Metsä Board’s comparable operating result in 2017 was EUR 194 million

Financial statements bulletin for 1 January – 31 December 2017, 8 February 2018 at 12:00 noon

JANUARY–DECEMBER 2017 (1–12/2016)

• Sales were EUR 1,848.6 million (1,720.3).

Comparable operating result was EUR 193.5 million (137.5), or 10.5 per cent (8.0) of sales. The operating result was EUR 207.1 million (132.3).

Comparable earnings per share were EUR 0.39 (0.26), and earnings per share were EUR 0.42 (0.25).

• Comparable return on capital employed was 11.2 per cent (8.1).

OCTOBER–DECEMBER 2017 (7–9/2017)

• Sales were EUR 451.3 million (478.6).

Comparable operating result was EUR 54.4 million (50.4), or 12.0 per cent (10.5) of sales. The operating result was EUR 54.4 million (60.6).

Comparable earnings per share were EUR 0.12 (0.08), and earnings per share were EUR 0.12 (0.11).

• Comparable return on capital employed was 12.4 per cent (11.5).

EVENTS IN OCTOBER–DECEMBER 2017

• In December, Metsä Board raised its result guidance for the fourth quarter due to the stronger-than-expected pulp market.

• Sales prices of paperboard rose, but deliveries were at a lower level than in the previous quarter, mainly due to the seasonal decline in December.

• The annual maintenance shutdown at the Husum integrated mill had a significant negative effect on the fourth quarter result.

• Thanks to the strong cash flow and the improved result, the ratio of interest-bearing net debt to comparable EBITDA fell to 1.2. Interest-bearing net debt decreased by nearly EUR 80 million.

• CDP recognised Metsä Board’s responsibility. The company was included on the A List in the Climate and Water programmes, and received Leadership status in the Forests programme.

EVENTS AFTER THE REVIEW PERIOD

• Due to suspected information security breach, Metsä Board announced preliminary information on the sales, comparable operating result and earnings per share for the fourth quarter of 2017 on 9 January 2018. The suspected information security breach has not had financial impacts on Metsä Board.

• Metsä Board announced an increase of EUR 50 per tonne in the white kraftliner prices in Europe as of 1 February 2018.

• Metsä Board introduced a biobased, biodegradable paperboard with a special eco-barrier treatment, developed particularly for food service packaging. In addition to being environmentally friendly, the new product offers efficiencies in printing and converting.

RESULT GUIDANCE FOR JANUARY–MARCH 2018

Metsä Board’s comparable operating result in the first quarter of 2018 is expected to improve slightly compared to the fourth quarter of 2017.

DIVIDEND PROPOSAL

The Board of Directors proposes to the Annual General Meeting to be held on 27 March 2018 that a dividend of EUR 0.21 per share will be paid for the 2017 financial period. The proposed dividend is equal to 50 per cent of the earnings per share for 2017.

Metsä Board’s CEO Mika Joukio:

“The average prices of our paperboards rose during the fourth quarter of 2017. Due to the seasonal decline in December, the delivery volumes of paperboards remained at a lower level than in the previous quarter. We also continued measures to improve the geographical sales mix of folding boxboard. Due to the strong pulp market, we raised the previously announced result guidance for the fourth quarter.

Year 2017 was Metsä Board’s first full year as a pure-play paperboard company. It was also a year of strong growth – our paperboard deliveries grew by 15 per cent from the previous year and amounted to approximately 1.8 million tonnes. Five of our eight production units set new annual production records.

Our comparable operating result improved by 41 per cent from the previous year and was EUR 194 million. In addition to an increase in paperboard deliveries, our profitability improved due to the strong pulp market. The new bioproduct mill of our associated company Metsä Fibre at Äänekoski started up in August in an excellent market situation, in addition to which the mill’s production volumes have been higher than forecast. The global market situation for white kraftliners remained good throughout the year.

