Munksjö Oyj's Financial Statements Bulletin 2015: Strong cash flow in the fourth quarter. Full year profitability affected by higher raw material prices.

MUNKSJÖ OYJ, FINANCIAL STATEMENTS BULLETIN 11 February 2016 at 7:30 a.m. CET  

Strong cash flow in the fourth quarter. Full year profitability affected by higher raw material prices.

Highlights of the fourth quarter 2015

- Net sales were EUR 290.0 (281.0) million.

- Adjusted EBITDA was EUR 22.1 (28.4) million and the adjusted EBITDA margin was 7.6% (10.1%).

- Operating result adjusted for non-recurring items was EUR 8.5 (14.4) million. There were no non-recurring items in the reporting period.

- Operating result was EUR 8.5 (10.7) million and net result EUR 7.2 (2.7) million.

- Earnings per share (EPS) were EUR 0.14 (0.05). 

- Operating cash flow was EUR 44.5 (33.3) million.
 

Highlights of January-December 2015

- Net sales were EUR 1,130.7 (1,137.3) million.

- Adjusted EBITDA was EUR 93.6 (105.0) million and the adjusted EBITDA margin was 8.3% (9.2%). 

- Operating result adjusted for non-recurring items was EUR 40.0 (51.0) million. Non-recurring items amounted to EUR -7.3 (-5.6) million.

- Operating result was EUR 32.7 (45.4) million and net result EUR 22.8 (7.7) million.  

- Earnings per share (EPS) were EUR 0.44 (0.14).

- Operating cash flow was EUR 55.5 (57.8) million.

- The Board of Directors proposes to the AGM that EUR 0.30 (0.25) per share be paid to the shareholders as return of equity from the reserve for invested non-restricted equity.
 

* Adjusted for non-recurring items

Unless otherwise indicated, the figures in parentheses refer to the figures for the equivalent period in 2014. This financial report is unaudited. It is published in Swedish, Finnish and English. In case of any discrepancies between the three versions, the Swedish text shall prevail.
 

Comment from Munksjö’s President and CEO, Jan Åström

“Munksjö’s 2015 showed stable volume development in most of our product segments during a year with global macroeconomic uncertainty, which especially impacted our operations in Brazil. Our main markets remain in Europe, but growth in business area Decor compared to 2014 was mainly driven by our selective geographical expansion and the business area reached record high delivery volumes in the fourth quarter.

During 2015, the price difference between short and long fibre pulp reached historically low levels. We have been bridging the profitability gap resulting from the spread by implementing price increases in our two largest business areas. The implemented price increases had an expected full effect from the beginning of the fourth quarter, but they are on an annual basis not yet compensating for the total effect of the increased raw material costs. We will close the gap for the remaining volumes within the European paper business unit of Release Liners during the first quarter of 2016, as already negotiated terms take effect.

In the fourth quarter, we implemented longer shutdowns in particularly business area Graphics and Packaging and in the paper business unit in Brazil in order to reach our targeted inventory levels at the end of the year. The shutdowns had a negative result effect of approximately EUR 3 million in the quarter. The annual cash flow from operations remained stable.

Our performance during 2015 confirmed my view that our strategy enables sustainable growth and that we also going forward are able to strengthen our leading positions through our value added solutions. Our long-term market growth expectation remains intact at between 2-4 per cent annually, as the demand for several of the end-use applications of our product solutions is supported by global megatrends.

During 2016, we continue the efforts and actions to achieve our profitability target, an EBITDA margin of 12 per cent at the end of the year.“
 

Outlook

The demand outlook in 2016 for Munksjö’s specialty paper products is expected to remain stable and reflect the seasonal pattern.

The price increases communicated in the second and third quarter of 2015 have had a full effect from the beginning of the fourth quarter of 2015, and the remaining increases in the European paper business unit of business area Release Liners have a full effect from the first quarter of 2016.

The EBITDA margin adjusted for non-recurring items in 2016 is expected to improve compared with 2015 driven by the on-going profitability improvement plan including increased operational efficiency, profitable growth, product and service quality leadership and utilising the position as a market and innovation leader.

The annual maintenance and vacation shutdowns in the second and third quarter as well as the seasonal shutdowns at the end of 2016 are expected to be carried out to about the same extent as in 2015. The next maintenance shut down at the pulp production facility in Aspa in Sweden will be carried out in the third quarter of 2016.

The cash flow effect of capital expenditure for fixed assets for 2016 is expected to be EUR 35-40 million.

