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									M-real
Results
2Q 2009
    Key Events in 2Q 2009

    • Operative cash flow neutral despite weak result
        – ONWC reduced by about 130 m€ in 1H 2009 mainly based on own actions
    • Changes in production portfolio and other restructuring has caused
      significant extraordinary operating costs in 1H 2009
    • Order inflows strengthened during the quarter
    • Paper and board prices remained relatively stable except WFU
    • Pulp price increased in USD
        – Weakened USD diminished the positive impact in euros
    • Major fixed and variable cost savings thanks to improvement programmes
    • Production costs declined



2
    Key Figures – Quarterly

     Sales                                     Operating Result excl.                Operating Result
     800
                                               non-rec. items
                    EUR, million                25           EUR, million                     EUR, million
                                                                                     50
     600                                            0
                                                         1Q 2009          2Q 2009     0
     400                                       -25                                         1Q 2009      2Q 2009
                   623             585                     -65                                            -73
                                                                                     -50
                                               -50                          -70
     200                                                                                    -118

                                               -75                                  -100
      0
                1Q 2009        2Q 2009        -100
                                                                                    -150
               ROCE                           Result before taxes excl.             Result before taxes
               %                              non-rec. items                                 EUR, million
           0                                               EUR, million               50
                                              50
                   1Q 2009         2Q 2009
       -5                           -10,2                                              0
                                               0
                    -13,4                                                                  1Q 2009          2Q 2009
                                                        1Q 2009       2Q 2009
      -10                                                 -62             -83        -50     -115
                                              -50                                                            -97


      -15                                                                           -100
                                             -100


      -20                                                                           -150
                                             -150

3
    Clean Operating Cash Flow Positive in 1H 2009 Mainly Due
    to Own Actions

                                                                                           EUR million

    EBITDA*, excluding non-recurring items                                                       -33
    Change in ONWC**                                                                             +133
    Net investments                                                                              -27
    Net interest expenses                                                                        -57

    Clean operating cash flow                                                                    +16




*Includes about EUR 25 million extraordinary operating costs related mainly to production portfolio changes and restructuring
** Inventories, trade accounts receivables and trade accounts payables including implemented restructuring measures


4
    Pulp Down Cycle’s Impact on Profitability (1H 09 vs. 1H 08)

                                      EUR million

      • Consumer Packaging            - 12
      • Office Papers                 - 14
      • Speciality Papers             -7
      • Market Pulp and Energy        - 18


      TOTAL                           - 51




5
    Consumer Packaging to Increase FBB Prices in the UK
                                                                   MEUR          Annual sales
• Profitability in 2009 negatively affected by lower operating     600
  rates, weaker pulp result, lower valuation of wood and                          540
  pulp inventories and weaker GBP                                  400                          463


                                                                   200
• Profitability improved by cost saving actions, price
  increases and stronger USD
                                                                     0
                                                                                1-2Q 2008       1-2Q 2009
• Order books improved clearly during 2Q                                 EBIT, excl non-recurring items
                                                                     MEUR
     – Currently at last year’s level                               40

                                                                    30
• FBB price increase process started in the UK
                                                                    20
     – Price increase under consideration for the other European                   21
       markets                                                      10

                                                                     0                            4
                                                                                1-2Q 2008       1-2Q 2009

6
    Office Papers’ Demand Situation Steadily Improving

                                                              MEUR          Annual sales
• Profitability in 2009 negatively affected by lower demand   450
  and paper prices, weaker pulp result as well as lower                      427
  valuation of wood and pulp inventories                      300
                                                                                            278
• Profitability improved by lower raw material costs and      150
  implemented cost savings actions
                                                                0
• Order books improved clearly during 2Q                                   1-2Q 2008       1-2Q 2009
     – Currently at last year’s level                               EBIT, excl non-recurring items
     – Improvement of underlying demand or seasonal impact?   MEUR

