Metsä Group’s comparable operating result in January–June 2018 was EUR 418 million
Metsä Group Half Year Financial Report 1 January–30 June 2018, 2 August 2018 at 12:00 noon EEST
January–June 2018 (1–6/2017)
- Sales were EUR 2,904 million (1–6/2017: 2,451).
- Operating result was EUR 412 million (253). Comparable operating result was EUR 418 million (247).
- Result before tax was EUR 368 million (237). Comparable result before tax was EUR 374 million (230).
- Comparable return on capital employed was 16.9% (11.5).
- Cash flow from operations was EUR 276 million (190).
April–June 2018 (4–6/2017)
- Sales were EUR 1,477 million (1,235).
- Operating result was EUR 204 million (122). Comparable operating result was EUR 210 million (119).
- Result before tax was EUR 184 million (107). Comparable result before tax was EUR 189 million (104).
- Comparable return on capital employed was 17.0% (10.6).
- Cash flow from operations was EUR 242 million (192).
Events during the second quarter of 2018
- Metsä Group started a prefeasibility study on the renewal of its Kemi pulp mill.
- Metsä Group established Metsä Spring Oy, a new innovation company.
- The market prices of long-fibre and short-fibre pulp continued to rise.
- Metsä Board’s paperboard deliveries increased and reached a record level.
- Metsä Board’s operating result was burdened by several planned maintenance shutdowns at its mills in Finland.
- In February, Metsäliitto Cooperative made an early repayment of EUR 100 million of its EUR 200 million loan maturing in 2019, and paid the remaining EUR 100 million in June.
- In April, Metsä Board made an early repayment of EUR 100 million of its EUR 150 million loan maturing in 2020.
- Metsäliitto Cooperative paid EUR 63.2 million in interest on the capital invested by its members.
Result guidance for July–September 2018
Metsä Group’s comparable operating result is in the third quarter of 2018 expected to be roughly at the same level as in the second quarter of 2018.
President and CEO Ilkka Hämälä:
“Metsä Group continued its strong performance in the second quarter. The good result was made possible by the increase in sales volumes and improvement in production efficiency facilitated by our development investments in recent years, combined with favourable global economic development.
The pulp and paperboard industry were in key role in Metsä Group’s performance, but the markets developed favourably also in other business areas. Wood supply normalised after the start of the year, which was challenging in terms of the weather, and Metsäliitto Cooperative’s members actively engaged in wood trade.
Metsä Group continues its development phase. In 2018, our investments focus on the wood products industry, and we are also increasing our converting capacity for tissue papers and our production of cooking papers. Established in May, Metsä Spring is an innovation company focusing on the development of new products of the future, as well as strengthening Metsä Group’s position as a company that leads the way in the industry.
As a result of the good performance, Metsä Group’s strong balance sheet provides favourable operating conditions, even during any disruption in international trade.”
