Metsä Group’s operating result excluding non-recurring items was EUR 109 million in January–March 2016
Metsä Group Interim Report January–March 2016 Stock Exchange Release 3 May 2016 at 12.00 noon EET
January–March 2016 (1–3/2015)
• Sales were EUR 1,156 million (EUR 1,255 million).
• Operating result excluding non-recurring items was EUR 109 million (129). Operating result including non-recurring items was EUR 107 million (118).
• Result before taxes excluding non-recurring items was EUR 90 million (117). Result before taxes including non-recurring items was EUR 88 million (106).
• Return on capital employed excluding non-recurring items was 10.6 per cent (13.5). Return on capital employed excluding non-recurring items and excluding assets under construction related to strategic investment projects was 11.5 per cent (13.6).
• Cash flow from operations was EUR -31 million (67).
Events during the first quarter of 2016
• The bioproduct mill project progressed on schedule. At the end of March, one third of the project was complete.
• The market price of long-fibre pulp decreased by 3 per cent on average, and the price of short-fibre pulp decreased by 5 per cent.
• The demand for paperboards remained at a good level in both Europe and the Americas. Price levels were stable.
• The new folding boxboard production line started up at the Husum mill in Sweden in February, slightly behind the original schedule.
• Nearly 20 per cent of wood acquired by Metsä Forest from private forest owners was purchased electronically. The figure was 25 per cent in the sale of forest management services.
• Standard & Poor’s Ratings Services raised Metsä Board Corporation's credit rating by one notch from BB to BB+ in February.
Events after the review period
Metsä board announced to initiate efficiency improvement programme in Husum integrate in Sweden. Minimum of EUR 10 million of annual cost savings is targeted from the efficiency programme.
Profit guidance for April–June 2016
Metsä Group’s operating result excluding non-recurring items in the second quarter of 2016 is expected to be roughly at the same level as in the first quarter of 2016.
President and CEO Kari Jordan:
”The development of Metsä Group's business operations was as expected in the first quarter of 2016. The operating result was affected by the slightly decreased price of pulp and the start-up phase of the new folding boxboard production line at Metsä Board’s Husum mill. The production line was inaugurated in April. The start-up has proceeded well and the required quality targets have already been met. The full production capacity is estimated to be reached by the end of this year.
The construction of the bioproduct mill in Äänekoski is progressing according to the schedule and on budget. During the first quarter, we signed new agreements with our bioproduct concept partners. Wood supply for the bioproduct mill has begun. The mill will start up in the third quarter of 2017.
Electronic wood trade has rapidly increased in popularity. During the first months of the year, nearly 20 per cent of the wood we acquired from private forest owners was purchased electronically. The figure was 25 per cent in the sale of forest management services.
Material acceleration in economic growth is not in sight. Increased volatility in foreign exchange rates and raw material prices has to some extent weakened the predictability of the business environment.”
|Condensed income statement, EUR million||1–3||1–3||1–12|
|Sales||1 155.6||1 255.1||5 016.0|
|Other operating income||8.3||15.4||95.7|
|Operating expenses||-990.8||-1 083.2||-4 311.4|
|Depreciation and impairment losses||-66.3||-69.4||-258.2|
| Share of results from associated companies and |
|Exchange gains and losses||-1.0||3.5||-1.2|
|Other net financial items||-17.8||-21.3||-83.8|
|Result before income tax||87.8||106.1||468.4|
|Result for the period||68.3||88.6||355.7|
|Operating result, EUR million||106.8||117.8||542.1|
|excluding non-recurring items||109.5||128.6||537.4|
|% of sales||9.5||10.2||10.7|
|Return on capital employed, %||10.3||12.5||13.7|
|excluding non-recurring items||10.6||13.5||13.6|
|Return on equity, %||11.3||16.7||15.9|
|excluding non-recurring items||11.8||18.8||15.8|
|Equity ratio, %||42.8||39.0||43.2|
|Net gearing ratio, %||35||41||25|
|Interest-bearing net liabilities, EUR million||847||887||610|
| Sales and Operating result |
1–3/2016, EUR million
| Wood Supply and Forest |
|Wood Products Industry|| |
|Paperboard Industry|| Tissue and Cooking |
|Other operating income||2.4||0.8||2.2||6.0||0.9|
| Depreciation and impairment |
| Operating result |
excluding non-recurring items
|% of sales||1.9||2.8||19.7||8.0||5.5|
Wood demand will target felling sites to be harvested when the ground is unfrozen and, in terms of energy wood, crown wood. The sales of forest management services are expected to remain good.
The market balance and sales prices of sawn timber are expected to improve. The market situation in Northern Africa will create uncertainty in the demand for pine sawn timber. The demand for Kerto® LVL products is expected to continue to be brisk, and competition in plywood products is expected to remain tense.
The global economic uncertainty and changes in the currency market will impact Metsä Fibre's operating environment. Nevertheless, demand for pulp has remained stable, and there are no signs of significant changes in the market.
Metsä Board's paperboard deliveries are expected to grow in April–June from the first quarter of 2016. Demand for paperboards is expected to remain stable in both Europe and the Americas. The market prices of folding boxboard and white fresh forest fibre linerboard are expected to remain stable.
The average price of Metsä Board's folding boxboard will be reduced by the lower price of start-up grades. The company estimates that the full production capacity of Husum’s new folding boxboard production line will be reached by the end of 2016.
In the tissue and cooking paper markets, demand is expected to continue to be stable in all market areas. Demand for tissue paper is expected to increase in eastern Central Europe, in particular, and demand for cooking papers is expected to grow in Asia.
Metsä Group’s operating result excluding non-recurring items is in the second quarter of 2016 expected to be roughly at the same level as in the first quarter of the 2016.
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–March 2016 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.
For further information, please contact:
Vesa-Pekka Takala, CFO, Metsä Group, tel. +358 (0)10 465 4260
Juha Laine, SVP, Communications, Metsä Group, tel. +358 (0)10 465 4541
Metsä Group is a forerunner in bioeconomy utilising renewable wood from sustainably managed northern forests. Metsä Group focuses on wood supply and forest services, wood products, pulp, fresh forest fibre paperboards and tissue and cooking papers.
Metsä Group’s sales totalled EUR 5.0 billion in 2015, and it employs approximately 9,600 people. The Group operates in some 30 countries. Metsäliitto Cooperative is the parent company of Metsä Group and owned by approximately 116,000 Finnish forest owners.