                                                               0
                                                                             -9
• Seems possible that the price deterioration ends soon       -10
     – Price levels defended by production curtailments
                                                              -20
• Production costs gradually decreasing, especially wood      -30                           -35
     – Alizay pulp mill standstill continues
                                                              -40
                                                                           1-2Q 2008       1-2Q 2009

7
    Speciality Papers Suffered from Extraordinary Operating
    Costs in 1H 2009
                                                                   MEUR
                                                                                  Annual sales
                                                                   400
• Hallein paper mill closed and Gohrsmühle standard WFC
  production discontinued in April 2009                            300            322

                                                                   200
                                                                                                 199
• Profitability weakened in 2009 due to significant                100
  extraordinary operating costs and demand decline
                                                                     0
    – Amount of extraordinary operating costs clearly less in 2H
                                                                                1-2Q 2008     1-2Q 2009
      2009
                                                                         EBIT, excl non-recurring items
                                                                   MEUR
                                                                    0              -4
• Profitability has improved due to slightly higher prices and
  implemented cost savings actions                                 -10

                                                                   -20
• Order books improved during 2Q
                                                                   -30                           -34

                                                                   -40
                                                                                1-2Q 2008     1-2Q 2009

8
    Gradually Turning Pulp Cycle Improving Market Pulp and
    Energy’s Profitability in 2H 2009
                                                          MEUR          Annual sales
                                                          400
• Profitability weakened by lower pulp demand and price
  as well as lower wood and pulp inventory valuations     300            322

                                                          200                          250
• Profitability improved by lower wood costs              100
    – Wood cost decline continues in 2H 2009
                                                            0
                                                                       1-2Q 2008       1-2Q 2009
                                                                EBIT, excl non-recurring items
• Long fibre pulp price increased for several months       MEUR

    – Weaker USD diminished the impact in euros            40

                                                           20
                                                                         22
• Price increase expected to continue mainly due to         0
  capacity closures and curtailments
                                                          -20                           -31
    – More meaningful increases as demand picks up
                                                          -40
                                                                       1-2Q 2008       1-2Q 2009

9
     M-real to Receive EUR 300 million Cash From the Divestment
     of Metsä-Botnia Uruguay Operations

•        M-real’s resource company Metsä-Botnia plans to divest its operations in Uruguay to
         UPM-Kymmene
•        Intention to change the way to consolidate Metsä-Botnia in M-real’s accounting from
         line by line to equity method
•        M-real’s total net debt reduction EUR 550 million
         –   EUR 300 million cash proceeds
         –   Decrease in the consolidated net debt by EUR 250 million
•        M-real’s annual sales reduction about EUR 250 million
•        Closing expected in 4Q 2009, subject to Board approvals, signing of final agreements,
         financing arrangements and competition authorities’ approval
•        New planned Metsä-Botnia ownership structure: Metsäliitto Cooperative 53%, M-real
         30%, UPM-Kymmene 17%

    10
 Divestment of Uruguay Operations in Line with M-real’s
 Strategy

 • Finnish high-quality pulp the main raw material for M-real’s strategic core
   Consumer Packaging
     – Eucalyptus pulp not used in cartonboard
 • Divestment of Graphic Papers at the end of 2008 reduced the need for eucalyptus
   pulp considerably
 • Paper business strategic review continues
     – Possibly reducing short fibre pulp consumption further
 • After the transaction pulp consumption and production in balance
     – Pulp self-sufficiency very important in the long run




11
    M-real’s Positive Net Debt Development Continues

                                                             4000   3693            Net Debt, EUR million
•        Net debt rather stable in the first half thanks                   3482
         to ONWC reduction                                   3500                        3109
                                                                                  3019

                                                             3000
•        Longer-term liquidity managed by                                                                  2403

          – EUR 60 million pension premium loan drawn        2500                               21832205

          – M-real has reasons to believe that as a result                                                        1867
            of their successful refinancing Sappi may pay    2000
            back a part of or in full the EUR 220 million
            vendor note in 3Q 2009                           1500                                                        1254 1276

