Metsä Board’s comparable operating result in January–September 2019 was EUR 145 million
Metsä Board Corporation Interim Report 1 January–30 September 2019 31 October 2019 at 12:00 noon EET
January–September 2019 (1–9/2018)
• Sales were EUR 1,453.4 million (1,486.1).
• Comparable operating result was EUR 145.3 million (191.9), or 10.0% (12.9%) of sales. Operating result was EUR 160.8 million (186.3).
• Comparable earnings per share were EUR 0.32 (0.44), and earnings per share were EUR 0.36 (0.43).
• Comparable return on capital employed was 11.0% (14.7%).
July–September 2019 (4–6/2019)
• Sales were EUR 489.2 million (477.1).
• Comparable operating result was EUR 42.5 million (41.0), or 8.7% (8.6%) of sales. Operating result was EUR 42.5 million (46.4).
• Comparable earnings per share were EUR 0.09 (0.09), and earnings per share were EUR 0.09 (0.10).
• Comparable return on capital employed was 9.7% (9.7%).
Events in July–September 2019
• The delivery volumes of paperboards in July–September increased from the previous quarter. Prices remained stable.
• The market prices of pulp declined from the previous quarter.
• Planned annual maintenance shutdowns were held at the Kemi and Husum integrated mills. The maintenance shutdown at Husum ended at the be-ginning of October, and for this reason some of the impact will be visible in the fourth quarter results.
• Metsä Board launched a new plastic-free eco-barrier paperboard for food and food service packaging.
• The company published new sustainability targets. Targets include e.g. fossil-free mills and raw materials by 2030.
• Metsä Board signed a bank financing facility including sustainability targets. The facility consists of a EUR 150 million term loan and a EUR 200 million revolving credit facility.
Events after the review period
• On 8 October, Metsä Board gave a positive profit warning concerning the July–September results. Paperboard deliveries in the third quarter were on a higher level than earlier expected and wood costs were lower.
• On 30 October, the company announced that it aims to minimize the delay caused by the environmental permit process for the first phase of the planned renewal of Husum pulp mill. The company will make financial commitments for the renewal of a maximum of EUR 100 million before the final investment decision.
Result guidance for October–December 2019
Metsä Board’s comparable operating result for the fourth quarter of 2019 is expected to remain roughly at the same level as in the third quarter of 2019.
Metsä Board’s CEO Mika Joukio:
“The negative effects of the weakening macroeconomic situation remained smaller than we expected in July–September and our comparable operating result, EUR 42.5 million, was better than we previously estimated. Good paperboard sales and wood costs, which were slightly lower than expected, improved our profitability. Particularly the delivery volumes of white kraftliners in July–September grew compared to previous quarters. Over the past year, we have defended our prices in a weakening market situation, which has been visible in the delivery volumes of our kraftliners. Profitability in the third quarter was burdened by the low price level of market pulp and the planned maintenance shutdowns of our integrated mills.
Our comparable operating result for January–September, EUR 145 million, was weaker than last year and mainly due to declining prices of market pulp. In Europe and China, the price of long-fibre pulp is approximately 30% lower than in the corresponding period last year. On the other hand, the average prices of our paperboards, and particularly folding boxboard, have increased from last year. Currencies have also had a positive impact on results.
In August, we published new ambitious sustainability targets. Among other things, we are aiming for fossil-free mills and raw materials as well as the improvement of energy efficiency and lower process water consumption by 2030. Sustainability is a strong part of our business, and the targets that we have now set are an indication of our commitment to combating climate change in accordance with the UN’s sustainable development goals. The renewal of Husum pulp mill would represent a significant step towards fossil-free mills. Our recently agreed new financing facility is also partly tied to our sustainability targets.
We continue to develop our paperboards and packaging solutions. Consumers and brand owners across the world are looking for more responsible and easily recyclable alternatives to plastic packaging. We responded to these needs in September by launching a new plastic-free eco-barrier paperboard suitable for food and food service packaging, which provides a barrier against moisture and grease, and which can be recycled along with other paperboards. Our eco-barrier paperboard has generated a lot of interest among our customers, and our expectations in terms of its commercial success are high.
Earlier in the summer, we announced that we will establish an excellence centre at Äänekoski focused on paperboard and packaging innovations. This will help us to take advantage of the opportunities provided by lightweight fresh fibre paperboards to an increasing degree.”
