Metsä Board’s comparable operating result in January–March 2018 was EUR 69 million
Metsä Board Corporation Interim Report 1 January – 31 March 2018, 3 May 2018 at 12:00 noon
January–March 2018 (10–12/2017)
• Sales were EUR 492.3 million (451.3).
• Comparable operating result was EUR 69.0 million (54.4), or 14.0% (12.0) of sales. The operating result was EUR 69.0 million (54.4).
• Comparable earnings per share were EUR 0.15 (0.12), and earnings per share were EUR 0.15 (0.12).
• Comparable return on capital employed was 15.8% (12.4).
January–March 2018 (1–3/2017)
• Sales were EUR 492.3 million (444.5).
• Comparable operating result was EUR 69.0 million (45.2), or 14.0% (10.2) of sales. The operating result was EUR 69.0 million (45.2).
• Comparable earnings per share were EUR 0.15 (0.10), and earnings per share were EUR 0.15 (0.10).
• Comparable return on capital employed was 15.8% (10.6).
Events in January–March 2018
• The market prices of folding boxboard and white kraftliner rose. The improved sales prices compensated for the unfavourable exchange rate in full.
• The prices of market pulp continued to rise.
• No significant maintenance shutdowns took place during the review period, and the production efficiency of the mills was at a good level.
• The capacity utilisation rate of folding boxboard at the Husum mill is now nearly 90%, and it will not be reported on separately in the future. The improvement of average sales prices still includes significant result improvement potential.
• Due to the strong pulp and paperboard market, Metsä Board raised the result guidance for January–March 2018 it had announced in its 2017 financial statements bulletin.
• Metsä Board’s Annual General Meeting for 2018 was held in Helsinki on 27 March 2018. The Annual General Meeting adopted the company’s financial statements for the financial year 2017 and decided to distribute a dividend of EUR 0.21 per share.
• Standard & Poor’s Ratings Services raised Metsä Board’s credit rating to investment grade. The outlook for the rating is stable.
Events after the review period
Metsä Board Corporation agreed to changes in its syndicated credit agreement maturing in 2020. The agreement has previously consisted of a EUR 150 million term loan and an undrawn revolving credit facility of EUR 100 million. On 27 April 2018, the company paid off EUR 100 million of its existing loan and simultaneously raised its credit facility by EUR 50 million. After the change, the syndicated credit agreement consists of a EUR 50 million term loan and an undrawn revolving credit facility of EUR 150 million.
Moody’s Investors Service raised the outlook on Metsä Board’s credit rating (Ba1) from stable to positive.
Result guidance for April–June 2018
Metsä Board’s comparable operating result in the second quarter of 2018 is expected to weaken compared to the first quarter of 2018.
Metsä Board has simplified its principles with regard to result guidance. The result guidance is issued on forecast changes in comparable operating result between the current quarter and the previous quarter, and there are three levels: weaker, roughly at the same level, and better. Previously, there were seven levels.
Metsä Board’s CEO Mika Joukio:
“Metsä Board had an excellent start for the year 2018 and the result for January-March was the best in years. Our sales grew by 9 percent and our comparable operating profit improved by 27 percent compared to the previous quarter. The production and delivery volumes of paperboard rose and sales prices in local currencies improved in all of our important market areas. The rise in prices compensated in full for the negative effect on results caused by exchange rates. Our profitability also improved due to the pulp market being stronger than expected and the rise in pulp prices. No significant maintenance shutdowns took place during the first quarter, which improves the quarter’s results in comparison to other quarters.
The production efficiency of our mills was at a good level, and several of our production units set new monthly production records. The production and delivery volumes of PE-coated paperboard at the Husum mill in Sweden also grew.
Our balance sheet remained to be strong. We have reduced our net interest-bearing liabilities by more than EUR 100 million over the year. The credit market showed its trust in Metsä Board’s future: in February, the credit rating agency Standard & Poor’s raised our credit rating to investment grade.
In our research and development operations, we are focusing on reducing the weight of paperboard and on the development of biobased barrier materials and other innovative barrier solutions. In January, we launched a new biobased, biodegradable ecobarrier paperboard for the food service end-uses.
I believe that the demand for fresh fibre paperboard will continue to grow. The plastic waste accumulating in oceans has raised environmental awareness among consumers, and concern over the transfer of mineral oils from packages made from recycled fibres to foodstuffs themselves is increasing demand for pure and safe fresh fibre. Metsä Board’s ecological and lightweight paperboards successfully meet these market trends and needs.”
