on quality, product
safety and hygiene requirements.
Metsä Board uses only fresh fibre for the production of paperboard. Global demand for high-quality fresh fibre paperboards has been
growing by 2–3% annually. In Metsä Board’s main markets, Europe and North America, the market situation for folding boxboard and
white kraftliners is expected to remain stable.
Metsä Board’s annual pulp surplus consists of:
• own pulp production +1.4 million tonnes
• own pulp consumption -1.6 million tonnes
• 24.9% share of Metsä Fibre +0.8 million tonnes
• Norra Skog’s 30% share of Husum’s pulp mill -0.2 million tonnes
Approximately half of Metsä Board’s pulp production is bleached chemo-ther-
momechanical pulp (BCTMP), of which the majority is integrated into our own
folding boxboard production. anks to BCTMP, folding boxboard is light but
sti. Compared to chemical pulp the yield is high; less raw wood is needed in the
pulp production.
Metsä Board’s associated company Metsä Fibre is a leading global supplier of
sowood market pulp (NBSK).
Metsä Fibre’s annual pulp capacity is approximately 3.25 million tonnes, of
which 80% is sowood pulp (NBSK) and 20% hardwood pulp (BHKP).
Roughly 25% of Metsä Fibre’s pulp production is used internally within
Metsä Group and the rest is sold as market pulp in Europe, Middle East, Africa
and Asia.
In 2020, the end uses of Metsä Fibre’s pulp were: 35% tissue papers, 31%
printing and writing papers, 26% paperboards and 8% specialty papers.
Globally, some 181 million tonnes of virgin pulp
is consumed, of which 112 million tonnes is
integrated, for example, in paper and paperboard
production. e rest, approximately 69 million
tonnes, is sold as market pulp, mainly bleached
sowood and hardwood pulp. e length and
strength of bres vary depending on the wood spe-
cies. erefore, pulp grades have properties suitable
for dierent end uses. Sowood pulp consists of
long bres, giving strength, while hardwood pulp
consisting of short bres, gives excellent surface
properties. Dierent pulp grades are oen mixed,
particularly in the production of paperboards.
Source: Metsä Fibre estimates based on several sources
OTHERS
6 million tonnes
SOFTWOOD
26 million tonnes
MARKET PULP
69 million tonnes
VIRGIN
WOOD FIBRE
CONSUMP-
TION
181
million tonnes
INTEGRATED
PULP
112 million
tonnes
HARDWOOD
37 million tonnes
Global annual demand for market pulp is approximately 69 million tonnes
PULP MARKET
WHITE KRAFTLINER
PRODUCERS IN EUROPE
Total capacity 2.4 million tonnes
FOLDING BOXBOARD
PRODUCERS IN EUROPE
Total capacity 3.9 million tonnes
Metsä Board 28%
Competitor 1 23%
Competitor 2 15%
Competitor 3 13%
Competitor 4 8%
Others 12%
Metsä Board 35%
Competitor 1 21%
Competitor 2 10%
Competitor 3 9%
Competitor 4 6%
Others 19%
Sources: RISI, Metsä Board,
companies’ websites
Competitor #3 has announced acquisitions of competitors #2 and #4.
GLOBAL DEMAND OF PULP
BY END USE
%
GLOBAL DEMAND OF PULP
BY AREA
%
PULP PRICE DEVELOPMENT (PIX)
IN EUROPE AND CHINA
USD/tonnes
Tissue paper 39
Printing and
writing papers 26
Packaging 9
Specialty papers 16
Flu 10
China 39
Europe 25
North America 11
Latin America 6
Japan 3
Others 16
Europe
China (net)
1,400
1,200
1,000
800
600
400
UNBLEACHED
PULP
2 million tonnes
CHEMI-THERMO-
MECHANICAL
PULP (CTMP)
4 million tonnes
Metsä Board is
globally the largest
producer of coated
white kraftliners
Source: PPPC Source: Hawkins Wright, 2019
In the long term, market pulp demand is supported by the rapid consumption growth of tissue paper,
particularly in China, and the global demand for packaging materials made from renewable raw materials.
Source: Fastmarkets Foex
1514
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
BUSINESS OPERATIONS
AND VALUE CREATION
BUSINESS OPERATIONS AND VALUE CREATION
|
METSÄ BOARD ANNUAL REPORT 2020
Collaborative innovative
product and service development
For consumer packaging board, we continue to develop increasingly lightweight
paperboard, without compromising on the paperboard’s strength or converting
properties. Our lightweight paperboards are material ecient and help reduce
the carbon footprint of packaging. Consumers use approximately 160 million
packages made of Metsä Board folding boxboard every day. By reducing the
weight of the paperboard by 1%, we can achieve material savings equivalent to
approximately 1.6 million packages every day.
We continue to develop barrier solutions and investigate the utilisation of
dispersion coating and bio-based coating solutions as well as their commercial
potential in food packaging and food service uses. We estimate the global
market size of PE-coated food and food service packaging, in which the coating
could be replaced with bio-based materials, to be more than 10 million tonnes a
year. Roughly half of the paperboards we produce are used for food packaging,
which is generally the biggest single end-use for packaging.
As the volume of packaging grows, the world needs
new, sustainable solutions that can replace fossil-
based materials and improve the recyclability of
packaging. We aim for large scale innovations to give
them global significance.
e key product qualities of our white kraliners are high strength,
converting eciency and good printing surface. We continue to develop these
qualities to boost the performance of high-volume, retail-ready packaging and
e-commerce packaging made from corrugated board.
EXCELLENCE CENTRE ACCELERATES DEVELOPMENT
WORK IN COOPERATION WITH OUR CUSTOMERS
In September 2020, we opened an Excellence Centre in the unique bioeconomy
ecosystem of Äänekoski. e Excellence Centre helps us to deepen our
collaboration with customers and helps us further focus development work
to meet customers’ needs. e Excellence Centre brings together our experts’
in-depth knowledge in bre-based packaging solutions, and the competence of
our partners, such as material and technology suppliers, start-up companies,
universities and research companies.
By optimising the materials and structure of packaging, we can provide
our customers with even more sustainable and high performing packaging
solutions. e Excellence Centre oers an ecient development platform for our
research and development facilities, a packaging design studio, a customer feed-
back centre and a state-of-the-art laboratory oering more than 100 dierent
analysis methods. e Centre’s services also include a virtual store environment
and a computer-based simulation tool (CAE), which enables us to analyse and
model the performance of packaging.
Metsä Board and the Finnish start-up
company Esbottle jointly develop an ecologi-
cal paperboard flute cup concept that meets
the need to reduce the use of plastic.
Fibre-based packaging oers many
solutions of the future. The new
Excellence Centre is an eective platform
for development work.
During the autumn, we organised several virtual workshops for customers
and partners from around the world.
INVESTING IN LONG-TERM
RESEARCH AND DEVELOPMENT
In June, Metsä Group and Fortum launched an approximately EUR 50 million
ExpandFibre programme, promoting the circular bioeconomy. e programme
is funded by Business Finland as one of the projects in the Veturi challenge
competition. Innovative packaging solutions – in particular food packaging and
the grease and moisture resistance (barrier solutions) of packaging – are part of
this four-year R&D programme.
e 3D development project, published in the autumn by Metsä Group’s
innovation company Metsä Spring and Valmet, is part of the ExpandFibre
programme. e goal is to develop a new type of wood-based 3D bre product
which can replace packaging made from fossil-based raw materials. e
product’s lightweight structure and new production technology minimises the
need for energy and raw materials and simplies supply chain logistics. e
3D bre products are produced directly from wet wood-bre pulp, without
intermediate processes, and they will be ready for delivery to end customers. e
construction of the pilot plant began at Äänekoski in December 2020.
AI TECHNOLOGY FOR THE BENEFIT OF CUSTOMERS
At the Kyro mill, we will continue to use articial intelligence in the quality
management of the folding boxboard production line. In the most recent
application, we utilise customer data at the Kemi mill to improve the runnability
of white kraliner on our customer’s corrugated board production line. e
data allows us to nd the optimum combination of quality parameters, which
improves the runnability on our customer’s corrugated board line.
We continue to investigate other opportunities for introducing articial
intelligence on other production lines.
1716
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
FINANCIAL
DEVELOPMENT GOVERNANCE
BUSINESS OPERATIONS
AND VALUE CREATION
BUSINESS OPERATIONS AND VALUE CREATION
|
METSÄ BOARD ANNUAL REPORT 2020
Sustainable
packaging promotes
the circular economy
High quality and strong fresh fibre is an
important raw material for making packaging
light in weight, sustainable and safe. The
fresh fibre provides a good starting point for
the recycling of packaging materials. To keep
recycling loops ongoing, new, pure fibre is
also needed for recycling.
• We source fibre raw material from sustainably managed northern
forests that grow more than they are used, and which act as
carbon sinks. In Finland, the annual growth of forests is 108 million
cubic metres and harvesting of roundwood amounts to 73 million
cubic metres. The other annual drain is 15 million cubic metres
(Natural Resources Institute Finland, 2019).
• In Finland, four new saplings are planted for every tree felled by
Metsä Forest during the regeneration felling phase. Metsä Forest
is responsible for Metsä Board’s wood supply.
• We use PEFC™ and FSC® Chain of Custody to ensure that the
wood always comes from certified or controlled forest which take
care of, for example, maintaining biodiversity.
• 80% of the wood raw material used by Metsä Board is certified,
while on average 10% of forests globally are certified.
• All our paperboards are recyclable and/or compostable depend-
ing on local recycling infrastructure.
• The recycling rate of paper and paperboard packaging is high,
83% in the European Union (Eurostat).
• Fresh fibre is essential in keeping the recycling loop of materials
ongoing. Wood fibre is estimated to circulate, on average, 3.6
times in a year (CEPI), but it deteriorates with each recycling
round.
• Metsä Board participates actively in 4evergreen and European
Paper Packaging Alliance communities, which promote the
recyclability of fibre-based packaging and food and food service
packaging.
• At its best, the carbon footprint of packaging made from our fresh
fibre paperboard is more than 50% smaller than packaging with
an equivalent stiness made from recycled fibre or solid bleached
board (Ecoinvent database).
• Paperboard provides alternatives to fossil-based materials.
• Fresh fibre paperboard is a sustainable and safe option:
only the origin of the fresh fibres can be traced back to the forest,
and the fresh fibres are naturally pure and do not contain unknown
chemicals.
• We reduce the environmental impact through considered
packaging design, for example, by optimising the use of the mate-
rial, ensuring that the packaging is fit for purpose, and designing
the packaging for recycling after use.
• 83% of the energy and 99% of the raw materials we use are fossil
free. Our target is completely fossil free production in 2030. In
addition, we are continuously improving our energy eciency.
• We recycle water in our paperboard mills on average 12 to 14 times
and in our BCTMP mills as many times as 30. We continue to
further improve water eciency.
• We already utilise 99% of our production side streams as material
or energy. The aim is to completely avoid landfill waste.
• Already two of our mills utilise artificial intelligence, which enables
us to increase, for example, the consistency of paperboard and to
improve production eciency by reducing the amount of waste
generated and the consumption of energy and raw materials.
Read more
Collaborative innovative product and service development, pp. 16–17
We work for a better climate and environment, pp. 30–34
Read more
Collaborative innovative product and service development, pp. 16–17
We oer sustainable choices, pp. 26–29
Read more
We oer sustainable choices, pp. 26–29
Read more
We bring the forest to you, pp. 24–25
Sustainable and renewable
wood raw material
Resource-ecient
production
Eco-friendly
and safe products
High
recycling rate
1918
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
For us, being a leader in sustainability means investing in resource eciency
and the ght against climate change, in sustainable products and a sustainable
supply chain as well as the sustainable use of forests. We want to achieve these
targets by complying with ethical operating methods and safe operating condi-
tions. We also expect the same high level of sustainability from all our partners.
OUR TARGETS MEET THE STRICTEST OF REQUIREMENTS
One of Metsä Board’s most important sustainability goals is to ensure that,
aer 2030, our mills no longer use any fossil fuels nor purchase any fossil-based
energy. At this point, our production will no longer generate any fossil-based
carbon dioxide emissions (Scope 1 and 2). We are also looking for alternatives
to fossil-oil-based raw materials and packaging materials with the target of all
materials used by the company being fossil free also by the end of 2030.
Our ambitious targets for reducing greenhouse gas emissions are endorsed
by the Science Based Targets initiative. Our targets (Scope 1 and 2) meet
the strictest requirements of the Paris Agreement, which aim to limit global
warming to 1.5 degrees. Metsä Board’s reduction targets for the emissions of
the company’s value chain (Scope 3) also meet the SBTi’s most stringent criteria
and are in line with current best practices. In terms of the value chain, our aim
is for 70% of our non-bre suppliers and downstream transportation suppliers
measured by spend to set themselves targets according to SBTi by 2024.
Our targets support the UN’s Sustainable Development Goals (SDGs). We
are also committed to the UN Global Compact and its CEO Water Mandate
initiative. Our sustainability targets are summarised on pages 22–23.
*) Scope 1 includes direct greenhouse gas emissions from own operations. Scope
2 includes indirect greenhouse gas emissions from generation of purchased
energy.
Our sustainability targets take us
towards a fossil free future
RECOGNITION FOR SUSTAINABILITY
Metsä Board takes part in external assessments which measure the company’s
operations in terms of environmental and social responsibility. In 2020, Metsä
Board was again acknowledged by the CDP’s Climate A list and Water A list for
actions to mitigate climate change and sustainable use of water resources. For
sustainable use of forests, the company scored A-. In addition, Metsä Board was
selected on CDP’s Supplier Engagement Rating Leaderboard for supply chain
engagement on climate issues. CDP is a non-prot organisation oering a global
disclosure platform for environmental information. In EcoVadis’s corporate
social responsibility assessment, we achieved the highest level, Platinum, in
2020. is result places Metsä Board among the top 1% of the companies
assessed by EcoVadis in the paper, paperboard and packaging industry. Metsä
Board has also achieved excellent results in other assessments related to environ-
ment, social responsibility and governance, carried out by, among others, MSCI,
Sustainalytics and ISS ESG.
Metsä Board’s sustainability targets aim to
mitigate climate change and develop
a low-carbon economy.
SUSTAINABILITY GOVERNANCE
At Metsä Board, the progress of sustainability related matters is monitored
and supported by the company’s Board of Directors, CEO and Corporate
Management Team. Sustainability is incorporated in the strategy approved by
the Board as well as in the company’s long-term business and investment plans,
risk assessments and annual action plans. e Board processes and approves the
sustainability targets presented by the CEO and monitors the achievement of the
targets on an annual basis. e sustainability targets are based on Metsä Group’s
strategic sustainability objectives and a comprehensive materiality analysis
on corporate responsibility, completed by Metsä Group in 2018. e analysis
accounted for the impact that Metsä Group’s operations have on society and the
environment, as well as the stakeholder perspective.
e CEO is responsible for implementing the measures needed to achieve
the sustainability targets in accordance with the instructions given by the Board
of Directors. e CEO reports to the Board on the most crucial sustainability
topics in a number of Board meetings over the year. Important topics include
progress in set targets, planned measures and investments aiming to achieve
the targets, the results of external ESG assessments and environmental reviews.
e results of the company’s risk assessments, including risks related to climate
change, are presented to the Board of Directors and the Audit Committee twice
a year.
e Corporate Management Team prepares matters related to sustainability
before the CEO presents them to the Board. e Corporate Management Team
also delegates responsibilities further within the organisation. Of the Corporate
Management Team’s members, the CFO heads Metsä Board’s Risk Committee,
while the Senior Vice President, Development participates in Metsä Group’s
Sustainability Process Management Team quarterly. e CEO and SVP, Devel-
opment, have annually determined targets which are related to sustainability
and aect their personal compensation.
Metsä Board’s Product Safety and Sustainability Director reports on the pro-
gress of sustainability targets and on sustainability-related development needs
to the company’s SVP, Development, and presents topical sustainability matters
to the entire Corporate Management Team on a regular basis. Sustainability is
part of daily work of the entire personnel. e Product Safety and Sustainability
Director leads a team which works in close cooperation with production,
wood supply, sourcing and logistics, the HR department, marketing and sales,
communications, investor relations and legal services. Wood supply, sourcing
and legal operations are centralised in Metsä Group.
SUSTAINABILITY GOVERNANCE AT METSÄ BOARD
Sustainable and ethical operations are the basis for Metsä Board’s oper-
ations. Metsä Board’s ethical principles and sustainability targets are
based on Metsä Group’s policies and long-term strategic sustainability
objectives.
Board of Directors
Corporate Management Team
Product Safety and
Sustainability Director
Business functions
Sustainability
More about MSCI ESG Rating
at www.msci.com
2120
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
Our sustainability targets for 2030
Our ambitious sustainability targets focus on four themes: we bring the forest to you, we
oer sustainable choices, we work for a better climate and environment, and we create well-
being. The targets support the achievement of the UN’s Sustainable Development Goals
(SDGs). From a total of 17 SDGs set by the UN, we focus on seven goals to which we can
contribute the most through our operations.
UN SUSTAINABLE
DEVELOPMENT GOALS OUR OPERATIONS OUR TARGETS
GOAL 6
Clean water
and sanitation
Metsä Board’s mills are located in areas with ample water resources. Our water use does not impair
other parties’ access to water.
We work for a better climate
and environment
We use only surface water in our production. Groundwater is only used as drinking water and for
hygiene purposes (roughly 0.01% of our total water use).
We use water sustainably and resource-eciently. The aim is to reduce the use of process water by
30% per tonne produced during 2018–2030.
Approximately 99% of the water we use is returned to the waterways. Before this, process waters are
treated using the best available technology.
GOAL 7
Aordable and
clean energy
Metsä Board is an important producer and user of bioenergy. Around half of the energy used by our
mills is renewable.
We work for a better climate
and environment
We aim to improve our energy eciency by a minimum of 10% during 2018–2030.
GOAL 8
Decent work and
economic growth
Metsä Board provides a job for some 2,400 people, and our indirect employment eect is much
greater.
We create well-being
We oer sustainable
choices
We pay special attention to safety at work. We aim for zero occupational accidents.
We operate ethically and expect the same from our partners.
GOAL 9
Industry, innovation
and infrastructure
Metsä Board continues to improve resource eciency and its processes, and invests in new
sustainable industrial concepts and technologies and in renewable energy. We aim at fossil free
production in terms of both energy consumption and raw materials.
We work for a better climate
and environment
We oer sustainable
choices
We are actively involved in research, development and innovation networks.
GOAL 12
Responsible
consumption
and production
Metsä Board promotes the circular economy throughout the value chain: We bring the forest to you
We oer sustainable
choices
We work for a better climate
and environment
We create well-being
Our paperboard is produced from entirely traceable wood fibre which comes from sustainably
managed forests.
The fresh fibre we use is a renewable resource which provides an alternative to fossil-based packaging
materials. Our goal is for all our raw materials and packaging materials to be fossil free by the end of
2030.
We also aim to utilise 100% of our production side streams in the recycling of materials or in energy
production so that we will not generate any landfill waste in the end of 2030.
Our paperboards are light in weight and their production consumes less raw materials, energy
and water than the production of heavier paperboard grades. Lightness is also an advantage in
transportation. After use, light paperboards produce less waste than heavier packaging materials.
All our paperboards are designed for recycling after use. Alternatively, they can be composted,
excluding the PE-coated grades.
We prioritise the safety of both our employees and consumers. We comply with practices which exceed
the requirements provided in legislation.
GOAL 13
Climate action
Metsä Board advances the low-carbon economy by improving its energy eciency and aiming for
fossil free production.
We bring the forest to you
We oer sustainable
choices
We work for a better climate
and environment
Our goal is for all our mills to use only fossil free energy by the end of 2030. We also aim for fossil free
raw materials and packaging materials.
By purchasing wood from sustainably managed forests only, we ensure that the forests grow more
than they are used and that the forests act as carbon sinks.
GOAL 15
Life on land
All of the wood raw material used by Metsä Board is traceable and comes from sustainably managed
forests, which are either certified (PEFC™, FSC®) or meet the criteria for controlled origin.
We bring the forest to you
Our goal is for at least 90% of the wood fibre we use to be certified no later than by 2030.
Sustainable forest management does not result in deforestation. Rather, it supports biodiversity. In
felling sites, biodiversity is promoted by leaving groups of retention trees and high biodiversity stumps,
for example, and by increasing the share of mixed forests.
TARGET
TARGET FOR
2030
PERFORMANCE
IN 2020
PERFORMANCE
IN 2019
PERFORMANCE
IN 2018 STATUS
WE BRING THE FOREST TO YOU
Certified wood fibre
Share of certified fibre > 90% 80% 76% 79%
WE OFFER SUSTAINABLE CHOICES
Fossil free raw materials
Share of fossil free raw materials and packaging materials, % of dry tonnes 100% 99.3% 99.4% 99.4%
Sustainable supply chain
Traceability of raw materials, share of total purchasing (in euros) 100% 97% 93% -
Commitment to Supplier Code of Conduct, share of total purchasing (in euros)
1)
100% 96% 95% 94%
Know your supplier check completed, share of total purchasing (in euros)
1)
100% 84% 77% -
Sustainability evaluation completed, share of total purchasing (in euros)
1)
100% 54% 49% 41%
WE WORK FOR A BETTER CLIMATE AND ENVIRONMENT
Fossil free mills and fossil free purchased energy
Share of fossil free energy (0 t CO
2
Scope 1 and 2)
100% 83% 83% 82%
Share of fossil free energy, own generation (0 t CO
2
Scope 1)
100% 83% 82% 82%
Share of purchased fossil free energy (0 t CO
2
Scope 2)
100% 83% 85% 81%
Resource-ecient production
Improvement in energy eciency compared to 2018
2)
> +10% +2.1% -0.7% -
Process water use per product tonne compared to 2018 -30% -7.7 % -11% -
Utilisation of side streams 100% 99.3% 99.4% 99.4%
WE CREATE WELL-BEING
Responsible corporate culture
Ethics barometer, % 100% 85% - -
Accident-free work environment
Total Recordable Injury Frequency (TRIF) per million hours worked 0 8.4 10.2 12.6
The base year for the sustainability targets is 2018. In departure from this, the base year for the traceability of raw materials and the completion of the Know your supplier check is
2019, and the base year for the Ethics Barometer is 2020.
There are also Metsä Group-level targets for safeguarding the biodiversity of forests and for increasing the amount of carbon stored in forests and products. Further information on
them is available in Metsä Group’s Sustainability Report.
The share of fossil free purchased energy decreased in 2020 compared to 2019, because the share of purchased fossil-based electricity increased and because the calculation
method was updated to comply with the GHG Protocol.
Process water use per product tonne decreased from 2018 but increased compared to 2019. This was caused by the strike in pulp and paper industry aecting the Finnish mills,
and by increased water use in Husum mill.
In 2020, the target for accident free work environment was switched from LTA1 to TRIF, which measures the total recordable incident frequency. The calculation method of TRIF was
updated in 2020 to comply with the OHSA standards.
1)
The calculation method has been updated, which is why the figures depart from the previously reported figures. The previously reported figures concerned the situation at
the end of the year. The new calculation method accounts for monthly averages weighted with total purchasing.
2)
The calculation method for the Husum mill has been updated, which is why the 2019 figure departs from the previously reported figure.
Good progress
Some progress
To be developed
Sustainability
2322
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
100
80
60
40
20
0
16 17 18 19 20
Fibren sellun kustannusrakenteeseen luvut:
puu 57%,
muut 18%,
kemikaalit 11%,
logistiikka 9%
henkilöstö 5
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
Wood from sustainably
managed forests
Seven of Metsä Board’s eight mills are located in Finland, Europe’s most forested
country. Forests cover roughly 75% of Finland’s land area. Finland’s forest
reserve increases continuously, given that the annual growth of its forests (108
million m
3
) surpasses the volume of harvested roundwood (73 million m
3
) and
other annual drain (15 million m
3
; Natural Resources Institute Finland, 2019).
Strictly protected forests account for 9% of Finland’s forest area, and according
to a study by the European Union, more than half of Europe’s strictly protected
forests are in Finland.
All the wood used by Metsä Board comes from sustainably managed north-
ern forests. In 2020, 51% of the wood came from Finland, 28% from Sweden and
the rest from the Baltic countries and Russia. Our wood use totalled 8.2 million
cubic metres (2019: 8.2 million m
3
). is use includes the wood used in Metsä
Board’s own production of pulp and high-yield pulp as well as the wood used in
the pulp purchased from Metsä Fibre.
All the wood we use is traceable and comes from
sustainably managed northern forests.
WE KNOW THE ORIGIN OF
ALL THE WOOD FIBRE WE USE
Metsä Group’s internal value chain helps us ensure the origin and quality of
the wood bre we use. Our wood supply is managed by Metsä Forest, also part
of Metsä Group. e pulp used for paperboard production is manufactured in
Metsä Board’s own BCTMP and pulp mills or in the pulp mills of our associated
company Metsä Fibre. e self-suciency in pulp and the full control of chem-
icals used in production secures the supply of bre and guarantees consistent
high quality and an unbroken product safety chain.
e wood used by Metsä Board always meets the criteria for at least PEFC™
Controlled Sources and FSC® Controlled Wood. In 2020, 80% (76%) of this
wood originated from certied forests, and 20% (24%) came from controlled
forest sources. Given that all parties involved in the processing of wood and bre
within our value chain comply with the requirements of the PEFC™ and FSC®
Chain of Custody systems, all the wood bre we use can be traced back to the
forest.
SUSTAINABILITY IS MONITORED THROUGH AUDITS
e operations of wood suppliers and harvesting contractors, and the
traceability of wood bre within our own processes, are monitored through
Chain of Custody systems and related Metsä Group and third-party audits. e
ALL THE WOOD FIBRE WE USE CAN
BE TRACKED BACK TO THE FOREST
All parties in our value chain involved in the processing of the
wood and fibre comply with the requirements of PEFC™ and
FSC® Chain of Custody. Therefore, the wood fibre we use is
100% traceable to the forest. In addition to sustainable forest
sites, we also choose our partners responsibly. Our monitoring
system is audited annually.
Wood 17
Pulp 17
Logistics 16
Personnel 13
Chemicals 11
Energy 9
Other 17
METSÄ BOARD’S
COST SPLIT IN 2020
EUR 1.6 billion, %
Finland 51
Sweden 28
Baltic countries 11
Russia 10
METSÄ BOARD’S
WOOD SUPPLY AREAS IN 2020
%
forest owners from whom the wood is purchased are responsible for their forests
meeting the requirements of the Chain of Custody systems.
e audits serve to ensure a number of matters related to sustainability, such
as the preservation of valuable natural habitats, the legal origin of wood, the
rights of indigenous peoples, safety at work, and the tracing and calculation
practices for wood bre pursuant to certication standards. is guarantees
wood with a legal and sustainable origin, and the share of certied wood used in
production.
SUSTAINABLE FOREST MANAGEMENT
ACCOUNTS FOR BIODIVERSITY
Preserving biodiversity is part of sustainable forest management. Biodiversity is
fostered by, for example, leaving broad-leaved trees and groups of retention trees
untouched and by creating high stumps during thinning and in regeneration
fellings. Biodiversity is also increased by protecting important habitats from
harvesting and by the buer zones of waterways, which also prevent the run-o
of soil and nutrients. Forest certications dene precise criteria for elements
safeguarding biodiversity, such as groups of retention trees.
Retention trees diversify the age structure of forests and generate decaying
wood, which is vital for many species including birds, insects and fungi. Metsä
Group also encourages forest owners to leave high stumps at felling sites, and
84% of forest owners already do so during thinning and regeneration fellings.
CUSTOMER
PAPERBOARD, PULP
AND BCTMP MILLS
WOOD
PROCUREMENT FOREST OWNERS
Target > 90%
SHARE OF CERTIFIED WOOD
FIBRE IN METSÄ BOARD
%
Approximately
10%
of the world’s
forests being
certified
Forest certification and our Chain of Custody system enable
our customers to inform their own customers about the
responsibility of the product. Certification and 100% trace-
ability ensures that the wood used in the product comes from
sustainably managed forests.
Metsä Board and Metsä Fibre
The mill records the quantity, origin and certification of the
wood it procures, and ensures, by calculation, that certified
products are sold in accordance with the incoming certified
quantity. The certification information can be seen on the
order and accompanying documents.
Metsä Forest
All the trees within our supply chain can be traced all the way back to
the forest with the help of maps, data recorded in information sys-
tems and various documents. Metsä Forest, which is responsible for
Metsä Group’s wood procurement, calculates the certification share
of purchased wood and sells a corresponding amount of certified
wood to mills. We also require sustainable origin for non-certified
wood, and that the wood always meets at least the requirements for
PEFC™ Controlled Sources and FSC® Controlled Wood.
Most of the wood we use comes from certified northern forests
(PEFC™ or FSC®). The forest owners are committed to the
requirements of forest certification and wood origin systems.
Metsä Group, external auditors and authorities verify sustainable
forest management by, among other things, audits of logging
sites.
WE BRING THE FOREST TO YOU
METSÄ FIBRE’S* PULP
COST STRUCTURE IN 2020
%
* Pulp is purchased
from the associated
company Metsä Fibre,
of which Metsä Board
owns 24.9%
2524
PEFC™/02–31–92
FSC®-C001580
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
e sustainability of our supply chain is ensured in terms of the wood and bre
(pp. 24–25) as well as the other raw materials and services involved. We use local
suppliers whenever possible. In 2020, 75% of all our purchases (2019: 76%) came
from Finland and Sweden, where our production units are located.
INDICATORS FOR ASSESSING
SUPPLIERS’ SUSTAINABILITY
e sustainability of suppliers delivering something other than wood or bre
is ensured centrally within Metsä Group’s sourcing process. ese include the
suppliers of chemicals, machinery, equipment, transport and other services.
Our selection process for suppliers includes a risk analysis where we review the
suppliers’ country and category risks and their compliance with legislation.
In our targets extending to 2030, we use three indicators for monitoring and
developing the sustainability of our supply chain: the suppliers’ commitment
We ensure the sustainability
of our supply chain and
our products
to a Code of Conduct, the completion of Know your supplier check and a
sustainability evaluation.
By the end of 2020, suppliers accounting for 96% (2019: 95%) of our total
purchasing were committed to Metsä Group’s Supplier Code of Conduct or had
a corresponding Code of Conduct themselves. In addition to the Supplier Code
of Conduct, agreements oen contain further sustainability requirements. By
the end of 2020, Know your supplier check had been conducted for suppliers
representing 84% (77%) of total purchasing. e sustainability evaluation, which
includes a supplier self-assessment questionnaire and the required development
actions when necessary, was conducted for 54% (49%) of suppliers, calculated by
spend.
e sustainability of suppliers is also monitored through audits carried out at
supplier premises. ese audits include questions related to environmental and
social responsibility. In 2020, Metsä Group conducted 12 (14) on-site audits and
an external party 9 (15) such audits at Metsä Board’s suppliers.
In our Science Based Targets, we are committed to 70% of our non-bre-
based suppliers and the logistics operators related to our customer deliveries
– measured as a share of purchasing costs – setting themselves targets in line
with the SBTi by 2024. e achievement of this target is supported by webinars
aimed at suppliers and with supplier-specic meetings, both set to begin in 2021.
By the end of 2020, 5% of our suppliers within the target group, had set targets
in line with the SBTi, while 4% had committed to setting such targets within the
next few years.
MORE ECOLOGICAL TRANSPORT
Given that most of our products are sold outside Finland and Sweden, transport
distances are oen long. e environmental impact of logistics is minimised
with careful route planning and by developing more ecient operating
methods. is reduces both costs and emissions. e alternative generating the
least emissions is given priority, and this is why we favour sea and rail deliveries
over trucks, insofar as possible. In 2020, 38% of transports were conducted
as sea transports, 36% on road, 7% on rail, and 19% were related on port and
warehouse logistics, measured by spend. We will be increasing the volume of
maritime transport signicantly as of 2021, when we will begin transporting
with environmentally friendly LNG-powered ships directly from Kemi to Cen-
tral Europe, close to our customers. is will reduce the need for road transport
and lessen carbon dioxide emissions arising from transport.
WE TRACE THE ORIGIN OF RAW MATERIALS
We will continue to improve the traceability of chemicals, other raw materials
and the packaging materials of our products. is is why we ask our suppliers
The sustainability of a package is the sum of many
things, such as its raw materials and their sourcing
as well as the manufacturing process and the safety,
functionality and recyclability of the finished product.
to detail the manufacturing location of the raw material we purchase in our
product safety questionnaires.
Our goal is to know the manufacturing country of all our raw materials and
packaging materials by 2030 and, for some raw materials, we will aim to trace
details of their origin even further. In 2020, we knew the origin – at minimum
the manufacturing country – of 97% (93%) of the total purchases of raw materi-
als and packaging materials.
AIMING FOR ENTIRELY FOSSIL FREE PRODUCTS
Our products are already produced primarily from a renewable raw material.
Our main raw material – wood bre – accounts for 93% of all our raw materials.
In addition, our paperboards contain raw materials based on minerals, such
as kaolin, and fossil-oil-based materials, such as latex. PE coating is also used,
particularly in some food service packaging. We are looking for alternatives to
fossil-oil-based raw materials, and we aim to use only fossil free raw materials
and packaging materials by the end of 2030. In 2020, fossil free raw materials
and packaging materials represented 99% (99%) of the volume per dry tonne.
ENVIRONMENTAL IMPACT IS
THE RESULT OF MANY THINGS
e environmental impact of a product is generated over its entire life cycle: it
is aected by the raw materials, the production process and transport, and by
how the product is used, recycled and disposed of. Our lightweight products,
PERFORMANCE IN 2020
Share of fossil free raw materials
99%
Traceability of raw materials
97%
Commitment to the Supplier Code of Conduct
96%
Know your supplier check completed
84%
Suppliers’ sustainability evaluation completed
54%
produced resource-eciently and principally out of a renewable raw material,
respond well to the needs of the circular economy. All our paperboards are
recyclable, and with good packaging design, and by participating in initiatives
promoting recycling, our goal is for our products to be recycled aer use (pp.
16–19).
We follow the environmental impact of our paperboards with life-cycle
analyses prepared in accordance with the ISO 14040 and ISO 14044 standards.
From the perspective of paperboard’s climate impact and carbon footprint,
the energy used in the production carries the most relevance. As we move on
to the use of entirely fossil free energy in our production, the carbon footprint
of the products will become even smaller. In the best case scenario, the carbon
footprint of packaging made from our fresh bre paperboard is currently more
than 50% smaller than that of packaging of an equivalent stiness made from
recycled bre or solid bleached board (Ecoinvent database).
The carbon footprint of packaging
made from our fresh fibre paper-
board is currently more than 50%
lighter that of packaging of an equiv-
alent stiness made from recycled
fibre or solid bleached board.
(Ecoinvent database)
White kraftliner enables eye-
catching e-commerce packaging
and is a lightweight, recyclable
and ecological material choice.
WE OFFER SUSTAINABLE CHOICES
2726
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
All Metsä Board paperboards, excluding PE-coated
grades, have been certified for industrial compostability
complying with DIN EN 13432 and ASTM D6400 stand-
ards. In addition, five paperboard grades also hold a home
compostability certificate according to standard NF T
51–800. “In order to enhance the circular economy, our
main aim is that our paperboards are recycled after use.
But recycling is not always possible – the paperboard
may become contaminated due to its contents and can-
not be recycled. In this instance compostability is a good
alternative.”
– Helena Moring-Vepsäläinen, Product Safety Manager
Our paperboards
have certificates on
compostability
e most important function of packaging is to keep the consumer safe. Our
products are manufactured from renewable fresh bres that are naturally pure,
traceable and recyclable. Fresh bre paperboards are the safest choice of bre
packaging for sensitive end uses like direct food contact, where the packaged
goods will retain the taste and smell intended.
WE KNOW OUR RAW MATERIALS
One of the advantages for Metsä Board is that the whole chain of wood raw
material from forest, via pulp mill, to board mill, is managed by business areas
of Metsä Group. is is how we know exactly what our paperboards are made
of. e use of fresh bres, and the unique chain from the forest to products,
Fresh fibre paperboard
is a safe choice
We do not compromise on product safety. Therefore
we follow product safety principles as strict as those
used by the food industry.
guarantees that no unknown chemicals end up in our paperboards. For exam-
ple, recycled bres contain traces of ink and other impurities that may end up in
the packaged product and be harmful to human health.
Only safe and carefully selected chemicals are used in our paperboard
production. Each of them is observed carefully; they are required to comply with
relevant global legislation, for example, food contact regulations. Health, safety
and environmental aspects are also carefully reviewed.
MANUFACTURING HYGIENIC AND SAFE PAPERBOARD
As a leading fresh bre paperboard manufacturer Metsä Board wants to ensure
that its product safety practices are equivalent to the standards in the food
industry. Metsä Board production sites work according to good manufacturing
practice (GMP), which is a basic requirement in Europe. In addition, all Metsä
Board mills have a certied ISO 22000 Food Safety Management System, and
the mills that are producing paperboards for food contact are also certied
according to FSSC 22000 requirements.
Metsä Board mills have evaluated their food safety hazards with a HACCP
(Hazard analysis and critical control points) tool, which is widely used in the
food industry. To prevent the product safety risks caused by recognised hazards
in advance, Metsä Board mills have dened preventive programmes that com-
prise the whole production chain. In addition to our own operations, a proper
hygiene level is also required from Metsä Board’s suppliers and subcontractors
to ensure that paperboards are protected against contamination in every phase
of the supply chain. We regularly audit our partners to ensure that risks are
managed throughout the supply chain.
EXCEEDING THE REGULATORY REQUIREMENTS
Packaging materials intended for direct contact with food are subject to several
global and local regulations and recommendations. Metsä Board ensures food
safety by strict compliance with regulatory requirements that are applicable
in relevant market areas, for example, in Europe, the US and Asia. Our global
team of experts continuously addresses the evolving regulations and emerging
product safety concerns to ensure that we full, and even exceed, these
requirements today and in the future.
To ensure the quality and safety of Metsä Board products, regular testing
of the chemical properties and microbiological purity of the products is con-
ducted. Metsä Board paperboards are also subject to sensorial examination of
organoleptic properties. All products are tested according to global legislation
in accredited external laboratories. e analysis, together with a detailed
internal risk assessment, forms the basis for a Product Safety Statement, which
covers all relevant product safety related issues for each Metsä Board product.
RAW MATERIALS
All wood raw material used by Metsä
Board comes from controlled or certified
sources and is traceable to the forest. Only
safe and carefully selected chemicals are
used in production. Chemical suppliers
are expected to fulfil our product safety
questionnaires annually.
PRODUCTION
Metsä Board products are manufactured
in accordance with good manufacturing
practice (GMP) and all Metsä Board
mills work according to a certified ISO/
FSSC 22000 Food Safety Management
System.
SAFE PRODUCTS
All products are tested and evaluated
according to global legislation to ensure the
safety of the products for dierent end uses,
for example, direct contact with foodstus.
LOGISTICS
With careful packaging and
requirements for logistics chain
we ensure the purity and safety
of our products throughout the
storage and transportation.
CONVERTING
High quality products elimi-
nate disruption and enable a
smooth converting process.
CONSUMER SAFETY AND END USE
The most important function of food pack-
aging is to keep the contents and consumers
safe. All Metsä Board paperboards are recy-
clable, depending on local recycling services.
They are also compostable and biodegradable,
excluding PE-coated products.
PRODUCT SAFETY IS IMPORTANT THROUGHOUT A PRODUCT’S LIFE CYCLE:
FROM THE RAW MATERIALS ALL THE WAY UP TO THE RECYCLING OF THE FINISHED PRODUCT.
WE OFFER SUSTAINABLE CHOICES
2928
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
100
80
60
40
20
0
17 18 19 20
240
200
160
120
80
40
0
16 17 18 19 20
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
We minimise the
environmental impact
of our production
Resource eciency and investments help to reduce
the emissions of our production further. They also
support the sustainable use of energy, water and raw
materials.
SHARE OF FOSSIL
FREE ENERGY, %
(OWN GENERATION
AND PURCHASED
ENERGY)
%
CO
2
EMISSIONS AND USE OF ENERGY AND WATER 2016–2020
2020 2019 2018 2017 2016
Fossil-based CO
2
emissions (Scope 1), t 240,036 248,274 288,579 300,973 278,725
Indirect fossil-based CO
2
emissions (Scope 2, market based), t 272,115 250,742 275,048 259,621 259,843
Indirect fossil-based CO
2
emissions (Scope 2, location based), t 373,816 374,409 416,789 361,652 275,885
Bio-based CO
2
emissions, t 1,812,952 1,815,179 1,837,299 1,914,832 1,881,238
Total energy consumption, GWh (primary energy consumption)* 11,817 11,686 11,675 11,809 11 960
Total energy consumption, GWh (final energy consumption)* 7,940 8,010 8,274 8,499 8,076
Water sourcing, 1,000 m³ 113,565 100,967 105,921 106,826 106,942
Of which used as process water, 1,000 m³ 62,037 59,381 65,662 68,568 70,611
Of which released back to the waterways as purified wastewater, 1,000 m³ 58,891 59,326 65,662 67,920 69,533
*
)
Total energy consumption can be expressed in two dierent ways: 1) According to the GRI’s calculation method as the final consumption of energy by summing up the amount of fuel, electricity and
heat consumed at the mills, and 2) as the consumption of primary energy, which describes the amount of energy consumed and the energy needed to produce it. The primary energy of purchased
electricity is calculated assuming the following eciency factors: 0.4 for traditional fuels, 0.33 for nuclear energy, and 1 for hydro, wind and solar energy. Purchased heat is calculated according to the
actual fuel consumption of nearby power plants.
More environmental figures, including mill-specific emissions into air and discharges into waterways, are reported on pages 40–41. Climate-related risks are reported according to TCFD (Task Force on
Climate-related Financial Disclosures) recommendations on pages 52–53.
The value chain’s CO
2
emissions (Scope 3) are disclosed as part of Metsä Board’s annual CDP reporting, in connection to which the Scope 3 details are also updated on Metsä Board’s website.
2018
Share of fossil free energy out of total energy. When the share is 100%,
Metsä Board’s Scope 1 and 2 emissions are zero.
Share of fossil free energy (out of total energy)
1)
Planned key investments subject to the final investment decisions.
Presented timelines are indicative
80%
Starting point:
82%
Target:
100%
90%
100%
2025 2030
KYRO
Peat replaced with
biomass
HUSUM, KYRO, TAKO, SIMPELE
Replacing natural gas in drying of coating with e.g. biogas or fossil free electricity
KEMI
Replacing liquefied petroleum gas (LPG) with biogas or fossil free electricity
ÄÄNEKOSKI
Piloting new technology to increse
coating drying capacity with biogas or
fossil free electricity
HUSUM, KASKINEN, KYRO, SIMPELE
Replacing power plant’s backup fuels with bio-based fuels
KASKINEN
Replacing process fuels in chemical recovery with
fossil free fuels
RENEWAL OF
HUSUM
PULP MILL
Phase 1: New recovery
boiler and turbine
RENEWAL OF
HUSUM
PULP MILL
Phase 2:
New fibre line
Estimated time frame
for the project
SIMPELE
Peat replaced with
biomass
JOUTSENO
Natural gas replaced
with biogas or fossil free
electricity
TAKO
In steam production
natural gas replaced
with e.g. fossil free
electricity
600,000
500,000
400,000
300,000
200,000
100,000
0
181,5
178,1
174,6
156,5
159,4
FOSSIL CO
2
EMISSIONS
(SCOPE 1 AND 2
MARKET-BASED)
t CO
2
kg CO
2
/t
t CO
2
Kg CO
2
per produced tonne
Our operations are guided by the principles of our environmental policy,
which considers: sustainable forest management, environmental responsibility,
the continuous improvement of our operations, resource eciency and our
suppliers’ sustainability.
All of our mills comply with the limits of mill-specic environmental and
water permits set by the local environmental authorities. e permits cover
factors such as discharges into water, emissions into air, noise and accidental
releases. In addition, all our production units follow certied management sys-
tems in terms of quality, the environment and energy. In accordance with these
management systems, our production units conduct regular risk assessments
and internal audits. ey are also regularly audited by third parties. We measure
and develop our performance with the help of ambitious sustainability targets,
which exceed the requirements of legislation.
COMBATING CLIMATE CHANGE
WITH FOSSIL FREE ENERGY
Our target is that by the end of 2030, our production units will not use any fossil
fuels or purchase any fossil-based energy. At this point, our direct and indirect
fossil-based carbon dioxide emissions (Scope 1 and 2) will fall to zero.
Our targets for reducing greenhouse gas emissions have been approved by
the Science Based Targets initiative. ey meet the strictest requirements of the
Paris Agreement which aims to limit global warming to 1.5 °C degrees. Metsä
Board’s reduction targets for the emissions of the company’s value chain (Scope
3) also meet SBTi’s most stringent criteria (pp. 26–27).
Roadmap to fossil free mills 2018–2030
1)
We have reduced our fossil-based CO
2
emissions (Scope 1 and Scope 2)
by 9% per tonne produced since 2018. e previous reduction in 2009–2018
was 48%. In 2020, fossil free energy accounted for 83% of Metsä Board’s total
energy consumption (2019: 83%). Most of this was bioenergy produced from the
wood-based side streams of our processes, such as black liquor, bark and logging
residue. Our energy eciency improved by 2.1% compared to the base year 2018
(2019: weakened 0.7%).
Our plan of moving towards the use of entirely fossil free energy includes
mill-specic measures and investments, which will further improve the
eciency of energy and process water use and abandon fossil-based energy
sources both in our own energy production and in purchased power and heat.
e renewal of the Husum pulp mill plays a major role in achieving the fossil
free target.
Fuels, renewable 4.58
Fuels, non-renewable 0.98
Purchased electricity,
renewable 0.22
Purchased electricity,
nuclear (fossil free) 4.11
Purchased electricity,
non-renewable 0.88
Purchased heat,
renewable 0.89
Purchased heat,
non-renewable 0.16
ENERGY SOURCED IN 2020
11.8 TWh (as primary energy)
Wood-based
side streams 4.58
Gas 0.67
Peat 0.14
Oil 0.17
Waste 0.002
TOTAL FUEL CONSUMPTION IN MILLS
IN 2020
5.6 TWh
Renewable energy, wood-
based side streams 5.50
Other renewable energy 0.18
Nuclear power 4.11
Fossil-based fuels 2.02
TOTAL ENERGY CONSUMPTION
IN 2020
11.8 TWh (as primary energy)
Own generation 0.37
Purchased through
PVO shareholding * 0.75
Purchased electricity 1.24
ELECTRICITY SOURCED
IN 2020
2.4 TWh
*
Pohjolan Voima Oyj is a non-listed public limited liability
company. It supplies electricity and heatfor its shareholders
at cost price. Metsä Board’s shareholding in PVO is 3.2%.
PERFORMANCE IN 2020
Improvement in energy eciency from 2018 level
+2.1%
WE WORK FOR A BETTER CLIMATE AND ENVIRONMENT
3130
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
EMISSIONS INTO AIR AND DISCHARGES
INTO WATER ARE MONITORED CLOSELY
e majority of our emissions into air are caused by the energy production
needed for the manufacturing of pulp, BCTMP and paperboard. Alongside
carbon dioxide emissions and the climate impact, our most notable emissions
into the air are sulphur and nitrogen oxides, which cause acidication. Locally
signicant eects can arise from noise, emissions of particulate matter and the
malodorous sulphur compounds generated in the production of chemical pulp.
With regard to waterways, the key indicators to be monitored are the volume
of nutrient emissions with an impact on eutrophication (phosphorus and
nitrogen), the volume of suspended solids, the biological and chemical oxygen
demand (BOD, COD) attributable to organic material and the chlorine-con-
taining AOX compounds arising from bleaching of chemical pulp. Our mills’
impact on waterways is typically low compared to the diuse pollution caused
by agriculture, forestry and scattered settlements. In Finland, for example,
only about 3–4% of nutrient discharges are attributable to the pulp and paper
industry (Finnish Forest Industries Federation).
Our production relies on the best available technology and we continuously
ensure that all our mills operate within the limits of the environmental and
water permits issued by the authorities. If deviations occur, we always report
them to the authorities. No deviations resulting in signicant environmental
impact occurred in Metsä Board’s production units in 2020. Some cases in
which permit conditions were exceeded on a monthly level were nevertheless
recorded. Our mill-specic emissions and all environmental permit limit
violations are reported on pages 40–41 of this Annual Report.
AIMING TO UTILISE ALL SIDE STREAMS
As part of Metsä Group, we are able to use every part of our wood raw material.
Metsä Group’s production units use the most valuable parts – thick logs – to
manufacture wood products used in construction, for example. e thinner
parts of tree trunks and the younger trees harvested during thinning operations
are the main raw material of pulp and paperboard products. Bark and branches
are utilised in the production of bioenergy.
We continuously improve recovery processes to avoid waste in pulp and
paperboard production. By increasing the recycling of process water, for
example, we can reduce bre material losses. We are also looking for new ways
to reuse residues, and we use organic fractions for energy production. Our goal
is to make use of all production side streams so that no landll waste will be
generated aer 2030. Our greatest challenge is nding applications for the green
liquor dregs generated in the pulp process, and we are currently investigating
potential solutions.
In 2020, we utilised 99% of the side streams (2019: 99%). Side streams consist
of production waste and by-products, such as ash used in fertilisers.
Some 35% of the waste generated in production was reused as materials,
while 63% of it was incinerated to produce energy. Approximately 2% of the
waste was delivered to landll or treated as hazardous waste.
WE IMPROVE THE EFFICIENCY OF WATER USE
We aim to continuously optimise water use within our processes and to increase
our eciency in recycling process water in the production process to reduce the
need for abstracting new raw water. is minimises our wastewater discharges
and saves energy, thereby also reducing the impact on the climate.
All the process and cooling waters we use are taken from nearby surface
waters such as rivers and lakes. Given that all our mills are located in water rich
areas in Finland and Sweden, no water is abstracted from areas with high water
stress (WRI Aqueduct Water Risk Atlas). Aer use, process water is puried
thoroughly before it is returned to waterways. Since the cooling water ows
within its own closed cycle, it remains clean at all times. Our water consumption
is very low compared to the volume of water we use: 99% is returned to the
waterways aer use and 1%, evaporates into the air during the process or is
bound to our products.
In 2020, Metsä Board’s freshwater intake totalled 114 million cubic metres
(101 million m
3
), of which approximately half was used in the process and
half for the cooling of machinery. To continue our eorts in reducing water
use (-20% per tonne produced in 2010–2018), our new aim is to reduce the use
of process water by 30% per tonne produced in 2018–2030. e reduction in
2020 was 7.7% compared to 2018 (2019: -11%). To achieve this target, we have
dened mill-specic measures which improve water recycling and reduce the
abstraction of raw water from waterways. e Husum integrated mill’s share of
our water use is around 40%, which is why the renewal of the Husum pulp mill
will reduce Metsä Board’s water use by a signicant degree.
25.0
20.0
15.0
10.0
5.0
0
PROCESS WATER USE, m
3
/tonne
Base year 2018 and target year 2030
Reduction target 2018–2030
Target level in 2030: 14,4 m
3
/t
Metsä Board participates in
the restoration of fish stocks
PERFORMANCE IN 2020
Reduction in process water use per product tonne
from 2018 level
-7.7%
Utilisation of side streams
99%
Metsä Board participated in the restoration of the Mämmenkoski fishery, located in
Äänekoski. The restoration was focused on enabling the fish to move upstream, from one
lake area to another, and on the lake trout’s natural regeneration in the rapids. Other partic-
ipants in the project included WWF Finland, the North Savo Centre for Economic Develop-
ment, Transport and the Environment, and the water body’s local participants’ association.
Practical measures in the restoration eort included opening two damns blocking the
trout’s way upstream, shaping the bed of the river into a natural fishway with the help of a
stone pavement, and building spawning areas for the trout and habitats for the juvenile fish.
The work was finished in the summer of 2020.
“Metsä Board is happy to participate in collaborative projects involving waterways and
fisheries. We hope that the trout will return to Mämmenkoski as soon as possible.”
– Mika Leino, Environmental Director at Metsä Group
3332
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
Metsä Board, as part of Metsä Group, is committed to respecting the human
rights recognised in the UN’s Universal Declaration of Human Rights. We are
also committed to the UN’s Global Compact initiative and support its ten prin-
ciples regarding human rights, labour, the environment and anti-corruption. We
also comply with the legal disclosure requirements applicable to us.
