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Contents

Investment highlights and update 2 Investment Highlights 3 Strategy 17 Financial Targets 19 3Q 2010 Results & Outlook 33 Price Development 35 Dividend 38 Investments Funding and debt information 41 Divestments 42 Funding and Debt 48 Credit Facilities 49 Rating History General presentation 50 General Info 57 Business Portfolio 66 Operations 72 Deliveries 74 Sourcing 82 Owners 85 Market Position

1 27.10.2010 Investor presentation 3Q 2010

Investment Highlights
Strong core in high-quality cartonboards
M-real the European market leader in folding boxboard Good growth potential

Turn-around in profitability Significant net debt reduction in recent years Strategic review ongoing
M-real the forerunner in paper merchanting and coated papers industry restructuring in Europe Asset divestments Extensive cost savings and cash flow improvement programmes
2 27.10.2010 Investor presentation 3Q 2010

Strategy

Consistent Strategic Direction Since 2006


Cartonboards for consumer packaging the strategic core business Divestment of underperforming paper businesses Major cost savings through complexity reduction Responsible and proactive approach to increase prices

4 27.10.2010 Investor presentation 3Q 2010

Packaging Is One of the Biggest and Fastest Growing Businesses in the World
One of the most important well-being drivers in the world Product safety issues are crucial Branding and information sharing increasingly important Criticism against bad packaging increasing
Flexible plastics 20 % Board 31 %

Global Packaging Market ($634 Billion)


Metal 15 % Glass 7 % Others 6%

Rigid plastics 21 %

Virgin fibre cartonboard ~7% of total

Sources: Pira & M-real

5 27.10.2010 Investor presentation 3Q 2010

Several Megatrends Supporting Good Packaging


Demand for good packaging heavily increasing Good packaging is environmentally sustainable
Made out of renewable raw material and recyclable High energy self-sufficiency in production Low carbon footprint Lightweight

Good packaging is safe


Durable No migration Good printing surface

Good packaging is economical

6 27.10.2010 Investor presentation 3Q 2010

Virgin Fibre Board Is the Best Example of Good Packaging Lowest Carbon Footprint
Virgin fibre based lightweight cartonboards the most environmentally sound packaging material Wood fibre based products replace non-renewable materials like plastic and aluminium Virgin fibre board replaces also recycled fibre based packaging materials

Cartonboard has the lowest carbon footprint


14000 12000 10000 kg/tonne 8000 6000 4000 2000 0 M-real's Carta Solida HDPE PET PLA (Biobased polymer) Aluminium

Source: M-real and Sustainable Packaging Coalition - SPC

7 27.10.2010 Investor presentation 3Q 2010

Watch Your Weight!


For an order of 50.000 sheets (520 x 720 mm) you will need 18.720 m2 of board:
~13 mNm CD stiffness, ~500 m thickness

SBB WLC
(white lined chipboard)
8 27.10.2010 Investor presentation 3Q 2010

Average FBB
(folding boxboard)

M-real lightweight paperboard

(solid bleached board)

M-real Targets Growth in Its Core Business Packaging


Huge growth potential in wood fibre based packaging applications when replacing non-sustainable packaging materials M-real a strong producer of virgin fibre based cartonboard and white top linerboard as well as packaging related speciality papers Access to wood raw material, superior fibre knowhow and pulp self-sufficiency M-reals important competitive advantages

9 27.10.2010 Investor presentation 3Q 2010

M-real Well Equipped for Expansion of Cartonboard Business


Excellent potential to increase the output of current machines with modest investments
Significant amount of excess pulp currently

New investments were announced by M-real in 3Q 2010 Investigations ongoing to benefit growth potential in Russia, Eastern Europe or Asia
Alone and together with the best selected local partners

10 27.10.2010 Investor presentation 3Q 2010

M-real is Investing in Its Cartonboard Business


26 M investment in 80 kton/a capacity expansion at Simpele
Simpeles cartonboard machine the most efficient in Europe Simpele mills sheeting capacity will be expanded To be completed in summer 2011

16 M investment in Kemiart Liners to modernize the coating section


Increased share of high value added coated products To be completed in autumn 2011