Financial key figures
| 2018 | 2017 | 2017 | 2017 | 2017 | 2017 | |
| Q1 | Q4 | Q3 | Q2 | Q1 | Q1–Q4 | |
| Sales, EUR million | 492.3 | 451.3 | 478.6 | 474.2 | 444.5 | 1,848.6 |
| EBITDA, EUR MILLION | 94.3 | 77.8 | 85.2 | 67.0 | 68.8 | 298.7 |
| comparable, EUR million | 94.3 | 77.8 | 75.0 | 67.5 | 68.8 | 289.1 |
| EBITDA, % of sales | 19.2 | 17.2 | 17.8 | 14.1 | 15.5 | 16.2 |
| comparable, % of sales | 19.2 | 17.2 | 15.7 | 14.2 | 15.5 | 15.6 |
| Operating result, EUR million | 69.0 | 54.4 | 60.6 | 46.9 | 45.2 | 207.1 |
| comparable, EUR million | 69.0 | 54.4 | 50.4 | 43.5 | 45.2 | 193.5 |
| Operating result, % of sales | 14.0 | 12.0 | 12.7 | 9.9 | 10.2 | 11.2 |
| comparable, % of sales | 14.0 | 12.0 | 10.5 | 9.2 | 10.2 | 10.5 |
| Result before taxes, EUR million | 61.0 | 46.8 | 43.8 | 40.3 | 39.9 | 170.8 |
| comparable, EUR million | 61.0 | 46.8 | 33.5 | 36.9 | 39.9 | 157.2 |
| Result for the period, EUR million | 53.9 | 42.1 | 39.3 | 35.0 | 34.2 | 150.5 |
| comparable, EUR million | 53.9 | 42.1 | 29.0 | 32.2 | 34.2 | 137.5 |
| Result per share, EUR | 0.15 | 0.12 | 0.11 | 0.09 | 0.10 | 0.42 |
| comparable, EUR | 0.15 | 0.12 | 0.08 | 0.09 | 0.10 | 0.39 |
| Return on equity, % | 18.7 | 14.8 | 14.2 | 13.2 | 13.1 | 13.6 |
| comparable, % | 18.7 | 14.8 | 10.5 | 12.2 | 13.1 | 12.4 |
| Return on capital employed, % | 15.8 | 12.4 | 13.9 | 11.1 | 10.6 | 11.9 |
| comparable, % | 15.8 | 12.4 | 11.5 | 10.3 | 10.6 | 11.2 |
| Equity ratio at end of period, % | 50 | 53 | 51 | 51 | 47 | 53 |
| Net gearing ratio at end of period, % | 29 | 31 | 39 | 45 | 44 | 31 |
| Interest-bearing net liabilities/EBITDA1) | 1.1 | 1.2 | 1.7 | 2.0 | 1.9 | 1.2 |
| Shareholders' equity per share at end of period, EUR | 3.21 | 3.28 | 3.14 | 3.06 | 2.90 | 3.28 |
| Interest-bearing net liabilities, EUR million | 334.7 | 358.4 | 436.9 | 495.2 | 457.8 | 358.4 |
| Gross investments, EUR million | 10.5 | 26.7 | 7.3 | 12.4 | 19.0 | 65.4 |
| Net cash flow from operating activities, EUR million | 30.2 | 106.1 | 67.5 | 37.1 | 25.6 | 236.3 |
| Personnel at the end of period | 2,402 | 2,351 | 2,369 | 2,581 | 2,450 | 2,351 |
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 kraftliner in local currencies are expected to remain stable or to rise slightly.
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 April–June are expected to grow slightly from the previous quarter.
Several maintenance shutdowns are set to take place at Finnish mills in the second quarter, including two mills of associated company Metsä Fibre, which will burden the result compared to 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 at least until the end of third quarter.
Production costs in 2018 are expected to rise from the previous year. In addition, general cost inflation has accelerated slightly.
METSÄ BOARD CORPORATION
Espoo, Finland, 3 May 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 3 May 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 9 7479 0361
Sweden +46 8 5033 6574
United Kingdom +44 330 336 9105
United States +1 323-794-2093
The conference ID is 9225128.
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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