We require our personnel to comply with applicable legislation, and to act
honestly and make ethically sound decisions. Our work and decision making
are guided by Metsä Group’s Code of Conduct. e Code of Conduct is supple-
mented by Metsä Group’s policies on competition law, environmental issues,
information security, equality, human resources and personal data protection,
among others.
We expect the same high standard of ethics from our suppliers. e require-
ments concerning suppliers are detailed in our Supplier Code of Conduct,
and they constitute a part of our purchasing contracts. We apply the Know
Your Business Partner process to both customers and suppliers. It allows us to
improve our understanding of who we are working with, and thereby reduce the
risk of getting involved in illegal activities.
Representatives of our personnel and stakeholders can report any problems
they detect through the company’s Compliance and Ethics Channel, which is
available in ten languages. e reports can be submitted anonymously. Any
breaches, or suspected breaches, the company becomes aware of are investigated.
Such investigations are steered by the Compliance Committee, composed of
the directors in charge of Metsä Group’s legal services, compliance function
and internal auditing. e Compliance Committee’s responsibilities include
monitoring that the consequences for non-compliance are consistent in cases
Our work is guided by
a culture of doing the right thing
of similar severity and that possible corrective actions are adequate. Any illegal
activities detected are reported to the authorities. In 2020, Metsä Board became
aware of a total of 10 (2019: 8) cases involving for example, a conict of interest,
inappropriate conduct or fraud attempts. None of these cases led to legal
proceedings against Metsä Board or involved corruption, bribery or use of child
labour.
CODE OF CONDUCT TRAINING
FOR ALL PERSONNEL
e culture of doing the right thing is strengthened by regular training focused
on the Code of Conduct. e primary purpose of such training is to help per-
sonnel identify ethically challenging situations and to act in the correct manner.
e e-learning course concerning the Code of Conduct has been completed by
99% (97%) of Metsä Board’s personnel. e target is 100%.
INTRODUCTION OF AN ETHICS BAROMETER
In 2020, we introduced an ethics barometer which measures our personnel’s
perception of ethics in their workplace and can be used to identify business
ethics related risks. e barometer’s target group included all personnel. e
Ethics Index representing the results of the barometer was at 85.1% for Metsä
Board; our target is 100%. e response rate at Metsä Board was 58.0%. e
trainings will continue in 2021.
Based on the barometer’s results, awareness of ethical matters is at a good
level in our company. Personnel consider the topic important and nd that
the company operates in an ethically sound manner. ere is still room for
improvement in leadership, the equal treatment of personnel, and in building a
culture where people have the courage to report unethical behaviour and where
any shortcomings are addressed. Appropriate development measures will be
selected for these issues, and the progress made will be monitored by conducting
the barometer at regular intervals.
WE PROMOTE EQUALITY
Metsä Board is committed to the development of a culture of equality where
everyone can achieve a successful career and become an accepted member of
the workplace community. Equality is promoted through new targets with
a particular focus on improving gender equality. e measures necessary to
achieve the targets are planned in such a way that they support workplace
diversity on a broader scale as well. We are committed to ensuring that personal
characteristics – such as gender, age, ethnic background, sexual orientation or
disability – do not inuence a person’s chances to succeed in working life.
We require our personnel
and partners to work ethically.
METSÄ GROUP’S COMMON
EQUALITY TARGETS:
• By the year 2025, 25% of Metsä Group’s leaders* are women
(*Vice President or higher).
• ere are no unjustiable pay gaps between women and men.
• Metsä Group develops equality through a training programme
targeted at all employees.
In accordance with these targets, a survey on pay equality and an e-learning
course on equality were carried out in 2020. 83% of Metsä Board’s personnel
completed the e-learning course. e trainings will continue in 2021.
PERFORMANCE IN 2020
Coverage of Code of Conduct e-learning
99%
Ethics Barometer
85%
Women aged less than 30
Men aged less than 30
Women aged 30–50
Men aged 30–50
Women aged more than 50
Men aged more than 50
PERSONNEL BY AGE AND GENDER IN 2020
%
PERSONNEL KEY FIGURES
2020 2019 2018
Number of employees, FTE
1) 2)
2,370 2,351 2,352
Share of women and men in blue-collars, % 11/89 11/89 9/91
Share of women and men in white-collars, % 40/60 41/59 42/58
Share of permanent employees, % 94.0 92.5 93.0
Share of full-time employees, % 96.4 97. 2 97.1
Average age, years 46.4 46.2 46.4
Average age, years (blue-collars) 46.2 46.1 46.7
Average age, years (white-collars) 46.7 46.6 45.5
Average years served, years 18.6 18.7 19.0
Employee turnover rate, %
3)
4.5 7.7 3.9
Average training hours per employee
2)
11.8 17.6 1 7. 5
Average training hours per employee (blue-collars) 8.8 - -
Average training hours per employee (white-collars) 16.0 - -
Employees covered by collective agreements, %
2)
78 - -
Share of women within all employees, % 21.3 21.1 21.5
Share of women in manager positions, %
4)
23.0 21.0 20.1
Share of women in executive positions, Vice President
or higher, %
19.4 - -
Share of women in the Corporate Management Team, % 33.3 33.3 33.3
Share of women in the Board of Directors, % 22.2 22.2 22.2
1)
Full-time equivalent FTE on 31 Dec.
2)
Subsidiary company Hangö Stevedoring is included
3)
The figure includes also redundancies caused by restructuring of business
4)
Share of women within all managers
COMPENSATION PER PRODUCTION COUNTRY
Finland Sweden
Ratio of annual total compensation for organisation's highest paid
individuals (highest 1%) to median annual total compensation
1)
4.2 2.5
Ratio of basic salary and remuneration of women to men, based on
comparable average job grades index
1)
1.0 0.9
Ration between salary of women to men, blue-collars 0.9 1
1)
Includes 94% of white-collar personnel
Finland
Sweden
The rest of the EMEA region
Americas and APAC
56
32
8
3
2
8
11
36
8
35
PERSONNEL BY REGION
%
COOPERATION TO PROMOTE WELL-BEING
Metsä Board is a major employer in the localities of its mills, and it engages
in active dialogue with other local stakeholders. Once the restrictions related
to coronavirus pandemic have been removed, we will reinstate our open
house events in the localities of our mills and invite local people to familiarise
themselves with our operations.
We are particularly focused on improving the well-being of children and
youth and on strengthening their relationship with the forest. We visit junior
high schools to share our expertise about the opportunities oered by the forest
industry and to oer summer jobs, thesis work and trainee programmes to
students.
As part of Metsä Group, we introduce children and young people to the
forest industry by cooperating with Finland’s 4H network and its more than 200
local organisations. Metsä Group also supports the youth campaign Nuorille
siivet launched by the Finnish Olympic Committee’s Sports Academies, by
sponsoring sport coaching to junior high school students.
WE CREATE WELL-BEING
3534
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
10
8
6
4
2
0
16 17 18 19 20
18
15
12
9
6
3
0
16 17 18 19 20
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
e safety of employees is of primary importance to Metsä Board. All our mills
comply with the ISO 45001 occupational health and safety management system,
which replaced the previous OHSAS 18001 system in 2020.
During the year, safety at work has been improved through a programme
covering the entire Metsä Group. e programme aims to create common safety
management principles, daily management processes, safety-at-work standards
and more detailed safety instructions. e resulting operating models will be
adopted throughout the Group. Metsä Board will adopt the operating models in
all its operations by the end of 2021. e safety programme’s principles support
operations in line with the ISO standard at our mills and comply with our
company’s Code of Conduct and safety policy. e safety principles cover our
entire personnel and partners.
e common safety management processes steer daily management and
carry us towards our goal of a safe working environment. By following the
common processes, we can make best practices available to everyone. e
implementation of the processes at the mills will be monitored through annual
internal audits. Annual external audits will be carried out in accordance with
the ISO 45001 standard.
INDICATORS FOR MONITORING SAFETY AT WORK
Metsä Group’s common safety performance indicators are an important
tool for developing occupational safety. Key indicators include TRIF, which
measures the total recordable incident frequency, and LTA1, which measures the
frequency of accidents leading to absences.
In 2020, TRIF was 8.4 (2019: 10.2), while the LTA1 rate was 5.7 (5.5). Safety
at our mills has improved, but the incident frequency in our port operations in
Hangö Stevedoring increased from the previous year. Slips, as well as injuries to
hands and feet, accounted for the most typical accidents.
We also monitor the achievement of the internal targets of proactive safety
work on a continuous basis. e proactive measures include safety observations,
safety walk-throughs and safety trainings.
TRAINING SUPPORTS THE ACHIEVEMENT OF TARGETS
e adoption of common safety practices has been supported through training
programmes aimed at all employees working at mills. In addition, maintenance
personnel have been provided with training on the mills’ maintenance
processes. Due to precautionary measures attributable to the coronavirus
situation, some of the training has been organised remotely. anks to electronic
training materials, the training of new employees and the retraining of current
employees can be implemented exibly and eciently.
Aiming for
zero accidents
SAFETY INCREASES PRODUCTIVITY
Metsä Board’s mills continued to roll out the 5S method, aiming to improve
productivity, safety at work and well-being at work. e method is in use at
all our mills and at our headquarters. Among other things, 5S has reduced
trips and slips and the resulting accidents. e continuous use of the method
is ensured through 5S audits, which also draws attention to any deviations
detected during the audit rounds.
In 2020, all production units adopted a criticality classication process
for maintenance operations. e process denes the maintenance needs of
functions and equipment. is supports the achievement of the production
units’ production targets and improves the operational reliability of machines
and equipment.
We develop safety at work through proactive
measures, a common way of working and by
complying with a standardised management system.
Our long-term objective is zero accidents.
SAFETY KEY FIGURES
2020 2019 2018
Sickness absences, % of theoretical working hours 3.9 4.0 3.5
Total Recordable Injury Frequency (TRIF )
per million hours worked
8.4 10.2 12.6
Lost-time accident frequency (LTA1)
per million hours worked
5.7 5.5 7.5
Number of lost-time accidents (LTA1),
external service providers
7 13 8
Accident severity rate 9.2 18.6 13.8
Accident severity rate, external service providers 12.1 10.3 7.8
Number of fatal occupational accidents 0 0 0
Subsidiary company Hangö Stevedoring is included in all figures.
5S is the cornerstone
of a safe and ecient
supply chain
LOST-TIME
ACCIDENT FREQUENCY
(LTA1)
per million hours worked
TOTAL RECORDABLE
INJURY FREQUENCY
(TRIF)
per million hours worked
Unified processes help us to eectively
develop maintenance practices and compe-
tences. With harmonised working practices
we can improve collaboration with our other
mills and support each other better.
– Jonas Mörnsjö, Maintenance Manager
Clean mills where well-labelled equipment and tools
are organised and easily accessible create conditions for a
high level of safety and production. Cleanliness and order
have a major impact on everyday well-being at work. At
Metsä Board, 5S is used in all mills as part of
day-to-day work and operation. The activities are
monitored by production line and each mill has a
system to systematically monitor 5S.
WE CREATE WELL-BEING
Kuvan sävyt korjataan.
3736
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
Strategy is implemented
in daily work
Motivated people are one of our critical success factors. We want each Metsä
Board employee to have meaningful work and continuous competence
development. We ensure that our common goals are clear, and that each of our
employees knows the importance of their work and their role as an implementer
of our strategy. Our remuneration systems support the implementation of the
strategy and incentivises employees to achieve the set goals.
As an employer, we are guided by company-wide policies which we require
every employee to know and comply with. Among other things, these policies
concern ethical operating methods, equality, well-being at work, safety and
sustainability.
Proactiveness plays a key role in promoting and maintaining well-being
at work and the capacity for work. Important tools in the early support model
include an assessment of working capacity and personal working capacity plans,
which are drawn up in cooperation with supervisors, occupational healthcare
and HR.
We encourage our employees to anticipate and assess their own coping
needs and health, and we provide monetary support for tness and cultural
hobbies. Everyone is entitled to free occupational healthcare. Benets related to
well-being at work are equal for both permanent and xed-term employees.
Our goal is for everyone in our workplace community
to know the meaning of their work and their role as
an implementer of our strategy. We believe that a
motivating and inspiring workplace attracts the best
talents.
GOAL-ORIENTED COMPETENCE DEVELOPMENT
Metsä Board is known for the high quality of its products and services. We
employ many professionals who have committed to their work for years and
possess deep insights into how the work should be developed. eir professional
skills constitute important knowledge capital. Making use of the skills of
specialists in induction and the development of work is important for us to be
able to ensure our operational eciency and the high quality of our products in
the future.
Our production relies on the industry’s latest and utilises best technology. A
forerunner position in technology increases the competence requirement level
and provides opportunities for continuous competence development. A high
level of competence ensures production process consistency and reliability in
all circumstances. Each of our employees has a performance and development
appraisal (PDA) twice a year for the purpose of setting goals and development
targets and assessing the progress made in them, together with their supervisors.
In 2020, Metsä Board adopted a competence assessment model based on
business processes, which was used to prepare a development plan based on
competence development needs for every employee.
We arrange apprenticeship training at our mills with the aim of recruiting
future production and maintenance professionals with multiple skills. A
personal training plan is drawn up for each student, and the aim is for them
to complete a basic degree in process engineering, mechanical engineering or
in a similar eld and to be employed by one of our production units once the
apprenticeship is completed. In 2020, our mills in Simpele, Tampere, Äänekoski,
Kaskinen and Kyröskoski began training a total of 31 apprentices.
Despite the exceptional circumstances, Metsä Board provided summer jobs
for 280 summer employees. e inductions were conducted safely with the help
of various arrangements.
Metsä Board is an international and continuously
developing company, and we can oer diverse
opportunities for job rotation and for continuous
personal competence development and career
advancement. Our strengths include an ethical and
respectful corporate culture, management through
clear objectives, allocation of responsibilities and
fast decision making.
– Camilla Wikström, Senior Vice President, Human Resources
During the exceptional year of the coronavirus pandemic,
we introduced strict precautionary measures that were in
line with the situation and exceeded the measures required
by the authorities. The aim of the extensive precautionary
measures was to ensure the health, safety and wellbeing of
employees, prevent chains of transmission and to ensure the
continuity of our business.
During the pandemic, we have worked remotely when-
ever the nature of the work has allowed for it. However, the
majority of our work takes place at production units where
remote working is not possible. We have used a variety of
means to minimise close contacts within our oces and
mills. We take care of hygiene and have detailed instructions
for the use of face masks. We have minimised infections by
applying special arrangements in canteens and sta facilities
Safety at work during
exceptional times
and on routes from one place to another and by reducing the number
of workstations.
We have permitted only the most important visits to our locations,
such as visits related to maintenance and investment work. We regu-
larly test our personnel in mills located within areas where the infection
is spreading.
The coronavirus pandemic added extensive special arrangements
to our maintenance shutdowns this year. Nearly 2,000 tests were
conducted in Metsä Group during the shutdowns. No infection chains
arose and to prevent them, department-specific routes and separate
sta facilities for employees in charge of maintenance were organised
in the mill areas for the duration of shutdowns. All our mills completed
their annual maintenance shutdowns successfully.
For the challenges that the exceptional situation causes in daily
work, we have provided employees and supervisors with information
on how to operate under high workloads and how to ensure the flow of
information under all circumstances. We have organised video meet-
ings for the entire sta, and we also encourage supervisors to hold reg-
ular bilateral discussions with each of their team members to support
time management, work ergonomics and the taking of breaks.
Our resource situation has remained normal during the pandemic.
Thanks to the strict safety measures, we have not seen any chains of
transmission at our workplaces. We have been able to continue our
business and development projects according to plans.
Metsä Board’s new Excellence Centre in
Äänekoski, Finland, employs professionals
in research and development and packaging
design services. Operations at the Excellence
Centre were started up in September with
strict safety measures.
As we use the latest and industry’s best technology,
the level of competency requirements increases.
During apprenticeship training, students do versatile
production or maintenance work. For our current
professionals, the programmes oer the opportunity
for further training and development of competencies.
WE CREATE WELL-BEING
3938
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCESUSTAINABILITY
SUSTAINABILITY
|
METSÄ BOARD ANNUAL REPORT 2020
MILL-SPECIFIC INFORMATION PRODUCTION CAPACITIES PER MILL
Mills Joutseno Kaskinen Kemi Kyro Simpele Tako Äänekoski Husum Others
5)
Total
COUNTRIES FINLAND FINLAND FINLAND FINLAND FINLAND FINLAND FINLAND SWEDEN
PERSONNEL
Number of employees, FTE
1)
56 82 118 152 269 213 196 674 610 2,370
Lost-time accident frequency (TRIF)
2)
0.0 0.0 5.0 3.9 8.6 14.1 3.1 6.0 - 8.4
Lost-time accident frequency (LTA1)
3)
0.0 0.0 5.0 3.9 2.2 2.8 0.0 4.3 - 5.7
Sickness absences, %
4)
3.5 3.2 4.3 3.3 3.0 4.9 4.4 4.4 - 3.9
MANAGEMENT SYSTEMS
ISO 9001
x x x x x x x x
ISO 14001
x x x x x x x x
ISO 50001
x x x x x x x x
OHSAS 18001
x x x x x x x x
ISO 22000
x x x x x x x x
FSSC 22000
x x x x x
CHAIN OF CUSTODY
PEFC™
x x x x x x x x
FSC®
x x x x x x x x
EMISSIONS TO AIR (t)
CO
2
bio
0 170,874 0 0 151,577 0 0 1,490,500 1,812,952
CO
2
fossil
31,275 5,874 5,935 4,509 63,146 74,044 0 55,253 240,036
Sulphur as SO
2
0 16 0 0 76 0.038 0.00 263 356
TRS compounds
0 0 0 0 0 0 0 79 79
Nitrogen oxides as NO
2
16 167 2.5 0.0 133 45 0 805 1,168
Particles
11 8 0 0 1.3 0 0 289 309
DISCHARGES TO WATER (t)
AOX
0 0 0 0 0 0 0 52 52
COD
588 1,358 260 163 442 178 451 7,425 10,864
BOD
6)
4.8 45 38 37 41 64 203 0 433
Total phosphorus
0.23 2.4 1.5 0.87 1.4 1.2 0.24 13.9 22
Total nitrogen
4.2 22 29 18 12 0.77 8 101 195
Total suspended solids
25 77 129 76 53 32 87 803 1,283
WATER USE (1,000 m
3
)
Water sourcing
6,503 15,155 9,757 4,206 27,546 3,927 4,439 42,101 113,633
Waste waterflow
607 4,096 7,481 3,310 4,733 2,571 2,090 34,003 58,891
WASTE (t)
Utilised 10,716 21,379 4,778 14,681 31,771 3,967 2,374 14,379
104,045
Landfill
0 759 329 2.6 34 0 0 0 1,124
Hazardous
13 53 0.5 8.5 52 42 33 481 685
1)
Full-time equivalent on 31 December 2020
2)
Total recordable incident frequency per million worked hours.
3)
Lost-time accident 1 frequency rate. Accidents at work resulting to at least one day sickleave per million worked hours.
4)
% of theoretical working time
5)
Includes personnel from sales and logistics operations, management and subsidiaries. Production, emissions and waste originate from Äänevoima’s production of energy sold for external use.
Personnel figures of Others are included in Metsä Board’s total figures.
6)
Husum mill’s BOD not measured.
An independent external assurance has been performed for the data in the table as part of Metsä Group’s Sustainability Report (limited assurance).
BOARD MILLS
Tonnes Country Machines Folding boxboard White kraftliner Total
Tampere (Tako) Finland 2 210,000 210,000
Kyröskoski (Kyro) Finland 1 190,000 190,000
Äänekoski Finland 1 260,000 260,000
Simpele Finland 1 290,000 290,000
Kemi Finland 1 425,000 425,000
Husum Sweden 2 400,000 250,000 650,000
Total 8 1,350,000 675,000 2,025,000
PULP AND BCTMP MILLS
Tonnes Country Chemical pulp BCTMP Total
Husum Sweden 730,000 730,000
Joutseno Finland 330,000 330,000
Kaskinen Finland 380,000 380,000
Total 730,000 700,000 1,440,000
METSÄ FIBRE PULP MILLS
1)
Tonnes Country Chemical pulp Total
Äänekoski Finland 1,300,000 1,300,000
Kemi Finland 610,000 610,000
Rauma Finland 650,000 650,000
Joutseno Finland 690,000 690,000
Total 3,250,000 3,250,000
1)
Metsä Board owns 24.9% of Metsä Fibre.
ENVIRONMENTAL PERMIT LIMIT VIOLATIONS
In 2020, there were no incidents at Metsä Board’s mills that would have caused signicant environmental impacts, and that would have been followed by claims, com-
pensations or signicant media coverage. All incidents that have caused violations of monthly, quarterly or annual permit limit values are detailed with description
and corrective actions in the table below. e authorities have been informed and corrective actions have been taken in all cases.
Unit Incident Corrective actions
Kyro Monthly permit limit for total nitrogen emissions to water was exceeded in
January due to operative problems concerning nutrient dosing to euent
treatment plant.
Nitrogen dosage level was corrected and operation of the treatment plant
returned to normal.
Kyro Monthly permit limit of phosphorous was exceeded in March. Balanced dosing of ferric sulphate and phosphorus acid.
Kyro Monthly waste water permit limit exceedings in September. Suspended solids
and phosphorus were at high level because of treatment plant failure.
Balanced dosing of nutrients and optimized process parameters.
Kaskinen The permit limit for total phosphorus emissions to water was exceeded in July
due to evaporation plant washing chemical and low consistency of aeration
basin in the waste water plant.
Treatment of used evaporation plant chemical was changed and sludge removal
of aeration was turned to lower level.
4140
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
350
300
250
200
150
100
50
0
500
400
300
200
100
0
350
300
250
200
150
100
50
0
200
160
120
80
40
0
20
16
12
8
4
0
300
250
200
150
100
50
0
100
80
60
40
20
0
100
80
60
40
20
0
21
18
15
12
9
6
3
0
80
60
40
20
0
18
15
12
9
6
3
0
20
16
12
8
4
0
16 17 18 19 20
16 17 18 19 20
16 17 18 19 20
16 17 18 19 20
16 17 18 19 20 16 17 18 19 20
16 17 18 19 20
16 17 18 19 20 16 17 18 19 20
17 18 19 20 16 17 18 19 20
16 17 18 19 20 16 17 18 19 20
16 17 18 19 2016 17 18 19 20
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
METSÄ BOARD ANNUAL REPORT 2020
FINANCIAL
DEVELOPMENT
KEY FIGURES KEY FIGURESCONTENTS
ReportoftheBoardofDirectors
CONSOLIDATEDFINANCIALSTATEMENTS
Consolidatedstatementof
comprehensiveincome
Consolidatedbalancesheet
Statementofchangesinshareholders’
equity
Consolidatedcashflowstatement
NOTESTOTHECONSOLIDATED
FINANCIALSTATEMENTS
Accountingpolicies
Profitability
Segmentinformation
Sales
Otheroperatingincome
Operatingexpenses
Remuneration
Employeecosts
Remunerationpaidtothekey
management
Sharedbasedpayment
Retirementbenefitobligations
Capitalemployed
Intangibleassets
Tangibleassets
Otherinvestments
Inventories
Accountsreceivableandother
receivables
Othernon-currentliabilities
Accountspayableandother
liabilities
Provisions
Capitalstructureandfinancialrisks
Shareholders’equity
Financialincomeandexpenses
Othernon-currentfinancialassets
Cashandcashequivalents
Borrowings
Managementoffinancialrisks
Fairvalueoffinancialassetsand
liabilities
Incometaxes
Groupstructure
Holdingsinothercompanies
Acquisitionsanddisposed
operationsandnon-currentassetsheld
forsale
Relatedpartytransactions
Othernotes
Contingentliabilitiesassetsand
commitments
Eventsafterthefinancialperiod
PARENTCOMPANY
FINANCIALSTATEMENTS
Parentcompanyincomestatement
Parentcompanybalancesheet
Parentcompanycashflowstatement
NOTESTOTHEPARENTCOMPANY
FINANCIALSTATEMENTS
Accountingpolicies
Sales
Exceptionalitems
Otheroperatingincome
Operatingexpenses
Depreciationandimpairmentcharges
Financialincomeandexpenses
Incometaxes
Intangibleandtangibleassets
Investments
Receivables
Shareholders’equity
Mandatoryprovisions
Deferredtaxassetsandliabilities
Non-currentliabilities
Currentliabilities
Financialinstruments
Disputeslegalproceedingsand
commitments
Sharesandholdings
TheBoard’sproposalforthe
distributionoffunds
Auditor’sreport
Sharesandshareholders
Calculationofkeyratios
Comparableperformancemeasures
Keyfiguresandtaxes
Corporategovernancestatement
MetsäBoardCorporation’s
BoardofDirectors
MetsäBoardCorporation’s
CorporateManagementteam
Investorrelationsandinvestor
information
SALES
EUR million
2,500
2,000
1,500
1,000
500
0
PAPERBOARD DELIVERIES
1,000 tonnes
METSÄ BOARD’S MARKET PULP
DELIVERIES
1)
1,000 tonnes
EBITDA, COMPARABLE
EUR million, % of sales
CASH FLOW FROM OPERATIONS
EUR million
OPERATING RESULT COMPARABLE
EUR million, % of sales
CAPITAL EMPLOYED, EUR million
RETURN ON CAPITAL EMPLOYED, %
SHARE OF FOSSIL FREE ENERGY (OWN
GENERATION AND PURCHASED ENERGY)
%
SHARE OF CERTIFIED WOOD FIBRE
IN METSÄ BOARD
%
NET DEBT, EUR million
NET DEBT / EBITDA, COMPARABLE
DISTRIBUTION PER SHARE, EUR
PAYOUT RATIO, %
TOTAL INVESTMENTS
EUR million
LOST-TIME ACCIDENT FREQUENCY
(TRIF)
per million hours worked
2,000
1,600
1,200
800
400
0
2.5
2.0
1.5
1.0
0.5
0
0.40
0.30
0.20
0.10
0
PERSONNEL AT THE END OF PERIODEARNINGS PER SHARE
EUR
3,000
2,500
2,000
1,500
1,000
500
0
2,000
1,500
1,000
500
0
600
500
400
300
200
100
0
Folding boxboard
White kraftliner
1)
includes chemical pulp and
high-yield pulp (BCTMP)
0.60
0.50
0.40
0.30
0.20
0.10
0
4342
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
REPORT OF THE BOARD OF DIRECTORS
|
METSÄ BOARD ANNUAL REPORT 2020
Report of the Board of Directors 2020
industries. On the other hand, the pandemic has weakened demand for the
packaging materials of luxury items and graphic end uses. Demand for food
service packaging has been weakened by less movement of people in public
places.
In 2020, deliveries by European folding boxboard producers within Europe
increased by 2% and market prices fell from the previous year. Correspondingly,
deliveries by white kraliner producers increased by 3% and market prices
decreased. Metsä Board accounted for 35 (36) percent of the total deliveries of
European folding boxboard producers and 56 (59) percent of exports outside
Europe. In the United States, production of bleached boxboard for local
consumption increased and production of food service board decreased. Market
prices for bleached boxboard decreased and market prices for food service
board remained stable.
MARKET PULP
Metsä Board’s annual pulp position in 2020 showed a surplus of approximately
600,000 tonnes. e company sells market pulp to Europe, Middle East, Africa
and Asia. In the long term, market pulp demand is supported by the rapid con-
sumption growth of tissue paper, particularly in China, and the global demand
for packaging materials made from renewable raw materials.
In 2020, the coronavirus pandemic accelerated the decline in the production
of printing and writing papers. e decline was partly compensated by the
good demand for tissue papers and paperboards. Towards the end of the year,
especially the demand for long-bre pulp picked up in China and the dollar-de-
nominated prices started to increase.
In 2020, the dollar-denominated market price of long-bre pulp in Europe
decreased by 14% from the previous year, calculated from the dierence of the
average prices of the years. e dollar-denominated market price of short-bre
pulp decreased by 21%. In China, the dollar-denominated market price of
long-bre pulp declined by 7%, and that of short-bre pulp by 19%.
SALES IN 2020 (2019)
Metsä Board’s sales totalled EUR 1,889.5 million (1,931.8). Folding boxboard
accounted for 59% (57) of sales, while 25% (25) of sales came from white
kraliner, 12% (13) from market pulp and 5% (5) from other operations.
RESULT 2020 (2019)
e comparable operating result was EUR 221.2 million (184.4), and the operat-
ing result was EUR 227.3 million (180.8). Items aecting comparability during
the review period were EUR 6.0 million and consisted of the sale of a land area
not related to business operations.
e lower production costs of pulp and particularly of paperboard improved
the comparable result of the review period. In Sweden, the price of imported
wood decreased, and lower market prices of oil products caused energy costs to
decline. e prices of other raw materials also declined.
METSÄ BOARD’S BUSINESS
Metsä Board is a leading European producer of fresh bre paperboards and
a forerunner in sustainability. e company focuses on premium lightweight
fresh bre paperboards used primarily in consumer goods packaging and for
various needs in the retail. e company’s annual capacity for folding boxboard
and food service paperboard is 1,350,000 tonnes, and the annual capacity for
white kraliners is 675,000 tonnes. e company also produces chemical pulp
and BCTMP, both for its own use and for sale. e annual capacity for pulp and
BCTPM is 1,430,000 tonnes. In addition, Metsä Board holds a 24.9% stake in
Metsä Fibre, whose annual capacity for pulp is 3,250,000 tonnes. Metsä Board
sells its products to approximately 100 countries, and the company employs
approximately 2,400 people in 19 countries.
STRATEGY AND FINANCIAL TARGETS
In the medium-term, Metsä Board aims to grow in a controlled manner,
accounting for the prevailing market situation. is growth will be based
on skilled people, the industry’s leading products and innovative packaging
solutions. Decision-making is guided by internal protability targets and the
increase of shareholder value. Metsä Board focuses on the continuous improve-
ment of cost-eectiveness and on customer accounts which benet from the
high performance of the company’s products and services. e company also
aims to retain a strong balance sheet.
In 2020, the company’s nancial targets and dividend policy remained
unchanged.
• e comparable return on capital employed (ROCE) is, at minimum, 12%.
Actual in 2020 was 12.2%.
• e ratio of interest-bearing net liabilities to comparable EBITDA of, at
maximum, 2.5. Actual in 2020 was 0.7.
Metsä Board aims to distribute at least 50% of the result for the nancial period
in dividends every year. e Board of Directors’ proposal to the Annual General
Meeting concerning the dividend and capital distribution to be paid for the
2020 nancial year corresponds with 54% of the result for the nancial period.
OPERATING ENVIRONMENT
PAPERBOARDS
Global megatrends inuence companies’ actions, and set safety, quality,
sustainability and recyclability requirements for packaging. e changing
operating environment creates challenges, but also opportunities, for business
growth and long-term development. Pure fresh bre paperboards are replacing
plastic packaging materials and the use of recycled paperboard to an increasing
degree, particularly in food and food service packaging. e global demand
for high-quality fresh bre paperboard has annually grown by approximately
2–3%.
e coronavirus pandemic has increased demand for clean and safe
packaging materials, particularly for end uses in the food and pharmaceutical
DELIVERY AND PRODUCTION VOLUMES
1,000 t 2020 2019 2018
Delivery volumes
Folding boxboard 1,223 1,207 1,215
White kraftliner 587 584 616
Metsä Board’s market pulp 521 460 457
Metsä Fibre’s market pulp
1)
696 745 701
Production volumes
Folding boxboard 1,249 1,242 1,226
White kraftliner 591 574 640
Metsä Board’s pulp 1,371 1,373 1,363
Metsä Fibre's pulp
1)
702 734 740
1)
equal to Metsä Board’s 24.9% holding in Metsä Fibre.
Report of the Board of Directors
KEY FIGURES
2020 2019 2018
Sales, EUR million 1,889.5 1,931.8 1,944.1
EBITDA, EUR million 321.8 294.5 338.2
comparable, EUR million 315.8 279.0 343.8
EBITDA, % of sales 17.0 15.2 1 7.4
comparable, % of sales 16.7 14.4 1 7.7
Operating result, EUR million 227.3 180.8 246.3
comparable, EUR million 221.2 184.4 251.9
Operating result, % of sales 12.0 9.4 12.7
comparable, % of sales 11.7 9.5 13.0
Result before taxes, EUR million 212.3 165.6 224.2
comparable, EUR million 206.3 169.2 229.7
Result for the period, EUR million 170.1 144.6 203.4
comparable, EUR million 165.3 145.8 2 07.8
Earnings per share, EUR 0.48 0.41 0.57
comparable, EUR 0.46 0.41 0.58
Return on equity, % 12.5 10.9 16.3
comparable, % 12.1 11.0 16.7
Return on capital employed, % 12.6 10.2 14.0
comparable, % 12.2 10.4 14.4
Equity ratio at the end of the period, % 60 59 58
Net gearing at the end of the period, % 17 23 25
Interest-bearing net liabilities/comparable EBITDA 0.7 1.1 1.0
Shareholders’ equity per share at the end of the period, EUR 3.89 3.76 3.72
Interest-bearing net liabilities at the end of the period, EUR million 235.5 3 07.8 334.6
Total investments, EUR million 166.4 98.9 70.3
Net cash flow from operations, EUR million 3 07.7 200.5 150.9
Personnel at the end of the period 2,370 2,351 2,352
4544
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
100
80
60
40
20
0
100
80
60
40
20
0
18 19 20 18 19 20
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
REPORT OF THE BOARD OF DIRECTORS
|
METSÄ BOARD ANNUAL REPORT 2020
e cheaper pulp improved the protability of the paperboard business.
However, accounting for the surplus in Metsä Board’s pulp position, pulp’s total
impact on the comparable operating result was neutral.
Exchange rate uctuations, including hedges, had a positive impact of around
EUR 31 million on the operating result compared to the comparison period.
e associated company Metsä Fibre’s share of Metsä Board’s comparable
operating result in January–December was EUR -2.4 million (45.3). In addition
to the decline in market pulp prices, Metsä Fibre’s protability was burdened
by lower delivery volumes than in the previous year. e decline in delivery
volumes was attributable to the paper industry strike early in the year and the
negative impact that the coronavirus pandemic had on the global demand for
pulp.
484,000 tonnes (432,000). e dollar-denominated average prices of paperboard
remained stable.
In the APAC region, paperboard deliveries declined from the previous year.
MARKET PULP SALES IN 2020 (2019)
In 2020, Metsä Board’s market pulp deliveries increased and were 521,000
(460,000) tonnes. e paper industry strike early in the year did not concern
Metsä Board’s Husum pulp mill in Sweden.
e associated company Metsä Fibre’s total pulp deliveries declined and
totalled 2,796,000 (2,994,000) tonnes. Around 50% of Metsä Fibre’s market pulp
is sold in the EMEA region and 50% in the APAC region, where China accounts
for a signicant share.
e dollar-denominated prices of long-bre pulp in Europe and China were
at a lower level compared to the previous year. Prices in China nevertheless
began to rise during the second half of the year. In Europe, this happened
during the fourth quarter.
While the worldwide increase in the demand for tissue paper has supported
demand for pulp and high-yield pulp (BCTMP), the coronavirus pandemic has
accelerated the decline in the production of printing papers. In China, demand
for pulp in the second half of the year was strengthened by paper and paper-
board production, which increased from the rst half of the year. Late in the
year, a shortage of containers in the trac between Europe and Asia strained
the situation in the pulp market. Globally, the second half of the year saw a
decline in the supply of long-bre market pulp because of the maintenance and
market shutdowns of several pulp producers.
PRODUCTION IN 2020 (2019)
e production volume of Metsä Board’s paperboards during the review period
totalled 1,840,000 tonnes (1,816,000), while the combined production volume of
pulp and high-yield pulp amounted to 1,371,000 tonnes (1,373,000).
Production in the rst half of the year was limited by the paper industry’s
strike, which lasted for more than two weeks and concerned all of
Metsä Board’s paperboard and BCTMP mills in Finland. e loss in paperboard
production was roughly 65,000 tonnes and the loss in BCTMP production some
34,000 tonnes. Despite the production losses, the full-year production volumes
of paperboards and BCTMP grew from the year before.
During the second quarter, the total production volume of paperboards was
record high. Correspondingly, the production volumes of white kraliners and
pulps reached record highs during the fourth quarter.
Production at Metsä Board’s mills and the mills’ annual maintenance works
have proceeded normally during the coronavirus pandemic.
CASH FLOW
Net cash ow from operations in 2020 was strong at EUR 307.7 million
(1‒12/2019: 200.5). Working capital decreased by EUR 37.9 million (increased
by 43.0). e lower price of pulp has increased the share of Metsä Board’s paper-
board business in the cash ow from operating activities. Correspondingly, the
associated company Metsä Fibre’s impact on cash ow has decreased. In the
fourth quarter, the cash ow was reduced by the payment of EUR 35 million in
corporate income taxes.
BALANCE SHEET AND FINANCING
Metsä Board’s equity ratio at the end of the review period was 60% (31
December 2019: 59%) and the net gearing ratio was 17% (23%). e ratio
of interest-bearing net liabilities to comparable EBITDA in the previous 12
months was 0.7 (1.1).
At the end of the review period, interest-bearing liabilities totalled EUR 452.4
million (31 December 2019: 444.9). Non-euro-denominated loans accounted
for 1.9% of loans and oating-rate loans for 12.5%, with the rest being xed-rate
loans. e average interest rate on liabilities was 2.3% (2.5%), and the average
maturity of non-current liabilities was 5.7 years (6.4). e interest rate maturity
of loans was 52.0 months (56.0).
At the end of the review period, net interest-bearing liabilities totalled EUR
235.5 million (31 December 2019: 307.8).
Metsä Board’s liquidity has remained strong. At the end of the review period,
the available liquidity was EUR 605.8 million (31 December 2019: 334.2),
consisting of the following items: liquid assets and investments of EUR 214.0
million, a syndicated credit facility (revolving credit facility) of EUR 200.0
million, and other committed credit facilities of EUR 191.8 million. As of 2020,
the company will no longer include undrawn pension premium (TyEL) funds
in available liquidity. Of the liquid assets, EUR 204.7 million consisted of
short-term deposits with Metsä Group Treasury, and EUR 9.3 million were cash
funds and investments. Other interest-bearing receivables amounted to EUR
2.9 million. In addition, Metsä Board’s liquidity reserve is complemented by
Metsä Group’s internal undrawn short-term credit facility of EUR 150.0 million
and undrawn pension premium (TyEL) funds of EUR 212.3 million
e fair value of long-term investments was EUR 186.9 million at the end
of the review period (31 December 2019: 255.1). e change in the fair value
is related to the decrease in the fair value of Pohjolan Voima Oyj’s shares.
e greater-than-usual change in the fair value was mainly attributable to
changes made to the valuation model during the second quarter. Metsä Board
discontinued the use of previous benchmark transactions in Pohjolan Voima
Oyj’s shares as a valuation basis and increased the discount rates used in the
valuation model based on projected cash ows.
At the end of the review period, 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 (31 December 2019: 7.8). e
degree of hedging during the period varied between seven and nine months, on
average. In addition to the balance sheet position, half of the projected annual
net foreign currency exposure at the normal level is hedged. e amount of
hedging may deviate from the normal level by 40% in either direction. When
hedging is at the normal level, the aim is to allocate the hedges primarily to the
following two quarters.
Metsä Board has investment grade credit ratings by S&P Global and Moody’s
Investor Service. e company’s rating by S&P Global is BBB-, with a stable
outlook. e company’s rating by Moody’s is Baa3, with a stable outlook.
DIVESTMENT OF A MINORITY STAKE
IN THE HUSUM PULP MILL
On 1 December 2020 Metsä Board signed an agreement with which it agreed
to sell a 30% holding in the Husum pulp mill in Sweden to the forest owner
cooperative Norra Skog. At the same time, Metsä Forest Sverige, responsible
for Metsä Board’s wood supply in Sweden, made a long-term wood delivery
agreement with Norra Skog. e transaction was closed on 4 January 2021.
Folding boxboard
White kraftliner
Market pulp
Others
EMEA
Americas
APAC
SALES SPLIT
BY PRODUCT
%
SALES SPLIT
BY REGION
%
e paper industry strike, which concerned Metsä Board’s mills in Finland
and all of Metsä Fibre’s pulp mills, had a negative impact of around EUR 20
million on the comparable operating result of the review period.
Financial income and expenses totalled EUR -14.9 million (-15.4), including
foreign exchange rate dierences from trade receivables, trade payables,
nancial items and the valuation of currency hedging instruments, totalling
EUR -3.4 million (-1.6).
e result before taxes was EUR 212.3 million (165.6). e comparable result
before taxes was EUR 206.3 million (169.2). Income taxes amounted to EUR
42.2 million (21.0).
Earnings per share were EUR 0.48 (0.41). e comparable earnings per
share were EUR 0.46 (0.41). e return on equity was 12.5% (10.9%), and the
comparable return on equity was 12.1% (11.0%). e return on capital employed
was 12.6% (10.2%), and the comparable return on capital employed was 12.2%
(10.4%).
BUSINESS DEVELOPMENT
Metsä Board produces high-quality, ecological fresh bre paperboards,
and is Europe’s largest producer of folding boxboard and white kraliners.
Metsä Board’s folding boxboard is mainly used in consumer product packaging,
such as food and pharmaceutical packaging. Correspondingly, the end uses of
white kraliners are mainly related to the various packaging needs of the retail
sector. More than half of the white kraliners produced by Metsä Board are
coated.
Metsä Board’s annual pulp position in 2020 showed a surplus of approxi-
mately 600,000 tonnes, and consists mostly of long-bre pulp. e company’s
total pulp position is composed of the dierence between its own production
and consumption of pulp, and its 24.9% holding in Metsä Fibre. In 2021
Metsä Board’s annual pulp surplus will be approximately 400,000 tonnes,
as the company sold a 30% stake in its Husum pulp mill to the forest owner
cooperative Norra Skog.
PAPERBOARD SALES IN 2020 (2019)
e paper industry strike at Finnish mills early in the year and the peak in the
demand for packaging materials resulting from the coronavirus outbreak accel-
erated the order inows for paperboards, particularly in March–April. During
the pandemic, the demand for food and pharmaceutical packaging in particular
has remained good. At the same time, the pandemic has weakened demand in
graphic end uses and the packaging materials for luxury items. Demand for
coated white kraliners has been supported by the brisk retail sector and the
growth in e-commerce.
In 2020, Metsä Board’s deliveries of folding boxboard were 1,223,000
(1,207,000) tonnes, of which 71% (71%) was delivered to the EMEA region, 22%
(20%) to the Americas, and 7% (9%) to the APAC region. Deliveries of white
kraliner were 587,000 (584,000) tonnes, of which 63% (66%) was delivered to
the EMEA region, 36% (33%) to the Americas, and 2% (1%) to the APAC region.
Deliveries of both folding boxboard and white kraliners to the EMEA
region grew from the previous year. Europe, the main market of uncoated white
kraliner, experienced occasional oversupply during the summer, but demand
picked up towards the end of the year. e average prices of paperboards
declined slightly.
Demand for Metsä Board’s paperboards in the Americas region, and particu-
larly in in the United States, remained strong. e total delivery volume was
DELIVERIES OF FOLDING BOXBOARD BY
REGION IN 2020 (2019)
1,000 tonnes
DELIVERIES OF WHITE KRAFTLINER BY
REGION IN 2020 (2019)
1,000 tonnes
EMEA region 866 (859)
Americas region 274 (242)
APAC region 83 (105)
EMEA region 369 (385)
Americas region 210 (190)
APAC region 9 (9)
4746
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
REPORT OF THE BOARD OF DIRECTORS
|
METSÄ BOARD ANNUAL REPORT 2020
e transaction reduces Metsä Board’s net debt by approximately EUR 260
million. It also reduces Metsä Board’s share of nancing the pulp mill’s renewal
during the second phase by about EUR 100 million. e transaction will not
result in capital gain to be reported in the income statement; rather, its positive
eects are shown directly in equity.
Metsä Board will continue to consolidate the Husum pulp mill as a
subsidiary in the consolidated nancial statements, so the operating result’s
sensitivity to changes in the market prices of pulp will remain unchanged. e
arrangement reduces Metsä Board’s annual net surplus in pulp by approxi-
mately 210,000 tonnes.
e long-term wood delivery agreement made between the parties increases
the share of certied wood purchased from Sweden and will clearly reduce the
volume of wood imported from the Baltic countries. e increase in the share of
wood purchased from Sweden will reduce the mill’s cost volatility.
e cash released by the arrangement together with avoided investments in
the coming years, totalling more than EUR 350 million, allow the company to
allocate a signicant portion of its development investments in paperboard.
INVESTMENTS
Total investments during the review period were EUR 166.4 million (98.9),
of which investments in own property, plant and equipment were EUR 159.4
million (94.9) and investments in leased property, plant and equipment were
EUR 7.0 million (4.1). Maintenance investments and development investments
account for approximately 32% and 68%, respectively, of the total investments.
e share of the rst phase of the Husum’s pulp mill investment was around
EUR 103 million in 2020.
RENEWAL OF THE HUSUM PULP MILL
In the fourth quarter of the year, Metsä Board obtained an approval for an
amendment to the environmental permit of the Husum mill and made the nal
investment decision on the rst phase of the pulp mill’s renewal. e invest-
ment’s pre-engineering phase began in 2019 and the preparatory construction
work got underway in the rst quarter of 2020.
e rst phase of the investment will include the renewal of the pulp mill’s
recovery boiler and turbine. e total value of the rst phase is roughly EUR
320 million, and the start-up of the new recovery boiler and turbine is estimated
in the rst half of 2022. It is planned that in the second phase of the investment,
during the 2020s, the current bre lines will be replaced with a new bre line.
e pulp mill’s renewal will enable the long-term development and growth of
competitive paperboard business operations at the Husum integrated mill over
the coming years. In addition, the investment aims to develop Metsä Board’s
pulp and energy production and promote a shi towards fossil free mills.
DEVELOPMENT PROGRAMME OF KEMI PAPERBOARD MILL
Aer the review period, on 11 February 2021, Metsä Board started a devel-
opment programme for its Kemi paperboard mill, which produces white-top
kraliner. e investment value of the programme is approximately EUR 67
million and the mill’s annual paperboard capacity will increase by approx-
imately 40,000 tonnes. e programme includes a series of modernisation
and bottleneck investments in the paperboard production line and as part of
the programme, Metsä Board will purchase the modernised unbleached pulp
production line with annual capacity of approximately 180,000 tonnes from
Metsä Fibre. e investments are scheduled for 2021–2023, and mainly for
2023. e development programme is a signicant step towards the company’s
sustainability targets for 2030.
ASSOCIATED COMPANY METSÄ FIBRE’S KEMI
BIOPRODUCT MILL AND RAUMA PINE SAWMILL
Metsä Fibre’s Kemi bioproduct mill received an environmental permit in
December 2020 and the investment decision was made aer the review period
on 11 February 2021.
e investment value is approximately EUR 1.6 billion and the construction
of the mill will take about two and a half years. e bioproduct mill will
produce approximately 1.5 million tons of sowood and hardwood pulp and
other bioproducts annually. e pulp production capacity includes the current
unbleached pulp production line, used in the production of white-top kraliner,
with an annual capacity of approximately 180,000 tonnes. e bioproduct mill
does not use fossil fuels at all and has a high electricity self-suciency of 250%.
e new mill will replace the current pulp mill in Kemi with an annual capacity
of approximately 620,000 tonnes. Financing for Metsä Fibre’s bioproduct mill
consists of funds generated from operations, and debt. Metsä Board will not
invest equity in Metsä Fibre to nance the project.
At the beginning of 2020, Metsä Fibre made an investment decision to
build a pine sawmill in connection with the Rauma pulp mill. Construction
work began in spring 2020 and production is scheduled to start in the third
quarter of 2022. e value of the investment is approximately EUR 200 million.
Metsä Board owns 24.9% of Metsä Fibre.
R&D, INNOVATIONS AND NEW PRODUCTS
As the volume of packaging grows, the world needs new, sustainable solutions
that can replace fossil-based materials and improve the recyclability of
packaging. e main objectives of Metsä Board’s research and development
activities in terms of consumer packaging boards are the production of
increasingly lightweight folding boxboards with a smaller carbon footprint
and the development of new products for the food and food service packaging
segment. e objective in terms of white kraliners is to maintain and develop
the competitiveness of the strength and printing properties. Metsä Board’s R&D
costs in 2020 totalled EUR 8.6 million (8.7), or 0.5% (0.4%) of net sales. In 2020,
the disclosure of research and development costs has been specied and the
gures of the comparison year have been adjusted accordingly. e research and
development costs include direct costs before depreciations and the investments
of the operations.
In September 2020, Metsä Board opened an Excellence Centre in
Äänekoski, Finland. e Excellence Centre enables Metsä Board to deepen
the collaboration with customers and helps to focus the development work to
better meet customers’ needs. During the autumn, several virtual workshops
were organised for customers and partners around the world. e Centre’s
operations bring together Metsä Board’s own experts’ in-depth expertise in
bre-based packaging solutions and the competence of Metsä Board’s partners,
such as material and technology suppliers, start-up companies, universities and
research companies.
In 2020, Metsä Board developed a number of dierent packaging solutions
in cooperation with packaging producers and brand owners. As an indication
of the success of this collaboration model, the company achieved success in,
for instance, the AIMCAL competition in the United States and the Nordic
Scanstar packaging competition.
Metsä Group’s innovation company Metsä Spring and Valmet are building
a pilot plant in Äänekoski for the development of a 3D bre product, which
could replace packaging made from fossil-based raw materials, for example. e
plant will produce nished 3D bre products directly from wet wood-bre pulp,
without intermediate phases, and the products will be ready for delivery to end
customers as is. e project’s total value is approximately EUR 20 million, and it
is part of the world class ExpandFibre programme. e four-year ExpandFibre
programme is a roughly EUR 50 million R&D programme promoting the
circular bioeconomy. Established jointly by Metsä Group and Fortum, the
programme focuses on wood bre from renewable and sustainable sources.
Metsä Board joined the 4evergreen alliance aiming to ensure and develop
the circular economy of bre-based packaging. e alliance includes a number
of businesses, research institutions and organisations representing the entire
packaging value chain from materials to brand owners and the industry’s
technology companies.
Metsä Board continues to explore the possibility of using articial intelli-
gence on its production lines. e latest application at the Kemi mill involves
using articial intelligence to enhance the runnability of white kraliner
with the help of data gathered from the customer’s corrugated board line. e
data allows us to nd the optimum combination of quality parameters which
improves the runnability of our customer’s corrugated board line.
NON-FINANCIAL INFORMATION
BUSINESS MODEL
Metsä Board is part of Metsä Group and benets from Metsä Group’s unique
value chain – from pure northern wood bre to high-quality end products.
e company produces high-quality recyclable fresh bre paperboards, used
primarily in consumer product packaging. Sustainable and protable growth
as well as the value creation for all stakeholders are at the core of Metsä Board’s
business model. Cooperating with its customers and technology partners on a
global scale, Metsä Board engages in product and service development with an
emphasis on innovation and sustainability.
e company’s eight production units are located in Finland and Sweden,
close to its main raw material: high-quality northern wood bre. Metsä Board’s
wood supply is carried out centrally through Metsä Forest, with wood supplied
from Finland, Sweden, the Baltic countries and Russia. e majority of the
wood purchased in Finland comes from forests owned by Metsäliitto Coopera-
tive’s owner-members.
Metsä Board is part of Metsä Group, which parent company is Metsäliitto
Cooperative. Metsäliitto Cooperative holds 48.2% of Metsä Board’s shares
and 67.4% of the voting rights conferred by shares. Metsä Board, on the other
hand, holds 24.9% of its associated company, Metsä Fibre. Metsä Board’s own
pulp production together with the holding in Metsä Fibre secure Metsä Board’s
self-suciency in pulp and guarantee a premium and consistent quality of pulp.
SUSTAINABILITY PRINCIPLES
In accordance with its strategy, Metsä Board aims to be a forerunner in
sustainability and create packaging solutions that respect nature. Climate
change mitigation and the ecient use of resources are strong drivers of the
company’s operations. e promotion of sustainability includes complying with
good corporate governance, bearing social and environmental responsibility,
respecting business ethics and human rights, and the continuous improvement
of operations in terms of all of the above. In addition to its own operations,
Metsä Board requires sustainability throughout its supply chain.
e company’s sustainability targets focus on four themes: (i) wellbeing,
(ii) sustainable raw materials, products and supply chain, (iii) climate and the
environment, and (iv) forest. e targets are based on Metsä Board’s business
strategy and Metsä Group’s strategic sustainability objectives. Further informa-
tion on Metsä Board’s sustainability work is available in Metsä Board’s Annual
Report and Metsä Group’s Sustainability Report at https://www.metsagroup.
com/en/Sustainability/Pages/default.aspx.