Evaluations regarding further development steps in cartonboard business continue

11 27.10.2010 Investor presentation 3Q 2010

M-real Strategic Review


- M-reals Response to the Changes in Business Environment In March 2006, M-real's Board of Directors initiated a strategic review M-real was the first major paper company to emphasize the need for industry consolidation and extensive restructuring M-real took the leading role in European paper merchanting restructuring in 2007 M-real also took the leading role in European coated paper industry restructuring in 2008 Extensive internal profit improvement programmes

12 27.10.2010 Investor presentation 3Q 2010

Strategic Review of the Paper Business Proceeds


M-real in strong position in participating restructuring of the European uncoated fine paper business M-real Zanders is a leading European speciality paper producer Potentially, also separate divestments of the non-profitable units

13 27.10.2010 Investor presentation 3Q 2010

M-real the Forerunner in Re-Engineering of European Paper and Board Industry


New Mets-Botnia ownership structure and divestment Uruguay pulp mill 2009 Pulp self-sufficiency 2008 Divestment of Graphic Papers, 2008 Divestment of Map Merchant Group 2007 Most extensive efficiency improvements in European paper and board industry 2006-2010 Need of structural change And new strategic direction 2005
14 27.10.2010 Investor presentation 3Q 2010

2011 Result Expected to Be Boosted by 60 M vs. 2010 Due to Own Already Implemented Measures

Cumulative Profit impact vs. 2009, m 1 Profit improvement programme 2010 2 Rollover impact of 2009 programme 3 Rollover impact of 2008 programme Total total target 80 60 20 160 2010 40 50 10 100 2011 80 60 20 160

15 27.10.2010 Investor presentation 3Q 2010

M-real Is a Responsible Company


Completed closures in 2007
Sittingbourne: coated fine paper Gohrsmhle PM6 and PM7: coated fine paper Wifsta: uncoated fine paper Tako BM2: folding boxboard 210 ktons/a 100 ktons/a 175 ktons/a 70 ktons/a

Closures in 2008
Kangas PM2: coated magazine paper Lielahti: BCTMP New Thames: uncoated fine paper (divestment, grade conversion) 100 ktons/a 105 ktons/a 230 ktons/a

Closures in 2009
Hallein paper mill: coated fine paper Gohrsmhle: standard coated fine paper * 310 ktons/a 250 ktons/a

Closures in 2010
Two machines in Reflex: Speciality paper Alizay pulp mill: Chemical pulp 80 ktons/a 310 ktons/a

Total paper capacity Total board capacity Total pulp (incl. BCTMP) capacity

1 465 ktons/a 70 ktons/a 415 ktons/a

16 27.10.2010 Investor presentation 3Q 2010

*In Gohrsmhle the speciality paper and uncoated fine paper reel and folio sheet production expanded after the discontinuation of the standard coated fine paper production.

Financial Targets

Financial Targets
ROCE target set at a minimum of 10% on average over the business cycle Net gearing not to exceed 100%
Minimum ROCE 10%*
13,5% 10,2% 7,6% 6,2%

Maximum net gearing 100%


184%

8,0% Minimum target of 10%

145%

2,8% 2,1%1,6% 0,9% 0,5%


83%

137% 119%

126% 99% 90% 84% 81%

95% 82% Maximum level of 100%

-0,5% -5,6%
99 00 01 02 03 04 05 06 07 08 09 1-3Q 10
99 00 01 02 03 04 05 06 07 08 09 3Q 10

* Excluding non-recurring items


18 27.10.2010 Investor presentation 3Q 2010

3Q 2010 results and Outlook

Key Events in 3Q 2010


Good profitability trend continued Strong demand in all main grades M-real continued to implement price increases Investments in Simpele and Kemi were announced Operative performance of Alizay paper mill improved Partial divestment of Reflex mill Credit rating upgrades by both Moodys and S&P

20 27.10.2010 Investor presentation 3Q 2010

Key Figures Quarterly


Sales
M M
75 50

Operating result excl. non-rec. items

1000

750 859 829 826

25 0 14 I -1 II 3 III IV -51 I -65 II -70 -22 III 7 IV

39 I

43

54

500

722

623 585 618 606 602

676 662

-25 -50

II

III

250 I II III IV I II III IV I II III

-75

Result before taxes excl. non-rec. items


M 50

25 0 -25 -50 -75 -100 I


21 27.10.2010 Investor presentation 3Q 2010

15 -21 -36 -34 -87 -62 -83 -70 -15

24

33

2008
II III IV I II III IV I II III

2009

2010

Operating Cash Flow Turned Positive in 3Q


3Q 2010 1-3Q 2010

EBITDA, excluding non-recurring items Change in ONWC Net investments Net financial costs Operating cash flow

