Metsä Group's comparable operating result in 2020 was EUR 368 million

Metsä Group Financial Statements Bulletin 2020 11.2.2021 at 12:00 noon EET

JANUARY–DECEMBER 2020 (1–12/2019)

• Sales were EUR 5,055 million (5,473).
• Operating result was EUR 376 million (374). The comparable operating result was EUR 368 million (495).
• The result before taxes was EUR 330 million (316). The comparable result before taxes was EUR 322 million (436).
• Comparable return on capital employed was 7.1% (9.6).
• Net cash flow from operations was EUR 667 million (485).

OCTOBER–DECEMBER 2020 (10–12/2019)

• Sales were EUR 1,357 million (1,290).
• Operating result was EUR 97 million (32). The comparable operating result was EUR 94 million (76).
• The result before taxes was EUR 88 million (18). The comparable result before taxes was EUR 86 million (62).
• Comparable return on capital employed was 7.4% (6.1).
• Net cash flow from operations was EUR 306 million (232).

EVENTS DURING THE FOURTH QUARTER OF 2020

• The average dollar-denominated market price of long-fibre pulp increased slightly and that of short-fibre pulp remained stable compared to the previous quarter.
• Paperboard deliveries were on a slightly higher level than during the corresponding period last year and declined seasonally compared to the previous quarter.
• The Regional State Administrative Agency for Northern Finland issued an environmental permit for Metsä Fibre’s Kemi bioproduct mill.
• Metsä Board announced that it would divest a 30% share of its Husum pulp mill in Sweden. The buyer is the Swedish forest owner cooperative Norra Skog.
• Metsä Board obtained an approval for an amendment to the environmental permit of the Husum mill and made the final investment decision on the first phase of the pulp mill’s renewal.

THE CORONAVIRUS PANDEMIC

Metsä Group has three key priorities in its operations when it comes to stopping the coronavirus pandemic: personnel safety, full participation in fighting the pandemic as part of society and ensuring business continuity. Metsä Group follows and complies with the guidelines issued by the authorities with regard to the coronavirus. Minimising physical contact is the most important precautionary measure.

Metsä Group’s resources have remained normal during the coronavirus pandemic. Production and deliveries have run normally, with the exception of our units in the UK in the spring and partly the Svir sawmill and wood supply in Russia during the spring and the second half of the year.

EVENTS AFTER THE PERIOD

Metsä Tissue announced that a tissue paper machine at the Mänttä mill will be renewed.

The sale of a 30% share in the Husum pulp mill to Norra Skog was finalized on 4 January 2021, and its impact will be included in Metsä Board’s financial reporting as of the interim report concerning January–March 2021. The transaction reduces Metsä Board’s net liabilities by approximately EUR 260 million and reduces Metsä Board’s share of financing the pulp mill renewal’s second phase by about EUR 100 million.

Metsä Board initiated pre-engineering on increasing the annual production capacity of folding boxboard by approximately 200,000 tonnes at the Husum mill.

The Nordic real estate investment company NREP bought Metsä Group’s head office in Tapiola, Espoo. The debt-free transaction price of Metsä Group's ownership share is EUR 44 million.

Kemi bioproduct mill investment decision was made. The value of the investment is EUR 1.6 billion and it is the largest investment ever made by the Finnish forest industry in Finland. The construction phase will take approximately two and a half years, and the mill will be completed during the third quarter of 2023. The Kemi bioproduct mill will produce some 1.5 million tonnes of softwood and hardwood pulp per year, as well as many other bioproducts. It will also produce 2.0 TWh of renewable electricity per year, which equals to roughly 2,5 percent of total Finnish electricity production. The Kemi bioproduct mill will use approximately 7.6 million cubic metres of pulpwood a year, which is 4.5 million cubic metres more than the current pulp mill in Kemi.

RESULT GUIDANCE FOR JANUARY–MARCH 2021

Metsä Group’s comparable operating result for January–March 2021 is expected to improve compared to October–December 2020.

BOARD OF DIRECTORS’ PROPOSAL ON THE USE OF THE SURPLUS ON THE BALANCE SHEET

Metsäliitto Cooperative’s Board of Directors has decided to propose that an interest of 6.0% for 2020 be paid on the statutory capital invested by members (6.5% for 2019), 5.0% (6.0) on additional members’ capital A and 1.0% (2.0) on additional members’ capital B. In total, the proposed distribution of profit would amount to around EUR 66 million (72).
 

