Metsä Group’s operating result for january–september 2014 excluding non-recurring items was eur 301 million
Metsä Group Interim Report 1–9/2014, Stock Exchange Release 5 November 2014 at noon EET
Result for January–September
– Sales amounted to EUR 3,723 million (1–9/2013: EUR 3,719 million).
– Operating result excluding non-recurring items was EUR 301 million (256). Operating result including non-recurring items was EUR 333 million (247).
– Result before taxes excluding non-recurring items was EUR 238 million (171). Result before taxes including non-recurring items was EUR 262 million (162).
– Return on capital employed excluding non-recurring items was 11.1 per cent (9.0).
– Cash flow from operations amounted to EUR 374 million (295).
Result for July–September
– Sales amounted to EUR 1,204 million (7–9/2013: EUR 1,214 million).
– Operating result excluding non-recurring items was EUR 104 million (73). Operating result including non-recurring items was EUR 103 million (63).
– Result before taxes excluding non-recurring items was EUR 81 million (41). Result before taxes including non-recurring items was EUR 79 million (31).
– Return on capital employed excluding non-recurring items was 10.7 per cent (7.4).
– Cash flow from operations amounted to EUR 180 million (170).
Events in the third quarter
– Sales amounted to EUR 1,204 million (7–9/2013: EUR 1,214 million).
– Operating result excluding non-recurring items was EUR 104 million (73). Operating result including non-recurring items was EUR 103 million (63).
– Result before taxes excluding non-recurring items was EUR 81 million (41). Result before taxes including non-recurring items was EUR 79 million (31).
– Return on capital employed excluding non-recurring items was 10.7 per cent (7.4).
– Cash flow from operations amounted to EUR 180 million (170).
Events after the period
– Mika Joukio, M.Sc. (Tech.), MBA, started as CEO of Metsä Board Corporation on 1 October 2014.
– In October, Metsä Wood announced it would launch a performance improvement programme consisting of sales growth projects, cost savings and structural changes.
“The third quarter operating result excluding non-recurring items was at the higher end of our guidance. The results of pulp and paperboard businesses were at a good level, as expected. Tissue and cooking papers increased its operating result considerably from the previous quarter.
Metsä Group has maintained its solid financial performance by means of cost-efficiency and high productivity. Because economic growth in Europe is at a standstill and no market recovery is in sight, we are also seeking growth outside of our main market Europe, in particular in North America and Asia. Our paperboard business is on a good growth track in North America, and our wood products industry has also strengthened its position outside Europe. Approximately one quarter of our pulp deliveries are shipped to Asia, which is an interesting market area for our other business operations as well.
We are continuing our systematic investments in order to ensure our long-term competitiveness. From the government we expect measures which safeguard a favourable operating environment for the Finnish export industry and thus ensure continued industrial production in Finland.”
Kari Jordan, President & CEO, Metsä Group
Metsä Group
| Income statement, EUR million | 2014 | 2013 | 2014 | 2013 | 2013 |
| The figures for 2013 are restated | 1–9 | 1–9 | 7–9 | 7–9 | 1–12 |
| Sales | 3 722.8 | 3 719.4 | 1 203.6 | 1 213.9 | 4 938.7 |
| Other operating income | 141.2 | 55.9 | 16.9 | 16.7 | 81.0 |
| Operating expenses | -3 342.3 | -3 332.9 | -1 054.5 | -1 099.7 | -4 427.7 |
| Depreciation and impairment losses | -188.9 | -195.8 | -63.1 | -67.9 | -257.1 |
| Operating result | 332.7 | 246.7 | 102.9 | 63.0 | 335.0 |
| Share of results from associated companies and joint ventures | 14.5 | 9.5 | -0.9 | 0.1 | 9.6 |
| Exchange gains and losses | -1.2 | -1.9 | -0.0 | -2.0 | -4.6 |
| Other net financial items | -83.7 | -92.0 | -22.6 | -30.1 | -116.2 |
| Result before income tax | 262.3 | 162.4 | 79.4 | 31.0 | 223.8 |
| Income tax | -58.6 | -45.4 | -17.4 | -10.6 | -35.1 |
| Result for the period | 203.7 | 117.0 | 62.0 | 20.4 | 188.7 |
| Profitability | 2014 | 2013 | 2014 | 2013 | 2013 |
| The figures for 2013 are restated | 1–9 | 1–9 | 7–9 | 7–9 | 1–12 |
| Operating result, EUR million | 332.7 | 246.7 | 102.9 | 63.0 | 335.0 |