          – Metsä-Botnia Uruguay transaction’s expected
                                                             1000
            cash proceeds EUR 300 million                                                                                        ~ 725
               • Total net debt reduction EUR 550 million
                                                              500


                                                                0
                                                                                                                                Including




                                                                    09
                                                                   00

                                                                   01

                                                                   02

                                                                   03

                                                                   04

                                                                   05

                                                                   06

                                                                   07


                                                               2Q 8
                                                                   0
                                                                                                                                   MB




                                                                 20
                                                                 20

                                                                 20

                                                                 20

                                                                 20

                                                                 20

                                                                 20

                                                                 20

                                                                 20

                                                                 20
                                                                                                                               transaction


    12
                                         12
 Succesfull Paper Industry Strategic Review Proceeds

 •   Graphic Papers divestment, closed at year end 2008, the biggest restructuring
     action in European paper industry of this decade


 •   In uncoated fine papers there is a clear need for consolidation
     –   Seems like the level of interest is increasing among industry players


 •   M-real committed to take part also in the speciality papers restructuring
     –   M-real Zanders (Gohrsmühle and Reflex) one of the major players
     –   Development in Gohrsmühle proceeding well
     –   This year result suffering from production portfolio changes




13
     Appendix



14
     Key Figures – Cumulative Comparison

                                                      Operating Result, excl.
     Sales                                                                              Operating Result
                                                      non-rec. items
                   EUR, million                         50           EUR, million       200    EUR, million
 2000

                                                                13
 1500                                                    0                              100
                                                             1-2Q 2008      1-2Q 2009            108
 1000                                                  -50                                0
                 1688
                                                                              -135             1-2Q 2008      1-2Q 2009
                                  1208
     500                                              -100                              -100                    -191

      0                                               -150                              -200
             1-2Q 2008       1-2Q 2009
       ROCE*                                           Result before taxes, excl.          Result before taxes
                                                       non-rec. items
      10     %                                         50    EUR, million                100   EUR, million

       5                                                                                           38
                  7,3                                   0                                  0
                                                             1-2Q 2008      1-2Q 2009          1-2Q 2008      1-2Q 2009
       0                                                        -57
             1-2Q 2008       1-2Q 2009                 -50                              -100                     -212
      -5                       -11,5
                                                                              -145
                                                      -100                              -200
     -10

     -15                                              -150                              -300

15     *from continuing and discontinued operations
 Due to Extensive Own Actions Cash Flow Development In
 Control Despite Negative Result*

                                                                          2Q09       1Q09   D iff.   1-2Q09   2008
     Net cash flow arising from operations, M€                             -20        -7    -13        -27     -97
     (including change in working capital)

     Investments, M€                                                       -16       -16      0       -32     -128
     Disposals, M€                                                          3         2       1        5      483
     Net investments, M€                                                   -13       -14      1       -27     355

     Net cash flow after investments, M€                                   -33       -14    -19       -54     258

     Net gearing at the end of period, %                                   116       101     15       116      90
     Covenant net gearing at the end of period, %                          91        81      10        91      74

     Equity ratio at the end of period, %                                  29,4      30,3   -0,9      29,4    30,8
     Covenant equity ratio at the end of period, %                          34        35     -1        34      36




* Cash flow figures including also non-recurring items and discontinued operations


16
Heavy Internal Profit Improvement Actions and Lower Costs
Improving the Situation in 2009



                                                           Cumulative
                                            total
Profit impact vs. 2008, m€                 target   2009         2010   2011
     1 Profit improvement programme 2009    80        20           60    80
     2 Profit improvement programme 2008    70        40           60    70
     3 Cost savings programmes 2007         10        10           10    10
      Total                                 160       70          130   160
      Estimated cost change 2009                     -30
      Profit impact after cost change               100




17
     Folding Boxboard Market Price in Europe
     2000 – 2Q 2009

     EUR / tn   Three month moving average


     1200



     1000



      800



      600



      400
         2000      2001      2002      2003   2004   2005   2006   2007          2008      2009
                                                                          Source: M-real