President and CEO Ilkka Hämälä:

“As estimated at the beginning of the quarter, Metsä Group’s fourth quarter results in 2020 turned out to be weaker than in the previous quarter. Annual maintenance shutdowns moved from the first half of the year were carried out also during the fourth quarter. The market situation of the paperboard and tissue paper businesses remained good. Demand for pulp was strong, particularly in China, and prices in Asia took a clear turn upward. The higher prices did not, however, impact profitability in the fourth quarter yet. Europe’s pulp market situation follows that of Asia with a delay. Demand for and the prices of sawn timber and veneer products have improved.

The Group operated in line with the special procedures adopted in the spring of 2020 in response to the pandemic. We have begun location-specific testing, offered to the entire personnel. All external employees set to work at mills are tested before they start working. Despite the stricter precautionary measures, the number of infections at our locations outside Finland increased in November–December. We have been able to continue our business operations and development projects as planned.

Investment projects are proceeding according to plans. The construction phase of the Rauma sawmill has proceeded on schedule and equipment installations will begin in February. Kemi bioproduct mill investment decision has now been made. Thanks to the growing production volume we will be an even stronger partner for the sustainable growth of our customers. The Kemi bioproduct mill is a global leader in environmental, energy and material efficiency. The large project will have significant positive impacts on the Kemi region and the whole country. An update to the environmental permit of Husum’s recovery boiler was received in November. The decision was not appealed and the project’s installation phase began immediately after the permit had been obtained. Husum’s new recovery boiler will be started up in May 2022.

Metsä Group’s innovation company, Metsä Spring, has begun the construction of a demo plant for 3D fibre packaging product in Äänekoski in cooperation with Valmet Corporation. The project develops new production technologies for the manufacture of high-quality fibre-based packaging. The operation of the textile demo plant owned jointly by Metsä Spring and Itochu Corporation continues and textile products for the markets are being made from the first test batches of the new material through Itochu’s partner network.

Through its operations, Metsä Group is responding to the need to provide products made from renewable materials for people’s everyday life. We develop our operations actively, from the better coordination of the ecological and economic goals related to northern forests to the continuous improvement of our production and operational processes and the introduction of renewable, increasingly resource-efficient products for consumers.”

KEY FIGURES

NEAR-TERM OUTLOOK

Demand for wood focuses on regeneration and thinning stands to be harvested when the ground is unfrozen. Purchases of winter stands is steered according to weather conditions. In energy wood, the demand focuses on crown wood. The demand for forest management services remains good.

The uncertainty in demand caused by the coronavirus pandemic will continue in all of Metsä Wood’s main markets. The free trade agreement between the UK and the EU will support demand for both Kerto LVL and plywood products. Demand for Kerto LVL is expected to remain strong, particularly in the North American and Australian markets. Demand is also expected to remain strong in the main markets for spruce plywood. While the demand outlook for birch plywood has strengthened, competition in Europe’s main markets remains tough. Demand in the UK is expected to remain strong over the next few months, considering the season. 

At Metsä Fibre, the pulp market is expected to gain strength as the demand for market pulp continues to grow, especially in the Asian markets. While new production capacity for hardwood pulp will enter the market at the end of 2021, new capacity in softwood pulp is not to be expected. The global shortage in containers, impacting the Asian deliveries of European and North American producers, will place further strain on the Asian markets.

The market for sawn timber is expected to remain strong across all of the main markets, even exceeding supply.

Metsä Board’s paperboard deliveries in January–March 2021 are expected to grow from October–December 2020. The prices of white kraftliner in local currencies are expected to increase slightly, while the prices of folding boxboard are expected to remain stable. No large-scale annual maintenance shutdowns at mills are set to take place in January–March 2021. Energy costs are expected to increase in January–March. Other production costs of paperboard and pulp are expected to remain fairly stable.

Uncertainty about the imact that the coronavirus pandemic will have on the short-term demand for products is still great in the countries in which Metsä Tissue operates. Demand for tissue paper products is expected to increase once the restrictions resulting from the pandemic can start to be eased. Demand for greaseproof papers is expected to continue to grow slightly. The company is preparing for increases in the costs of raw materials and other costs and steers its pricing actively to ensure profitable operations.

METSÄ GROUP

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 leads the way in the bioeconomy. We invest in growth, developing bioproducts and a fossil free future. The raw material for our products is renewable wood from sustainably managed northern forests. We focus on the growth sectors of the forest industry: wood supply and forest services, wood products, pulp, fresh fibre paperboards, and tissue and greaseproof papers.

Metsä Group’s annual sales is approximately EUR 5.5 billion, and we have around 9,200 employees in 30 countries. Our international Group has its roots in the Finnish forest: our parent company is Metsäliitto Cooperative owned by 100,000 forest owners.

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