Metsä Group’s comparable operating result in 2019 was EUR 495 million
Metsä Group Financial Statements Bulletin 2019 12.2.2019 at 12:00 noon EET
JANUARY–DECEMBER 2019 (1–12/2018)
- Sales were EUR 5,473 million (5,709).
- Operating result was EUR 374 million (843). Comparable operating result was EUR 495 million (849).
- Result before taxes was EUR 316 million (769). Comparable result before taxes was EUR 436 million (775).
- Comparable return on capital employed was 9.6% (16.8).
- Cash flow from operations was EUR 658 million (882).
OCTOBER–DECEMBER 2019 (10–12/2018)
- Sales were EUR 1,290 million (1,419).
- Operating result was EUR 32 million (208). Comparable operating result was EUR 76 million (208).
- Result before taxes was EUR 18 million (193). Comparable result before taxes was EUR 62 million (193).
- Comparable return on capital employed was 6.1% (16.4).
- Cash flow from operations was EUR 236 million (292).
Events during the fourth quarter of 2019
- The average dollar-denominated price of long-fibre pulp decreased by 10% and that of short-fibre pulp by 15% compared to the previous quarter.
- Paperboard deliveries declined from the previous quarter due to the seasonal decline in December. The average prices of folding boxboard and white kraftliner remained stable.
- Metsä Board began investments in the first phase of the modernisation of the Husum pulp mill in advance of the final investment decision. The investment amounted to EUR 21 million. The total value of the first phase of the investment is approximately EUR 320 million.
- In December 2019, Metsä Tissue made an agreement on the sale of its napkin business. The transaction covers the property, machinery, equipment and warehouses of the Stotzheim mill, located in Germany, and the Fasana and Mondial brands.
EVENTS AFTER THE REPORTING PERIOD
Production at all Metsä Group’s Finnish units was suspended on 27 January 2020 due to Finnish Paperworkers’ Union’s and Industrial Union’s strikes. The Paperworkers’ Union’s strike in chemical forest industry lasted until 10 February 2020. Industrial Union’s strike in mechanical forest industry is still continuing.
RESULT GUIDANCE FOR JANUARY–MARCH 2020
Comparable operating results is in the first quarter of 2020 expected to weaken from the fourth quarter of 2019 due to the strikes at Finnish mills.
President and CEO Ilkka Hämälä
“The decline in pulp prices which began in the fourth quarter of 2018 continued throughout 2019 and led to a significant decrease in the level of Metsä Group’s result compared to 2018. The demand for and prices of mechanical forest industry products, such as sawn timber as well as plywood and LVL, were likewise low. The Group’s folding boxboard and white kraftliner business remained on a good level, in line with expectations. The markets for tissue and greaseproof papers were characteristically stable and the operational efficiency of this business improved as a result of Metsä Tissue’s strategic review.
The factors driving long-term demand and growth in all product categories are not expected to change. Consumer demand is expected to grow, particularly in developing markets, and the potential of products made from renewable materials, such as wood, for replacing fossil-based materials is good in all market areas. The further improvement of ecological sustainability will become increasingly important in the development of the entire value chain, from forests to consumers.
Metsä Group’s operations start from forest management. We are the biggest supplier of forest management services in the Baltic Sea region. The development of our services is guided by combating the impact of climate change in forestry and by promoting the biodiversity of forest nature. At the same time, it is our job to ensure the financial sustainability of forestry, which is an important issue from the perspective of private forest owners, companies and Finnish society. In addition to the work carried out in forests, ensuring financial, social and ecological sustainability requires the consistent development of our mills, products and the entire value chain related to them.
Over the past few years, Metsä Group has invested more than EUR 2 billion in mills processing northern wood. We are currently planning the next roughly EUR 2 billion investment programme. Preparatory work for the recovery boiler investment of the Husum pulp mill is underway. The environmental permit process of the potential bioproduct mill to be built in Kemi is proceeding, as are the other preparations towards the investment decision. The pre-engineering project related to the next-generation sawmill in Rauma is also proceeding as planned.”