Our cash flow from operations grew clearly in 2017, and our balance sheet is strong. We issued a ten-year bond, and the strong demand for it is also an indication of the credit market’s trust in Metsä Board’s future.

We begin 2018 in a good market situation. The prices of paperboard are on the rise and demand is at a good level in the market areas that are important for us. On the other hand, the weakening of the US dollar has a negative impact on our result. We have not yet reached the targeted profitability in Husum’s folding boxboard, and we are continuing our measures on this front.

As part of our business development, we renewed our key marketing messages, and harmonised our product and service portfolio in 2017. This strengthens Metsä Board’s market position as a company focused on premium, lightweight paperboards. The Better with Less concept reflects our desire to promote packaging solutions that create better consumer experiences with less environmental impact.

Metsä Board will continue to invest in growth, but at the same time, we want to reward our shareholders. The Board of Directors proposes that a dividend of EUR 0.21 per share will be paid for 2017. I would also like to extend my thanks for the past year to our customers, employees and other stakeholders.”

FINANCIAL KEY FIGURES

2017 2017 2017 2017 2016 2017 2016
Q4 Q3 Q2 Q1 Q4 Q1–Q4 Q1–Q4
Sales, EUR million 451.3 478.6 474.2 444.5 421.8 1,848.6 1,720.3
EBITDA, EUR MILLION 77.8 85.2 67.0 68.8 58.9 298.7 234.6
  comparable, EUR million 77.8 75.0 67.5 68.8 53.1 289.1 231.1
EBITDA, % of sales 17.2 17.8 14.1 15.5 14.0 16.2 13.6
  comparable, % of sales 17.2 15.7 14.2 15.5 12.6 15.6 13.4
Operating result, EUR million 54.4 60.6 46.9 45.2 38.5 207.1 132.3
  comparable, EUR million 54.4 50.4 43.5 45.2 32.8 193.5 137.5
Operating result, % of sales 12.0 12.7 9.9 10.2 9.1 11.2 7.7
  comparable, % of sales 12.0 10.5 9.2 10.2 7.8 10.5 8.0
Result before taxes, EUR million 46.8 43.8 40.3 39.9 28.6 170.8 101.6
  comparable, EUR million 46.8 33.5 36.9 39.9 22.8 157.2 106.8
Result for the period, EUR million 42.1 39.3 35.0 34.2 24.7 150.5 90.4
  comparable, EUR million 42.1 29.0 32.2 34.2 19.2 137.5 93.6
Result per share, EUR 0.12 0.11 0.09 0.10 0.07 0.42 0.25
  comparable, EUR 0.12 0.08 0.09 0.10 0.05 0.39 0.26
Return on equity, % 14.8 14.2 13.2 13.1 9.6 13.6 8.7
  comparable, % 14.8 10.5 12.2 13.1 7.5 12.4 9.0
Return on capital employed, % 12.4 13.9 11.1 10.6 9.0 11.9 7.8
  comparable, % 12.4 11.5 10.3 10.6 7.7 11.2 8.1
Equity ratio at end of period, % 53 51 51 47 48 53 48
Net gearing ratio at end of period, % 31 39 45 44 44 31 44
Interest-bearing net liabilities/EBITDA1) 1.2 1.7 2.0 1.9 2.0 1.2 2.0
Shareholders' equity per share at end of period, EUR 3.28 3.14 3.06 2.90 2.96 3.28 2.96
Interest-bearing net liabilities, EUR million 358.4 436.9 495.2 457.8 463.8 358.4 463.8
Gross investments, EUR million 26.7 7.3 12.4 19.0 43.3 65.4 162.4
Net cash flow from operating activities, EUR million 106.1 67.5 37.1 25.6 54.6 236.3 77.0
Personnel at the end of period 2,351 2,369 2,581 2,450 2,466 2,351 2,466

