Metsä Group’s operating result for January–March was EUR 89 million excluding non-recurring items
Metsä Group Interim Report 1–3/2013, Stock Exchange Release 7 May 2013 at noon EET
Result for the first quarter of 2013
– Sales amounted to EUR 1,261 million (1–3/2012: EUR 1,284 million).
– Operating result excluding non-recurring items was EUR 89 million (53). Operating result including non-recurring items was EUR 94 million (45).
– Result before taxes excluding non-recurring items was EUR 57 million (18). Result before taxes including non-recurring items was EUR 62 million (10).
– Return on capital employed excluding non-recurring items was 9.7 per cent (5.7).
– Due to increase in working capital, cash flow from operations amounted to EUR -20 million (43).
Events during the first quarter of 2013
– Pulp prices increased slightly during the period.
– Folding boxboard orders strengthened and delivery volumes increased from the previous quarter. The demand for linerboard continued to be strong.
– The bark gasification plant at Metsä Fibre’s Joutseno mill was inaugurated.
– The Alizay mill site in France, including all equipment and buildings, was sold to Conseil Général de l’Eure, representing the French government, for EUR 22 million.
– An agreement was concluded on the divestment of the shares of Metsä Wood Merk GmbH to the German group Ed. Züblin AG. The transaction was closed on 22 April 2013.
Events after the period
– Katrinefors Kraftvärme AB, a joint venture in which Metsä Tissue has a 50 per cent holding, announced that it will build a bioenergy plant in conjunction with the Metsä Tissue mill in Mariestad, Sweden. The plant will be operational by the end of 2014. The total investment will amount to EUR 30 million.
– Metsä Wood announced that it will launch an efficiency programme. The reasons for this are the weak development of productivity over the last few years and declining sales in the main markets. The reduction of workforce is not expected to exceed 255 employees, of which an estimated 95 will be in Finland.
– Metsä Tissue signed a EUR 200 million syndicated loan agreement. The loan is a five-year credit facility to refinance the current facility maturing in September 2013.
– Metsäliitto Cooperative acquired on 2 May 2013 from Varma Mutual Pension Insurance Company all its holdings in Metsä Tissue Corporation, representing a total of 8.38 per cent of Metsä Tissue’s share capital.
“All of our business areas improved their operating profit for the first quarter compared to the previous year. The wood supply business has been active, the profitability of tissue and cooking papers continued to develop favourably and increased folding boxboard order inflow provides a good foundation for the future development of our paperboard business.
Metsä Group has been investing in increasing the production and utilisation of bioenergy at its mills for years. Of the fuels used by the Group, 80 per cent is wood-based, and therefore our fossil carbon dioxide emissions have decreased by 27 per cent in 2009–2012. The Joutseno pulp mill is carbon dioxide-neutral in normal operation due to the new bark gasification plant, and we are also aiming for similar developments at our other pulp mills. The use of renewable energy is also increasing in Sweden, with the bioenergy plant planned in conjunction with the Mariestad tissue paper mill due for completion at the end of next year.
Uncertain market conditions continue to impair the accuracy of business forecasts and the market development visibility beyond one quarter is poor.”