18
     Paper and Pulp Market Price in Europe
     1998 – 2Q 2009

     EUR / ton,                                                                                             EUR/USD

        1100                                                                                                       1,7

                                                                                                                   1,6
        1000
                                                                                                                   1,5
         900
                                                                                                                   1,4
         800                                                                                                       1,3

         700                                                                                                       1,2

                                                                                                                   1,1
         600
                                                                                                                   1
         500
                                                                                                                   0,9

         400                                                                                                       0,8
            1998    1999    2000    2001      2002     2003     2004     2005    2006     2007   2008    2009

            Coated magazine paper LWC (60g)          Uncoated fine paper (B-copy, 80 g)
                                                                                                        Source: Foex, Reuters
            Softwood pulp NBSK                       Coated fine paper (100 g)             EUR/USD


19
       Liquidity

                                        Liquid funds
        EUR, million
                                        Committed credit facilities
1600

1400

1200

1000

 800

 600

 400

 200

   0
               I/08    II/08   III/08   IV/08               I/09      II/09


  20
     Balance Sheet Ratios*

     Equity Ratio                                                              Net gearing
     %                                                                         %
         40                                                              140
                                                                                                                               116
              35,0       36,5                                                                        114
                                   32,5
         35                                                              120                                             101
                                             30,8      30,3                        100     100
                                                                 29,4
         30                                                                                                     90
                                                                         100
         25
                                                                          80
         20
                                                                          60
         15
                                                                          40
         10

          5                                                               20

          0                                                                0
                I          II        III      IV         I        II                I        II       III       IV         I    II


                                                                  2008          2009

21                   *Closing of the Metsä-Botnia transaction announced in July 2009 expected to reduce net gearing by about
                     40 %-units and improve equity ratio by about 3 %-units. Closing expected in 4Q 2009.
      Interest-Bearing Net Debt*


     EUR, million



     2000       1892                   1888                1865
     1800
     1600
                                                                                1254                                         1276
     1400                                                                                             1243
     1200

     1000
      800
      600
      400

      200
        0
                    I                   II                   III                   IV                    I                    II

                                                                   2008       2009

22                  *Closing of the Metsä-Botnia transaction announced in July 2009 expected to reduce net debt by EUR 550
                    million. Closing expected in 4Q 2009.
     Sales by Business Area

           EUR, million

     250
                           237
                  226
     200


     150
                                    147
                                              131                                 134
                                                           117                              116
     100

                                                                      82
      50


       0
               Consumer Packaging   Office Papers         Speciality Papers   Market Pulp and Energy


                                                1Q 2009     2Q 2009


23
     Operating Result by Business Area*


     EUR, million


     10

      5                 5

      0
                -1
      -5

     -10                                              -12                    -12

     -15                         -17       -18                                         -19

     -20                                                         -22

     -25
            Consumer Packaging   Office Papers       Speciality Papers   Market Pulp and Energy

                                           1Q 2009   2Q 2009             * excl. non-recurring items


24
     Sales by Business Area

 EUR, million




 600

                540

                       463
 400                            427


                                                             322                    322
                                          278
                                                                                              250
 200
                                                                        199




     0
           Consumer Packaging   Office Papers               Speciality Papers   Market Pulp and Energy

                                                1-2Q 2008      1-2Q 2009


25
     Operating Result by Business Area*

     EUR, million

     30

     20                                                                            22
                    21

     10

                          4
      0                                                     -4
                                   -9
 -10

 -20
                                                                                               -31
 -30
                                             -35                       -34

 -40
              Consumer Packaging   Office Papers           Speciality Papers   Market Pulp and Energy


                                               1-2Q 2008     1-2Q 2009               * excl. non-recurring items



26
      Consumer Packaging

Sales by Quarter                                                Operating Result by Quarter*
           EUR, million                                           EUR, million

  300
               266        274   274                             40
                                       248
  250                                              237
                                             226                         18
                                                                30
                                                                                      17
  200
                                                                20