POLICIES, MANAGEMENT SYSTEMS
AND SUSTAINABILITY GOVERNANCE
Work and decision-making at Metsä Board are guided by the Metsä Group
Code of Conduct, which is complemented by policies pertaining to matters such
as anti-trust legislation, personnel, equality, environmental matters and infor-
mation security. Suppliers are also expected to commit to the Supplier Code
of Conduct. All of Metsä Board’s mills apply quality, occupational health and
safety, environmental and energy eciency management systems (ISO 9001,
ISO 45001, ISO 14001, ISO 50001) as well as the management and monitoring
system ISO 22000 required for food safety. e mills producing paperboard for
food packaging also apply the FSSC 22000 food safety system.
At Metsä Board, the achievement of sustainability targets is supported
and monitored by the company’s Board of Directors, CEO and Corporate
Management Team. Sustainability is incorporated in the strategy approved by
the Board as well as in the company’s long-term business and investment plans,
risk assessments and annual action plans.
e Board processes and approves the sustainability targets presented by
the CEO and monitors their achievement. e CEO is responsible for the
implementation of the sustainability targets in accordance with the Board’s
instructions. Sustainability-related reviews are processed by Metsä Board’s
Corporate Management Team and the Board of Directors regularly during the
year.
INTERNATIONAL COMMITMENTS
Metsä Board respects internationally recognised human rights in accordance
with the UN’s Universal Declaration of Human Rights and the ILO Declaration
on Fundamental Principles and Rights at Work. e company is committed to
operating according to the UN’s principles concerning business operations and
human rights, and expects the same from its business partners. e company
also supports the UN’s Global Compact initiative and its principles on human
rights, labour, the environment and anti-corruption. Metsä Board’s sustain-
ability targets, which extend to 2030, further the achievement of the UN’s
Sustainable Development Goals (SDGs). e company’s targets in reducing
greenhouse gas emissions have been approved by the Science Based Targets
initiative (SBTi) and accord with the Business Ambition for 1.5 °C commitment:
Metsä Board’s targets for reducing emissions meet the strictest requirements of
the Paris Agreement, which aim to limit global warming to 1.5 °C degrees.
4948
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
REPORT OF THE BOARD OF DIRECTORS
|
METSÄ BOARD ANNUAL REPORT 2020
NON-FINANCIAL KEY FIGURES
2020 2019
Target for
2030
Personnel
Coverage of Code of Conduct training, % 99
1)
97 100
Personnel’s Ethics Barometer, % 85 - 100
Total Recordable Incident Frequency (TRIF)
per million hours worked
8.4 10.2 0
Lost-time accident frequency (LTA1)
per million hours worked
5.7 5.5 0
Raw materials and supply chain
Share of certified wood fibres, % 80 76 > 90
Commitment to the Supplier Code of Conduct,
% of total purchases
2)
96 95 100
Know your supplier check completed,
% of total purchases
2)
84 77 100
Sustainability evaluation completed,
% of total purchases
2)
54 49 100
Traceability of raw materials, % of total purchases 97 93 100
Share of fossil free raw materials and packaging
materials, % of dry tonnes
99.3 99.4 100
The environment
Fossil-based CO
2
emissions (Scope 1), t 240,036 248,274 0
Indirect fossil-based CO
2
emissions
(Scope 2, market based), t
272,115 250,742 0
Indirect fossil-based CO
2
emissions
(Scope 2, location based), t
373,816 374,409 0
Share of fossil free energy (Scope 1+2), % 83 83 100
Share of fossil free energy, own generation
(Scope 1), %
83 82 100
Share of fossil free energy, purchased (Scope 2), % 83 85 100
Improvement in energy eciency from 2018 level, %
2)
+2.1 -0.7 +10
Reduction in process water use per tonne produced,
compared to 2018 level, %
-7.7 -10.8 -30
Utilisation of production side streams, % 99.3 99.4 100
1)
The figure includes also Hangö Stevedoring for the first time.
2)
The calculation method has been updated, which is why the figures can depart from the previously
reported figures.
PERSONNEL AND SOCIAL RESPONSIBILITY
At the end of the nancial period, Metsä Board’s personnel totalled 2,370 (31
December 2019: 2,351), of whom 1,422 (1,414) were based in Finland. In 2020,
the average number of employees was 2,455 (1–12/2019: 2,433). Personnel
expenses in January–December totalled EUR 196.9 million (194.9).
Metsä Board aims to ensure the availability and retention of skilled
personnel by investing in its employer image and by making use of development
programmes and successor planning. e company prepares for future
retirements by draing retirement forecasts, and resource plans are drawn up
based on these. e company also arranges apprenticeship training, aiming to
recruit future personnel, and the mill units invest in on-the-job learning and
the sharing of know-how. Risk anticipation relies on early support discussions
and solutions between supervisors and employees, the anticipation of possible
working capacity risks, and on guidance and support targeted at risk groups.
Metsä Board is committed to the development of a culture of equality where
everyone can achieve a successful career and become an accepted member of
the workplace community. Personal characteristics such as gender, age, ethnic
background, sexual orientation or disability do not inuence a person’s chances
to succeed in their workplace community. Metsä Board promotes the equality
of its personnel with the help of targets set in 2020, which focus particularly on
improving gender equality.
Metsä Board aims for zero accidents. During the review period, total record-
able incident frequency (TRIF) stood at 8.4 (10.2), while the lost-time accident
frequency (LTA1) was 5.7 (5.5). Safety at the mills has improved, but incident
frequency in the port operations of Hangö Stevedoring increased from the pre-
vious year. e most typical accidents were slips and injuries to hands and feet.
Accidents are prevented with anticipatory measures such as safety observations,
safety walk-throughs and safety training. In 2020, safety at work was improved
through a programme covering the entire Metsä Group. e programme
aims to create common safety management principles, daily management
processes, safety-at-work standards and more detailed safety instructions. All of
Metsä Board’s mills and its head oce have adopted the 5S method, which aims
to increase productivity and improve wellbeing and safety at work.
OPERATIONS DURING THE CORONAVIRUS PANDEMIC
Metsä Board is following precautionary measures appropriate for the situation,
some of which exceed the measures required by the authorities. e company’s
priorities include ensuring the health and safety of employees, preventing
the virus from spreading, and securing business continuity. Metsä Board’s
production and deliveries have continued without disruption during the pan-
demic, and the annual maintenance shutdowns at the mills were also carried
out successfully. All in all, Metsä Group performed nearly 2,000 coronavirus
tests in connection with the annual maintenance shutdowns. At the onset of
the pandemic, the company shied to remote working in all jobs that allowed
for it. e mills and oces have followed strict special arrangements which
minimise close contact along passageways, in cafeterias and sta facilities and
at workstations. Employees have been provided with detailed instructions on
hygiene and the use of masks. e special arrangements also apply to suppliers
visiting the mills.
RESPECTING HUMAN RIGHTS AND THE COMPANY’S
ANTI-CORRUPTION AND ANTI-BRIBERY ACTIVITIES
Metsä Board requires its personnel to comply with applicable legislation, and to
act honestly and make ethically sound decisions. e Code of Conduct and the
related training programme seek to strengthen the culture of doing the right
thing, help personnel to identify ethically challenging situations and encourage
them to report any shortcomings they observe.
99% (97%) of the company’s personnel have completed the training related
to the Code of Conduct. Among other things, the Code of Conduct commits
to a respect for human rights and to measures against corruption and bribery.
Human rights issues are also discussed in the equality training provided to the
entire personnel and in the KYC (Know Your Customer) training organised for
sales representatives. e company’s partners are also expected to comply with
the Code of Conduct. Based on the human rights risk assessment launched in
2017, the company has continued to develop its processes to prevent human
rights risks linked to its operations and supply chain.
e company’s rst Ethics Barometer, aimed at the entire personnel, was
carried out in 2020. e barometer measures the personnel’s perception
of ethics in their workplace and can be used to identify risks related to the
ethics of Metsä Board’s business. e “ethics index” yielded by the results of
the barometer was at 85.1% at Metsä Board, with the goal being 100%. In the
future, the Ethics Barometer and the Organisation Functionality Survey will be
organised in alternate years.
Metsä Group has a joint compliance and ethics channel through which
personnel and stakeholder representatives can anonymously report any
short-comings they detect. All breaches and suspected breaches brought to the
attention of the company are investigated, and the most signicant of them are
dealt with by the Compliance Committee. In 2020, Metsä Board was informed
of a total of 10 (8) incidents involving matters such as conicts of interest,
inappropriate conduct or irregularities. None of the incidents led to legal
proceedings or related to corruption, bribery, the use of child labour or other
human rights violations.
RAW MATERIALS AND SUPPLY CHAIN
e sustainability of Metsä Board’s raw materials and supply chain is ensured
within separate processes in terms of i) wood bre and ii) other raw materials
and services.
Metsä Board’s wood supply is managed by Metsä Forest, part of Metsä Group,
and the wood bre’s sustainability and traceability are ensured with practices
that meet the criteria of the PEFC™ Chain-of-Custody and FSC® Chain-of-
Custody. All the wood raw material used by the company is traceable and comes
from either certied or controlled and sustainably managed northern forests in
which biodiversity is safeguarded. Metsä Board aims for certied wood bre to
account for at least 90% of all the wood used by the company by 2030. During
the review period, 80% (76%) of the wood bres came from certied forests.
e sourcing of other raw materials and services has been centralised in
Metsä Group, where the Group-wide purchasing process ensures that the
partners operating in the Group’s supply chain comply with principles that
support ethical and sustainable business operations. is aims to minimise
risks related to the environment, health, corruption, the use of child labour and
human rights violations in the supply chain. Metsä Group’s Supplier Code of
Conduct was updated in 2020 to respond to the Group’s goals and stakeholders’
stricter requirements. e review period saw the further development of the
supplier assessment and auditing process. e company also organised several
sustainability-related training sessions to personnel working in sourcing and
logistics.
e selection process for suppliers includes the performance of a risk analysis
which reviews suppliers’ country and category risks and their compliance with
legislation. Metsä Board also employs three key indicators to monitor and
develop the supply chain’s sustainability: suppliers’ commitment to the Supplier
Code of Conduct as well as the completion of a Know your supplier check and
sustainability evaluation. e Know your supplier check inspects a supplier’s
background in terms of trade sanctions, money laundering, corruption, human
rights violations and other key risks. Metsä Board also has a corresponding
process applicable to customers. Every year, Metsä Group and external auditors
audit some of Metsä Board’s suppliers. In 2020, Metsä Group conducted 12
(14) onsite audits and an external party 9 (15) onsite audits at Metsä Board’s
suppliers.
In 2020, the company knew the origin – at a minimum the manufacturing
country – of 97% (93%) of the total purchases of raw materials and packaging
materials. e systematic collection of origin data is being developed further.
e proportion of fossil free raw materials, including the packaging materials
of the company’s own products, was 99% (99%).
According to our targets approved by the Science Based Targets initiative, we
are committed to 70% of our non-bre-based suppliers and the logistics oper-
ators related to our customer deliveries, measured by purchasing costs, setting
themselves targets in line with the SBTi by 2024. In 2020, 5% of our suppliers
had done so. In addition, 4% had committed to setting themselves targets in line
with the SBTi.
CLIMATE AND THE ENVIRONMENT
Metsä Board aims to use only fossil free energy by the end of 2030. In essence,
this refers to a situation where the company’s mills do not use fossil fuels or pur-
chase energy generated with fossil fuels. Accordingly, the target for fossil-based
CO
2
emissions (Scope 1 and 2) is zero. In 2020, 83% (83%) of the energy used
by Metsä Board was fossil free. e company has reduced its fossil-based CO
2
emissions (Scope 1 and 2) by 9% per tonne produced in 2018–2020.
In terms of energy eciency, Metsä Board aims for a minimum improvement
of 10% in 2018–2030. In 2020, energy eciency improved by 2.1% compared to
2018.
Metsä Board’s process water use in 2020 was 62,0 million cubic metres (59.4),
100% of which was surface water. Metsä Board does not abstract any water from
areas with high water stress (WRI Aqueduct Water Risk Atlas). Of all the water
we use, some 99% is returned to the waterways aer use. e aim is to reduce
the use of process water by 30% per tonne produced in 2018–2030. In 2020, the
reduction was 7.7% (10.8%) compared to 2018. Approximately 99% (99%) of
production side streams were used as materials or energy.
EXTERNAL RECOGNITIONS
In 2020, Metsä Board was again acknowledged by the CDP’s global
environmental assessment’s Climate A and Water A lists for actions related
to climate change mitigation and the sustainable use of water resources. For
the sustainable use of forests, the company received the high rating of A-. In
EcoVadis’s corporate social responsibility assessment, Metsä Board achieved the
highest Platinum level. Metsä Board has also achieved excellent results in other
assessments related to the environment, social responsibility and governance,
carried out by MSCI, Sustainalytics and ISS ESG, among others.
ENVIRONMENTAL LIABILITIES AND OBLIGATIONS
Metsä Board has environmental liabilities related to former operations at sites
that have since been closed, sold or leased, as well as at decommissioned landll
sites. Financial provisions for the cost of land rehabilitation work have been
made in cases where it has been possible to measure the company’s liability for
land contamination. Metsä Board’s environmental liabilities in 2020 totalled
EUR 3.4 million (3.5) and the environmental expenses amounted to EUR
16.3 million (14.4). e environmental expenses consist mainly of expenses
related to the use and maintenance of environmental protection equipment,
expenses related to waste management and environmental insurance, and the
depreciation of capitalised environmental expenses. No deviations resulting
in signicant environmental impact occurred in Metsä Board’s production
units in 2020. Short-term deviations from permit conditions were nevertheless
recorded and reported to the authorities, in accordance with regulations.
5150
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
REPORT OF THE BOARD OF DIRECTORS
|
METSÄ BOARD ANNUAL REPORT 2020
RELATED RISKS
e risks related to the environmental, human and social issues, respect for
human rights as well as the anti-corruption and anti-bribery activities reviewed
above are described in more detail in this Board of Directors’ Report under the
section “Main risks and uncertainties”.
DISCLOSURE ACCORDING TO TCFD RECOMMENDATIONS
Metsä Board’s disclosures on climate-related risks and opportunities, according
to the recommendations of TCFD (Task Force on Climate-related Financial
Disclosures), have been summarised in the table below.
e references to more detailed information are indicated with abbreviations:
(AR) Annual Report, (BoD) Board of Directors’ Report, (CG) Corporate
Governance Statement.
Governance
Disclose the organisation’s governance around climate-related risks and opportunities.
a) Describe the Board’s oversight of climate-related risks and
opportunities.
AR: Sustainability governance, p. 21
CG: Risk management, pp. 138–139
b) Describe management’s role in assessing and managing climate-re-
lated risks and opportunities.
AR: Sustainability governance, p. 21
CG: Risk management, pp. 138–139
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s business operations, strategy and financial planning where such
information is material.
a) Describe the climate-related risks and opportunities the organisation
has identified over the short, medium, and long term.
The identified climate risks and opportunities may occur in the medium term (1–5 years) and the long
term (more than 5 years). Weather-related risks such as dry summers and rainy winters which are
expected to become more common as climate change progresses may occur in the short term (0–1
years).
AR: Strategy, pp. 8–9
BoD: Main risks and uncertainties, pp. 53–55
CG: Risk management, pp. 138–139
Opportunities:
AR: Megatrends and operating environment, pp. 12–15
AR: Product and service development, pp. 16–17
AR: Sustainable products, pp. 26–29
b) Describe the impact of climate-related risks and opportunities on the
organization’s businesses, strategy, and financial planning.
AR: Strategy, pp. 8–9
AR: Megatrends and operating environment, pp. 12–15
AR: Sustainability targets and governance, pp. 20–23
BoD: Main risks and uncertainties, pp. 53–55
CG: Risk management, pp. 138–139
c) Describe the resilience of the organisation’s strategy, taking into
consideration dierent climate-related scenarios, including a 2°C or
lower scenario.
While Metsä Board still has room for improvement in utilising climate-related scenarios, the company is
already adapting its operations to a low-carbon economy and is committed to the target of limiting global
warming to 1.5 °C compared to the pre-industrial era. Metsä Board’s targets for reducing greenhouse
gas emissions have been approved by the Science Based Targets initiative. The company aims for zero
carbon dioxide emissions (Scope 1 and 2) by the end of 2030. With respect to the impact climate change
will have on forest management and wood supply, Metsä Board makes use of analyses based on the RCP
2.6 and RCP 4.5 scenarios.
AR: Megatrends and operating environment, pp. 12–15
AR: Product and service development, pp. 16–17
AR: Sustainability, pp. 18–32
BoD: Main risks and uncertainties, pp. 53–55
Risk management
Disclose how the organisation identifies, assesses and manages climate-related risks.
a) Describe the organisation’s processes for identifying and assessing
climate-related risks.
Climate-related risks have been integrated into Metsä Board’s general risk management:
AR: Sustainability governance, p. 21
BoD: Main risks and uncertainties, pp. 53–55
CG: Risk management, pp. 138–139
b) Describe the organisation’s processes for managing climate-related
risks.
BoD: Main risks and uncertainties, pp. 53–55
CG: Risk management, pp. 138–139
c) Describe how the processes for identifying,
assessing and managing climate-related risks are integrated into the
organisation’s overall risk management.
Climate-related risks have been integrated into Metsä Board’s general risk management:
AR: Sustainability governance, p. 21
BoD: Main risks and uncertainties, pp. 53–55
CG: Risk management, pp. 138–139
Climate risks are assessed as part of Metsä Board’s overall risk assessment process. Risks are assessed
with the help of a risk matrix which accounts for the magnitude of a risk’s potential financial impact and
the likelihood of the risk’s materialisation.
Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
a) Disclose the metrics used by the organisation to assess climate-re-
lated risks and opportunities in line with its strategy and risk manage-
ment process.
AR: Sustainability targets and governance, pp. 20–23
AR: Sustainable products, pp. 18–19, 26–27
AR: Climate and the environment, pp. 30–32
AR: Product and service development, pp. 16–17
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse
gas emissions and the related risks.
Scope 1 and 2 emissions:
AR: Climate and the environment, pp. 30–31
Metsä Board discloses Scope 3 emissions as part of its annual CDP reporting, in connection to which
Scope 3 emissions are also disclosed on Metsä Board’s website (https://www.metsaboard.com/
Sustainability).
c) Describe the targets used by the organisation to manage climate-
related risks and opportunities and performance against targets.
AR: Sustainability targets, pp. 22–23
AR: Climate and the environment, pp. 30–32
MAIN RISKS AND UNCERTAINTIES
Metsä Board’s risk management is systematic and proactive work, allowing for
the assessment and management of opportunities, risks and threats related to
the business. As part of continuous operations, the company systematically
assesses strategic, operational, nancial and damage risks and conducts risk
assessments in connection with annual planning and strategy processes. e
risk assessment of the annual planning process reviews sales, cost, operating
environment, development project, and liability and damage risks related to
protability. e risk assessment of the strategy process reviews risks related to
the implementation of the company’s business strategy.
Risks that exceed Metsä Board’s risk-bearing capacity have been transferred
to insurance companies, banks and other counterparties with insurance con-
tracts, derivative instruments and other agreements. Substantial damage risks
are covered by property and business interruption, liability loss, transport loss,
cyber and credit insurance policies. Any identied risks and their management
are reported to the Board of Directors and the Board’s Audit Committee at least
twice a year. e company’s Corporate Management Team reviews the most
signicant risks as part of its work.
e risk assessments carried out in 2020 identied the following risks and
uncertainties that may have an impact on Metsä Board’s business operations
and protability:
MARKET RISKS
UNCERTAINTY IN THE WORLD ECONOMY
CAUSED BY THE CORONAVIRUS PANDEMIC
e coronavirus pandemic will continue to cause considerable uncertainty in
the world economy and Metsä Board’s business environment in 2021. is is
inuenced by the increase in the number of infections in many countries, the
restrictions imposed by governments, and uncertainty about the eectiveness of
the vaccine and the duration of the pandemic. Prolonged pandemic caused by
Covid-19 may subdue the economic recovery or even further weaken the world
economy and consumers’ purchasing power in all of Metsä Board’s market
areas, thereby reducing demand for the company’s products. In addition, any
impairment in customers’ cash position or slower payment behaviour may have
an impact on Metsä Board’s cash ow and result in credit losses. e pandemic
may also incur additional costs for the company, should the availability of
transportation capacity grow weaker, for example.
UNCERTAINTY IN THE DEVELOPMENT OF THE ECONOMY
Considerable uncertainties still exist in the global economy. If realised, they
may result in weakened demand and reduced prices for end products. Any
changes in the industrial and trade policies of leading industrialised nations
may lead to more extensive trade restrictions, slowing down the recovery of the
world economy aer the pandemic and reducing global trade ows. Increased
protectionism and negative developments in international trade would, if
realised, have a weakening impact on Metsä Board’s result.
In 2021, factors that cause uncertainty include the trade relations of the
United States, China and Europe, tensions in the domestic aairs of the United
States following the country’s presidential elections and any changes to the
accommodative monetary policies of central banks. In addition, the new trade
deal between the UK and the EU may aect global trade ows.
CHANGES IN THE OPERATING ENVIRONMENT
Metsä Board operates in an industry where the balance between supply and
demand aects the demand and price level of end products. New players enter-
ing the market, alternative products or changes in consumer behaviour may
have a negative impact on the demand for Metsä Board’s paperboards. Capacity
increases or growth in the product portfolios of competitors could lower the
price level of end products and have a negative impact on Metsä Board’s prof-
itability. Signicant changes in exchange rates may also inuence the market
balance of products and companies’ competitiveness.
Changes in regulations, such as the EU’s climate and environmental policies,
and increasing new requirements aiming to limit carbon dioxide, sulphur or
other emissions, may increase production costs and weaken the protability
of business. Restrictions imposed on products that contain single-use plastics
guide Metsä Board’s product portfolio. e acceptability of plastic-free single
used products also involves risks. e acceptability and taxation of various
packaging materials involves regulatory risks.
MARKET SITUATION OF PULP
Structural changes in customer’s pulp consumption, increasing competition,
and new production capacity in the global pulp market may have a
negative eect on pulp’s delivery volumes and market prices, and thereby on
Metsä Board’s protability. From 2021 onwards, Metsä Board’s market pulp
position, accounting for its holding in Metsä Fibre, shows a surplus of approxi-
mately 400,000 tonnes. A 10% strengthening (weakening) in the market price of
pulp would have a positive (negative) impact of roughly EUR 30 million on the
company’s operating result.
5352
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
REPORT OF THE BOARD OF DIRECTORS
|
METSÄ BOARD ANNUAL REPORT 2020
GEOPOLITICAL RISKS
e impact of existing inter-related geopolitical risks and crises in the world
may manifest as changes in regional security situations and living conditions,
and also in the global economy. ese include regional conicts, the repercus-
sions of which are visible as the migration of people and in terrorism stemming
from extremism. e predictability of these risks is poor, and their impact may
also emerge either very rapidly or over a long period of time. e international
sanctions related to the management of international crises may have a direct
or indirect impact on the demand for Metsä Board’s products and on its
protability.
OPERATIONAL RISKS
SUSTAINABILITY AND CLIMATE RISKS
While the promotion of sustainability supports Metsä Board’s business and
its development, particularly climate change and the loss of biodiversity also
involve risks. Climate risks are divided into 1) transition risks, i.e. risks arising
from the transition to a low-carbon economy, and 2) physical risks, which con-
cern changes in temperatures and precipitation, for example. At Metsä Board,
these climate risks particularly concern forests and the use of energy and
water. Should they materialise, climate risks could have a negative impact on
Metsä Board’s protability. e supply and demand of products in a low-carbon
economy may also dier from what it currently is.
e most important transition risks include increasing regulation,
requirements for new technology as well as a market and reputation risk, if the
company fails to respond to the changed market environment in an eective
manner. Regulation aiming to mitigate climate change and reduce greenhouse
gas emissions may, furthermore, increase costs and result in substantial change
requirements applicable to production technology. Securing the biodiversity of
forests by means of increasing regulation will also result in risks for the use of
forests. All wood purchased by Metsä Group comes from sustainably managed
forests. is is veried by certication or otherwise controlled. In 2020, Metsä
Group furthermore initiated a new programme on the ecological sustainability
of forestry which supports the preservation of biodiversity and the protection of
waters.
Physical climate risks can be further divided into acute weather phenomena
and more permanent, long-term changes. Extreme weather phenomena may
weaken the availability of the process water needed by mills and result in
production breaks. is risk is mitigated by the fact that all of Metsä Board’s
mills are located in northern areas with ample water. As the climate grows
warmer, the most signicant risks inuencing forests and the availability of the
wood raw material are the weakening of harvesting conditions as winters grow
shorter and the increase of various kinds of damage caused by insects.
Climate change mitigation and the transition to a low-carbon economy are
strongly visible in Metsä Board’s sustainability targets for 2030. e core of
these goals consists of a transition to the use of entirely fossil free energy in pro-
duction, abandoning the use of raw materials based on fossil oil and increasing
the eciency of energy and water consumption. e measures related to these
goals help Metsä Board manage climate risks. At the same time, they open up
new opportunities for Metsä Board in the changed operating environment.
Metsä Board’s disclosures on climate-related risks and opportunities,
according with the recommendations of TCFD (Task Force on Climate-related
Financial Disclosures), are presented in the Non-nancial information -section.
inputs. Metsä Board works to hedge against this risk by entering into long-term
delivery agreements and goods-related derivative instruments. In addition,
a steep increase in transportation and other logistics costs, or the weak
availability of transport capacity, may have a negative eect on Metsä Board’s
protability. Moreover, any amendments to legislation, regulations or taxation
related to the most important production inputs may result in signicantly
increased costs.
LIABILITY RISKS
Metsä Board’s business involves liability risks, such as contractual, environ-
mental and product liability risks. Liability risks are managed by way of ecient
business processes, contract training, management practices, quality control
and transparent operations. Some of the operational liability risks have been
hedged with insurance policies.
CORPORATE SECURITY RISKS
Risks that may compromise corporate security include shortcomings and
negligence in personal safety and security and occupational safety or in the
management of nancial irregularities. ey also include negative information
operations and cyber threats, threats concerning delivery chains and the
adequacy of internal controls. e operating processes of corporate security as
well as the guidelines, training and internal controls related the management
of risks are developed continuously, and exercises related to the management of
crisis situations are organised regularly.
PERSONNEL AVAILABILITY AND RETENTION
Metsä Board pays attention to ensuring the availability and retention of
competent personnel by means of various personnel development programmes
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.
FINANCIAL RISKS
FINANCIAL AND EXCHANGE RATE RISKS
As a result of increasing regulation in the nancial market, the operations
of credit and bond markets may become more dicult, which may impact
the company’s ability to acquire long-term debt nancing at a competitive
price. e nancial risks are managed in accordance with the treasury policy
approved by Metsä Board’s Board of Directors. e purpose is to hedge against
considerable nancial risks, balance cash ow and give the business enough
time to adjust to changing conditions.
Metsä Board sells its products in several countries and is therefore susceptible
to uctuations in exchange rates. e US dollar strengthening by 10% against
the euro would have a positive impact of approximately EUR 62 million on
Metsä Board’s annual operating result. Correspondingly, the Swedish krona
strengthening by 10% would have a negative impact of approximately EUR 42
million. e British pound strengthening by 10% would have a positive impact
of approximately EUR 9 million. e impact of weakened exchange rates would
be the opposite. e sensitivities do not include the impact of hedging.
CONCENTRATION OF OPERATIONS IN A LIMITED
GEOGRAPHICAL AREA
Seven of Metsä Board’s eight production units are located in Finland, and one of
them is located in Sweden. Finland has a history of labour disputes in both the
forest industry and in the distribution chain of forest industry products. ese
may have a negative impact on production volumes and customer deliveries,
and weaken the company’s competitiveness and protability. Labour disputes
in Sweden may also damage Metsä Board’s production and customer deliveries
and have a negative impact on the company’s business operations.
CONTINUITY RISKS
e continuity of mills’ production can be inuenced by, among other things,
large-scale res, major equipment malfunctions, extreme weather phenomena
and environmental damage. In addition, employees falling ill as a result of
infectious diseases, any long-term disruptions in IT systems, labour market
disputes, availability problems in key raw materials and disruptions in the
logistics chain may interrupt business operations either in part or in full.
With respect to property and continuity damage risks, the company engages
in active risk management work with insurance companies, including risk
assessments conducted at mills and in the delivery chain at regular intervals.
Interruptions in production or the delivery chain may have an impact
on the continuity and delivery reliability of customer services. Should such
interruptions draw out, the nancial losses can be very substantial and lead to
the permanent loss of customer accounts. e company has prepared continuity
and recovery plans in preparation for the materialisation of these risks.
BUSINESS DEVELOPMENT
e development and growth of Metsä Board’s business requires strategic
choices that involve risks. e uncertainties in question involve the selection
and timing of growth investments, for example, as well as the development of
sales and the customer portfolio. e growth of the paperboard business and
the introduction of new production to the market are dependent on successful
sales. e commercialisation of new products involves uncertainties that,
should they materialise, could have a negative impact on the demand for
Metsä Board’s products and the company’s protability. Increasing sales on a
global scale also involves cost and exchange rate risks.
BUSINESS ETHICS
Business ethics in general and the prevention of human rights violations,
conicts of interest, fraud, bribery and money laundering have been identied
as areas requiring continuous development. In 2020, the company conducted
its rst ethics barometer aimed at the entire personnel. An anonymous whistle-
blowing channel and the functionality of the related investigation process are
also key tools in the identication and management of compliance-related risks.
As part of Metsä Board’s continuous actions in sustainability, the company is
developing processes related to the identication of its suppliers and customers.
is will enable the increasingly ecient identication and management of
risks related to the sustainability of the supply chain.
PRICE RISKS OF PRODUCTION AND LOGISTICS COSTS
An unforeseen rise in the price of production inputs important for
Metsä Board’s operations (such as wood, energy and chemicals), or availability
problems, may weaken protability and threaten the continuity of operations.
Changes in exchange rates may also inuence the costs of some production
CREDIT RISKS
e management of credit risks related to commercial operations is the respon-
sibility of Metsä Board’s executive management and Metsä Group’s centralised
credit control. Metsä Board’s management determines the limits on credit
extended to customers and the applicable terms of payment in cooperation with
the centralised credit control. Nearly all credit risks are transferred by means of
credit insurance contracts. Metsä Board’s customer credit risk was at a normal
level in 2020. e main principles of credit control are dened in the credit
guidelines of the risk management policy approved by the company’s Board of
Directors.
Metsä Board’s nancial risks and their management are described in
more detail in the 2020 Annual Report - Notes to the Consolidated Financial
Statements – 5.6. Management of nancial risks.
LEGAL PROCEEDINGS
In the autumn of 2015, the Finnish Tax Administration, in its assessment
of the 2014 taxation, refused the deductibility of certain losses related to the
cross-border merger of a French subsidiary in Metsä Board Corporation’s 2014
taxation. Metsä Board believes the losses to be deductible and has appealed
the Tax Administration’s decision. e Board of Adjustment dismissed the
company’s appeal in March 2018. e company has appealed the decision to the
Administrative Court of Helsinki.
CORPORATE GOVERNANCE
e Company’s statutory bodies include the General Meeting of Shareholders,
the Board of Directors and the CEO. In addition, a Corporate Management
Team assists the CEO in the operative management of the Company and in
coordinating its operations. Members of the management team are not mem-
bers of the Board of Directors. e tasks and responsibilities of the dierent
corporate bodies are specied in the Finnish Companies Act.
Metsä Board’s Board of Directors has nine members, two of whom two are
women. A majority of Board members (six of nine) are independent of both
the company and its biggest shareholders. ree members of the Board of
Directors are not independent of Metsäliitto Cooperative. During the 2020
nancial period, the Board of Directors held a total of 17 meetings, at which the
attendance rate of Board members was 100% (2019: 97%).
Metsä Board’s Board of Directors has determined the principles applicable to
the diversity of the Board. e realisation of the principles is reported on yearly,
in the Board’s Corporate Governance Statement.
RESOLUTIONS OF THE 2020 ANNUAL GENERAL MEETING
e Annual General Meeting held on 11 June 2020 adopted the company’s
nancial statements for the nancial year 2019, and decided to distribute a
dividend of EUR 0.10 per share and capital in the amount of EUR 0.14 per share
from the reserve for invested non-restricted equity, totalling EUR 0.24 per
share.
e Annual General Meeting decided to keep the Board of Directors’
annual remuneration unchanged in such a way that the Chair of the Board
of Directors is paid annual remuneration of EUR 95,000, the Deputy Chair is
paid EUR 80,000 and each member of the Board is paid EUR 62,500, and that a
meeting fee of EUR 700 is paid for each meeting of the Board and committees
5554
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
of the Board that a member attends. e Annual General Meeting decided to
pay roughly half of the remuneration in the form of the company’s B shares
acquired through public trading. Furthermore, the Annual General Meeting
decided to pay the Chair of the Audit Committee monthly remuneration of
EUR 800.
e Annual General Meeting conrmed the number of Board members as
nine (9) and elected the following persons as members of the Board of Directors:
Hannu Anttila, M.Sc. (Economics); Ilkka Hämälä, M.Sc. (Technology); Kirsi
Komi, LL.M.; Kai Korhonen, M.Sc. (Technology); Liisa Leino, M. Ed.; Jussi
Linnaranta, M.Sc. (Agriculture); Jukka Moisio M.Sc. (Economics); Timo
Saukkonen M.Sc. (Agriculture); and Veli Sundbäck, LL.M. e Board members’
term of oce expires at the end of the next Annual General Meeting.
More information about the decisions made by the Annual General Meeting
and materials related to the meeting are available on the company’s website at
www.metsaboard.com/Investors/General-Meeting/General-Meeting-2020/.
SHARES
At the end of the nancial period, the price for Metsä Board’s B share on the
Nasdaq Helsinki was EUR 8.62. e share’s highest and lowest prices in 2020
were EUR 8.79 and EUR 4.47, respectively. At the end of the nancial period,
the price for Metsä Board’s A share on the Nasdaq Helsinki was EUR 8.64.
e share’s highest and lowest prices in 2020 were EUR 8.80 and EUR 4.80,
respectively.
In 2020, the average daily trading volumes of the B and A shares on the
Nasdaq Helsinki were 616,002 shares and 6,980 shares, respectively. e total
trading volumes of the B and A shares were EUR 950 million and EUR 12
million, respectively.
In addition to the Nasdaq Helsinki, Metsä Board’s shares are also traded on
other marketplaces. e Nasdaq Helsinki’s share of total trading during the
review period was around 82%.
During the review period, a total of 200,496 of Metsä Board Corporation’s
A shares were converted to B shares. At the end of the review period, the total
number of Metsä Board shares was 355,512,746, of which 32,887,151 were A
shares and 322,625,595 were B shares.
At the end of the review period, the market value of all Metsä Board shares
was EUR 3.1 billion, of which the market value of the B shares and the A shares
accounted for EUR 2.8 billion and EUR 0.3 billion, respectively.
During the review period, Metsä Board received a notication of major
holdings according to which Metsäliitto Cooperative’s combined share of votes
in Metsä Board Corporation exceeded the limit of two-thirds (2/3).
At the end of the review period, Metsäliitto Cooperative held 48% (31
December 2019: 46%) of all shares, and the votes conferred by these shares was
67% (66%). International and nominee-registered investors held approximately
16% (15%) of all shares. e company does not hold any treasury shares.
NEAR-TERM OUTLOOK
e duration of the coronavirus pandemic and the scope of its negative impact
on the world economy and on Metsä Board’s business operations continue to be
dicult to estimate.
Metsä Board’s paperboard deliveries in January–March 2021 are expected to
grow from the delivery volumes of October–December 2020 (441,000 tonnes).
e prices of white kraliner in local currencies are expected to increase
slightly, while the prices of folding boxboard are expected to remain stable.
No signicant annual maintenance shutdowns at mills are set to take place in
January–March 2021.
Demand for long-bre pulp will be supported by increased economic activity,
particularly in Asia. Supply has recently reduced due to producers’ annual
maintenance shutdowns, the production curtailments announced by some
parties and a shortage of containers in the trac between Europe and Asia.
e improved market situation in Asia has reected to Europe and market pulp
prices are increasing.
Exchange rates, accounting for the eect of hedging, in January–March 2021
will have a negative impact on results compared to October–December 2020
and a negative impact on results compared to January–March 2020.
Energy costs are expected to increase in January–March. e other produc-
tion costs of paperboard and pulp are expected to remain fairly stable.
EVENTS AFTER THE REVIEW PERIOD
e sale of a 30% share in the Husum pulp mill to Norra Skog was completed
on 4 January 2021, and its impact will be included in Metsä Board’s nancial
reporting as of the interim report concerning January–March 2021. e trans-
action will decrease Metsä Board’s net debt by approximately EUR 260 million,
and in addition it will reduce Metsä Board’s nancial contribution in the second
phase of the Husum pulp mill renewal by approximately EUR 100 million.
Metsä Board announced on 22 January 2021, that it has started pre-engineer-
ing for increasing the annual production capacity of folding boxboard at the
Husum mill in Sweden by approximately 200,000 tonnes. e pre-engineering
phase includes also an evaluation of the mill’s port capacity for increased
volumes of raw materials and nished goods. e readiness to make the nal
investment decision is expected to be achieved in the summer of 2021 and the
ramp-up of the additional capacity would start in 2023.
On 11 February 2021, Metsä Board’s associated company Metsä Fibre made
an investment decision on the construction of a new bioproduct mill in Kemi,
Finland.
On 11 February 2021, Metsä Board made an investment decision on the
development programme for its Kemi paperboard mill.
BOARD OF DIRECTORS’ PROPOSAL FOR
DIVIDEND AND CAPITAL DISTRIBUTION
e distributable funds of the parent company on 31 December 2020 were EUR
640.2 million, of which the retained earnings for the nancial year are EUR
372.7 million.
e Board of Directors proposes to the Annual General Meeting to be held
on 25 March 2021 that a dividend of EUR 0.10 per share and a capital distribu-
tion from the reserve for invested non-restricted equity of EUR 0.16 per share,
totalling EUR 0.26, be paid for the 2020 nancial period.
e proposed dividend and capital distribution, totalling EUR 0.26 per share,
corresponds to 54% of the result per share for 2020. e amount of dividend
and capital distribution totals EUR 92.4 million.
e dividend and capital distribution will be paid to shareholders who are
registered in the company’s shareholders register held by Euroclear Finland on
the dividend payment and capital distribution record date of 29 March 2021.
e Board of Directors proposes 7 April 2021 as the dividend payment and
capital distribution date.
EUR million Note 1–12/2020 1–12/2019
Sales 2.1, 2.2, 7.3 1,889.5 1,931.8
Change in stocks of finished goods and work in progress -38.7 3.8
Other operating income 2.3, 7.3 33.3 51.7
Materials and services 2.4, 7.3 -1,225.4 -1,389.8
Employee costs 3 -196.9 -194.9
Share of result of associated company 7.2, 7.3 -2.4 43.1
Depreciation, amortisation and impairment charges 4.1, 4.2 -94.5 -113.7
Other operating expenses 2.4 -137.5 -151.1
Operating result 227.3 180.8
Share of profit from associated companies and joint ventures 7. 2 -0.1 0.1
Net exchange gains/losses 5.2 -3.4 -1.6
Other financial income 5.2, 7.3 0.4 0.8
Interest and other financial expenses 5.2, 7.3 -11.9 -14.6
Result before tax 212.3 165.6
Income taxes 6 -42.2 -21.0
Result for the period 170.1 144.6
Other comprehensive income
Items that will not be reclassified to profit or loss 5.1
Actuarial gains/losses on defined benefit pension plans 3.4 -3.7 -3.5
Financial assets at fair value through other comprehensive income 4.3 -70.3 -14.7
Share of profit from other comprehensive income of associated company 0.4 0.2
Income tax relating to items that will not be reclassified 15.0 2.8
Total -58.6 -15.1
Items that may be reclassified to profit or loss 5.1
Cash flow hedges 17.6 -10.1
Translation dierences 6.2 -3.4
Share of profit from other comprehensive income of associated company 0.7 1.7
Income tax relating to items that may be reclassified -3.4 2.2
Total 21.1 -9.6
Other comprehensive income, net of tax -37.5 -24.8
Total comprehensive income for the period 132.6 119.8
Result for the period attributable to
Shareholders of parent company 170.1 144.6
Non-controlling interest
Total comprehensive income for the period attributable to
Shareholders of parent company 132.6 119.8
Non-controlling interest
Adjusted average number of shares, thousands 355,513 355,513
Basic and diluted earnings per share for result for the period attributable to the shareholders
of parent company, EUR
The notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Consolidated financial statements
5756
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
EUR million Note 31 DEC 2020 31 DEC 2019
ASSETS
Non-current assets
Goodwill 4.1 12.4 12.4
Other intangible assets 4.1 6.7 8.8
Tangible assets 4.2 824.7 742.0
Investments in associated companies and joint ventures 7. 2 369.0 392.4
Other investments 4.3, 5.7 186.9 255.1
Other non-current financial assets 5.3 10.8 15.2
Derivative financial instruments 5.7 0.0 1.4
Deferred tax receivables 6 7.5 6.7
Current assets
Inventories 4.4 360.0 379.5
Accounts receivable and other receivables 4.5, 7.3 276.7 303.8
Current income tax receivables 0.7 1.7
Derivative financial instruments 5.7 33.3 17.3
Cash and cash equivalent 5.4, 7.3 214.0 134.2
Total assets 2,302.5 2,270.4
SHAREHOLDERS’ EQUITY AND LIABILITIES
Equity attributable to shareholders of parent company 5.1
Share capital 557.9 557.9
Translation dierences -24.9 -29.1
Fair value and other reserves 136.6 175.5
Reserve for invested unrestricted equity 265.8 315.5
Retained earnings 448.4 318.2
Non-controlling interests
Total shareholders' equity 1,383.8 1,338.0
Non-current liabilities
Deferred tax liabilities 6. 97.5 105.6
Post employment benefit obligations 3.4 13.4 13.8
Provisions 4.8 3.7 4.2
Borrowings 5.5, 5.6, 5.7 444.8 412.9
Other liabilities 4.6 1.9 1.9
Derivative financial instruments 5.7 3.4 3.1
Current liabilities
Provisions 4.8 1.0 1.6
Current borrowings 5.5, 5.6, 5.7 7.6 32.0
Accounts payable and other liabilities 4.7, 7. 3 340.4 345.4
Current income tax liabilities 0.1 4.2
Derivative financial instruments 5.7 4.9 7.8
Total liabilities 918.7 932.4
Total shareholders' equity and liabilities 2,302.5 2,270.4
The notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF PARENT COMPANY
EUR million Note Share capital
Translation
dierences
Fair value and
other reserves
Reserve for
invested re-
stricted equity
Retained
earnings Total
Non-control-
ling interest
Total
share holders'
equity
Shareholders’ equity, 1 Jan 2020 557.9 -29.1 175.5 315.5 318.2 1,338.0 1,338.0
Result for the period 170.1 170.1 170.1
Other comprehensive income net of tax total 5.1 4.2 -38.9 -2.8 -37.5 -37.5
Comprehensive income total 4.2 -38.9 167.3 132.6 132.6
Share based payments 3.3 -1.5 -1.5 -1.5
Related party transactions
Dividends and capital distribution 5.1 -49.8 -35.6 -85.3 -85.3
Shareholders’ equity, 31 Dec 2020 557.9 -24.9 136.6 265.8 448.4 1,383.8 1,383.8
Shareholders’ equity, 1 Jan 2019 557.9 -26.4 194.0 383.1 214.4 1,322.9 0.0 1,322.9
Result for the period 144.6 144.6 0.0 144.6
Other comprehensive income net of tax total 5.1 -2.7 -18.4 -3.6 -24.8 -24.8
Comprehensive income total -2.7 -18.4 140.9 119.8 0.0 119.8
Share based payments 3.3 -1.6 -1.6 -1.6
Related party transactions
Dividends and capital distribution 5.1 -67.5 -35.6 -103.1 -103.1
Shareholders’ equity, 31 Dec 2019 557.9 -29.1 175.5 315.5 318.2 1,338.0 1,338.0
The notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
5958
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
1–12/2019EUR million Note 1–12/2020
Cash flow from operating activities
Result for the period 170.1 144.6
Adjustments to the result, total 140.6 70.6
Interest received 0.1 0.3
Interest paid -11.4 -16.3
Dividends received 21.9 63.3
Other financial items, net -6.3 -0.9
Income tax paid -45.2 -18.1
Change in working capital 37.9 -43.0
Net cash flow from operations 307.7 200.5
Cash flow from investing activities
Acquisition of other shares -2.2 0.0
Capital expenditure -154.2 -94.3
Proceeds from disposal of shares in subsidiary, net of cash 7. 1 4.2
Proceeds from disposal of other shares 0.1 3.7
Proceeds from sale of tangible and intangible assets 14.5 20.1
Change in non-current receivables, net -0.2 0.1
Net cash flow from investing -142.0 -66.3
Cash flow from financing activities
Proceeds from non-current interest bearing liabilities 33.2 150.0
Payment of non-current interest bearing liabilities -32.0 -155.7
Change in current liabilities 5.5 -0.3 -1.7
Change in non-current non-interest bearing liabilities, net -0.1 -0.2
Dividend paid and capital distribution -85.3 -103.1
Net cash flow from financing -84.4 -110.6
Change in cash and cash equivalents 81.3 23.6
Cash and cash equivalents at beginning of period 134.2 109.7
Translation adjustments -1.5 0.9
Change in cash and cash equivalents 81.3 23.6
Cash and cash equivalents at end of period 5.4 214.0 134.2
Adjustments to the result, total
Taxes 42.2 21.0
Depreciation, amortisation and impairment charges 94.5 113.7
Share of result from associated companies and joint ventures 2.5 -43.2
Gains and losses on sale of non-current assets -14.0 -33.3
Finance costs, net 14.9 15.5
Post-employment benefit obligations and provisions -1.0 -3.5
Other adjustments 1.5 0.5
Adjustments to the result, total 140.6 70.6
Change in working capital
Inventories 17.7 -15.1
Accounts receivables and other receivables 26.1 -2.5
Accounts payable and other liabilities -5.8 -25.4
Change in working capital 37.9 -43.0
The notes are an integral part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT
Notes to the consolidated
financial statements
1. ACCOUNTING PRINCIPLES
METSÄ BOARD GROUP
Metsä Board Corporation and its subsidiaries comprise a forest industry group
(”Metsä Board” or ”the Group”). Metsä Board’s business operations consist
solely of folding boxboard, fresh bre linerboard and market pulp businesses.
Metsä Board reports on its nancial performance in one reporting segment.
Metsä Board Corporation is Group’s parent company, which is domiciled in
Helsinki. e registered address of the company is Revontulenpuisto 2, 02100
Espoo Finland. e parent company is listed on Nasdaq Helsinki Ltd. At the
end of 2020 Metsäliitto Cooperative owned 48.2 per cent of the shares, and the
voting rights conferred by these shares were 67.4 per cent.
A copy of the annual report can be obtained from Metsä Board’s website
www.metsaboard.com or parent company’s head oce at Revontulenpuisto 2,
02100 Espoo Finland.
e Group consolidated nancial statements were authorised for issue by the
Board of Directors on 10 February 2021. According to Finnish Companies Act
shareholders can accept or reject the nancial statements in General Meeting
of shareholders aer date of publication. General Meeting of shareholders also
have possibility to decide to change nancial statements.
ACCOUNTING PRINCIPLES
Metsä Board Corporation’s consolidated nancial statements have been
prepared in accordance with the International Financial Reporting
Standards (IFRS), applying the IAS and IFRS standards and SIC and IFRIC
interpretations that were eective and approved by the EU at the date of the
nancial statements 31 December 2020. International Financial Reporting
Standards refer to the standards and their interpretations approved for use in
the EU by the Finnish Accounting Act and the regulations set out pursuant
to it in accordance with the procedure dened in the EU regulation (EC) no.
1606/2002. e notes to the consolidated nancial statements also comply with
the requirements of Finnish accounting and company legislation supplement-
ing the IFRS regulations.
e consolidated nancial statements are presented in millions of euros,
unless otherwise noted.
e consolidated nancial statements have been prepared based on original
acquisition costs, excluding nancial assets recognised at fair value, hedged
items in fair value hedging, biological assets, assets and obligations related to
dened benet plans and share-based payments measured at fair value.
CORONAVIRUS PANDEMIC
e impact of the coronavirus pandemic on business has been discussed in the
Report of the Board of Directors. e impacts of the coronavirus pandemic on
determining the impairment of sales receivables as well as cash and cash equiv-
alents are discussed in Note 5.6, Management of nancial risks, counterparty
risk.
AMENDMENTS TO STANDARDS APPLIED
DURING THE 2020 FINANCIAL PERIOD
e amendments to standards that entered into force at the beginning of 2020
have no material impacts on the consolidated nancial statements.
NEW AND AMENDED STANDARDS TO BE APPLIED
DURING FUTURE FINANCIAL PERIODS
Amendments to IAS 16, Property, Plant and Equipment - Proceeds before
Intended Use* (to be applied during the nancial periods beginning on 1
January 2022 or thereaer). e amendment prohibits deducting from the cost
of an item of property, plant and equipment any proceeds from selling items
produced while bringing that asset to the location and condition necessary for
it to be capable of operating in the manner intended by management. Instead,
the proceeds from selling such items, and the cost of producing those items, are
recognised in prot or loss. e amendments will impact the denition of the
acquisition cost of the Group’s tangible assets and the notes to be presented.
* Amendment has not been approved to be applied by the EU by 31.12.2020.
Other standard amendments will not have a material impact on the
consolidated nancial statements.
6160
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
TRANSLATIONS IN FOREIGN CURRENCY
e items included in the nancial statements of Group companies are
presented in the currency that is used in each company’s primary operating
environment. e consolidated nancial statements are presented in euros,
which is the parent company’s functional and presentation currency.
Business transactions denominated in foreign currencies are recognised in
the operating currency using the exchange rate on the transaction date. At the
end of the nancial period, open receivables and liabilities denominated in for-
eign currencies are translated into the functional currency using the exchange
rate on the balance sheet date. Any gains or losses resulting from transactions
in foreign currencies and from the translation of monetary items are recognised
in nancial income and expenses.
Information about currency hedging is provided in Note 5.6 Management of
nancial risks.
e income statements of Group companies whose functional currency is
not the euro are translated into euros using the average exchange rates of the
nancial period, and their balance sheets are translated using the exchange
rates on the balance sheet date. Changes in translation dierences arising from
the translation of Group companies’ income statements and balance sheets
and from the translation of net investments in foreign entities are recognised
in the consolidated comprehensive income statement. In conjunction with
divestments of Group companies, either by selling or by dissolving , translation
dierences accumulated by the time of the divestment are recognised in the
income statement as part of the gain or loss from the divestment.
EARNINGS PER SHARE
Undiluted earnings per share are calculated using the weighted average number
of shares during the reporting period. In calculating earnings per share
adjusted for the eect of dilution, the average number of shares is adjusted
for the dilution eect of any equity instruments that have been issued. In
calculating earnings per share, earnings are taken to be the reported earnings
attributable to the parent company’s shareholders.
OTHER ACCOUNTING PRINCIPLES
Other accounting principles are presented as part of the relevant Notes.
KEY ESTIMATES AND JUDGEMENTS
e preparation of nancial statements requires the use of the management’s
estimates, assumptions and judgement-based decisions that aect the amount
of assets and liabilities, the presentation of contingent assets and liabilities in
the nancial statements, and the amount of income and expenses. Even though
such estimates and assumptions are based on the management’s best knowledge
at the time they were made, it is possible that the actual values dier from those
used in the nancial statements. In terms of the nancial statements, the key
areas that involve the management’s estimates and judgement-based decisions
are presented in the following notes:
Key estimates and judgements Note
Retirement benefit obligations 3.4 Retirement benefit obligations
Impairment of intangible and tangible assets
4.1 Intangible assets
4.2 Tangible assets
Leases 4.2 Tangible assets
Financial instruments measured at fair value 4.3 Other investments
Valuation of inventories 4.4 Inventories
Valuation of accounts receivable 4.5 Accounts receivable and other receivables
Provisions 4.8 Provisions
Income taxes 6. Income taxes
Contingent liabilities from legal disputes and
claims
8.1 Contingent liabilities, assets and
commitments
2. PROFITABILITY
2.1 SEGMENT INFORMATION
ACCOUNTING PRINCIPLES
The Corporate Management Team is the chief operational decision-maker monitoring business operations performance based on the operating
segments.