+85 -24 +10 -20 +51

+234 -132 +7 -59 +50

22 27.10.2010 Investor presentation 3Q 2010

Good Progress in Price Increases in Consumer Packaging


M

Sales

In comparison to 2Q 2010 profitability was negatively impacted by scheduled maintenance shut downs at all board mills resulting in lower deliveries Profitability improved due to implemented price increases Demand continues strong. 4Q deliveries negatively impacted by seasonality Price increases implemented to annual contracts as planned, result impact mainly from 1Q 2011 onwards Long delivery times and fully booked capacity in FBB still a challenge for daily business
New capacity increases announced

400 300 200 100 0


2Q 2010
M

310

305

3Q 2010

EBIT, excl non-recurring items


50 40 30 20 10 0
2Q 2010 3Q 2010

38

34

23 27.10.2010 Investor presentation 3Q 2010

Office Papers Result Improved Clearly


M

Sales

Profitability improved due to implemented price increases and better operating rates Result was weakened by higher fibre price Demand expected to continue strong, 4Q deliveries negatively impacted by seasonality Alizays operative performance improved by the permanent closure of the pulp mill Husums energy efficiency investments proceeding as planned
New turbine in place in 1Q 2011, additional annual savings of about 12 m

200 150 100 50 0


2Q 2010
M

153

164

3Q 2010

EBIT, excl non-recurring items


30 20 10 9 0 -10
24 27.10.2010 Investor presentation 3Q 2010

-4
2Q 2010 3Q 2010

Extensive Profit Improvement Actions Continued in Speciality Papers


M

Result was weakened by lower operating rates and decreased delivery volumes. Continued high pulp price maintains profitability challenges Result was improved by price increases and implemented cost savings Demand expected to remain stable Positive price development continued in speciality grades Full result impact of agreed productivity improvements from 1Q 2011 onwards. New measures are in the pipeline Share of coated speciality grades still too low in Gohrsmhle
Simpele speciality grades planned to be moved to Gohrsmhle Intensive actions to find new volumes continue
25 27.10.2010 Investor presentation 3Q 2010

Sales

100 75 50 25 0
2Q 2010
M

80

75

3Q 2010

EBIT, excl non-recurring items


20 10 0 -10 -20
2Q 2010 3Q 2010

-5

-7

Market Pulp and Energys Profitability Stable


M

Sales

Profitability improved by increased pulp price Profitability was negatively impacted by lower operating rates due to maintenance shutdowns, lower delivery volumes and higher wood costs Demand expected to continue strong, 4Q deliveries negatively impacted by seasonality Good progress in technical sales actions to allocate more Kaskinen BCTMP volumes to Europe Pulp price is expected to be slightly lower in 4Q than in 3Q
No radical decreases in sight

200 150 100 50 0


2Q 2010
M

126 93

3Q 2010

EBIT, excl non-recurring items


25 20 15 10 5 0
2Q 2010 3Q 2010

16

16

26 27.10.2010 Investor presentation 3Q 2010

M-real Is Showing Market Leadership


Board price increased slightly in 3Q and annual contract negotiations are proceeding well
After agreed increases FBB and liner prices in excess of 10% higher than in the beginning of 2010 Result impact of new annual FBB contracts mainly from 1Q 2011

WFU prices were again increased in 3Q


This year prices have increased in excess of 15 % in total Further price increases are necessary to maintain profitability, however, possibilities seem limited

Carbonless and one-side coated speciality paper prices increased in 3Q


Some potential for further increases exist, but no material changes in price levels are expected

Pulp price is somewhat lower in 4Q vs. 3Q, no material further decreases in sight

Estimates are based on current sales mix and currency rates


27 27.10.2010 Investor presentation 3Q 2010

M-real is Growing Its Cartonboard Business


26 M investment in 80 kton/a capacity expansion at Simpele
Simpeles cartonboard machine the most efficient in Europe Simpele mills sheeting capacity will be expanded To be completed in summer 2011

16 M investment in Kemiart Liners to modernize the coating section


Increased share of high value added coated products To be completed in autumn 2011

