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Metsä Group’s comparable operating result in January–June 2019 was EUR 308 million

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Metsä Group Half-year financial report 2019 1 August 2019 at 12:00 noon EEST

January–June 2019 (1–6/2018)

  • Sales were EUR 2,809 million (2,904).

  • Operating result was EUR 232 million (412). Comparable operating result was EUR 308 million (418).

  • Result before tax was EUR 202 million (368). Comparable result before tax was EUR 279 million (374).

  • Comparable return on capital employed was 12.1% (16.9).

  • Cash flow from operations was EUR 183 million (276).

April–June 2019 (4–6/2018)

  • Sales were EUR 1,372 million (1,477).

  • Operating result was EUR 49 million (204). Comparable operating result was EUR 128 million (210).

  • Result before tax was EUR 36 million (184). Comparable result before tax was EUR 115 million (189).

  • Comparable return on capital employed was 10.2% (17.0).

  • Cash flow from operations was EUR 142 million (242).

Events during the second quarter of 2019

  • The prices of long-fibre pulp decreased by 9% and of short-fibre pulp by 6% in Europe compared with Q1. In China, the prices decreased by around 4%.

  • The prices of folding boxboard were stable. Changes in the sales mix had a negative effect on the average price of white kraftliner.

  • Total deliveries of paperboard increased slightly from the previous quarter.

  • Metsä Board establishes an excellence centre in Äänekoski. The centre will focus on paperboard and packaging innovation.

  • Metsä Fibre started pre-engineering projects related to a new bioproduct mill in Kemi and a new pine sawmill in Rauma. Metsä Board started pre-engineering related to the first phase of the renewal of the Husum pulp mill.

  • Metsä Wood’s new Kerto® LVL line, with an annual capacity of 65,000 cubic metres, started up at the Punkaharju mill in April. The mill was inaugurated in May.

  • Metsä Tissue recognised an impairment loss of around EUR 102 million. This was mainly related to goodwill.

  • Metsä Group’s new Nemus Futurum visitor centre was opened in Kirkniemi in Lohja in June.

Events after reporting period

Metsä Group’s innovation company, Metsä Spring, made an equity investment in Woodio Ltd, a leading developer of waterproof wood composite products. 

Result guidance for July–September 2019

Metsä Group’s comparable operating result is in the third quarter of 2019 expected to weaken from the second quarter of 2019.

President and CEO Ilkka Hämälä:

“Metsä Group’s second-quarter result decreased from the first quarter, as expected. This was mainly due to the low price level in the Asian pulp market, which was also reflected in prices in Europe. The pulp market is expected to improve when the stock levels reach their normal level.

During the first half of the year, wood was harvested according to targets, and deliveries to customers’ production units ran smoothly.

The markets for folding boxboard and tissue and greaseproof papers were strong, as expected. Demand for sawn timber and veneer products in the main markets was weaker than usual.

The pre-engineering of investments aiming for Metsä Group’s growth and profitability at Husum, Kemi and Rauma has progressed as planned.

The operational restructuring of the tissue paper business has already begun to visibly improve the profitability of business operations.

The construction of the demo plant for textile fibre in Äänekoski has been completed, and the equipment will be installed during the third quarter.”

KEY FIGURES

2019 2018 2019 2018 2018
Condensed income statement, EUR million 1–6 1–6 4–6 4–6 1–12
Sales 2 809.4 2 904.3 1 371.7 1 476.5 5 709.1
Other operating income 27.8 20.9 10.8 10.6 58.1
Operating expenses -2 378.2 -2 363.3 -1 179.6 -1 215.6 -4 639.5
Depreciation and impairment losses -227.3 -149.6 -154.0 -67.1 -284.8
Operating result 231.8 412.3 48.8 204.5 843.0
Share of results from associated companies and joint ventures 2.4 0.8 2.8 0.0 7.0
Exchange gains and losses -4.4 -4.5 -1.9 -1.0 -6.3
Other net financial items -27.3 -40.5 -13.9 -19.9 -74.6
Result before income tax 202.5 368.1 35.9 183.6 769.1
Income tax -55.2 -79.1 -21.3 -40.8 -156.4
Result for the period 147.3 289.0 14.6 142.8 612.7


2019 2018 2019 2018 2018
Profitability 1–6 1–6 4–6 4–6 1–12
Operating result, EUR million 231.8 412.3 48.8 204.5 843.0
Comparable operating result 308.1 418.0 128.4 210.1 848.5
% of sales 11.0 14.4 9.4 14.2 14.9
Return on capital employed, % 9.1 16.7 4.1 16.5 16.6
Comparable return on capital employed 12.1 16.9 10.2 17.0 16.8
Return on equity, % 7.9 18.5 1.6 18.0 18.5
Comparable return on equity 12.1 18.7 10.1 18.7 18.7

  

2019 2018 2019 2018 2018
Financial position 30.6. 30.6. 31.3. 31.3. 31.12.
Equity ratio, % 56.2 51.2 53.3 46.5 53.1
Net gearing ratio, % 15 26 18 34 13
Interest-bearing net liabilities, EUR million 562 841 646 1 039 463

SEGMENTS  

Sales and Operating result 1–6/2019, EUR million Wood Supply and Forest Services Wood Products Industry Pulp and Sawn Timber Industry Paperboard Industry Tissue and Greaseproof Papers
Sales 1 034.1 230.2 1 178.8 964.2 533.4
Other operating income 6.5 4.0 5.3 28.4 2.4
Operating expenses -1 019.7 -218.2 -924.5 -819.7 -497.4
Depreciation and impairment losses -4.0 -8.8 -54.2 -54.6 -124.7
Operating result 16.8 7.2 205.5 118.3 -86.3
Items affecting comparability - -2.0 - -15.5 110.2
Comparable operating result 16.8 5.2 205.5 102.8 24.0
% of sales 1.6 2.3 17.4 10.7 4.5

 

Near-term outlook

Wood demand will focus on thinning sites to be harvested when the ground is unfrozen and, in terms of energy wood, on crown wood. Demand for forest management services is expected to remain good.

In wood products, uncertainty has increased in of the demand for Kerto LVL products. Demand for spruce plywood is expected, in the main, to remain stable during the third quarter. The uncertainty in demand for birch plywood and the tough price competition in the distributor market are expected to continue.

In the UK market, delivery volumes will decrease due to seasonality in the third quarter.

The development of the global pulp market remains uncertain over the short term. However, the production curtailments announced by pulp producers, as well as annual maintenance shutdowns scheduled for the third quarter, will balance the demand and supply.

The increase in demand for Metsä Fibre’s long-fibre market pulp and sawn timber is expected to continue during the second half of the year, particularly in emerging markets.

Metsä Board’s paperboard deliveries in the third quarter are expected to be roughly at the same level as in the second quarter of the year.

The prices of folding boxboard are expected to remain stable. The market situation for linerboards is more uncertain which may have an impact on the average prices of Metsä Board’s kraftliner in the third quarter.

Demand in the tissue and greaseproof paper markets is expected to remain stable in all market areas. Profitability is expected to improve during the second half of 2019 in comparison with 2018, due to efficiency measures, higher sales prices and a predicted decrease in raw material prices.

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 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 2018, Metsä Group’s sales totalled EUR 5.7 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.

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