Metsä Board’s business operations consist solely of folding boxboard, fresh fibre linerboard and market pulp businesses. Metsä Board reports on its
financial performance in one reporting segment.
Sales, assets and capital expenditure information by geographical areas is presented in the table below. Geographical sales are reported based on the
location of the customer and assets and capital expenditure based on the location of the assets.
PERSONNEL AT YEAR END
By country 2020 2019
Finland 1,422 1,414
Sweden 691 684
Belgium 58 56
Germany 51 46
USA 60 54
Singapore 12 11
Other countries 76 86
Total 2,370 2,351
PERSONNEL AVERAGE
By country 2020 2019
Finland 1,486 1,458
Sweden 714 710
Belgium 58 58
Germany 50 48
USA 57 55
Singapore 11 8
Other countries 80 97
Total 2,455 2,433
INFORMATION ON MOST IMPORTANT CUSTOMERS
ere were no customers with revenue exceeding 10 per cent of total
Group revenue in 2020 and 2019.
GEOGRAPHICAL AREAS
External sales
by location of customer
Non-current
assets Capital expenditure
EUR million 2020 2019 2020 2019 2020 2019
Germany 147.4 154.4 3.7 4.7 -0.4 0.1
Italy 120.6 130.1 0.8 0.5 0.5 0.0
Sweden 84.0 108.5 432.6 341.7 122.1 44.8
Turkey 103.8 118.4
Finland 101.8 77.7 961.2 1,061.9 43.4 53.0
United Kingdom 79.1 85.5 7.0 11.8 0.0 0.0
Russia 95.2 85.5 0.2 0.3 0.0 0.3
Spain 69.4 74.7 0.4 0.5
France 53.7 65.9 0.5 0.6 0.0 0.2
Poland 73.1 74.9 0.1 0.1 0.1 0.0
Norway 3.6 43.5
The Netherlands 77.5 86.2
Belgium 17.7 25.4 1.5 2.0 0.1 0.0
Other Europe and Middle East 165.1 161.5 0.0 0.0
USA 365.0 309.4 1.2 1.5 0.1 0.1
Canada 17. 2 25.9
Asia 148.0 131.8 0.7 0.4 0.4 0.2
Other countries 1 67.4 172.3 0.6 0.0
Total 1,889.5 1,931.8 1,410.4 1,425.9 166.4 98.9
Non-current assets include all non-current assets with the exception of derivative nancial instruments and deferred tax assets.
6362
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
2.2 SALES
ACCOUNTING PRINCIPLES
Performance obligations arising from the Group’s sales contracts
are mainly order-driven customer deliveries related to the sale of
forest industry goods. Services mostly have an ancillary role in the
Group’s business operations, or they complement deliveries of
goods.
The transaction price is the amount that the Group expects to
receive in exchange for a fulfilled performance obligation. This
amount, less sales-based value added taxes and sales taxes, is
presented as the Group’s sales. The prices received by the Group
are divided into a fixed part and a variable part. The variable part
consists of various discounts based on, among other things,
payment terms and purchased quantities, and is allocated by the
Group as deductions from sales revenue in line with estimates of the
extent of the discount the customer is deemed to be entitled to. The
Group’s sales contracts mostly include obligations solely related to
deliveries of goods, to which the allocation of the transaction price
is uncomplicated. The terms of payment applied in the Group’s
sales invoicing vary to some degree geographically and in dierent
business areas, but the term of payment provided is nonetheless
always clearly less than a year, when the financing component does
not need to be separated.
The Group recognises revenue from the sale of goods in the period
during which the control of the delivered products passes to the cus-
tomer, i.e. when the risks and benefits related to the sold products
transfer to the customer. Services are recognised as income over
time.
Control to products transfers at the point of time when the products
have been delivered in accordance with the agreed term of delivery.
The Incoterms 2010 delivery terms most commonly applied by the
Group and the corresponding times of sales income recognition are:
D terms: Delivery of goods to the buyer at the agreed destination
at the agreed time
C terms: Handing over the goods to be transported to the agreed
destination by a carrier arranged for by the seller
F terms: Handing over the goods to a carrier arranged for by the
buyer
The Group sees geographical distribution of sales as describing best
the nature, amount, timing and uncertainty of sales revenue. Sales
by geographical regions is presented below based on the location of
customers.
GEOGRAPHICAL DISTRIBUTION OF SALES
EUR million 2020 2019
Germany 147.4 154.4
Italy 120.6 130.1
Sweden 84.0 108.5
Turkey 103.8 118.4
Finland 101.8 7 7.7
United Kingdom 79.1 85.5
Russia 95.2 85.5
Spain 69.4 74.7
France 53.7 65.9
Poland 73.1 74.9
Norway 3.6 43.5
The Netherlands 77. 5 86.2
Belgium 17.7 25.4
Rest of EMEA 254.9 238.2
EMEA 1,281.8 1,369.1
USA 365.0 309.4
Canada 17. 2 25.9
Rest of Americas 58.5 68.2
Americas 440.7 403.5
APAC 1 67.0 159.3
Total 1,889.5 1,931.8
2.3 OTHER OPERATING INCOME
EUR million 2020 2019
Gains on disposal 14.2 33.4
Rental income 1.2 1.2
Service revenue 3.4 6.0
Government grants and allowances 9.9 5.4
Scrap and waste sale 0.1 0.3
Other operating income 4.5 5.4
Total 33.3 51.7
GAINS ON DISPOSAL
EUR million 2020 2019
Emission rights 6.2 14.1
Divestment of Äänevoima Oy shares to Metsä Fibre 9.0
Sale of non-business related land area 6.0 5.5
Non-operative share investment 3.3
Other 1.9 1.6
Total 14.2 33.4
e government grants and compensation relate to the compensation for
training, healthcare and research costs, insurance indemnities and energy aid.
2.4 OPERATING EXPENSES
EUR million 2020 2019
Materials and services
Raw materials and consumables
Purchases during the financial year 898.4 1,103.6
Change in inventories 25.5 -9.6
External services
Logistics cost 244.1 239.7
Other external services 57.4 56.1
Total 1,225.4 1,389.8
Employee costs
Employee costs total 196.9 194.9
Other operating expenses
Rents and other real estate expenses 12.3 10.5
Purchased services 69.7 76.1
Losses on sale of non-current assets 0.2 0.4
Other operating expenses 55.3 64.0
Total 137.5 151.1
Employee costs are reported in Note 3.1 and information on depreciation,
amortisation and impairment charges in Notes 4.1 and 4.2.
Other operating expenses include e.g. energy costs, real estate costs, market-
ing and advertising costs and administrative costs.
Research and development expenses excluding depreciations were EUR
6.6 (7.0) million. e reporting of research and development expenses has
been claried and the gures for the comparison year have been adjusted
accordingly.
PRINCIPAL AUDITOR FEES
Group’s principal auditor is KPMG Oy Ab.
PRINCIPAL AUDITOR FEES
EUR million 2020 2019
Audit 0.4 0.4
Auditors' opinions 0.0 0.0
Tax services 0.0 0.0
Other services 0.0 0.0
Total 0.4 0.4
In 2020 fees to other auditors than KPMG amounted to EUR 0.1 (0.1) million.
6564
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
3. REMUNERATION
3.1 EMPLOYEE COSTS
EUR million 2020 2019
Wages and salaries 123.1 123.4
Share-based payments 1.4 1.7
Social security costs
Pension costs
Defined benefit plans 0.3 0.4
Defined contribution plans 18.7 24.6
Other social security costs 53.5 44.9
Social security costs total 72.5 69.8
Employee costs total 196.9 194.9
3.2 THE MANAGEMENT’S SALARIES, REMUNERATION AND PENSION EXPENSES
Key management includes members of the Board of Directors as well as Corporate Management Team.
THE MANAGEMENT’S SALARIES, REMUNERATION AND PENSION EXPENSES
EUR 2020 2019
Salaries and other remuneration 1,820,308.99 2,208,039.91
Share-based payments (long-term remuneration) 2,449,410.62 2,398,896.71
Pension costs
Defined benefit plans 476,611.79 538,994.91
Defined contribution plans 191,951.86 262,578.06
Total 4,938,283.26 5,408,509.59
REMUNERATION PAID TO THE MEMBERS OF THE BOARD OF DIRECTORS OF THE PARENT COMPANY AND THEIR SHAREHOLDING
Shareholding
shares
2020
Renumeration
EUR
2019
Renumeration
EUR
2020
Defined
contribution
EUR
2019
Defined
contribution
EUR
Ilkka Hämälä, chairman 337,648 109,060 106,260 14,784 17,249
Martti Asunta, Vice chairman (until 11 June 2020) 7,70 0 91,140 1,268 16,154
Jussi Linnaranta, Vice chairman (from 11 June 2020) 20,939 93,940 73,500 14,151 13,031
Hannu Anttila 140,619 77,000 74,200 11,622 13,155
Kirsi Komi 78,287 77,000 74,200 10,475 12,050
Kai Korhonen 215,057 86,600 83,800 14,869
Liisa Leino 182,932 76,300 73,500 10,380 11,936
Jukka Moisio (from 11 June 2020) 5,275 68,600 9,228
Juha Niemelä (until 11 June 2020) 7,70 0 73,500
Timo Saukkonen (from 11 June 2020) 9,875 68,600 9,228
Veli Sundbäck 67,952 76,300 74,200
Total 1,058,584 748,800 724,300 81,135 98,444
Metsä Board’s Annual General Meeting 2020 decided, that about one half of the remuneration will be paid in cash while the other half is paid in company’s B shares.
Remuneration of Corporate Management Team consists of xed monthly salary, annual bonus determined by each Team member position pension benets and
share based incentive schemes. In addition the CEO has a pension benet.
e monthly salary of CEO Mika Joukio is EUR 40,576. e salary includes car and phone benets and extended insurance cover for travel and accidents. Until
2018, the CEO could, based on a decision by the Board and overall performance, be paid an annual bonus equal to a maximum of 58,33 % of xed annual salary. In
2019, the remuneration possibility of the CEO’s short-term remuneration scheme was, at the target level, 30%, and at the maximum level, 75% of the xed annual
salary.
Until 2018, the members of Corporate Management Team could, based on a
decision by the Board and overall performance, be paid an annual bonus equal to
a maximum of 50 % of xed annual salary. In 2019, the remuneration possibility
of the Corporate Management Team’s short-term remuneration scheme was, at
the target level, 20% or 25%, and at the maximum level, 50% or 62,5% of the xed
annual salary.
e Board approves the forms and basis of the compensation systems as well
as the measures and targets applied. e potential rewards are based on the
achievement of the company’s nancial and strategic goals as well as personal
goals.
Share based incentive schemes and the shareholding programme for Corpo-
rate Management Team are presented in Note 3.3.
e CEO’s mutual term of notice is six months. In case the CEO contract is
terminated by the Board of Directors, the CEO is entitled to receive discharge
compensation equal to his 12-month salary.
e period of notice for other members of Corporate Management Team is
six months. Corporate Management Team members are entitled to additional
severance compensation of six month salary in case of employment termination
on grounds not related to the aected Management Team member.
e CEO is covered by statutory employee pension scheme. is oers pen-
sion benets based on term of service and renumeration earned as prescribed
in applicable legislation. rough supplementary pension arrangements, the
CEO is entitled to retire at the age of 62 years. His pension will be equal to 60
per cent of his salary at the time of retirement calculated in accordance with
Finnish pension legislation and based on the calculation period of ve years
immediately preceding retirement. In case the CEO’s contract is terminated
prior to retirement, the pension earned by the CEO becomes vested.
Excluding the CEO, the Corporate Management Team members have no
pension arrangements diering from statutory pensions. Corporate Manage-
ment Team members are covered by statutory employee pension scheme. is
oers pension benets based on term of service and renumeration earned as
1)
Basic salary includes a company phone and car benefit, extended healthcare, travel and accident insurance.
2)
The 2020 payment concerns performance in 2019; the 2019 payment concerns performance in 2018.
3)
2020: earning period 2017–2019; 2019: earning period 2016–2018.
4)
Delayed long-term rewards were paid EUR 658 981 in accordance with the conditions of payment in 2020 and total of EUR 625 703 in 2019. The payment 2019 also includes long-term rewards delayed
in 2017.
5)
Delayed long-term rewards were paid EUR 445 620 in accordance with the conditions of payment in 2020 and total of EUR 527 526 in 2019. The payment 2019 also includes long-term rewards
delayed in 2017.
SALARIES AND REMUNERATION PAID TO THE CEO AND OTHER
MEMBERS OF THE CORPORATE MANAGEMENT TEAM
EUR
2020
CEO
2019
CEO
2020
Other
Management Team
2019
Other
Management Team
Salaries and remuneration
Basic salary including fringe benefits
1)
511,158 511,552 1,119,875 1,116,592
Short-term performance bonus
2)
64,903 218,168 124,372 361,728
Long-term share-based incentive
3)
572,876 604,104 771,934 641,564
Deferred long-term share-based incentive
4) 5)
658,981 625,703 445,620 527,526
Total 1,807,918 1,959,527 2,461,802 2,647,410
Pension Costs
Supplemental defined benefit pension plan 476,612 538,995
Contribution-based statutory arrangement 52,856 77,496 139,095 185,082
Total 529,468 616,491 139,095 185,082
Salaries and remuneration as well as pension costs in total 2,337,386 2,576,018 2,600,897 2,832,492
prescribed in applicable legislation. e Group has no o balance sheet pension
liabilities on behalf of management.
Key management had any loans outstanding from the company or its subsid-
iares and there were no guarantees given on behalf of key management.
3.3 SHARE-BASED PAYMENTS
ACCOUNTING PRINCIPLES
Share-based incentive programmes in which the payments are
made with equity instruments and cash have been established for
the company’s top executives. The Group’s share-based incentive
schemes have been treated in full as arrangements settled in
shares. The incentives granted are measured at fair value on the
grant date, and recognised as expenses in the income statement
and equity evenly over the vesting period.
The eect on profit of the incentive programmes is presented under
employee costs.
During the review period, Metsä Board had four active share-based incentive
schemes: Share incentive scheme 2014, which company Board of Directors
decided to adopt on 6 February 2014, Performance based share incentive scheme
2017–2021 and Retentive share incentive scheme, both of which the company
Board of Directors decided to adopt on 10 January 2017 and Performance based
share incentive scheme 2020–2024 which the company Board of Directors
decided to adopt on 12 December 2019, as part of company’s incentive and key
personnel retention programme.
6766
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
31 Dec 2020 2014–2016 2015–2017 2016–2018 Total
Key characteristics
Shares allocated to the scheme, shares 427,500 427,500 266,250 1,121,250
Grant date(s)
17.3.2014,
10.6.2014,
1.11.2016
27.2.2015,
1.11.2016
18.4.2016,
1.11.2016,
7.9.2017
Criteria
Equity ratio, ROCE, EBIT
multiplier
Equity ratio, ROCE, EBIT
multiplier
Equity ratio,
ROCE, EBIT
Personnel (31 December 2020) 2
Factors used to determine fair value (EUR)
1)
Share price at grant date 3.37 5.85 5.60
Share fair value at grant date 2.90 5.12 4.94
Annual dividend assumption in fair value measurement 0.10 0.14 0.22
Share price at payment date / balance sheet date 6.31 7.46 5.98
Fair value on balance sheet date 0
Eect on result and financial position (EUR)
Expense in 2020, share-based payments settled as equity 0 0 302,391 302,391
Share-based payments settled in cash, unpaid part, estimate 0 308,801 0 308,801
Number of shares 1 January 2020
2)
Outstanding at the beginning of the period 0 0 131,792 131,792
Changes during the year
Shares granted 0 0 0 0
Shares forfeited 0 0 0 0
Shares exercised 0 0 0 0
Shares expired 0 0 131,792 131,792
Number of shares 31 December 2020
Outstanding at the end of the period 0 0 0 0
and tax-like payments arising from the reward at the time of the transfer of the
shares.
e company changed the terms of the scheme during 2016 so that for incen-
tive periods 2014–2016 and 2015–2017 a cap was set for total employee com-
pensation, including the share incentive paid, based on each plan participant’s
salary. e part of earned incentive exceeding the cap is deferred and paid in
full in cash in coming years when allowed by the cap. Starting from vesting
period 2016–2018, a salary based cap was set with the eect of cutting the part
of share incentive exceeding the cap and resulting in the forfeiture of the excess
part of the incentive. On balance sheet date, the deferred compensation for
periods 2014–2016 and 2015–2017 reects the value of deferred compensation
and interest accrued thereon to be paid later when the employment criterion is
fullled
RETENTIVE SHARE INCENTIVE SCHEME 2017–2021
The scheme offers the participants the possibility to be awarded
Metsä Board Corporation’s B shares, provided that the participant’s
employment contract remains in force and continues to do so until the end
of the retention period. The scheme has retention periods of 12–36 months.
As a rule, the incentive is forfeited, if the participant’s employment is
terminated during the retention period.
Key characteristics of Share incentive scheme 2014 are summarised in the
table below:
Key characteristics of Performance based share incentive scheme and Retentive share incentive scheme 2017–2021 are summarised in the table below:
Performance based
share incentive scheme
2017–2021
Retentive share
incentive scheme
2017–2021
31 Dec 2020 2017–2019 2018–2020 2019–2021 2018–2020 Total
Key characteristics
Shares allocated to the scheme, shares 269,167 275,278 280,694 10,000 835,139
Grant date(s)
6.4.2017,
7.9.2017
9.4.2018,
25.9.2018
2.4.2019,
13.6.2019,
12.8.2019
25.9.2018
Criteria
Equity ratio,
ROCE ja EBIT
Equity ratio,
ROCE ja EBIT
Equity ratio,
ROCE ja EBIT
Employment
requirement
Personnel (31 December 2020) 26
Factors used to determine fair value (EUR)
1)
Share price at grant date 6.37 8.64 5.82 8.65
Share fair value at grant date 5.92 7.8 4 5.20 8.12
Annual dividend assumption in fair value measurement 0.23 0.27 0.31 0.27
Share price at payment date / balance sheet date 4.86 8.62 8.62 7. 14
Fair value on balance sheet date 2,285,099 2,295,909 429 336 5,010,344
Eect on result and financial position (EUR)
Expense in 2020, share-based payments settled as equity 494,236 329,838 95,199 81,587 1,000,859
Share-based payments settled in cash, unpaid part, estimate 1,193,440 338,742 1,532,181
Number of shares 1 January 2020
2)
Outstanding at the beginning of the period 244,724 256,389 280,694 10,000 791,807
Changes during the year
Shares granted
Shares forfeited
Shares exercised 10,000 10,000
Shares expired 61,037 61,037
Number of shares 31 December 2020
Outstanding at the end of the period 183,687 256,389 280,694 720,770
e eect on consolidated income statement of share-based incentive
schemes amounted to EUR 1,404,744 in 2020 (2019: EUR 1,719,419).
SHARE INCENTIVE SCHEME 2014, PERFORMANCE BASED SHARE
INCENTIVE SCHEME 2017–2021 AND PERFORMANCE BASED
SHARE INCENTIVE SCHEME 2020-2024
e schemes oer the participants the possibility to be awarded Metsä Board
Corporation’s B shares for achieving set goals for three-year periods. Incentive
periods are the calendar years 2014–2016, 2015–2017, 2016–2018, 2017–2019,
2018–2020, 2019–2021, 2020-2022, 2021-2023 and 2022-2024. e bonus
awarded under the share incentive scheme 2014 and performance based share
incentive plan 2017-2021 is determined by achievement of the set goals and
paid in March following the incentive period. In addition to shares, the bonus
includes a cash component, which is used to cover taxes and tax-like charges
incurred by plan participants due to the bonus. e number of shares allocated
under the performance share plan 2020-2024 includes both the share and the
cash portion. Accordingly, the reward is paid partly in shares and partly in
cash and the cash portion is intended to cover taxes and tax-like payments. e
bonus is not paid if the person’s employment ends before the end of the earning
period. In addition, the scheme includes a two-year commitment period. If the
key employee’s employment ends during the commitment period, the key per-
son must, as a rule, return the delivered shares to the Company free of charge.
Based on the fulllment of the criteria for the earning period 2017-2019, 183
687 Metsä Board Oyj B shares and a cash contribution were paid to cover taxes
6968
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
Key characteristics of Performance based share incentive scheme 2020–2024 are summarised in the table below:
Performance based
share incentive scheme
2020–2024
31 Dec 2020 2020–2022 Total
Key characteristics
Shares allocated to the scheme, shares 590,788 590,788
Grant date(s) 27.1.2020
Criteria
Equity ratio,
ROCE ja EBIT
Personnel (31 December 2020) 25
Factors used to determine fair value (EUR)
1)
Share price at grant date 5.36
Share fair value at grant date 4.55
Annual dividend assumption in fair value measurement 0.27
Share price at payment date / balance sheet date 8.62
Fair value on balance sheet date 537,617 537,617
Eect on result and financial position (EUR)
Expense in 2020, share-based payments settled as equity 101,494 101,494
Share-based payments settled in cash, unpaid part, estimate 543,928 543,928
Number of shares 1 January 2020
2)
Outstanding at the beginning of the period 0 0
Changes during the year
Shares granted 590,788 590,788
Shares forfeited 0 0
Shares exercised 0 0
Shares expired 0 0
Number of shares 31 December 2020
Outstanding at the end of the period 590,788 590,788
1)
The fair value of the share settled component at the grant date was the share price of Metsä Board Corporation’s B share less any dividends estimated by analyst consensus to be paid before the
payment of the incentive. The fair value of the share based payment is recognised to the number of shares based on the best available estimate of the total incentive to which the participants are
expected to be entitled.
2)
The amounts in the table represent net amounts, i.e. the number of shares to be given based on the share based payment schemes. In addition, the payment will include a cash settled component
used to cover taxes and tax-like charges.
3.4 RETIREMENT BENEFIT OBLIGATIONS
ACCOUNTING PRINCIPLES
The Group’s arrangements concerning benefits following the
termination of employment are either defined benefit pension plans
or defined contribution pension plans. A defined contribution plan
is a pension arrangement in which fixed contributions are made to
a separate unit, and the Group does not have legal or constructive
obligations to make additional contributions if the fund has
insucient funds to pay all benefits to all employees in accordance
with its obligations in the future. All arrangements that do not meet
these requirements are considered to be defined benefit plans. A
defined benefit plan defines the pension benefit that the employee
will receive upon retiring , the amount of which depends on factors
including the employee’s age, years of service and salary level, for
example.
With defined benefit plans, the current value of the obligations on
the end date of the reporting period, less the fair value of the assets
included in the arrangement, is recognised on the balance sheet
as a liability. The amount of the obligation arising from the plan is
based on annual calculations by independent actuaries using the
projected unit credit method. The current value of the obligation
is determined using the interest rate equalling the interest rate of
high-quality bonds issued by the companies as the discount rate for
the estimated future cash flows. The bonds used in determining the
interest rate have been issued in the same currency as the benefits
to be paid, and their maturity is approximately the same as that of
the corresponding pension obligation.
Actuarial gains and losses from experience verifications and
changes in actuarial assumptions are recognised through items
of other comprehensive income as a reimbursement or charge in
equity for the period during which they have been incurred. Past
service costs are recognised immediately through profit and loss.
Apart from contributions related to pension insurance, the Group
does not have any other payment obligations in defined contribution
plans. Obligation-based payments are allocated as expenses in
accordance with accrual accounting.
KEY ESTIMATES AND JUDGEMENTS
The determination of the current value of pension obligations
arising from defined benefit plans and the items to be recognised
as expenses during the financial period is based on the use of
actuarial assumptions, which involves management judgement. The
actuarial assumptions used may dier significantly from the actual
results, due to changes in economic conditions or the employment
relationships of the people covered by the arrangements. Significant
dierences between the assumptions and actual results may aect
the amount of the pension obligation and the value of items to be
recognised as expenses.
POST-EMPLOYMENT BENEFITS
EUR million 2020 2019
Liabilities recognised in balance sheet
Defined benefit pension plans 13.1 13.5
Defined contribution pension plans 0.1 0.2
Total 13.2 13.8
Surplus of funded plans in assets -7. 5 -12.1
DEFINED BENEFIT PENSION PLANS
e most signicant dened benet pension plans are in Germany and United
Kingdom.
Group’s German dened benet pension plans grant old-age pensions,
disability pensions and family pensions exceeding the statutory pension level to
eligible ocials and senior management. e retirement age is usually 65 years,
and the amount of pension depends on the length of service. Ocials and sen-
ior management are required to have a service history of 25–30 years to receive
a full pension. Some of the pension arrangements are closed. e dened benet
plans in Germany are unfunded.
e dened benets plans in United Kingdom guarantee participants of
the plan a pension, the amount of which is based on the length of service and
the salary in the most recent working years. e arrangement is closed to new
members. e assets in the arrangement have been invested in funds that are
managed in accordance with local guidelines and practice. Funds administered
by third parties pay the benets to the eligible recipients. e Group participates
actively in the activities of the pension trust’s investment committee.
e Group also has dened benet plans in Finland, Belgium and Italy.
AMOUNTS IN BALANCE SHEET
EUR million 2020 2019
Present value of funded obligations 59.1 56.9
Fair value of plan assets -64.8 -67.5
Deficit (+) / surplus (-) -5.7 -10.5
Present value of unfunded obligations 11.3 11.9
Deficit (+) / surplus (-) of defined benefit pension plans, total 5.6 1.4
Defined benefit-based pension liabilities
on the balance sheet, net
13.1 13.5
Defined benefit-based pension assets
on the balance sheet, net
-7. 5 -12.1
7170
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
CHANGE IN DEFINED BENEFIT PENSION OBLIGATIONS IN 2019
EUR million
Present
value of
obligation
Fair value of
plan assets Total
1 Jan 2019 57.4 -60.8 -3.3
Current service cost 0.4 0.4
Administrative costs 0.0 0.0
Interest expense (+) or interest income (-) 1.4 -1.7 -0.3
Past service cost
Total amount recognised in profit and loss 1.8 -1.7 0.1
Remeasurements in other comprehensive income
Return on plan assets, excluding amounts included
in interest income or expense
-7. 2 -7. 2
Gains (-) and losses (+) from change in demographic
assumptions
-0.8 -0.8
Gains (-) and losses (+) from change in financial
assumptions
9.4 9.4
Experience gains (-) and losses (+) 2.3 2.3
Total remeasurements in other comprehensive income 10.9 -7.2 3.7
Translation dierences 1.7 -2.3 -0.7
Contributions
Employers 2.2 2.2
Plan participants 0.0 0.0 0.0
Payments from plans
Benefit payments -2.9 2.3 -0.6
Settlements
31 Dec 2019 68.9 -67.5 1.4
CHANGE IN DEFINED BENEFIT PENSION OBLIGATIONS IN 2020
EUR million
Present
value of
obligation
Fair value of
plan assets Total
1 Jan 2020 68.9 -67.5 1.4
Current service cost 0.3 0.3
Administrative costs
Interest expense (+) or interest income (-) 1.0 -1.1 -0.1
Past service cost
Total amount recognised in profit and loss 1.4 -1.1 0.2
Remeasurements in other comprehensive income
Return on plan assets, excluding amounts included
in interest income or expense
-0.6 -0.6
Gains (-) and losses (+) from change in demographic
assumptions
0.2 0.2
Gains (-) and losses (+) from change in financial
assumptions
6.9 6.9
Experience gains (-) and losses (+) -2.3 -2.3
Total remeasurements in other comprehensive income 4.7 -0.6 4.2
Translation dierences -2.3 2.9 0.6
Contributions
Employers -0.3 -0.3
Plan participants 0.0 0.0 0.0
Payments from plans
Benefit payments -2.3 1.8 -0.6
Settlements
31 Dec 2020 70.4 -64.8 5.6
DEFINED BENEFIT PENSION OBLIGATION AND PLAN ASSETS BY COUNTRY IN 2020
EUR million Germany United Kingdom Finland Other countries Total
Present value of obligation 10.4 44.5 11.4 4.1 70.4
Fair value of plan assets -51.5 -11.3 -2.1 -64.8
Total 10.4 -6.9 0.2 1.9 5.6
DEFINED BENEFIT PENSION OBLIGATION AND PLAN ASSETS BY COUNTRY IN 2019
EUR million Germany United Kingdom Finland Other countries Total
Present value of obligation 11.0 42.0 12.4 3.5 68.9
Fair value of plan assets -53.7 -11.9 -1.9 -67.5
Total 11.0 -11.7 0.5 1.6 1.4
SIGNIFICANT ACTUARIAL ASSUMPTIONS 2020
Germany United Kingdom Finland Belgium
Discount rate, % 0.74 1.20 0.38 0.30
Salary growth rate, % 3.00 2.30 0.00 1.00
Pension growth rate, % 1.74 3.10 1.40 1.70
SIGNIFICANT ACTUARIAL ASSUMPTIONS 2019
Germany United Kingdom Finland Belgium
Discount rate, % 0.82 2.00 0.56 1.50
Salary growth rate, % 3.00 2.10 0.00 1.00
Pension growth rate, % 1.75 3.10 1.37 1.50
SENSITIVITY OF BENEFIT OBLIGATION TO CHANGES IN ESSENTIAL
WEIGHTED ASSUMPTIONS 2020
Impact on benefit obligation
Change of
assumption Increase Decrease
Discount rate 0.5%-points 6.9% decrease 7.2% increase
Salary growth rate 0.5%-points 0.2% increase 0.2% decrease
Pension growth rate 0.5%-points 5.7% increase 5.5% decrease
One year increase
in assumption
One year decrease
in assumption
Life expectancy 3.6% increase 3.6% decrease
e aforementioned sensitivity analyses are based on a situation where all other
assumptions remain unchanged when one assumption changes. e sensitivity
of a dened benet obligation to changes in signicant actuarial assumptions
has been calculated using the same method as is used in calculating the pension
obligation entered in the balance sheet.
PLAN ASSETS ARE COMPRISED AS FOLLOWS:
2020
EUR million
2020
%
2019
EUR million
2019
%
Qualifying insurance policies 2.1 3% 1.9 3%
Cash and cash equivalents 0.2 0% 0.1 0%
Investment funds 51.3 79% 53.6 79%
Funds held by Insurance company 11.3 17% 11.9 18%
Total 64.8 100% 67.5 100%
e most considerable risks related to Dened benet plans are as follows:
VOLATILITY OF ASSETS
e Group works to reduce investment risk by diversifying the assets in the
arrangement to dierent asset types such as property, government bonds as well
as corporate bonds.
CHANGES IN THE RETURN ON BONDS
Liabilities arising from the arrangements have been calculated using a discount
rate based on the return on high-quality corporate bonds. A decline in the
discount rate increases the arrangements’ liabilities.
INFLATION RISK
e plan’s benet obligations are linked to ination and a higher ination will
lead to increased obligation.
LIFE EXPECTANCY
e majority of the arrangement obligations arises from generating lifetime
benets for members, so the expected increase in life expectancy will increase
the arrangement obligations.
e contribution made to post-employment dened benet plans is expected
to be EUR 0.8 million in 2021. e weighted average duration of the dened
benet obligation is 15.1 years (15.7).
4. CAPITAL EMPLOYED
4.1 INTANGIBLE ASSETS
ACCOUNTING PRINCIPLES
GOODWILL
Goodwill arising from the merging of business operations is recog-
nised as the amount by which the sum of the consideration paid, the
non-controlling interests’ share in the object of the acquisition and
the previous holding exceed the fair value of the acquired net assets.
Goodwill is not amortised. Instead, it is tested for impairment
annually and always when there is an indication of a decrease in
value. Goodwill is therefore allocated to cash-generating units for
impairment testing. Goodwill is recognised at original acquisition
cost less accumulated impairment losses.
OTHER INTANGIBLE ASSETS
Intangible assets are initially recognised at their original acquisition
cost on the balance sheet if the acquisition cost can be determined
reliably and it is probable that the expected financial benefit from
the asset will be to the benefit of the Group.
Intangible assets with limited useful lives are recognised as
expenses over their known or estimated useful lives, using the
straight-line depreciation method.
The residual value of an asset, the useful life and depreciation
method are reviewed at least annually, at the end of each financial
period, and adjustments are made when necessary to reflect
changes in the expected financial benefit of the asset.
RESEARCH AND DEVELOPMENT COSTS
Research costs are recognised as expenses at the time they are
incurred. Development costs are capitalised and amortised over
their useful lives if the research project is likely to generate financial
benefits and the costs can be measured reliably. Metsä Board has
not capitalised development costs.
COMPUTER SOFTWARE
Costs arising from developing and building of significant new com-
puter software are recognised as intangible assets on the balance
sheet and depreciated on a straight-line basis over its estimated
useful life, which is not to exceed seven years. Maintenance and
operating costs related to computer software are recorded as
expenses in the reporting period during which they have been
incurred.
OTHER
The cost of patents, licences and trademarks with finite useful lives
are capitalised on the balance sheet under intangible assets and
depreciated on a straight-line basis over their useful lives of 5–10
years.
7372
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
EUR million Goodwill Other intangible assets Construction in progress Total
Acquisition cost, 1 Jan 2020 12.4 130.5 1.4 144.3
Translation dierences 0.3 0.3
Increases 0.7 0.0 0.7
Decreases -8.1 0.0 -8.1
Transfers between asset categories 0.0 -0.8 -0.8
Acquisition cost, 31 Dec 2020 12.4 123.4 0.6 136.4
Accumulated amortisation and impairment charges, 1 Jan 2020 -123.1 -123.1
Translation dierences -0.2 -0.2
Accumulated amortisation on decreases and transfers 8.1 8.1
Amortisation for the period -2.2 -2.2
Impairment charges for the period
Accumulated amortisation and impairment charges, 31 Dec 2020 -117.4 -1 17.4
Book value, 1 Jan 2020 12.4 7.4 1.4 21.2
Book value, 31 Dec 2020 12.4 6.1 0.6 19.1
EUR million Goodwill Other intangible assets Construction in progress Total
Acquisition cost, 1 Jan 2019 12.4 136.6 0.9 149.9
Translation dierences -0.1 -0.1
Increases 1.0 0.5 1.5
Decreases -6.9 -6.9
Transfers between asset categories 0.0 0.0
Acquisition cost, 31 Dec 2019 12.4 130.5 1.4 144.3
Accumulated amortisation and impairment charges, 1 Jan 2019 -127.4 -127.4
Translation dierences 0.1 0.1
Accumulated amortisation on decreases and transfers 6.8 6.8
Amortisation for the period -2.5 -2.5
Impairment charges for the period
Accumulated amortisation and impairment charges, 31 Dec 2019 -123.1 -123.1
Book value, 1 Jan 2019 12.4 9.2 0.9 22.5
Book value, 31 Dec 2019 12.4 7.4 1.4 21.2
No impairments were recorded for intangible assets during the current or previous financial year.
Other intangible assets include among other things computer software, patents and licenses. Metsä Board has not capitalised development expenditure.
IMPAIRMENT TESTING
Depreciation is not recognised for assets with indefinite useful lives.
Instead, such assets are tested for impairment annually. Assets that are
subject to depreciation are always tested for impairment when events
or changes in conditions indicate that it is possible that the monetary
amount corresponding to the book value of the assets might not be
recoverable.
Cash-generating units are reporting segments or smaller units for which
a utility value can be defined.
The recoverable amount is the higher of the fair value of an asset less
the cost of sale, and its value in use. Value in use is the estimated future
net cash flows, discounted to their present value, expected to be derived
from said asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of the asset
is higher than its recoverable amount. If the impairment loss concerns
a cash-generating unit, it is first allocated to decrease the goodwill of
the cash-generating unit, and thereafter to decrease the other assets
of the unit on pro-rata basis. In connection with the recognition of the
impairment loss, the useful life of the depreciated asset is re-evaluated.
An impairment loss recognised for an asset other than goodwill is
reversed if a change has taken place in the estimates used to determine
the recoverable amount of the asset. However, the maximum reversal
of an impairment loss amounts to no more than the carrying amount of
the asset if no impairment loss had been recognised. An impairment loss
recognised on goodwill is not reversed under any circumstances.
KEY ESTIMATES AND JUDGEMENTS
FUTURE CASH FLOWS
The recoverable amounts of cash-generating units are based on calcula-
tions of value in use. The management’s key estimates in the calculations
concern the product price developments, delivery volumes, currency
exchange rates, capacity utilisation rates, and the development of costs
related to key raw material costs and other costs, as well as the discount
rate.
DISCOUNT RATE
The discount rate used is the weighted average cost of capital (WACC).
When calculating the WACC, the cost of debt takes into account the mar-
ket-based view of the credit risk premium. Both future cash flows and the
discount rate are calculated after tax, which means that the established
discounted cash flows and values in use are before tax.
IMPAIRMENT TESTING 2020
Metsä Board carries out impairment testing at least once a year, during the
fourth quarter and based on the situation as of 30 September. Additionally, a
sensitivity analysis is performed quarterly. Full impairment test is initiated if
sensitivity analysis indicates possible impairment. At the turn of 2020, there
were no indications of impairment.
In 2020, the Group did not recognise impairments based on impairment
testing.
In 2020 testing , the cash-generating units are Folding boxboard, Liner, and
Market Pulp. e cash generating units are the same as in 2019 testing. e
recoverable cash ows for the cash-generating units under testing are based on
value in use and ve-year forecasts with subsequent cash ows expected to grow
at a constant rate. e key factors aecting estimates are similar to those used in
2019 testing.
Metsä Board’s share of Metsä Fibre’s recoverable amounts, carrying amount
and goodwill included in “Investment in associated companies and joint ven-
tures” (EUR 45.2 million) and other assets with indenite useful life (brands),
which are not amortised (EUR 5.6 million) is allocated to cash generating units
in the proportion of their pulp purchases.
For the situation on 30 September 2020 and for previous goodwill impair-
ment tests, the cash ows subsequent to the 5-year projected cash ows are
based on a 1.5 (2019: 1.5) per cent xed annual growth rate. Average values for
the key assumptions (price, variable costs) during the projection period have
been used as initial point for the cash ows following the forecast period. e
xed costs are based on the projected costs for the h year.
e discount rate used is Metsä Board’s Weighted Average Cost of Capital
(WACC). When calculating WACC, the cost of debt takes into account market
based view of Metsä Board’s risk premium. For testing carried out based on
status at 30 September 2020, the WACC aer taxes was 5.41 per cent (2019:
5.56) and for Metsä Fibre 5,49 per cent (5.54). Management’s view is that the
risk factors regarding future cash ows do not dier materially from one
cash-generating unit to another.
e goodwill impairment test results are evaluated by comparing the
recoverable amount with the carrying amount of the cash-generating unit. e
most important cash-generating units of Metsä Board Group, the goodwill and
brands allocated to them as of 30 September 2020.
Cash-generating unit
Goodwill
EUR million
Brand
EUR million
Folding boxboard
1)
29.7 2.5
Liner
1)
27. 9 3.0
Market pulp
1)
Total 5 7.6 5.6
1)
Goodwill includes the goodwill from Metsä Board’s holding in Metsä Fibre (EUR 45.2 million).
Goodwill from the holding as well as other assets with indefinite useful life (EUR 5.6 million)
are shown under ”Investments in associated companies and joint ventures” in balance sheet.
In the 2020 tests, a somewhat possible change in any single key assumption will
not result in the carrying amount exceeding the recoverable amount for any
cash-generating unit.
ACCOUNTING PRINCIPLES
The Group has received emission allowances in accordance with
the European Union Emissions Trading System. Allowances are
treated as intangible assets and are measured at acquisition cost.
The acquisition cost of emission allowances received without
consideration is zero. Emission allowances are used simultaneously
with the carbon dioxide emissions generated during their validity
period. Earnings from emission allowances sold are recognised in
other operating income. If the emission allowances received without
consideration are not sucient to cover the amount of the actual
emissions, the Group purchases additional allowances from the
market.
The allowances purchased are recognised in intangible rights at
the fair value on the acquisition date. The provision to fulfil the
obligation to return the emission allowances is recognised at fair
value on the closing date of the reporting period if the emission
allowances received without consideration and purchased are not
sucient to cover the amount of the actual emissions.
In 2020 the Group received 606 thousand tonnes of emission allowances free
of charge (2019: 846). In addition the Group has sold 217 thousand tonnes to
the market (563). At balance closing date the group had emission allowances of
1,060 thousand tonnes (922). Emissions during the reporting period fell below
the amount of emission allowances received free of charge and consequently
emissions during the year did not have an impact on income statement or
balance sheet.
In 2020, the Group sold emission allowances for EUR 6.2 million (14.1). On
the balance sheet date, the fair market value of an emission right was EUR
32.04 per tonne (24.93) and total value of owned rights approximately EUR 34.0
million (23.0).
EMISSION ALLOWANCES
7574
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
ACCOUNTING PRINCIPLES
Property, plant and equipment are measured at acquisition cost less
accumulated depreciation and impairment losses.
The acquisition cost includes costs that are directly incurred in the
acquisition of an item of property, plant or equipment. Qualifying external
borrowing costs resulting directly from the acquisition, construction or
manufacture of an item of property, plant or equipment are capitalised as
part of the acquisition cost of property, plant and equipment.
If a piece of property, plant or equipment consists of several components
with diering useful lives, each component is handled as a separate
item. In that case, the expenses related to replacing the component are
capitalised, and any book value remaining at the time of replacement is
derecognised on the balance sheet.
Spare parts, spare equipment and maintenance supplies are recognised
in property, plant and equipment when they fulfill the criteria for recogni-
tion of property, plant and equipment. Otherwise, such commodities are
classified as inventories.
Significant investments in refurbishments and improvements are capital-
ised on the balance sheet and depreciated over the remaining useful life
of the main asset related to such investments.
Repair and maintenance costs are recognised as expenses when they are
incurred.
Property, plant and equipment is depreciated on a straight-line basis over
the estimated useful lives. Depreciation is not recognised for owned land
and water.
Estimated useful lives
Buildings and constructions 20–40 years
Machinery and equipment
Heavy power plant machinery 20–40 years
Other heavy machinery 15–20 years
Lightweight machinery and equipment 5–15 years
Other tangible assets 5–20 years
The residual value of an asset, the financial useful life and depreciation
method are reviewed at least annually, at the end of each financial period,
and adjustments are made when necessary to reflect changes in the
expected financial benefit of the asset.
Gains and losses arising from the sale and decommissioning of items of
property, plant and equipment are recognised in other operating income
and expenses. Sales gains or losses are calculated as the dierence
between the sales price and the remaining acquisition cost.
Government grants related to the acquisition of assets are presented as
adjustments of the acquisition cost on the balance sheet and recognised
as income in the form of lower depreciation during the useful life of the
asset.
LEASES
The Group has leased various land areas, properties, equipment and
vehicles. When the leased asset is available for the Group’s use, A fixed
asset item and a corresponding liability of the lease is recognised. Paid
rents are divided into liabilities and finance costs. The finance cost
is included in profit or loss over the lease term in such a way that the
interest rate of the remaining debt balance is the same during each
period. The leased fixed asset is subject to straight-line depreciations
over the asset’s economic life or the lease term, depending on which of
them is shorter.
Assets and liabilities arising from leases are initially measured at the
present value. Lease liabilities include fixed payments, less any lease
incentives receivable; amounts expected to be payable by the lessee
under residual value guarantees; the exercise price of a purchase option
if the lessee is reasonably certain to exercise that option; and payments
of penalties for terminating the lease, if the lease term reflects the lessee
exercising an option to terminate the lease. The lease payments are
discounted using the interest rate implicit in the lease, if that rate can
be readily determined, or the Group’s incremental borrowing rate. The
leased fixed assets are measured at cost, which includes the amount of
the initial measurement of the lease liability; any lease payments made
at or before the commencement date, less any lease incentives received;
any initial direct costs incurred; and any costs incurred by restoring the
site on which it is located.
Some of the leases include options to extend or terminate, which are
largely available only for the Group, not the lessor.
Payments related to short-term leases or leases where the value of the
underlying asset is low are recognised as costs on a straight-line basis.
A lease with a lease term of 12 months or less is considered a short-term
lease. Assets of a low value include mainly ICT and oce equipment.
KEY ESTIMATES AND JUDGMENTS
LEASES
When determining the lease term, the management accounts for all
relevant facts and circumstances that create an economic incentive to
exercise the option to extend the lease, or not to exercise the option to
terminate the lease. Options to extend the lease (or the time subsequent
to an option to terminate) are accounted for in the lease term only if
the extension of the lease (or the decision not to terminate the lease) is
reasonably certain. The possible future cash flows of EUR 1.9 million have
not been included in the lease liability because the extension of the lease
(or the decision not to terminate it) is not reasonably certain. The Group
will conduct a reassessment upon the occurrence of either a significant
event or a significant change in circumstances that is within the control of
the lessee and aects the assessment.
4.2 TANGIBLE ASSETS
Land and water areas Buildings and constructions Machinery and equipment
EUR million Owned Leased Owned Leased Owned Leased
Acquisition cost, 1 Jan. 2020 14.6 2.5 391.8 10.9 2,416.9 16.2
Translation dierences 0.0 4.8 -0.2 50.9 0.5
Additions 4.9 0.3 4.9 0.0 28.0 6.6
Decrease -2.6 -0.6 2.9 0.1 43.8 -1.1
Transfers between items 6.4 18.2 -0.3
Acquisition cost, 31 Dec. 2020 1 7.0 2.3 410.7 10.8 2,557.8 21.9
Accumulated depreciation and impairment charges 1 Jan. 2020 -0.5 -0.3 -267.3 -2.3 -1,906.2 -5.1
Translation dierences 0.0 -3.8 0.1 -40.8 -0.2
Accumulated depreciation on deductions and transfers 0.4 -2.9 -0.1 -44.3 0.9
Depreciation for the period -0.3 -8.1 -2.4 -75.1 -5.3
Impairments
Accumulated depreciation and impairment charges 31 Dec. 2020 -0.5 -0.2 -282.1 -4.8 -2,066.3 -9.7
Book value, 1 Jan. 2020 14.2 2.2 124.5 8.5 510.7 11.1
Book value, 31 Dec. 2020 16.5 2.1 128.7 6.0 491.4 12.2
Other tangible
assets
Construction in
progress Total Total
EUR million Owned Owned Owned Leased Total
Acquisition cost, 1 Jan. 2020 24.6 60.9 2,908.9 29.6 2,938.5
Translation dierences 0.4 5.8 61.9 0.3 62.2
Additions 0.4 120.5 158.6 7.0 165.6
Decrease -1.2 -4.6 38.2 -1.6 36.6
Transfers between items 0.6 -24.1 1.1 -0.3 0.8
Acquisition cost, 31 Dec. 2020 24.8 158.4 3,168.7 35.0 3,203.7
Accumulated depreciation and impairment charges 1 Jan. 2020 -14.8 -2,188.8 -7.7 -2,196.5
Translation dierences -0.3 -44.9 -0.2 -45.1
Accumulated depreciation on deduction and transfers 0.9 -46.2 1.2 -45.1
Depreciation for the period -1.2 -84.4 -8.0 -92.4
Impairments
Accumulated depreciation and impairment charges 31 Dec. 2020 -15.4 -2,364.3 -14.7 -2,379.0
Book value, 1 Jan. 2020 9.8 60.9 720.1 21.8 742.0
Book value, 31 Dec. 2020 9.4 158.4 804.4 20.2 824.7
7776
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
Land and water areas Buildings and constructions Machinery and equipment
EUR million Owned Leased Owned Leased Owned Leased
Acquisition cost, 1 Jan. 2019 12.7 396.1 2,528.1
Translation dierences 0.0 0.0 -2.2 -23.2 0.0
Adoption of IFRS 16 standard 2.5 10.4 4.0
Additions 2.3 0.0 6.2 0.4 29.8 3.6
Decrease -0.4 -9.3 -126.6 -0.5
Transfers between items 0.0 1.0 8.8 9.1
Acquisition cost, 31 Dec. 2019 14.6 2.5 391.8 10.9 2,416.9 16.2
Accumulated depreciation and impairment charges 1 Jan. 2019 -0.5 -267.4 -1,950.3
Translation dierences 0.0 1.6 0.0 16.2 0.0
Accumulated depreciation on deductions and transfers 7. 8 120.9 0.0
Depreciation for the period -0.3 -7.0 -2.3 -76.1 -5.1
Impairments -2.3 -16.8
Accumulated depreciation and impairment charges 31 Dec. 2019 -0.5 -0.3 -267.3 -2.3 -1,906.2 -5.1
Book value, 1 Jan. 2019 12.2 128.7 57 7. 8
Book value, 31 Dec. 2019 14.2 2.2 124.5 8.5 510.7 11.1
Other tangible
assets
Construction in
progress Total Total
EUR million Owned Owned Owned Leased Total
Acquisition cost, 1 Jan. 2019 22.1 26.2 2,985.2 2,985.2
Translation dierences -0.2 0.4 -25.2 0.0 -25.2
Adoption of IFRS 16 standard 16.9 16.9
Additions 1.4 53.7 93.4 4.1 9 7.4
Decrease -0.1 0.0 -136.3 -0.5 -136.8
Transfers between items 1.4 -19.4 -8.2 9.1 0.9
Acquisition cost, 31 Dec. 2019 24.6 60.9 2,908.9 29.6 2,938.5
Accumulated depreciation and impairment charges 1 Jan. 2019 -13.8 -2,232.0 -2,232.0
Translation dierences 0.1 18.0 0.0 1 7. 9
Accumulated depreciation on deduction and transfers 0.1 128.7 0.0 128.7
Depreciation for the period -1.2 -84.4 -7.7 -92.1
Impairments -19.1 -19.1
Accumulated depreciation and impairment charges 31 Dec. 2019 -14.8 -2,188.8 -7.7 -2,196.5
Book value, 1 Jan. 2019 8.3 26.2 753.2 753.2
Book value, 31 Dec. 2019 9.8 60.9 720.1 21.8 742.0
LEASES
EUR million 2020 2019
Costs related to short-term leases 0.3 1.2
Costs of leases in which the underlying asset is of low value 1.3 1.3
Interest expenses 0.6 0.6
Cash outflow for leases 8.4 7.7
Disclosures on lease liabilities are presented in Note 5.5 (Financial liabilities)
and 5.6 (Management of nancial risks) and disclosures on lease obligations in
Note 8.1 (Commitments and contingencies).
ACCOUNTING PRINCIPLES
Other investments consist of listed and unlisted equity investments.
The most significant of these is the Group’s holding in Pohjolan
Voima. This investment is unlisted and strategic in nature, serving
the Group’s long-term energy sourcing needs. This being the
case, the Group classifies its shares in Pohjolan Voima as financial
assets at fair value recognised under other items of comprehensive
income. Changes in their fair value are presented in the fair value
reserve, accounting for the tax eect. Changes in fair value are never
transferred from equity to profit and loss.
The Group classifies its other equity financial assets as financial
assets at fair value to be recognised as financial assets through
profit and loss.
The fair values of publicly listed shares are based on the share price
on the balance sheet date. The fair values of shares other than listed
shares are determined using various valuation models, such as the
price levels of recent transactions and valuation methods based on
the present value of discounted cash flows. As far as possible, the
valuation methods are founded on market-based valuation factors.
KEY ESTIMATES AND JUDGEMENTS
FAIR VALUE MEASUREMENT
The application of valuation models to measuring fair value requires
judgement concerning the selection of the method to be applied,
as well as valuation factors required by the chosen method that are
based on the price and interest levels prevailing in the market on
the end date of each reporting period. The most significant item of
other investments that has been valued by using a valuation model
is the Group’s investment in the shares of Pohjolan Voima Oyj. The
price of these shares is determined based on the present value of
discounted cash flows. Key factors aecting cash flows include the
price of electricity, inflation expectations and the discount rate.
The 12-month moving average of electricity futures prices has been
used as the energy price for the first six years. Subsequent prices
are based on a long-term market price forecast. In 2020 Group dis-
continued the use of previous bench-mark transactions in Pohjolan
Voima Oyj’s shares as a valuation basis and increased the discount
rates used in the valuation model based on projected cash flows to
reflect prevailing circumstances.
The carrying amount of the Group’s shares in Pohjolan Voima was
EUR 183.4 million on the balance sheet on 31 December 2020.
