Metsä Board Oyj: Metsä Board's comparable operating result in 2024 January-September was EUR 73 million
Metsä Board Corporation Stock exchange release Interim report 24 October 2024 at 12:00 noon EET
- Sales were EUR 1,492.6 million (1,519.2).
- The comparable operating result was EUR 72.6 million (121.5), or 4.9% of sales (8.0). Operating result was EUR 64.0 million (121.0).
- Comparable earnings per share were EUR 0.11 (0.26), and earnings per share were EUR 0.09 (0.26).
- Comparable return on capital employed was 4.3 % (6.7).
- Net cash flow from operations was EUR -11.9 million (218.6).
- Sales were EUR 499.0 million (479.0).
- The comparable operating result was EUR 41.9 million (5.5), or 8.4% (1.1) of sales. Operating result was EUR 41.7 million (3.1).
- Comparable earnings per share were EUR 0.08 (0.02), and earnings per share were EUR 0.08 (0.01).
- Comparable return on capital employed was 7.3% (1.3).
- Net cash flow from operations was EUR 4.6 million (76.6).
Events in July-September 2024
The delivery volumes of Metsä Board's fresh fibre paperboards increased slightly from the previous quarter. Average prices remained stable.
In Europe, the pulp market situation remained stable. In China, pulp deliveries decreased significantly. Metsä Board's associated company Metsä Fibre curtailed softwood pulp production to match the demand situation.
Metsä Board's comparable operating result for July-September 2024 includes EUR 23 million in insurance compensation related to the gas explosion that occurred in March at the evaporation plant of Metsä Fibre's bioproduct mill. The compensation includes the impact of Metsä Fibre's share of the result. The repair work caused by the gas explosion was completed on 20 June 2024, after which the mill's production returned to its ramp-up curve. Negotiations with the insurance consortium to com insurance compensation.
Metsä Board adopted Metsä Group's updated Green Finance Framework. The previous framework was from 2019.
Events after review period
Laura Remes has been appointed SVP, Business Development and a member of the Corporate Management Team. Remes will start in her role at a time to be specified later, and will report to CEO Mika Joukio (Stock exchange release 4 October 2024).
Metsä Board renews its' dividend policy. The new dividend policy is: Metsä Board's target is to distribute a dividend of at least half of the result for the financial period over time, taking into account the company's future investment and development needs. The previous dividend policy was: Metsä Board's target is to distribute a dividend of at least 50% of the result for the financial period. The new dividend policy supports Metsä Board's strategy to grow in fibre-based packaging materials and renew its industrial operations (Stock exchange release 24 October 2024).
Near-term outlook
The overall demand for consumer products is determined by the development of consumers' purchasing power and their general purchasing behaviour. For the rest of the year, demand for fresh fibre paperboards is expected to be affected by the seasonal slowdown in December.
Metsä Board's paperboard delivery volumes are expected to decrease slightly in October-December compared to the previous quarter (Q3/2024: 387,000 tonnes). Sales prices in local currencies are expected to remain stable.
Total costs excluding pulp costs are estimated to increase. Increases are expected especially in wood costs and fixed costs. There are less annual maintenance shutdowns at the mills in October-December than in the previous quarter.
Average sales prices of market pulp decreased in October. In the fourth quarter, demand for market pulp is expected to remain stable in Europe and North America. In China, demand has returned to normal after a very quiet third quarter. The demand and price situation for sawn timber is expected to remain at the current level.
In October-December 2024, exchange rate fluctuations, including the impact of hedges, will have a slightly negative impact on the operating result compared to July-September 2024 and a slightly negative impact compared to October-December 2023.
Regarding the gas explosion at Metsä Fibre's bioproduct mill, negotiations continue with the insurance consortium to compensate the remaining estimated financial losses. Metsä Board does not have an estimate of the timing or extent of any future insurance compensation.
Result guidance October-December 2024
Metsä Board's comparable operating result in October-December 2024 is expected to be weaker than in July-September 2024.
The result guidance does not take into account the insurance compensation from the gas explosion at Metsä Fibre's bioproduct mill included in the comparable operating result for July-September, nor possible future insurance compensation for October-December. Metsä Board's comparable operating result for July-September 2024 was EUR 42 million, including EUR 23 million in insurance compensation.
Metsä Board's CEO Mika Joukio:
"In 2024, demand for fresh fibre paperboards has clearly improved from last year's record-low level, although demand growth has been somewhat slower than expected. At the beginning of the year, demand was boosted by restocking in the value chain, which levelled out towards the end of the first half. In July-September, the demand and price situation for paperboards was similar to the previous quarter. Due to higher living costs, consumers' purchasing behaviour remained relatively cautious, and consumption is more focused on services than on products.