Evaluations regarding further development steps in cartonboard business continue

28 27.10.2010 Investor presentation 3Q 2010

Recent Improvement Measures in Office Papers


Major complexity reduction in recent years including closures and divestments of uncompetitive capacity Actions implemented in 2010 improve results by over 30 M, fully from 2011
Energy efficiency investment worth 22 M under implementation in Husum Personnel reduction of 200 in Husum Closure of Alizay pulp mill

Streamlining of product portfolio


Focus on high value added products First deliveries of the new product SAVE! in September

Price increases

29 27.10.2010 Investor presentation 3Q 2010

Recent Improvement Measures in Speciality Papers


In recent years significant efficiency improvements and closures of uncompetitive capacity Discontinuation of Gohrsmhles former main business, standard WFC, in 2009 Intensive development of new speciality products to Gohrsmhle Actions implemented in 2010 improve results by about 18 M, fully from 2011
Closure of two speciality paper machines at Reflex, product offering and business volume unchanged Personnel reduction of 220 in M-real Zanders

Planned continuation of Simpele speciality paper production in Gohrsmhle Partial divestment of the Reflex mill as part of the Paper Park concept

30 27.10.2010 Investor presentation 3Q 2010

Promising Further Profit Improvement Potential


All opportunities for new price increases will be utilised Continue profitable growth in cartonboard business New extensive profit improvement programme MRP11 focusing on paper units under construction Potential divestments of non-profitable assets Next steps in implementation of Reflex Paper Park Paper business strategic review continues

31 27.10.2010 Investor presentation 3Q 2010

Profitability Outlook

M-reals fourth quarter 2010 operating result, excluding non-recurring items, is expected to be temporarily weaker than in the third quarter due to unfavourable exchange rate development as well as seasonality

32 27.10.2010 Investor presentation 3Q 2010

Folding Boxboard Market Price in Europe 2000 9/2010


EUR / tn Three month moving average

1200

1000

800

600

400 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: M-real
33 27.10.2010 Investor presentation 3Q 2010

Paper and Pulp Market Price in Europe 1998 9/2010


EUR / tn EUR/USD

1100 1000 900 800 700 600

1,7 1,6 1,5 1,4 1,3 1,2 1,1 1

500 400 1998

0,9 0,8

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Coated magazine paper LWC (60g) Softwood pulp NBSK


34 27.10.2010 Investor presentation 3Q 2010

Uncoated fine paper (B-copy, 80 g) Coated fine paper (100 g) EUR/USD Source: Foex, Reuters

Dividend

Dividend Policy
Future dividends will take into account the need to achieve and maintain sufficient financial flexibility The Company remains committed to an attractive and competitive dividend M-real's dividend policy is stable and rewarding to shareholders, and aims at paying a dividend of at least 1/3 of the Company's EPS on average over the business cycle, nonetheless taking into account the Company's gearing target

36 27.10.2010 Investor presentation 3Q 2010

Dividend Yield
3 2,5 2 5,6% 5,5% 1,5 4,1% 3,3%
1,09 1,13

12 % 8,6% 6,9%
1,85

10 % 7,2% 8% 4,3% 2,8% 2,1% 1,4% 1,3%


0,06

6% 4% 2% 0,0% 0,0% 0,00 0,00 0% 2006


-1,21 -0,59

per share

1 0,5 0 -0,5 -1 -1,5 -2

0,23 0,14

0,50 0,26

0,37

0,38

0,51 0,460,51

0,51 0,30

0,25 -0,43

0,12

0,12 -0,25

0,06

1996

1997

1998

1999

2000

2001

2002

2003

2004
-0,79

2005

2007

2008

2009 -2 %
-1,09

-4 % -6 % -8 %

-1,58

Earnings per share

Dividend per share

Dividend yield

Dividend yield calculated from annual average B-share volume weighted price

37 27.10.2010 Investor presentation 3Q 2010

Dividend yield, %

Investments

Capital Investments about 70 m in 2010 Capital Investments


2 500

2 000 1 500

Disposals

1 000 Million

Acquisitions
500

0 -500

-1 000 -1 500

Capital expenditure on fixed assets


96 99 02 03 05 98 97 00 01 04 06 07 08 09 20 10 20 E

19

19

20

20

20

20

19

19

20

20

20

20

20

*Indicative level for 2010

39 27.10.2010 Investor presentation 3Q 2010

Funding and debt information

Significant Divestments - EUR 3.4 billion in assets divested since 2001


Year
2009 2008 2008 2008 2007 EUR millions 2007 2007 2005 2005 2005 2004 2002 2001 2001

