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Sep 01,2017---

This is a summary of the January - June 2017 interim report. The complete report is attached to this release and is also available at www.kotkamills.com/fi/kotkamillsgroup/keyfinancials

KOTKAMILLS INTERIM REPORT

April - June 2017 (4-6/2016)

The revenue of continuing operations of EUR 75,9 (EUR 49,5) million improved by EUR 26,4 million mainly due to increased Consumer Boards sales.

After the discontinuing Magazine Paper business and implementing Consumer Board machine investment and entering in the Consumer Boards markets since Q4/2015 (excluding one-time profit of disposal Malaysian subsidiary shares in Q4/2016) the Group delivered positive EBITDA of 2,4 MEUR in Q2/2017.

The operating profit of continuing operations was EUR -1,7 million (EUR -6,1 million) due to improved but still a negative impact from the commercial ramp-up of Consumer Boards business. The good financial performance of Industrial Products segment with operating profit of EUR 6,8 million (EUR 3,0 million) continued also in Q2/2017 (In 2016 the maintenance shutdown took place in May, in 2017 in August).

January-June 2017 (1-6/2016)

The revenue of continuing operations of EUR 135,9 million (EUR 100,5 million) improved by EUR 35,4 million from the same period a year ago mainly due to increased Consumer Boards sales.

The operating profit of continuing operations was EUR -5,8 million (EUR -8,2 million) due to improved but still a negative impact from the commercial ramp-up of Consumer Boards business.

Events in April - June 2017

The delivery volumes of Industrial Products segment increased compared to the previous quarter and the demand continued to stay at a good level.

The delivery volumes of Consumer Boards more than doubled compared to the previous quarter and commercial ramp-up of Consumer Boards products continued in the second quarter.

The Group monitors capital using an equity ratio and an adjusted equity ratio based on the financial covenants, which is total equity added with shareholder loans and the junior term loan and divided by total assets. The Group's policy is to keep the adjusted equity ratio above 30%. There have been no breaches of the financial covenants of equity ratio in the current period.

Events after reporting date

The Kotkamills group has been producing Saturating Base Kraft (laminating papers) in Tainionkoski, Imatra on Paper Machine 7 (PM 7) leased from Stora Enso Oyj since the separation of Kotkamills from Stora Enso in 2010. The operations are part of the Group's Industrial Products.

On July 3rd, 2017 The Company informed that Stora Enso Oyj has notified Kotkamills Oy that the leasing agreement concerning Tainionkoski PM7 will be terminated in accordance with its terms to expire at the end of 2018.

To serve its existing customers and fulfill the needs arising from increasing demand for laminating papers, Kotkamills is planning to increase the production capacity of Paper Machine 1 (PM1) on Kotkamills' site in Kotka. In addition, Kotkamills has started preparations to procure external production capacity for laminating papers. The external capacity is planned to be available during the first half of 2018.

The discontinuation of the Group's operations in Imatra is not expected to have a material impact on the Group's financial position or results of operations.

On July 5th, 2017 the Company informed that its wholly owned subsidiary Kotkamills Oy ("Kotkamills") intends to transfer three of its existing business lines, namely the Imprex®, Absorbex® and Wood business lines, into wholly owned subsidiaries of Kotkamills (the "Reorganisation"). Kotkamills' fourth existing business line, Consumer Boards, producing bleached CTMP base high-quality Nordic Folding Boxboard and recyclable barrier board products, will remain in Kotkamills Oy.

The purpose of the Reorganisation is to optimize the group structure, increase efficiency and transparency and optimize the performance, profitability and development of each business line. In the Reorganisation, materially all assets and liabilities of the business lines to be transferred will be transferred to the relevant subsidiaries (intended to be named Kotkamills Absorbex Oy, Kotkamills Imprex Oy and Kotkamills Wood Oy). The Reorganisation is primarily intended to be implemented by way of a contribution in kind against shares in the relevant subsidiary. The Reorganisation is intended to be implemented (in one or several phases) during the second half of 2017.

Under the terms and conditions of Kotkamills Group's EUR 105,000,000 Senior Secured Callable Bonds2015/2020 (ISIN: FI4000148705), the Reorganisation constitutes a permitted transfer between Kotkamills group companies. To the extent the assets transferred are currently covered by the Transaction Security (as defined in the terms and conditions of the bonds), the existing security arrangements will remain in place or the receiving subsidiaries will grant appropriate security over the assets as required under the terms and conditions of the bonds.

Outlook for 2017

The revenue of the third quarter in 2017 is estimated to be slightly higher than in the second quarter 2017 due to increase in Consumer Boards delivery volumes offset by the overall effect of the maintenance shutdown in August (2016 in May). The profit of continuing operations for the third quarter of 2017 is estimated to be at the same level compared to the previous quarter due to one-time effect of the maintenance shutdown and diluting effect of the continuing excitable commercial ramp-up of Consumer Boards business.

The demand of all business segments is expected to stay at the good level, but changes in economic situation in Europe and geopolitical risks may have weakening impact on demand.

Currency exchange rate changes and possible increases in raw material prices could adversely impact the Group's profit development.

Kotkamills Group Oyj
Board of Directors

For additional information, please contact:

CFO Petri Hirvonen, tel.+358 40 571 0834, petri.hirvonen@kotkamills.com

DISTRIBUTION:
Nasdaq Helsinki Ltd
Key media
www.kotkamills.com

Kotkamills Group in brief

Kotkamills is a responsible partner that delivers renewable products and performance to its customers' processes via product innovations created from wood, a renewable raw material. The key brands of the company include Absorbex® and Imprex®, both innovative laminating paper products for the laminate, plywood and construction industries. Moreover, Kotkamills offers ecological, technically sound and visually attractive wood products for demanding joinery and construction. In summer 2016, Kotkamills started up a new board machine producing AEGLE(TM) Folding Boxboard and ISLA(TM) Food Service Boards, including the capability to add barriers on-machine. All Consumer Board material solutions are fully recyclable and repulpable.

Kotkamills has two production sites in Finland, located in Kotka and Imatra. The majority shareholder of Kotkamills is MB Funds, a Finnish private equity firm.

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