Kari Jordan, President & CEO, Metsä Group
Metsä Group
| Income statement, EUR million The figures for 2012 are restated | 2013 1–3 | 2012 1–3 | 2012 1–12 |
| Sales | 1 261.1 | 1 283.9 | 5 001.0 |
| Other operating income | 16.2 | 21.2 | 76.8 |
| Operating expenses | -1 113.8 | -1 194.1 | -4 587.2 |
| Depreciation and impairment losses | -69.3 | -65.9 | -249.1 |
| Operating result | 94.2 | 45.1 | 241.5 |
| Share of profit from associates | 6.7 | -1.0 | 4.8 |
| Exchange gains and losses | 0.2 | 1.3 | 2.4 |
| Other net financial items | -38.8 | -35.3 | -115.5 |
| Result before income tax | 62.3 | 10.1 | 133.2 |
| Income taxes | -16.0 | -8.5 | -31.8 |
| Result for the period | 46.3 | 1.6 | 101.4 |
| Profitability The figures for 2012 are restated | 2013 1–3 | 2012 1–3 | 2012 1–12 |
| Operating result, EUR mill. | 94.2 | 45.1 | 241.5 |
| - “ -, excluding non-recurring items | 89.0 | 53.0 | 255.7 |
| - “ - % of sales | 7.1 | 4.1 | 5.1 |
| Return on capital employed, % | 10.2 | 4.8 | 6.7 |
| - ” -, excluding non-recurring items | 9.7 | 5.7 | 7.1 |
| Return on equity, % | 9.9 | 0.4 | 6.1 |
| - ” -, excluding non-recurring items | 8.8 | 2.6 | 6.9 |
| | |||
| Financial position The figures for 2012 are restated | 2013 31.3. | 2012 31.3. | 2012 31.12. |
| Equity ratio, % | 35.1 | 28.3 | 34.8 |
| Net gearing ratio, % | 89 | 133 | 86 |
| Interest-bearing net liabilities, EUR mill. | 1 676 | 1 993 | 1 590 |
Segments
| Sales and Operating result January–March 2013 (EUR mill.) | Wood Supply & Forest Services | Wood Products Industry | Pulp Industry | Paperboard and Paper Industry | Tissue and Cooking Papers |
| Sales | 422.8 | 215.5 | 323.1 | 535.0 | 250.1 |
| Other operating income | 1.4 | 1.7 | 2.9 | 11.7 | 1.6 |
| Operating expenses | -416.0 | -205.3 | -257.9 | -485.2 | -228.0 |
| Depreciation & impairment losses | -0.8 | -7.6 | -20.8 | -26.7 | -9.9 |
| Operating result | 7.4 | 4.3 | 47.4 | 34.8 | 13.7 |
| Non-recurring items | - | - | - | -4.6 | -0.6 |
| Operating result, excl. non-rec. items | 7.4 | 4.3 | 47.4 | 30.2 | 13.1 |
| - % of sales | 1.8 | 2.0 | 14.7 | 5.6 | 5.3 |
Comparative data
Metsä Group adopted the amended IAS 19 Employee Benefits standard retroactively on 1 January 2013. Metsä Group’s members’ funds decreased by approximately EUR 29.9 million as a result of the amendment on 31 December 2012, the operating profit for 2012 improved by EUR 4.0 million, and financial expenses increased by EUR 5.2 million. The figures for 2012 have been restated to correspond with the amendments made during the 2013 financial period.
| KEY FIGURES 2012, restated | 1–12 | 10–12 | 7–9 | 4–6 | 1–3 |
| EBITDA | 486.6 | 129.4 | 121.4 | 126.0 | 109.7 |
| IAS 19 restatement | 4.0 | 0.2 | 1.3 | 1.3 | 1.3 |
| EBITDA | 490.6 | 129.6 | 122.6 | 127.3 | 111.0 |
| EBITDA excl. non-rec. items | 513.9 | 134.2 | 132.2 | 127.6 | 119.8 |
| IAS 19 restatement | 4.0 | 0.2 | 1.3 | 1.3 | 1.3 |
| EBITDA excl. non.-rec. items | 517.9 | 134.4 | 133.5 | 128.9 | 121.1 |
| Operating result | 237.5 | 77.0 | 55.7 | 61.0 | 43.8 |
| IAS 19 restatement | 4.0 | 0.2 | 1.3 | 1.3 | 1.3 |
| Operating result | 241.5 | 77.2 | 57.0 | 62.2 | 45.1 |
| Operating result excl. non-rec. items | 251.7 | 70.8 | 66.6 | 62.6 | 51.7 |
| IAS 19 restatement | 4.0 | 0.2 | 1.3 | 1.3 | 1.3 |
| Operating result excl. non-rec. items | 255.7 | 71.0 | 67.8 | 63.9 | 53.0 |
| Result before income tax | 134.5 | 48.9 | 24.6 | 50.9 | 10.1 |
| IAS 19 restatement | -1.2 | -1.2 | 0.0 | 0.0 | 0.0 |
| Result before income tax | 133.2 | 47.7 | 24.6 | 50.9 | 10.1 |
| Equity ratio, % | 35.4 | 35.4 | 34.4 | 33.8 | 28.5 |