Divestiture
Graphic Papers 100 000 B2 shares in PVO New Thames mill Map Merchant Group Folding carton plants Botnia (9%) Botnia (8%) Forestia (95%) Savon Sellu Mets Tissue Papierfabrik Albbruck MD Papier Noviant (19%)

Enterprise Value
300* 750 80 82** 382 60 240 164 163 20 570 235 300 41 3,387

Mets-Botnias Uruguayn operations

41 27.10.2010 Investor presentation 3Q 2010

* Cash portion **Incl. pension liabilities

Loans and Interest Rate


At the end of 3Q 2010 Average maturity of long term loans Average interest rate of loans (including derivatives) Interest rate maturity of loans (including derivatives)

2,8 years 5,0 % 7,9 months

Of the loans about 83 per cent was subject to variable interest rates and 17 per cent to fixed interest rates

42 27.10.2010 Investor presentation 3Q 2010

Long-term Interest Bearing Liabilities


3% 5% 7% 5%

MTN Programme Bonds Pension premium loans Loans from financial institutions Finance leases Other interest bearing liabilities

20 %

60 %

Total 1 123 m 30.9.2010


43 27.10.2010 Investor presentation 3Q 2010

Short term interest bearing liabilities Short-term Interest Bearing Liabilities


2%

Metsliitto Group Short-term bank loans and other

98 %

Total 237 m 30.9.2010


44 27.10.2010 Investor presentation 3Q 2010

Interest bearing net liabilities 31.12.2003 Interest Bearing Net Liabilities 30.9.2010
Long-term Short-term Total interest bearing liabilities Liquidity and other interest bearing receivables Interest bearing net liabilities 1 123 237 1 360 539 821

45 27.10.2010 Investor presentation 3Q 2010

Long-term Interest Bearing Liabilities 30.9.2010


EUR, million
700 600 600 500 400 300 200 100 33 0 2010 2011 2012 2013 2014 2015 2016 >2 016 98

158 117 81 18 18

46 27.10.2010 Investor presentation 3Q 2010

Liquidity
M
1400 1200 1000 800 600 400 200 0 I/09 II/09 III/09 IV/09 I/10 II/10 III/10
Liquid funds Committed credit facilities

47 27.10.2010 Investor presentation 3Q 2010

Debt Programs
The following table sets forth the significant debt securities issued and outstanding of M-real as at Sept. 30, 2010:
Average Long-term borrowings USD 350 million Private Note Iss ue E UR 500 mil lion Bond Issue E UR 400 mil lion Bond Issue G lobal Medium-Term Note Program EUR 52 million private placements E UR 131 mil lion bilateral loans E UR 29 mil lion finance leases E UR 245 mil lion pension loans Short-term funding programmes E UR 350 mil lion domestic CP-program E UR 150 mil j. Belgian CP-program EUR 350 EUR 150 EUR 0 EUR 0 Total amount USD 350 EUR 500 EUR 400 EUR 1 500 EUR 52 EUR 131 EUR 29 EUR 245 EUR 131 EUR 29 EUR 226 3,3 % 1,5 % 5,0 % 5.4% (1) 2011 20102013 20102014 20102020 Outstanding USD 224 EUR 500 EUR 0 Interest Rate 5.7% (1) 7.0% (1) Maturity 20122014 2013 2010 (currency in millions)

Average interest rate of all M-real Group interes t bearing liabilities including interest rate derivatives per 30.9.2010 is 5,0 %. (1) The average interest rates take into account outstanding i nterest rate swaps and amortised arrangement fees.

48 27.10.2010 Investor presentation 3Q 2010

Ratings History
2000 S&P: Short term ratings lowered to A3, Long term ratings placed to credit watch negative Moodys: Long and short term ratings outlook changed from stable to negative 2001 S&P: Long term ratings lowered to BBB-, stable outlook Moodys: Long and short term ratings lowered to Baa3/P3, negative outlook 2003 S&P: Downgrade to BB+, stable outlook Moodys: Downgrade to Ba1, negative outlook 2004 S&P: Outlook changed from stable to negative, ratings affirmed Moodys: Downgrade to Ba2, stable outlook 2008 S&P: Outlook to negative 2009 S&P: Downgrade to CCC+, negative outlook Moodys: Downgrade to Caa1, outlook negative 2010 S&P: Outlook to stable Moodys: Outlook to stable S&P: Upgrade to B-, stable outlook Moodys: Upgrade to B3, outlook to positive 2007 Moodys: Downgrade to B3, negative outlook S&P: Downgrade to B, negative outlook S&P: Downgrade to B-, stable outlook 2005 S&P: Downgrade to BB, stable outlook Moodys: Outlook changed from stable to negative, ratings affirmed 2006 S&P: Downgrade to BB-, negative outlook Moodys: Downgrade to Ba3, negative outlook Moodys: Downgrade to B2, negative outlook S&P: Downgrade to B+, negative outlook

