Metsä Board Corporation Stock Exchange Release January-September Interim report
29 October 2020 at 12 noon EET
January–September 2020
(compared to 1–9/2019)
· Sales were EUR 1,416.4 million (1,453.4).
· Comparable operating result was EUR 156.7 million (145.3) or 11.1% (10.0%)
of sales. Operating result was EUR 162.7 million (160.8).
· Comparable earnings per share were EUR 0.33 (0.32), and earnings per share
were EUR 0.34 (0.36).
· Comparable return on capital employed was 11.8% ( 11.0%).
· Net cash flow from operations was EUR 226.7 million (110.9).
July–September 2020
(compared to 7–9/2019)
· Sales were EUR 471.2 million (489.2).
· Comparable operating result was EUR 62.5 million (42.5), or 13.3% (8.7%) of
sales. Operating result was EUR 62.5 million (42.5).
· Comparable earnings per share were EUR 0.13 (0.09), and earnings per share
were EUR 0.13 (0.09).
· Comparable return on capital employed was 14.3% (9.7%).
· Net cash flow from operations was EUR 74.4 million (43.8).
Impact of coronavirus pandemic on Metsä Board’s business operations
The coronavirus pandemic has increased demand for hygienic and safe packaging
materials, particularly for end uses in the food and pharmaceutical industries.
On the other hand, the pandemic has weakened demand for the packaging materials
of luxury items and graphic end uses.
The coronavirus has not had an impact on production at Metsä Board’s mills. Some
annual maintenance works were postponed from the first to the second half of the
year. The planned annual maintenance shutdowns scheduled for the third quarter
went well.
Metsä Board’s financial position is good. The maturity structure of the loans is
healthy, and the company has adequate liquidity. Metsä Board’s paperboard
product portfolio is defensive in a pandemic situation, and thus the cash flow,
which has remained strong, supports financial headroom.
The company has at its disposal substantial precautionary measures aiming to
ensure personnel’s health and safety and the continuity of business operations.
Despite the precautionary measures, a prolonged pandemic could lead to
disruptions in production and/or the supply chain. Furthermore, any strong
weakening of the world economy attributable to the pandemic could also reduce
demand for Metsä Board’s products and thereby have a negative impact on the
company’s profitability.
Events in July–September 2020
· Demand for Metsä Board’s fresh fibre paperboards remained good and delivery
volumes were on the previous quarter’s high level. The average prices of folding
boxboard and white kraftliner remained stable.
· The profit losses due to the annual maintenance shutdowns held in the third
quarter were at the lower end of the estimated range.
· In China, demand for market pulp picked up and prices increased slightly. In
Europe, the pulp market remained uncertain.
· Net cash flow from operations in the third quarter was EUR 74.4 million and
interest-bearing net liabilities at the end of the period were EUR 277.3
million. The financial position remained strong.
· The Excellence Centre for paperboard and packaging design opened in
Äänekoski, Finland.
· All Metsä Board paperboards, except the PE-coated grades, achieved
certificates in industrial compostability.
Events after the review period
On 9 October 2020, Metsä Board gave a positive profit warning concerning the
comparable operating result for July–September. Previously, the company expected
its comparable operating result for the third quarter to weaken from the second
quarter. Paperboard sales in the third quarter were higher than expected and
total costs were lower than expected.
Near-term outlook
The duration of the coronavirus pandemic and the scope of its negative impact on
the world economy and on Metsä Board’s business operations continue to be
difficult to estimate.
Metsä Board’s paperboard deliveries in the fourth quarter of 2020 are expected
to decline slightly from the level of the third quarter of 2020. The decline is
mainly caused by the seasonally slower December.
The market prices of folding boxboard and white kraft-liners in local currencies
are expected to remain stable.
Annual maintenance shutdowns will be held at three of Metsä Fibre’s pulp mills
during the fourth quarter, in addition to which the annual maintenance shutdown
of Metsä Board’s Husum mill integrate extended to the first week of October,
according to plan.
The supply of long-fibre market pulp during the fourth quarter will decrease due
to the annual maintenance shutdowns of producers and the production curtailments
announced by some producers. Metsä Board’s market pulp deliveries in the fourth
quarter of 2020 are expected to increase from the level of the third quarter of
2020.
Changes in exchange rates, including the impact of hedges, will have a neutral
impact on the result in the fourth quarter of 2020 compared to the third quarter
of 2020 and a positive impact compared to the fourth quarter of 2019.
The production costs of paperboard and pulp are expected to remain fairly
stable.
Result guidance for October–December 2020
Metsä Board’s comparable operating result for the fourth quarter of 2020 is
expected to remain roughly at the same level as in the third quarter of 2020.
Metsä Board’s CEO Mika Joukio:
“The impacts of coronavirus pandemic on Metsä Board’s business operations has so
far been smaller than expected. Good demand for food and pharmaceutical
packaging as well as various packaging solutions in the retail sector has
increased the sales of our fresh fibre paperboards in both Europe and North
America. In January–September, the total delivery volumes of our paperboards
were on a higher level than in the corresponding period last year. We have a
good paperboard product portfolio, which has proven to be defensive in a
pandemic situation. Further, our recyclable paperboards made from renewable wood
fibre are ideal for sustainable packaging, which will support their demand in
the future.
Our comparable operating result in July–September was EUR 62.5 million
(7–9/2019: 42.5). Profitability was supported particularly by the lower
production costs of paperboard, a reduction in fixed costs and a positive FX
impact. The sales prices of market pulp were lower than in the corresponding
period last year. In China, the market situation of pulp has picked up slightly
over the past few months, while in Europe, the rapid decline in paper production
continues to reduce demand for market pulp.