| IAS 19 restatement | -0.6 | -0.6 | -0.2 | -0.2 | -0.2 |
| Equity ratio, % | 34.8 | 34.8 | 34.2 | 33.6 | 28.3 |
| Net gearing ratio, % | 84 | 84 | 89 | 94 | 132 |
| IAS 19 restatement | 2 | 2 | 1 | 2 | 1 |
| Net gearing ratio, % | 86 | 86 | 90 | 94 | 133 |
| ROCE excl. non-rec. items, % | 7.0 | 7.3 | 7.0 | 7.3 | 5.5 |
| IAS 19 restatement | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
| ROCE excl. non-rec. items, % | 7.1 | 7.3 | 7.1 | 7.4 | 5.7 |
| ROE excl. non-rec. items, % | 6.9 | 9.6 | 5.9 | 8.6 | 2.5 |
| IAS 19 restatement | 0.0 | -0.2 | 0.0 | 0.1 | 0.0 |
| ROE excl. non-rec. items, % | 6.9 | 9.4 | 5.9 | 8.6 | 2.6 |
EBITDA = Operating result before depreciation and impairment losses
ROCE = Return on capital employed
ROE = Return on equity
The new and amended standards adopted at the beginning of 2013 and their impact on the balance sheet and statement of comprehensive income are described in more detail in the notes to this interim report.
Near-term outlook
In Finland, demand for logging sites harvested in the summer continues to be good with respect to all timber types. There is also demand for wood harvested by the forest owner himself.
Due to seasonal and economic circumstances, the market situation of building and industrial customers utilising wood solutions is expected to pick up during the second quarter. The spring season will also accelerate garden and yard furnishing.
The utilisation rates of pulp mills are expected to remain good in the second quarter as well. The uncertain development of the European economy and the development of the euro against the US dollar in particular make it more difficult to predict profitability.
Volumes of folding boxboard are estimated to improve slightly in the second quarter. Demand for linerboard is expected to continue to be strong and delivery volumes to remain at the level of the previous quarter. The delivery volumes of Metsä Board’s papers are expected to decrease slightly in the second quarter for seasonal reasons. Metsä Board has announced new increased prices for both white-top kraftliner and uncoated fine paper.
The steady growth in the demand for tissue and cooking papers is expected to continue. The completed development programme and organisational reform will further strengthen Metsä Tissue’s competitiveness in the tightening market.
Metsä Group’s operating result excluding non-recurring items in the second quarter of 2013 is expected to be at approximately the same level as in the first quarter.
Disclosure procedure
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 2013 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.
METSÄ GROUP
Group Communications
For further information, please contact:
Vesa-Pekka Takala, CFO, Metsä Group, tel. +358 (0)10 465 4260
Reeta Kaukiainen, SVP, Communications, Metsä Group, tel. +358 (0)10 465 4541, +358 (0)50 522 0924
www.metsagroup.com
Metsä Group is a responsible forest industry group whose products’ main raw material is renewable and sustainably grown Nordic wood. Metsä Group focuses on tissue and cooking papers, consumer packaging paperboards, pulp, wood products, and wood supply and forest services. Its high-quality products combine renewable raw materials, customer-orientation, sustainable development and innovation. Metsä Group’s sales totalled EUR 5.0 billion in 2012, and it employs approximately 11,500 people. The Group operates in some 30 countries. Metsäliitto Cooperative is the parent company of Metsä Group and is owned by approximately 125,000 Finnish forest owners.