49 27.10.2010 Investor presentation 3Q 2010

General presentation

M-real in Brief
Annual sales about EUR 2.5 billion. Approximately 4,900 employees. Present in over 70 countries. 13 production units in 5 European countries. Part of Metsliitto Group and listed on the NASDAQ OMX Helsinki Ltd. Metsliitto Group is one of the largest forest industry groups in the world, owned by a cooperative of 130.000 private Finnish forest owners.
Sales breakdown 2009

Consumer Packaging 40% Paper 40% Market pulp and energy 20%

51 27.10.2010 Investor presentation 3Q 2010

Offering for Consumer Packaging, Communications and Advertising


Cartonboards and white-top kraftliners for packaging beautycare, healthcare, cigarettes, food, consumer durables etc. Graphic boards e.g. for book covers, postcards, greeting cards, CD or DVD covers Office papers from high-volume copying and printing to highquality color presentations Speciality papers for advertising and corporate materials, flexible packaging, creative designs, labeling, self-adhesive laminates and for wallcovering industry

52 27.10.2010 Investor presentation 3Q 2010

M-reals Customers
Publishers

Office product resellers

Brand owners

Paper merchants

Printers and converters

Office paper users

Advertising and design agencies

53 27.10.2010 Investor presentation 3Q 2010

Focus on Core Businesses


1995 Sales 2.3 billion
9% 6% 3% 17 %

2009 Sales 2.4 billion

40 %
12 %

40 %

8 Businesses
32 %

3 Businesses

9% 12 % Paper Paperboard Tissue Merchanting

20 %
Pulp Packaging Mechanical Forest Products Chemicals

54 27.10.2010 Investor presentation 3Q 2010

M-real Restructuring Story


Acquisitions
Modo Paper Biberist Paper Mill Kyro Board Mill Zanders UK Paper Kemiart Liners (53 %)

Simpele Mill

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006
PSM

2007

2008 2009
Map

Sawn Goods & Building Materials

Chemicals Business

Botnia Wood

Corrugated Packaging

MD Papier

Albbruck

Mets Tissue

Savon Sellu

8% in Botnia

9% in Botnia

New Thames

Graphic Papers MB Uruguay

Forestia

Divestments

Carton plants

100 000 B2 shares in PVO

55 27.10.2010 Investor presentation 3Q 2010

Annual Sales Development


EUR, million

8000 7000 6000 5000 4044 4000 3014 3000 2000 1000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2313 3319 3236 2432 5898 6923 6564 6044 5460 5624 5241 4440

56 27.10.2010 Investor presentation 3Q 2010

Business Portfolio

Business Portfolio
Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy

58 27.10.2010 Investor presentation 3Q 2010

Consumer Packaging
Mainly Folding Boxboard and Linerboard

Fibre-based high value-added packaging solutions for global brand owners in beautycare, healthcare, cigarette, food and consumer electronics industries as well as for graphical end-uses Relatively high earnings stability High segment consolidation Competitive folding boxboard mills with end use specified production
No. 1 Folding Boxboard Producer in Europe
M-real Stora Enso Mayr-Melnhoff Careo IP 0% 5% 10 % 9% 8% 10 % 15 % 20 % Capacity Share (%) 25 % 30 % 35 % 25 % 32 %

59 27.10.2010 Investor presentation 3Q 2010

Office Papers
Mainly Uncoated Fine Paper

High quality uncoated fine papers for printing and photocopying as well as for forms, envelopes, manuals and communication purposes Diversified customer base, e.g. merchants, retail chains, office equipment manufacturers and corporations Leading European office paper brands like DataCopy and Evolve
No. 5 Uncoated Fine Paper Producer in Europe
Portucel Stora Enso Mondi UPM-Kymmene M-real 0% 5% 11 % 10 % 9% 10 % 15 % 14 % 14 %

