Metsä Board’s comparable operating result in 2019 was EUR 184 million
Financial statements bulletin for 1 January–31 December 2019 12 February 2020 at 12:00 noon EET
January–December 2019 (1–12/2018)
• Sales were EUR 1,931.8 million (1,944.1).
• Comparable operating result was EUR 184.4 million (251.9), or 9.5% (13.0%) of sales. Operating result was EUR 180.8 million (246.3).
• Comparable earnings per share were EUR 0.41 (0.58), and earnings per share were EUR 0.41 (0.57).
• Comparable return on capital employed was 10.4% (14.4%).
October–December 2019 (7–9/2019)
• Sales were EUR 478.4 million (489.2).
• Comparable operating result was EUR 39.1 million (42.5), or 8.2% (8.7%) of sales. Operating result was EUR 20.0 million (42.5).
• Comparable earnings per share were EUR 0.09 (0.09), and earnings per share were EUR 0.05 (0.09).
• Comparable return on capital employed was 8.9% (9.7%).
Events in October–December 2019
• Cash flow from operations was strong due to lower working capital.
• Paperboard deliveries declined from the previous quarter due to the seasonal decline in December. The average sales prices of folding boxboard and white kraftliner remained stable.
• The market prices of pulp continued to decline, particularly in Europe. Lower pulp costs in the paperboard business reduced the negative impact, but the overall impact on operating result was negative.
• Metsä Board began investing in the first phase of the renewal of the Husum pulp mill, before the final investment decision. In October–December, the investments in the project amounted to EUR 21 million. The total value of the first phase of the investment is approximately EUR 320 million.
• The finishing area of Kyro’s board machine is going to be modernised. The cost of the modernisation is roughly EUR 20 million, and it includes a new reeler and winder, as well as the renewal of the reel broke handling system. The modernisation is expected to be completed in 2021.
• Metsä Board adopted Metsä Group’s Green Finance Framework, which links sustainability and climate change mitigation to Metsä Board’s future financing activities.
• For the third year in a row, Metsä Board achieved the “Gold” level in EcoVadis’s sustainability and social responsibility evaluation. Metsä Board is included among the top 1% of paperboard manufacturers and converters in EcoVadis’s evaluation.
Events after the period
• Finnish Paper Union launched a paper industry strike in Finland on 27 January 2020, which ended on 10 February 2020. The strike affected all Metsä Board’s mills in Finland and the pulp mills of its associated company Metsä Fibre. Metsä Board estimates that the strike will have a negative impact on its operating result of approximately EUR 20 million, affecting mainly the first quarter of the year.
• CDP selected Metsä Board for its Climate A-list in recognition of company’s efforts to reduce fossil CO2 emissions, minimize climate risks and develop low carbon solutions. In the CDP’s Water Program and Forest Program and in the Supply Chain Engagement category, Metsä Board was awarded the Leadership status A-.
Board of Directors’ proposal for dividend and capital distribution
The Board of Directors proposes to the Annual General Meeting to be held on 26 March 2020 that a dividend of EUR 0.10 per share and a capital distribution of EUR 0.14 per share be paid for the 2019 financial period. The proposed dividend and capital distribution, totalling EUR 0.24 per share, corresponds to 59% of the result per share for 2019.
Near-term outlook
The total impact of the Paper Union strike on operating result is approximately EUR 20 million and it will mainly affect the first quarter of 2020.
Metsä Board’s paperboard deliveries in the first quarter are expected to be approximately at the same level as in the fourth quarter of 2019.
The market prices of folding boxboard and white kraftliner in local currencies are expected to remain stable.
The supply and demand of long-fibre pulp is expected to remain balanced, and prices are not expected to decline further.
No significant maintenance shutdowns will take place during January–March at Metsä Board’s mills. The annual maintenance of the associated company Metsä Fibre’s Äänekoski bioproduct mill will begin at the end of March and end at the beginning of April.
Changes in exchange rates, including the impact of hedges, during the first quarter will have a slightly positive impact compared to the fourth quarter of 2019 and a positive impact compared to the first quarter of 2019.
Production costs are expected to remain stable. The prolonged mild winter may complicate harvesting and increase wood costs.
Result guidance for January–March 2020
Metsä Board’s comparable operating result for the first quarter of 2020 is expected to weaken compared to the fourth quarter of 2019 due to strikes at mills in Finland.
Metsä Board’s CEO Mika Joukio:
“October–December developed according to our expectations, and our comparable operating result was EUR 31.9 million. In addition to lower paperboard delivery volumes, our profitability was burdened by market pulp prices, which weakened compared to the previous quarter, particularly in Europe. Our sales prices of folding boxboard and white kraftliner remained stable and lower maintenance costs together with the sales of emission allowances improved the result.
The planned renewal of the Husum pulp mill is progressing. The equipment suppliers for the new recovery boiler and turbine have been selected, and we made the first investments related to the project at the end of the year. We expect to make the final investment decision, which awaits the amendment to the environmental permit issued by the Swedish authorities, during the second quarter of 2020. The renewal will enable the long-term development of our paperboard business at the Husum integrated mill. It will also improve our energy efficiency and is a remarkable step toward our goal of fossil-free mills.
Our comparable operating result in 2019 was EUR 184.4 million. The higher average prices of paper-boards, especially in folding boxboard, improved our profitability. In white kraftliners, we defended our prices successfully, particularly in Europe’s muted demand. The total paperboard delivery volumes were lower than in the previous year. Our market pulp position is large through our holding in Metsä Fibre, due to which the decline in the pulp market prices had a significant negative impact on our results. The cash flow from our operations, EUR 200.5 million, was clearly better than in the previous year, and our balance sheet remained strong.