| - ” -, excluding non-recurring items | 300.9 | 255.6 | 104.3 | 72.6 | 342.9 |
| - ” -, % of sales | 8.1 | 6.9 | 8.7 | 6.0 | 6.9 |
| Return on capital employed, % | 12.0 | 8.7 | 10.6 | 6.4 | 8.9 |
| - ” -, excluding non-recurring items | 11.1 | 9.0 | 10.7 | 7.4 | 9.1 |
| Return on equity, % | 13.6 | 8.3 | 12.4 | 4.4 | 9.9 |
| - ” -, excluding non-recurring items | 12.0 | 9.0 | 12.6 | 6.4 | 10.3 |
| Financial position | 2014 | 2013 | 2014 | 2013 | 2013 |
| The figures for 2013 are restated | 30.9. | 30.9. | 30.6. | 30.6. | 31.12. |
| Equity ratio, % | 38.5 | 35.9 | 37.9 | 34.8 | 37.9 |
| Net gearing ratio, % | 62 | 85 | 70 | 90 | 77 |
| Interest-bearing net liabilities, EUR million | 1 258 | 1 604 | 1 389 | 1 669 | 1 510 |
SEGMENTS
| Sales and Operating result 1–9/2014, EUR million | Wood Supply and Forest Services | Wood Products Industry | Pulp Industry | Paperboard and Paper Industry | Tissue and Cooking Papers |
| Sales | 1 177.5 | 681.0 | 958.6 | 1 509.0 | 755.2 |
| Other operating income | 4.5 | 6.8 | 30.3 | 49.0 | 7.1 |
| Operating expenses | -1 161.1 | -637.3 | -777.8 | -1 372.2 | -692.9 |
| Depreciation and impairment losses | -2.3 | -22.1 | -47.6 | -76.0 | -28.7 |
| Operating result | 18.6 | 28.4 | 163.4 | 109.8 | 40.7 |
| Non-recurring items | 1.5 | 0.8 | -20.3 | -10.2 | 0.4 |
| Operating result excluding non-recurring items | 20.1 | 29.2 | 143.1 | 99.6 | 41.0 |
| - " -, % of sales | 1.7 | 4.3 | 14.9 | 6.6 | 5.4 |
Near-term outlook
Metsä Forest buys wood from across the country, primarily from stands harvested when the ground is unfrozen. Winter thinning stands are purchased in limited volumes, mainly from active contract customers. This is due, among other things, to an inability to carry out some of the thinnings planned for last winter because of the poor weather conditions, which were then moved to the upcoming winter harvest.
Sales in the wood products industry are expected to grow slightly in the fourth quarter compared to both the third quarter and the corresponding period in the previous year. The strengthening exchange rate of the US dollar supports the sales prices and competitiveness of wood products in markets outside Europe. The balance between demand and supply in sawn timber has weakened due to increased supply in the Nordic countries. The production of sawn timber might have to be restricted during the remainder of the year. The weak trend in construction in our main markets in Europe decreases demand for wood products. In other markets demand is picking up. The market balance for softwood plywood is still good.
The global demand for softwood pulp is expected to continue to grow moderately, and softwood pulp supply and demand are expected to be in balance in the near future as well. The capacity utilisation rates of Metsä Fibre's mills are expected to remain at a good level in the last quarter of the year.
Compared to the previous quarter, the delivery volumes of folding boxboard and white-top fresh forest fibre linerboard are expected to decrease slightly in the last quarter of 2014 due to the seasonally weak month of December. The delivery volumes of papers are expected to remain at approximately the same level as in the third quarter.
Demand in the tissue paper market is expected to continue to grow in all market areas and particularly in eastern Central Europe.
Metsä Group’s operating result excluding non-recurring items in the last quarter of 2014 is expected to be approximately on the same level as in the third quarter of 2014.
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–September 2014 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, Communications, Metsä Group, tel. +358 (0)10 465 4541, +358 (0)50 522 0924
www.metsagroup.com
Metsä Group is a responsible forest industry group whose products’ main raw material is renewable and sustainably grown northern wood. Metsä Group focuses on tissue and cooking papers, consumer packaging paperboards, pulp, wood products, and wood supply and forest services. Its high-quality products combine renewable raw materials, customer-orientation, sustainable development and innovation. Metsä Group’s sales totalled EUR 4.9 billion in 2013, and it employs approximately 11,000 people. The Group operates in some 30 countries. Metsäliitto Cooperative is the parent company of Metsä Group and is owned by approximately 123,000 Finnish forest owners.