KEY FIGURES
| 2019 | 2018 | 2019 | 2018 | |
| Condensed income statement, EUR million | 1–12 | 1–12 | 10–12 | 10–12 |
| Sales | 5 473.4 | 5 709.1 | 1 290.3 | 1 419.0 |
| Other operating income | 59.2 | 58.1 | 23.2 | 23.2 |
| Operating expenses | -4 742.9 | -4 639.5 | -1 162.4 | -1 166.1 |
| Depreciation and impairment losses | -415.5 | -284.8 | -119.0 | -68.5 |
| Operating result | 374.3 | 843.0 | 32.2 | 207.6 |
| Share of results from associated companies and joint ventures | 3.3 | 7.0 | 0.7 | 2.5 |
| Exchange gains and losses | -6.4 | -6.3 | -0.9 | -0.4 |
| Other net financial items | -55.4 | -74.6 | -14.4 | -16.8 |
| Result before income tax | 315.7 | 769.1 | 17.6 | 192.8 |
| Income tax | -76.8 | -156.4 | -1.9 | -39.0 |
| Result for the period | 238.9 | 612.7 | 15.7 | 153.8 |
| 2019 | 2018 | 2019 | 2018 | |
| Profitability | 1–12 | 1–12 | 10–12 | 10–12 |
| Operating result, EUR million | 374.3 | 843.0 | 32.3 | 207.6 |
| Comparable operating result | 494.9 | 848.5 | 76.4 | 207.6 |
| % of sales | 9.0 | 14.9 | 6.0 | 14.6 |
| Return on capital employed, % | 7.3 | 16.6 | 2.6 | 16.4 |
| Comparable return on capital employed | 9.6 | 16.8 | 6.1 | 16.4 |
| Return on equity, % | 6.4 | 18.5 | 1.7 | 17.2 |
| Comparable return on equity | 9.7 | 18.7 | 6.4 | 17.2 |
| 2019 | 2018 | 2019 | 2018 | |
| Financial position | 31.12. | 31.12. | 30.9. | 30.9. |
| Equity ratio, % | 56.2 | 53.1 | 56.0 | 52.7 |
| Net gearing ratio, % | 10 | 13 | 13 | 18 |
| Interest-bearing net liabilities, EUR million | 374 | 463 | 488 | 622 |
SEGMENTS
| Sales and Operating result 1–12/2019, EUR million | Wood Supply and Forest Services | Wood Products Industry | Pulp and Sawn Timber Industry | Paperboard Industry | Tissue and Greaseproof Papers |
| Sales | 1 972.9 | 434.2 | 2 236.0 | 1 931.8 | 1 060.0 |
| Other operating income | 7.3 | 5.9 | 11.4 | 51.7 | 6.3 |
| Operating expenses | -1 944.5 | -412.2 | -1 875.4 | -1 689.0 | -965.3 |
| Depreciation and impairment losses | -8.3 | -18.7 | -123.4 | -113.7 | -164.3 |
| Operating result | 27.4 | 9.2 | 248.6 | 180.8 | -63.4 |
| Items affecting comparability | - | -2.0 | - | 3.6 | 136.7 |
| Comparable operating result | 27.4 | 7.2 | 248.6 | 184.4 | 73.4 |
| % of sales | 1.4 | 1.7 | 11.1 | 9.5 | 6.9 |
Near-term outlook
Wood demand will focus on stands to be harvested when the ground is unfrozen, and on crown wood in terms of energy wood. The demand for forest management services remains good. The insect damage in Central Europe will continue to have an impact on the wood trade.
The outlook for the demand for Kerto LVL® and birch plywood products will continue to be uncertain, but the outlook in terms of the demand for spruce plywood products is slightly better. Delivery volumes are forecast to experience seasonal growth in the UK market during the first quarter. The uncertainty brought about by Brexit will continue.
The pulp market is expected to balance as the demand for market pulp continues to increase, especially in the Asian market, and producers’ inventory levels continue to decrease. The sawn timber market is expected to improve as demand continues to increase, especially in China, and supply reaches a normal level compared to demand.
Metsä Board’s paperboard deliveries are in the first quarter expected to be approximately at the same level as in fourth quarter of 2019. The market prices of folding boxboard and white kraftliner in local currencies are expected to remain stable.
Changes in exchange rates, including the impact of hedges, will during the first quarter have a slightly positive impact for Metsä Board 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.
Metsä Tissue aims to improve its profitability and grow in its main markets, close to its customers. Growth is sought by way of strong customer cooperation as well as development and a streamlining of the product portfolio. The demand for tissue and greaseproof papers is expected to remain stable in all market areas. The demand for tissue paper is expected to increase particularly in Central Europe, and demand for greaseproof papers is expected to grow in Asia.
METSÄ GROUP
Espoo, Finland, 12 February 2020
BOARD OF DIRECTORS
For further information, please contact:
Vesa-Pekka Takala, EVP, CFO Metsä Group, tel. +358 10 465 4260
Juha Laine, SVP, Communications, Metsä Group, tel. +358 10 465 4541
Metsä Group
www.metsagroup.com
Metsä Group is a forerunner in sustainable bioeconomy utilising renewable wood from sustainably managed northern forests. Metsä Group focuses on wood supply and forest services, wood products, pulp, fresh fibre paperboards and tissue and greaseproof papers.
In 2019, Metsä Group’s sales totalled EUR 5.5 billion, and it employs approximately 9,300 people. Metsäliitto Cooperative is the parent company of Metsä Group and is owned by approximately 103,000 Finnish forest owners.
Follow Metsä Group: Twitter LinkedIn Facebook YouTube Instagram Slideshare