The carrying value of other investments is estimated to change
by EUR -8.6 million and EUR 9.3 million should the rate used for
dis-counting the cash flows change by 0.5 percentage points from
the rate estimated by the management. The carrying value of other
investments is estimated to change by EUR 79.1 million should the
energy prices used in calculating the fair value dier by 10% from
the prices estimated by the management.
EUR million 2020 2019
Pohjolan Voima Oyj 183.4 251.4
Other unlisted shareholdings 3.5 3.7
Other investments total 186.9 255.1
e most important unlisted shareholding under other investments consists
of a 3.2 per cent stake in Finnish energy company Pohjolan Voima Oyj, which
produces electricity and heat for its shareholders in Finland. Pohjolan Voima
trades with its shareholders at prices based on production costs, which gener-
ally are lower than market prices. e Group is entitled to about:
• 5.2 per cent of the energy produced by Olkiluoto nuclear power plants (OL1
and OL2) through its ownership of Pohjolan Voima B-shares,
• 1.5 per cent of the energy produced by Olkiluoto 3 nuclear power plant
under construction through its ownership of Pohjolan Voima B2-shares, and
• 84 per cent of the energy produced by Hämeenkyrön Voima Oy through
Pohjolan Voiman G10-shares.
In November 2020, Metsä Board participated in the shareholder loan of
Pohjolan Voima Oyj with EUR 2.2 million, corresponding to its holding, to
fund the comple-tion of the Olkiluoto 3 project. e loan retains the cur-rent
level of Metsä Board’s portion of OL3 power. e unsecured loan does not have
a maturity date, its re-payment and interest payments depend on a decision of
the debtor company’s Board of Directors, and the loan capital can be converted
into 40,011 new B2 series shares in Pohjolan Voima Oyj. e loan capital is
re-payable in the event of bankruptcy only with a priority poorer than that of all
other creditors.
e ownership is measured quarterly at fair value on share series basis by
using the average of discounted cash ow method and valuation based on
earlier transactions. e weighted average cost of capital used was 2.87 (2019:
1.37) per cent and 3.87 per cent (2.37) for the Olkiluoto 3 currently under
construction.
e acquisition cost of shares in Pohjolan Voima Oy is EUR 40.2 million
(38.0) and the fair value EUR 183.4 million (251.3), which can be allocated to
dierent shares as follows: e fair value of nuclear power shares totals EUR
171.3 million (239.4) and G10 shares have a fair value of EUR 12.0 million (12.0).
Shareholder agreement restricts sale of shares of Pohjolan Voima to buyers
that are not existing shareholders.
4.3 OTHER INVESTMENTS
IMPAIRMENTS
Metsä Board investments in modernisation of the Husum pulp mill in Sweden.
e investment includes a new recovery boiler and turbine. In Financial
Statements 2019 Metsä Board recognised a EUR 19.1 million impairment in the
assets taken out of service.
BORROWING COSTS
Borrowing costs capitalised in 2020 totalled to EUR 0.2 million (0.0).
7978
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
ACCOUNTING PRINCIPLES
Inventories are measured at the lower of acquisition cost or net
realisable value. In measuring inventories, the FIFO principle is
observed or, alternatively, the weighted average price method,
depending on the nature of the inventories. The acquisition cost of
finished products acquired comprises all purchase costs, including
direct transport, handling and other expenses. The acquisition cost
of finished and semi-finished products of own manufacture includes
raw materials, direct production costs, and the systematically
allocated portion of variable manufacturing overheads and fixed
overheads at the normal level of operation. Borrowing cost is not
included in the acquisition cost.
Net realisable value is the estimated sales price in ordinary business
operations less the estimated cost of completion and the necessary
sales costs.
KEY ESTIMATES AND JUDGEMENTS
The Group regularly reviews its inventories for situations where
the inventories contain non-marketable items or items with net
realisable value below the acquisition cost. When necessary, the
Group reduces the book value of the inventories accordingly. This
review requires the management’s estimates of the sales prices
of products, the cost of completion and the costs necessary to
make the sale. Any changes in these estimates might lead to an
adjustment in the book value of the inventories in future periods.
ACCOUNTING PRINCIPLES
Trade receivables are measured at the expected net realisable value,
which is the original invoicing value less estimated impairment
provisions on the receivables. The Group applies a model based
on expected credit losses to the determination of the impairment
of trade receivables. Provisions are furthermore set up on a case-
by-case basis when there is a justifiable reason to assume that the
Group will not receive payment for the invoiced amount according to
the original terms.
KEY ESTIMATES AND JUDGEMENTS
The evaluation of the recognition criteria and the amount of impair-
ment losses requires the management’s judgement. If customers’
financial position weakens so that it aects their solvency, further
impairment losses may need to be recognised in future periods. The
impacts of the corona pandemic on determining the impairment of
sales receivables is discussed in Note 5.6, Management of financial
risks, counterparty risk.
EUR million 2020 2019
Raw materials and consumables 147. 5 156.7
Finished goods 201.1 211.5
Advance payments 11.4 11.3
Inventories total 360.0 379.5
e value of Metsä Board inventories was not reduced through write-downs in
2020 or in 2019.
ACCOUNTS RECEIVABLE AND OTHER NON-INTEREST BEARING
RECEIVABLES
EUR million 2020 2019
From Group companies
Accounts receivable 17.0 13.4
Other receivables 0.8
Prepayments and accrued income 0.0 0.0
Total 17.0 14.2
From associated companies and joint ventures
Accounts receivable 0.2 0.4
From others
Accounts receivable 208.4 229.6
Impairment -3.0 -2.1
Total 205.4 227.5
Other receivables 26.5 37.1
Prepayments and accrued income 27.7 24.7
From others total 259.6 289.2
Accounts receivable and other receivables total 276.7 303.8
Receivables from Group companies are receivables from parent company
Metsäliitto Cooperative and from other subsidiaries of the parent company.
Derivative receivables are from Metsä Group Treasury Oy, a wholly owned
subsidiary of Metsäliitto Cooperative.
4.4 INVENTORIES 4.5 ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
DOUBTFUL ACCOUNTS RECEIVABLE
Case-specic impairments and impairments determined by applying the
model based on expected credit losses deducted from accounts receivable are as
follows:
EUR million 2020 2019
Value 1 Jan 2.1 1.0
Increase 4.6 1.5
Decrease -3.7 -0.4
Value 31 Dec 3.0 2.1
EUR 0.3 million of credit losses were recognised during 2020 (EUR 0.8 million
in 2019).
AGE DISTRIBUTION OF ACCOUNTS RECEIVABLE LESS
IMPAIRMENTS
EUR million 2020 2019
Not overdue 195.6 207.7
Overdue
Less than 30 days 10.1 17.8
Between 31 and 60 days 0.4 0.8
Between 61 and 90 days 0.0 0.1
Between 91 and 180 days -0.4 0.4
Over 180 days -0.2 0.7
Total 205.4 227.5
4.6 OTHER NON-CURRENT LIABILITIES
EUR million 2020 2019
Non-interest bearing non-current liabilities to Group companies
Non-interest bearing non-current liabilities to others
Advance payments received 1.5 1.5
Accruals and deferred income 0.4 0.3
Total 1.9 1.9
4.7 ACCOUNTS PAYABLE AND OTHER LIABILITIES
EUR million 2020 2019
Advance payments received 4.5 4.1
Accounts payable, Supply Chain Finance schemes 55.3 63.4
Other accounts payable 172.0 170.2
Other liabilities 12.8 10.2
Accruals and deferred income
Customer discounts 20.6 23.6
Purchase-related items 23.4 27.8
Employee costs 29.9 25.9
Other accrued expenses 21.8 20.2
Total 340.4 345.4
With nancing banks, Metsä Group has established Supply Chain Finance
(SCF) schemes aimed at a few key suppliers. In the schemes, the suppliers are
oered the option of selling their Metsä Group receivables to a bank providing
the SCF scheme. e SCF schemes partly replace the earlier advance payment
arrangements, and their aim is not to cause a signicant deviation from Metsä
Group’s normal payment terms.
8180
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
4.8 PROVISIONS
ACCOUNTING PRINCIPLES
A provision is recognised when, as a result of an earlier event, the Group
has a legal or actual obligation, the realisation of a payment obligation
is likely, and the amount of the obligation can be reliably estimated. Any
reimbursement from a third party is presented as an asset separate
from the provision if it is practically certain that reimbursement will be
received.
RESTRUCTURING
A restructuring provision is recorded when the Group has incurred a legal
or constructive obligation to make a payment. Termination payments are
recorded when a detailed plan has been made for the restructuring and
the Group has raised valid expectations in those aected that it will carry
out the restructuring by starting to implement that plan or announcing
its main features to those aected by it. If the Group makes an oer to
employees concerning voluntary resignation against benefits determined
in the oer, the liability arising from this is recorded when the Group can
no longer withdraw its oer. The liability arising from such an oer is
based on the number of employees that the Group expects to accept the
oer. Benefits falling due in twelve months’ time or later are measured at
their present value.
ENVIRONMENTAL OBLIGATIONS
Costs arising from environmental remediation that do not increase pres-
ent or future revenue are recorded as expenses. Environmental liabilities
are measured at current value in accordance with current environmental
protection regulations when it is probable that an obligation has arisen
and its amount can be estimated reasonably.
OTHER PROVISIONS
Other provisions mainly consist of provisions arising from estimated cost
of future restoration of leased sites.
PROVISIONS
EUR million Restructuring Environmental Other Total
1 Jan 2020 1.2 3.5 1.2 5.8
Translation dierences 0.0 0.0 0.1
Increases 0.0 0.0
Utilised during the year -1.0 -0.2 -1.2
Unused amounts reversed -0.1 -0.1
31 Dec 2020 0.2 3.4 1.0 4.7
1 Jan 2019 4.0 5.5 1.7 11.2
Translation dierences -0.1 0.0 -0.1
Increases 0.0 0.0 0.0
Utilised during the year -2.7 -0.1 -0.5 -3.3
Unused amounts reversed -2.0 -2.0
31 Dec 2019 1.2 3.5 1.2 5.8
2020 2019
Non-current 3.7 4.2
Current 1.0 1.6
Total 4.7 5.8
Half of non-current provisions are estimated to be utilised by the end of 2025 and the rest in 2030s. e decrease in restructuring provision in 2019 relates to usage
of Husum plant eciency improvement programme 2018 provision. Decrease in environmental obligations in 2019 is mainly due to updated estimate of fair value of
environmental provision.
5. CAPITAL STRUCTURE AND
FINANCIAL RISKS
5.1 SHAREHOLDERS’ EQUITY
CHANGES IN SHARE CAPITAL
Share capital
EUR million Series A Series B Total
1 Jan 2019 55.5 502.4 557.9
Conversion of A shares into B shares -3.6 3.6
31 Dec 2019 51.9 506.0 557.9
Conversion of A shares into B shares -0.3 0.3
31 Dec 2020 51.6 506.3 557.9
Each series A share confers to its holder twenty (20) votes at the General Meet-
ing of Shareholders, and each series B share confers to the holder one (1) vote.
All shares carry the same right to receive a dividend. Metsä Board’s A shares
can be converted to B shares if shareholder or representative of the nominee
registered shares makes a written request for the conversion to the company. No
monetary consideration is paid for the conversion.
NUMBER OF SHARES
Share capital
shares Series A Series B Total
1 Jan 2019 35,358,794 320,153,952 355,512,746
Conversion of A shares into B shares -2,271,147 2,271,147
31 Dec 2019 33,087,647 322,425,099 355,512,746
Conversion of A shares into B shares -200,496 200,496
31 Dec 2020 32,887,151 322,625,595 355,512,746
e share has no nominal value. All shares have been paid in full.
TRANSLATION DIFFERENCES
Translation dierences include translation dierences arising from translation
of subsidiaries in other currencies than euro and gains and losses arising
on hedging of net investments in these subsidiaries less deferred tax, when
requirements of hedge accounting have been fullled. Net investments were not
hedged in Metsä Board Group in 2020 or in 2019.
Cumulative translation
Translation dierences in other
comprehensive income
EUR million 2020 2019 2020 2019
SEK -17.6 -31.7 14.1 -5.5
RUB * -7.7 -5.4 -2.3 0.9
USD 0.4 6.3 -5.9 1.2
CNY 0.9 -0.9 0.0
GBP -0.7 -0.3 -0.4 0.4
Others 0.7 1.0 -0.3 0.3
Total -24.9 -29.1 4.2 -2.7
* RUB denominated translation dierence arises mostly from associate company Metsä Fibre.
FAIR VALUE AND OTHER RESERVES
EUR million 2020 2019
Fair value reserve 135.0 173.8
Legal reserve and reserves stipulated by the Articles
of Association
1.7 1.7
Total 136.6 175.5
FAIR VALUE RESERVE
Fair value changes in derivatives designated as cash ow hedges are recorded
to fair value reserve deducted by deferred tax eect. Additionally, the fair
value change of Pohjolan Voima Oyj shares recognised by the Group as other
investments is moved to the reserve with deferred tax eect deducted.
LEGAL RESERVE AND RESERVES STIPULATED BY THE ARTICLES OF
ASSOCIATION
Legal reserve and reserves stipulated by the Articles of Association have
been created and accumulated on resolutions by the General Meeting of
Shareholders.
RESERVE FOR INVESTED UNRESTRICTED EQUITY
EUR million 2020 2019
Reserve for invested unrestricted equity 265.8 315.5
According to Finnish Limited Liability Companies Act, the reserve for invested
unrestricted equity shall be credited with the part of the subscription price of
the shares that according to the share issue decision is not to be credited to the
share capital and that according to the Accounting Act is not to be credited to
liabilities, as well as with other equity additions that are not to be credited to
some other reserve.
DIVIDEND
Dividends payable by the company are recorded as deductions to equity in the
period during which the shareholders in a general meeting have declared the
dividend.
e Board of Directors has proposed that a dividend of EUR0.10 per share be
distributed for the 2020 nancial year, and further that EUR 0.16 per share be
distributed from the unrestricted equity reserve
8382
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
OTHER COMPREHENSIVE INCOME AFTER TAXES 2020
EUR million Translation dierences
Fair value and
other reserves Retained earnings Total equity
Items that will not be reclassified to profit or loss
Actuarial gains/losses on defined benefit pension plans -3.7 -3.7
Financial assets at fair value through other comprehensive income -70.3 -70.3
Share of profit from other comprehensive income of associated company 0.4 0.4
Income tax relating to items that will not be reclassified 14.1 0.9 15.0
Total -55.8 -2.8 -58.6
Items that may be reclassified to profit or loss
Cash flow hedges
Currency hedges
Gains and losses recorded in equity 39.3 39.3
Transferred to adjust Sales -19.7 -19.7
Interest hedges
Gains and losses recorded in equity -0.7 -0.7
Transferred to adjust net financial items 0.0 0.0
Commodity hedges
Gains and losses recorded in equity -12.8 -12.8
Transferred to adjust purchases 11.5 11.5
Share of profit from other comprehensive income of associated company 2.7 2.7
Cahs flow hedges total 20.3 20.3
Translation dierences 6.2 6.2
Share of profit from other comprehensive income of associated company -2.0 -2.0
Translation dierences total 4.2 4.2
Income tax relating to items that may be reclassified -3.4 -3.4
Total 4.2 16.9 21.1
Other comprehensive income, net of tax 4.2 -38.9 -2.8 - 37. 5
OTHER COMPREHENSIVE INCOME AFTER TAXES 2019
EUR million Translation dierences
Fair value and
other reserves Retained earnings Total equity
Items that will not be reclassified to profit or loss
Actuarial gains/losses on defined benefit pension plans -3.5 -3.5
Financial assets at fair value through other comprehensive income -14.7 -14.7
Share of profit from other comprehensive income of associated company 0.2 0.2
Income tax relating to items that will not be reclassified 2.9 -0.1 2.8
Total -11.5 -3.6 -15.1
Items that may be reclassified to profit or loss
Cash flow hedges
Currency hedges
Gains and losses recorded in equity -25.0 -25.0
Transferred to adjust Sales 28.8 28.8
Interest hedges
Gains and losses recorded in equity -0.9 -0.9
Transferred to adjust net financial items 0.0 0.0
Commodity hedges
Gains and losses recorded in equity -5.8 -5.8
Transferred to adjust purchases -7. 2 -7. 2
Share of profit from other comprehensive income of associated company 1.0 1.0
Cash flow hedges total -9.1 -9.1
Translation dierences -3.4 -3.4
Share of profit from other comprehensive income of associated company 0.7 0.7
Translation dierences total -2.7 -2.7
Income tax relating to to items that may be reclassified 2.2 2.2
Total -2.7 -6.9 -9.6
Other comprehensive income, net of tax -2.7 -18.4 -3.6 -24.8
ACCOUNTING PRINCIPLES
Interest income and expenses are recognised using the eective
interest rate method.
Dividend income is recognised when the right to receive a payment
is established.
Borrowing costs are generally recognised as an expense in the
period in which they are incurred. When an item of property, plant or
equipment is involved in a major and long-term investment project,
the borrowing costs directly due to the acquisition, construction or
production of the asset are included in the asset’s acquisition cost.
The Group presents net interest income and expenses related to
defined benefit plans as financial income and expenses.
5.2 FINANCIAL INCOME AND EXPENSES 5.3 OTHER FINANCIAL ASSETS
EUR million 2020 2019
Exchange dierences
Commercial items -7.0 2.1
Hedging, hedge accounting not applied 3.7 -3.6
Other items 0.0 -0.1
Exchange dierences total -3.4 -1.6
Other financial income
Interest income on loans, other receivables and cash and cash
equivalents
0.3 0.7
Dividend income 0.0 0.0
Other financial income total 0.4 0.8
Valuation of financial assets and liabilities
Impairment gains and losses from financial assets 0.0 0.8
Gains and losses on derivatives, hedge accounting not applied 0.7
Valuation total 0.0 1.4
Interest expenses on financial liabilities carried at amortised
cost using the eective interest method
-11.1 -15.2
Other financial expenses -0.8 -0.8
Interest and other financial expenses, total -11.9 -16.0
Valuation of financial assets and liabilities and interest and other
financial expenses, total
-11.9 -14.6
EUR million 2020 2019
Loan receivables 2.9 2.9
Defined benefit pension plans (Note 3.5) 7.5 12.1
Other receivables and accrued income 0.3 0.2
Total 10.8 12.3
8584
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
ACCOUNTING PRINCIPLES
Cash and cash equivalents consist of cash and other short-term,
highly liquid investments that can be easily converted into an
amount of cash known in advance and that carry a minimal risk
of value changes. Metsä Board has classified as cash and cash
equivalents the short-term money market investments made in
accordance with its treasury policy and interest-bearing receivables
comparable to cash funds and available immediately from Metsä
Group’s internal bank Metsä Group Treasury Oy. The expected
credit losses are reviewed for the following 12 months. The impacts
of the corona pandemic on determining the impairment of sales
receivables is discussed in Note 5.6, Management of financial risks,
counterparty risk.
ACCOUNTING PRINCIPLES
Financial liabilities are categorised initially recognised at fair value. The Group has classified all financial liabilities under “Other liabilities”. Transaction
costs are included in the original book value of financial liabilities measured at amortised cost. Subsequently, all financial liabilities are measured at
amortised cost using the eective interest method.
5.4 CASH AND CASH EQUIVALENTS
5.5 BORROWINGS JA NET DEBT
EUR million 2020 2019
Financial assets carried at amortized cost 1.0 1.0
Cash at hand and in bank 8.2 6.0
Deposits to Metsä Group Treasury Oy 204.7 127.1
Total 214.0 134.2
INTEREST-BEARING LIABILITIES
EUR million 2020 2019
Non-current interest-bearing financial liabilities
Bonds 248.6 248.5
Loans from financial institutions 182.1 148.8
Lease liabilities 14.1 15.6
Other liabilities 0.0
Total 444.8 412.9
Current interest-bearing financial liabilities
Current portion of non-current debt 6.2 30.4
Current liabilities to group companies 1.3 1.6
Total 7.6 32.0
Interest-bearing financial liabilities total 452.4 444.9
INTEREST-BEARING ASSETS
EUR million 2020 2019
Non-current interest-bearing financial assets
Loan receivables 2.9 2.9
Current interest-bearing financial assets
Current investments at amortised cost 1.0 1.0
Cash at hand and in bank 8.2 6.0
Deposits to Metsä Group Treasury Oy 204.7 127.1
Total 214.0 134.2
Interest-bearing financial assets total 216.9 1 3 7. 1
Interest-bearing net debt 235.5 3 07.8
Metsä Board has classied interest-bearing receivables comparable to cash
funds and available immediately from Metsä Group’s internal bank Metsä
Group Treasury Oy as Cash and cash equivalents.
CASH AND NON-CASH CHANGES IN FINANCIAL LIABILITIES 2019 Non-cash changes
EUR million 1 Jan 2019 Cash flows
Changes in foreign
exchange rates New finance leases Other changes 31 Dec 2019
Non-current interest-bearing liabilities incl. Current portion
Bonds 308.6 -60.4 0.3 248.5
Loans from financial institutions 63.1 8 7. 1 -1.4 148.8
Pension loans 62.6 -38.5 24.1
Finance lease liabilities 8.6 -6.9 -0.1 3.4 16.9 21.8
Other liabilities 1.1 -1.1 0.0
Total 443.9 -19.8 -0.1 3.4 15.9 443.3
Non-current non-interest bearing liabilities 1.9 -0.2 0.0 0.1 1.8
Current interest-bearing liabilities 3.3 -1.7 0.0 1.6
Current non-interest bearing receivables 0.0 0.0 0.0
Total 449.1 -21.7 -0.1 3.4 15.9 446.7
Other changes consist mostly of accrual of eective interest during the nancial year on nancial liabilities valued.
CASH AND NON-CASH CHANGES IN FINANCIAL LIABILITIES 2020 Non-cash changes
EUR million 1 Jan 2020 Cash flows
Changes in foreign
exchange rates New finance leases Other changes 31 Dec 2020
Non-current interest-bearing liabilities incl. Current portion
Bonds 248.5 0.0 0.1 248.6
Loans from financial institutions 148.8 33.2 0.0 182.1
Pension loans 24.1 -24.1
Finance lease liabilities 21.8 -7.8 0.1 6.3 0.0 20.4
Total 443.3 1.3 0.1 6.3 0.1 451.1
Non-current non-interest bearing liabilities 1.8 -0.1 0.1 0.0 1.9
Current interest-bearing liabilities 1.6 -0.3 0.0 1.3
Total 446.7 1.0 0.2 6.3 0.1 454.3
BONDS
EUR million Interest % 2020 2019
2014–2019 4.00
2017–2027 2.75 248.6 248.5
Total 248.6 248.5
Metsä Board Corporation issued in September 2017 a bond of EUR 250 million.
e bond carries a xed coupon rate of 2.75 per cent, and the maturity date is 29
September 2027. e bond ranks senior and is unsecured.
8786
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
5.6 MANAGEMENT OF FINANCIAL RISKS
e nancial risks associated with business operations are managed in
accordance with the nancial policy endorsed by the Board of Directors and the
senior management of the company. e policy denes focal instructions on the
management of foreign currency, interest rate, liquidity and counterparty risks,
and for the use of derivative nancial instruments. Correspondingly, commod-
ity risks are managed according to the company’s commodity risk policy. e
purpose is to protect the company against major nancial and commodity risks,
to balance the cash ow and to allow the business units time to adjust their
operations to changing conditions.
Metsä Group Treasury Oy is specialized in nance and functions as the
Group’s internal bank. Metsäliitto Cooperative´s holding is 100 per cent of the
company. Financial operations have been centralised to Metsä Group Treasury,
which is in charge of managing the Group companies’ nancial positions
according to the strategy and nancial policy, providing necessary nancial
services and acting as an advisor in nancial matters.
FOREIGN CURRENCY RISK
e Group’s foreign currency exposure consists of the risks associated with for-
eign currency ows, translation risk of net investments in foreign entities and
economic currency exposure. Most of the Group’s costs are incurred in the euro
zone and to some extent in Sweden, but a signicant part of the sales is received
or priced in other currencies. Sales may therefore vary because of changes in
exchange rates, while production costs remain unchanged. e foreign currency
transaction exposure is consisting of foreign currency denominated sales and
costs. e exposure is including foreign currency denominated balance sheet
exposure consisting of accounts receivable and accounts payable and 50 per cent
share of the annual contracted or estimated net currency cash ow.
e main currencies of the Group’s foreign currency transaction exposure
are the US dollar, the Swedish krona and the British pound. e share of
dollar is 54 per cent, share of Swedish krona is 36 per cent and share of
pound is 8 per cent. A strengthening of the dollar and the pound has a
positive impact on the nancial result and a weakening a negative impact.
A weakening of the Swedish krona has a positive impact on the result of the
Group. Other signicant currencies are Australian dollar and Canadian
dollar. e hedging policy is to keep the balance sheet exposure and 50 per
cent of annual cash ow of contracted or estimated currency ows consist-
ently hedged. e amount of hedging may deviate from the normal level
by 40 per cent in either direction. e Board of Directors of Metsä Board
is deciding on hedging levels signicantly deviating from the norm set out
in the nancial policy. e amount of currency-specic hedging depends
on current exchange rates and market expectations, on the interest rate
dierences between the currencies and the signicance of the exchange rate
risk for the nancial result of the Group. e transaction exposure is mainly
hedged by forward transactions but also by the use of foreign currency loans
and currency options.
At the end of the reporting period, the foreign exchange transaction
exposure had been hedged 7.9 months on average (2019: 7.8) being 112 per cent
of the hedging norm (109). During the reporting period, the hedging level has
varied between 7 and 9 months (7–8) being between 107 and 115 per cent of
the norm (107–113). e dollar’s hedging level was 6.6 months (6.2) being 97
per cent of the norm (90). e Swedish krona’s hedging level was 10.0 months
(10.6) being 139 per cent of the norm (140). e pound’s hedging level was
7.8 months (7.7) being 100 per cent of the norm (100). Hedge accounting in
accordance with IFRS 9 has been applied to hedging of transaction exposure
and forwards and options allocated to hedge accounting have been used to
hedge the portion of highly probable forecast sales of the currency transaction
exposure.
e translation risk of a net investment in a foreign entity is generated from
the consolidation of the equity of subsidiaries and associated companies out-
side the euro area into euros in the consolidated nancial statements. Hedging
of equity has been discontinued.
e Group applies the Value-at-Risk method to assess the risk of its open
foreign currency positions. e VaR is calculated on the deviation from the
balance sheet exposure plus 50 per cent of annual foreign currency exposure
hedge norm dened in the nancial policy. A 99% condence level on one
month period is applied to the VaR risk gure. e risk mandates regarding
hedging decisions have been dened by restricting the company management’s
powers by linking them to maximum currency-specic hedging level changes
and to a VaR limit. Possible strategic decisions which exceed the policy risk
limits are made by the Board of Directors. e limit set for the Metsä Board’s
foreign currency risk is EUR 12.5 million (10.5) and the VaR is at the end of
the reporting period EUR 3.9 million (3.8). Average during the period has been
EUR 3.8 million (4.1).
INTEREST RATE RISK
e interest rate risk is related in the interest bearing receivables and loans,
working capital nancing and currency hedging. e most signicant curren-
cies in risk management are the euro, the US dollar, the British pound and the
Swedish krona. e objective of the interest rate risk policy is to minimise the
negative impact of interest rate changes on the Group´s and group companies´
result and the nancial position, and to optimise nancing costs within the
framework of risk limits. e eect of interest rate changes on nancial costs
depends on the average interest xing time of interest bearing assets and liabil-
ities, which is measured in the Group by duration. As duration is lengthening
the rise of interest rates aects more slowly the interest expenses of nancial
liabilities. e maturity of the loan portfolio can be inuenced by adjusting
between oating-rate and xed-rate loans and by using interest rate swaps.
e average interest duration norm based on the Group’s nancial policy
is twelve months. e duration can, however, deviate from the hedging pol-
icy norm so that the decision of a deviation exceeding four months has to be
made by the Board of Directors. e average duration of loans was high 52.0
months at the end of the year (56.0). During the reporting period duration
has varied between 51 and 56 months (53–65). Duration is lengthened by the
10 year bond of EUR 250 million. Of interest-bearing liabilities 13 per cent
(18) is subjected to variable rates and the rest to xed rates and the average
interest rate at the end of 2020 is 2.3 per cent (2.5). At the end of 2020, an
increase of one per cent in interest rates would decrease net interest rate
costs of the next 12 months by EUR 2.2 million (1.3).
e Group has applied cash ow hedge accounting in accordance with IFRS
9 to interest rate swaps by which oating-rate nancing has been converted to
xed-rate nancing. e gross nominal volume of interest rate derivatives at the
time of nancial statements is EUR 100.0 million (100.0) and the maturity of
interest rate swap contracts varies between 1–5 years (1–6). e ongoing interest
rate benchmark reform has not had any impact on eectiveness of interest rate
hedging or nancial costs.
COMMODITY RISK
In the hedging of commodity risks the Group applies risk management policies
dened separately for each selected commodity. According to the policy, the
management of commodity risks with regard to nancial hedges is accom-
plished centralized by Metsä Group Treasury based on the strategy approved by
Board of Directors of Metsä Board. e commodity hedging policy is applied
to the management of the price risks of electricity, natural gas, propane and
fuel oil and also transactions related to Emission allowances are managed by
Metsä Group Treasury. Hedge accounting in accordance with IFRS 9 has been
applied to all commodity hedging. According to the commodity hedging policy
an 80 per cent hedge level of the estimated net position during the rst 12
month period has been set as a hedging norm and the hedge ratio can vary by
20 per cent in either direction. Hedges based on previous policy are gradually
maturing. e Group Board of Directors makes signicant strategic decisions.
Metsä Board’s target in managing the electricity price risk is to balance the
eect of changes in the price of electricity on the Group’s result and nancial
position. e main principle is to hedge the electricity purchase exposure,
which consists of the dierence of factory-specic electricity consumption
estimates and power plant production shares in the possession of the Group.
e hedge strategy is implemented in cooperation with Metsä Group Energy
service unit centralized through Metsä Group Treasury. Approximately
a quarter of Metsä Board’s mills’ purchase of fuel is based on natural gas
and and the company is hedging the price risk of natural gas and propane
purchases by using nancial hedges. Metsä Board is hedging also the gas oil,
heavy fuel oil and 0.5 % fuel oil price risk related to logistics costs (sea freights)
based on commodity risk policy by using nancial hedges. Metsä Board is not
hedging its pulp price risk.
LIQUIDITY RISK
Liquidity risk is dened as the risk that funds and available funding become
insucient to meet business needs, or costs that are incurred in arranging
the necessary nancing are unreasonable high. Liquidity risk is monitored by
estimating the need for liquidity needs 12 – 24 months ahead and ensuring that
the total liquidity available will cover a main part of this need. According to
the nancial policy, the liquidity reserve must at all times cover 100 per cent of
the Group’s liquidity requirement for the rst 12 months and 50 – 100 per cent
of the following 12 – 24 months liquidity requirement. e objective is that at
the most 20 per cent of the Group’s loans, including committed credit facilities,
are allowed to mature within the next 12 months and at least 25 per cent of the
total debt must have a maturity in excess of four years. e target is to avoid
keeping extra liquidity as liquid funds and instead maintain a liquidity reserve
as committed credit facilities outside the balance sheet.
e cornerstone of liquidity risk management is to manage the Group’s
operative decisions in such a way that targets concerning indebtedness and
sucient liquidity reserve can be secured in all economic conditions. Liquidity
risk is also managed by diversifying the use of capital and money markets to
decrease dependency on any single nancing source and the optimisation
of the maturity structure of loans is also emphasized in nancial decisions.
Metsä Board is using short-term working capital nancing related to accounts
receivables and accounts payables. During 2020 Metsä Board has signed
Finnvera guaranteed loan of EUR 100 million and EIB loan of EUR 125 million
for Husum investments.
Metsä Board’s liquidity has remained strong. At the end of the review period,
available liquidity was EUR 605.8 million (334.2), consisting of following
items: liquid assets and investments of EUR 214.0 million (134.2), a syndicated
credit facility (revolving credit facility) of EUR 200.0 million (200.0), and other
committed credit facilities of EUR 191.8 million (0.0). As of 2020, the company
will no longer include undrawn pension premium (TyEL) funds in available
liquidity. Of the liquid assets, EUR 204.7 million consisted of short-term depos-
its with Metsä Group Treasury (127.1), and EUR 9.3 million were cash funds
and investments (7.1). Other interest-bearing receivables amounted to EUR 2.9
million (2.9). In addition, Metsä Board’s liquidity reserve is complemented by
Metsä Group’s internal undrawn short-term credit facility of EUR 150.0 million
(150.0) and undrawn pension premium (TyEL) funds of EUR 212.3 million
(190.1). At the end of 2020, the liquidity reserve covers fully the forecasted
nancing need of 2021–2022. 1 per cent (4) of long-term loans and committed
facilities fall due in a 12 month period and 88 per cent (95) have a maturity of
over four years. e average maturity of long-term loans is 5.7 years (6.4). e
share of short-term nancing of the Group’s interest bearing liabilities is 0.3 per
cent (0.4).
COUNTERPARTY RISK
Financial instruments carry the risk that the Group may incur losses should
the counterparty be unable to meet its commitments. e Group is managing
this risk by entering into nancial transactions only with most creditworthy
counterparties and within pre-determined limits. Cash and cash equivalents,
and other investments have been spread to several banks, commercial papers
of several institutions and money market funds. During the reporting period,
credit risks of nancial instruments did not result in any losses. However
corona pandemic had a negative eect on valuation of nancial investments
in Q1, but this was compensated later in 2020. Counterparty limits have been
revised during the year by taking into account the needs of the company and
the view on the nancial position of the used counterparties. Derivatives
trading is regulated by the standardised ISDA contracts made with the
counterparties. Main part of nancial credit risks are in the balance sheet of
Metsä Group Treasury and not directly in the balance sheet of Metsä Board.
e Group has applied expected credit loss model in accordance with IFRS 9 to
calculate the impairment of nancial assets.
e Group’s accounts receivable carry a counterparty risk that the Group
may incur losses should the counterparty be unable to meet its commitments.
Credit risk attached to accounts receivable is managed on the basis of the credit
risk management policies approved by operative management. Accounts receiv-
able performance is followed by Group Credit Risk Management Team and
reported monthly to Customer Credit & Compliance Committee and operative
management. Credit quality of customers is assessed at regular intervals based
on the customers’ nancial statements, payment behaviour, credit agencies and
credit ratings agencies. Individual credit limits are reviewed at least annually.
Letters of Credits, bank and parent company guarantees and Credit insurance
are used to mitigate credit risk according to management decisions. Credit
limits are approved according to credit risk management policy with approval
limits of varying values across the Group. e Customer Credit & Compliance
Committee reviews and sets all major credit limits which are not supported by
credit insurance and/ or other security. In response to the corona pandemic,
more regular reviews of customer credit risks have been undertaken, along with
the credit insurance companies.
8988
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
21 22 23 24 25 26-
300
250
200
150
100
50
0
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
Metsä Board implements regular impairment tests for customer accounts
receivables. Credit loss impairment is booked when a customer enters legal
bankruptcy or becomes past due for more than 6 months (180 days) without a
valid payment plan or other acceptable reasons. New net credit loss provisions
for the year were EUR 0.3 million (2019: 1.0). e portion of overdue client
receivables of all accounts receivable is at the time of nancial statements 3.8
per cent (7.5), of which 0.0 per cent (0.1) is overdue between 90–180 days and
0.9 per cent (0.1) over 180 days. e specication of doubtful receivables is in
the Notes. Expected credit losses on accounts receivables in accordance with
IFRS 9 are calculated by using a provision matrix. Expected credit loss expense
is recognized by applying expected credit loss percentages based on ve-year
historic losses on accounts receivables from external debtors net of credit
insurance outstanding at period end. e calculations were adjusted to take in
to account the impact of corona pandemic. e expected credit loss percentage
is 0.5 per cent of receivables (0.1).
e geographical structure of the accounts receivable is diversied and is
reecting the external sales structure presented in the Segment information.
e top ten largest sources of credit risk exist in USA, Italy, United Kingdom,
Turkey, Germany, Russian Federation, Poland, Spain, Finland and Australia
(around 68 per cent of total external receivables (64)). e share of largest indi-
vidual customer (individual companies or groups of companies under common
ownership) credit risk exposure of Metsä Board at the end of 2020 represented
5 per cent (4) of total external accounts receivable. 31 per cent (30) of accounts
receivable was owed by ten largest customer groups (individual companies or
groups of companies under common ownership). At the end of 2020, there was
around 1.0 per cent (1.4) shortfall of credit insurance limits beyond usual policy
deductibles and exclusions.
MANAGING THE CAPITAL
Terms capital and capital structure are used to describe investments made in
the company by its owners and retained earnings (together equity) and debt
capital (liabilities) as well as the relation between them. In managing its capital
structure, the Group aims at maintaining an ecient capital structure that
ensures the Group’s operational conditions in nancial and capital markets in
HEDGING OF FOREIGN EXCHANGE
TRANSACTION EXPOSURE 31.12.2020 Annual transaction exposure
EUR million USD GBP SEK AUD CAD Other long Other short Total
Transaction exposure, net (mill. currency units) 761 80 -4,188 22 14
Transaction exposure, net (EUR million) 620 89 -417 14 9 3 0 1,152
Transaction exposure hedging (EUR million) -339 -58 347 -7 -4 0 0 -755
Hedging at the end of the year (months) 6.6 7. 8 10.0 6.4 5.0 7. 9
Average hedging in 2020 (months) 6.7 7. 5 10.3 10.3 6.1 8.0
Average rate of hedging at the end of the year 1,1873 0,9066 10,5698
HEDGING OF FOREIGN EXCHANGE
TRANSACTION EXPOSURE 31.12.2019 Annual transaction exposure
EUR million USD GBP SEK AUD CAD Other long Other short Total
Transaction exposure, net (mill. currency units) 709 72 -4,073 11 14
Transaction exposure, net (EUR million) 631 85 -390 7 10 3 0 1,125
Transaction exposure hedging (EUR million) -325 -54 345 -6 -5 0 0 -736
Hedging at the end of the year (months) 6.2 7.7 10.6 11.3 6.0 7. 8
Average hedging in 2019 (months) 6.3 7.4 10.2 10.8 6.0 7.7
Average rate of hedging at the end of the year 1,1232 0,8777 10,7000
NET INVESTMENTS IN A FOREIGN ENTITY 31.12.2020 Equity exposure
EUR million USD GBP SEK Others Total
Equity exposure (mill. currency units) 93 6 4,084
Equity exposure (EUR million) 76 6 407 4 493
NET INVESTMENTS IN A FOREIGN ENTITY 31.12.2019 Equity exposure
EUR million USD GBP SEK Others Total
Equity exposure (mill. currency units) 91 9 4,051
Equity exposure (EUR million) 81 10 388 6 485
INTEREST RATE RISK / DURATION AND RE-PRICING STRUCTURE OF LOANS (INCL. INTEREST RATE DERIVATIVES) 31.12.2020
Loan
amount
(EUR million)
Duration
(months)
Average
interest rate
(%)
Interest rate
sensitivity
(EUR million)
31 Dec 20
Re-pricing structure of interest rates of loans
1–4/2021 5–8/2021 9–12/2021 2022 2023 2024 >2024
452 52,0 2,3 -2,2 -98 3 151 7 57 6 326
INTEREST RATE RISK / DURATION AND RE-PRICING STRUCTURE OF LOANS (INCL. INTEREST RATE DERIVATIVES) 31.12.2019
Loan
amount
(EUR million)
Duration
(months)
Average
interest rate
(%)
Interest rate
sensitivity
(EUR million)
31 Dec 19
Re-pricing structure of interest rates of loans
1–4/2020 5–8/2020 9–12/2020 2021 2022 2023 >2023
445 56.0 2.5 -1.3 -97 20 158 2 2 52 308
1)
Interest rate sensitivity is an estimate of the eect of an interest rate change of one percent in one direction on net interest cost based on year end exposure
HEDGING OF ELECTRICITY PRICE RISK EXPOSURE
GWh 31 Dec 20 31 Dec 19
Electricity exposure, net 2021 850 773
Electricity hedging 2021 367 458
Hedging at the end of the year 2020 (%) 43 59
Average price of hedging at the end of the year 2020 (e/MWh) 24,10 21.38
Electricity price risk is hedged based on dened risk management policy by physical contracts or by nancial contracts. e net electricity exposure has been
calculated by taking into account the own and associated companies´ electricity production.
all circumstances despite the uctuations typical to the sector. e company has
a credit rating for its long-term nancing. Certain central target values, which
correspond to standard requirements set by nancing and capital markets, have
been dened for the capital structure. No target level has been dened for the
credit rating. e Group’s capital structure is regularly assessed by the Group’s
Board of Directors and its Audit Committee.
Metsä Board updated the company´s long-term nancial targets and decided
on a new dividend policy in 2017. Metsä Board´s target for the comparable
return on capital employed is at least 12 per cent. According to the company´s
new target, the ratio of interest-bearing net liabilities to comparable EBITDA
is a maximum of 2.5. is target level gives the company enough exibility for
potential growth in the future. In 2020 the long-term nancial targets have been
kept constant.
e key ratios describing the capital structure and the capital amounts
used for the calculation of the key ratio were on 31.12.2020 and 31.12.2019 the
following:
EUR million 2020 2019
Interest-bearing net liabilities/comparable EBITDA 0.7 1.1
Net gearing ratio, % 17 23
Interest-bearing borrowings 452.4 444.9
./. Liquid funds 214.0 134.2
./.Interest-bearing receivables 2.9 2.9
Net interest bearing liabilities 235.5 3 07.8
Equity attributable to shareholders
of parent company
1,383.8 1,338.0
+ Non-controlling interest
Total Equity 1,383.8 1,338.0
In Group`s certain nancial contracts nancial covenants have been set
regarding nancial performance and capital structure. Other covenants in the
Group’s loan agreements are customary terms and conditions including for
example a negative pledge, restrictions on major asset disposals, limitations on
subsidiary indebtedness, restrictions on changes of business and mandatory
prepayment obligations upon a change of control of the Group. e Group has
been in compliance with its covenants during the accounting periods 2020
and 2019. In case the company could not meet its obligations as dened in
nancial contracts and in order to avoid a breach of contract that could have an
adverse eect on the company’s nancial position, it would need to renegotiate
its nancial arrangements, payback its loans or get its debtors to give up their
claims to meet these obligations.
Metsä Group has launched a Green Finance Framework, which integrates
sustainability and climate change mitigation to the Group´s investments and
related nancing activities. e framework is based on the Group´s strategy and
the strategic sustainability objectives for 2030.
Metsä Group has launched a Green Finance Framework, which integrates
sustainability and climate change mitigation to the Group´s investments and
related nancing activities. e framework is based on the Group´s strategy and
the strategic sustainability objectives for 2030.
REPAYMENT OF
NON-CURRENT
LOANS
EUR million
BREAKDOWN
OF CURRENCY
EXPOSURE
%
USD 54%
SEK 36%
GBP 8%
AUD 1%
CAD 1%
Others 0%
9190
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
MARKET RISK SENSITIVITY 2020 31 Dec 20 Impact on equity exposure and annual transaction exposure
MEUR
Impact on
financial assets
and liabilities
Impact on
net equity of
foreign entities
Impact on annual
transaction expo-
sure (cash flow)
Impact on annual
transaction expo-
sure (cash flow)
incl. hedging
Interest rate risk (100 bp rise in interest rates)
Eect on profit 2.2 5.3
Eect on other change in equity 3.0
Commodity risk (electricity price + 20%)
Eect on profit -5.8 -3.7
Eect on other change in equity 2.0
FX risk (USD - 10%)
Eect on profit -0.5 -62.0 -28.1
Eect on other change in equity 29.7 -7.6
FX risk (GBP - 10%)
Eect on profit 0.1 -8.9 -3.1
Eect on other change in equity 4.4 -0.6
FX risk (SEK - 10%)
Eect on profit 0.2 41.7 7.0
Eect on other change in equity -30.7 -40.7
MARKET RISK SENSITIVITY 2019 31 Dec 19 Impact on equity exposure and annual transaction exposure
MEUR
Impact on
financial assets
and liabilities
Impact on
net equity of
foreign entities
Impact on annual
transaction expo-
sure (cash flow)
Impact on annual
transaction expo-
sure (cash flow)
incl. hedging
Interest rate risk (100 bp rise in interest rates)
Eect on profit 4.0 1.3 5.3
Eect on other change in equity
Commodity risk (electricity price + 20%)
Eect on profit -5.3 -1.5
Eect on other change in equity 3.9
FX risk (USD - 10%)
Eect on profit 0.0 -63.1 -30.6
Eect on other change in equity 31.4 -8.1
FX risk (GBP - 10%)
Eect on profit 0.0 -8.5 -3.0
Eect on other change in equity 4.2 -1.0
FX risk (SEK - 10%)
Eect on profit -0.3 39.0 4.5
Eect on other change in equity -29.2 -38.8
Items with + sign = positive eect = increase of assets / decrease of liabilities / increase of cash flow
Items with - sign = negative eect = decrease of assets / increase of liabilities / decrease of cash flow
IFRS 7 requires an entity to disclose a sensitivity analysis for each type of
market risk to which the entity is exposed at the reporting date, showing how
prot or loss and equity would have been aected by changes in the relevant risk
variable that were reasonably possible at that date. e Group has recognised
interest rates, electricity prices and foreign exchange rates as its key market
risks and has set 1 per cent interest rate rise, 20 per cent rise in electricity
price and 10 per cent weakening of USD, GBP and SEK as reasonably possible
risk variables. ese currencies represent over 98 per cent of Group´s annual
transaction exposure. e nature of the market price risk is relatively linear so
that the size of eects of opposite market price changes do not essentially dier
from the presented gures. e scenarios have been calculated by using regular
principles of calculating market values of nancial instruments described in the
Group Accounting policies. Figures at the reporting date reect quite well the
average market risk conditions throughout the reporting period.
Additionally the Group is presenting gures describing the eects of the risk
variables to its equity exposure and annual transaction exposure (cash ow) to
present a broader picture about market risks of interest rates, electricity prices
and foreign exchange rates. Annual cash ows are based on estimates, but not
existing commercial contracts. e weakening of USD and GBP has a negative
impact on annual cash ow and the weakening of SEK has a positive impact.
Hedges reduce this impact depending on hedging strategy. e impact on net
equity of foreign entities is arising from the consolidation of subsidiaries to
the Group consolidated accounts. e rise of electricity price has a negative
impact on cash ow. As according to hedging policy the electricity price risk of
the nearest year has mostly been hedged, the impact including hedges remains
minor.
CASH FLOWS OF INSTALLMENTS AND INTEREST PAYMENTS OF FINANCIAL LIABILITIES 2020
EUR million 2021 2022 2023 2024 2025 2026– Total
Bonds 248.6 248.6
Loans from financial institutions 3.9 3.9 3.9 153.0 1 7.4 182.1
Finance lease liabilities
1)
6.7 5.3 3.9 2.4 1.2 2.9 22.3
Non-current interest-bearing liabilities total 6.7 9.2 7. 8 6.3 154.2 268.9 453.1
Current interest-bearing liabilities 1.3
Total liabilities 8.0 9.2 7.8 6.3 154.2 268.9 454.4
Interest payments 8.6 8.6 8.5 8.5 7. 5 14.2 55.9
Guarantee agreements 0.8 0.2 0.1 2.4 3.5
Derivatives
Currency derivative, liabilities 963.6 963.6
Currency derivative, receivables -988.0 -988.0
Interest rate swaps, liabilities 1.0 0.9 0.7 0.5 0.2 3.4
Commodity derivatives, liabilities 0.4 0.1 0.4
Commodity derivatives, receicables -4.3 0.0 -4.3
Derivatives, net -27.3 1.0 0.7 0.5 0.2 0.0 -24.9
CASH FLOWS OF INSTALLMENTS AND INTEREST PAYMENTS OF FINANCIAL LIABILITIES 2019
EUR million 2020 2021 2022 2023 2024 2025– Total
Bonds 248.5 248.5
Loans from financial institutions 148.8 148.8
Pension loans 24.1 24.1
Finance lease liabilities
1)
6.8 4.9 3.9 2.7 1.6 4.1 24.1
Non-current interest-bearing liabilities total 30.9 4.9 3.9 2.7 1.6 401.5 445.6
Current interest-bearing liabilities 1.6 1.6
Total liabilities 32.5 4.9 3.9 2.7 1.6 401.5 447.2
Interest payments 8.9 8.2 8.2 8.2 8.2 21.0 62.9
Guarantee agreements 6.4 0.2 0.2 2.4 9.1
Derivatives
Currency derivative, liabilities 964.7 964.7
Currency derivative, receivables -970.5 -970.5
Interest rate swaps, liabilities 0.9 0.7 0.7 0.4 0.3 0.1 3.1
Commodity derivatives, liabilities 3.0 0.0 0.0 3.0
Commodity derivatives, receicables -6.7 -1.1 -0.2 -8.1
Derivatives, net -8.7 -0.4 0.4 0.4 0.3 0.1 -7.8
1)
Cash flows from lease liabilities include both debt repayment and financing expense.
e balance sheet value of lease liabilities on December 31, 2020 was EUR 20.4 million (21.8). e balance sheet value of currency derivative liabilities on 31 December 2020 was EUR
4.6 million (4.8) and the value of currency derivative receivables was EUR 29.0 million (10.6).
9392
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
5.7 CLASSIFICATION AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
CLASSIFICATION AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES 2020
EUR million Note
Fair value through
profit and loss
Fair value through other
comprehensive income Amortised cost Total carrying amount
Financial assets
Other non-current investments 4.3 3.5 183.4 186.9
Other non-current financial assets 5.3 10.8 10.8
Accounts receivable and other receivables 4.5 276.7 276.7
Cash and cash equivalents 5.4 214.0 214.0
Derivative financial instruments 5.7 0.6 32.6 33.3
Total carrying amount 4.1 216.0 501.5 721.6
Total fair value 4.1 216.0 501.5 721.6
Financial liabilities
Non-current interest-bearing financial liabilities 5.5 444.8 444.8
Other non-current financial liabilities 4.7 0.4 0.4
Current interest-bearing financial liabilities 5.5 7.6 7.6
Accounts payable and other liabilities 4.7 306.0 306.0
Derivative financial instruments 5.7 1.1 7.2 8.4
Total carrying amount 1.1 7. 2 758.7 767.1
Total fair value 1.1 7.2 791.7 800.1
CLASSIFICATION AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES 2019
EUR million Note
Fair value through
profit and loss
Fair value through other
comprehensive income Amortised cost Total carrying amount
Financial assets
Other non-current investments 4.3 3.7 251.4 255.1
Other non-current financial assets 5.3 15.2 15.2
Accounts receivable and other receivables 4.5 303.8 303.8
Cash and cash equivalents 5.4 134.2 134.2
Derivative financial instruments 5.7 0.7 17.9 18.6
Total carrying amount 4.4 269.4 453.2 726.9
Total fair value 4.4 269.4 453.2 726.9
Financial liabilities
Non-current interest-bearing financial liabilities 5.5 412.9 412.9
Other non-current financial liabilities 4.7 0.3 0.3
Current interest-bearing financial liabilities 5.5 32.0 32.0
Accounts payable and other liabilities 4.7 315.4 315.4
Derivative financial instruments 5.7 0.3 10.6 10.9
Total carrying amount 0.3 10.6 760.6 771.4
Total fair value 0.3 10.6 789.4 800.3
Accounts receivable and other receivables do not include advance payments,
accrued tax receivables and periodisations of employee costs (Note 4.5).
Accounts payable and other nancial liabilities do not include advance pay-
ments, accrued tax liabilities and periodisations of employee costs (Note 4.7).
In Metsä Board, all interest-bearing liabilities are valued in the balance sheet
at amortised cost based on eective interest method.
Fair values are based on present value of cash ow of each liability or assets
calculated by market rate. e discount rates applied are between 0.3–1.5
per cent (31 December 2019: 0.3–2.1). e fair values of accounts and other
receivables and accounts payable and other liabilities do not materially deviate
from their carrying amounts in the balance sheet.
FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES
ACCOUNTING PRINCIPLES
Financial assets and liabilities measured at fair value have been catego-
rised as follows:
Level 1 Fair value is based on quoted prices in active markets.
Level 2 Fair value is determined by using valuation techniques
that use observable price information from market.
Level 3 Fair value are not based on observa-ble market data,
but on company’s own assumptions.