  150
                                                                10                                                    5
                                                                                 3
  100
                                                                 0
                                                                             I   II   III      IV          I -1       II
      50
                                                                -10
                                                                                            -9
       0
                 I         II    III   IV     I     II          -20
                                                                                                    * excl. non-recurring items
                                                         2008         2009

 27
     Office Papers

     Sales by Quarter                                    Operating Result by Quarter*
 EUR, million                                            EUR, million

     250                                                  10
            223
                    204
                          203
     200                                                    5
                                174
                                      147
                                            131             0
     150

                                                                   -2
                                                           -5
     100                                                                        -6
                                                                           -7
                                                         -10
      50
                                                         -15
                                                                                        -14
       0                                                                                            -17
                                                         -20                                                     -18
                I    II   III   IV     I     II
                                                                       I   II   III     IV            I           II
                                                  2008          2009                          * excl. non-recurring items

28
     Speciality Papers

     Sales by Quarter                                    Operating Result by Quarter*
 EUR, million                                            EUR, million


     180                                                10
            164
     160            158   153   147                      5
     140
                                      117                0
     120
                                                         -5              -1   -3
     100                                    82
                                                                 -3
      80                                                -10
                                                                                    -8
      60                                                                                     -12
                                                        -15
      40
                                                        -20
      20
                                                                                                        -22
                                                        -25
       0
                                                                     I   II   III   IV        I          II
                I    II   III   IV     I    II

                                                 2008         2009                       * excl. non-recurring items

29
     Market Pulp and Energy

     Sales by Quarter                                     Operating Result by Quarter*
 EUR, million                                             EUR, million


     200                                                 20
                          172                                             12   12
     180    162                                          15       10
                    160         150
     160                                                 10
                                      134
     140                                                  5
                                            116
     120                                                  0
     100
                                                          -5
                                                                                     -2
      80
                                                         -10
      60
                                                         -15                                  -12
      40
                                                         -20
      20                                                                                                 -19
       0                                                 -25
                                                                      I   II   III   IV        I
                I    II   III   IV     I     II

                                                  2008         2009                       * excl. non-recurring items

30
      Quarterly Sales

       EUR, million


     1000




      750




                 859    829   826
      500                                         722
                                                        623
                                                              585



      250
                  I     II    III                 IV     I     II


                                    2008   2009

31
     Quarterly Operating Result*

         EUR, million

60


40


20
                                3
                   14
     0
                   I    II -1   III            IV     I                     II
-20
                                               -51
                                                     -65
-40                                                                        -70


-60


-80
                                                           * excl. non-recurring items
                                 2008   2009

32
      Quarterly Result Before Taxes*

      EUR, million

 40

 20

      0
                     -21
 -20                       -36   -34

                                                                         -62
 -40                                                                                               -83
                                                     -87

 -60

 -80

-100
                      I     II   III                 IV                    I                        II
                                                           * from continuing operations excl. non-recurring items
                                       2008   2009

 33
      Quarterly ROCE %*


      %

10

 8

 6

 4

 2
          2,9
                           1,0
 0
           I     -0,2 II   III                 IV      I                    II
 -2
                                               -6,2   -7,0
 -4
                                                                           -8,3
 -6

 -8

-10
                                 2008   2009                 * excl. non-recurring items


 34
     M-real Shareholders 30.6.2009


                     Non-Finnish nationals;     Non-profitmaking Financial and
                            15 %               organizations; 3insurance institutions;
                                                                %
                                                                       4%
                                                                 Public communities; 9
              Other companies; 5                                           %
                      %




                                                                       Households; 27 %




                           Metsäliitto; 39 %




35
     M-real Voting Rights 30.6.2009


                           Non-Finnish nationals;Non-profitmaking
                                    5%          organizations; 4 % Financial and
                                                               insurance institutions;
                  Other companies; 2 %
                                                                       1%

                                                                       Public communities;
                                                                               14 %




                                                                           Households; 13 %




                    Metsäliitto; 61 %




36

								
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