Capacity Share (%)

60 27.10.2010 Investor presentation 3Q 2010

Speciality Papers
Leading European speciality paper producer with strong focus on packaging applications Packaging specialities
Flexible packaging Luxury packaging Labels Speciality paper sales

Graphical specialities
Premium fine papers Carbonless papers Digital imaging papers
Packaging specialities 50% Graphical specialities 30% WFU 20%

Uncoated fine papers

61 27.10.2010 Investor presentation 3Q 2010

Sales by Business Area


M
350 300 250 200 150 100 80 50 0 Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy 75 153 164 126 107 310

305

2Q 2010

3Q 2010

62 27.10.2010 Investor presentation 3Q 2010

Operating Result by Business Area*


M
50 40 38 30 20 10 9 0 -10 -20 Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy -4 -5 -7 16 16 34

2Q 2010

3Q 2010

* excl. non-recurring items

63 27.10.2010 Investor presentation 3Q 2010

Sales by Business Area


M
1000 900 800 700 600 500 400 300 200 100 0 Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy 279 237 477 411 382 328 713 872

1-3Q 2009

1-3Q 2010

64 27.10.2010 Investor presentation 3Q 2010

Operating Result by Business Area*


M
120 100 80 60 40 20 0 -20 -40 -60 Consumer Packaging Office Papers Speciality Papers Market Pulp and Energy -48 -45 -18 -45 35 5 41 111

1-3Q 2009

1-3Q 2010

* excl. non-recurring items

65 27.10.2010 Investor presentation 3Q 2010

Operations

Production Capacity
1000 tons/a
2 000 1 800 1 600 1 400 1 200 1 000 1 800 800 600 400 200 0 Paper Board Pulp and BCTMP 1 200 2 100

67 27.10.2010 Investor presentation 3Q 2010

M-real Production Locations


Consumer Packaging: Simpele nekoski board and paper Kyro Tako Kemi Joutseno Office Papers: Alizay Husum paper and pulp Speciality Papers: Gohrsmhle Reflex Market Pulp and Energy: Kaskinen Hallein
Gohrsmhle and Reflex Alizay Hallein

Kemi Husum Kaskinen Kyro Tako nekoski Simpele Joutseno

68 27.10.2010 Investor presentation 3Q 2010

Paper and Board Capacity by Grade


(1000 t/a)
BOARD M ILLS Board Mill Tampere Kyrskoski nekoski Simpele Kemi Total PAPER MILLS Paper Mill Country Machines Coated Magazine Paper nekoski Simpele Kyrskoski Bergisch Gladbach Dren Husum Alizay Total Finland Finland Finland Germany Germany Sweden France 1 1 1 2 2 3 1 11 275 275 180 435 310 925 260 180 Coated Fine Paper 180 55 105 80 20 Uncoated Fine Paper Specialty Paper Total 180 55 105 260 20 710 310 1640 Country Finland Finland Finland Finland Finland Machines 2 1 1 1 1 6 795 Folding Boxboard 205 160 210 220 375 375 Liner Total 205 160 210 220 375 1170

69 27.10.2010 Investor presentation 3Q 2010

Pulp Capacity
(1000 t/a)
PULP MILLS Pulp Mill H usum H allein Joutseno Kas kinen Total BOTNIA * Mill nekoski Kemi Rauma Joutseno Total * M-real share is 30% of the capacity Country Finland Finland Finland Finland Chemical Pulp 500 590 630 650 2370 Total 500 590 630 650 2370 Country Sweden Austria Finland Finland 850 Chemical Pulp 690 160 280 300 580 BCTMP Total 690 160 280 300 1430

70 27.10.2010 Investor presentation 3Q 2010

Personnel Development
25000 22237 21070 20372 20000 17351 16490 15572 15000 12637 11463 10000 9508 6546 4903 5000 4682 13885 15154 14125

0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10

71 27.10.2010 Investor presentation 3Q 2010

Deliveries

Annual Deliveries*
Cartonboard
18 %

Uncoated fine paper


1% 5% 8%

6% 44 %

32 %

86 %
Western- Europe
* Indicative numbers

Eastern- Europe

Americas

Asia & Pacific

73 27.10.2010 Investor presentation 3Q 2010

Sourcing

M-real Cost Structure 2009*


(total annual costs in industrial operations ~ EUR 2 Billion)
Other fixed 13 %

Fixed costs

Delivery costs 16 %

Personnel 18 %

Wood 21 %

Variable costs

Other variables 7% Energy 10 %

Chemicals, pigments and fillers 15 %

* Percentage of annual costs in industrial operations


75 27.10.2010 Investor presentation 3Q 2010

Electricity Sourcing 2009 (total 3 400 GWh)