The fair value measurement of financial assets at fair value recognised
under other items of comprehensive income is described in Note 4.3.
The fair values of electricity, natural gas and fuel oil derivatives are
determined by using public price quotations in an active market (Level 1).
The fair values of currency forwards and options are determined by using
the market prices of the closing date of the reporting period. The fair
values of interest rate swaps are determined by using the present value
of expected payments, discounted using a risk adjusted discount rate,
supported by market interest rates and other market data of the closing
date of the reporting period (Level 2).
For financial instruments not traded on an active market, the fair value is
determined by valuation techniques. Judgment is used when choosing
the dierent techniques and making assumptions, which are mainly
based on circumstances prevailing in the markets on each closing date of
the reporting period (Level 3).
FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES 2020
31 Dec 2020
EUR million Note Level 1 Level 2 Level 3 Total
Financial assets at fair value
Other non-current investments 4.3 186.9 186.9
Derivative financial assets 5.7 2.3 30.9 33.3
Financial liabilities measured at fair value
Derivative financial liabilities 5.7 0.4 8.0 8.4
Financial assets not measured at fair value
Cash and cash equivalents 5.4 214.0 214.0
Financial liabilities not measured at fair value
Non-current interest-bearing financial liabilities 5.5 477.8 477.8
Current interest-bearing financial liabilities 5.5 7.6 7.6
FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES 2019
31 Dec 2019
EUR million Note Level 1 Level 2 Level 3 Total
Financial assets at fair value
Other non-current investments 4.3 0.0 255.1 255.1
Derivative financial assets 5.7 8.1 10.6 18.6
Financial liabilities measured at fair value
Derivative financial liabilities 5.7 2.0 8.8 10.9
Financial assets not measured at fair value
Cash and cash equivalents 5.4 134.2 134.2
Financial liabilities not measured at fair value
Non-current interest-bearing financial liabilities 5.5 441.4 441.4
Current interest-bearing financial liabilities 5.5 32.3 32.3
OTHER NON-CURRENT INVESTMENTS MEASURED AT FAIR VALUE BASED ON LEVEL 3 VALUATION
EUR million 2020 2019
Value 1 Jan 255.1 270.1
Total gains and losses in profit and loss -0.1 3.2
Total gains and losses in other comprehensive income -70.3 -14.7
Purchases 2.2 0.0
Sales -0.1 -3.5
Value Dec 31. 186.9 255.1
9594
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
FINANCIAL DERIVATIVES AND HEDGE ACCOUNTING
ACCOUNTING PRINCIPLES
Derivative contracts are initially recognised on the balance sheet at fair
value at cost, and thereafter during their term-to-maturity revalued at
their fair value at each reporting date. The fair value of derivatives is
presented in non-interest-bearing receivables or liabilities. Gains and
losses resulting from recognition at fair value are treated in accounting
as required with regard to the intended use of the derivative contract in
question. Derivatives are initially classified as either
1. Hedges of the exposure to changes in the fair value of receivables,
liabilities or firm commitments;
2. Hedges of the cash flow from a highly probable forecast transaction;
3. Hedges of a net investment in a foreign entity, or
4. Derivatives to which it has been decided not to apply hedge
accounting.
Metsä Board currently applies hedge accounting only to cash flow
hedging. When applying hedge accounting at the inception of a hedging
relationship, the Group has documented the relationship between
the hedged item and the hedging instruments, as well as the hedging
strategy observed. To meet the requirements of hedge accounting, the
Group has also continuously carried out eectiveness testing to verify
that changes in the fair value of the hedging instrument for each hedging
relationship cover any changes in the fair value of the hedged item eec-
tively enough, with respect to the hedged risk. Changes in the fair value
of the eective portion of derivative instruments that meet the criteria
for cash flow hedging are recognised in other items of comprehensive
income. The gains and losses recognised in equity are transferred to
the income statement when the forecast sale or purchase is realised,
and are recognised as an adjustment to the hedged item. If the forecast
transaction is no longer expected to occur, the gain or loss accrued in
equity is recognised immediately in the income statement.
Derivatives not subject to hedge accounting, as well as the ineective
portion of derivatives subject to hedge accounting, are measured at fair
value, and changes in the value of interest rate and currency derivatives
are recognised in financial items and changes in the value of commodity
derivatives are recognised in other income and expenses.
Hedge accounting is applied as cash flow hedging to highly probable
cash flows from sales denominated in foreign currencies and contractual
cash flows from floating interest rates of loans. In the management of
price risks related to commodities, hedge accounting is applied to cash
flows from highly probable purchases of electricity, liquefied natural gas
(LNG), natural gas, propane, light, heavy and 0.5% fuel oil. The fair values
of forward foreign exchange contracts are based on the forward prices
prevailing on the balance sheet date, and currency options are measured
at fair value in accordance with the Black–Scholes model. Interest rate
swaps are measured at the current value of cash flows, with the calcula-
tion being based on the market interest rate yield curve. The fair values of
derivatives are measured on the basis of publicly quoted market prices.
MANAGEMENT OF FINANCIAL RISKS AND HEDGE
EFFECTIVENESS
The management of the Group’s currency, interest rate and commodity
risks is described in more detail in Note 5.6, Management of financial
risks. Note 5.7., Fair values of financial assets and liabilities, includes
the fair values and grouping of derivatives. Note 5.1, Equity, includes
itemisations of hedge accounting entries in the fair value reserve.
The hedging of the currency flow position is eective, given that there is
a direct financial relationship between the hedged sale and the hedging
derivative. The spot rate component of a forward contract or the
reference value component of a currency option has been determined
as the hedged item, and the forward points or the option’s time value are
treated as hedging costs subject to amortisation based on the period.
Currency flow forecasts are fairly stable, invoicing steady within quarters
and months, and forward deals are allocated to each month, due to which
the ineectiveness of hedging usually remains very low. Changes in pro-
duction or the structure of sales may sometimes lead to ineectiveness
during the validity of a hedging relationship, in which case the hedging is
adjusted accordingly.
The hedge accounting of the cash flow from interest rates is primarily
eective, given that there is a direct financial relationship between the
long-term loans subject to hedging and the hedging interest rate swaps.
Ineectiveness in the hedge relationship derives from any possible
dierences between the loans and the swaps’ interest rate periods as
well as from dierences in the reference rates of contract terms. The
ineective portion of interest rate hedging is recognised through profit
and loss. Premature loan withdrawals or premature repayment of loans
may result in a state of ineectiveness, in which case the hedging interest
rate swaps are reversed or derecognised from hedge accounting, and the
change in fair value is recognised in financial items under income.
The hedging of commodity purchases is eective, given that, in lieu
of the total purchase price, the hedged item is the same, identical risk
component of pricing applied in the hedging derivative. In the hedging
of the price risk of electricity, the hedged item is what is referred to
as the portion of the system price and the hedging takes place with a
system-priced electricity swap. Correspondingly, the price components
of the purchases and the hedging derivative in the hedging of natural gas,
propane and fuel oil are identical. Commodity purchases are fairly steady
and hedges are allocated to each month, due to which the ineectiveness
of the hedging usually remains low. Changes in the use of various com-
modities may sometimes lead to ineectiveness during the validity of a
hedging relationship, in which case the hedging is adjusted accordingly.
DERIVATIVES 2020
Nominal value Fair value
EUR million Derivative assets
Derivative
liabilities Fair value net
Fair value through
profit and loss
Fair value
through other
comprehensive
income
Interest rate swaps 100.0 3.4 -3.4 -3.4
Interest rate derivatives 100.0 3.4 -3.4 -3.4
Currency forward contracts 959.1 29.0 4.6 24.4 -0.5 24.9
Currency derivatives 959.1 29.0 4.6 24.4 -0.5 24.9
Electricity derivatives 9.8 0.6 0.3 0.3 0.3
Oil derivatives 12.3 1.3 0.1 1.2 1.2
Other commodity derivatives 8.3 2.4 0.0 2.3 2.3
Commodity derivatives 30.4 4.3 0.4 3.9 3.9
Derivatives total 1,089.4 33.3 8.4 24.9 -0.5 25.4
DERIVATIVES 2019
Nominal value Fair value
EUR million Derivative assets Derivative liabilities Fair value net
Fair value through
profit and loss
Fair value
through other
comprehensive
income
Interest rate swaps 100.0 3.1 -3.1 -3.1
Interest rate derivatives 100.0 3.1 -3.1 -3.1
Currency forward contracts 959.9 10.3 4.7 5.6 0.4 5.2
Currency option contracts 480.3 0.2 0.1 0.1 0.1
Currency derivatives 1,440.2 10.6 4.8 5.8 0.4 5.3
Electricity derivatives 17. 1 7. 5 1.4 6.1 6.1
Oil derivatives 7.6 0.5 0.5 0.0 0.0
Other commodity derivatives 8.5 0.1 1.1 -1.0 -1.0
Commodity derivatives 33.2 8.1 3.0 5.1 0.0 5.1
Derivatives total 1,573.4 18.6 10.9 7.8 0.4 7.3
Changes in the value of hedge accounting and the eects on prot or loss are presented in Note 5.1 Equity
ECONOMIC EFFECT OF THE NET SETTLEMENT OF INSTRUMENTS UNDER MASTER
NETTING AGREEMENTS EXECUTED
2020 2019
Financial
derivatives
on-balance sheet
Assets and
liabilities
related to
master netting
agreements Net risk
Financial
derivatives
on-balance sheet
Assets and
liabilities
related to
master netting
agreements Net risk
Derivative assets 33.3 33.3 18.6 18.6
Derivative liabilities -8.4 -8.4 -10.9 -10.9
Master netting agreements are used for derivative contracts entered into by the Group and its counterparties. In the event of unlikely credit events, all valid trans-
actions based on the agreement will be cancelled, and only one net sum will be payable by each counterparty for all the transactions. e items are not netted on the
balance sheet.
9796
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
CASH FLOW HEDGE MATURITIES 2020
EUR million
1–6
months
6–12
months
1–5
years
over 5
years
Hedged
cash flow total
Interest rate derivatives, hedge accounting 100.0 100.0
Currency rate derivatives, hedge accounting 548.9 110.9 659.8
Currency derivatives, no hedge accounting 100.5 0.0 0.0 100.5
Commodity derivatives, hedge accounting 15.2 14.2 1.0 30.4
CASH FLOW HEDGE MATURITIES 2019
EUR million
1–6
months
6–12
months
1–5
years
over 5
years
Hedged
cash flow total
Interest rate derivatives, hedge accounting 50.0 50.0 100.0
Currency rate derivatives, hedge accounting 525.4 99.2 624.6
Currency derivatives, no hedge accounting 8 7.4 8 7.4
Commodity derivatives, hedge accounting 1 7.0 9.4 3.3 29.8
DERIVATIVES 2020
Nominal value Fair value
EUR million Derivative assets
Derivative
liabilities Fair value net
Fair value through
profit and loss
Fair value
through other
comprehensive
income
Interest rate swaps XXX.X X.X -X.X -X.X
Interest rate derivatives XXX.X X.X -X.X -X.X
Currency forward contracts XXX.X XX.X X.X X.X X.X X.X
Currency option contracts XXX.X X.X X.X X.X X.X
Currency derivatives X.XXX.X XX.X X.X X.X X.X X.X
Electricity derivatives XX.X X.X X.X X.X X.X
Oil derivatives X.X X.X X.X -X.X -X.X
Other commodity derivatives X.X X.X X.X -X.X -X.X
Commodity derivatives XX.X X.X X.X X.X X.X X.X
Derivatives total X.XXX.X XX.X XX.X X.X X.X X.X
DERIVATIVES 2019
Nominal value Fair value
EUR million Derivative assets Derivative liabilities Fair value net
Fair value through
profit and loss
Fair value
through other
comprehensive
income
Interest rate swaps 100.0 3.1 -3.1 -3.1
Interest rate derivatives 100.0 3.1 -3.1 -3.1
Currency forward contracts 959.9 10.3 4.7 5.6 0.4 5.2
Currency option contracts 480.3 0.2 0.1 0.1 0.1
Currency derivatives 1.440.2 10.6 4.8 5.8 0.4 5.3
Electricity derivatives 17. 1 7. 5 1.4 6.1 6.1
Oil derivatives 7.6 0.5 0.5 -0.0 -0.0
Other commodity derivatives 8.5 0.1 1.1 -1.0 -1.0
Commodity derivatives 33.2 8.1 3.0 5.1 0.0 5.1
Derivatives total 1.573.4 18.6 10.9 7.8 0.4 7.3
6. INCOME TAXES
ACCOUNTING PRINCIPLES
Tax expenses in the income statement consist of taxes based on
the taxable income for the period, taxes for previous periods, and
deferred tax assets and liabilities. The tax eect related to the items
recorded in the comprehensive income statement is recognised in
the comprehensive income statement. Taxes based on the taxable
income for the period are calculated based on taxable income in
accordance with the tax rate as it stands in each country at that
time. Deferred tax assets and liabilities are calculated on the tem-
porary dierences between the carrying amount and the tax base in
accordance with the tax rates enacted as at the balance sheet date.
No deferred taxes are recognised for non-deductible goodwill, and
no deferred taxes are recognised for subsidiaries’ undistributed
profits to the extent that the dierence will not likely realise in the
predictable future. Deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available against which a
deductible temporary dierence can be utilised.
Deferred income tax assets and liabilities can be oset when there
is a legally enforceable right to oset current tax assets against
current tax liabilities and when the deferred taxes are related to the
same taxation authority.
The most significant temporary dierences arise from depreciation
of property, plant and equipment; the measurement of other invest-
ments and derivatives contracts at fair value; defined benefit plans;
unused tax losses; and measurement at fair value in conjunction
with acquisitions of business operations.
KEY ESTIMATES AND JUDGEMENT
The management’s judgement is required for determining the taxes
based on the result for the period, deferred tax assets and liabilities,
and the extent to which deferred tax assets are recorded. The
Group is subject to income taxation in several countries, and the
final amount of tax is uncertain for several business operations and
calculations. The Group anticipates future tax audits and recognises
liabilities based on estimates of whether further taxes will need to be
paid. If the associated final tax diers from the originally recorded
amounts, the dierence has an eect on both the taxes based on the
taxable income for the period, and on deferred tax receivables and
liabilities.
EUR million 2020 2019
Income taxes for the financial period 41.8 16.9
Income taxes from previous periods 0.2 0.1
Change in deferred taxes 0.2 4.1
Income taxes total 42.2 21.0
INCOME TAX RECONCILIATION
EUR million 2020 2019
Result before tax 212.3 165.6
Calculated tax at Finnish statutory rate of 20.0% 42.5 33.1
Change in Swedish company tax rate from 21.4% to 20.6% -1.1
Eects of dierences between Finnish and non-Finnish tax rates 0.2 0.8
Tax exempt income -0.4 -2.3
Non-deductible expenses 0.1 0.2
Previous years tax losses on which no deferred tax asset has
been recognised used during period
0.7 -0.3
Adjustments to previously recognised deferred taxes -0.3 -2.0
Losses from subsidiaries, on which no deferred tax asset
has been recognised
0.0 0.1
Share of result from associate companies and joint ventures 0.5 -8.6
Income taxes from previous periods 0.2 0.1
Other items -0.1 0.0
Income taxes total 42.2 21.0
Eective tax rate, % 19.9 12.7
In the autumn of 2015 as a part of Metsä Board Oyj’s 2014 tax assessment
Finnish Tax Administration refused to accept the deductibility of a French sub-
sidiary’s losses transferred in a cross-border merger. Metsä Board has appealed
the decision issued by the Tax Administration, as the company believes the
losses are deductible. e Board of Adjustment dismissed the company’s appeal
in March 2018. e company will appeal the decision to the Administrative
Court of Helsinki. Metsä Board has not recognised a deferred tax asset on the
contested losses.
Taxes reported in other comprehensive income are specied in Note 5.1.
9998
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
DEFERRED TAX ASSETS AND LIABILITIES 2020
EUR million 1 Jan 2020
Charged to
income statement
Charged to other
comprehensive
income
Translation
dierences Sold subsidiaries 31 Dec 2020
Deferred tax assets
Pension obligations and provisions 4.1 -0.2 0.4 0.0 4.2
Intercompany margins 3.8 0.9 -0.2 4.5
Unused tax loss carry-forwards 0.6 0.6
Other temporary dierences 3.7 -0.7 -0.5 -0.1 2.4
Total 12.3 0.0 -0.2 -0.3 11.8
Netting against liabilities -5.5 2.2 0.0 -1.0 -4.3
Deferred tax assets in balance sheet 6.7 2.2 -0.2 -1.2 7. 5
Deferred tax liabilities
Pension obligations 2.1 -0.1 -0.6 -0.1 1.3
Depreciation dierences and appropriations 63.4 -3.4 0.0 1.2 61.2
Other investments recognised at fair value 42.5 -14.1 28.4
Financial instruments 2.9 0.3 3.4 0.1 6.7
Net investments in foreign operations -0.9 0.9
Other temporary dierences 0.3 4.3 -0.5 0.1 4.2
Total 111.2 0.2 -11.8 2.2 101.8
Netting against receivables -5.5 2.2 0.0 -1.0 -4.3
Deferred tax liabilities in balance sheet 105.6 2.4 -11.8 1.2 9 7. 5
DEFERRED TAX ASSETS AND LIABILITIES 2019
EUR million 1 Jan 2019
Charged to
income statement
Charged to other
comprehensive
income
Translation
dierences Sold subsidiaries 31 Dec 2019
Deferred tax assets
Pension obligations and provisions 5.3 -1.2 -0.1 0.0 4.1
Intercompany margins 2.7 1.1 0.0 3.8
Unused tax loss carry-forwards 8.4 -7. 5 -0.3 0.6
Other temporary dierences 2.7 2.9 0.0 0.0 -1.9 3.7
Total 19.2 -4.8 -0.1 -0.3 -1.9 12.3
Netting against liabilities -13.7 7.8 0.0 0.3 0.1 -5.5
Deferred tax assets in balance sheet 5.5 3.0 -0.1 0.1 -1.7 6.7
Deferred tax liabilities
Pension obligations 2.3 -0.4 -0.1 0.2 2.1
Depreciation dierences and appropriations 66.3 -2.0 0.0 -0.8 -0.1 63.4
Other investments recognised at fair value 45.4 -2.9 42.5
Financial instruments 3.6 1.4 -2.1 0.0 2.9
Net investments in foreign operations 0.7 -0.7
Other temporary dierences 0.6 -0.3 0.0 0.3
Total 118.2 -0.7 -5.0 -1.2 -0.1 111.2
Netting against receivables -13.7 7.8 0.0 0.3 0.1 -5.5
Deferred tax liabilities in balance sheet 104.5 7. 1 -5.1 -0.9 105.6
e Group has recognised deferred tax assets related to operating loss carry-forwards for EUR 0.6 million in Germany. Management assesses that taxable prot will
be available against which loss carry-forward can be utilised.
e taxable loss carry-forwards of business operations, for which deferred tax assets have not been recognised due to uncertainty of amount or utilisation
possibilities, amounted approximately to EUR 506 million (505), mainly in Finland. e unrecognised deferred tax assets for these loss carry forwards is about EUR
113 million (113). Loss carry-forwards do not expire.
7. GROUP STRUCTURE
7.1 HOLDINGS IN OTHER COMPANIES
SUBSIDIARIES AND JOINT OPERATIONS 31 DECEMBER 2020
METSÄ BOARD OYJ’S HOLDINGS IN GROUP COMPANIES
Country Holding, % Number of shares
Book value
EUR
Holdings in parent company
Metsäliitto Cooperative Finland - 179,171 606,778.98
Subsidiary shares in Finland
Kotimaiset
Oy Hangö Stevedoring Ab Finland 100.00 150 1,000,000.00
Metsä Board International Oy Finland 100.00 10,000 23,347,464.13
in other countries
Metsa Board Americas Corporation
1)
USA 99.00 17,820 12,209,018.39
Metsä Board Benelux n.v./s.a
1)
Belgium 0.08 2 0.00
Metsa Board Hong Kong Ltd
1)
Hong Kong 1.00 1 168.19
Metsä Board Deutschland GmbH Germany 100.00 1 0.00
MetsaBoardIbériaSA
Spain 1.00 100 1,561.63
Metsä Board NL Holding B.V. The Netherlands 100.00 15,350 4,492,764.02
Metsä Board Sverige Ab Sweden 100.00 10,000,000 493,721,059.95
Subsidiary shares total 534,772,036.31
Shares and holdings in Group companies 535,378,815.29
TotalGroupholding
Subgroup in Finland
Metsä Board International Oy
Metsä Board Benelux n.v./s.a
1)
Belgium 99.92 2,921 140,001.71
OOO Metsä Board Rus Russia 100.00 1 821,786.71
Metsä Board France SAS France 100.00 8,211 418,951.75
Metsa Board Hong Kong Ltd
1)
Hong Kong 99.00 99 1,069.35
Metsa Board Ibéria S.A.
1)
Spain 99.00 147,771 155,316.78
Metsa Board Italia S.r.l. Italy 100.00 100,000 50,691.84
Metsa Board (Middle East & Africa) Ltd Cyprus 100.00 742,105 214,000.00
Metsä Board Polska Sp. Z o.o. Poland 100.00 232 54,458.58
Metsa Board Singapore Pte Ltd Singapore 100.00 10,000 4,036.51
Metsa Board Singapore Pte Ltd Indian Branch India 100.00 - -
Metsa Board UK Ltd United Kingdom 100.00 2,400 264,172.02
Metsa Board Americas Corporation
1)
USA 1.00 180 4,435.15
Metsa Board Australia and New Zealand Pty Ltd Australia 100.00 1 41,827.54
Metsa Board Middle East & Africa DMCC UAE 100.00 50 12,690.00
Total 2,183,437.94
Subgroup in other countries
Metsä Board Sverige Ab
Husum Pulp Ab Sweden 100.00 100,000 4,982.91
Total 4,982.91
ACCOUNTING PRINCIPLES
SUBSIDIARIES
The financial statements include all of the companies controlled by the
Group. Intra-Group shareholding is eliminated using the acquisition
method. Intra-Group business transactions, receivables, liabilities and
unrealised gains, as well as internal distribution of profits, are eliminated
on consolidation. Unrealised losses arising from impairment are not
eliminated. When necessary, the accounting principles applied by subsid-
iaries have been adjusted to comply with the Group’s principles.
The parent company’s owners’ and non-controlling interests’ shares of
the result for the period and comprehensive income are presented in the
comprehensive income statement. The non-controlling interests’ share
of equity is presented as a separate item under equity on the balance
sheet.
JOINT OPERATIONS
A joint operation is a joint arrangement in which parties who have joint
control in the arrangement have rights concerning the assets related
to the arrangement and obligations concerning liabilities. The Group
consolidates its proportion of the assets, liabilities, income and expenses
of the joint operation in its financial statements.
101100
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
INVESTMENTS IN ASSOCIATE COMPANIES AND JOINT VENTURES
EUR million 2020 2019
Value 1 Jan 392.4 411.3
Share of results from associated companies and joint ventures
Share of result from Metsä Fibre -2.4 43.1
Share of results from other associated companies
and joint ventures
-0.1 0.1
Dividends received -21.8 -63.3
Share of other comprehensive income from
associated companies and joint ventures
Fair value reserve 3.1 1.2
Translation dierences and other changes in equity -2.2 -0.1
Investments in associated companies and joint ventures
31 Dec
369.0 392.4
AMOUNTS RECOGNISED IN INCOME STATEMENT
EUR million 2020 2019
Associate companies -2.4 43.2
joint ventures -0.1 0.0
Amounts recognised in income statement total -2.5 43.2
AMOUNTS RECOGNISED IN BALANCE SHEET
EUR million 2020 2019
Associate companies 368.5 391.8
joint ventures 0.5 0.6
Amounts recognised in balance sheet total 369.0 392.4
e carrying amount of associated companies at 31 December 2020 includes
goodwill of EUR 45.2 million (2019: 45.2). None of the associate companies or
joint ventures are listed companies. Transactions with associate companies and
joint ventures are detailed in Note 7.3.
FINANCIAL INFORMATION SUMMARY OF
ESSENTIAL ASSOCIATED COMPANIES
According to management’s view, the only essential associated company
is Metsä Fibre Group, which produces chemical pulp and sawn timber.
Metsä Board owns 24.9 per cent of Metsä Fibre. Metsä Board’s parent company,
Metsäliitto Cooperative, owns 50.1 per cent, and Itochu Corporation from
Japan owns 25.0 per cent. Metsä Fibre has operations primarily in Finland, and
its production capacity is approximately 3.2 million tonnes of chemical pulp.
In Addition Metsä Fibre has ve sawmills in Finland and Metsä Svir sawmill in
Russia.
SUMMARISED FINANCIAL INFORMATION FOR METSÄ FIBRE
METSÄ FIBRE GROUP
EUR million 2020 2019
Sales 1,826.5 2,236.0
Result for the period -13.4 175.3
Other comprehensive income 4.5 7. 9
Total comprehensive income for the period -8.9 183.2
Dividend received 21.8 63.3
Non-current assets 1,473.2 1,462.6
Current assets 838.4 964.7
Non-current liabilities 543.5 632.4
Current liabilities 486.1 415.2
Net assets 1,282.1 1,379.6
RECONCILIATION OF FINANCIAL INFORMATION FOR METSÄ FIBRE TO
THE VALUE RECOGNISED IN CONSOLIDATED BALANCE SHEET
EUR million 2020 2019
Group's share of net assets 319.2 343.5
Goodwill 45.2 45.2
Other purchase price allocations at acquisition 5.6 6.1
Other adjustments -1.7 -3.2
Carrying value of associated company in consolidated
balance sheet
368.3 391.7
Metsä Fibre has been consolidated according to equity method based on its
consolidated nancial statements prepared under IFRS.
FINANCIAL INFORMATION SUMMARY OF OTHER THAN ESSENTIAL
ASSOCIATED COMPANIES
EUR million 2020 2019
Share of result from other associated companies 0.0 0.1
Carrying value in consolidated balance sheet 0.1 0.1
JOINT VENTURES
Metsä Board has one joint venture, Kemishipping Oy. Kemishipping Oy
oers logistics services in Kemi, Finland. Parties have joint control of relevant
activities. Kemishipping Oy has been consolidated according to equity method.
Metsä Board’s ownership is 15 per cent.
EUR million 2020 2019
Sales 12.9 15.3
Result for the period -0.5 0.2
Result for the period includes the following items:
Depreciation, amortisation and impairment charges 1.4 1.3
Interest expenses 0.1 0.1
Income taxes 0.1 0.0
Dividends received from Joint Ventures
Non-current assets 6.1 6.2
Current assets 3.5 4.3
Non-current liabilities 2.3 2.6
Current liabilities 3.9 3.9
Net assets 3.4 4.0
Group's share of net assets 0.5 0.6
Joint venture carrying value in consolidated balance sheet 0.5 0.6
MATERIAL SUBSIDIARIES
Metsä Board has two material subsidiaries:
• Metsä Board Sverige AB
Metsä Board Sverige AB is located in Örnsköldsvik, Sweden. Metsä Board
Sverige AB produces folding boxboard and kraliner. Metsä Board Sverige
AB’s sales were EUR 601 million (2019: 610) in 2020. e company’s capacity is
250,000 tonnes of liner and 400,000 tonnes of folding boxboard.
• Husum Pulp AB
Husum Pulp Ab was established in 2020. e pulp business of Metsä Board
Sverige Ab was transferred to the company on December 31, 2020. Husum
Pulp AB produces pulp for Metsä Board Sverige Ab and to the market. e
company’s capacity 730,000 tonnes of chemical pulp. A 30% minority stake in
the company was sold to the Swedish forest owners’ cooperative Norra Skog and
the transaction was completed on January 4, 2021
ACCOUNTING PRINCIPLES
Associated companies include all companies over which the Group
has considerable influence but no control. Significant influence
is usually based on a shareholding conferring 20–50 per cent of
the voting rights. A joint venture is a joint arrangement in which
the parties that have joint control of the arrangement have rights
to its net assets. Investments in associates and joint ventures are
accounted for using the equity method and are initially recognized at
cost. The Group’s shares in associated companies and joint ventures
also include the goodwill measured at the time of acquisition, less
any impairment.
The Group’s share of the profits or losses of associated companies
and joint ventures is recognised in the income statement as a
separate line item above the operating result in case of associate
company Metsä Fibre and below the operating result in case of other
associate companies. Correspondingly, the Group’s share of other
comprehensive income in associated companies and joint ventures
is recognised in its items of other comprehensive income. A propor-
tion corresponding to the Group’s shareholding is eliminated from
unrealised profits between the Group and its associate companies
and joint ventures. Unrealised losses arising from impairment are
not eliminated. When necessary, the accounting principles applied
by associated companies and joint ventures have been adjusted to
comply with the Group’s principles.
103102
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
CONSOLIDATED FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
7.3 RELATED PARTY TRANSACTIONS
Related parties include Metsä Board’s ultimate parent company Metsäliitto
Cooperative, which owns 48 per cent of Metsä Board’s shares and 67 per cent
of the voting rights, other subsidiaries of Metsäliitto, associated companies
and joint ventures as well as Metsäliitto Employees’ Pension Foundation. e
members of the Board of Directors, Metsä Group’s Executive Management
Team and Metsä Board’s Corporate Management Team as well as their close
family members are also included in related parties.
e most signicant subsidiaries of Metsäliitto, with which Metsä Board has
business transactions, are as follows:
Metsä Tissue Group
Metsä Fibre Group
Metsä Forest Sverige Ab
Metsä Fibre has been consolidated by using equity method according to Invest-
ments in associates standard (IAS 28). Related party transactions with Metsä
Fibre are presented as transactions with sister companies.
Financial operations of the Group have been centralised to Metsä Group
Treasury Oy, which is a wholly-owned subsidiary of Metsäliitto Cooperative
and in charge of managing the Group companies’ nancial positions according
to the strategy and nancial policy dened by the Group, providing necessary
nancial services and acting as a competence center in nancial matters.
Financial transactions with Metsä Group Treasury Oy are carried out at market
prices.
e value of wood purchases from Metsäliitto Cooperative was EUR 113.4
million (2019: 112.0) and pulp purchases from Metsä Fibre Oy EUR 249.1
million (327.3). e purchases were carried out at market prices.
Metsä Board is participating in the supplementary pension arrangement of
Metsä Group executives. Payments to the arrangement amounted to EUR 0.5
million in 2020 (2019: 0.5).
Metsäliitto Employees’ Pension Foundation is a separate legal entity granting
dened supplementary pension benets to part of Metsä Board ocials and
manages foundation’s assets. Metsäliitto’s Oce Operators’ Pension Fund’s
insurance operations were transferred to OP Life Assurance Company Ltd on
31 December 2019.
TRANSACTIONS WITH PARENT COMPANY AND SISTER
COMPANIES
Transactions with
parent company
Transactions with
sister companies
EUR million 2020 2019 2020 2019
Sales 6.8 8.1 68.6 93.0
Other operating income 2.9 2.9 1.0 11.3
Purchases 113.4 112.0 485.3 570.4
Share of result from associat-
ed companies
-2.4 43.1
Dividend income 0.0 0.0
Interest income 0.1 0.1
Interest expense 0.9 1.9
Receivables
Accounts receivable and
other receivables
0.9 1.7 49.3 31.1
Cash equivalents 204.7 127.1
Liabilities
Accounts payable and
other liabilities
10.5 9.3 44.3 45.3
TRANSACTIONS WITH ASSOCIATED COMPANIES AND
JOINT VENTURES
EUR million 2020 2019
Sales 0.5 0.5
Purchases 3.0 5.3
Interest income
Receivables
Other non-current financial assets
Accounts receivable and other receivables 0.2 0.4
Liabilities
Accounts payable and other liabilities 0.6 0.6
Metsä Board has classied interest-bearing receivables comparable to cash
funds and available immediately from Metsä Group’s internal bank Metsä
Group Treasury Oy as Cash and cash equivalents.
e receivables from group companies do not include doubtful receivables,
and no bad debt was recognised during the period. No security or collateral has
been provided for group liabilities.
7.2 ACQUIRED AND DISPOSED OPERATIONS AND NON-CURRENT ASSETS HELD FOR SALE
ACCOUNTING PRINCIPLES
Acquired business operations are consolidated from the time when
control is transferred to the Group, and divested operations are
consolidated until the time when control is transferred away from the
Group.
The consideration paid, including the contingent sales price and
the identifiable assets and liabilities of the acquired business
operations, are measured at fair value at the time of acquisition.
Expenses related to acquisitions are recognised as costs. Depending
on the acquisition, the non-controlling interests’ share in the object
of the acquisition is recognised at fair value or at the amount that
corresponds to the non-controlling interests’ proportion of the net
assets of the object of the acquisition.
The amount by which the sum of the consideration paid, the fair
value of the non-controlling interests’ share and the fair value of the
assets previously owned in the object of the acquisition exceed the
fair value of the identifiable net assets is recognised as goodwill.
ere were no acquisitions and no assets were classied as held for sale in 2020
or 2019.
In February 2019, Metsä Board sold all 56.25% ownership in its partly owned
subsidiary Äänevoima subgroup (Äänevoima Oy and Ääneverkko Oy) to
associated company Metsä Fibre. Cash balance of the sold company amounted
to EUR 2.5 million, and Metsä Board received EUR 6.7 million for the shares.
e transaction had a cash ow eect of EUR 4.2 million and resulted in a
divestment gain of EUR 6.8 million (net in operating prot).
DISPOSED ASSETS, 2019 ÄÄNEVOIMA SUBGROUP
EUR million 2020 2019
Intangible rights 0.2
Tangible assets 6.9
Other non-current non-interest bearing receivables 0.0
Inventories 0.7
Accounts receivable 2.9
Accrued income and other receivables 1.8
Cash and cash equivalents 2.5
Total assets 15.0
Non-current loan liabilities 14.0
Accounts payable 2.2
Accrued expenses and other liabilities 1.2
Total liabilities 17.4
Net assets disposed -2.4
Total -2.4
Proceeds from the sale 6.7
Less: associated company Fibre's internal margin -2.2
Divestment gain before tax 6.8
Income taxes 0.0
Divestment gain after tax 6.8
Divestment proceeds received 6.7
Cash and cash equivalents of divested subsidiary -2.5
Proceeds from disposal of shares in subsidiary,
net of cash
4.2
105104
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
PARENT COMPANY FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
8. OTHER NOTES
8.1 CONTINGENT LIABILITIES, ASSETS AND
COMMITMENTS
DISPUTES AND CLAIMS
In the autumn of 2015 as a part of Metsä Board Oyj’s 2014 tax assessment
Finnish Tax Administration refused to accept the deductibility of a French sub-
sidiary’s losses transferred in a cross-border merger. Metsä Board has appealed
the decision issued by the Tax Administration, as the company believes the
losses are deductible. e Board of Adjustment dismissed the company’s
appeal in March 2018. e company has appealed against the decision to the
Administrative Court of Helsinki.
Metsä Board companies have been sellers in several share transactions in
recent years. In these divestments, the companies have issued regular seller’s
assurances. Claims presented against Metsä Board companies and costs
incurred by the companies due to these assurances cannot be ruled out.
EUR million 2020 2019
Own liabilities for which collateral has been provided 24.1
Pledges granted 138.7
Floating charges 192.8 232.8
Real estate mortgages 192.8 371.5
Other commitments given on own behalf 2.8 9.1
Commitments given on the behalf of others 0.1 0.1
Total 195.7 380.8
Commitments include granted pledges, mortgages and oating charges as well
as guarantees. Pledges granted are shares in associate company (Metsä Fibre).
INVESTMENT COMMITMENTS
EUR million 2020 2019
Payments due in following 12 months 60.4 60.2
Payments due later
Total 60.4 60.2
Commitments related to property, plant and equipment concern the rst phase
of the modernisation of the Husum pulp mill.
OTHER INFORMATION
Metsä Board has investment grade credit ratings by S&P Global and Moody’s
Investor Service. e company’s rating by S&P Global is BBB-, with a stable
outlook. e company’s rating by Moody’s is Baa3, with a stable outlook.
8.2 EVENTS AFTER THE FINANCIAL PERIOD
e sale of a 30% share in the Husum pulp mill to Norra Skog was completed
on 4 January 2021, and its impact will be included in Metsä Board’s nancial
reporting as of the interim report concerning January–March 2021. e trans-
action will decrease Metsä Board’s net debt by approximately EUR 260 million,
and in addition it will reduce Metsä Board’s nancial contribution in the second
phase of the Husum pulp mill re-newal by approximately EUR 100 million.
Metsä Board announced on 22 January 2021, that it has started pre-engineer-
ing for increasing the annual production capacity of folding boxboard at the
Husum mill in Sweden by approximately 200,000 tonnes. e pre-engineering
phase includes also an evaluation of the mill’s port capacity for increased
volumes of raw materials and nished goods. e readiness to make the nal
investment decision is expected to be achieved in the summer of 2021 and the
ramp-up of the addition-al capacity would start in 2023.
On 11 February 2021, Metsä Board’s associated company Metsä Fibre made
an investment decision on the construction of a new bioproduct mill in Kemi,
Finland.
On 11 February 2021, Metsä Board made an invest-ment decision on the
development programme for its Kemi paperboard mill.
EUR NOTE 1.1.–31.12.2020 1.1.–31.12.2019
Sales 2 1,262,298,497.02 1,298,912,836.71
Change in stocks of finished and unfinished products -3,581,989.63 -7,841,433.77
Other operating income 3.4 36,169,588.08 41,790,929.10
Materials and services
Materials, consumables and goods
Purchases during the financial period -655,650,971.36 -795,211,696.96
Changes in stocks 3,084,733.82 1,819,625.65
External services 5 -184,687,540.74 -191,026,632.56
Employee costs 5 -96,195,043.20 -93,166,366.22
Depreciations and impairment charges 3.6 -51,242,262.32 -49,425,058.98
Other operating expenses 3.5 -111,572,081.32 -119,924,845.71
-1,096,263,165.12 -1,246,934,974.78
Operating profit/loss 198,622,930.35 85,927,357.26
Financial income and expenses 7
Income from group companies 33,578,546.16 72,115,919.33
Income from investments in other non-current assets 1,980.00 1,432.32
Other interest and financial income 2,614.49 866.91
Exchange rate dierences 6,263,249.69 -5,590,305.18
Interest expenses and other financial expenses -11,306,180.32 -15,124,245.07
28,540,210.02 51,403,668.31
Profit/loss before appropriations and taxes 227,163,140.37 137,331,025.57
Appropriations
Change in depreciation dierences 6 -9,066,231.37 -6,020,879.19
Group contribution 1,160,000.00 1,050,000.00
-7,906,231.37 -4,970,879.19
Income taxes 8 -38,800,726.87 -14,427,786.37
Profit/loss for the financial period 180,456,182.13 117,932,360.01
Parent company
INCOME STATEMENT
Parent company financial statements
107106
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
PARENT COMPANY FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
PARENT COMPANY
BALANCE SHEET
EUR Note 31.12.2020 31.12.2019
ASSETS
Intangible assets 9
Intangible assets 12,657,981.63 14,278,206.33
Other intangible assets 366,412.56 486,562.90
Advance payment and construction in
progress
635,869.44 1,383,677.21
13,660,263.63 16,148,446.44
Tangible assets 9
Land and water areas 31,282,413.06 28,976,820.98
Buildings and constructions 128,739,857.83 126,429,353.21
Machinery and equipment 227,344,444.31 233,190,115.27
Other tangible assets 7,065,754.44 7,162,554.22
Advance payment and construction in
progress
20,641,731.56 31,410,056.94
415,074,201.20 427,168,900.62
Investments 10
Shares in group companies 535,378,815.29 535,378,815.29
Receivables from group companies 306,190,496.80 301,618,572.70
Shares in associated companies 86,429,409.33 86,429,409.33
Other shares and holdings 184,224,295.61 252,435,976.80
Other receivables 35,222.52 35,222.52
1,112,258,239.55 1,175,897,996.64
Total non-current assets 1,540,992,704.38 1,619,215,343.70
CURRENT ASSETS
Inventories
Materials and consumables 48,604,835.96 45,520,102.14
Finished products 134,958,631.37 138,540,621.00
Advance payments 7,334,704.15 7,463,245.05
190,898,171.48 191,523,968.19
NON-CURRENT RECEIVABLES 11
Receivables from group companies
Receivables from group companies 79,726,537.97 76,578,473.79
79,726,537.97 76,578,473.79
Current receivables 11
Accounts receivables 118,264,583.91 138,926,647.98
Receivables from group companies 210,760,985.45 68,621,064.30
Receivables from associated companies 199,805.19 426,042.57
Other receivable 17,934,171.78 21,802,288.77
Prepayments and accrued income 24,299,436.72 20,579,735.64
371,458,983.05 250,355,779.26
Total receivables 451,185,521.02 326,934,253.05
Cash and cash equivalents 5,542,571.15 3,258,020.29
Total current assets 647,626,263.65 521,716,241.53
TOTAL ASSETS 2,188,618,968.03 2,140,931,585.23
EUR Note 31.12.2020 31.12.2019
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY 12
Share capital 557,881,540.40 557,881,540.40
Other reserves
Reserve for invested unrestricted equity 267,521,521.17 317,293,305.61
Value adjustment reserve 134,374,020.36 171,598,515.80
Profit/loss for previous financial periods 192,268,464.93 109,887,379.52
Profit/loss for the financial period 180,456,182.13 117,932,360.01
1,332,501,728.99 1,274,593,101.34
APPROPRIATIONS
Accumulated depreciation dierence 6 147,963,297.28 138,897,065.91
PROVISIONS 13 4,476,995.67 4,568,212.78
LIABILITIES
Non-current liabilities 15
Bonds 249,433,483.02 249,349,299.01
Loans from financial institutions 183,225,000.00 150,000,000.00
Advance payments 1,515,404.91 1,515,404.94
Deferred tax liability 8, 14 32,698,049.43 42,013,315.59
Liabilities to group companies 3,361,597.67 3,093,184.14
470,233,535.03 445,971,203.68
Current liabilities 16
Pension premium loans 0.00 23,348,214.32
Advance payments 1,756,007.02 2,870,361.05
Accounts payable 119,759,541.04 134,113,280.45
Liabilities to group companies 49,863,035.29 51,944,254.45
Liabilities to participating companies 379,727.97 415,389.81
Other liabilities 6,612,960.98 6,328,756.57
Accruals and deferred income 55,072,138.76 57,881,744.87
233,443,411.06 276,902,001.52
Total liabilities 703,676,946.09 722,873,205.20
Total shareholdes’ equity and
liabilities
2,188,618,968.03 2,140,931,585.23
EUR 1.1.–31.12.2020 1.1.–31.12.2019
CASH FLOW FROM OPERATING ACTIVITIES
Profit/loss before appropriations and taxes 227,163,140.37 137,331,025.57
Adjustments to profit/loss
a)
14,139,599.44 -17,853,757.10
Interest received 8,356,030.38 8,822,022.70
Interest paid -10,714,750.12 -14,084,523.72
Dividends received 25,226,848.20 63,295,885.58
Other financial items, net -1,478,801.92 -2,920,192.59
Income taxes paid -43,029,488.89 -14,438,004.48
Change in net working capital
b)
-4,921,666.18 -30,197,487.13
Net cash flow from operating activities 214,740,911.28 129,954,968.83
INVESTMENTS
Acquisition of shares in aliated companies, 0.00 0.00
Acquisition of other shares -2,240,616.00 -32,697.47
Investments in tangible and intangible assets -43,947,568.55 -58,388,063.02
Proceeds from disposal of shares in aliated companies, 0.00 1,338,919.46
Proceeds from disposal of participating interests 0.00 6,663,325.00
Proceeds from disposal of other shares 65,008.00 3,491,420.46
Proceeds from sale of tangible and intangible assets 14,718,563.46 19,940,902.58
Increase and decrease of non-current receivables, net -0.01 0.00
Total cash flow from investing activities -31,404,613.10 -26,986,192.99
CASH FLOW BEFORE FINANCIAL ACTIVITIES 183,336,298.18 102,968,775.84
Cash flow from financial activities
Dividend paid and other profit distribution -85,323,059.04 -103,098,696.34
Increase in non-current liabilities 33,225,000.00 150,000,000.00
Decrease in non-current liabilities -23,348,214.35 -148,289,588.83
Increase or decrease in interest bearing current liabilities, net 0.00 -7.12
Increase or decrease in interest bearing current receivables, net -105,605,473.93 -4,700,352.33
-181,051,747.32 -106,088,644.62
CHANGES IN CASH AND CASH EQUIVALENTS 2,284,550.86 -3,119,868.78
Cash and cash equivalents opening balance 3,258,020.29 6,377,889.07
Change in cash and cash equivalents 2,284,550.86 -3,119,868.78
Cash and cash equivalents closing balance 5,542,571.15 3,258,020.29
a) Adjustments to profit/loss
Depreciations and impairment charges 51,242,262.32 49,425,058.98
Financial income and expenses -28,540,210.02 -51,403,668.31
Gains or losses on sale of fixed assets -8,471,235.75 -13,380,996.64
Change in provisions -91,217.11 -2,494,151.13
Total 14,139,599.44 -17,853,757.10
b) Change in net working capital
Inventories 625,796.71 4,336,977.69
Change in current receivables, non-interest bearing 7,072,320.09 -8,315,945.23
Change in current liabilities, non-interest bearing -12,619,782.98 -26,218,519.59
Total -4,921,666.18 -30,197,487.13
PARENT COMPANY ACCOUNTS
CASH FLOW STATEMENT
109108
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
PARENT COMPANY FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
PARENT COMPANY ACCOUNTING POLICIES
1. ACCOUNTING POLICIES
Metsä Board Oyj belongs to Metsä Group, whose parent company is Metsäliitto
Cooperative. Metsäliitto Cooperative’s registered oce is in Helsinki. e
Metsä Group prepares consolidated nancial statements which are available at
the Group’s main oce at Revontulenpuisto 2 A, FIN-02100 Espoo, Finland.
Metsä Board Oyj’s nancial statements have been prepared in accordance
with Finnish Accounting Standards (FAS).
Metsä Board Plc has transactions with other companies in the Group.
ese are described in more detail in the notes to the consolidated nancial
statements in section 7.3. Transactions with related parties are based on market
prices.
FOREIGN CURRENCY TRANSACTIONS
Foreign exchange gains and losses have been booked to exchange gains/losses
under nancial income and expense. Open and actual foreign exchange dier-
ences hedging sales are recorded immediately to nancial income and expenses
in the income statement.
DERIVATIVE FINANCIAL INSTRUMENTS
e company uses derivatives only for hedging against currency, interest rate
and commodity risks. Derivatives are valued at fair value in accordance with
the alternative treatment permitted by Chapter 5, Section 2a of the Accounting
Act.
e management of nancial risks and the principles applied to derivatives are
explained in Notes 5.6 and 5.7 to the consolidated nancial statements.
e unrealised fair value of cash ow hedges in hedge accounting is
recognised in the fair value reserve of the balance sheet to the extent that they
are eective. e unrealised fair value of derivatives not in hedge accounting is
recognised in the income statement. In addition, the company has recognised
deferred tax assets and liabilities as a separate item in the income statement and
balance sheet during the nancial year.
Metsä Board Oyj applies the fair value option under Chapter 5, Section 2a
of the Accounting Act also to the other shares and holdings. Accordingly,
the company has classied its shares in Pohjolan Voima Oyj as nancial
assets at fair value through equity in accordance with IFRS 9 and other
equity instruments in nancial assets valued at fair value through prot or
loss. e principles applied in determining the fair value of shares and the
sensitivity of fair value to various valuation factors are described in Note 4.3
to the consolidated nancial statements.
SALES
Sales are calculated aer deduction of indirect sales taxes, trade discounts and
other items adjusting sales.
PENSIONS AND PENSION FUNDING
Statutory pension security is handled by pension insurance companies outside
the Group. In addition to statutory pension security, some salaried employees
have supplementary pension arrangements which are either insured at Pohjola
or are an arranged through Metsäliitto Employees’ Pension Foundation or are
anMetsäliitto Employees’ Pension Foundation or are an unfunded liability of
the company. Pension insurance premiums have been accrued to correspond to
the accrual-based wages and salaries given in the nancial statements.
LEASING
Lease payments are treated as rental expenses.
INCOME TAXES
Tax expenses in the income statement consists of taxes based on the taxable
income for the period, taxes for the previous periods and deferred tax assets and
liabilities. Deferred tax assets and liabilities are calculated on the temporary
dierences between the carrying amount and the tax base in accordance with
the tax rate issued as at the balance sheet date. Deferred taxes are calculated on
the basis of the enacted tax rate.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
e carrying values of property, plant and equipment are based on original
acquisition costs less depreciation according to plan and impairment losses.
Depreciation according to plan is based on the estimated useful life of the asset
as follows:
Buildings and constructions 20–40 years
Heavy machinery 20–40 years
Other heavy machines 15–20 years
Lightweight machinery and equipment 5–15 years
Other tangible assets 5–10 years
Depreciation is not recorded on the purchase cost of land and water.
INVENTORIES
Inventories are measured at the lower of cost or net realisable value. FIFO
principle is observed in measuring inventories or, alternatively, the weighted
average cost method. Value of nished and semi-nished goods comprises raw
materials, direct wages and salaries, depreciation and amortisation and other
direct cost as well as a reasonable share of variable and xed production over-
head cost calculated at normal level of production. Net realisable value is the
estimated selling price less the estimated cost of completion and the estimated
costs necessary to make the sale.
PROVISIONS
Contingent costs and losses that are no longer generate corresponding income
and for which the parent company is obliged or committed and whose mone-
tary value can be reasonably estimated are recognised in the income statement
in line with the nature of the expense item and in the mandatory provisions of
the balance sheet.
EUR 2020 2019
2. SALES BY REGION
Finland 70,750,494.84 44,551,062.34
Other EU-countries 674,947,752.34 701,544,734.24
Other European countries 162,720,555.65 207,031,287.84
Other countries 353,879,694.19 345,785,752.29
Total 1,262,298,497.02 1,298,912,836.71
3. EXCEPTIONAL ITEMS
Other operating income
Proceeds from liquidation of shares, 0.00 5,419,690.00
Proceeds from selling of land 6,039,731.85 5,456,174.34
6,039,731.85 10,875,864.34
Employee costs
Refund from pension -581,739.51 2,493,510.00
-581,739.51 2,493,510.00
Other operating expenses
Subsidiary merger loss 0.00 -6,109,684.85
0.00 -6,109,684.85
Exceptional items in income statement 5,457,992.34 7,259,689.49
4. OTHER OPERATING INCOME
Rental income 1,053,576.83 1,080,975.72
Service revenue 14,038,890.30 12,270,340.82
Gains on disposal 8,561,323.35 19,216,671.07
Government grants and allowances 9,884,268.49 5,388,743.69
Scrap and waste sale 93,693.78 289,697.26
Others 2,537,835.33 3,544,500.54
36,169,588.08 41,790,929.10
5. OPERATING EXPENSES
External services
Distribution costs 139,431,896.81 140,130,611.14
Other external services 45,255,643.93 50,896,021.42
184,687,540.74 191,026,632.56
Employee costs
Wages and salaries for working hours 59,481,772.98 57,849,024.96
Social security expenses
Pension expenses 14,935,467.02 11,307,166.51
Other social security expenses 21,777,803.20 24,010,174.75
96,195,043.20 93,166,366.22
Management’s salaries, wages and pension commitments are presented in Group’s Note 3.2. Management’s share-based payments are described in Group’s
Note 3.3 and other long-term fees in Group’s Note 3.4.
The average number of personnel during the financial period in the parent company 1,218 1,177
Other operating expenses
Rental and other property costs 10,839,928.55 8,882,314.90
Purchases of services 79,978,131.97 81,868,726.97
Losses on disposal of non-current assets 90,087.60 6,199,408.43
Other expenses
Voluntary social costs 2,658,151.88 2,310,950.99
Fixed energy costs 9,367,338.76 9,220,062.19
Traveling expenses 345,627.91 1,652,292.34
Insurances 2,009,099.23 2,413,653.52
Advertising and marketing expenses 1,626,306.97 2,183,325.61
Others 4,657,408.45 5,194,110.76
111,572,081.32 119,924,845.71
Fees of principal auditor
Audit fees 196,064.00 196,064.00
Auditor's opinions 760.00 2,870.00
196,824.00 198,934.00
e principal auditor is KPMG Oy Ab.