Metsä Board's first half was overshadowed by the political strikes in Finland and the gas explosion at Metsä Fibre's Kemi bioproduct mill. These caused us large production and sales losses and significant additional costs. We expect the negative impact on the operating result to total EUR 65 million, including the impact of Metsä Fibre's share of the result. The July-September result includes EUR 23 million in insurance compensation related to the gas explosion in Kemi. Negotiations with the insurance consortium are still ongoing.
In the third quarter, our paperboard deliveries increased by 14% year-on-year, totalling 388,000 tonnes (Q3/2023: 340,000). In the review period, paperboard deliveries amounted to 1,130,000 tonnes, which was 5% higher than in the comparison period (Q1-Q3/2023: 1,073,000). Despite the increases, delivery volumes still remained clearly below capacity levels.
In January-September, sales amounted to EUR 1,493 million, and the comparable operating result was EUR 73 million (Q1-Q3/2023: 1,519; 121). Sales and the comparable operating result were weakened by lower sales prices of folding boxboard. Meanwhile, market pulp prices (PIX) have increased this year especially in Europe, where improved activity of paper and paperboard producers, especially in the first half of the year, supported pulp demand. In China, demand has been much weaker, and our market pulp deliveries to China have been low in recent months.
Production costs have been mainly decreasing in the review period, excluding wood costs, which increased by 7% from the comparison period. Our wood supply is handled by Metsä Group, which is Finland's largest buyer of wood. In Sweden, we have a long-term wood supply agreement with Norra Skog, a minority owner of the Husum pulp mill. The availability of wood is therefore well secured for us.
Our strategy is to grow in fibre-based packaging materials and renew our industrial operations. Earlier this year, we launched the first phase of the Simpele investment programme: the renewal of the mill's paperboard machine. We are also planning other development investments to improve the competitiveness of our current mills and products and to support our goal of entirely fossil free production.
After the review period, we revised our dividend policy to better reflect our future investment and development needs. Dividends are still an essential part of our capital allocation, and our aim is to continue to pay dividends of at least half of the result for the financial period over time."
Key figures
2024 2023 2024 2023 2023
Q3 Q3 Q1-Q3 Q1-Q3 Q1-Q4
Sales, EUR million 499.0 479.0 1,492.6 1,519.2 1,941.9
EBITDA, EUR million 66.0 21.1 149.4 189.5 214.6
comparable, EUR million 66.3 23.5 150.4 189.9 216.0
EBITDA, % of sales 13.2 4.4 10.0 12.5 11.1
comparable, % of sales 13.3 4.9 10.1 12.5 11.1
Operating result, EUR million 41.7 3.1 64.0 121.0 120.8
comparable, EUR million 41.9 5.5 72.6 121.5 122.2
Operating result, % of sales 8.3 0.7 4.3 8.0 6.2
comparable, % of sales 8.4 1.1 4.9 8.0 6.3
Result before taxes, EUR million 39.5 4.3 57.1 119.5 120.9
comparable, EUR million 39.8 6.7 65.7 120.3 122.6
Result for the period, EUR million 32.2 2.8 41.9 100.8 101.6
comparable, EUR million 32.5 5.2 49.0 102.1 103.8
Earnings per share, EUR 0.08 0.01 0.09 0.26 0.27
comparable, EUR 0.08 0.02 0.11 0.26 0.27
Return on equity, % 6.7 0.5 2.8 6.3 4.7
comparable, % 6.7 1.0 3.3 6.4 4.8
Return on capital employed, % 7.3 0.9 3.9 6.7 5.0
comparable, % 7.3 1.3 4.3 6.7 5.1
Equity ratio at the end of the 65 68 65 68 67
period, %
Net gearing at the end of the 18 11 18 11 7
period, %
Interest-bearing net 2.0 0.7 2.0 0.7 0.7
liabilities/comparable EBITDA, 12
months rolling
Shareholders' equity per share at 5.04 5.25 5.04 5.25 5.35
the end of the period, EUR
Interest-bearing net liabilities at 347.7 219.6 347.7 219.6 144.0
the end of the period, EUR million
Total investment, EUR million 67.1 49.3 120.5 156.8 228.7
Net cash flow from operations, EUR 4.6 76.6 -11.9 218.6 342.8
million
Personnel at the end of the period 2,353 2,310 2,353 2,310 2,240
METSÄ BOARD CORPORATION