Purchased energy 26 % Own generation 43 %

Associated company (PVO) 29 %

Outsourced generation 2%

76 27.10.2010 Investor presentation 3Q 2010

Fuels Used 2009 (total 19,6 TWh)


Peat Hydropower Oil 4% 1% 4% Nuclear power 9% Coal 9%

Natural gas 13 %

Woodbased 60 %

77 27.10.2010 Investor presentation 3Q 2010

Wood Sourcing by Country


1 000 m3 2009

Finland Sweden Russia France Austria Latvia Estonia Lithuania


Total

3488 2272 563 133 524 228 204 47


7459

78 27.10.2010 Investor presentation 3Q 2010

Development of Softwood Pulpwood


Cost at Mill, Wood for Chemical Pulping
1980 2Q 2010
60 EUR/m sob, nominal
3

50
Finland, south, pine Sweden, south, pine Germany, south, pine Chile, radiata pine USA South, SYP Canada East, SPF

40

30

20

10

0
19 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 2099 2000 2001 2002 2003 2004 2005 2006 2007 0 20 20 8 10 09 q 2

Source: Pyry

79 27.10.2010 Investor presentation 3Q 2010

Development of Softwood Pulpwood


Cost at Mill, Wood for Mechanical Pulping
1980 2Q 2010
70 60 50 40 30 20 10 0 EUR/m sob, nominal
3

Finland, south, spruce


Sweden, south, spruce
Germany, south, spruce
Austria, spruce
Canada East, S PF
US A Great Lakes, spruce

19 1 98 0 1 98 1 1 98 2 1 98 3 1 9 84 19 85 19 86 19 87 19 88 19 89 19 9 0 1 99 1 1 99 2 1 99 3 1 99 4 1 99 5 1 99 6 1 99 7 1 99 8 2 09 9 2 00 0 2 0 01 20 02 20 03 20 04 20 05 20 06 20 0 7 20 2 00 8 10 09 q 2

Source: Pyry

80 27.10.2010 Investor presentation 3Q 2010

Development of Hardwood Pulpwood


Cost at Mill, Wood for Chemical Pulping
1980 2Q 2010
EUR/m sob, nominal 60
3

50
Finland, south, birch Sweden, south, birch Portugal, E. globulus
Brazil, E. grandis South Africa, E. grandis USA South, mixed hw

40

30

20

10

19 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 2099 2000 2001 2002 2003 2004 2005 2006 2007 20 2008 10 09 q 2

Source: Pyry

81 27.10.2010 Investor presentation 3Q 2010

Owners

M-real Shareholders 30.9.2010


Non-profitmaking organizations; 3 %

Non-Finnish nationals; 18 %

Financial and insurance institutions; 4% Public communities; 7 %

Other companies; 5 %

Households; 24 %

Metsliitto; 39 %

83 27.10.2010 Investor presentation 3Q 2010

M-real Voting Rights 30.9.2010


Non-profitmaking Non-Finnish nationals; organizations; 4 % 6% Other companies; 2 %

Financial and insurance institutions; 2% Public communities; 14 %

Households; 12 %

Metsliitto; 61 %

84 27.10.2010 Investor presentation 3Q 2010

Market Position

Folding Boxboard Capacities in Europe


BIG-5 = 84% of total
M-real
32%

Stora Enso

25% 10%

Mayr-Melnhof Careo

9%

IP

8% 8% 8% Capacity: tons/year (million)

Holmen

Others 0 100 200

300

400

500

600

700

800

900

Source: Pyry Forest Industry Consulting

86 27.10.2010 Investor presentation 3Q 2010

Uncoated Fine Paper Capacities in Europe


BIG-5 = 57% of total
14% 14% 11% 10% 8% 8% 3% 3% Capacity: tons/year (million) 28%

Portucel Stora Enso Mondi UPM M-real International Paper Arctic Paper Sappi Others 0
Source: Pyry Forest Industry Consulting, M-real 87 27.10.2010 Investor presentation 3Q 2010

500

1000

1500

2000

2500

3000

3500

Thank you
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