Financial key figures
| 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | 2018 |
||
| Q3 | Q2 | Q1 | Q3 | Q1-Q3 | Q1-Q3 | Q1-Q4 | ||
| Sales, EUR million | 489.2 | 477.1 | 487.1 | 475.1 | 1453.4 | 1486.1 | 1944.1 | |
| EBITDA, EUR million | 62.1 | 73.6 | 99.3 | 84.2 | 235.1 | 257.0 | 338.2 | |
| comparable, EUR million | 62.1 | 68.1 | 89.3 | 84.2 | 219.6 | 262.6 | 343.8 | |
| EBITDA, % of sales | 12.7 | 15.4 | 20.4 | 17.7 | 16.2 | 17.3 | 17.4 | |
| comparable, % of sales | 12.7 | 14.3 | 18.3 | 17.7 | 15.1 | 17.7 | 17.7 | |
| Operating result, EUR million | 42.5 | 46.4 | 71.9 | 63.7 | 160.8 | 186.3 | 246.3 | |
| comparable, EUR million | 42.5 | 41.0 | 61.8 | 63.7 | 145.3 | 191.9 | 251.9 | |
| Operating result, % of sales | 8.7 | 9.7 | 14.8 | 13.4 | 11.1 | 12.5 | 12.7 | |
| comparable, % of sales | 8.7 | 8.6 | 12.7 | 13.4 | 10.0 | 12.9 | 13.0 | |
| Result before taxes, EUR million | 38.8 | 41.9 | 67.9 | 59.5 | 148.6 | 168.4 | 224.2 | |
| comparable, EUR million | 38.8 | 36.4 | 57.9 | 59.5 | 133.1 | 174.0 | 229.7 | |
| Result for the period, EUR million | 32.5 | 36.3 | 59.6 | 57.5 | 128.4 | 153.2 | 203.4 | |
| comparable, EUR million | 32.5 | 31.9 | 50.2 | 57.5 | 114.6 | 157.6 | 207.8 | |
| Earnings per share, EUR | 0.09 | 0.10 | 0.17 | 0.16 | 0.36 | 0.43 | 0.57 | |
| comparable, EUR million | 0.09 | 0.09 | 0.14 | 0.16 | 0.32 | 0.44 | 0.58 | |
| Return on equity, % | 10.1 | 11.4 | 18.4 | 18.7 | 13.1 | 16.7 | 16.3 | |
| comparable, % | 10.1 | 10.0 | 15.5 | 18.7 | 11.7 | 17.2 | 16.7 | |
| Return on capital employed, % | 9.7 | 10.9 | 16.7 | 15.0 | 12.1 | 14.3 | 14.0 | |
| comparable, % | 9.7 | 9.7 | 14.4 | 15.0 | 11.0 | 14.7 | 14.4 | |
| Equity ratio at the end of period, % | 58 | 57 | 56 | 57 | 58 | 57 | 58 | |
| Net gearing ratio at the end of period, % | 27 | 30 | 23 | 27 | 27 | 27 | 25 | |
| Interest-bearing net liabilities/comparable EBITDA1) | 1.2 | 1.2 | 0.9 | 1.0 | 1.2 | 1.0 | 1.0 | |
| Shareholders’ equity per share at the end of period, EUR | 3.65 | 3.60 | 3.57 | 3.58 | 3.65 | 3.58 | 3.72 | |
| Interest-bearing net liabilities, EUR million | 351.8 | 380.2 | 296.6 | 343.6 | 351.8 | 343.6 | 334.6 | |
| Gross investments, EUR million | 17.9 | 17.9 | 6.4 | 10.7 | 42.2 | 36.4 | 70.3 | |
| Net cash flow from operations, EUR million | 43.8 | 30.7 | 36.4 | 53.9 | 110.9 | 120.5 | 150.9 | |
| Personnel at the end of period | 2,382 | 2,591 | 2,382 | 2,375 | 2,382 | 2,375 | 2,352 | |
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rolling 12 months
Near-term outlook
Metsä Board’s paperboard deliveries in the fourth quarter are expected to decline from the third quarter level (July–September deliveries were 466,000 tonnes). The decline in delivery volumes is influenced by the seasonally slower December.
The prices of folding boxboard and white kraftliner are expected to remain stable.
The pulp producers’ global stock levels are still high. In China, the decline in the price of long-fibre pulp has stopped, and several pulp producers have announced price increases. In Europe, the market price of long-fibre pulp (PIX) has continued to fall, which will have a negative effect on the October–December result.
The scheduled annual maintenance shutdown at Husum began in September and ended at the beginning of October, due to which some of the impact will be visible in the results of the fourth quarter.
Production costs are expected to remain stable.
During the fourth quarter, changes in exchange rates, including the impact of hedges, will have a neutral effect compared to the third quarter and a clearly positive effect compared to the corresponding period in the previous year.
METSÄ BOARD CORPORATION
Espoo, Finland, 31 October 2019
BOARD OF DIRECTORS
Further information will be available as of 1 p.m. on 31 October 2019.
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 +1 323-794-2423
The conference ID is 6191786.
Metsä Board’s financial reporting and Annual General Meeting in 2020:
12 February 2020: 2019 Financial Statements Bulletin
29 April 2020: Interim report for January–March 2020
30 July 2020: Half-year financial report January–June 2020
29 October 2020: Interim Report for January–September 2020 26 March 2020: Annual General Meeting
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 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 2018, 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.
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