A number of planned annual maintenance shutdowns at our mills took place in the
third quarter, the most significant being the annual maintenance shutdowns of
the Kemi and Husum mill integrates. The maintenance works proceeded well, and
the profit losses due to them remained at the lower end of the estimated range.
This was a continuation of the good performance of our mills throughout the
pandemic.
Our cash flow from operations remained strong, amounting to EUR 226.7 million in
January–September – twice as much as in the corresponding period last year. This
will further strengthen our good liquidity and support us in our large-scale
investments. We are ready to make the final investment decision on the renewal
of the Husum pulp mill as soon as the amendment to the environmental permit is
approved by the Swedish authorities. We expect this to happen before the year
end. The renewal of Husum’s pulp mill is an important investment for us, given
that it will enable the long-term development and growth of competitive
paperboard business at the Husum mill integrate in the coming years. The
investment will also take us closer to our ambitious goal of fossil-free mills
by 2030.
Growing consumption and the demand for sustainable packaging solutions will
accelerate the need for innovations. In September, we opened a new Excellence
Centre in Äänekoski’s unique bioeconomy ecosystem in Finland. The Excellence
Centre aims to accelerate material and packaging innovations by utilizing state
-of-the-art technology in R&D work, and to provide a collaboration platform for
customers and technology partners globally. I’m very excited about the
possibilities that the new Excellence Centre will provide us with now and in the
future.”
Key figures
2020 2019 2020 2020 2019 2019
Q3 Q3 Q2 Q1–Q3 Q1–Q3 Q1–Q4
Sales, EUR million 471.2 489.2 473.1 1,416.4 1,453.4 1,931.8
EBITDA, EUR million 84.7 62.1 92.6 236.6 235.1 294.5
comparable, EUR million 84.7 62.1 86.6 230.6 219.6 279.0
EBITDA, % of sales 18.0 12.7 19.6 16.7 16.2 15.2
comparable, % of sales 18.0 12.7 18.3 16.3 15.1 14.4
Operating result, EUR 62.5 42.5 66.5 162.7 160.8 180.8
million
comparable, EUR million 62.5 42.5 60.5 156.7 145.3 184.4
Operating result, % of 13.3 8.7 14.1 11.5 11.1 9.4
sales
comparable, % of sales 13.3 8.7 12.8 11.1 10.0 9.5
Result before taxes, EUR 58.1 38.8 63.9 150.8 148.6 165.6
million
comparable, EUR million 58.1 38.8 57.8 144.8 133.1 169.2
Result for the period, 47.0 32.5 51.7 120.8 128.4 144.6
EUR million
comparable, EUR million 47.0 32.5 46.9 116.0 114.6 145.8
Earnings per share, EUR 0.13 0.09 0.15 0.34 0.36 0.41
comparable, EUR 0.13 0.09 0.13 0.33 0.32 0.41
Return on equity, % 14.6 10.1 16.0 12.2 13.1 10.9
comparable, % 14.6 10.1 14.5 11.7 11.7 11.0
Return on capital 14.3 9.7 15.3 12.2 12.1 10.2
employed, %
comparable, % 14.3 9.7 13.9 11.8 11.0 10.4
Equity ratio, % 59 58 58 59 58 59
Net gearing, % 21 27 24 21 27 23
Interest-bearing net 1.0 1.2 1.1 1.0 1.2 1.1
liabilities/comparable
EBITDA
Shareholders’ equity per 3.69 3.65 3.57 3.69 3.65 3.76
share, EUR
Interest-bearing net 277.3 351.8 305.5 277.3 351.8 307.8
liabilities, EUR million
Total investments, EUR 44.4 17.9 43.3 117.5 42.2 98.9
million
Net cash flow from 74.4 43.8 72.3 226.7 110.9 200.5
operations, EUR million
Personnel 2,398 2,382 2,662 2,398 2,382 2,351
METSÄ BOARD CORPORATION
Further information:
Jussi Noponen, CFO, tel. +358 10 465 4913
Katri Sundström, VP, Investor Relations, tel. +358 10 462 0101
Further information as of 1 p.m.
A conference call held for investors and analysts in English will begin at 3
p.m. Conference call participants are requested to dial in and register a few
minutes earlier on the following numbers:
Finland: +358 981 710 310
Sweden: +46 856 642 651
The United Kingdom: +44 333 300 0804
The United States: + 1 631 913 1422
The conference call ID is 81715944#.
Metsä Board
www.metsaboard.com (https://www.metsaboard.com/Pages/default.aspx)
Metsä Board is a leading European producer of premium fresh fibre paperboards
and forerunner in sustainability. We produce premium lightweight folding
boxboards, food service boards and white kraftliners for consumer goods
packaging as well as retail-ready and food service applications. We work
together with our customers on a global scale to innovate solutions for better
consumer experiences with less environmental impact. The pure
fresh fibres Metsä Board uses are a renewable resource, traceable to origin in
sustainably managed northern forests. We aim for completely fossil free mills
and raw materials by 2030.
The global sales network of Metsä Board supports customers worldwide, including
brand owners, retailers, converters and merchants. In 2019, the company’s
sales totalled EUR 1.9 billion, and it has approximately 2,400 employees. Metsä
Board, part of Metsä Group, is listed on the Nasdaq Helsinki.
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