KEY FIGURES
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Condensed income statement, EUR million | 1–6 | 1–6 | 4–6 | 4–6 | 1–12 |
| Sales | 2 904.3 | 2 451.4 | 1 476.5 | 1 235.2 | 5 040.0 |
| Other operating income | 20.9 | 25.7 | 10.6 | 11.7 | 60.3 |
| Operating expenses | -2 363.3 | -2 109.0 | -1 215.6 | -1 072.8 | -4 269.7 |
| Depreciation and impairment losses | -149.6 | -114.6 | -67.1 | -51.9 | -249.7 |
| Operating result | 412.3 | 253.4 | 204.5 | 122.2 | 581.0 |
| Share of results from associated companies and joint ventures |
0.8 | 18.9 | 0.0 | 4.9 | 17.1 |
| Exchange gains and losses |
-4.5 | -2.6 | -1.0 | -4.0 | -3.3 |
| Other net financial items |
-40.5 | -33.2 | -19.9 | -16.1 | -88.5 |
| Result before income tax | 368.1 | 236.6 | 183.6 | 107.1 | 506.2 |
| Income tax | -79.1 | -43.8 | -40.8 | -20.9 | -102.3 |
| Result for the period | 289.0 | 192.8 | 142.8 | 86.1 | 403.9 |
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Profitability | 1–6 | 1–6 | 4–6 | 4–6 | 1–12 |
| Operating result, EUR million | 412.3 | 253.4 | 204.5 | 122.2 | 581.0 |
| Comparable operating result |
418.0 | 246.9 | 210.1 | 119.1 | 566.1 |
| % of sales | 14.4 | 10.1 | 14.2 | 9.6 | 11.2 |
| Return on capital employed, % | 16.7 | 11.8 | 16.5 | 10.9 | 12.6 |
| Comparable return on capital employed |
16.9 | 11.5 | 17.0 | 10.6 | 12.3 |
| Return on equity, % | 18.5 | 14.3 | 18.0 | 12.6 | 14.5 |
| Comparable return on equity |
18.7 | 13.9 | 18.7 | 12.2 | 14.0 |
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Financial position | 30.6. | 30.6. | 31.3. | 31.3. | 31.12. |
| Equity ratio, % | 51.2 | 45.3 | 46.5 | 44.1 | 45.0 |
| Net gearing ratio, % | 26 | 45 | 34 | 46 | 34 |
| Interest-bearing net liabilities, EUR million | 841 | 1 252 | 1 039 | 1 226 | 993 |
SEGMENTS
| Sales and Operating result 1–6/2018, EUR million | Wood Supply and Forest Services | Wood Products Industry | Pulp and Sawn Timber Industry | Paperboard Industry | Tissue and Cooking Papers |
| Sales | 985.6 | 228.0 | 1 229.5 | 1 011.1 | 515.1 |
| Other operating income |
2.9 | 2.9 | 11.4 | 6.6 | 1.4 |
| Operating expenses |
-971.9 | -212.7 | -865.9 | -844.9 | -474.4 |
| Depreciation and impairment losses |
-2.2 | -6.6 | -65.3 | -50.2 | -18.4 |
| Operating result | 14.5 | 11.6 | 309.8 | 122.6 | 23.7 |
| Items affecting comparability |
- | - | - | 5.6 | - |
| Comparable operating result | 14.5 | 11.6 | 309.8 | 128.2 | 23.7 |
| % of sales | 1.5 | 5.1 | 25.2 | 12.7 | 4.6 |
Near-term outlook
Demand for wood will focus on regeneration and thinning felling that can be harvested in the summer and, in energy wood, primarily on crown pulp. The sales of forest management services are expected to remain at good level.
General market demand for wood products is expected to remain strong, which improves order book levels, particularly for plywood products. The strong construction market supports demand for Kerto LVL products. In the UK market, demand is expected to decrease slightly, particularly in terms of distributor customers.
The pulp and sawn timber markets are expected to remain strong. There is a good balance between demand and supply at the moment, particularly in the pulp market, meaning that any interruptions in production will have an immediate effect on the market situation.
Demand for high-quality consumer packaging paperboard made from fresh fibre is expected to continue to grow. Metsä Board’s paperboard deliveries in July–September are expected to remain roughly at the same level as in the second quarter. The market prices of folding boxboard and white kraftliner in local currencies are expected to remain stable.
In the tissue and cooking paper markets, demand is expected to remain stable in all market areas. Demand for tissue paper is expected to increase, particularly in eastern Central Europe, and demand for cooking papers is expected to grow in Asia.
For further information, please contact:
Vesa-Pekka Takala, CFO, Metsä Group, and Deputy Managing Director of Metsäliitto Cooperative, 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 cooking papers.
Metsä Group’s sales totalled EUR 5.0 billion in 2017, and it employs approximately 9,100 people. The Group operates in nearly 30 countries. Metsäliitto Cooperative is the parent company of Metsä Group and is owned by approximately 104,000 Finnish forest owners.
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