Metsä Group's Sales in January-June 2025 Reached €3.069 Billion

Metsä Group 2025 Half-Year Financial Report

January-June 2025 (vs January-June 2024)

April-June 2025 (vs April-June 2024)

Key Events in Q2 2025

• The average selling price of Metsä Group's softwood market pulp increased by 5% in Europe compared to the previous quarter, while it decreased by 6% in China.

• Due to weak demand for market pulp in Europe and China, Metsä Fibre temporarily reduced pulp production at the Joutseno mill.

• Metsä Group's board deliveries decreased slightly compared to the previous quarter, with average prices remaining stable. In particular, uncertainty caused by additional import tariffs imposed by the US affected customers' purchasing behavior.

• To improve profitability and competitiveness, the Tako board mill was permanently closed in June 2025, with production capacity transferred to the Kyro board mill.

• Jussi Vanhanen officially assumed the position of President and CEO of Metsä Group on July 1, 2025.

Q3 2025 Earnings Outlook

The comparable operating profit for July-September 2025 is expected to be lower than that for April-June 2025.

Post-Reporting Period Events

In view of continued profit weakness and uncertain market prospects, Metsä Group will initiate preparations for a large-scale cost-saving and profit improvement program, targeting annual cost savings of approximately €300 million by the end of 2026.

Preparations for the cost-saving and profit improvement program are expected to be completed by the end of Q3. According to current plans, the program will focus on savings in procurement and logistics costs, optimization of the wood supply chain from forests to production units, and reduction of fixed costs. The program will not involve permanent or temporary closure of production units.

In addition to the cost reduction program, all business segments will further improve performance by updating and optimizing commercial strategies.

Comments by President and CEO Jussi Vanhanen

Metsä Group's performance in Q2 2025 was significantly negative, mainly due to increased uncertainty in global trade. The US government has imposed additional tariffs on imported goods from China and almost all other countries, leading Metsä Group's customers to adopt a cautious strategy. In the short term, the uncertainty of tariffs itself constitutes a major challenge. Moreover, consumer confidence in Europe and the US weakened in the first half of 2025.

In Q2, Metsä Group's pulp deliveries dropped by more than 30% compared to Q1, especially as Asian customers significantly reduced purchases due to unclear sales and profit prospects, leading to price declines. Demand in the Asian market rebounded slightly at the end of the quarter. In Europe, demand in most end-use sectors declined to some extent due to heightened economic uncertainty.

Our US board customers reduced orders due to tariff uncertainty. Currently, we have not lost any customers, but continued uncertainty will increase risks. Demand in the European market remains stable.

In Q2, high costs—especially for wood raw materials—severely affected the profitability of all business segments of the Group. Although wood procurement prices fell slightly during the quarter, they remained at historically high levels.

In recent years, Metsä Group's operational focus has been on driving business growth, which is crucial for the long-term development of the company and its shareholders. According to our ownership strategy, our production bases are mainly located in Northern Europe, but one-third of sales come from markets outside Europe. Therefore, Metsä Group is vulnerable to changes in global trade flows.

After the reporting period, the US and the EU reached a preliminary agreement, under which the US will impose a 15% tariff on almost all European imports, including forest products. The competitiveness of the Nordic forest industry in the US market will depend on local competition conditions and tariff agreements between the US and other countries. Currently, we seem to be at a disadvantage in competition with US and Canadian peers. The trend of supply chain regionalization triggered by the pandemic is expected to continue. Metsä Group's major investments in tissue paper and wood products will be completed next year, mainly targeting demand in the European market.

Metsä Group's equity ratio remains sound, and we must ensure that it continues to remain at this level. The current profit level is unsustainable and cannot support new growth-oriented investments. We cannot rely solely on an improvement in the economic cycle; instead, we should proactively enhance profitability. Therefore, we have initiated preparations for a cost-saving and profit improvement program, targeting at least €300 million in cost savings by the end of 2026.

We have significant savings potential in the optimization of procurement, logistics, fixed costs, and wood utilization, which requires closer collaboration across the Group. Detailed planning for related projects is underway and will be completed in Q3.

Metsä Group has faced various challenges and the need for change and development in its history, and our employees have always responded actively with persistent efforts. Similarly, we will address the current profit challenges through firm collaboration.

Near-Term Outlook

In most parts of Europe, the outlook for the construction industry remains bleak, particularly reflected in weak demand for spruce plywood. However, demand for veneer laminated lumber Kerto LVL remains stable.

Overall demand for birch plywood is expected to remain stable, but demand for specialty plywood products from industrial customers is expected to recover.

Overall demand for softwood market pulp is expected to improve slightly but remain below normal levels. Uncertainties related to global economic development and tariff negotiations in trade policies continue to weaken overall demand for paper and board products. Affected by seasonal factors, demand for sawn timber is expected to decline slightly in Q3.

The annual shutdown maintenance of the Äänekoski bioproducts mill in Finland will be carried out in Q3.

Consumers' cautious purchasing behavior, along with the growth of virgin fiber board supply outpacing demand—especially in the Europe, Middle East, and Africa (EMEA) markets—will continue to affect board demand. Tensions in global trade policies, especially additional tariffs imposed by the US, have increased uncertainty, making board sales trends difficult to predict. It is expected that the overall board product deliveries of Metsä Board will be roughly the same as those in April-June 2025 for July-September 2025.

Demand for tissue paper and greaseproof paper is expected to remain stable.