The Munksjö Group 

* Adjusted for non-recurring items

Fourth quarter 2015

Net sales were EUR 290.0 (281.0) million.

EBITDA adjusted for non-recurring items decreased to EUR 22.1 (28.4) million and the adjusted EBITDA margin was 7.6% (10.1%). Currency hedge losses of EUR 0.2 (1.8) million were recorded in segment Other in the quarter.

The operating result adjusted for non-recurring items was EUR 8.5 (14.4) million. There were no non-recurring items in the reporting period.

The seasonal shutdowns at the end of 2015 were slightly longer on a Group level compared to the corresponding period last year, as the shutdowns were longer in the Business Area Graphics & Packaging and the paper business unit in Brazil of business area Release Liners. The prolonged shutdowns were carried out in accordance with the plan to reduce inventory levels in the fourth quarter of 2015 and resulted in a decrease in EBITDA of approximately EUR 3 million.

The operating result was EUR 8.5 (10.7) million and net result EUR 7.2 (2.7) million.
 

January–December 2015

Net sales were EUR 1,130.7 (1,137.3) million.

EBITDA adjusted for non-recurring items decreased to EUR 93.6 (105.0) million and the adjusted EBITDA margin was 8.3% (9.2%). A higher raw material cost level resulted in a decrease of EBITDA of EUR 26 million. This negative result effect was only partially compensated for by a positive effect of EUR 14 million as a result of increased sales prices. Sales prices were impacted by implemented price increases, a more favourable currency development, a different product mix and a lower sales price for long-fibre pulp (NBSK).

Currency hedge losses of EUR 4.9 (3.6) million were recorded in segment Other in the reporting period.

The operating result adjusted for non-recurring items was EUR 40.0 (51.0) million. Non-recurring items amounted to EUR -7.3 (-5.6) million and were related to the restructuring actions at the production facility located in Italy, which is part of Business Area Release Liners, other efforts to adjust the cost structure, other reorganization activities and environmental provisions.

The planned annual maintenance and vacation shutdowns in the second and third quarter were carried out to the same extent as in 2014. The seasonal shutdowns at the end of 2015 were slightly longer on a Group level compared to the corresponding period last year, as the shutdowns were longer in the Business Area Graphics & Packaging and the paper business unit in Brazil of business area Release Liners.

The operating result was EUR 32.7 (45.4) million and net result EUR 22.8 (7.7) million. Earnings per share increased to EUR 0.44 (0.14).

The currency hedge loss of EUR 4.9 (3.6) million recorded in EBITDA was more than compensated for by exchange gains on financial assets and liabilities of EUR 9.5 (losses of 0.9) million recorded in net financial items.

Webcast and conference call

A combined news conference, conference call and live webcast will be arranged on the publishing day 11 February 2016 at 10:00 a.m. CET (11:00 a.m. EET, 9:00 a.m. GMT) at restaurant Savoy (Eteläesplanadi 14, 7th floor, Helsinki). The report will be presented by President and CEO Jan Åström. The event will be held in English.

The conference call and live webcast can be followed on the Internet and an on-demand version of the webcast will be available on the same webpage later the same day. To join the conference call, participants are requested to dial one of the numbers below 5-10 minutes prior to the start of the event.

Webcast and conference call information

Finnish callers: +358 (0)9 6937 9543
Swedish callers: +46 (0)8 5033 6539
US callers: +1 646 254 3366
UK callers: +44 (0)20 3427 1904

Conference ID: 8871412

Link to the webcast

For further information, please contact

Jan Åström, President and CEO, Tel. +46 10 250 1001
Pia Aaltonen-Forsell, CFO, Tel. +46 10 250 1029

Made by Munksjö - Intelligent paper technology

Munksjö is a world-leading manufacturer of advanced paper products developed with intelligent paper technology. Munksjö offers customer-specific innovative design and functionality in areas ranging from flooring, kitchens and furnishings to release papers, consumer-friendly packaging and energy transmission. The transition to a sustainable society is a natural driving force for Munksjö's growth as the products can replace non-renewable materials. This is what "Made by Munksjö" stands for. Given Munksjö's global presence and way of integrating with the customers, the company forms a worldwide service organisation with approximately 2,900 employees and 15 facilities located in France, Sweden, Germany, Italy, Spain, Brazil and China. Munksjö's share is listed on Nasdaq in Helsinki and Stockholm. Read more at www.munksjo.com.