DELIVERY AND PRODUCTION VOLUMES

2017 2017 2017 2017 2016 2017 2016
1000 t Q4 Q3 Q2 Q1 Q4 Q1–Q4 Q1–Q4
Deliveries
Paperboard 1) 429 469 477 428 399 1,803 1,607
Paper 0 0 0 0 2 0 35
Market Pulp 120 123 134 138 116 515 500
Production
Paperboard 1) 459 458 444 456 418 1,817 1,708
Paper 0 0 0 0 0 0 23
Metsä Fibre pulp 2) 180 152 140 147 149 619 577
Metsä Board pulp 305 353 344 328 306 1,330 1,236

1) Includes wallpaper base deliveries and production, which was discontinued in Q3 2016.

2) Equal to Metsä Board's 24.9 per cent holding in Metsä Fibre.

NEAR-TERM OUTLOOK

Growth in the demand for high-quality consumer packaging paperboard made from fresh fibre is expected to continue in market areas important for Metsä Board. The market prices of folding boxboard and white kraftliners in local currencies are expected to rise as a result of the price increases announced in 2017. Metsä Board aims to further improve the average price of Husum’s folding boxboard and increase sales in North America.

Metsä Board’s paperboard deliveries in January–March are expected to grow from the previous quarter. No significant maintenance shutdowns will take place during the first quarter.

The weakening of the US dollar against the euro, including the impact of hedges, will have a negative effect on the operating result in at least the first half of the year.

The rainy and mild weather in last autumn and early winter has made the situation in the wood supply tougher. For now, the weaker availability of wood has not led to production curtailments at Metsä Board.

Production costs in 2018 are expected to rise from the previous year. Wood prices are expected to increase, particularly in Sweden and the Baltic countries. In addition, the general cost inflation has accelerated slightly.

METSÄ BOARD CORPORATION

Espoo, Finland, 8 February 2018
BOARD OF DIRECTORS

Further information:

Jussi Noponen, CFO, tel. +358 10 465 4913
Katri Sundström, Head of Investor Relations, tel. +358 400 976 333

Further information will be available as of 1 p.m. on 8 February 2018. A conference call held for investors and analysts in English will begin at 3 p.m. Conference call participants are requested to dial in and register a few minutes earlier on the following numbers:

Finland: +358 (0)9 7479 0361
Sweden: +46 (0)8 5033 6574
UK: 44 (0)330 336 9105
US: +1 323-794-2149

The conference ID is 6742592.

Metsä Board
www.metsaboard.com


Metsä Board is a leading European producer of premium fresh fibre paperboards including folding boxboards, food service boards and white kraftliners. Our lightweight paperboards are developed to provide better, safer and more sustainable solutions for consumer goods as well as retail-ready and food service applications. We work together with our customers on a global scale to innovate solutions for better consumer experiences with less environmental impact. The pure fresh fibres Metsä Board uses are a renewable resource, traceable to origin in sustainably managed northern forests.
The global sales network of Metsä Board supports customers worldwide, including brand owners, retailers, converters and merchants. In 2017, the company’s sales totalled EUR 1.8 billion, and it has approximately 2,350 employees. Metsä Board, part of Metsä Group, is listed on the Nasdaq Helsinki.

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About Us

Metsä Boardwww.metsaboard.com Metsä Board is a leading European producer of premium fresh fibre paperboards including folding boxboards, food service boards and white kraftliners. Our lightweight paperboards are developed to provide better, safer and more sustainable solutions for consumer goods as well as retail-ready and food service applications. We work together with our customers on a global scale to innovate solutions for better consumer experiences with less environmental impact. The pure fresh fibres Metsä Board uses are a renewable resource, traceable to origin in sustainably managed northern forests. The global sales network of Metsä Board supports customers worldwide, including brand owners, retailers, converters and merchants. In 2017, the company’s sales totalled EUR 1.8 billion, and it has approximately 2,350 employees. Metsä Board, part of Metsä Group, is listed on the Nasdaq Helsinki.