111110
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
PARENT COMPANY FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
EUR 2020 2019
6. DEPRECIATION AND IMPAIRMENT CHARGES
Planned depreciation
Intangible rights 1,641,719.87 1,852,262.64
Other intangible assets 120,150.34 225,347.22
Buildings and constructions 8,742,569.99 7,671,798.14
Machinery and equipment 39,975,101.43 38,968,190.12
Other tangible assets 762,720.69 707,460.86
Total 51,242,262.32 49,425,058.98
Change in depreciation dierence 9,066,231.37 6,020,879.19
Total depreciation 60,308,493.69 55,445,938.17
Depreciation dierence at the beginning of the financial year 138,897,065.91 113,793,981.38
Change in depreciation dierences 9,066,231.37 6,020,879.19
Transfer in Merger 0.00 19,082,205.34
Depreciation dierence at the end of the financial year 147,963,297.28 138,897,065.91
7. FINANCIAL INCOME AND EXPENSES
Income from investments in non-current assets
Dividend income
From Group companies 25,224,868.20 63,294,453.26
From others 1,980.00 1,432.32
25,226,848.20 63,295,885.58
Interest income on investments in non-current assets
From Group companies 6,331,028.39 6,905,069.36
6,331,028.39 6,905,069.36
Total income from non-current assets 31,557,876.59 70,200,954.94
Other interest and financial income
Interest income from Group companies 2,022,649.57 1,916,396.71
Other interest income 2,352.42 556.63
Other financial income 262.07 310.28
2,025,264.06 1,917,263.62
Exchange rate dierences recognised in financial income and expenses
Exchange rate dierences on sales -2,350,438.98 1,366,174.87
Exchange rate dierences on purchases 358,683.24 -76,941.19
Exchange rate dierences on financing 8,255,005.43 -6,879,538.86
6,263,249.69 -5,590,305.18
Impairment losses on investments in non-current assets 5,316.53 0.00
Interest and other financial expenses
Interest expenses for the same group companies -891,984.39 -1,781,249.49
Other interest expenses -9,387,119.08 -11,289,806.84
Other financial expenses -1,032,393.38 -2,053,188.74
Total interest expenses and other financial expenses -11,311,496.85 -15,124,245.07
Financial income and expenses total 28,540,210.02 51,403,668.31
8. INCOME TAXES
Taxes for the financial year 38,781,516.74 13,928,522.19
Taxes for previous financial years 966.71 433.95
Deferred taxes 18,243.42 498,830.23
38,800,726.87 14,427,786.37
EUR 2020 2019
9. INTANGIBLE AND TANGIBLE ASSETS
Intangible rights
Acquisition costs 1.1. 117,255,065.98 114,519,881.98
Increases 9,946,350.49 9,293,523.18
Decreases -9,707,883.45 -6,579,639.18
Transfers between items 0.00 21,300.00
Acquisition costs 31.12. 117,493,533.02 117,255,065.98
Accumulated depreciation and impairment charges 1.1. -102,976,859.65 -101,124,597.01
Accumulated depreciation of deductions and transfers -216,971.87 0.00
Depreciation and write-downs for the financial period -1,641,719.87 -1,852,262.64
Accumulated depreciation and impairment 31.12. -104,835,551.39 -102,976,859.65
Book value 31.12. 12,657,981.63 14,278,206.33
Goodwill
Acquisition costs 1.1. 24,970,634.39 24,970,634.39
Acquisition costs 31.12. 24,970,634.39 24,970,634.39
Accumulated depreciation and impairment charges 1.1. -24,970,634.39 -24,970,634.39
Accumulated depreciation and impairment 31.12. -24,970,634.39 -24,970,634.39
Book value 31.12. 0.00 0.00
Other intangible assets
Acquisition costs 1.1. 15,724,698.18 15,852,998.18
Decreases -7,846,147.26 -128,300.00
Acquisition costs 31.12. 7,878,550.92 15,724,698.18
Accumulated depreciation and impairment charges 1.1. -15,238,135.28 -15,141,088.06
Accumulated depreciation of deductions and transfers 7,846,147.26 128,300.00
Depreciation and write-downs for the financial period -120,150.34 -225,347.22
Accumulated depreciation and impairment 31.12. -7,512,138.36 -15,238,135.28
Book value 31.12. 366,412.56 486,562.90
Advance payments and work in progress
Acquisition costs 1.1. 1,383,677.21 901,832.68
Increases 45,880.00 503,144.53
Transfers between items -793,687.77 -21,300.00
Acquisition costs 31.12. 635,869.44 1,383,677.21
Intangible assets total
Acquisition costs 1.1. 159,334,075.76 131,274,712.84
Increases 9,992,230.49 9,796,667.71
Decreases -17,554,030.71 -6,707,939.18
Transfers between items -793,687.77 0.00
Acquisition costs 31.12. 150,978,587.77 159,334,075.76
Accumulated depreciation and impairment charges 1.1. -143,185,629.32 -141,236,319.46
Accumulated depreciation of deductions and transfers 7,629,175.39 128,300.00
Depreciation and write-downs for the financial year -1,761,870.21 -2,077,609.86
Accumulated depreciation and impairment charges 31.12. -137,318,324.14 -143,185,629.32
Book value 31.12. 13,660,263.63 16,148,446.44
Land and water areas
Acquisition costs 1.1. 28,976,841.96 26,511,751.58
Increases 2,681,077.36 2,302,472.96
Increase from Kemi merger 0.00 520,077.00
Decreases -375,485.28 -357,459.58
Acquisition costs 31.12. 31,282,434.04 28,976,841.96
Accumulated depreciation and impairment charges 1.1. -20.98 -20.98
Accumulated depreciation and impairment charges 31.12. -20.98 -20.98
Book value 31.12. 31,282,413.06 28,976,820.98
113112
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
PARENT COMPANY FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
EUR 2020 2019
Buildings and constructions
Acquisition costs 1.1. 295,270,714.76 282,902,966.42
Opening balance adjustment 6,458,935.50 0.00
Increases 4,690,025.74 6,061,728.59
Increase from Kemi merger 0.00 5,286,407.95
Decreases -4,550,431.22 0.00
Transfers between items 6,383,939.28 1,019,611.80
Acquisition costs 31.12. 308,253,184.06 295,270,714.76
Accumulated depreciation and impairment charges 1.1. -168,841,361.55 -161,169,563.41
Opening balance adjustment -6,458,935.50 0.00
Accumulated depreciation of deductions and transfers 4,529,540.81 0.00
Depreciation and write-downs for the financial year -8,742,569.99 -7,671,798.14
Accumulated depreciation and impairment 31.12. -179,513,326.23 -168,841,361.55
Book value 31.12. 128,739,857.83 126,429,353.21
Machinery and equipment
Acquisition costs 1.1. 1,155,859,703.19 1,085,857,469.61
Opening balance adjustment 87,438,189.37 0.00
Increases 15,911,955.47 14,471,064.30
Increase from Kemi merger 0.00 39,006,333.67
Decreases -37,256,639.55 -60,176.35
Transfers between items 18,217,475.00 16,585,011.96
Acquisition costs 31.12. 1,240,170,683.48 1,155,859,703.19
Accumulated depreciation and impairment charges 1.1. -922,669,587.92 -883,707,282.80
Opening balance adjustment -87,109,446.12 0.00
Accumulated depreciation of deductions and transfers 36,927,896.30 5,885.00
Depreciation and write-downs for the financial year -39,975,101.43 -38,968,190.12
Accumulated depreciation and impairment 31.12. -1,012,826,239.17 -922,669,587.92
Book value 31.12. 227,344,444.31 233,190,115.27
Other tangible assets
Acquisition costs 1.1. 13,752,403.75 10,955,016.63
Increases 346,120.38 1,373,597.54
Increase from Kemi merger 0.00 41,212.99
Decreases -555,452.57 0.00
Transfers between items 319,800.53 1,382,576.59
Acquisition costs 31.12. 13,862,872.09 13,752,403.75
Accumulated depreciation and impairment charges 1.1. -6,589,849.53 -5,882,388.67
Accumulated depreciation of deductions and transfers 555,452.57 0.00
Depreciation and write-downs for the financial year -762,720.69 -707,460.86
Accumulated depreciation and impairment 31.12. -6,797,117.65 -6,589,849.53
Book value 31.12. 7,065,754.44 7,162,554.22
Advance payments and work in progress
Acquisition costs 1.1. 31,410,056.94 23,167,806.23
Increases 13,359,201.66 24,382,531.92
Increase from Kemi merger 0.00 2,846,919.14
Transfers between items -24,127,527.04 -18,987,200.35
Acquisition costs 31.12. 20,641,731.56 31,410,056.94
Total tangible assets
Acquisition costs 1.1. 1,525,269,720.60 1,429,395,010.47
Opening balance adjustment 93,897,124.87 0.00
Increases 36,988,380.61 96,292,346.06
Decreases -42,738,008.62 -417,635.93
Transfers between items 793,687.77 0.00
Acquisition costs 31.12. 1,614,210,905.23 1,525,269,720.60
Accumulated depreciation and impairment charges 1.1. -1,098,100,819.98 -1,050,759,255.86
Opening balance adjustment -93,568,381.62 0.00
Accumulated depreciation of deductions and transfers 42,012,889.68 5,885.00
Depreciation and write-downs for the financial year -49,480,392.11 -47,347,449.12
Accumulated depreciation and impairment 31.12. -1,199,136,704.03 -1,098,100,819.98
Book value 31.12. 415,074,201.20 427,168,900.62
EUR 2020 2019
10. INVESTMENTS
Shares in Group companies
Acquisitions costs 1.1. 535,378,815.29 563,209,026.13
Addition from Kemi merger 0.00 168.19
Decreases 0.00 -27,830,379.03
Acquisitions costs 31.12. 535,378,815.29 535,378,815.29
Shares in participating companies
Acquisitions costs 1.1. 86,429,409.33 90,929,409.33
Decreases 0.00 -4,500,000.00
Acquisitions costs 31.12. 86,429,409.33 86,429,409.33
Other shares and holdings
Acquisitions costs 1.1. 252,435,976.80 267,411,629.23
Increases 2,240,616.00 32,697.47
Addition from Kemi merger 0.00 1,700.00
Decreases -70,452,297.19 -15,010,049.90
Acquisitions costs 31.12. 184,224,295.61 252,435,976.80
Total investments and holdings
Acquisitions costs 1.1. 874,244,201.42 921,550,064.69
Increases 2,240,616.00 34,565.66
Decreases -70,452,297.19 -47,340,428.93
Acquisitions costs 31.12. 806,032,520.23 874,244,201.42
Receivables from Group companies
Acquisitions costs 1.1. 301,618,572.70 304,923,645.95
Increases 4,571,924.10 0.00
Decreases 0.00 -3,305,073.25
Acquisitions costs 31.12. 306,190,496.80 301,618,572.70
Other receivables
Acquisitions costs 1.1. 35,222.52 35,222.52
Acquisitions costs 31.12. 35,222.52 35,222.52
Receivables total
Acquisitions costs 1.1. 301,653,795.22 304,958,868.47
Increases 4,571,924.10 0.00
Decreases 0.00 -3,305,073.25
Acquisitions costs 31.12. 306,225,719.32 301,653,795.22
Investments total
Acquisitions costs 1.1. 1,175,897,996.64 1,226,508,933.16
Increases 6,812,540.10 34,565.66
Decreases -70,452,297.19 -50,645,502.18
Acquisitions costs 31.12. 1,112,258,239.55 1,175,897,996.64
115114
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
PARENT COMPANY FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
EUR 2020 2019
11. RECEIVABLES
Non-current receivables
Receivables from group companies
Loans receivables 79,726,537.97 76,578,473.79
79,726,537.97 76,578,473.79
Total non-current receivables 79,726,537.97 76,578,473.79
Current receivables
Receivables from group companies
Accounts receivable 43,898,813.17 27,941,695.10
Loans receivables 131,520,586.04 25,915,112.11
Other receivables 1,170,305.62 1,999,146.01
Prepayments and accrued income 34,171,280.62 12,765,111.08
210,760,985.45 68,621,064.30
Receivables from participating companies
Accounts receivable 199,805.19 426,042.57
199,805.19 426,042.57
Receivables from others
Accounts receivable 118,264,583.91 138,926,647.98
Other receivables 17,934,171.78 21,802,288.77
Prepayments and accrued income 24,299,436.72 20,579,735.64
160,498,192.41 181,308,672.39
Total current receivables 371,458,983.05 250,355,779.26
Accrued income from group companies, current, specification
Derivatives 32,539,914.86 11,251,348.16
Accrued interests 1,631,365.76 1,513,762.92
34,171,280.62 12,765,111.08
Accrued income from others, current, specification
Accrued personnel costs 6,471.75 846,121.00
Energy and other taxes 12,583,236.96 13,059,069.00
Others 11,709,728.01 6,674,545.64
24,299,436.72 20,579,735.64
Total receivables 451,185,521.02 326,934,253.05
EUR 2020 2019
12. SHAREHOLDERS’ EQUITY
Restricted equity
Share capital 1.1.
A-shares 51,922,153.80 55,486,107.56
B-shares 505,959,386.60 502,395,432.84
557,881,540.40 557,881,540.40
Conversion of A shares into B shares
A-shares -314,624.49 -3,563,953.76
B-shares 314,624.49 3,563,953.76
0.00 0.00
Share capital 31.12.
A-shares 51,607,529.31 51,922,153.80
B-shares 506,274,011.09 505,959,386.60
Total 557,881,540.40 557,881,540.40
Fair value reserve 1.1. 171,598,515.80 182,839,879.60
Changes -37,224,495.44 -11,241,363.80
Fair value reserve 31.12. 134,374,020.36 171,598,515.80
692,255,560.76 729,480,056.20
Unrestricted equity
Reserve for invested unrestricted equity 1.1. 317,293,305.61 384,840,727.35
Return of invested unrestricted equity -49,771,784.44 -67,547,421.74
Reserve for invested unrestricted equity 31.12. 267,521,521.17 317,293,305.61
Retained earnings 1.1. 227,819,739.53 145,438,654.12
Dividends -35,551,274.60 -35,551,274.60
Profit for the financial period 180,456,182.13 117,932,360.01
Retained earnings 31.12. 372,724,647.06 227,819,739.53
640,246,168.23 545,113,045.14
Equity total 31.12 1,332,501,728.99 1,274,593,101.34
Distributable funds
Reserve for invested unrestricted equity 267,521,521.17 317,293,305.61
Profit from previous financial periods 192,268,464.93 109,887,379.52
Profit for the financial period 180,456,182.13 117,932,360.01
Distributable funds 640,246,168.23 545,113,045.14
117116
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
PARENT COMPANY FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
EUR 2020 2019
13. PROVISIONS
Provisions for pension
1.1. 843,168.00 889,819.00
Decrease 0.00 -46,651.00
31.12. 843,168.00 843,168.00
Provisions for unemployment pension cost
1.1. 242,063.20 636,556.73
Decrease -45,977.11 -394,493.53
31.12. 196,086.09 242,063.20
Provisions for environmental obligations
1.1. 3,482,981.58 5,535,988.18
Increase 29,091.00 29,091.00
Decrease -74,331.00 -82,097.60
Cancellation of unused provision 0.00 -2,000,000.00
31.12. 3,437,741.58 3,482,981.58
Total provisions
1.1. 4,568,212.78 7,062,363.91
Increase 29,091.00 29,091.00
Decrease -120,308.11 -2,523,242.13
31.12. 4,476,995.67 4,568,212.78
14. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets
Mandatory provisions 895,399.14 913,642.55
895,399.14 913,642.55
Deferred tax liabilities
Valuation of Pohjolan Voima Oyj shares at fair value 28,407,818.26 42,464,818.26
Financial instruments 5,185,630.30 462,139.88
33,593,448.56 42,926,958.14
Deferred tax assets (+) and liabilities (-), net -32,698,049.42 -42,013,315.59
e deferred tax liability for accrued depreciation in 2020 was EUR 29.6 million (27.8).
15. NON-CURRENT LIABILITIES
Liabilities to group companies
Accrued liabilities
Derivatives 3,361,597.67 3,093,184.14
3,361,597.67 3,093,184.14
Other liabilities
Bonds 249,433,483.02 249,349,299.01
Loans from financial institutions 183,225,000.00 150,000,000.00
Deferred tax liabilities 32,698,049.43 42,013,315.59
Advance payments 1,515,404.91 1,515,404.94
466,871,937.36 442,878,019.54
Non-current liabilities total 470,233,535.03 445,971,203.68
BOND AND DEBENTURES
Bond Nominal value Interest % 2020 2019
2017–2027 250,000,000.00 2.75 249,433,483.02 249,349,299.01
250,000,000.00 249,433,483.02 249,349,299.01
In 2020, Metsä Board signed a EUR 100 million loan agreement guaranteed by Finnvera and a EUR 125 million loan agreement from the EIB for Husum’s
investments.
NON-CURRENT LIABILITIES AND REPAYMENT
Liabilities to
group companies Bonds
Loans from
financial
institutions
Other
loans Total
2021 0.00
2022 0.00
2023 0.00
2024 0.00
2025 183,225,000.00 183,225,000.00
2026– 249,433,483.02 0.00 249,433,483.02
Total 0.00 249,433,483.02 183,225,000.00 0.00 432,658,483.02
EUR 2020 2019
16. CURRENT LIABILITIES
Liabilities from Group companies
Accounts payable 44,124,848.19 44,212,846.86
Accruals and deferred income 5,738,187.10 7,731,407.59
49,863,035.29 51,944,254.45
Liabilities from participating interests
Accounts payable 379,727.97 415,389.81
379,727.97 415,389.81
Liabilities from other
Premium pension loans 0.00 23,348,214.32
Advance payment 1,756,007.02 2,870,361.05
Accounts payable 119,759,541.04 134,113,280.45
Other liabilities 6,612,960.98 6,328,756.57
Accruals and deferred income 55,072,138.76 57,881,744.87
183,200,647.80 224,542,357.26
Total current liabilities 233,443,411.06 276,902,001.52
Accruals and deferred income to group companies, current, specification
Derivatives 4,749,964.04 6,938,840.59
Others 988,223.06 792,567.00
5,738,187.10 7,731,407.59
Accruals and deferred income, current, external
Personnel expenses 24,385,420.58 23,730,052.16
Accruals of purchases 7,998,028.05 9,323,139.88
Discounts 15,023,668.87 16,229,184.80
Interests 2,093,172.00 2,127,990.43
Others 5,571,849.26 6,471,377.60
55,072,138.76 57,881,744.87
119118
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
PARENT COMPANY FINANCIAL STATEMENTS
|
METSÄ BOARD ANNUAL REPORT 2020
17. FINANCIAL INSTRUMENTS
FINANCIAL DERIVATIVES 2020
Nominal value Fair value Fair value
EUR Derivative assets Derivative liabilities Total
Fair value
through
profit and loss
Fair value through
fair value reserve
Interest rate swaps 100,000,000.00 3,361,597.67 -3,361,597.67 0.00 -3,361,597.67
Total interest rate derivatives 100,000,000.00 3,361,597.67 -3,361,597.67 0.00 -3,361,597.67
Currency forward agreements 959,055,983.54 28,982,108.06 4,588,914.69 24,393,193.37 -479,508.43 24,872,701.80
Currency option agreements 0.00 0.00 0.00 0.00 0.00 0.00
Currency derivates total 959,055,983.54 28,982,108.06 4,588,914.69 24,393,193.37 -479,508.43 24,872,701.80
Electricity derivatives 1,010,304.05 29,500.95 39,025.00 -9,524.05 0.00 -9,524.05
Oil derivatives 12,278,325.00 1,322,834.33 122,024.35 1,200,809.98 0.00 1,200,809.98
Other commodity derivatives 7,181,221.20 2,205,471.52 0.00 2,205,471.52 0.00 2,205,471.52
Commodity derivatives 20,469,850.25 3,557,806.80 161,049.35 3,396,757.45 0.00 3,396,757.45
Derivatives total 1,079,525,833.79 32,539,914.86 8,111,561.71 24,428,353.15 -479,508.43 24,907,861.58
FINANCIAL DERIVATIVES 2019
Nominal value Fair value Fair value
EUR Derivative assets Derivative liabilities Total
Fair value through
profit and loss
Fair value through
fair value reserve
Interest rate swaps 100,000,000.00 3,093,184.14 -3,093,184.14 0.00 -3,093,184.14
Total interest rate derivatives 100,000,000.00 3,093,184.14 -3,093,184.14 0.00 -3,093,184.14
Currency forward agreements 959,922,102.68 10,311,344.00 4,703,492.00 5,607,852.00 439,059.00 5,168,793.00
Currency option agreements 480,297,808.00 242,797.50 98,446.98 144,350.52 0.00 144,350.52
Currency derivates total 1,440,219,910.68 10,554,141.50 4,801,938.98 5,752,202.52 439,059.00 5,313,143.52
Electricity derivatives 4,172,392.45 170,926.48 639,485.50 -468,559.02 0.00 -468,559.02
Oil derivatives 7,611,085.00 457,860.61 489,733.51 -31,872.90 0.00 -31,872.90
Other commodity derivatives 7,396,908.00 68,419.57 1,007,682.60 -939,263.03 0.00 -939,263.03
Commodity derivatives 19,180,385.45 697,206.66 2,136,901.61 -1,439,694.95 0.00 -1,439,694.95
Derivatives total 1,559,400,296.13 11,251,348.16 10,032,024.73 1,219,323.43 439,059.00 780,264.43
All derivative agreements of Metsä Board Oyj have been entered into for hedging purpose, and cash ow hedge accounting according to IFRS 9 has been applied
in major part of the agreements within IFRS nancial statements. Only the part of currency derivatives designated as hedges of accounts receivables and accounts
payables is not directed to hedge accounting. Interest rate derivatives are interest rate swaps maturing in 1–5 years and entered into to hedge the oating rate interest
payments. Currency derivatives contracts concluded to hedge currency cash ows mature fully during 2021. Commodity derivatives are electricity forwards, natural
gas forwards, propane forwards and gasoil and heavy fuel oil forwards concluded to hedge the cash ows arising from purchases of these commodities. Commodity
forwards mature fully during 2021. A more detailed description of nancial risk management and the principles applied to derivative contracts is included in note
5.6 and 5.7 of the consolidated Group accounts.
THE FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES 2020
EUR Level 1 Level 2 Level 3 Total
Financial assets at fair value
Other shares and holdings 184,224,295.61 184,224,295.61
Derivative financial assets 2,234,972.47 30,304,942.39 32,539,914.86
Financial liabilities measured at fair value
Derivative financial liabilities 39,025.14 8,072,536.57 8,111,561.71
THE FAIR VALUE HIERARCHY OF FINANCIAL ASSETS AND LIABILITIES 2019
EUR Level 1 Level 2 Level 3 Total
Financial assets at fair value
Other shares and holdings 252,435,976.80 252,435,976.80
Derivative financial assets 697,206.66 10,554,141.50 11,251,348.16
Financial liabilities measured at fair value
Derivative financial liabilities 1,187,093.33 8,844,931.40 10,032,024.73
e principles applied to classication of nancial assets and liabilities valued at fair value are described in Notes 5.6 and 5.7 of the Metsä Board consolidated
nancial statements.
18. DISPUTES, LEGAL PROCEEDINGS AND COMMITMENTS
DISPUTES AND LEGAL PROCEEDINGS
Disputes are presented in Note 8.1 of the consolidated nancial statements.
COMMITMENTS AND CONTINGENCIES
EUR 2020 2019
For own liabilities
Liabilities secured by pledges
Pension premium loans 0.00 6,785,714.32
Pledges granted 0.00 30,615,259.99
Corporate mortgages
Liabilities secured by mortgages
Pension premium loans 0.00 17,312,500.00
Real estate mortgages 192,779,000.00 232,779,000.00
For aliated companies
Guarantees 3,455,798.00 9,431,119.00
For associated and joint ventures
Guarantees 78,815.00 95,704.00
Leasing commitments
Payments due in following 12 months 1,579,013.73 1,286,910.48
Payments due later than 1 year 5,334,441.43 4,699,743.88
Total
Pledged assets 0.00 30,615,259.99
Real estate mortgages 192,779,000.00 232,779,000.00
Guarantees 3,534,613.00 9,526,823.00
Leasing commitments 6,913,455.16 5,986,654.36
Total commitments 203,227,068.16 278,907,737.35
19. SHARES AND HOLDINGS
Shares and holdings are presented in Note 7.2. of consolidated nancial statements.
121120
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
AUDITOR’S REPORT
|
METSÄ BOARD ANNUAL REPORT 2020
FINANCIAL
DEVELOPMENT
THE BOARD’S PROPOSAL FOR THE DISTRIBUTION OF FUNDS
e distributable funds of the company are EUR 640,246,168.23 of which retained earnings constitute EUR 372,724,647.06
and prot for the period EUR 180,456,182.13.
e Board of Directors proposes the following to the Annual General Meeting regarding the distribution of funds:
Dividend of EUR 0.10 per share be paid, or in total 35,551,274.60
Capital distribution of EUR 0.16 per share from the invested
unrestricted equity fund be paid, or in total
56,882,039.36
To be left in the unrestricted shareholders' equity 547,812,854.27
Distributable funds of the company 640,246,168.23
e Board of Directors proposes that the dividend and equity repayment will be paid on 7th April, 2021.
No material changes have been taken place in respect of the company’s nancial position aer the balance sheet date.
e liquidity of the company is good, and in the opinion of the Board of Directors, the proposed prot distribution would
not compromise the liquidity of the company.
Espoo 10th February 2021
Ilkka Hämälä Hannu Anttila Kirsi Komi
Kai Korhonen Liisa Leino Jussi Linnaranta
Jukka Moisio Timo Saukkonen Veli Sundbäck
Mika Joukio
CEO
AUDITOR’S REPORT
TO THE ANNUAL GENERAL MEETING OF METSÄ BOARD CORPORATION
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
We have audited the nancial statements of Metsä Board Corporation (business
identity code 0635366-7) for the year ended 31 December, 2020. e nancial
statements comprise the consolidated balance sheet, statement of comprehen-
sive income, statement of changes in equity, statement of cash ows and notes,
including a summary of signicant accounting policies, as well as the parent
company’s balance sheet, income statement, statement of cash ows and notes.
In our opinion
• the consolidated nancial statements give a true and fair view of the group’s
nancial performance, nancial position and cash ows in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU
• the nancial statements give a true and fair view of the parent company’s
nancial performance and nancial position in accordance with the laws
and regulations governing the preparation of nancial statements in Finland
and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit
Committee.
BASIS FOR OPINION
We conducted our audit in accordance with good auditing practice in Finland.
Our responsibilities under good auditing practice are further described in the
Auditor’s Responsibilities for the Audit of the Financial Statements section of
our report.
We are independent of the parent company and of the group companies in
accordance with the ethical requirements that are applicable in Finland and are
relevant to our audit, and we have fullled our other ethical responsibilities in
accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we
have provided to the parent company and group companies are in compliance
with laws and regulations applicable in Finland regarding these services, and we
have not provided any prohibited non-audit services referred to in Article 5(1)
of regulation (EU) 537/2014. e non-audit services that we have provided have
been disclosed in note 2.4 to the consolidated nancial statements.
We believe that the audit evidence we have obtained is sucient and appro-
priate to provide a basis for our opinion.
MATERIALITY
e scope of our audit was inuenced by our application of materiality. e
materiality is determined based on our professional judgement and is used to
determine the nature, timing and extent of our audit procedures and to evaluate
the eect of identied misstatements on the nancial statements as a whole.
e level of materiality we set is based on our assessment of the magnitude of
misstatements that, individually or in aggregate, could reasonably be expected
to have inuence on the economic decisions of the users of the nancial
statements. We have also taken into account misstatements and/or possible
misstatements that in our opinion are material for qualitative reasons for the
users of the nancial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were
of most signicance in our audit of the nancial statements of the current
period. ese matters were addressed in the context of our audit of the nancial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. e signicant risks of material
misstatement referred to in the EU Regulation No 537/2014 point (c) of Article
10(2) are included in the description of key audit matters below.
THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
VALUATION OF TANGIBLE AND INTANGIBLE ASSETS (REFER TO NOTES 4.1 AND 4.2 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
Tangible and intangible assets total EUR 844 million and represent 37
percent of the consolidated total assets. Total investments amounted to EUR
166 million.
Tangible and intangible assets are allocated to cash-generating units
and tested for impairment annually or more frequently should there be an
indication of impairment.
Determining the key assumptions used in the cash ow forecasts underly-
ing the impairment tests requires management judgment.
Due to the signicant carrying values involved, valuation of tangible and
intangible assets is determined a key audit matter.
Our audit procedures included evaluation of the appropriateness of the
capitalization and depreciation principles applied.
We also assessed the key assumptions used in the impairment tests by ref-
erence to the budgets approved by the parent company’s Board of Directors,
data external to the Group and our own views. We involved KPMG valuation
specialists when assessing the mathematical accuracy of the calculations,
as well as comparing the assumptions to externally available market and
industry data.
In addition, we considered the appropriateness of the disclosures regard-
ing the tangible and intangible assets.
Auditor’s Report
123122
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCE
AUDITOR’S REPORT
|
METSÄ BOARD ANNUAL REPORT 2020
We have also addressed the risk of management override of internal controls.
is includes consideration of whether there was evidence of management bias
that represented a risk of material misstatement due to fraud.
RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THE
MANAGING DIRECTOR FOR THE FINANCIAL STATEMENTS
e Board of Directors and the Managing Director are responsible for the
preparation of consolidated nancial statements that give a true and fair view
in accordance with International Financial Reporting Standards (IFRS) as
adopted by the EU, and of nancial statements that give a true and fair view in
accordance with the laws and regulations governing the preparation of nancial
statements in Finland and comply with statutory requirements. e Board of
Directors and the Managing Director are also responsible for such internal
control as they determine is necessary to enable the preparation of nancial
statements that are free from material misstatement, whether due to fraud or
error.
In preparing the nancial statements, the Board of Directors and the Manag-
ing Director are responsible for assessing the parent company’s and the group’s
ability to continue as a going concern, disclosing, as applicable, matters relating
to the going concern and using the going concern basis of accounting. e
nancial statements are prepared using the going concern basis of accounting
unless there is an intention to liquidate the parent company or the group or
cease operations, or there is no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE
AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance on whether the nancial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit con-
ducted in accordance with good auditing practice will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
VALUATION OF INVENTORIES (REFER TO NOTE 4.4 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
Inventory management, stocktaking routines and pricing of inventories are
key factors in the valuation of inventories. e Group’s carrying value of
inventories was EUR 360 million at the end of the nancial year.
e valuation of inventories involves management estimates in relation to
potentially obsolete inventory, as well as to uctuations in the market prices
of nished goods.
e valuation of inventories has a signicant impact on the prot and loss
account and therefore it is determined as a key audit matter.
We evaluated the appropriateness of the accounting policies by reference
to IFRS standards, as well as the functionality of the key IT systems of
inventory management.
We tested the controls over inventory management, accuracy of inventory
amounts and valuation of inventories, as well as performed substantive audit
procedures relating to the valuation of inventories to test the accuracy of
inventory valuation. We also followed the execution of certain stocktaking
routines during the nancial year.
FINANCIAL CONTRACTS AND HEDGING INSTRUMENTS
(REFER TO NOTES 5.5, 5.6 AND 5.7 TO THE CONSOLIDATED FINANCIAL STATEMENTS)
e nancial liabilities amount to EUR 452 million, accounting for 20 per-
cent of the consolidated balance sheet. In addition, the Group has o-balance
sheet committed credit facility agreements amounting to EUR 392 million.
e Group hedges nancial risks with interest rate and foreign currency
derivatives and their nominal values amounted to EUR 1 059 million at the
end of the nancial year.
Due to the signicance of the nancial and derivative contracts and large
number of transactions, the nancial contracts and hedging instruments are
determined as a key audit matter.
Our audit procedures included evaluation of the recognition and meas-
urement principles applied to nancial instruments for appropriateness in
relation to IFRS requirements, as well as testing of controls over the accuracy
and valuation of nancial instruments.
As part of our year-end audit procedures we tested the appropriateness
of valuations by using various analysis, as well as selecting transactions for
testing on a sample basis.
In addition, we evaluated the adequacy of the disclosures relating to
nancial instruments.
CONTROLS OVER FINANCIAL REPORTING AND RELATED IT SYSTEMS
e IT control environment relating to the nancial reporting process and
the application controls of individual IT systems have an impact on the
selected audit approach.
As the consolidated nancial statements are based on extensive number
of data ows from multiple IT systems, consequently the nancial reporting
control environment is determined as a key audit matter.
Our audit procedures included evaluation of the nancial reporting process
and related control environment, as well as testing of the eectiveness of
controls including general IT controls. Our audit procedures focused on
testing the reconciliation and approval controls as well as on evaluating the
administration of access rights.
Our audit procedures extensively consisted of several substantive proce-
dures as well as data analysis relating to the most signicant balances on the
income statement and on the balance sheet.
are considered material if, individually or in aggregate, they could reasonably be
expected to inuence the economic decisions of users taken on the basis of the
nancial statements.
As part of an audit in accordance with good auditing practice, we exercise
professional judgment and maintain professional scepticism throughout the
audit. We also:
• Identify and assess the risks of material misstatement of the nancial state-
ments, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sucient and
appropriate to provide a basis for our opinion. e risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the eectiveness of the parent
company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonable-
ness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Man-
aging Director’s use of the going concern basis of accounting and based on
the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast signicant doubt on the parent company’s
or the group’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the nancial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the parent company or the
group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the nancial
statements, including the disclosures, and whether the nancial statements
represent the underlying transactions and events so that the nancial
statements give a true and fair view.
• Obtain sucient appropriate audit evidence regarding the nancial infor-
mation of the entities or business activities within the group to express an
opinion on the consolidated nancial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and signicant audit nd-
ings, including any signicant deciencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we
have complied with relevant ethical requirements regarding independence
and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we
determine those matters that were of most signicance in the audit of the nan-
cial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the
public interest benets of such communication.
OTHER REPORTING REQUIREMENTS
INFORMATION ON OUR AUDIT ENGAGEMENT
We were rst appointed as auditors by the Annual General Meeting on 28
March 2012 and our appointment represents a total period of uninterrupted
engagement of 9 years.
OTHER INFORMATION
e Board of Directors and the Managing Director are responsible for the other
information. e other information comprises the report of the Board of Direc-
tors and the information included in the Annual Report but does not include
the nancial statements and our auditor’s report thereon. We have obtained the
report of the Board of Directors prior to the date of this auditor’s report, and
the Annual Report is expected to be made available to us aer that date. Our
opinion on the nancial statements does not cover the other information.
In connection with our audit of the nancial statements, our responsibility
is to read the other information identied above and, in doing so, consider
whether the other information is materially inconsistent with the nancial
statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. With respect to the report of the Board of Directors,
our responsibility also includes considering whether the report of the Board
of Directors has been prepared in accordance with the applicable laws and
regulations.
In our opinion, the information in the report of the Board of Directors is
consistent with the information in the nancial statements and the report of the
Board of Directors has been prepared in accordance with the applicable laws
and regulations.
If, based on the work we have performed on the other information that we
obtained prior to the date of this auditor’s report, we conclude that there is a
material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
OTHER OPINIONS
We support that the nancial statements should be adopted. e proposal by
the Board of Directors regarding the treatment of distributable funds is in
compliance with the Limited Liability Companies Act. We support that the
Board of Directors of the parent company and the Managing Director should be
discharged from liability for the nancial period audited by us.
Helsinki, February 11, 2021
KPMG Oy Ab
Kirsi Jantunen
Authorized Public Accountant
125124
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
1 2 3 4 5 6 7 8 9 10 11 12
80
60
40
20
0
16 17 18 19 2016 17 18 19 2016 17 18 19 20 16 17 18 19 20
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
SHARES AND SHAREHOLDERS
|
METSÄ BOARD ANNUAL REPORT 2020
SHARES AND SHAREHOLDERS
METSÄ BOARD’S SHARES
Metsä Board’s shares are listed on the Nasdaq
Helsinki. On 31 December 2020, the company’s
share capital was EUR 557,881,540.40.
Metsä Board has two series of shares. At the
end of 2020, there were 32,887,151 A shares and
322,625,595 B shares.
Each A share entitles its holder to twenty (20)
votes at a General Meeting of Shareholders, and
each B share entitles the holder to one (1) vote. All
shares carry the same right to receive a dividend.
Metsä Board’s A shares can be converted to B
shares if a shareholder or a representative of the
nominee registered shares makes a written request
for the conversion to the company. In 2020, a total
of 200,496 Metsä Board Corporation’s A shares
were converted to B shares.
TRADING OF SHARES IN 2020
e shares of Metsä Board are listed on the Nasdaq
Helsinki. e trading ID of the B share is METSB
and the ISIN code FI0009000665. A share trading
ID is METSA and ISIN code FI0009000640.
At the end of the nancial year, the price for B
share on Nasdaq Helsinki was EUR 8.62 (6.00).
e highest price for the B share in 2020 was EUR
8.79 (6.65) and the lowest was EUR 4.47 (3.86). At
the end of the period, the price for Metsä Board’s A
share on Nasdaq Helsinki was EUR 8.64 (6.14). e
highest price in 2020 was EUR 8.80 (7.98) and the
lowest was EUR 4.80 (5.46).
In 2020, the average daily trading volumes of
the B and A shares on the Nasdaq Helsinki were
616,002 shares and 6,980 shares, respectively. e
total trading volumes of the B and A shares were
EUR 950 million and EUR 12 million, respectively.
SHAREHOLDERS
At the end of 2020, Metsä Board had 7,426
registered shareholders of A shares and 48,165 of
B shares. During the review period, Metsä Board
received a notication of major holdings according
to which Metsäliitto Cooperative’s combined share
of votes in Metsä Board Corporation exceeded
the limit of two-thirds (2/3). At the end of 2020,
Metsäliitto Cooperative owned 48% (46) of the
shares, and the voting rights conferred by these
shares totalled 67% (66). Foreign and nominee-reg-
istered investors held 16% (15) of the shares. e
company does not hold any treasury shares.
BASIC INFORMATION ON METSÄ BOARD’S SHARES
Metsä Board’s A share Metsä Board’s B share
Listing Nasdaq Helsinki Nasdaq Helsinki
Date of listing 2 January 1987 2 January 1987
Market cap segment Large Cap Large Cap
Ticker symbol METSA METSB
ISIN code FI0009000640 FI0009000665
Reuters code METSA.HE METSB.HE
Bloomberg code METSA FH METSB FH
Number of shares 31 Dec 2020 32,887,151 322,625,595
TRADING ON THE NASDAQ HELSINKI IN 2020 (2019)
Metsä Board’s A share Metsä Board’s B share
Closing price on 31 December, EUR 8.64 (6,14) 8.62 (6.00)
Lowest price, EUR 4.80 (5,46) 4.47 (3.86)
Highest price, EUR 8.80 (7,98) 8.79 (6.65)
Average price, EUR 6.88 (6.56) 6.12 (5.26)
Average daily trading volume, no. of shares 6,980 (2,778) 616,002 (880,683)
Total trading volume, no. of shares 1,758,863 (694,519) 155,232,570 (220,170,829)
Market capitalisation, EUR million 300 (203) 2,800 (1,934)
SHARE PRICE DEVELOPMENT 2020
Shares and shareholders
MAJOR SHAREHOLDERS 31 DEC 2020,
1)
A series B series
Total shares
Votes
Shareholders No. of shares No. of shares No. of shares % %
1 Metsäliitto Cooperative 25,767,605 145,452,320 171,219,925 48.16 67.4 0
2 Varma Mutual Pension Insurance Company 2,203,544 15,041,485 17,245,029 4.85 6.03
3 Ilmarinen Mutual Pension Insurance 1 250 000 8 677 409 9 927 409 2,79 3,44
4 Etola Erkki Olavi 0 6 500 000 6 500 000 1.83 0.66
5 Elo Mutual Pension Insurance Company 0 4,089,094 4,089,094 1.15 0.42
6 The State Pension Fund 0 3 215 617 3 215 617 0,90 0.33
7 Evli Finnish Small Cap Fund 0 2,464,00 2,464,00 0.69 0.25
8 OP-Finland 0 2,115,998 2,115,998 0.60 0.22
9 Danske Invest Finnish Equity Fund 0 1,188,295 1,188,295 0.33 0.12
10 Maa- ja Metsätaloustuottajain Keskusliitto MTK ry 619,743 491,581 1,111,324 0.31 1.31
11 OP-Finland Small Firms Fund 0 1,074,294 1,074,294 0.30 0.11
12 Veritas Pension Insurance Company Ltd. 0 892,555 892,555 0.25 0.09
13 Säästöpankki Kotimaa Mutual Fund 0 757,600 757,600 0.21 0.08
14 Aktia Capital Mutual Fund 0 754,841 754 841 0,21 0.08
15 OP-Henkivakuutus Ltd. 0 753,345 753,345 0.21 0.08
16 Etola Markus Eeriki 0 750,000 750,000 0.21 0.08
17 Etola Mikael Kristian 0 630,000 630,000 0.18 0.06
18 Nordea Pro Finland Fund 0 624,225 624,225 0.18 0.06
19 Kirkon Eläkerahasto 0 617,998 617,998 0.17 0.06
20 Seppälä Tommi Kalervo 0 600,000 600,000 0.17 0.06
1)
Shareholders in the book entry system
METSÄ BOARD A SHARE
Number of shares
Number of
Shareholders % Number of shares %
1–10 966 13.01 5354 0.02
11–100 2,845 38.31 152,339 0.46
101–1.000 3,067 41.30 1,177,086 3.58
1.001–10.000 522 7. 0 3 1,233,608 3.75
10.001–100.000 21 0.28 370,182 1.13
100.001+ 5 0.07 29,948,582 91.07
Total 7,426 100 32,887,151 100
METSÄ BOARD B SHARE
Number of shares
Number of
Shareholders % Number of shares %
1–10 3,025 6.28 20,097 0.01
11–100 13,408 2 7.0 4 706,483 0.22
101–1.000 21,740 45.14 87,22,648 2.70
1.001–10.000 9,002 18.69 25,224,724 7.8 2
10.001–100.000 882 1.83 20,440,660 6.34
100.001+ 108 0.22 267,510,983 82.92
Total 100 322,625,595 100
DIVIDEND
EUR
Dividend yield, %
SHAREHOLDER’S
EQUITY PER SHARE
EUR
EARNINGS
PER SHARE
EUR
DIVIDEND/
EARNINGS
%
0.30
0.25
0.20
0.15
0.10
0.05
0
4.0
3.0
2.0
1.0
0
0.6
0.5
0.4
0.3
0.2
0.1
0
Source: Euroland
9.0
8.0
7.0
6.0
5.0
4.0
5.0
4.0
3.0
2.0
1.0
0.0
EUR Million shares
Metsä Board A
Metsä Board B
OMX Helsinki Portfolio Index (scaled)
Trading volume
DONEDONE
6.0
5.0
4.0
3.0
2.0
1.0
0
127126
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
SHARES AND SHAREHOLDERS
|
METSÄ BOARD ANNUAL REPORT 2020
SHAREHOLDINGS OF THE MEMBERS OF THE BOARD OF DIRECTORS
AND CEO ON 31 DECEMBER 2020
Holding
Ilkka Hämälä Chairman of the Board of Directors 337,648 B shares
Jussi Linnaranta Vice Chairman of the Board of Directors 20,939 B shares
Hannu Anttila Member of the Board of Directors 140,619 B shares
Kirsi Komi Member of the Board of Directors 78,287 B shares
Kai Korhonen Member of the Board of Directors 215,057 B shares
Liisa Leino Member of the Board of Directors 182,932 B shares
Jukka Moisio Member of the Board of Directors 5,275 B shares
Timo Saukkonen Member of the Board of Directors 9,875 B shares
Veli Sundbäck Member of the Board of Directors 67,952 B shares
Mika Joukio CEO 354,025 B shares
Share holdings of the Corporate Management Team members are presented on page 137.
CHANGES IN SHARE CAPITAL AND NUMBER OF SHARES 1 JANURY 2004–31 DECEMBER
2020
Number of shares
Share capital,
EUR million
2003 Share capital 31 December 2003 178,999,425 304.3
2004 Rights issue 148,633,415 252.7
Rights issue 532,772 0.9
Share capital 31 December 2004 328,165,612 557.9
2005–2014 No changes
2015 Rights issue, no changes to share capital 27,347,134
Share capital 31 December 2015 355,512,746 557.9
2016–2020 No changes
Share capital 31 December 2020 355,512,746 557.9
PRICE DEVELOPMENT AND NUMBER OF SHARES
2020 2019 2018 2017 2016
Adjusted share prices, EUR
A share high 8.80 7.98 10.10 7.28 6.93
low 4.80 5.46 6.00 5.43 4.80
closing 8.64 6.14 6.14 7. 1 3 6.75
average 6.88 6.56 8.36 6.35 5.85
B share high 8.79 6.65 10.30 7.36 7.15
low 4.47 3.86 4.98 5.34 4.23
closing 8.62 6.00 5.12 7.15 6.80
average 6.12 5.26 7.95 6.37 5.34
Trading volume at Nasdaq Helsinki, number of shares
A share 1,758,683 694,519 2,227,788 1,491,973 776,677
% of total number of shares 5.3 2.1 6.3 4.2 2.2
B share 155,232,570 220,170,829 180,834,626 172,937,862 185,712,500
% of average number of shares 48.1 68.3 56.5 54.1 58.1
Number of shares at year end
A share 32,887,151 33,087,647 35,358,794 35,886,682 35,895,651
B share 322,625,595 322,425,099 320,153,952 319,626,064 319,617,095
Total 355,512,746 355,512,746 355,512,746 355,512,746 355,512,746
Number of shares at year end, adjusted for 2015 rights issue. 355,512,746 355,512,746 355,512,746 355,512,746 355,512,746
Market capitalisation at year end, EUR million 3,065.2 2,136.1 1,856.3 2,539.6 2,415.7
Number of shareholders, B shares 48,165 50,420 45,341 43,268 42,011
KEY FIGURES
EUR million 2020 2019 2018 2017 2016
Earnings per share
Result before tax 212.3 165.6 224.2 170.8 101.6
– Income taxes -42.2 -21.0 -20.8 -20.3 -11.3
= Result for the period 170.1 144.6 203.4 150.5 90.4
– Average number of shares 355,512,746 355,512,746 355,512,746 355,512,746 355,512,746
Earnings per share, basic and diluted, EUR 0.48 0.41 0.57 0.42 0.25
Shareholders’ equity per share, EUR 3.89 3.76 3.72 3.28 2.96
Dividend per share, EUR 0.26
,1)
0.24 0.29 0.21 0.19
Payout ratio, % 54.3 58.5 50.9 50.0 76.0
Metsä Board shares have no nominal value.
Dividend yield, % of closing price
A share 3.0
,1)
3.9 4.7 2.9 2.8
B share 3.0
,1)
4.0 5.7 2.9 2.8
Price/earning ratio (P/E ratio)
A share 18.1 15.0 10.8 17.0 2 7.0
B share 18.0 14.6 9.0 17.0 2 7. 2
Price to book value (P/BV), %
A share 222.0 163.3 165.1 217.4 228.0
B share 221.5 159.6 1 3 7.6 217.8 229.7
1)
The Board of Directors has proposed that a dividend of EUR 0.10 per share be distributed for the 2020 financial year, and further that EUR 0.16 per share be distributed from the unrestricted equity
reserve.
IMPACT OF CHANGE IN CONTROL
Some of Metsä Board’s shareholder agreements
concerning resource and associated companies
include provisions under which Metsä Board must
oer its shares in an associated company for sale
to the other shareholders in the case of a change
of control of Metsä Board. Of these agreements,
pursuant to the shareholders agreement of Metsä
Fibre Oy, Metsä Fibre’s shareholders should oer
their shares for sale to the other shareholders in the
case of a change of control. A decrease in the voting
rights of Metsäliitto Cooperative in Metsä Board
to below 50% would not, however, obligate
Metsä Board to oer its shares in Metsä Fibre Oy
for sale.
BOARD OF DIRECTORS’ AUTHORITY TO
ISSUE SHARES
e Board of Directors is authorised to decide on
an issue of shares and any special rights with an
entitlement to shares as referred to in Chapter 10,
section 1 of the Limited Liability Companies Act as
follows.
e maximum number of shares that can
be issued on the basis of the authorisation is
35,000,000 B shares, which corresponds to
approximately 10% of all shares in the company.
e Board of Directors decides on all terms and
conditions applicable to the issue of shares and the
special rights with an entitlement to shares. e
authorisation applies to both an issue of new shares
and the assignment of own shares. e issue of
shares and any special rights with an entitlement to
shares may occur in departure from a shareholder’s
subscription right (private placement).
e authorisation is valid until 23 March 2022.
e authorisation was fully unused on 31 December
2020.
DIVIDEND POLICY
Metsä Board aims to distribute at least 50% of
the result for the nancial period as dividend
every year. e Board of Directors proposes that
a dividend of EUR 0.10 per share and a capital
distribution of EUR 0.16 per share be paid for the
2020 nancial period. e proposed dividend and
capital distribution, totalling EUR 0.26 per share,
corresponds to 54% of the result per share for 2020.
SPLIT OF SHAREHOLDINGS AND VOTING RIGHTS, 31 DECEMBER 2020
SPLIT OF
SHAREHOLDINGS
%
SPLIT OF
VOTING RIGHTS
%
Metsäliitto Cooperative 48
Finnish institutions 18
Finnish private investors 16
Foreign owners 18
Metsäliitto Cooperative 67
Finnish institutions 12
Finnish private investors 15
Foreign owners 6
DONE
129128
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
KEY FIGURES
|
METSÄ BOARD ANNUAL REPORT 2020
CALCULATION OF KEY RATIOS
ALTERNATIVE PERFORMANCE MEASURES
Key figure
Definition
Justification for the use of the key figure
PROFITABILITY
Operating result =
Result before income tax, financial income and expenses,
exchange gains and losses and share of results from
associated companies and joint ventures
The key figure describes the Group’s ability to produce a profit from its business, and it is
independent of the company’s capital structure
EBITDA =
Operating result before depreciation, amortisation and
impairment losses
The key figure shows how much margin is left over from the Group’s sales after deducting the
variable and fixed costs of business before depreciation, amortisation and impairment
Return on equity (%) =
Result before income tax - income taxes
The key figures describe the Group’s ability to produce a profit with the assets invested in the
Group by shareholders
Shareholder’s equity (average)
Return on capital employed (%) =
Result before income taxes + net exchange dierences and
other financial expenses
The key figure describes the Group’s ability to produce a profit on the capital invested, from
the point of the party investing the capital
Balance total + non-interest bearing liabilities (average)
FINANCIAL POSITION
Equity ratio (%) =
Shareholder’s equity
The key figure describes the Group’s capital structure, solvency and ability to take care of its
commitments in the long run
Balance total - advance payments received
Net gearing ratio (%) =
Interest-bearing net liabilities
The key figure describes the Group’s capital structure and financial position
Shareholder’s equity
Interest-bearing net liabilities =
Interest-bearing liabilities – cash and cash equivalents
and interest-bearing receivables
The key figure describes the Group’s indebtedness
OTHER
Total investments =
Investments in owned and leased fixed assets
and investments in business combinations
The key figure describes the Group’s application of funds for maintaining and renewing its
production machinery and plants and for expanding its business with corporate acquisitions
Interest cover =
Net cash flow arising from operating activities + net interest
expenses
The key figure describes the Group’s ability to meet its debt obligations
Net interest expenses
SHARE PERFORMACE INDICATORS
Key figure Definition
Earnings per share =
Profit attributable to shareholders of parent company
Adjusted number of shares (average
Shareholders’ equity per share =
Equity attributable to shareholders of parent company
Adjusted number of shares at the end of the period
Dividend per share =
Dividends
Adjusted number of shares at 31 December
Payout ratio (%) =
Dividend per share
Earnings per share
Dividend yield (%) =
Dividend per share
Share price at 31 December
Price/earnings ratio
(P/E ratio) (%)
=
Share price at 31 December
Earnings per share
P/BV (%) =
Share price at 31 December
Shareholders' equity per share
Adjusted average share price =
Total traded volume per share (EUR)
Average adjusted number of shares traded
during the financial year
Market capitalisation =
Number of shares x market price at the end of period
The presentation of earnings per share is regulated by the Decree of the Ministry of Finance on the Regular Duty of Disclosure of an Issuer of a Security.
In addition, the earnings per share ratio is regulated by the IAS 33 standard.
