Metsä Group’s operating result EUR 52 million excluding non-recurring items in January–March

Metsä Group Interim Report 1-3/2012, Stock Exchange Release 3 May 2012 at noon EET

Result for the first quarter of 2012
– Sales amounted to EUR 1,284 million (1–3/2011: EUR 1,403 million).
– Operating result excluding non-recurring items was EUR 52 million (130). Operating result including non-recurring items was EUR 44 million (133).
– Result before taxes and excluding non-recurring items was EUR 18 million (86). Result before taxes including non-recurring items was EUR 10 million (89).

Events in the first quarter
– Metsäliitto Group changed its name to Metsä Group and adopted a new corporate identity. Wood Products Industry is now Metsä Wood, Metsä-Botnia is Metsä Fibre and M-real is Metsä Board. The name of Metsä Tissue remained unchanged. Metsäliitto Cooperative’s Wood Supply is now Metsäliitto Puunhankinta in Finland and Metsä Forest internationally.
– A new investment product, Equity Bonus, has been available to owner-members of Metsäliitto Cooperative from the beginning of the year.
– The unprofitable operations of Metsä Board’s Gohrsmühle mill were discontinued and the Alizay mill in France was closed down.
– Metsä Board sold the Premium Paper business operations of the Reflex mill to Hahnemühle FineArt GmbH.

Events after the period
– Metsä Group agreed on a transaction in which the Japanese Itochu Corporation acquires a 24.9 per cent holding in Metsä Fibre. The transaction is expected to be completed within the next couple of days. In addition, on 24 April 2012, Metsäliitto Cooperative used its purchase option concerning Metsä Fibre shares owned by UPM-Kymmene. The realisation price of the purchase option concerning UPM’s 11 per cent holding in Metsä Fibre was EUR 150 million.
– At the beginning of May, Metsä Board signed a committed syndicated credit facility totalling EUR 600 million, in order to refinance a EUR 500 million bond maturing on 1 April 2013.

“Our performance in the first quarter of 2012 was as expected: both sales and the result improved compared with the final quarter of 2011. In particular, Metsä Board and Metsä Fibre improved their operating results, due to higher delivery volumes of board, improved utilisation rates and increased sales volumes of pulp. However, the continuing uncertainty over the world economy affected financial performance in all of our business operations. 

Metsä Board’s restructuring measures, initiated in 2005, and the strategic review of its paper business are close to completion. Measures taken due to the discontinuing of businesses have proceeded according to plan and within the estimated cost budget.  The company is now focusing on fresh forest fibre board, its foundation is stronger and results will start to show in the next quarters. Our position as one of the leading players in the global pulp market will be strengthened by the ownership arrangement carried out in April. 

Metsä Group's new corporate identity has been received well in the market, and it enhances the Group's competitiveness. Thanks to our focused strategy, we can allocate our development investments to areas where we see the best opportunities for growth. Our investment programme to improve the productivity and efficiency of our production plants is progressing as planned.”


Kari Jordan, President & CEO, Metsä Group


Key figures

Metsä Group

Income statement 2012
1–3
2011
1–3
2011
1–12
Sales 1 284 1 403 5 346
  Other operating income 21 29 95
  Operating expenses -1 195 -1 228 -5 058
  Depreciation and impairment losses -66 -71 -354
Operating result 44 133 29
  Share of profit from associates -1 0 4
 Exchange gains and losses 1 -1 2
  Other net financial items -34 -44 -133
Result before income tax 10 89 -98
  Income taxes -8 -26 -59
Result for the period 2 63 -157



Metsä Group

Profitability 2012
1–3
2011
1–3
2011
1–12
Operating result, EUR mill. 44 133 29
   - “ -, excluding non-recurring items 52 130 314
   - “ - % of sales 4.0 9.3 5.9
Return on capital employed, % 4.7 13.2 1.1
   - ” -, excluding non-recurring items 5.5 12.8 8.5
Return on equity, % 0.4 14.7 -9.9
   - ” -, excluding non-recurring items 2.5 13.9 8.6
       
Financial position 2012
31.3
2011
31.3
2011
31.12
Equity ratio, % 28.5 30.4 28.3
Net gearing ratio, % 132 112 131
Interest-bearing net liabilities, EUR mill. 1 993 1 933 1 953


 

Segments 

Sales and Operating result
January–March 2012
(EUR mill.)
 
Wood
Supply 
Wood
Products
Industry
 
Pulp
Industry
Paperboard and Paper
Industry
Tissue and Cooking
Papers
Sales 404 222 326 545 244
 Other operating income 3 2 4 12 4
 Operating expenses -400 -212 -273 -532 -226
 Depreciation & impairment losses -1 -8 -12 -29 -12
Operating result 6 4 45 -4 10
  Non-recurring items - - -2 10 -
Operating result, excl. non-rec. items 6 4 43 5 10
- % of sales 1.5 1.9 13.0 0.9 3.9

 

Near-term outlook
Demand for logging sites harvested in the summer continues to be good, particularly with regard to log-dominated regeneration felling and thinning. Demand for wood from delivery contracts is also good.

The operating result of Wood Products Industry is expected to strengthen during the second quarter. In particular, building is expected to recover, due to seasonal variation in demand.

The increases in delivery volumes and prices in the first quarter provide a good basis for the coming months in the pulp business, provided that there are no negative developments in the general economic climate.

Order books for board have normalised and utilisation rates have clearly improved from the year-end level. In the second quarter, board delivery volumes are expected to improve compared with the first quarter. No essential changes are expected in board prices in the next few months. No major changes are expected in paper product delivery volumes in the second quarter. The price of uncoated fine paper is expected to rise slightly, and the price of coated paper is expected to remain steady on average.

Demand for tissue and cooking papers is expected to increase moderately. Additional sales are sought through new products. High energy and raw material prices will continue to present challenges to the company’s profit development. The increase of sales based on own brands, the increase of cash flow and improvement of the operating result are the main goals for this year.

Metsä Group's operating result excluding non-recurring items in the second quarter of 2012 is expected to improve from the first quarter.

Disclosure procedure
Metsä Group follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority and hereby publishes its Interim Report for January–March 2012 enclosed to this stock exchange release. Metsä Group’s complete Interim Report is attached to this release in pdf-format and is also available on the company's web site at www.metsagroup.com.


METSÄ GROUP
Group Communications

For further information, please contact:
Vesa-Pekka Takala, CFO, Metsä Group, tel. +358 (0)10 465 4260
Reeta Kaukiainen, SVP, Metsä Group Communications, tel. +358 (0)10 465 4541, +358 (0)50 522 0924


www.metsagroup.com 

Metsä Group is a responsible forest industry group whose products are part of people’s everyday life and promote sustainable well-being. Metsä Group produces high-quality products mainly from renewable Nordic wood. The Group’s business areas are tissue and cooking papers, board and paper, pulp, wood products as well as wood supply. Metsä Group’s sales totalled EUR 5.3 billion in 2011, and it employs approximately 12,500 people. The Group is present in some 30 countries.

About Us

Metsä Tissuewww.metsatissue.com With its high-quality tissue and cooking papers, Metsä Tissue makes life more comfortable for consumers, customers and end-users every day. Metsä Tissue is a leading tissue paper products supplier to households and professionals in Europe and the world’s leading supplier of baking and cooking papers. Our main brands are Lambi, Serla, Mola, Tento, Katrin and SAGA. With production units in five countries, we employ a total of about 2,700 people. Our sales in 2016 were EUR 1 billion. Metsä Tissue is part of Metsä Group.

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