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Metsä Group’s comparable operating result in January–September 2018 was EUR 641 million

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Metsä Group Interim Report 1 January–30 September 2018  8 November 2018 at 12:00 noon

January–September 2018 (1–9/2017)

  • Sales were EUR 4,290 million (3,712).

  • Operating result was EUR 635 million (397). Comparable operating result was EUR 641 million (381).

  • Result before tax was EUR 576 million (345). Comparable result before tax was EUR 582 million (330).

  • Comparable return on capital employed was 17.1% (11.2).

  • Cash flow from operations was EUR 591 million (611).

July–September 2018 (7–9/2017)

  • Sales were EUR 1,386 million (1,260).

  • Operating result was EUR 223 million (143). Comparable operating result was EUR 223 million (134).

  • Result before tax was EUR 208 million (109). Comparable result before tax was EUR 208 million (100).

  • Comparable return on capital employed was 18.3% (10.8).

  • Cash flow from operations was EUR 314 million (420).

Events during the third quarter of 2018

  • The market prices of long-fibre and short-fibre pulp continued to rise.

  • Bioproduct mill in Äänekoski reached its nominal capacity in August.

  • Metsä Board’s profitability improved due to the higher average prices of paperboard and market pulp as well as increased pulp production and delivery volumes of the associated company Metsä Fibre.

  • Planned maintenance shutdowns took place at the Kemi and Husum integrated mills. The maintenance shutdown at Husum began in September and ended in October.

  • Production at Metsä Wood’s birch plywood mill in Pärnu began officially at the end of August.

  • Metsäliitto Cooperative made an early repayment of its EUR 56 million loan to the European Investment Bank.


Events after the review period

Metsä Group’s innovation company Metsä Spring and Itochu Corporation from Japan announced the establishment of a joint venture, which will invest approximately EUR 40 million in an industrial demo plant producing textile fibre. The facility will be built in Äänekoski, Finland.

Result guidance for  October–December 2018

Metsä Group’s comparable operating result is in the last quarter of 2018 expected to be roughly at the same level as in the third quarter of 2018.


President and CEO Ilkka Hämälä:

“Strong demand for our products continued in the third quarter. The prices of different product groups remained stable or rose slightly. The market situation, combined with the high sales volume enabled by our development investments, led to an excellent financial result.

In terms of the Group’s development path, we completed our birch plywood investments in Äänekoski and Pärnu, and immediately after the review period, we decided on a new industrial demo plant to produce wood-based textile fibres to be built at Äänekoski. We are continuing the LVL mill investment at Punkaharju and exploring development options for our pulp mill in Kemi.

Converting Finnish wood into diverse carbon-storing products and the combined development of forest management services that support the sustainable growth of forests represent Metsä Group’s actions to combat climate change.”

Key figures

2018 2017 2018 2017 2017
Condensed income statement, EUR million 1–9 1–9 7–9 7–9 1–12
Sales 4 290.2 3 711.8 1 385.8 1 260.4 5 040.0
  Other operating income 34.9 43.4 14.0 17.7 60.3
  Operating expenses -3 473.3 -3 179.2 -1 110.1 -1 070.1 -4 269.7
  Depreciation and impairment losses -216.3 -179.3 -66.7 -64.7 -249.7
Operating result 635.4 396.7 223.1 143.3 581.0
  Share of results from associated companies and joint ventures 4.5 15.9 3.7 -3.0 17.1
  Exchange gains and losses -5.9 -3.3 -1.4 -0.7 -3.3
  Other net financial items -57.8 -64.1 -17.3 -30.9 -88.5
Result before income tax 576.3 345.2 208.2 108.6 506.2
  Income tax -117.4 -65.8 -38.3 -22.0 -102.3
Result for the period 458.9 279.4 169.9 86.6 403.9


2018 2017 2018 2017 2017
Profitability 1–9 1–9 7–9 7–9 1–12
Operating result, EUR million 635.4 396.7 223.1 143.3 581.0
  Comparable operating result 641.0 381.2 223.0 134.3 566.1
  % of sales 14.9 10.3 16.1 10.7 11.2
Return on capital employed, % 17.0 11.6 18.3 11.5 12.6
  Comparable return on capital employed 17.1 11.2 18.3 10.8 12.3
Return on equity, % 19.0 13.7 20.1 12.4 14.5
  Comparable return on equity 19.2 13.0 20.1 11.1 14.0

   

2018 2017 2018 2017 2017
Financial position 30.9. 30.9. 30.6. 30.6. 31.12.
Equity ratio, % 52.7 43.4 51.2 45.3 45.0
Net gearing ratio, % 18 41 26 45 34
Interest-bearing net liabilities, EUR million 622 1 165 841 1 252 993


Segments  

Sales and Operating result 1–9/2018, EUR million Wood Supply and Forest Services Wood Products Industry Pulp and Sawn Timber  Industry Paperboard Industry Tissue and Cooking Papers
Sales 1 457.0 333.9 1 839.0 1 486.1 769.4
  Other operating income 5.6 5.0 17.9 9.6 3.3
  Operating expenses -1 436.0 -314.7 -1 265.7 -1 238.7 -715.0
  Depreciation and impairment losses -3.3 -9.9 -94.5 -70.7 -27.5
Operating result 23.4 14.4 496.7 186.3 30.2
  Items affecting comparability - - - 5.6 -
Comparable operating result 23.4 14.4 496.7 191.9 30.2
  % of sales 1.6 4.3 27.0 12.9 3.9


Near-term outlook

Demand for wood will focus on regeneration and thinning felling that can be harvested in the summer and, in terms of energy wood, primarily on crown wood. The sales of forest management services are expected to remain at a good level.

General market demand for wood products is expected to remain good, which improves order book levels, particularly for plywood products. The strong construction market is supporting demand for Kerto LVL products. In the UK market, the uncertainty caused by the Brexit negotiations will be reflected in the demand outlook, particularly in the distributor segment.  

The balance in demand and supply in the pulp market is good at the moment. The situation is expected to remain stable in the fourth quarter of the year as well.

The demand for and price level of sawn timber has improved over the year. Demand is expected to remain stable in the main markets in Europe.

Growth in demand for high-quality consumer packaging paperboard made from fresh fibre is expected to continue. The market prices of folding boxboard and white kraftliner in local currencies are expected to remain mainly stable or to rise slightly.

Paperboard deliveries during the fourth quarter are expected to remain roughly at the level of the third quarter or to decline slightly. Delivery volumes in the fourth quarter are affected by the seasonally slower December.

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 markets outside Europe. The rise in market prices is expected to continue.

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 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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