COMPARABLE PERFORMANCE MEASURES
European Securities and Markets Authority (ESMA) guidelines on Alternative
Performance Measures dene alternative performance measures as a nancial
measure of historical or future nancial performance, nancial position or
cash ows, other than a nancial measure dened in the applicable nancial
reporting framework, in Metsä Board’s case International Financial Reporting
Standards as adopted in the EU pursuant to Regulation (EC) No 1606/2002.
With the exception of Earnings per share dened in IAS 33 Earnings Per Share,
performance measures provided in the interim report all qualify as alternative
performance measures under the ESMA guidelines.
Metsä Board sees the presentation of alternative performance measures as
providing users of nancial statements with an improved view of the company’s
nancial performance and position, including among other things the eciency
of its capital utilisation, operational protability and debt servicing capabilities.
Exceptional and material items outside the ordinary course of business have
been eliminated from the comparable operating result. Metsä Board has dened
operating result as follows: Result for the period presented in IFRS income
statement before income taxes, nancial income and expense as well as share of
result of associate companies and joint ventures.
Reconciliation of operating result under IFRS and comparable operating
result as well as EBITDA and comparable EBITDA is presented below. Com-
parable return on capital employed has been calculated using the same adjust-
ments as the comparable operating result, and it has been further adjusted with
items of nancial income aecting comparability when applicable. Metsä Board
considers that key gures derived in this manner improve comparability
between reporting periods.
None of these key gures with items aecting comparability eliminated
are key gures used in IFRS reporting, and they cannot be compared with
other companies’ key gures identied with the same names. Typical items
aecting comparability include material gains and losses on disposals of assets,
impairments and impairment reversals in accordance with IAS 36 Impairment
of Assets, restructuring costs and their adjustments as well as items arising
from legal proceedings.
In Metsä Board’s view, comparable performance measures better reect the
underlying operational performance of the company by eliminating the result
eect arising from items and transactions outside ordinary course of business.
RECONCILIATION OF OPERATING RESULT AND EBITDA
EUR million 2020 2019
Operating result 227.3 180.8
Depreciation, amortisation and impairment charges 94.5 113.7
EBITDA 321.8 294.5
Items aecting comparability
Gains and losses on disposal in other operating income and
expenses
-6.0 -17.8
Share of result of associated company 2.2
Total -6.0 -15.5
EBITDA, comparable 315.8 279.0
Depreciation, amortisation and impairment charges -94.5 -113.7
Items aecting comparability
Impairment charges and reversals of impairments 19.1
Operating result, comparable 221.2 184.4
"+" sign items = expense aecting comparability
"-" sign items = income aecting comparability
Items aecting comparability in 2020 totaled EUR 6.0 million and comprised
disposal gains from sold non-business related land area.
Items aecting comparability in 2019 totaled EUR -3.6 million and com-
prised disposal gains from shares in Liaison Technologies Inc. reported under
other investments total of EUR 3.3 million, Äänevoima Oy shares sold to Metsä
Fibre totalling to net eect on operating result EUR 6.8 million, disposal gains
from sold non-business related land area total of EUR 5.5 million as well as the
EUR -19.1 million impairment recognised in the assets of the Husum pulp mill.
Key figures
131130
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION GOVERNANCE
FINANCIAL
DEVELOPMENT
KEY FIGURES
|
METSÄ BOARD ANNUAL REPORT 2020
QUARTERLY DATA
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Income statement, eur million
Sales 1,890 1,932 1,944 1,849 1,720 2,008 2,008 2,019 2,108 2,485
- change, % -2.2 -0.1 5.2 7.5 -14.3 -0.0 -0.5 -4.2 -15.2 -4.6
EBITDA, comparable 316 279 344 289 231 283 236 208 186 180
- % of sales 16.7 14.4 17.7 15.6 13.4 14.1 11.8 10.3 8.8 7. 2
Operating result 227 181 246 207 132 199 117 114 221 -214
Operating result, comparable 221 184 252 193 137 180 137 104 75 59
- % of sales 13.6 9.5 13.0 10.5 8.0 9.0 6.8 5.2 3.6 2.4
Result for the period 170 145 203 150 90 137 69 64 171 -273
Balance sheet, eur million
Balance sheet total 2,302 2,270 2,284 2,226 2,194 2,220 2,149 2,097 2,581 2,688
Equity attributable to shareholders of parent company 1,384 1,338 1,323 1,167 1,052 1,029 841 850 851 732
Interest bearing net liabilities 236 308 335 358 464 333 427 597 625 783
Key figures per share and distribution
Dividend and equity distribution, EUR million 92.4
1)
85.3 103.1 74.7 6 7. 5 60.4 39.4 29.5 19.7 0.0
Dividend and equity distribution per share, EUR 0.26
1)
0.24 0.29 0.21 0.19 0.17 0.12 0.09 0.06 0.0
Payout ratio including equity distribution, % 54.31
1)
58.5 50.9 50.0 76.0 43.6 5 7. 1 47.4 11.3 0.0
Dividend yield, % 3.0
1)
4.0 5.7 2.9 2.8 2.5 2.7 2.9 2.7 0.0
Key figures – profitability
Return on capital employed (ROCE), comparable, % 12.2 10.4 14.4 11.2 8.1 11.3 9.1 6.4 4.8 3.4
Return on equity, comparable, % 12.1 11.0 16.7 12.4 9.0 12.9 10.4 6.5 5.3 0.9
Key figures – balance sheet and financing
Interest bearing net liabilities / EBITDA, comparable 0.7 1.1 1.0 1.2 2.0 1.2 1.8 2.9 3.4 4.4
Equity ratio, % 60.3 59.1 58.1 52.6 48.2 46.5 39.2 40.7 33.2 2 7.4
Net gearing, % 17 23 25 31 44 32 51 70 73 106
Net cash flow from operations, EUR million 308 201 151 236 77 247 198 82 -2 83
Net interest expense, EUR million 12 14 19 36 26 26 42 60 70 66
Interest cover 2 7.6 15.4 9.0 7.6 4.0 10.4 5.7 2.4 1.0 2.3
Other key figures
Gross investments, EUR million 166 95 70 65 162 178 44 67 66 95
Depreciation, amortisation and impairment losses, EUR million 95 114 92 92 102 104 126 101 100 191
R & D expenditure, EUR million
2)
9 9 6 6 6 8 6 5 5 5
- % of sales 0.5 0.4 0.3 0.3 0.4 0.4 0.3 0.3 0.2 0.2
Personnel, average 2,455 2,433 2,435 2,456 2,588 2,851 3,200 3,245 3,552 4,428
- in Finland 1,486 1,458 1,433 1,441 1,552 1,538 1,542 1,560 1,634 1,795
Paperboard deliveries, 1,000 t 1,810 1,792 1,830 1,803 1,568 1,404 1,256 1,141 1,062 1,018
Dividend and key figures per share for years 2011–2014 have been issue-adjusted. The rights issue factor was 1.030627. Eect of IAS19 Employee Benefits has been reported only for years 2012–2020.
1)
The Board of Directors has proposed that a dividend of EUR 0.10 per share be distributed for the 2020 financial year, and further that EUR 0.16 per share be distributed from the unrestricted equity
reserve, totalling to EUR 0.26 per share. Dividend yield for 2020 has been calculated including the proposed equity distribution and using the B share closing price as of 31 December 2020.
2)
In 2020, the reporting of research and development expenses has been clarified and the figures for the comparison year 2019 have been adjusted accordingly.
Calculation of key ratios is presented on page 130.
TEN YEARS IN FIGURES
Full year Quarterly
EUR million 2020 2019 IV/2020 III/2020 II/2020 I/2020 IV/2019 III/2019 II/2019 I/2019
Sales 1,889.5 1,931.8 473.1 471.2 473.1 472.1 478.4 489.2 477. 1 487.1
2020 2019 IV/2020 III/2020 II/2020 I/2020 IV/2019 III/2019 II/2019 I/2019
Operating result, comparable 221.2 184.4 64.5 62.5 60.5 33.8 39.1 42.5 41.0 61.8
2020 2019 IV/2020 III/2020 II/2020 I/2020 IV/2019 III/2019 II/2019 I/2019
Operating result 227.3 180.8 64.5 62.5 66.5 33.8 20.0 42.5 46.4 71.9
Share of profit from associated companies -0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0
Exchange gains/losses -3.4 -1.6 -0.2 -1.3 -0.2 -2.0 -0.1 -0.3 -0.8 -0.4
Other financial income and expenses -11.5 -13.8 -2.8 -3.0 -2.8 -2.9 -3.0 -3.4 -3.8 -3.6
Result before tax 212.3 165.6 61.5 58.1 63.9 28.9 17.0 38.8 41.9 6 7. 9
2020 2019 IV/2020 III/2020 II/2020 I/2020 IV/2019 III/2019 II/2019 I/2019
Operating result, % of sales 12.0 9.4 13.6 13.3 14.1 7.2 4.2 8.7 9.7 14.8
Full year Quarterly
1,000 t 2020 2019 IV/2020 III/2020 II/2020 I/2020 IV/2019 III/2019 II/2019 I/2019
Deliveries
Folding boxboard 1,223 1,207 297 318 310 298 300 305 299 303
White kraftliner 587 584 144 143 148 152 139 161 146 138
Metsä Fibre’s pulp
1)
521 460 158 107 126 130 137 104 109 110
Metsä Board’s pulp 696 745 207 168 156 165 180 207 166 192
2020 2019 IV/2020 III/2020 II/2020 I/2020 IV/2019 III/2019 II/2019 I/2019
Production
Folding boxboard 1,249 1,242 317 311 333 288 313 311 308 310
White kraftliner 591 574 168 137 156 130 155 132 138 149
Metsä Fibre’s pulp
1)
1,371 1,373 359 335 348 329 332 343 352 346
Metsä Board’s pulp 702 734 174 188 193 148 186 182 186 181
1)
Corresponds to Metsä Board’s ownership of 24.9 per cent in Metsä Fibre.
Metsä Board contributes to surrounding society also through paid taxes. In
addition to paid corporate income taxes and property taxes Metsä Board’s
operations generate various other taxes and tax-like payments. Some are
directly paid by the company, like employer’s social security payments. Some
are collected by Metsä Board on behalf of the government, like employees’
payroll taxes.
In addition, fuels and electricity used for production activities include indi-
rect taxes. Considering all directly and indirectly generated taxes and tax-like
payments arising from Metsä Board’s operations, our economic contribution to
surrounding society is material.
Metsä Board is committed to follow international transfer pricing guidelines
and local tax laws and regulations in all of its operating countries. Majority of
Metsä Board’s production and other operations are located in Finland, thus
most of the taxes are paid in Finland.
TAXES
Metsä Board’s cooperation with tax authorities is transparent and active.
e tax issues are managed by Metsä Group’s tax function, and taxes are in the
scope of Board of Directors’ Audit Committee’s regular follow-up.
METSÄ FIBRE’S SHARE OF RESULT
Metsä Board’s consolidated result includes associated company Metsä Fibre’s
result share (24.9% ownership). Metsä Fibre pays corporate income taxes on its
own results and Metsä Board consolidates the result share on post-tax basis.
PAID CORPORATE INCOME TAXES AND PROPERTY TAXES
EUR million 2020 2019
Finland 43.9 15.1
Sweden 2.0 1.1
Other countries 0.6 3.1
133132
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCE
CORPORATE GOVERNANCE STATEMENT
|
METSÄ BOARD ANNUAL REPORT 2020
Corporate governance statement
INTRODUCTION
is statement describing the corporate governance
of Metsä Board Corporation (Metsä Board or
Company) has been issued as a separate statement
pursuant to the Securities Markets Act and the
Finnish Corporate Governance Code 2020 and
is published concurrently with the Company’s
nancial statements and report of the Board of
Directors. e Finnish Corporate Governance
Code from 2020 is available at the website of the
Finnish Securities Markets Association at www.
cginland..
Metsä Board is a Finnish public limited company
whose A and B series shares are subject to public
trading on the ocial list of Nasdaq Helsinki.
(Helsinki Stock Exchange). In its administration
and governance Metsä Board applies Finnish laws,
especially the Companies Act, the Company’s
Articles of Association and rules and regulations
issued pursuant to laws, including those issued by
the Financial Supervisory Authority and applying
to listed companies. Metsä Board also complies
with the rules and recommendations of Nasdaq
Helsinki as applicable to listed companies.
Metsä Board prepares its nancial statements
and interim reports according to the International
Financial Reporting Standards (IFRS). e nancial
statement documents are prepared and published in
Finnish and English.
Metsä Board’s headquarters are located in Espoo,
Finland. e Company’s registered domicile is
Helsinki.
APPLICATION OF THE FINNISH
CORPORATE GOVERNANCE CODE
As a Finnish listed company, Metsä Board applies
the Finnish Corporate Governance Code of
2020, which became eective on 1 January 2020.
Currently Metsä Board does not deviate from any
single recommendation of the Code. is statement
has been issued in compliance with the regulations
concerning reporting content set out in the code.
is statement has been reviewed by the Board of
Directors’ Audit Committee.
METSÄ BOARD’S GOVERNANCE
STRUCTURE
e Company’s statutory bodies include the
General Meeting of Shareholders, the Board of
Directors and the CEO. In addition, a Corporate
Management Team assists the CEO in the operative
management of the Company and in coordinating
its operations. Members of the management team
are not members of the Board of Directors. e
tasks and responsibilities of the dierent corporate
bodies are specied in the Finnish Companies Act.
Metsä Board has a function based organisation,
including marketing and sales, production and
technology, nance, business development and
human resources. Function heads are members of
the Corporate Management Team. Functions are
supported by centralised support functions, most
of which are common with other Metsä Group
companies. Support functions are based on specic
service agreements, the terms of which are at arm’s
length.
GENERAL MEETING
e General Meeting of Shareholders is the
Company’s highest decision-making body where
shareholders use their decision-making power.
Each shareholder is entitled to participate in a Gen-
eral Meeting by following the procedure described
in the notice to the General Meeting. According to
the Companies Act, the General Meeting decides
on the following matters, among others:
• amending the Articles of Association
• approving the nancial statements
CORPORATE GOVERNANCE IN METSÄ BOARD
• prot distribution
• mergers and demergers
• acquisition and transfer of own shares
• appointing the members of the Board and
specifying their and Board committee members’
compensation
• appointing the auditor and specifying his/her
compensation.
Shareholders are entitled to put forward a matter
pertaining to the General Meeting to be addressed
when the shareholder delivers a written request
to this eect so well in advance that the matter
can be included in the notice to the meeting. e
Company has specied January 15 as the relevant
deadline. In addition, a shareholder has a right
to present questions on the items on the agenda
of the General Meeting. A shareholder is entitled
to participate in a General Meeting when he/she
is included in the register of shareholders eight
(8) working days before the General Meeting. An
Annual General Meeting takes place each year in
June at the latest. Notice to a General Meeting is
served at the earliest three months and at the latest
three weeks before the meeting by publishing it
on the Company’s website and by publishing the
notice or a summary thereof in at least one Finnish
nationwide newspaper.
An Extraordinary General Meeting will convene
if the Board nds it necessary, or if the auditor or
shareholders representing at least 10% of all shares
deliver a written request to this eect in order to
process a specied matter.
BOARD OF DIRECTORS
e Board of Directors is responsible for the
Company’s administration and arranging the
Company’s operations properly according to
applicable laws, the Articles of Association and
good corporate governance. e general authority
of the Board covers matters that are far-reaching,
strategically signicant or unusual and which
therefore do not belong to the Company’s day-
to-day business operations. e Board supervises
Metsä Board’s operations and management
and decides on strategy, major investments, the
Company’s organisation structure and signicant
nancing matters. e Board supervises the proper
arrangement of the Company’s operations, and
ensures that accounting and asset management
control, nancial reporting and risk management
have been organised in an appropriate manner.
For its operation, the Board has a written work-
ing order. In accordance with the working order,
the Board’s tasks include:
• appointing and discharging the CEO and ensur-
ing that the CEO takes care of the Company’s
day-to-day administration in accordance with
the regulations and guidelines given by the
Board;
• establishing necessary committees, appointing
their members and approving their working
orders;
• addressing and approving the long range plan
and corporate strategy;
• accepting the annual operational plan and
budget;
• monitoring how the Company’s accounting,
asset management, risk control and nancial
reporting are arranged;
• deciding on signicant investments, business
acquisitions, divestments and closures of
operations;
• deciding on considerable investments and
nancing arrangements;
• deciding on the transfer and pledging of the
Company’s signicant real property;
• deciding on management authorizations and
granting rights to represent the Company;
• monitoring that the Company’s Articles of
Association are complied with;
• convening the General Meeting and monitoring
that the decisions taken by the General Meeting
are implemented;
• signing and presenting the nancial statements
to the Annual General Meeting for approval, and
preparing a proposal for the use of prots;
• approving key policies and guidelines, including
the insider guidelines;
• publishing the nancial statements bulleting as
well as interim and half-year nancial reports;
• approving and publishing or authorizing the
CEO to publish all inside information likely to
have a signicant eect on the value of the Com-
pany’s shares, or which otherwise have to be
made public according to the Finnish Securities
Markets Act or the Rules of the Helsinki Stock
Exchange.
e working order of the Board of Directors is
presented in full on the Company’s website (www.
metsaboard.com/lnvestors/Corporate Governance).
e Board can delegate matters in its general
authority to the CEO and correspondingly take
charge of decision-making in a task that belongs to
the CEO’s general authority.
On an annual basis, the Board assesses its own
operation and the Company’s governance and
decides on any necessary changes.
e Board convenes on a regular basis. In the
nancial year 2020, the Board held a total of 17
meetings. Due to corona pandemic, meetings were
held by using a number of dierent methods of
participation. e attendance rate of the members
was 100% (100% in 2019 and 98% in 2018).
COMPOSITION, DIVERSITY AND
INDEPENDENCE OF THE BOARD OF
DIRECTORS
e composition and number of members of
the Board of Directors must facilitate eective
fullment of the Board’s tasks. e composition
of the Board of Directors takes into account the
development phase of the Company, ownership
structure, the special requirements of the industry
and the needs of the Company’s operations. Both
genders are represented on the Board of Directors.
A member of the Board must possess the compe-
tence required by the task and the opportunity to
allocate sucient time for the task.
e Board recognises the benets to the
Company and its shareholders of a diverse and
broad Board composition. Diversity supports the
Board’s open work atmosphere, independent role
and decision-making. e Board is responsible
for the company’s administration and the proper
arrangement of its operations. A key task of the
Board is also to support and challenge the operative
management from various perspectives in a consist-
ent and predictable manner. e successful working
by the Board and its Committees requires a diverse
composition, knowledge and experience base as
well as taking into account the personal qualities
of individual members. Diversity shall further
support the Company’s each development stage and
correspond to the future needs of the development
of the Company and its business.
Metsä Board has identied that key diversity fac-
tors for the company include industry knowledge,
experience from dierent elds of business and the
international business scene. In addition, varying
educational backgrounds, management experience
from dierent business sectors and a varying age
and gender structure have been identied as items
promoting diversity. Metsä Board’s target is to
have both genders represented at the Board. e
Board evaluates the successful implementation of
FINANCIAL REPORTING
Internal auditing | Auditing
SHAREHOLDERS’ MEETING
BOARD OF DIRECTORS
BOARD COMMITTEES
Audit
Committee
Nomination and compensation
Committee
CEO
Corporate Management Team
Corporate governance statement
135134
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCE
CORPORATE GOVERNANCE STATEMENT
|
METSÄ BOARD ANNUAL REPORT 2020
these targets as part of its and its Nomination and
Compensation Committee’s normal operation.
According to the Articles of Association, a
minimum of ve and a maximum of ten ordinary
members shall be appointed to the Board of
Directors by the shareholders at the Annual
General Meeting for a one-year period at a time.
e number of consecutive terms is not limited. At
present, the Board has nine members.
e Board appoints a Chairman and a Vice
Chairman from among its members. e Annual
General Meeting of 2020 appointed the following
persons as members of the Board of Directors:
• Mr Hannu Anttila, born 1955, independent of
the Company and of its signicant shareholders,
M.Sc. (Econ.), member since 2018, 140,619 B
shares
• Mr Ilkka Hämälä, born 1961, Chairman, M.Sc.
(Eng.), member since 2018, 337,648 B-shares
• Ms Kirsi Komi, born 1963, independent of the
Company and of its signicant shareholders,
L.L.M., member since 2010, 78,287 B shares
• Mr Kai Korhonen, born 1951, independent of
the Company and of its signicant shareholders,
M.Sc. (Eng.), member since 2008, 215,057 B
shares
• Ms Liisa Leino, born 1960, independent of the
Company and of its signicant shareholders,
M.Sc. (Nutrition), member since 2009, 182,932
B shares
• Mr Jussi Linnaranta, born 1972, independent of
the Company, M.Sc. (Agr.), member since 2017,
20,939 B shares
• Mr Jukka Moisio, born 1961, independent of the
Company and of its signicant shareholders,
M.Sc. (Econ.), MBA, member since 2020, 5,275
B shares
• Mr Timo Saukkonen, born 1963, independent of
the Company, M.Sc. (For.), member since 2020,
9,875 B shares
• Mr Veli Sundbäck, born 1946, independent of
the Company and of its signicant shareholders,
L.L.M., member since 2013, 67,952 B shares
ese ownerships include shares possibly owned by
controlled entities as at 31 December 2020.
A majority of the members of the Board of Direc-
tors are independent of both the Company and its
signicant shareholders. As President and CEO of
Metsä Group Chairman Hämälä is dependent on
both the Company and its majority shareholder
Metsäliitto Cooperative. Jussi Linnaranta and Timo
Saukkonen are members of the Board of Metsäliitto
Cooperative and consequently dependent on a
signicant shareholder. Kirsi Komi, Liisa Leino and
Kai Korhonen have each served on the Board for
more than 10 consecutive years but are considered
as independent of the Company and its signicant
shareholders, based on the Board’s general
evaluation.
e Board’s Nomination and Compensation
committee proposes to the Annual General Meet-
ing convened for March 25, 2021 that current Board
members Anttila, Hämälä, Komi, Linnaranta,
Moisio, Saukkonen and Sundbäck be re-elected for
a new term and further that Raija-Leena Hankonen
and Erja Hyrsky be elected as new members. Fur-
ther information on existing and proposed Board
members is available on the Company’s website
at (www.metsaboard.com/Investors/Corporate
Governance).
BOARD COMMITTEES
Board committees provide assistance to the Board
of Directors, preparing matters for which the Board
is responsible. e Board of Directors appoints an
Audit Committee and a Nomination and Compen-
sation Committee from among its members. Every
year aer the Annual General Meeting, the Board
of Directors appoints each committee’s chairman
and members. e Board of Directors and its
committees can also seek assistance from external
advisors.
Final decisions concerning matters related to
the tasks of the committees are made by the Board
of Directors on the basis of committee proposals,
excluding proposals on Board composition and
compensation made directly to the General
Meeting by the Nomination and Compensation
Committee.
AUDIT COMMITTEE
e Audit Committee is responsible for assisting
the Board of Directors in ensuring that the com-
pany’s nancial reporting, calculation methods,
annual nancial statements and other nancial
information made public by the Company are cor-
rect, balanced, transparent and clear. On a regular
basis, the Audit Committee reviews the internal
control and management systems and monitors the
progress of nancial risk reporting and the auditing
of the accounts. e Audit Committee assesses
the eciency and scope of internal auditing, the
company’s risk management, key risk areas and
compliance with applicable laws and regulations.
e Committee assesses the independence of the
Auditor and gives a recommendation to the Board
concerning the appointment of auditors to the
Company. e Audit Committee also processes the
annual plan for internal auditing and the reports
prepared on signicant auditing.
e Audit Committee consists of four Board
members. Since the Annual General Meeting of
2020, Kai Korhonen has been chairman of the
Audit Committee with Hannu Anttila, Kirsi Komi
and Jukka Moisio as members. All members are
independent of the Company and its signicant
shareholders.
e committee members must have adequate
expertise in accounting and nancial statement
policies. e Audit Committee convenes on a
regular basis, at least four times a year, including
meeting with the Company’s auditor. e commit-
tee chairman provides the Board with a report on
each meeting of the Audit Committee. e tasks
and responsibility areas have been specied in
the committee’s working order which the Board
has approved (www.metsaboard.com/Investors/
Corporate Governance).
When necessary, the following persons are also
represented in the Audit Committee meetings as
summoned by the Committee: the auditor, Chief
Executive Ocer and Chief Financial Ocer as
well as other management representatives and
external advisors.
e Audit Committee convened ve times dur-
ing 2020 and the attendance rate of the members
was 95% (100% in 2019 and 94% in 2018).
NOMINATION AND COMPENSATION
COMMITTEE
e task of the Nomination and Compensation
Committee is to assist the Board of Directors in
matters related to the appointment and compensa-
tion of the company’s CEO, a possible Deputy CEO
and the senior management and prepare matters
related to the reward schemes for management and
employees. In addition, the Committee prepares
for the Annual General Meeting a proposal on the
number of Board members, Board composition
and Board member compensation. e Committee
also recommends, prepares and proposes to the
Board the CEO’s (and a Deputy CEO’s) nomination,
salary and compensation, and further evaluates
and provides the Board and the CEO with recom-
mendations concerning management rewards and
compensation systems.
e Committee consists of ve Board members.
It convenes on a regular basis at least four times
a year. e Committee chairman presents the
proposals issued by the Committee to the Board.
e tasks and responsibilities of the Nomination
and Compensation committee have been specied
in the committee’s working order, which the
Board approves (www.metsaboard.com/Investor
Relations/Corporate Governance).
Since the Annual General Meeting of 2020, Ilkka
Hämälä has been chairman of the Nomination and
Compensation Committee with Liisa Leino, Jussi
Linnaranta, Timo Saukkonen and Veli Sundbäck as
members.
e Nomination and Compensation Committee
convened four times during 2020 and all members
participated in all meetings (the attendance rate
was 100% also in 2019 and 2018).
CHIEF EXECUTIVE OFFICER
Chief Executive Ocer Mika Joukio, M.Sc.(Eng.),
born 1964, is responsible for the daily management
of the Company’s administration according to the
guidelines and instructions given by the Board. In
addition, the CEO is responsible for ensuring that
the Company’s accounting has been carried out
according to applicable laws and that asset man-
agement has been organised in a reliable manner.
e CEO manages the Company’s daily business
and is responsible for controlling and steering the
functions.
e CEO has a written CEO contract approved
by the Board. e Board monitors the CEO’s per-
formance and provides a performance evaluation
once a year. e CEO is covered by the Finnish
Employees’ Pension Act, which provides for a
pension compensation based on service years and
earnings. Basic salary, rewards and fringe benets
are included in the calculation, but not stock option
or share plan based income. e Company has
commissioned an extra pension insurance policy
for the CEO, entitling the CEO to retire at the age
of 62. e policy entitles the CEO to receive pension
compensation equal to 60% of his salary at the time
of retirement (calculated in accordance with Finn-
ish pension laws) on the basis of a ve-year-period
preceding the moment of retirement.
e Board appoints and discharges the CEO. e
Board can discharge the CEO without a specic
reason. e CEO can also resign from his assign-
ment. e mutual term of notice is six months.
e Board may, however, decide to discharge the
CEO without a period of notice. When the service
contract of the CEO is terminated by the Board, the
CEO is entitled to receive discharge compensation
equal to his 12-month salary.
DEPUTY TO THE CEO
e Board can at its discretion appoint a Deputy
to the CEO. e Deputy to the CEO is responsible
for carrying out the CEO’s tasks when the CEO is
unable to perform his duties. For the time being no
Deputy to the CEO has been appointed.
CORPORATE MANAGEMENT TEAM
In the operative management of Metsä Board, the
CEO is assisted by the Corporate Management
Team, which consists of Mika Joukio, CEO,
together with function heads Ari Kiviranta
(Business Development), Jussi Noponen (Finance
and Control), Sari Pajari-Sederholm (Sales and
Marketing), Harri Pihlajaniemi (Production and
Technology) and Camilla Wikström (Human
Resources), who all report to the CEO.
Each Corporate Management Team member has
a written employment or service contract, With the
exception of the CEO, members of the Corporate
Management Team have no extraordinary pension
arrangements which would deviate from applicable
pension legislation. e term of notice of Corporate
Management team members is six months.
e Corporate Management Team’s tasks and
responsibilities include planning investments,
specifying and preparing the Company’s strategic
guidelines, allocating resources, controlling routine
functions as well as preparing several matters to be
reviewed by the Board.
e Corporate Management Team convenes at
the Chairman’s invitation once a month, as a rule,
and also otherwise when necessary.
e Corporate Management Team members
owned the Company’s shares at the end of the
nancial year 2020 as follows:
Mika Joukio 354,025 B shares
Ari Kiviranta 36,000 B shares
Jussi Noponen 55,000 B shares
Sari Pajari-Sederholm 48,000 B shares
Harri Pihlajaniemi 17,523 B shares
Camilla Wikström 35,184 B shares
Possible controlled entities of management team
members do not hold shares in the Company.
INTERNAL CONTROL, INTERNAL
AUDITING AND RISK MANAGEMENT
Protable business requires that operations
are monitored continuously and with adequate
eciency. Metsä Board’s internal management
and control procedure is based on the Finnish
Companies Act, regulations and recommendations
for listed companies, the Articles of Association
and the company’s own approved principles and
policies. e functionality of the company’s inter-
nal control is evaluated by the company’s internal
auditing. Internal control is carried out throughout
the organisation. Internal control methods include
internal guidelines and reporting systems. e
following describes the principles, objectives and
responsibilities of Metsä Board’s internal control,
risk management and internal auditing.
INTERNAL CONTROL
Being a listed company, Metsä Board’s internal
control is steered by the Finnish Companies Act
and the Securities Market Act, other laws and
regulations applicable to the operations and the
rules and recommendations of the Nasdaq Hel-
sinki, including the Corporate Governance Code.
External control is carried out by Metsä Board’s
auditor and the authorities.
In Metsä Board, internal control covers nancial
reporting and other monitoring. Internal control
is implemented by the Board and operative
management as well as the entire personnel.
Internal control aims to ensure achieving the goals
and objectives set for the company; economical,
appropriate and ecient use of resources; correct
and reliable nancial information and other man-
agement information; adherence to external regu-
lations and internal policies; security of operations,
information and property in an adequate manner;
and the arrangement of adequate and suitable
manual and IT systems to support operations.
Internal control is divided into (i) proactive
control, such as the specication of corporate
values, general operational and business principles;
(ii) daily control, such as operational systems and
work instructions related to operational steering
and monitoring; and (iii) subsequent control,
such as management evaluations and inspections,
comparisons and verications with the aim of
ensuring that the goals are met and that the agreed
operational and control principles are followed. e
corporate culture, governance and the approach
to control together create the basis for the entire
process of internal control.
MONITORING OF THE FINANCIAL
REPORTING PROCESS, CREDIT CONTROL
AND AUTHORISATION RIGHTS
e nancial organisations of the functions and the
central administration are responsible for nancial
reporting. e units and functions report the
137136
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCE
CORPORATE GOVERNANCE STATEMENT
|
METSÄ BOARD ANNUAL REPORT 2020
nancial gures each month. e functions’ control
functions check their units’ monthly performance
and report them further to central administration.
Functions’ protability development and business
risks and opportunities are discussed in monthly
meetings attended by senior management of
the Company and of the function in question.
e result will be reported to the Board and the
Corporate Management Team each month. e
Board presents the Financial Statements to the
Annual General Meeting for approval, approves the
nancial statement bulletin and quarterly reports
and decides on their publication. e Company’s
internal guidelines provide detailed descriptions on
the reporting and control rules and the reporting
procedure.
Credit control in Metsä Board has been central-
ised under a Credit Committee, which convenes at
least each quarter. e development of trade receiv-
ables is monitored in each sales company by credit
controllers under the supervision of the Group
Director, Credit Management. Counterparty-spe-
cic credit limits are set within the boundaries of
the credit policy conrmed by the Board in coop-
eration with centralised credit control and business
area management. e development of credit risks
is reported to the Board on a regular basis.
Authorisation rights concerning expenses,
signicant contracts and investments have been
specied continuously for dierent organisation
levels according to the decision-making
authority policy conrmed by the Board and the
authority separately granted by the CEO and other
management personnel. Investment follow-up is
carried out by the Group’s nancial administration
according to the investment policy conrmed by
the Board. Aer pre-approval, investments are
taken to the management teams of the functions
and the Corporate Management Team within the
framework of the annual investment plan. Most
signicant investments are separately submitted for
Board approval. Investment follow-up reports are
compiled each quarter.
INTERNAL AUDITING
Internal auditing assists the Board and CEO with
their control tasks by evaluating the quality of
internal control maintained in order to achieve
the Company’s objectives. In addition, internal
auditing supports the organisation by evaluating
and ensuring the functionality of business
processes, risk management and the management
and administration systems.
e key task of internal auditing is to assess
the eciency and suitability of internal control
concerning the company’s functions and units. In
its assignment, internal auditing evaluates how well
the operational principles, guidelines and reporting
systems are adhered to, how property is protected
and how eciently resources are used. Internal
auditing also acts as an expert in development
projects related to its task area and prepares special
reports at the request of the Audit Committee or
operative management.
Internal auditing operates under the supervision
of the Audit Committee and the CEO. Audit
observations, recommendations and the progress
of measures are reported to the management of the
target audited, the company management and the
auditor. Every six months, internal auditing reports
its auditing measures, plans and operations to the
Audit Committee. Internal auditing applies in its
tasks a working order approved by the Board of
Directors.
e action plan of internal auditing is prepared
for one calendar year at a time. e aim is to
allocate the auditing to all functions and units at
certain intervals. Auditing is annually allocated
to areas that are in a key position regarding the
evaluated risk and the company’s objectives at
the time. e topicality and appropriateness of
the action plan are processed with the Company’s
management every six months.
e scope and coordination of the auditing
operations are ensured through regular commu-
nication and information exchange with other
internal assurance functions and the auditor. When
necessary, internal auditing uses external service
providers for temporary additional resourcing
or special expertise for carrying out demanding
evaluation tasks.
RISK MANAGEMENT
Risk management is an essential part of
Metsä Board’s standard business planning and
leadership. Risk management belongs to daily
decision-making, operations follow-up and internal
control, and it promotes and ensures that the
objectives set by the Company are met.
Linking business management eciently with
risk management is based on the operational
principles conrmed by the Board; the aim of the
principles is to maintain risk management as a
process that is well dened, understandable and
suciently practical. Risks and their development
are reported on a regular basis to the Board’s Audit
Committee. Centralised risk management also
takes care of the coordination and competitive
bidding of Metsä Board’s insurance coverage.
e most crucial objective of risk management
is to identify and evaluate those risks, threats
and opportunities which may have an impact on
the implementation of the strategy and on how
short-term and long-term objectives are met.
e businesses regularly evaluate and monitor
the risk environment and related changes as part
of their normal operational planning. e risks
identied and their control is reported to the Audit
Committee and the Board at least twice a year.
Business risks also involve opportunities, and they
can be utilised within the boundaries of the agreed
risk limits. Conscious risk-taking decisions must
always be based on an adequate evaluation of the
risk-bearing capacity and the prot/loss potential,
among other things, which shall be conducted
before any pre-engineering and execution phases of
projects and investments.
Risk management responsibilities in Metsä Board
are divided among dierent functions. e Board
is responsible for the Company’s risk management
and approves the Company’s risk management
policy; the Audit Committee evaluates the levels
and procedures of the Company’s risk management
and the essential risk areas and provides the Board
with related proposals. e CEO and the Manage-
ment Team are responsible for the specication
and adoption of the risk management principles.
ey are also responsible for ensuring that the risks
are taken into account in the company’s planning
processes and that risk reporting is adequate and
appropriate. e Vice President of Risk Manage-
ment reports to the CFO and is responsible for the
Company’s risk management process development,
coordination, the implementation of risk evaluation
and the essential insurance decisions. e Risk
Committee conducts twice each year a risk review,
the results of which the CEO presents to the Board
following a review by the Corporate Management
Team. e Risk Committee consists of the CFO act-
ing as Chair, SVP Production, SVP Development,
VP Risk Management and VP Group Accounting.
Businesses and support functions identify and
evaluate the essential risks related to their own
areas of responsibility in their planning processes,
prepare for them, take necessary preventive action
and report on the risks as agreed.
Metsä Board’s essential risk management
elements include implementing a comprehensive
corporate risk management process that supports
the entire business, protecting property and
ensuring business continuity, corporate security
and its continuous development, as well as crisis
management and continuity and recovery plans.
According to the risk management policy and prin-
ciples, adequate risk management forms a necessary
part of the preliminary review and implementation
stages of projects which are nancially or otherwise
signicant.
e tasks of Metsä Board’s risk management are
to
• ensure that all identied risks with an impact
on personnel, customers, products, property,
information assets, corporate image, corporate
responsibility and operational capacity are
controlled according to applicable laws and
on the basis of best available information and
nancial aspects
• ensure that the company’s objectives are met
• full the expectations of stakeholders
• protect property and ensure disruption-free
business continuity
• optimise the prot/loss possibility ratio
• ensure the management of the company’s overall
risk exposure and minimise the overall risks.
e most signicant risks and uncertainties that
the company is aware of are described in the Report
of the Board of Directors.
AUDITING
According to Metsä Board’s Articles of Association,
the company has one auditor who shall be an
auditing rm authorised by the Central Chamber
of Commerce of Finland. e General Meeting
appoints the auditor each year. e Audit Com-
mittee together with the Audit Committee of the
parent entity Metsäliitto Cooperative arranged
in 2011 a tender for the auditing services. As a
result of the tendering, the Company’s long-term
auditor PricewaterhouseCoopers Oy was at the
2012 Annual General Meeting changed to KPMG
Oy Ab. Pursuant to the decision of the Annual
General Meeting of 2020, KPMG Oy Ab acts as the
Company’s auditor and appointed Kirsi Jantunen,
APA, as the new auditor with main responsibility.
Pursuant to EU’s Audit Directive an audit entity
may act as a company’s auditor for a maximum
of 10 years, following which audit services shall
be subject to tendering. Should the same auditor
be re-elected in the tendering, it may proceed
as the company’s auditor for another 10 years at
maximum. ereaer the auditor must be changed.
e Audit committee controls the appointment
procedure of the auditors and provides the Board
and the General Meeting with a recommendation
for the appointment of the auditor.
In 2020, KPMG Oy Ab received EUR 196,064
(EUR 196,064 in 2019 and EUR 234,389 in 2018)
in auditing compensation, KPMG internationally
received altogether EUR 402,322 (EUR 413,528 in
2019 and EUR 410,642 in 2018) and other auditing
rms outside Finland were paid EUR 23,484 (EUR
23,484 in 2019 and EUR 40,984 in 2018). In addi-
tion, KPMG has received EUR 3,581 (EUR 34,327 in
2019 and EUR 6,825 in 2018) for services not related
to the actual auditing of the accounts.
INSIDER ADMINISTRATION
Metsä Board and its group comply in insider
matters with Finnish laws, namely the Securities
Markets Act, the Regulation N:o 596/2014 by the
European Parliament and the Commission on
market abuse (MAR) and supporting orders and
regulations as well as the insider guidelines of
NASDAQ Helsinki Ltd. (Helsinki Stock Exchange)
(https://www.nasdaq.com/solutions/rules-reg-
ulations-helsinki). e Board has based on the
above rules approved the Company’s own insider
guidelines.
Pursuant to MAR Article 14 and Chapter 51
of the Penal Code, a person who possesses inside
information shall not (i) engage or attempt to
engage in insider dealing by acquiring or transfer-
ring nancial instruments in his own name or on
behalf of a third party, (ii) recommend that another
person engage in insider dealing or induce another
person to engage in insider dealing, (iii) unlawfully
disclose inside information to another person,
unless such disclosure is made as part of carrying
out normal work duties. e purpose of insider
management is to enable a transparent ownership
of the Company’s securities by the Company’s
insiders, while simultaneously maintaining
public trust in the trading with the Company’s
securities and their price formation. e Company
recommends only long-term investments. Insiders
are being trained at regular intervals.
Following the MAR becoming eective on 3 July
2016, the Company no longer has a register of pub-
lic insiders and the Company no longer maintains
a permanent company-specic insider register. e
Company shall, when required and by decision of
the Chairman of the Board of Directors, set up a
project-specic insider register to cover all persons
who are involved in the preparation of a specic
project containing insider information.
e Company’s managers with a duty to notify
include members of the Board of Directors and
the CEO. e holdings of such managers and
their related parties is public. Each of them have
an individual duty vis-à-vis the Company and
the competent supervisory authority to notify all
transactions executed with the shares and other
nancial instruments of Metsä Board. Metsä Board
will publish all such notications by means of a
stock exchange release.
Trading in the Company’s shares and other
nancial instruments is prohibited during a period
starting at the end of each reporting period and
lasting until the results release has been published
(always at minimum 30 days; “closed window”).
is prohibition applies not only to managers with
a duty to notify but also to such other persons
specied by the Company who participate in the
preparation of nancial reports.
RELATED PARTY TRANSACTIONS
e Board of Directors has determined the
principles applicable to the review and evaluation
of business transactions with related parties. e
Company’s business activities include contractual
relationships with the parent entity Metsäliitto
Cooperative and aliated companies Metsä Fibre
Oy and Metsä Tissue Corporation. e most signif-
icant of these include raw material (such as wood
and pulp) sourcing and acting in jointly operated
integrated mill sites. In situations where the Board
of Directors addresses a business relationship or
other contractual relationship or connection to
Metsäliitto Cooperative or the Company’s aliated
companies, the Board of Directors shall, as a rule,
act without those of its members who are dependent
on Metsäliitto Cooperative or the relevant aliated
company. e Audit Committee follows up and
anlyses any business and contractual relationships
between the Company and its related parties.
To assess the independence and impartiality of
the members of the Board of Directors, the mem-
bers shall notify the Company of circumstances
that may have an impact on the member’s ability to
act without conict of interest.
As at 31 December 2020, neither the Board
members, nor the Company’s CEO or the Corpo-
rate Management Team members had monetary
loans from the Company or its subsidiaries. No
security arrangements or signicant business
relations existed between these persons (including
their related parties as dened in IFRS) and the
Company during 2020.
139138
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCE
BOARD OF DIRECTORS
|
METSÄ BOARD ANNUAL REPORT 2020
JUSSI LINNARANTA
b. 1972
M.Sc. (Agriculture and Forestry)
Agronomist
Member of the Board since 2017
Vice Chairman of the Board since 2020
Independent of the company.
Not independent of the company’s
significant shareholder
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
20,939 B shares
TIMO SAUKKONEN
b. 1963
M.Sc. (Agriculture and Forestry)
Forester
Member of the Board since 2020
Independent of the company.
Not independent of the company’s
significant shareholder
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
9,875 B shares
VELI SUNDBÄCK
b. 1946
LL.M., Master of Laws
Member of the Board since 2013
Independent of the company
and of its significant shareholders
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
67,952 B shares
KIRSI KOMI
b. 1963
LL.M., Master of Laws
Member of the Board since 2010
Independent of the company
and of its significant shareholders
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
78,287 B shares
JUKKA MOISIO
b. 1961
M.Sc. (Econ.), MBA
Member of the Board since 2020
Independent of the company
and of its significant shareholders
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
5,275 B shares
ILKKA HÄMÄLÄ
b. 1961
M.Sc (Eng.)
Vuorineuvos
(Finnish honorary title)
Metsä Group, President and CEO
Chairman of the Board since 2018
Not independent of the company
or its significant shareholder
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
337,648 B shares
HANNU ANTTILA
b. 1955
M.Sc. (Econ.)
Teollisuusneuvos
(Finnish honorary title)
Member of the Board since 2018
Independent of the company
and of its significant shareholders
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
140,619 B shares
KAI KORHONEN
b. 1951
M.Sc. (Eng.), eMBA
Member of the Board since 2008
Independent of the company
and of its significant shareholders
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
215,057 B shares
LIISA LEINO
b. 1960
M.Sc. (Nutrition)
Teollisuusneuvos
(Finnish honorary title)
Member of the Board since 2009
Independent of the company
and of its significant shareholders
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
182,932 B shares
Metsä Board’s
Board of Directors
Board of Directors
Read more
www.metsaboard.com/Investors/Board-of-Directors
141140
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCE
CORPORATE MANAGEMENT TEAM
|
METSÄ BOARD ANNUAL REPORT 2020
SARI PAJARI-SEDERHOLM
b. 1968
M.Sc. (Tech)
Senior Vice President,
Sales and Marketing
Metsä Group employee since 2007.
Member of Metsä Board Corporate
Management Team since 2011
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
48,000 B shares
MIKA JOUKIO
b. 1964
M.Sc. (Tech), MBA
Chief Executive Ocer
Metsä Group employee since 1990.
Chairman of Metsä Board Corporate
Management Team since 2014
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
354,025 B shares
ARI KIVIRANTA
b. 1963
D.Sc. (Tech)
Senior Vice President,
Development
Metsä Group employee since 1993.
Member of Metsä Board Corporate
Management Team since 2014
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
36,000 B shares
HARRI PIHLAJANIEMI
b. 1970
M.Sc. (Tech)
Senior Vice President, Production
Metsä Group employee since 2017.
Member of Metsä Board Corporate
Management Team since 2017
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
17,523 B shares
JUSSI NOPONEN
b. 1975
M.Sc. (Tech)
Chief Financial Ocer
Metsä Group employee since 2000.
Member of Metsä Board Corporate
Management Team since 2016
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
55,000 B shares
CAMILLA WIKSTRÖM
b. 1970
M.Sc. (Tech)
Senior Vice President,
Human Resources
Metsä Group employee since 2002.
Member of Metsä Board Corporate
Management Team since 2019
Shares owned in Metsä Board
Corporation 31 Dec. 2020:
35,184 B shares
Metsä Board’s
Corporate Management Team
Corporate Management Team
Read more
www.metsaboard.com/Investors/CEO-and-other-management
143142
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
SUSTAINABILITY
BUSINESS OPERATIONS
AND VALUE CREATION
FINANCIAL
DEVELOPMENT GOVERNANCE
e task of Metsä Board’s Investor Relations is
to ensure that the market receives accurate and
sucient information in order to determine
the value of Metsä Board’s shares. e Investor
Relations function engages in active dialogue
with representatives of the capital markets and is
responsible for the planning and implementation
of the company’s nancial and investor commu-
nication. e activities of Investor Relations also
include collecting feedback from investors and
market information for Metsä Board’s management
and Board of Directors. Meetings with investors
and analysts are primarily attended to by the Vice
President for Investor Relations, the CFO and the
CEO. All requests from investors are handled in a
centralised manner by Investor Relations. During
the silent period, the company will not provide
comments on the company’s nancial situation or
outlook, or the market environment.
INVESTORS WEBSITE
More information on Metsä Board as an investment
as well as the company’s strategy, operating
environment, nancials and governance can be
found on the company’s Investors website at www.
metsaboard.com/investors
INVESTOR RELATIONS IN 2020
e coronavirus pandemic had a strong impact
on Metsä Board’s investor relations activities in
2020. Nearly all investor and analyst were held
virtually, avoiding close contacts. e company
also participated in virtual investor conferences
organized by brokerage rms. In September, the
company held a virtual Capital markets day, where
the company’s management held presentations and
participants had the opportunity to ask questions.
A recording of this real-time event can be found
on the company’s Investors website. e 2020
AGM was held in June with extraordinary meeting
procedures. It was only possible to attend the
meeting by voting in advance and asking questions
and possible counter-proposals in advance.
In connection with the publication of interim
reports, Metsä Board organises a conference call in
which the CEO presents the interim report and the
audience can ask questions. Presentation materials
and recordings of the conference call are available
on the company’s Investors website. Metsä Board’s
investor communication makes use of social media
through Twitter and LinkedIn accounts.
ANALYST COVERAGE
At least the following brokerage rms conducted
analyses of Metsä Board in 2020: ABGSC, Carnegie,
Danske Equities, DnB, Evli Bank, Handelsbanken,
Inderes, Nordea Markets, OP, Pareto Securities,
SEB and UBS. e contact details of the analysts
and some of the consensus forecasts are available
on the company’s Investors website. Metsä Board is
not responsible for the content, accuracy or extent
of the analysts’ views.
ANNUAL GENERAL MEETING IN 2021
e registration period and advance voting period
commence on 2 March 2021 at 10 a.m. EET, aer
the deadline for delivering counterproposals to be
put to a vote has expired. A shareholder, who is reg-
istered in the Company’s shareholders’ register and
who wishes to participate in the general meeting
by voting in advance, must register for the general
meeting by giving a prior notice of participation
and by delivering his/her votes no later than on 18
March 2021 at 4 p.m. EET, by which time the notice
and votes must be received. When registering,
requested information such as the name, personal
identication number or company identication
number, address and telephone number of the
shareholder, as well as requested information on a
possible proxy representative (name, personal iden-
tication number), must be notied. e personal
data submitted to Euroclear Finland Ltd. will be
used only in connection with the general meeting
and with the processing of related registrations.
Shareholders with a Finnish book-entry account
can register and vote in advance on certain matters
on the agenda during the period 2 March 2021 at 10
a.m. – 18 March 2021 at 4 p.m. EET in the following
manners:
a) electronically via the Company’s website at
www.metsaboard.com/AGM2021. e sharehold-
er’s book-entry account number is required for the
electronic advance voting. Terms and instructions
for electronic advance voting are available on the
website; or
b) by mail or e-mail by sending the voting
instructions form available on the Company’s
website to Euroclear Finland Ltd., Yhtiökokous,
P.O.Box 1110, 00101 Helsinki or by e-mail to
yhtiokokous@euroclear.eu.
PROFIT DISTRIBUTION
e Board of Directors proposes to the Annual
General Meeting to be held on 25 March 2021, a
dividend of 0.10 euros per share be distributed for
the nancial year 2020, and further that 0.16 euros
per share be distributed from the unrestricted
equity reserve, altogether 0.26 euros per share. e
distribution will be paid to shareholders who on the
record date for the distribution, 29 March 2021, are
recorded in the shareholders’ register held by Euro-
clear Finland Ltd. e Board of Directors propose
that the distribution is to be paid on 7 April 2021.
CONTACT DETAILS FOR
INVESTOR RELATIONS
Katri Sundström
Vice President, Investor Relations
Tel. +358 10 462 0101
katri.sundstrom@metsagroup.com
General questions and comments related
to investor relations can be emailed to:
metsaboard.investors@metsagroup.com.
Metsä Board has a global sales network.
To locate contact details of Metsä Board
sales oces, please visit company website
www.metsaboard.com/contacts.
Business ID 0635366–7
METSÄ BOARD
CORPORATION
Head oce
P.O. Box 20
02020 METSÄ, Finland
FINANCIAL REPORTING IN 2021
Silent period Financial report Publication date
1 January–10 February 2021 Financial Statements Bulletin 2020 11 February 2021
1 April–27 April 2021 Interim Report for January–March 2021 28 April 2021
1 July–27 July 2021 Half-Year Financial Report for January–June 2021 28 July 2021
1 October–26 October 2021 Interim Report for January–September 2021 27 October 2021
Investor relations and investor information
Visiting address:
Revontulenpuisto 2 A
02100 Espoo, Finland
Tel. +358 10 4611
www.metsaboard.com
144
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
PEFC/02–31–92
Together we make
the perfect package
Your partner in
sustainable growth
METSÄ BOARD CORPORATION
P.O. Box 20
FI-02020 Metsä, Finland
Visiting address: Revontulenpuisto 2 A
02100 Espoo, Finland
Tel. +358 10 4611
www.metsaboard.com
Covers: MetsäBoard Prime FBB Bright 235g/m². © Metsä Board Corporation 2021
METSÄ BOARD
Annual Report 2020
Business operations
and value creation
2 This is Metsä Board
4 CEO’s review
6 Highlights of the year
8 Strategy and targets
10 Creating value
12 Operating environment
16 Product and service development
18 Circular economy
Sustainability
20 Sustainability targets
24 We bring the forest to you
26 We oer sustainable choices
30 We work for a better climate
and environment
34 We create well-being
40 Mill-specific information
Financial development
44 Report of the Board of Directors
57 Consolidated financial statements
61 Notes to the consolidated
financial statements
107 Parent company financial
statements
110 Notes to the parent company
financial statements
123 Auditor’s report
126 Shares and shareholders
132 Key figures and taxes
Governance
134 Corporate governance statement
140 Metsä Board Corporation’s
Board of Directors
142 Metsä Board Corporation’s
Corporate Management Team
144 Investor relations and
investor information