In 2019, we focused on product development: In the spring, we renewed our folding boxboard portfolio, and in the autumn, we introduced a new, plastic-free eco-barrier paperboard. Both have generated a lot of interest among our customers, and I believe strongly in their commercial success.
The importance of sustainability cannot be overemphasised. We are committed to slowing down cli-mate change and have set ourselves ambitious targets through which we aim, among other things, to have fossil-free mills and raw materials by 2030. Sustainability is important for our customers, and I believe that fossil-free products will provide us with a significant competitive edge in the long run.
Our strategy and financial targets remained unchanged in 2019. We will continue to focus on premium fresh fiber paperboards, and our future growth is strongly guided by our profitability targets. We are a forerunner in sustainability and are increasingly investing in developing innovative and sustainable packaging solutions in cooperation with our customers.
I want to thank our personnel, customers and other stakeholders for the past year.”
Key figures
| 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | |
| Q4 | Q3 | Q2 | Q1 | Q4 | Q1–Q4 | Q1–Q4 | |
| Sales, EUR million | 478.4 | 489.2 | 477.1 | 487.1 | 458.0 | 1931.8 | 1,944.1 |
| EBITDA, EUR million | 59.5 | 62.1 | 73.6 | 99.3 | 81.2 | 294.5 | 338.2 |
| comparable, EUR million | 59.4 | 62.1 | 68.1 | 89.3 | 81.2 | 279.0 | 343.8 |
| EBITDA, % of sales | 12.4 | 12.7 | 15.4 | 20.4 | 17.7 | 15.2 | 17.4 |
| comparable, % of sales | 12.4 | 12.7 | 14.3 | 18.3 | 17.7 | 14.4 | 17.7 |
| Operating result, EUR million | 20.0 | 42.5 | 46.4 | 71.9 | 60.1 | 180.8 | 246.3 |
| comparable, EUR million | 39.1 | 42.5 | 41.0 | 61.8 | 60.1 | 184.4 | 251.9 |
| Operating result, % of sales | 4.2 | 8.7 | 9.7 | 14.8 | 13.1 | 9.4 | 12.7 |
| comparable, % of sales | 8.2 | 8.7 | 8.6 | 12.7 | 13.1 | 9.5 | 13.0 |
| Result before taxes, EUR million | 17.0 | 38.8 | 41.9 | 67.9 | 55.8 | 165.6 | 224.2 |
| comparable, EUR million | 36.1 | 38.8 | 36.4 | 57.9 | 55.8 | 169.2 | 229.7 |
| Result for the period, EUR million | 16.2 | 32.5 | 36.3 | 59.6 | 50.2 | 144.6 | 203.4 |
| comparable, EUR million | 31.2 | 32.5 | 31.9 | 50.2 | 50.2 | 145.8 | 207.8 |
| Earnings per share, EUR | 0.05 | 0.09 | 0.10 | 0.17 | 0.14 | 0.41 | 0.57 |
| comparable, EUR | 0.09 | 0.09 | 0.09 | 0.14 | 0.14 | 0.41 | 0.58 |
| Return on equity, % | 4.9 | 10.1 | 11.4 | 18.4 | 15.5 | 10.9 | 16.3 |
| comparable, % | 9.5 | 10.1 | 10.0 | 15.5 | 15.5 | 11.0 | 16.7 |
| Return on capital employed, % | 4.6 | 9.7 | 10.9 | 16.7 | 13.7 | 10.2 | 14.0 |
| comparable, % | 8.9 | 9.7 | 9.7 | 14.4 | 13.7 | 10.4 | 14.4 |
| Equity ratio at end of period, % | 59 | 58 | 57 | 56 | 58 | 59 | 58 |
| Net gearing ratio at end of period, % | 23 | 27 | 30 | 23 | 25 | 23 | 25 |
| Interest-bearing net liabilities/comparable EBITDA | 1.1 | 1.2 | 1.2 | 0.9 | 1.0 | 1.1 | 1.0 |
| Shareholders’ equity per share at end of period, EUR | 3.76 | 3.65 | 3.60 | 3.57 | 3.72 | 3.76 | 3.72 |
| Interest-bearing net liabilities at end of period, EUR million | 307.8 | 351.8 | 380.2 | 296.6 | 334.6 | 307.8 | 334.6 |
| Investments in owned property, plant and equipment, EUR million | 53.8 | 17.0 | 17.6 | 6.4 | 33.9 | 94.9 | 70.3 |
| Investments in leased property, plant and equipment, EUR million | 3.0 | 0.8 | 0.2 | 0.0 | - | 4.1 | - |
| Net cash flow from operations, EUR million | 89.6 | 43.8 | 30.7 | 36.4 | 30.4 | 200.5 | 150.9 |
| Personnel at end of period | 2,351 | 2,382 | 2,591 | 2,382 | 2,352 | 2,351 | 2,352 |
METSÄ BOARD CORPORATION
BOARD OF DIRECTORS
Further information will be available as of 1 p.m. on 12 February 2020.
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 9 7479 0361
Sweden: +46 8 5033 6574
The United Kingdom: +44 330 336 9105
The United States: +1 323-701-0225
The conference ID is 7352059.
Further information:
Jussi Noponen, CFO, tel. +358 10 465 4913
Katri Sundström, VP, Investor Relations, tel. +358 10 462 0101
Metsä Board
Metsä Board is a leading European producer of premium fresh fibre paperboards and forerunner in sustainability. We produce premium lightweight folding boxboards, food service boards and white kraftliners for consumer goods packaging 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. We aim for completely fossil-free mills and raw materials by 2030.
The global sales network of Metsä Board supports customers worldwide, including brand owners, retailers, converters and merchants. In 2019, the company’s sales totalled EUR 1.9 billion, and it has approximately 2,400 employees. Metsä Board, part of Metsä Group, is listed on the Nasdaq Helsinki.